Fifteen months ago, I wrote of the “cataclysmic” dangers of a budding, historic commodity crash. And no, Precious Metals are decidedly not “commodities” – which is why, unprecedented Cartel price suppression notwithstanding, physical gold and silver demand have surged to all-time highs. Just as there is nothing inherently “Precious Metals’ negative” about “rising rates”; again, unprecedented Cartel price suppression notwithstanding. Let alone, with prices already at multi-year lows; demand at record highs; supply rapidly vanishing; the global economy collapsing; and nearly every Central bank hyper-inflating their currencies
Fourteen months ago, I warned that crashing oil prices ($81/bbl at the time) – and generally speaking, commodity prices – would foster “unspeakable” political, economic, and social horrors.
And eleven months ago, issued my “direst prediction of all.” Which was, utilizing David Stockman’s “Great Deformation” research as the basis if my views, that said commodity crash may last not just years, but decades.
Eight months ago, upon witnessing the “ugliest economic data I’d ever seen” – i.e., 12% and 15% year-over-year plunges, respectively, in China’s March imports and exports, I upgraded my long-standing call for a significant Yuan devaluation from inevitable to imminent. Not to mention, my incredulity regarding the continued, parabolic, margin-fueled explosion of Chinese stock prices.
“Whilst the Chinese, Japanese, and Hong Kong stock exchanges rise parabolically, Chinese imports are plunging, and exports utterly imploding. Frankly, it is difficult to find a better measure of global trade activity than Chinese exports; and when combined with ugly Chinese import data, the picture is one of worldwide recession, if not depression. This is why global ZIRP, NIRP, and QE programs are all but guaranteed to accelerate; likely, right now. Moreover, the expanding economic carnage is why the Miles Franklin Blog has loudly predicted a dramatic – perhaps imminent – Yuan devaluation; i.e., the political, economic, and social “big bang to end all big bangs.” To a man, it is difficult to conceive how the most blatant currency manipulators on the planet are not actively planning to de-peg the Yuan from the “helium balloon” the dollar has become; as not only is China’s manufacturing market share being stolen by Japan and other currency immolating nations, but competition is becoming fiercer due to inexorably weakening economic conditions.”
Six months ago, the Chinese stock market peaked – crashing 45% in the ensuing two months, before the Chinese PPT (comically named the “national team”) adopted U.S.-PPT-like tactics, like “dead ringer” and “hail mary” algorithms, to stabilize it. That said, it’s still down 33% – and acting “heavy” anew, having been decidedly rejected by national team-orchestrated attempts to push it above its 200 day moving average.
And four months ago, after Chinese trade data depicted dramatically deteriorating economic activity, I espoused that the “imminent” Yuan devaluation predicted in April had just become “hyper-imminent.” And Voila!, that very evening it occurred, with the Yuan/dollar peg devalued, over a two-day period, by 6%, to a new 4½ year low. Which not only immediately catalyzed the final leg of the Shanghai stock market’s collapse; but the CRB Index’s first touch of its 40-year low of 185; and the dollar index’s surge to a new 12-year high.
The latter of which, I might add, I predicted in my “2014 predictions” twenty months earlier – under the assumption that fearful global capital would flee illiquid “commodity currencies” for the “safety” of the world’s most hyper-inflated “reserve currency.” Gold and silver prices surged upon the Yuan devaluation – as they should – causing the Cartel to go berserk capping them at their respective 200 day moving averages of roughly $1,175/oz and $16.00/oz – before viciously attacking them, in unprecedented fashion, when the Fed’s “December rate hike or bust” campaign commenced with the October 28th FOMC statement; in pretending the imploding global economy was “recovering,” via a pathetic propaganda campaign which likely, once and for all, will destroy its remaining “credibility.”
Three months ago, upon witnessing the PBOC’s unfathomably Keystone Kop-like support of the Yuan, whilst simultaneously attempting to devalue it, I deemed China’s government the “most dangerous, destabilizing force on Earth”; first, for fostering history’s largest financial and economic bubbles; and secondly, for its inept efforts at “containing” and “stabilizing” it. Thankfully for the long-term outlook of the Chinese economy, a millennium of fiat currency failures have ingrained the value of accumulating gold, under all scenarios, by both the Chinese government and citizenry alike. But that’s another story altogether, to be told over the coming decades.
