Scanning the news – and brain-dead MSM “commentary” – from the past 24 hours alone, the first thing that comes to mind is that we’re not just living in the Twilight Zone, but an “Ultra-Twilight Zone” that makes the plain old Twilight Zone appear sane and logical. To wit, the blatant, easily disproved lies – particularly regarding economic “recovery”; the egregious propaganda of a wealth-sucking establishment intent on kicking the can as far as possible; hideously irresponsible, borderline criminal corporate behavior; suicidal, comprehensively destructive fiscal and monetary policies; parabolically exploding debt, in every level of society; and financial “markets” with not a shred of free market price discovery, characterized by round the clock manipulation that even a reasonably intelligent ten year old can spot. Consequently, financial assets – and a host of real assets as well – are trading not just merely at “stretched” valuations, but all-time high levels, exceeding the most infamous manias of our era, in 1929, 1987, 2000, and 2007 (not how the recent mania are spaced far more narrowly, in response to explosive monetary stimulus).
In turn, I considered which of the various manipulative governments, bankers, and media outlets were worthy of being anointed the “liar king”; let alone, so-called “good guys,” like the countless Precious Metal-focused “newsletter writers” that employ “proprietary analysis” – technical or otherwise – to convince you to trade metal and mining shares under the perpetual assumption that gold and silver will “fall in the near term, but surge in the long-term.”
True, the average person has little incentive to embrace the truth, either due to a lack of financial means to act on it; a cognitive inability to address scenarios contrary to their best interests; and of course, the financial incentive to believe in “best case scenarios” like peace, prosperity, and ever-rising stock prices. However, it’s simply not possible to actually live in this world – including the supposedly “decoupled” States of America – without realizing the economy is far worse than reported; inflation far higher; and geopolitical stress far more destabilizing.
To wit, last night the Chinese government reported its lowest GDP growth rate since 2009 – which, I might add, represented the worst economic crisis of our lifetimes. However, they still claim said “growth” is 7%. I mean, at what point does the 1990s excuse that high Chinese growth rates are feasible because they are coming off extremely low levels lose credibility? Today, China is the world’s second largest economy – with a GDP twice that of Japan, a global manufacturing powerhouse for decades. And thus, even if the rest of the global economy weren’t simultaneously collapsing, 7% growth is, for all intents and purposes, mathematically impossible. Let alone in 2009, when the entire world was engulfed in a horrific depression, which saw everything from employment, to (largely un-manipulated) stock markets, to commodities and currencies plunge at freefall speed.
Today, the global economy is far worse off than in 2009; and following $15 trillion of Chinese debt accumulation in the ensuing six years, and countless tens of trillions of superfluous capital spending, China’s credit, construction, and real estate bubble is quite visibly collapsing before our eyes. Collapsing factory and durable goods orders; plunging iron ore, cement, coal, oil, lumber, and other commodity prices; falling home prices; and even “island of lies” diffusion indices sharply below 50 – not only refuting the concept of “recovery,” but screaming outright recession. I mean, what part of yesterday’s “ugliest economic data I’ve ever seen” – of utterly imploding Chinese exports – suggests 7% GDP growth, if not 7% contraction? But hey, from the second the PBOC started aggressively easing monetary policy last August, the Chinese stock market has rocketed higher; with a frenzy – and margin debt explosion – reminiscent of the height of the 1990’s dotcom bubble. So I guess everything’s A-OK, with no chance that anything could possibly go wrong?
Then we have the machinations of the recently formed “oil PPT,” which I have written exhaustively of for two months. Ironically, said oil PPT has nothing to do with OPEC; which care of kingpin Saudi Arabia’s staunch opposition to production cuts – under the premise that it must destroy high-cost producers like the U.S. shale industry – has acted in the polar opposite manner of its age-old mandate to support prices. No, what we are witnessing is, unquestionably, another U.S. government-led foray into market manipulation; as trust me, they are well aware of the $500 billion of junk bonds and leveraged loans supporting the borderline insolvent shale industry; as well as the fact that energy production accounts for a third of all U.S. corporate capital expenditures – and thus, a significant portion of GDP and tax revenue collection. Heck, according to the BLS itself, oil and gas has been the only industry – other than “waiters and bartenders” over age 55 – to have posted positive job growth since the 2008 crisis; not to mention, at the highest wages of essentially any job category.
For two months now, the footprints of their trading practices have become as ubiquitous, and transparent, as those of the gold and silver Cartel. Which, I might add, is quite the damning statement – from someone who has devoted 13 years of his life to “Cartel studies.” Said oil PPT is particularly blatant around the weekly inventory publications; first, when the API reports Tuesday afternoons – at roughly 4:30 PM EST; and secondly, when the EIA follows up Wednesday morning at 10:30 AM EST. Amazingly, the WTI crude price has been lifted to the – still globally devastating – level of $54/bbl from last month’s seven-year low of $42/bbl. And yet, since that time inventories have surged every week – including last week’s largest build in more than three decades; to the point that America’s largest storage terminal – in Cushing, Oklahoma – is more than 90% full, and may well reach 100% by this summer. Total U.S. crude oil inventories are not only at all-time high levels, but have surged parabolically above long-term ranges; and despite the largest rig count plunge in U.S. history, U.S. production is still at an all-time high level.
