The end of 2013 can best be characterized as an all-out blitz by TPTB to boost Wall Street bonuses, depress bullion bulls’ spirits and take “recovery” propaganda to historic, near-spiritual levels. However, the “reality onslaught” of just the first few weeks of 2014 is setting the stage for perhaps the most calamitous economic year in generations or, at the least, since 2008.
Let’s just look at the past two weeks’ football playoffs, for example. In last week’s divisional round, it wasn’t until the last minute – with significant corporate aid and price-cutting – that three of the four games actually sold out. The fact that any game did not sell out immediately should tell you exactly how bad the real economy is; much less, three of the four games. Worse yet, in yesterday’s AFC Championship between the New England Patriots and Denver Broncos, the game was sold out – but secondary market tickets were vastly lower than regular season games as recently as three months ago.
I mean, yesterday could not have been a more beautiful day here in Denver; with 60-degree temperature and no wind – or even clouds. A trip to the Super Bowl was on the line, pitting arguably the two greatest quarterbacks of our time; and do you know how much tickets were going for on ticketzoom.com? For the worst seats in the house, $250; and the best, $550. This compares to prices closer to $550 for the worst seats in on opening day in September, and three to four times that for the best. Anecdotal evidence or coincidence? You make the call; but when you do, consider this damning portrayal of the reality of America’s supposed “retail resurgence.”
Sadly, the facts of daily life prove just how dire the economic situation has become. Record low approval ratings for politicians from the U.S. to France to Japan are the simplest way of gauging such reality; as are surveys such as the Gallup poll below, depicting how Americans’ satisfaction with the state of the economy has plummeted to record low levels. By the way, the 68% satisfaction response in January 2001 – versus just 28% today – occurred a year after the catastrophic “tech wreck” commenced.
Then you have the giant pink elephant in the room; i.e., the Chinese stock market – which refuses to join the hyperinflation party, despite the PBOC printing more money than any Central bank last year, including the Fed itself. As the Shanghai Exchange approaches its 2008 crisis low, clearly something is “rotten in the state of Denmark.” According to the MSM, the so-called U.S. “recovery” is being supported by a growing Chinese economy. However the reality of the situation is clearly significantly different.
“About that recovery,” we last month forecasted 2014 would be the year the entire world realizes the farce that is U.S. “job growth.” Not only is the falling “unemployment rate” due solely to a plunging labor force – which likely, will fall by another 2-4 million people in the next 12 months – but even the government’s own employment data is internally inconsistent.
As you can see below, its own “JOLTS,” or Job Openings and Labor Turnover Survey, has become so disjointed from the BLS’ monthly NFP report, it is becoming outright embarrassing. Not un-coincidentally, this disparity commenced in late 2008, when TPTB decided to commandeer all aspects of financial market performance and economic reporting; in this case, depicting how actual hiring has barely budged, amidst what the BLS deems “strong job growth.” We won’t even go into the fact that the majority of new jobs are now temporary, low paying ones that don’t even qualify for benefits such as healthcare; that is, those not created by the fictional “birth/death model.” But suffice to say, the “reality onslaught” in the U.S. jobs market will only strengthen as the year wears on.
As will the fact that despite the propaganda of U.S. corporations being “cash rich,” they have never had more net debt; on average, 15% higher than in 2008, if you can believe it. Actually, it shouldn’t surprise anyone; as the government itself is 70% more indebted than 2008; or 120% if including “off balance sheet” debt from nationalizing Fannie Mae and Freddie Mac and 150% when incorporating the inexorable growth in “unfunded liabilities. Not to mention, the unfettered growth in personal debt – the large majority of which, via unproductive auto and student loans. Per below, isn’t it funny how this debt explosion commenced in the early 1970s – i.e., right after the gold standard was abandoned?
And I wouldn’t expect the aforementioned, debt-infested corporations to “grow us out” of recession anytime soon; as per below, margins are on the verge of being compressed to 2008-09 crisis levels. Due to the toxic combination of a weak economy and creeping inflation, profit margins are being dramatically compressed; and thus, even the slightest economic weakness – from already stagnant levels – could prove financially catastrophic.
But don’t worry; as if your bank isn’t “bailed out” or “bailed in” amidst the upcoming reality onslaught, you can lock in the “high-yield” rate of 0.60% on CDs – if you promise not to withdraw your funds for three years. Heck, that won’t even offset the BLS’s embarrassingly understated inflation calculations; let alone, the real rate of roughly 8%-10%!
As for the reality of the Precious Metals markets, we’ve always been confident that we’d live to see the end of the Cartel. However, it’s one thing to predict it; and another entirely to see its death throes in person. Never have we seen so much mainstream coverage of gold manipulation – as we wrote about last week. However, this weekend alone, said “reality onslaught” really hit home; particularly when validated by an actual U.S. “gold trader” – who hit the situation on the head in this rare, must hear interview.
First, we learned that just five of the measly 37 tonnes returned to Germany in 2013 actually emanated from the Fed, which obviously no longer has Germany’s gold. Next, the shocking statement from the head of Germany’s financial regulatory commission – Bafin – that gold manipulation is ‘much worse’ than LIBOR rigging; followed, “coincidentally,” by Deutsche Bank’s withdrawal from the daily London gold “fixing.”
And finally, under the category of “where there’s smoke there’s fire,” it appears last week’s Bloomberg article about the PBOC holding 2,710 of gold – compared to the “official” level of 1,054 tonnes – is presaging an official PBOC statement validating this very number; as suggested by an article in the state-controlled Shanghai Daily. Regarding the latter, the fact the PBOC likely holds many multiples of this amount is immaterial; as once the world gets wind of the fact that China is aggressively accumulating gold, the global stampede into real money could be historic…
If China announces an increase in gold reserves, there would be an immediate drag-up force in the gold market,” Albert Cheng, managing director of the industrial association World Gold Council for the Far East, told Shanghai Daily.
–Shanghai Daily, January 17, 2014
Under such circumstances, the Cartel still – pitifully – executed its 24th “Sunday Night Sentiment” capping in the past 25 weeks. What a shock, at the key “technical level” of $1,260/oz. – followed by its 11th “2:15 AM” attack in this year’s 12 trading days. And yet, despite the COMEX being closed for the MLK holiday, overseas trading platforms still enabled gold to recover – via the EXACT same chart pattern of the past five days!
Clearly, the ill winds of 2013 are shifting; as said “reality onslaught” kicks into high gear – worldwide. Likely, not only will the gaping disparity between PAPER prices and PHYSICAL demand in the gold and silver markets resolved decidedly to the upside in 2014; but more importantly, the unprecedented incongruence between rigged financial markets and collapsing economies will become universally understood. And when it does – in the words of Paul Craig Roberts, in this revealing interview, “If the currency collapses and you try to flee into gold, there won’t be any.” Thus, the time is now to protect your assets from the upcoming, inevitable hyperinflation.