It’s 2:30 AM MST Friday morning, on my “day off.” However, I couldn’t sleep because too much is going through my head – as I digest the second “financial big bang” in just a week’s time. Many more are coming this year – perhaps as early as Monday, following Sunday’s Greek elections; and no doubt, several will be of the “black swan” variety. As discussed in yesterday’s MUST LISTEN audio blog, the two guaranteed to “rock the world” are the inevitable “Yellen Reversal” – i.e., when Janet Yellen admits the U.S. needs more QE as well; and, more calamitous yet, when the surging dollar forces the Chinese to de-peg the Yuan. In other words, whilst the Swiss National Bank and ECB got the party started this week, it’s not even 7:00 PM on New Year’s Eve. I have little doubt “midnight” will be reached in the not too distant future, perhaps this year; and when it does, Richard Russell’s expectation of the end of the gold Cartel – or as I deem it, the “New York Gold Pool,” will be forever destroyed.
“There is a giant secret stirring under today’s market. China, India, Russia and almost every central bank is buying physical gold. I’m guessing that within another year, physical gold will be swept off the market.”
Masked by unprecedented PPT support of global equity markets – to ensure Mario Draghi’s “QE suicide” is perceived positively – is the stark fact that the announcement failed miserably. What terrifies me most, and was unquestionably interpreted likewise by the world’s big money, was just how transparent the ECB’s desperation was. To wit, in “leaking” a €50 billion/month program a day earlier, and watching the Euro fail to fall lower than the eleven-year low versus the dollar of 1.16, the ECB, like chickens with their heads cut off, said “oh my god, it’s not enough! Let’s do €60 billion instead – and for good measure, lower the TLTRO loan spread to ZERO, to ensure banks borrow for free!” I mean, these are the stewards of the world’s most widely utilized currency – acting like terrified children, and playing god with the life’s savings of hundreds of millions of people. Or more appropriately, billions, given the widespread, horrifying ramifications of stirring up the global “final currency war” to DEFCON .
Yes, the “Dow Jones Propaganda Average” rose 259 points yesterday – although you’d have to be brain-dead to not realize the moved was entirely due to PPT support, via the same “dead ringer” algorithm I’ve written of for three years. And yes, similar European goosing (and hyperinflation fears) caused European stocks to surge to a record-high P/E ratio. And naturally, gold’s advance was maniacally capped at the Cartel’s latest “line in the sand” at the key round number of $1,300/oz; with the high of the day achieved at – yep, you guessed it – the 12:00 PM EST “cap of last resort” I identified a decade ago.
However, the “footprints of failure” were as big as those of the Sasquatch – starting with the fact that a parabolic surge in the dollar index caused gold to explode worldwide. By day’s end, the Euro had collapsed all the way to 1.134, whilst the dollar rocketed 1.8% higher, to a new 12-year high. Consequently, Euro and Rupee gold are now just 16% from their all-time high, whilst Canadian and Australian gold are just 10% from theirs, to name a few high profile currencies. That said, the day’s “big winner” was Yen Priced gold, which officially achieved a new all-time high. Cumulatively, such movements will cause dramatic, parabolic growth in worldwide physical demand; until ultimately, Richard Russell’s forecast is met – and then some!
Of course, the horrifying plunge in global currencies following the ECB’s lunatic announcement – which, like the recent Japanese expansion of Abenomics, was made despite no visible crisis – is only a small part of the abject failure demonstrated yesterday, front and center. Remember, the main reason the Draghi claims these draconian actions to be necessary is the need to stop “deflation”; but judging from how markets other than PPT-goosed equities traded, the polar opposite reaction occurred. In other words, whilst MSM headlines focus principally on the stock surge – conveniently ignoring the global Precious Metals surge, of course – the most important moves of the day occurred in the commodity markets, which plunged further into the abyss. To wit, the CRB commodity index fell another 1.3%, to within 9% of its 2008 spike low, led by a 2.5% plunge in copper – or as I deemed it last year, ” Dr. Death” – and a 2.8% crude oil nose dive.
