Yes, I know human nature is resistant to change. And I know the near-term economic ramifications of a Scottish “yes” vote would have been difficult to some and unpleasant to others. However, let me just start by saying this. The Scottish people blew a generational opportunity to escape from the political and financial tyranny of London, which has caused more damage than any institution in human history; and today, is more of a global threat than ever – albeit, using modern “weapons” like derivatives, instead of ancient ones like cannonballs. The vote was roughly 55% to 45%, largely in line with pre-election polls. However, the nation’s youth tally was more than 70% “yes,” whilst its elderly vote was more than 70% “no.” As Zero Hedge so aptly put it this morning, what will Scotland’s political climate look like in the coming years when said youth are the nation’s primary demographic?
But enough on this specific vote, as the real story isn’t Scotland, but – as we wrote in last week’s “secession movements gain momentum” – the “99%” are increasingly angry by what London, Washington and other bureaucratic agencies have done to their standard of living; largely, due to the unfettered money printing of history’s largest fiat Ponzi scheme. Scotland’s secession movement is far from the last; and frankly, what’s going on in Catalonia, Spain appears to be a far more determined effort with a potentially greater political and economic impact. Nearly two million Catalonians rallied for secession last week; and thus, the odds of a “yes” vote November 9th appear far better. In fact, just today, Catalonia’s parliament is expected to approve a measure giving regional leader Artur Mas the power to call a referendum, despite vows by Prime Minister Mariano Rajoy to block it. But again, specific votes are not what we should focus on; but instead, the fact that as the global economy inexorably weakens, social and geopolitical instability will become the “new normal.” In other words, “Pax Americana” is dead; sadly, due principally to its own abusive actions.
As pertains to “goldbugs” –who use it tend to have little understanding of the historical significance and stability of sound money – there is, of course, a specific vote that could have dramatic ramifications on the “world order”; far more so than Catalonia. And that, of course, is Switzerland’s November 30th referendum regarding the re-implementation of a Swiss “gold standard.” Right now, it is difficult to determine which way the vote will go. However, given that Egon von Greyerz is one of the world’s pre-eminent sound money experts – and Swiss to boot – I’ve attached his current thoughts here. In a nutshell, there are no more sophisticated financial experts anywhere in the world; and following the Swiss government’s decision to “sell its financial soul” a decade ago, the nation’s standing – and currency – have fallen dramatically. A “yes” vote would require Switzerland to buy a whopping 1,700 tonnes of gold, and additional metal for each Franc the Swiss National Bank prints, ad infinitum. Even the most determined Cartel effort yet would not be able to staunch the tide – of physical demand and even paper prices – under such a scenario; and thus, stay tuned as November 30th is but two months away.
I’m eager to get to today’s very important commentary, but I’d be remiss if I didn’t mention last night’s news that Japan’s government – which has staunchly supported its own “recovery” propaganda despite mountains of evidence to the contrary – turned tail and admitted its comical economic outlook is overly optimistic. Apparently, yet another quarter of negative GDP growth is in the cards; and after this week’s Yen implosion – to more than 109/dollar last night – it will be significantly more so, assuming the oncoming irreversible inflation tsunami is properly accounted for. This is a unique time in human history, as we are watching the slow motion march of a “first world” nation to hyperinflation; which, of course, will be followed by countless other nations in the coming years.
And now, the “reality” referred to in today’s title, which I was inspired to write of following last night’s Scottish vote. Not to mention, what Bill Holter wrote in the eighth and ninth paragraphs of yesterday’s article – of one of the world’s leading PM advocates showing “distraction” from the Cartel’s relentless “psy ops” campaign of the past three years – and frankly, the past fifteen. I know exactly who he is referring to; and in his asking, “What do you think they will do to PMs after the FOMC announcement,” he is clearly responding in the Pavlovian manner we have all been “conditioned” to expect of gold and silver trading particularly around “key attack events” like major geopolitical dislocations.
Last night’s Scottish vote was a perfect example, and several reader emails last night validated such. In other words, we find ourselves “praying” for anything that might “beat” the Cartel, no matter how “bad” such events might be. Simultaneously, we “live in fear” that if “bad news” emerges, we will be subjected to another frustrating, humiliating paper raid. The way I’ve described it is being subjected to a “financial concentration camp,” where hope dies and evil reigns – that is until they are inevitably liberated. During such seemingly hopeless times – as exemplified by what a reader emailed me last night, that he’s “never seen things this dark in our camp” – the big picture gets obscured; in this case, that the world is no different with or without an independent Scotland and certainly precious metal fundamentals. Actually, as noted above, the simple fact that such a vote even occurred is wildly PM-bullish, as it symbolizes the commencement of an “age of discontent” that will only worsen with each printed dollar, Euro, Yen – and oh yeah, British Pound.
To that end, my 12½ years of precious metal ownership, employment and commentating – not to mention, being one of the few understanding economic reality in a delusional world – has taught me much about human nature. Life is hard to start with, but bad times make it exponentially more so. And nothing is harder than being decidedly right, but having your attempts at capitalizing on your convictions – and in this case, protecting yourself – dashed by powerful, corrupt forces. Fortunately, I long ago “climbed to the top of the totem pole” of “financial defense” by eschewing “paper PM investments” for real physical metal. However, it’s still been a rough journey that has dramatically weakened my faith in humanity i.e., an “innocence lost” that will never be recaptured.
And never are humanity’s evils more on display than times like this; when, as noted above, times are “darkest.” As they say, it’s “darkest before the dawn.” However, in the meantime, we must endure ridicule from the unsophisticated; self-interested propaganda from those seeking to capitalize on negative emotions; and, of course, the mental and financial pain of dealing with such unjustness. To wit, I rarely, if ever, receive a negative email. However, following the post-Labor Day Cartel attacks that have pushed PM sentiment to its lowest level of the past decade, I have receive a handful. One in particular, I received last night came from a person about his losses he incurred in junior mining stocks; which, in my view, is as strong an indicator “the bottom” is near than anything I can imagine.
Will this in fact be the case? No one knows, but if PM prices fall much lower – especially at year-end, when mining companies revisit reserve calculations – mining output will be reduced by such dramatic amounts, the industry will barely be recognizable. I continue to stand by my expectation of a 20%+ decline in PM production in the coming years; and if the Cartel isn’t careful, that number could be significantly larger. Which, of course, will only hasten their inevitable demise, as physical demand will inexorably grow larger. Just yesterday, I wrote of the head of the PBOC calling gold an “important part of financial markets”; and rest assured, it will only become more important as the global fiat Ponzi scheme bursts.
Well, that’s enough gloom and doom for today, so let’s end the week on a positive note. As you know, Jim Sinclair has been pounding the table of a return to $2,000 in the not-too-distant future. Two of his “gurus” are anticipating the final bottom to be reached this month, which is almost over. In other words, it may have already occurred; and given what I just wrote of mining costs – not to mention, the global economic outlook – such a conclusion is rooted in ironclad facts. For what it’s worth, here is what one of them just wrote – of how last year’s lows will not be breached, with the metals bottoming this month, and spiking sharply into year-end. Again, I have no faith or belief in charts – and thus, am neither agreeing or disagreeing with this analysis. I simply thought you’d like to see the kind of things Jim Sinclair sees.