And heck, just yesterday, following another inventory build announcement,the EIA predicted U.S. production would keep rising – from today’s 9.2 million barrels per day – to a peak of 10.6 million barrels/day in 2020, compared to its year ago peak estimate of just 9.6 million barrels per day. And this, as the ink hasn’t yet dried on America’s agreement to allow Iranian exports back on the market, of perhaps another 1.5 million barrels per day in the not too distant future!
Meanwhile, with the global economy in free fall, it is entirely possible demand growth will ground to a halt, expanding what is already the largest oil glut in global history. Meanwhile, with few exceptions, nearly all commodity prices are sharply declining; and the stronger the dollar gets – as the “liquidity vacuum” of the world’s largest “fear trade” expands – the more unaffordable oil prices will get to the 96% of global denizens not living in America. And yet, and yet, and yet – the “oil PPT” has prices inexorably rising; i.e, an act of blatancy topped only by Yahoo! Finance’s top story this morning, that “Cramer says to exploit this rare moment for oil” by buying energy equities. Or better yet, the smarmy commentator that yesterday claimed oil prices have nowhere to go but up, because – get this – U.S. refinery capacity is scheduled to increase next year, yielding increased demand for WTI crude oil. Yes, except this will simply transfer the glut from raw to finished products, yielding the exact same issue; let alone, as the same oil companies own both the E&P and refining segments. And did I mention that oil equities, as we speak, are trading at essentially their highest valuations of all-time. No really, I’m not making this up!
Then we have Greece, where yet another article emerged this morning that Germany – like essentially everyone else in Europe – is “preparing contingency plans” for a Greek sovereign default. Better yet, the obviously leaked propaganda suggests they want Greece to stay in the Euro irrespective, and will even continue to prop up the Greek banks – despite the fact they will likely be nationalized, which would simply amount to another bailout. Greek bonds collapsed further this morning; and what I have long deemed the “world’s most important stock” – and “most insolvent financial institution” – the National Bank of Greece, is plumbing its all-time low as I write. But don’t worry, what could possibly go wrong – as Germany’s Finance Minister just claimed there’s no possibility of contagion (perhaps he should view this chart)? I mean, what’s so bad about a potential $400 billion bond default – with half of Europe’s politicians, bankers, and citizens lining up to do the same? And the entire Western world on the hook for the resulting write-downs – with the only possibility of “salvation” being hyperinflationary, “QE to Infinity” money printing?
And last but not least, the “Recovering States of America”; which, on the heels of yesterday’s punk retail sales and NFIB Business Outlook reports – and the highest inventory to sales ratio since 2008, this morning reported plunging mortgage applications; an “unexpected” decline in the Empire State Manufacturing Index, from March’s 7.0 to April’s negative 1.2 (wait, I thought the “bad weather” was in March, not April); and a horrific, “unexpected” 0.6% plunge in March Industrial production, solidifying the possibility of a negative 1Q GDP print. The benchmark 10-year Treasury yield is again below 1.9%; but don’t worry, PPT-supported stocks are up again, and those mythical Fed “rate hikes” are just around the corner. Which, for some reason, Wall Street and the MSM fail to not realize have traditionally been horrible for stock, bond, and real estate valuations; much less, in the most indebted economy in global history. And geez, what’s this I’m reading? The so-called “conservative” Republican Congress is expected to propose a whopping 20% increase in the budget deficit this year; no doubt, focused on non-productive industries like defense and public works; as well as society-draining entitlements and corrupt pork barrel programs. Yes, the Fed is going to raise rates – and pigs will fly, too!
Based on the above evidence, there are plenty of excellent candidates for this year’s “liar king” award. However, the undisputed champion remains the U.S. government-led gold and silver Cartel; which, aside from their blatant trading practices, are supplemented by a host of Wall Street, MSM, and newsletter “partners.” Ten years ago – yes, 10 years – I first muttered my long-standing “manipulation mantra” of “each day worse than the last.” Well, what we have seen in the first two-and-a-half days of this week – which, I might add, marks the two-year anniversary of the April 12th-15th “alternative currencies destruction” attacks – takes the cake; as, amidst a sheer avalanche of PM-positive news, the Cartel has maniacally defended its 2015 “line in the sand” at $1,200/oz like nothing I’ve ever seen – whilst attacking silver with an equally violent vengeance. Meanwhile, global PM demand continues to rise; and with gold supply clearly having peaked, with silver right behind it, the odds of a supply shortage “accident” occurring – far more serious than in even 2008 – have never been higher.
And thus, we ask, to those trying to figure out whether the time is right to protect their assets with history’s best net worth protectors – at their lowest inflation-adjusted prices ever, with the mining industry on the verge of collapse; what are you waiting for?