It’s Thursday morning – and after nearly two years of recording at least one Audioblog per week, I’m taking a break. Frankly, the amount of mental energy exhausted in passionately typing the copy, and subsequently recording, is enormous – to the point that when I’m done, I feel like Whoopi Goldberg after she lets a Ghost possess her. But have no fear, as not only did my new SGT Report and Kerry Lutz podcasts post this week, but my recent Caravan to Midnight appearance should be available shortly; and next week, I promise my milestone 100th Audioblog will be a good one – likely, taped Thursday morning as usual, following Wednesday’s FOMC farce policy decision.
I’ve got to tell you, I’m not “feeling it” this morning – as at times, even I temporarily succumb to the “ennui” of watching relentless money printing, blatantly rigged financial markets, and unending propaganda. Regarding the former, two more Central banks – in South Korea and New Zealand – cut interest rates this morning, as the “final currency war” expands toward its inevitable, horrific climax. Meanwhile, both the IMF and World Bank issued unabashed pleas for the Fed to “hold off” raising rates until 2016 – whilst the former again lowered its global growth forecast, citing weak economic growth and the impact of inexorably falling commodity prices.
As for money printing; if anything, the ECB, which already increased the run rate of the €1.2 trillion, open-ended QE scheme it commenced in March, will be forced to increase it further – now that the worldwide interest rate surge we first warned of six weeks ago is taking on a life of its own, global economic weakness notwithstanding. Let alone if Greece “surprises” the world’s Pollyanna politicians, bankers, and media by doing what it must eventually do; i.e., default on its roughly €400 billion of debt. In Japan, “Peter Pan” Kuroda continues to believe Abenomics can “fly” – knowing full well that if he stops “believing,” the world’s most overvalued sovereign bonds will crash.
In China, the PBOC has apparently increased the size of its “backdoor QE” program, enabling countless insolvent municipalities to “swap” their toxic debts for freshly printed Chinese government bonds. And then of course, there’s Whirlybird Janet, who despite last week’s comically fraudulent NFP employment report – “double seasonally adjusted” and all – is facing some of the weakest economic data since the 2008 crisis, whilst market rates fly in the face of logic by surging higher, jeopardizing the elusive “recovery” she so desperately needs to not only save her face, but the finances of history’s most indebted nation.
As for market manipulation, the Department of Justice has decided to investigate gold and silver trading; just as the CFTC has done numerous times – and oh yeah, European trading authorities, resulting in Deutsche Bank being forced out of the London Gold Fix last year, and UBS paying fines for manipulating gold prices. Not to mention the COMEX traders who earlier this year were fined and censured for “spoofing” gold and silver futures; i.e, manipulating prices. But don’t worry, there’s nothing to see here. I mean, it’s not like anyone important has ever admitted to manipulating gold – like, say, Alan Greenspan while he was Chairman of the Federal Reserve in 1998.
“Banks stand ready to lease gold in increasing quantities should the price rise.”
Or, for that matter, Bank of England governor Eddie George when gold spiked in 1999, following the surprise announcement of the Washington Agreement (which limited Central bank gold sales to prescribed quotas)…
“We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K.'”
To that end, I was reading an article by Peter Schiff yesterday, in which he stated the “Dow Jones Propaganda Average” (my term, not his) hadn’t had a 10% correction since September 2011. You know, when the U.S. lost its triple-A credit rating with a national debt more than $4 trillion lower than today’s (heavily understated) $18.2 trillion; economic activity was far more vibrant than today’s 2008-like levels; and the CRB index was roughly 330, compared to the 225 level witnessed both today and at the 2008 bottom. And oh yeah, September 2011 was also when “dollar-priced gold” peaked at $1,920/oz, mere hours before one of the most Precious Metal bullish announcements in decades; i.e., the Swiss National Bank pegging the Franc to the dying Euro. A hideous trade, of course, that was unceremoniously unwound earlier this year, following catastrophic taxpayer losses. No, no manipulation there.
Since then, physical Precious Metal demand has surged to record levels – as demonstrated by today’s fantastic Steve St. Angelo article, titled “Indian Silver Imports – On Track to Smash All Records.” Not to mention, September 2011 marked the commencement of the current, global explosion of Central bank money printing – starting with the Fed’s “Operation Twist” in September 2011 itself, followed by QE3 in December 2012; as well as Abenomics in Japan; QE in Europe; whatever you want to call it in China; and not dozens, but hundreds of rate cuts the world round – in several cases, to negative levels. In other words, a “perfect storm” of bullish Precious Metals news flow that continues to this day – with only one possible direction in the years to come, as history’s largest fiat Ponzi scheme races through its terminal phase.
