It’s Wednesday afternoon, and I’m writing from the Tarmac due to a flight delay (hope they don’t bust me like Alec Baldwin). However, all should be well for my short jaunt to Phoenix, as I wrote part of today’s RANT this morning, and should get much more done on the plane. Unfortunately, I’ll be editing on an Apple Computer, and doing so late at night, so my apologies for the drop off in production quality, and for the life of me I cannot figure how to paste a Kitco gold chart.
Amidst another day of comatose media coverage of the darkening economic landscape, it was yet another day of 100% MARKET CONTROL. I awoke to find European markets and Dow Futures lower, with the Euro at new lows on fears of imminent, catastrophic financial contagion.
Gold, emboldened by finally recapturing its 200 DMA, as I emphatically predicted – was modestly higher, attempting to re-assert its “once and future” status as MONEY, outperforming the Dow and gaining momentum all morning.
Until EXACTLY 12:00 PM EST, of course.
From my standpoint, as one of the most experienced “Cartel watchers” on Earth, today’s “cap of last resort” goes down as one of the most blatant acts of manipulation yet, which coming from me is saying a lot. For no reason whatsoever, the same old drill, same Bat Time, same Bat Channel. Sorry I cannot reproduce the chart, but if you go to kitco.com, then hit “charts and data,” you can get the daily chart, which in yesterday’s case depicts the “foursome of terror,” caps at 3:00 AM EST, 8:20 AM EST, 10:00 AM EST, and the coup de grace, at EXACTLY 12:00 PM EST. Conversely, the Dow was rescued time and again by the PPT, as it literally is not allowed to materially decline anymore. In recent weeks, I have written of the incredible, widening disconnect of the Dow with ALL GLOBAL MARKETS, particularly European equities AFTER they close for the day, and today was a perfect example. Amazingly, each day after Europe closes, financial stocks awaken, even when sovereign bonds do not.
In today’s world of outright media desertion of important topics, financial markets have the appearance of extreme calm, although WE know better. The calm is simply the eye of the storm, and I assure you this Katrina-like monster is just getting warmed up.
Apparently, it is no longer newsworthy when the U.S. government blatantly issues more debt despite having unconstitutionally breached its debt ceiling:
Nor is it important that Chinese debt yields are surging, an incredibly ominous sign for the global economy. China, “the engine of the world,” is suffering from a triple-threat of slowing economic activity, a bursting real estate bubble, and rising inflation – not to mention a falling stock market. But don’t worry, all’s well when the PPT is on the job.
China’s Debt Maturity Problem Has Arrived – ZeroHedge
Next, our good friends in Athens, whose sovereign bonds trade at Lehman Brothers valuations while the nation’s political, economic, and social infrastructure crumbles. Do “market participants” REALLY believe Greece will not default later this year, taking down the entire Euro Zone with it?
Or how about the U.S. deploying a second aircraft carrier to the Persian Gulf, as the drumbeats of INEVITABLE WAR grow louder? Nope, not newsworthy, except to Zero Hedge, which I LOVE excepting its inability to properly address PM suppression.
Sorry to be so short today (although my definition of “short” overlays most people’s definition of long) but given my schedule tonight and tomorrow I won’t have much time to write. However, I still have a few tricks up my sleeve, the first to reproduce a wonderful quote by David Schectman in his daily newsletter yesterday.
David wrote that, “Buying gold is not spending your money, it is saving it in the safest way possible.” EXACTLY how one should be viewing Precious Metals. As he notes, gold is NOT an investment, and when held in PHYSICAL, UNENCUMBERED form will ALWAYS maintain its value over time versus fiat currencies. The sooner you realize this, the sooner you will understand the message of PROTECTION I have been spreading for the past decade.
And on the topic of PHYSICAL precious metals, I was sent an article today noting that China plans to increase its solar panel capacity by 500% in the next three years, a process that should significantly increase silver demand. You see, few people realize the emerging solar energy sector takes up 10% of all silver production (i.e. 75 million ounces per year) so it doesn’t take complex math to realize how significant an announcement like this is.