To that end, I noted yesterday how the Fed is desperately trying to goose equities, bond yields, and oil ahead of next Wednesday’s FOMC meeting, in order to have a “position of strength” in its desperate goal of maintaining the illusion of a potential rate tightening. Well, after pushing WTI crude up to $49/bbl early in the morning, it plunged all the way back to $46.30/bbl by day’s end; and even after the “convenient” death of Saudi King Abdullah died right after the market close caused prices to spike (for what reason, I have no idea), as I write early Friday morning prices have dipped back down to $46.50/bbl. Worse yet, as I write – it’s now 3:15 AM MST – copper has plunged another 1.2% to $2.53/lb; and get this, the dollar index is up another 0.7%, to an incredible 94.90 – as the Euro is down another cent, to 1.1228, another 12-year low. Per the chart below, the Euro is clearly headed to its all-time lows below parity, en route to its inevitable dissolution in the coming years – or perhaps, months. And putting the cherry on the cake of Central bank failure, the blatant Fed rate goosing of the past two days has decidedly failed; with the 10-year Treasury yield having peaked at 1.96% yesterday morning (from 1.77% 36 hours earlier) – and as I write at 3:45 AM MST, nearly “round-tripped” all the way back to 1.80%!
Speaking of Central bank failure, just two days ago I highlighted how even the lackey MSM is turning tail, in viciously attacking Central bank policies on the heels of the catastrophic Swiss National Bank actions. On Monday alone, the New York Times, Bloomberg, and CNBC published scathing articles criticizing the Swiss National Bank and ECB; and following yesterday’s announcement, Reuters “joined the herd” in noting how “central bankers lurch from ‘whatever it takes’ to ‘whatever next.’ Better yet, Wall Street joined in as well, with none other than Societe Generale – the French bank that will undoubtedly be one of the first to demand a bailout when Europe collapses – claiming “since the ECB’s QE will fail, it will need to be increased to €3 Trillion (i.e., tripled), and include stocks.” However, the coup de gras came at the hands of William White, the former Chief Economist of the Bank of International Settlements – of GATA fame, for in 2005 claiming the BIS’ primary goal is “the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful.” In claiming “QE in Europe is doomed to failure, and may draw the region into deeper difficulties,” he screamed to the world that the Central banking cabal is coming apart at the seams – as said “final currency war” turns nuclear.
That said, these statements pale compare to the “most ominous quote of the year” from U.S. Commerce Secretary Penny Pritzker; fittingly, made from the annual Davos, Switzerland conference of the world’s most sociopathic bankers, politicians, financiers and industrialists. For the past three years – and particularly throughout the past three months’ historic currency crash – I have “shouted from the rooftops” of the calamitous political backlash an exploding dollar will provoke amidst the backdrop of a plunging global economy; let alone, its dramatically negative impact on the earnings of the multi-national corporations that run America. In other words, just as the Chinese are being pushed toward “de-pegging” the Yuan to avoid it rising too sharply (yes, I believe it will fall if de-pegged, for the same reason all currencies are falling versus the dollar), the U.S. government cannot, and will not, allow the dollar to continue rising. Quite ironic, wouldn’t you say, as the “code name” for the past two decades of gold suppression was Robert Rubin’s “strong dollar policy?”
Anyhow, when asked whether a climbing greenback could drag down U.S. trade and economic expansion, Pritzker said “it’s a factor, and something to keep an eye on.” As regards to said “final currency war,” no more ominous words could be spoken – irrespective of how innocuous they appear at the surface. In this case, I’ll defer to Zero Hedge’s analysis thereof, describing exactly what is going on behind the scenes.
“(The political and economic impact of the dollar’s surge) is something Pritzker knows too well. So the question is – how long until she speaks to none other than Jack Lew, who in turn conveys a message to Janet Yellen, forcing her to ‘patiently’ remind the market the U.S. never has, and never will, decouple from the rest of the world; and that, unless the US wants to go straight from 5% Obamacare-boosted ‘growth’ to recession, it too will have to join the devaluation party. Moreover, considering that everyone is now long the dollar, the macro devastation that would result if the Fed pulls an SNB and surprises the market (with additional QE), will be one for the generations.”
So there you have it, in a nutshell. The global economy is collapsing; the “final currency war” has reached its terminal stage; and the political and geopolitical backlash is about to be unleashed full force. Consequently, no matter what Central bankers do, four-plus decades of monetary sin have sentenced the entire world to “death by deflation“; which, what do you know, CNN, too, just posted an eviscerating article about.
