Never in my lifetime – and likely, many far older than I – have so many things been wrong with the world. Fortunately, my focus is solely on the financial aspect – but frankly, it is my firm view that the “spillover” from four-plus decades of unfettered fiat currency are the root cause of evils far broader that economics and finance.
Can I make a direct link, for example, between the proliferation of the vile “cheating” website AshleyMadison.com – which amazingly, remains legal – and fiat currency? Of course not. That said, it’s difficult to believe the hideous disregard of monetary discipline the world is engrossed in is not a contributing factor. And god help us if, in fact, the hackers that claim to have stolen the identities and personal information of Ashley Madison’s 37 million clients make good on their promise to release it. I mean, what could possibly be worse for a nation grappling with financial ruin, than millions of new divorces?
Sorry to get on my high horse; as frankly, we’re all free to do as wish – within the confines of the law, of course. However, given that I’ve spent more than a decade writing of how the financial laws my livelihood has been governed by have been all but murdered – not just by rogue crooks, but the government mandated with defending our rights – has shaken by beliefs in humanity to the core. Let alone, a day after the second “Sunday Night Paper Precious Metals Massacre” in four years; in this case, focused on gold – as opposed to the “original” on May 1st, 2011, which targeted silver when it approached the “ultimate triple top breakout” at $50/ounce.
In fact, so identical were the two raids in method, they were nearly indiscernible if you showed side by side charts, omitting the prices only. Back in May 2011, the Cartel was clearly more focused on silver; and thus, “2:15 AM” EST raid notwithstanding, gold had “snuck up on them” to recoup all its Sunday night losses just before midday on Monday, May 2nd, 2011, actually going up $10/oz for the day. And nearly ditto for silver; which despite relentless propaganda claiming bin Laden’s “capture” and “death” were the “reason” silver plunged $6/oz, or 13%, in five minutes on a thinly traded Sunday night – with China closed for a holiday, to boot – silver actually came within $0.50/oz of recouping its entire loss as well. Of course, this extremely orchestrated Cartel hit job was not to be denied; so naturally, the time-honored 12:00 PM EST “cap of last resort” was utilized to its fullest, taking gold down $40/oz in the ensuing four hours – with no incremental news, or material outside market movements (the Dow was down a measly three points that day) – and silver $3/oz.
And wouldn’t you know it, nearly the exact same thing occurred yesterday; only this time, with the Cartel’s focus clearly on gold, it was silver that nearly did them in. In fact, just before said “cap of last resort” at 12:00 PM EST – which as long-time readers know, I’ve been writing of for the past decade – silver was actually up $0.10/oz on the day. And as for gold – blatant “Cartel Herald” notwithstanding, at exactly 2:15 AM EST – it had recovered more than 60% of its losses just before midday.
Which is why, yet again, said “cap of last resort” was deployed to maximum effect – not only taking silver from a $0.10/oz gain to a $0.20/oz loss, and gold from a $20/oz loss to a $30/oz loss (again, with no incremental news or material market movements). Moreover, just after the NYSE close, they unleashed another $550 million of “paper gold” into the ultra-thin “Globex” market, taking it from $1,105/oz to $1,095/oz in less than ten minutes. Combining the $1.4 billion of “paper gold” dumped at Friday morning’s COMEX open; $2.7 billion in the middle of the night Sunday; and the aforementioned $550 million at yesterday’s NYSE close, and the Cartel’s sum total of instantaneous paper gold dumps totaled $4.7 billion, or 5% of total annual worldwide production, in a cumulative span of roughly five minutes – taking gold from roughly $1,145/oz to $1,080/oz at its lows, or nearly 6%.
And this, on a day when we learned of surging gold withdrawals from the Shanghai Exchange; the GLD ETF; and oh yeah, the U.S. Mint, which had its biggest day of Gold Eagle sales since the “alternative currencies destruction” raids of Friday, April 12th and Monday, April 15th, 2013. You know, one day after the infamous April 11th, 2013 “closed door meeting” between Obama and the top “TBTF” bank CEOs. And by the way, following those attacks, not only did silver premiums soar as they are doing so now, but Miles Franklin had its best month of client buying ever; which is being challenged, I might add, this month.
Yes, my friends, the Miles Franklin Blog has a wealth of historical knowledge at its disposal; which hopefully, will empower you to realize the paper games we are watching are but a mirage. That is, unless you misguidedly believe you can “protect yourself” from the inevitable – and perhaps, imminent – hyperinflationary nightmare that’s coming with speculative “paper PM investments” like mining shares, as opposed to the time-honored safety that real, physical gold and silver has provided for millennia. Which I’ll get to in a second, after alerting you of the rest of yesterday’s horrible – and wildly Precious Metal bullish – headlines.