Silver has been projected by the U.S. Geologic Service (USGS) to be the first “extinct” element. Thus, not long from now, you can count on a vicious bidding war for scarce silver supplies between investors and industrial users, and if industry does not get what it needs, you’re going to see many of the things we consider integral to daily living become scarce. NOW do you see why someone is buying up PSLV at a 30% premium to Net Asset Value?
Moreover, this DIRE supply/demand situation will only grow worse due to TODAY’S announcement the U.S. government is shutting down Hecla Mining’s bellwether Lucky Friday silver mine outside Coeur D’Alene, Idaho. Lucky Friday has been producing for more than 50 years, and in 2010 its production was 3.4 million ounces, or 0.5% of global silver supply.
MSHA orders Lucky Friday closure – KXLY.com
Based on the previous paragraph’s conclusions about the silver demand outlook, production losses of this caliber will make it significantly harder for the Cartel to keep the silver genie in the bottle. I believe the IMMINENT silver explosion is coming A LOT sooner than most can imagine, and fully expect it to reach a four-digit price (in today’s dollars) when PHYSICAL demand swamps the Cartel’s efforts to suppress the PAPER price.
Conversely, MINING STOCKS will likely underperform PHYSICAL gold and silver ad infinitum, as a combination of Cartel naked shorting, upcoming nationalization fears, brokerage and taxation risks, and heightened operational risks will make it very difficult for the group to gain significant momentum for sustained periods of time, in my view.
Keep in mind that Hecla is not only one of the oldest mining companies in the world, but on the New York Stock Exchange itself. Unfortunately, an investment in one of the battle-worn, experienced silver miners, during a decade-long bull market, got you a break-even result over the past ten years, and a 30% loss (including 20% today) in the last five.
Only PHYSICAL gold and silver, i.e. REAL MONEY, are guaranteed to PROTECT your net worth from the ravages of HYPERINFLATION. All other “investments” are just that – pieces of paper speculating on a derivative adjunct.
In last week’s RANT, “SINGLE-CELLED OPTION,” I discussed how “derivative securities” were once an ovum, a zygote, an embryo, and a young, virile being. Today, “derivatives” are decrepit, diseased, and near death, which I expect to come via sudden heart attack, NOT prolonged deterioration. The derivative system’s arteries are clogged beyond the ability of its immune system, or the best surgeon in the world for that matter, to clear, and it’s only a matter of time before its host is dead, and the derivative system with it.
Over the centuries, “lending” has served hundreds, if not thousands of purposes, many of them good, some very bad. Abuses by “loan sharks,” “usurers,” and various, sundry crooks date to the earliest recorded history, but then the fiends tended to be loners, or working in small, disorganized bands.
As society became more financially savvy, and communications technology advanced, the thieves banded together to obtain economies of scale and exchange best practices. The earliest “organized crime” groups were gangs utilizing brute force, followed by the “mafia,” which mastered intimidation and amorphous management structures to spread their tentacles into myriad “businesses,” legal and otherwise.
Eventually, banks invented “financial engineering,” the ability to create complex securities with computers. Coupled with superior communications infrastructure, loose monetary policy, and the 1999 repeal of Glass-Steagall, the banks generated so much profit and power that they became SELF-AWARE, to use a term from the Terminator movies.
In other words, they became more powerful than the system itself. Through unlimited capital via its “partnership” with the Federal Reserve, the now “too big to fail” banks could destroy the system supporting it, absorbing all its wealth and burning the waste – i.e. the public.
Through an exponential increase in bribery to Washington, euphemistically referred to as “greenmail,” the banks affected a silent coup of the government in less than a decade. From their new position of absolute power, they quickly realized DEBT was the key to the realm, as leverage provides profits and financial ruin to un-backed competitors, enabling the banks to seize more property and power. Through government plants such as the Federal Reserve Chairman, Treasury Secretary, and White House Chief of Staff, they could directly create DEBT increasing programs, both in the U.S. and the rest of the world. Even Eastern sovereigns such as China found themselves tethered to the banker’s whims, as in their aggressive pursuit of manufacturing growth, made the fatal flaw of tying their fiat currencies to the “world’s reserve currency.”