Last year, I deemed that very same month of September 2011 to be TPTB’s “point of no return,” which is why I found the aforementioned statistic regarding the U.S. stock market so interesting. In other words, validating my long-time contention that at that point, the world’s “leaders” realized their haphazard post-2008 manipulations were not “working.” And thus, that more “extreme measures” were required – like taking all interest rates to zero; commandeering all financial markets; and launching unprecedented economic propaganda schemes, including the fabrication of all economic data. And here we are, nearly four years later, with the IMF and World Bank begging the Fed to hold off raising rates by a measly quarter point, for fear of the ramifications on a world addicted to record levels of debt, at record low rates. Not to mention financial markets; which, manipulated or not, are trading at their highest valuations ever, utilizing more leverage than ever, amidst the weakest economic environment in generations. And this, whilst the same manipulative forces have suppressed gold and silver prices so far below the cost of production, the mining industry is on the verge of collapse. Not to mention, as Precious Metal sentiment has plunged to record low levels, last seen when gold and silver bottomed 16 years ago.
I know I’m jumping around a bit; but I’m doing my best on a morning devoid of a particular inspiration – which hopefully, can be excused given my Cal Ripken like streak of providing material essentially every day for more years than I can recall. However, unquestionably so, the item bouncing around my head like a super ball is the incessant, relentless talk of imminent Fed “rate hikes” – as if one Central bank’s action, particularly as tiny as it would likely be – would matter a whit in a world where all other Central banks (aside from ones like Brazil, whose currencies are dangerously close to hyper-inflating) are going the opposite direction, in emphatic fashion.
To me, the only reason the Fed even considers raising rates is a desperate attempt to “save face,” after having spent five years claiming the U.S. to be “recovering.” Not expanding, mind you, but simply “recovering” from its biggest economic plunge since the Depression. Which by most measures, it has decidedly NOT done – such as commodity prices, capital spending, real income, labor participation, and entitlement demand, to name a few. But don’t worry, the PPT goosed stock market is higher; Fed goosed bonds are higher; “1%” real estate is higher; and corporations are buying back stock – financed by debt at record low rates – like never before. Not that the “99%” benefit from such actions – and in fact, are negatively impacted by their inflationary ramifications. However, surging markets make for great headlines for vote-seeking politicians, “profit” seeking bankers, and rating seeking media outlets.
Of course, this illusion is 100% dependent on record low interest rates; not to mention, the ability of Central bankers – and their government and banking “partners in crime” – to manipulate markets to desired levels; including, of course, the suppression of gold and silver prices amidst an environment of surging demand, stagnating supply, and record low inventories. Not to mention, collapsing global currencies – care, in large part, of the inflation exported by ZIRP and QE programs from stronger Central banks, like those in U.S., Europe, and Japan. And clearly, global bond markets are decidedly not cooperating – as the aforementioned “tectonic market shifts” are wreaking havoc with the Central bankers’ “best laid plans.”
In my June 3rd article, “Rate Hikes and Precious Metals,” I discussed the mathematical impossibility of the Fed materially raising rates – given the tens, if not hundreds of trillions of federal, municipal, institutional, corporate, and individual debt that would be negatively impacted. Not to mention, global financial markets; for the most part, trading at unprecedentedly high valuations, principally due to interest rate suppression to record low levels. However, the situation is far direr still, as so much else is dependent on the Fed’s monetary heroin – from off balance sheet derivatives; to pension fund present value calculations; to who knows how many trillions of mortgage, auto, student, and other loan types – increasingly, given to sub prime borrowers – with rate adjustment provisions. Last but not least is the fact that if the Fed is crazy enough to attempt a rate hike later this year – even if but a carefully market-controlled quarter point, simply to make its point – it will likely trigger a dollar explosion against the vast majority of the world’s 150+ “non-reserve currencies.” Such a dramatic move, even if the Fed/PPT/ESF are able to prevent financial markets from plunging as a result, would have dire ramifications for America’s manufacturing markets share, and already weakening corporate earnings. This, in turn, would likely yield further White House pressure to “ease up” – per what it released earlier this year; and likely, this week.