Next up, the breakdown of said “financial markets” worldwide – which lately, has been focused principally on China, where 20% of the Shanghai Exchange’s stocks are still frozen by a government determined to subvert “Economic Mother Nature” at all costs. Here in the States, stock market breadth has gotten so bad – i.e, market averages rising despite the majority of stocks declining – that even CNBC actively discussed it yesterday, on a day featuring some of the worst “depth” in stock market history. Putting an exclamation point on just how desperate the PPT is to “save” the market (yesterday’s perfect “dead ringer” algorithm should tell all you need to know), the Dow is down 170 points this morning, hit not only by hideous earnings from IBM, but a massive downward revision of this year’s industrial production data. And yet, the NASDAQ is up – in my view, due to investor froth about the upcoming Apple earnings announcement this afternoon; as clearly, Apple stock has massive upside potential (note the sarcasm) from the record $760 billion market cap it already sports. Throw in the desperation of the omnipresent “oil PPT” – which is now defending WTI $50/bbl as if the U.S. economy depends on it (it does), and you can see just how fearful “TPTB” have become, as depicted by Sunday night’s historic gold raid.
Which brings me closer to the gist of today’s article; i.e., the “biggest supply reaction in commodity history” – which frankly, is but a follow-up of February’s “supply response,” in which I postulated that not only are commodities more oversupplied than at any time in history, but that gold and silver – which are decidedly NOT “commodities” – are, conversely, more undersupplied than ever before. Yesterday, whilst the PPT was busy “saving the Dow”; and the MSM not only proclaiming Greece “fixed,” but deeming gold a “pet rock,” the Bloomberg Commodity Index closed at a new 13-year low, with the CRB Commodity index within 2% of its 2009 financial crisis bottom. Back in January, when these indices were at essentially the same levels, gold and silver were at 52-week highs of roughly $1,300/oz and $18.50/oz, respectively – and the Dow, all the way down at 17,000. Which is exactly why, with identical commodity price movements today – and explosive PM demand – they are attacking gold and silver prices with a vengeance; and conversely, supporting the stock market so blatantly, even a moron can see it.
Except, of course, for Precious Metal mining stocks – which for the past four years, I have as railed against as vehemently as anyone on the planet. After having owned mining stocks from 2002-11, and working in the mining industry from 2006-11, it became crystal clear that not only was it one of the world’s most difficult industries in its own rite; but with a gold, silver, and mining share suppressing Cartel dogging it every second of every day, “making money” on mining shares appeared next to impossible, certainly from a risk/reward standpoint. And when the Cartel inevitably breaks, my guess is the end of the global fiat monetary regime will be at hand – prompting the nationalization and/or windfall taxation of essentially all gold and silver mines, making the “window” to profit from mining shares, if at all, extremely narrow, to say the least. That said, following this week’s historic mining share collapse; amounting to an incredible 17% in the past two days, and 26% in the past two weeks for the benchmark HUI Index – to a level 81% below the August 2011 high, and 41% below the October 2008 low – all such discussions may shortly become moot, irrespective of gold and silver price trends.
To wit, I have spent months writing of the dire condition of the world’s largest miners; and frankly, years discussing the horrific risks associated with owning them – starting with an article 2½ years ago about the South African miners, which can best be described as the “shale oil” players of the mining industry, due to their immense production costs. Well, following this week’s carnage, not only are most of the world’s largest gold and silver miners’ shares at all-time lows – and this, with gold and silver prices more than four times their 1999-2001 levels; but for many, they are one significant write-off from bankruptcy. Which, if the year were to end today, would be all but guaranteed for many of the world’s largest PM miners.
Heck, in looking at the macroaxis.com website – which utilizes a variety of financial metrics to predict bankruptcy – several of the largest names are above 70% probabilities without consideration of the aforementioned, highly probable write-offs; including Kinross (the world’s fifth largest gold miner, just a hair behind #4 Goldcorp) and Coeur D’Alene. Barrick Gold, by far the world’s largest gold miner, sits at 52%; and countless others, including #2 Newmont Mining and #3 Anglogold Ashanti, are straddling 50% as well. In other words, a “coin flip” as to whether their operations, as currently deployed, can survive. And again, once the write-downs kick in (mandated at year-end, or earlier if accountants deem it necessary), all such bets are off, particularly for heavily indebted companies like Barrick. In other words, not only are the “peak gold” and silver we have long warned of a fait accompli, but if base metal prices continue to plunge, taking silver byproduct production with it, we may well witness the “biggest supply reaction in commodity history.” Which will be quite the (inadvertently Cartel orchestrated) feat, given that global gold and silver demand will be at record levels before said supply collapse accelerates.
To that end, we cannot pound the table further of the potential for the current silver shortage to rapidly morph into the chronic shortages experienced in both gold and silver in 2008. Which, assuming said “powers that be” lose control of the collapsing global economy (and subsequently, financial markets), may well be permanent. And given just how unstable the bullion industry itself has become – as discussed in last week’s podcast with Miles Franklin’s President and co-founder Andy Schectman, the value in dealing with one of the industry’s oldest, most reputable firms has never been higher.
P.S. As I’m editing, the following email was sent to me by one of our brokers, who has been with Miles Franklin from the day it opened 26 years ago…
“Silver eagles are currently spot +$4.00 which is over 25+% premium. The best value is 1 oz Buffalo Silver Rounds at spot +$1.60. This works out to about an 11% premium. Both items are shipping 4 weeks from receipt of funds at this time. Demand is FAR overwhelming available supply at these low silver prices.”