In the process of buying Washington, they inadvertently transformed political parties from grassroots social organizations to self-serving, imperialistic collectives of the nation’s wealthiest lawyers and businessman, altering their modus operandi from community service to global domination. The “political process” has since been erased from memory, now 100% aligned with the profit-focused, sociopath Wall Street ethos.
The trend toward bigger business, banker control, and political whoredom has been ongoing for decades, but the transformation to an EVIL, CENTRALIZED power center fueled by Wall Street occurred almost overnight. Alan Greenspan’s discovery of the 24/7 printing press catalyzed society to give up control of its destiny, and barely ten years later, the die has been cast for the most momentous, cataclysmic “financial revolution” in human history. The catastrophe will take the form of DEBT DEFAULT and CURRENCY COLLAPSE, ultimately yielding a “reversion to the financial mean,” i.e. THE END OF BORROWING.
For ten years I have watched the “positive” uses of debt dwindle from roughly half of all transactions to less than 10%, to use rough numbers. Most “debt” is now used as leverage to increase profits, as opposed to “capital” for new investment, particularly in the U.S. where “new investment” is a thing of the past.
When one does not work, they cannot invest, and between the dramatic drop-off in work ethic and utter abandonment of American industry via low-cost Chinese labor and suicidal trade laws, work is on the verge of being deleted from American dictionaries. Meanwhile, in Europe, decades of socialism has atrophied once proud nations such as England, France, Spain, and Italy to worthless shells, where work cannot even be viewed in the rear-view mirror.
In essence, borrowing has become leverage, and thanks to the repeal of Glass-Steagall, and evil partnership between Washington, Wall Street, and the Federal Reserve, the banks can increase leverage as high as they want. Profits generated, real or via accounting fraud, build the debt edifice higher, while losses are socialized, building the debt further via MONEY PRINTING. Moreover, entire financial markets are now controlled with unfettered bank borrowing, displacing the diversified lending that once distributed investment capital evenly throughout the economy. In other words, the banks get richer and “Main Street” poorer, as well as its denizens – the millions of Joe and Jane Six-Packs nationwide.
The debt edifice eventually became a Ponzi Scheme in which ONLY new debt can prevent its collapse, and due to the disappearance of Main Street, the ONLY source of new debt has become MONEY PRINTING. Insolvent banks are reluctant to lend. EXACTLY why ALL the European LTRO and Fed “swap facility” money has been re-deposited into the Central Banks, and bankrupt individuals, corporations, and municipalities can no longer qualify for new loans. Hence, we have a system dependent ENTIRELY on Federal Reserve MONEY PRINTING, whose primary achievement in 99 years of existence has been the destruction of 99% of the dollar’s purchasing power.
I think you understand where this is going, and it’s only a matter of WHEN.
Readers of my RANTS tend to be heavily invested in Precious Metals, thus focused on hopes for an elimination of debt, i.e. leverage, in PAPER gold and silver markets such as the New York COMEX futures exchange. PHYSICAL gold and silver, i.e. REAL MONEY, are the linchpins of the global financial system, EXACTLY why such incredible amounts of leverage and fraud are expended in the pursuit of suppressing them. However, the COMEX fractional system is a tiny pimple on the “big picture arse,” system-wise excessive leverage threatening to destroy the GLOBAL ECONOMY any given day. Rest assured it WILL happen, and don’t be surprised if it occurs A LOT sooner than you expect.
Once public CONFIDENCE in the Wall Street/Washington/Federal Reserve’s ability to sustain the system with MONEY PRINTING dies, the game will end quickly, and those who have not PROTECTED THEMSELVES will lose most, if not everything they own.
Only REAL MONEY, i.e. PHYSICAL GOLD and SILVER, will remain intact, and only TANGIBLE ITEMS OF REAL VALUE in demand. Once this LONG, PAINFUL chapter of human history begins, debt will become a dirty word as in the days of yore, with no one left to lend, and fewer to borrow.
PROTECT YOURSELF, and do it NOW!