It’s early Tuesday morning, and I can almost hear what’s going on inside the five-star hotel in Austria where the oil world’s dying “leadership” – which by tomorrow, may be permanently dead – have the U.S.-led “oil PPT” on the phone, trying to “manage” the fact that with Russia not attending tomorrow’s all-important meeting; at which, the odds of a viable, believable agreement are slim to none. Which, I might add, is what I have predicted from the day after September’s fraudulent “Algiers agreement” was promulgated – not because an actual agreement had occurred, but to buy time ahead of tomorrow’s meeting, to keep prices up for two more months. Crude oil prices are in freefall, so it’s only a matter of time until a new “oil PPT” generated headline hits the tape; such as the same one that hit Thursday (just before talks collapsed Friday) and yesterday (just before Russia decided not to attend tomorrow’s meeting); i.e., the Iraqi oil minister’s hollow espousal of “optimism.” This, in a nutshell, is how the Precious Metal Cartel “manages” gold and silver prices as well; i.e., via propaganda and market manipulation. Which, as may well befall the oil Cartel tomorrow, will inevitably fail – when the forces of physical reality eventually play out, as they always do.
Before I get to today’s very, very important topic, I feel the need to comment on Harry Dent – given that, as occurs every time gold prices decline, he’s out in force fear mongering his perpetual $700 price target. Which in turn, has prompted several worried readers to ask about it.
Long-time readers are well aware of my disdain for his commentary, given how it shows little, if any, understanding of gold’s history; let alone, its time-tested differentiation from other “commodities.” In this article, from ten months ago, I actually commend him for the aspects of his analysis I agree with, whilst separating it from his long-standing misunderstanding of gold. Which, if you read through it, you’ll find links to my two previous articles about his “deflationary” reasons for proclaiming gold’s death for the past five years; which, when you read through them, you’ll understand the hypocrisy of his claiming gold will plunge due to “deflation,” whilst ignoring the fact that stocks are currently trading at all-time highs. Heck, in the post-Trump environment, we have seen the biggest bond market crash in 25 years; as well as one of the biggest hype-bubbles ever – base metals – which have surged parabolically due to inflationary fears, real or misguided. And yet, gold prices have been suppressed like never before, given the Cartel’s latest propagandist “meme” that the economy will “recovery” under Trump – ignore the record high deficits, and resulting inflation – so gold is not needed.
Dent’s track record, as described in the aforementioned articles, speaks for itself – such as his 1999 prediction that the Dow and NASDAQ would reach 41,000 and 20,000, respectively, by 2008; and his April 2011 prediction that the Dow would plunge to 3,000 by 2014. In both cases, utilizing the same emotion-grasping modus operandi – which is extremely useful in selling newsletters – of predicting things that are rising will soar, whilst things that are falling will plunge. And given that he has been predicting for years that stocks would crash, only to see them surge to all-time highs (because he doesn’t understand the concept of rigged markets), he is clearly speaking more about gold now, as it’s the only thing he has recently gotten “right” (again, because he doesn’t understand, or acknowledge, the concept of rigged markets).
He yesterday wrote of how gold will go to $700 not because of the “deflation” reasoning he has given for years (which has failed him miserably, given that gold has been the best performer in every deflationary event in memory), but because India will likely ban gold imports. Which, as I discussed in both Friday’s and yesterday’s Audioblogs, not only makes little sense, but has already been refuted by senior Indian officials. Not that they can’t change their mind, of course; but I assure you, if Narendra Modi was insane enough to try it, he’d likely incite a revolution like the French in 1789, or the Bolsheviks in 1917. And of course, he conveniently ignores the fact that any decline in demand in India, were it to occur (highly unlikely given its raging, rapidly adjusting black market, with the Rupee at an all-time low), would be more than offset by rising demand from China (where the PBOC has devalued the Yuan to a nine-year low); and oh yeah, the global Moslem community, as the new Sharia Law gold standard is scheduled to be unveiled by year-end.
