Do you know what we haven’t seen for the entirety of the now 16-year bull market in Precious Metals? Other than April 2011, when silver rose roughly a dollar a day in the final stages of its run to $50/oz, that is? Yep, two strong up days in a row – despite the aforementioned bull market, and the strongest imaginable fundamentals. Unlike the “Dow Jones Propaganda Average,” of course. Which despite being, quantitatively speaking, more overvalued than at any time in history, amidst the worst imaginable fundamentals, can rise, via the low volatility “dead ringer” algorithm, for days on end. To wit, below is the PPT-supported Dow on four consecutive trading days last week; Wednesday, June 1st, through Monday, June 6th. Remember, the Fed’s daily “open market operations” occur at 10:00 AM EST – which is exactly why the Dow bottoms at that time essentially every day, “coincident” with Precious Metals’ “key attack time #1.”
Think about it. PMs finally had their big breakout day on Friday, following a week of manipulative misery. Followed by two days of excruciatingly blatant “caps and attacks,” before yesterday’s “follow-up surge.” And what has occurred this morning, amidst this litany of overwhelmingly “PM bullish, everything-else-bearish” headlines…
1. A massive plunge in Japanese machinery orders – at 11% month-over-month, and 15% year-over-year, its biggest decline since early 2009
2. Equally abysmal Chinese trade data, in which the blatant manipulation of mainland/Hong Kong transactions hid freefalling capital flows
3. A “surprise” rate cut in South Korea, to just 1.25%
4. The average German Bund yield fell below 0.4%, and the benchmark 10-year Treasury yield decisively broke below massive support at 1.70% – to 1.67% as I write, a level last seen when the stock market was crashing three months ago
5. “Dr. Copper” plunged 2% to $2.02/lb, within a measly 1% of its post-2009 low
6. Former Bank of England head Mervyn King – joining “Maestro” Greenspan before him – espousing how all investment portfolios should include gold
7. News that U.S. retail store closings are up a whopping 33% from a year ago – and adding insult to injury, a Washington D.C. survey concluded that half of all employers in the area have reduced employee hours in response to minimum wage increases
8. Further evidence that Spain’s Banco Popular may be facing Deutsche Bank-like financial straits, increasing the likelihood that one of the flailing PIIGs’ largest banks may require a bailout, or “bail in.”
9. The World Bank again downgraded, sharply so, its forecast of 2016 global GDP growth
Yep, amidst these headlines, the Cartel has done everything in its power to prevent PMs from rising. That said, as of 9:30 AM EST NYSE open, as I edit, both metals are fighting hard – and heck, just turned positive, which never occurs this time of day. Oh, “they” will fight to the death, TRUST ME. But in the end game – which frankly, appears more imminent than ever – “they” will lose as ignominiously as any manipulative operative in history; particularly in silver, where historic shortages are for all intents and purposes, assured.
That said, no “manipulative operative” I have seen thus far – including QE and even negative interest rates; holds a candle to the ECB’s hare-brained scheme to monetize investment grade corporate bonds. Which, per the title of today’s article, commenced yesterday, as part of the expansion of Draghi’s unprecedented QE program – now in its 15th month, at €80 billion of freshly printed Euros per month. I mean, at least when the Fed was monetizing mortgage-backed bonds – which they still own, of course – it was because they were taking bad assets off of bad balance sheets. However, in the ECB’s case, they are adding investment grade corporate bonds to their “portfolio” because they are running out of sovereign bonds to purchase. Luckily for the Fed, they were able to end QE (LOL) when they only owned a third of all Treasuries (mostly at the long end of the yield curve) and half of the mortgage-backed bonds. That said, rest assured Whirlybird Janet will be forced – by plunging economic activity and expanding currency wars – to re-start QE sooner rather than later; so don’t be surprised if she joins Goldman Mario in the “most insane, destructive Central bank scheme to date.”
As I wrote 17 months ago, the “deformative” destruction wrought by post-2008 Central bank lunacy is unparalleled in history – and exactly why copper, perhaps the most industrially-sensitive of all commodities, may break below $2.00/lb by week’s end. However, in monetizing the bonds of healthy companies like Anheuser Busch Imbev, the ECB is catalyzing an explosion of debt issuance, and bubblicious speculation, in a corporate sector already drowning in record-high leverage. Heck, Toyota just issued Japan’s lowest-ever yielding corporate bond yesterday – three-year notes yielding 0.001%, with the clear understanding that it may well be “monetized” by Central bankers!
My friends, this incomprehensibly moronic action – which unquestionably, will be copied by other Central banks, including the Fed – will likely spark the final, parabolic stage of global debt explosion, en route to certain monetary oblivion. Frankly, even I become speechless in trying to calculate the myriad ways such monetary irresponsibility will negatively impact “99%” of the world’s population – and eventually, the “1%” it was intended to enrich. Fittingly, Mario Draghi himself offered the following, “Custer’s last stand” statement this morning – of exactly why the “most insane, destructive Central bank scheme to date” is doomed to fail; and why physical gold, silver, and platinum are the best risk/reward assets in not only their own storied histories, but of the entire history of financial assets!
“A too-slow return of output to potential is far from innocuous. To the contrary, it has lasting economic consequences, since it can ultimately lead to potential being eroded as well.”