In a world of historic, parabolic debt accumulation; and Central banks void of both credibility and “dry powder,” the near-term ramifications will be horrifying. As gold and silver are not “commodities” but the world’s only real money, they are rocketing higher in all currencies; as in the 1930s and 2008-09, proving their historic safe haven status. It won’t be long before gold (and eventually, silver) trades at an all-time high in all currencies; and lastly, “dollar-priced gold” when the Big Kahuna, the Federal Reserve, joins the overt devaluation party.
Consequently, we at the Miles Franklin Blog can only plead with you to protect yourself whilst you still can; which, if you wisely choose to do, we hope you’ll give us a call at 800-822-8080, and “give us a chance” to earn your business.
It makes little difference to “trade.”
“It” being the denominational “value” of whatever physical form is used as an account of credit. Be it a dollar or sea shells.
Trade will exist with, or without it. Mankind has traded since before written history. Without the constraints of a fiat unit of account to contend with, traders will find a way of mutually beneficial trade. Be it oil for wheat or what have you.
There will be a time of upheaval and flux, as the world of trade finds these new parameters/boundaries. The question being, is to survive this period of flux with your wealth and life intact.
Life skills will be much in demand, as will trade skills.
What do you see for the future of grains: up, down, or eventually indifferent to the value of currencies
I am not a financial advisor; and even when I worked on Wall Street (in the Energy sector), I knew little of the specific dynamics of most other commodities.
Today is a particularly tough time, as worldwide, there is massive spare capacity (read /the-direst-prediction-of-all) in industrial commodities, and undoubtedly many agricultural commodities as well. That said, there are plenty of specific issues like the Brazilian and Californian droughts to consider, as well as rapidly rising global population and a rapidly contracting global economy. Not to mention, exploding money printing.
And thus, while the overall trend is likely deflationary, that doesn’t mean it will be for any specific market – particularly grains, as they are the most important commodities on Earth.
I read this morning, Another 6.5million Oz’s disappears from SLV
That’s over 1000 tons since beginning of December!!!
WTF is going on? My immediate guess is this metal doesn’t exist and never did, and they are drawing down the fake inventory in Lew of a run.
What’s your take?
Agreed. I don’t believe a word of what JP Morgan (SLV’s custodian) reports about SLV inventories, particularly as their movement over they years has made absolutely no sense given accompanying silver price movements.
Just as an update Andy,
And this maybe nothing, but I have an account with Raiffaisen bank Austria, they used to buy and sell all precious metals as part of their normal business.
They always marketed the Austrian philharmonicas in silver and gold as well as gold and silver bullion bars. At some point in the last few days/weeks they have stopped selling all silver bars and now only list philharmonicas. Interestingly they still list gold coins and bars.
So I’m wondering if we are not seeing a silent run in Silver in Austria. Incidentally silver is 20% more expensive in Europe due to the VAT levy on it., which always kept buyers away from it in the past.
After today’s Greek election, which was decidedly won by Syriza (as I anticipated), there’s going to be a MASSIVE run on European PMs!
Here is a link to Raiffaisens silver and gold prices.
As you can see, even Platinum attracts 20% VAT, only gold for some strange reason is exempt.
And all silver product other than philharmonicas have disappeared.
I can’t speculate on what’s going on at that particular bank, but I expect a 2008 or 2011-style silver shortage in the not too distant future.
I think your right on the money (Excuse the Pun)
I was just looking at euro silver up 25.7% in the last 30 days!
As we both know that just shows the devaluation of currency against real money.
Anyone with a functioning brain cell and an IQ in single digits can work out that the Euro is going down FAST, and not just against the the other currencies.
I see that yesterday the opposition in the Greek election warned that a Syriza win would mean a lack of toilet paper! I guess the reference was to Venizuala where you might need to now stand upwind of your neibours. This will not be an issue in Greece, as pretty soon there will be ample toilet paper which will be deepened from ATM machines.
World central bankers and politicians seems to push propaganda about the evil of deflation, but correct me if I am mistaken, surely in a world of inelastic money anchored to gold, the result would be persistent secular deflation due to economies of scale and technological improvements, meaning that production of anything would require less in terms of human effort and resources so, consequently, a constantly rising standard of living.