Simultaneously, I warned that if the Fed were stupid, and suicidal enough to actually raise rates – even by a “token” quarter point – it would be the “only financial event as potentially cataclysmic as a significant Yuan devaluation.” And Voila! Three months later, the CRB commodity index has crashed to 176, free falling as I speak; as Friday’s historic OPEC decision to maintain production – which I vehemently predicted all year – has, in the words of yesterday’s article, “sealed the global economy’s terrifying fate.” Not to mention, severely jeopardized the Fed’s moronic rate-increasing propaganda scheme – as collapsing stocks, interest rates, high yield bonds, commodities, and currencies, if not reversed by miraculously manipulated rallies – will make it all but impossible to pretend the economy is “recovering” at next week’s FOMC meeting. Particularly as the Fed’s own data says otherwise; and this, before the latest currency/commodity/equity/junk bond/Treasury yield implosion!
Just yesterday, we learned that China’s foreign exchange reserves had their third-largest monthly plunge ever – mirroring what all “emerging market” currencies, most of which are already at all-time lows, are experiencing – as said “liquidity vacuum” is causing global capital to flee to the dollar; and in the process, annihilating the economies, and finances, of hundreds of nations. Not to mention, decidedly validating previous data suggesting the Chinese government is massively selling U.S. Treasuries to protect its collapsing financial markets – making it more likely than ever that not only is a Fed rate hike off the table, but that, as I have noted countless times before – like here and here – the Fed not only never “ended” QE, but has been doing it, covertly, more aggressively than ever!
Subsequently, China’s horrific, and “worse than expected” November trade data – was released last night – depicting further implosion of both exports and imports. Which, combined with the deleterious, lingering impact of Friday’s historically deflationary OPEC decision, has caused commodity prices to accelerate to the downside – such as WTI crude, which as I write Tuesday morning, is at a new six-year low of $36.85/bbl, compared to $41.50/bbl before the OPEC announcement Friday afternoon.
Far ominously, in yet another cataclysmic development completely unreported by the Mainstream Media, last night’s Yuan peg was below the low level set just after the initial August devaluation, as the PBOC continues to “gradually” walk it down. Which, now that it has been “accepted” into the IMF’s pathetic, useless “strategic currency basket” (which in effect, simply served the Chinese as a publicity statement), the PBOC has free reign to destroy the Yuan “at will.” Which I assure you, it most certainly will – although more likely, via the small, daily “Chinese water torture” steps they have been using lately; rather than the shocking, destabilizing “bazooka” type unleashed August 10th and 11th.
Which brings us to next week’s potentially historic FOMC meeting – at which the Fed is desperate to raise rates, in a pathetically misguided, hopelessly inept attempt to “save face” – after having promised tighter policy for nearly three years. They – and you – know full well that the only way they can do this is in an environment of surging stock prices and stable bonds, commodities, and currencies. Which, for the umpteenth time, is all they care about; and all their manipulative efforts are channeled at.
However, now that the “perfect cataclysmic storm” of plunging commodities, currencies, high yield bonds, Treasury yields, and economic activity is upon them (including, just one day after their blatantly manipulated NFP employment report, a plunge in the Fed’s very own “Labor Market Conditions Index”) – not to mention, dangerous political and geopolitical trends – it’s looking more and more likely that said “rate hike” may in fact be substituted by some variation of the inevitable “Yellen Reversal.” Which is, when Whirlybird Janet is forced by collapsing financial markets to admit the economy is not only collapsing, but in need of further, immediate monetary stimulus. And trust me, if when it becomes apparent to the entire world that the PBOC does in fact intend to unleash the “financial big bang to end all big bangs” – which, I might add, the Chinese government’s own reports already assume – the “final currency war” I predicted three years ago will officially go “thermonuclear.” Which I assure you, will decidedly NOT engender Fed “rate hikes”; but, to the contrary, negative interest rate and “QE to Infinity!”
To that end, in light of already record-high global gold and silver demand; collapsing inventories and production; and the time-honored “safe haven” roles Precious Metals play amidst fiat currency devaluations; not to mention, the chart featured in yesterday’s article; do you believe you are prepared to weather the “perfect cataclysmic storm?”
And by the way, as I edit, the metals’ supply implosion I have been warning of for the past year just became a REALITY – when Anglo-American, the world’s fifth largest miner, announced it will sell 60% of its assets, suspend its dividend, take up to $4.7 billion of write-offs, and lay off an astounding 85,000 employees, or 65% of its global work force! My friends, this is what I have been all but screaming about; as a combination of Central bank/Wall Street-induced base metal/industrial commodity oversupply; plunging economy-related demand; and in the case of primary Precious Metals mines, Cartel suppression; have set up the mining industry to violently collapse in 2016 – which is why I recently predicted 2016 will be an “unmitigated disaster,” on all levels other than physical gold and silver demand, and prices!