His argument all along, that gold would decline due to “deflation,” is what errs me most, given that gold, going all the way back to the Great Depression – and continuing through the 2008 crisis, and every “deflationary” event since – has been the world’s best safe haven asset during such times, Cartel manipulation notwithstanding. And if you think the powers that be can stave off deflation forever; or “stimulate” growth without hyperinflation, you are not paying attention to the lessons of a thousand years of fiat currency history. Not to mention, Economics 101, if you think a commodity with an all-in cost of perhaps $1,500/oz; amidst an industry already in dire financial condition; with reserves in freefall; declining production; limited capital availability; and oh yeah, record high demand and near record low above ground, available-for-sale inventories; could fall to $700; let alone, as fiat currencies the world round crash.
OK, on to the cataclysmic political and economic events of TODAY; starting with the potential for the OPEC meeting, which with each passing minute looks more and more likely, to decidedly – and potentially, permanently – fail to support prices, amidst the worst crude oil glut in the century since it was first commercially used. Trust me, the powers that be – let alone, if Trump wants nothing to do with them – are going to have their hands full preventing an immediate economic catastrophe if OPEC produces no agreement; and potentially, World War III due to the ominous political and social ramifications – including an exploding Moslem migrancy crisis; expanded Middle Eastern civil war; and undoubtedly, heightened U.S./Saudi/Iranian/Russian tensions.
Even the OPEC meeting pales in comparison to the global “BrExit movement”; which, as I vehemently predicted all summer and Fall, U.S. decidedly citizens joined on November 8th. Which, just five days from now, may well go parabolic, when – not if – Italians resoundingly reject the “Constitutional Reform” referendum that actuality, should be deemed an “ItalExit” vote – or as Five Star Movement leader Beppi Grillo deems it, “ItaLeave.”
Of which, I am officially “shouting from the rooftops” that it not only represents a seminal moment in Italian history, but global history. As when, as is widely expected, the referendum fails, expectations of the dissolution of the European Union – and Euro currency with it – will unquestionably skyrocket. Which is probably why the Italian bank sector – by far Europe’s weakest – is in freefall mode; why Italian (and all other PIIGS’) bonds are plunging; and why the Euro is within a hair’s breadth of its 13-year low, en route to much, much lower levels; potentially, starting Sunday night.
Which, I might add, will be devastating for global trade, given that European exports would become more competitive against the countless nations whose exports have already been collapsing – one more desperate than the next for a weaker currency. Which goes double for the U.S., of course, as the surging dollar I have long predicted – because the dollar always surges against less liquid fiat trash during times of crisis – is destroying whatever’s left of the near dead U.S. manufacturing sector. In turn, making Trump’s silly claims that he can bring long-gone jobs back sound that much more ridiculous. And oh yeah, inciting the “final currency war” I first warned of four years ago to go thermonuclear.
Did I mention the upcoming, unprecedented bond defaults? First, by the energy sector, given that more “high-yield” (i.e, junk) debt is tied to the oil industry than any other. And second, because the ECB has created the biggest-ever financial bubble in European sovereign bonds; in many cases, taking some of the world’s worst credits to negative yields; all of which, will violently crash when the reality of an imminently collapsing European Union takes hold of fearful speculators’ minds. Which I assure you, no amount of NIRP, QE, or other market manipulation will be able to staunch – as once the “tear this wall down” mentality, to quote Ronald Reagan’s famous 1987 speech, gains momentum, NOTHING will be able to stop “Economic Mother Nature” from demonstrating her long-suppressed wrath. Most notably, in the monetary world, as billions of global denizens, trapped in rapidly collapsing fiat currencies, desperately seek safe havens to hide in; of which, the majority of sovereign bonds will no longer be on that tiny, select list.
So, to the Italians (and Austrians) this weekend, I implore you to “tear down the walls” of destruction (and market manipulation) that has destroyed your finances; and in many cases, your lives; so that, as was destined from day one, REALITY can once again rule the day!
P.S. As I was about to hit “send,” the Iranian oil minister unequivocally said Iran would NOT cut production – causing prices to plunge further; and likely, ending all hope of an OPEC agreement!
Thank you for this letter.