And even if they do, DON’T BELIEVE THE PROPAGANDA that such action portends “plunging gold and silver prices.” For one, for all the aforementioned reasons, a material rate hike is impossible – let alone, to levels above the current, raging inflation rate that would cause real rates to turn positive. Secondly, if such a suicidal action is actually initiated, the global “blow back” would likely be as swift as it intense – politically, economically, and financially. This is why the IMF, World Bank, and others are all but begging the Fed to hold off. And last but not least; is it me, or am I the only one that recognizes the giant pink PM elephant in the room; i.e., that amidst the aforementioned “perfect storm” of PM bullish news flow – for years running – gold and silver prices have been pushed so far below the cost of production, the mining industry is on the verge of implosion, and the global supply/demand balance historically tight. And thus, any attempt to push prices lower will likely exacerbate these delicate trends, putting us one day closer to the inevitable destruction of the “New York Gold Pool,” just like the London Gold Pool and countless other PM suppression efforts before it.
In other words, don’t fear the rate hike propaganda, and know that a real, material increase is not possible in today’s debt infested world. Unless, of course, rates surge outside the Fed’s (and other Central banks’) plans, as we are starting to see today. If such trends are indeed being catalyzed by the “return of the bond vigilantes” – seeking to return markets to their rightfully lower levels – all hell would likely break loose; which, of course, is the type of environment Precious Metals thrive in most.
Thanks for all that you do.
I have really enjoyed the podcasts and hope they continue even though its obvious they take an insane amount of effort to produce.
You’re welcome; and have no fear, they won’t be stopping any time soon!
Have a great weekend.
I like your podcasts, but they do sound a bit “canned”. I would prefer you just outline what you want to say, topics and supporting facts, and then do the podcast. You are at your best when a topic is thrown at you and then you talk off the top of your head. You are fast and have nice flow as well as emotion that is missing in your scripted podcasts.
Thanks, but I prefer to script my podcasts, which I write in a very free-flowing manner. I do plenty of podcast interviews, so there’s plenty of variety of what I do.
I did a few in the past where I just outlined, but I don’t feel as comfortable that way.
Appreciate the work you do from your neighbors in da Springs
Like Cal Ripken and the “Iron Horse” Lou Gehrig before him, you have demonstrated an astonishing ability to suit up, show up, and perform at a consistently high level, well beyond what most others might have even been able to conceive of. And you have delivered all of your penetrating, spot-on insights/observations for the ridiculously low cost of FREE. If that ain’t a killer deal I don’t know what is! lol
I along with so many others thank you sincerely for helping the rest of us come up to speed on the sorry state of affairs that has become little more than a desperate go-for-broke strategy to keep the debt-ridden fantasy going as long as possible. Certainly they’ve kept up the facade a LOT longer than most might have ever imagined possible, you & yours truly included!
Totally understand your ‘hitting the wall’ this late in the marathon of reporting the truth of things as you (rightly) see it. How much longer until the fat lady sings no one can say obviously, but it is inevitable and she is vocalizing at this very moment for her grand aria before the curtain and indeed the entire theater come crashing down around us all.
Btw, I totally understand your approach to the podcasts, and value them greatly.
Please – Don’t – Stop!!!
The laws of mathematics and of Nature herself cannot be suspended in perpetuity, no matter what manner of spin, deceit, obfuscation, or other sleight of hand TPTB engage in. We’re all in this one for the duration as they used to say, so glad quality guys like you, Bill Holter, and a handful of others are in it with the rest of us who still believe in such quaint notions as truth in reporting, fair markets (remember those???), and not capitulating to the endless schemes, suppression, etc. put in place to benefit the .00001% at the expense of the 99.99999% (by my math).
Looking forward to your upcoming 1000th post, thanks for hanging in and being able to hit the curves outta the park!
Much appreciated Alan! And don’t worry, I won’t stop!
If they don’t raise rates are there any other mathematical certainties or reasons everything else they do can’t continue for five more years?
Yes, the entire global economy is imploding. Currencies are collapsing, and debt is exploding; and the longer rates stay artificially low, the more rapidly such trends will expand.
Five years? Not a chance.
You’re one of the smartest guys in the room Andrew. Having said that, just wanted you to know how much we (me and my wife Nina) appreciate your blog, written and audio. As we are a bit concerned about the economic development in Europe (we live in Sweden) we find your writing not only to be prolific but in the spirit of William of Ockham and to that end we feel a lot more prepared for any political/economic development in the world. Looking forward to your next piece. Take care!
Thanks so much, Dan!
My first email from Sweden. Great soccer game yesterday!
Justice investigates gold rigging, and rumor has it FED bailed out COMEX. Whats wrong with this picture.
Got the blog running, wish me luck!!