It’s Friday afternoon, and I’m going to start today’s article with a handful of “theater of the absurd” headlines and news items – cumulatively, depicting how the “propaganda leg” of the TPTB’s “evil tripod” of money printing, market manipulation, and propaganda has not only broke, but been shattered to pieces. Remember, there are 7.3 billion people on the planet – each with savings to protect; and each reading the same, increasingly blatant lies from the “evil Troika” of Washington, Wall Street, and the MSM. Here at the Miles Franklin Blog, we seek to empower you to make correct financial decisions – and by shining the light of reality on such lies, which seek to separate you from your money, we hope to objectify your personal due diligence process.
To wit, this article by CNN Money objectively demonstrates the massive, accelerating trend of foreign governments selling U.S. Treasury bonds; and none more than China – which, along with Japan, is the world’s largest Treasury bond holder. And yet, Treasury yields continue to plunge, with the 2.03% yield on the benchmark 10-year bond sitting at a five-month low. Not to mention, given the 225-year range of 1.5% to 16.0%, it is within a handful of basis points of its all-time low. In other words, someone is buying countless billions of Treasury bonds hand over fist – which, as I noted in December 2013’s “proof of the tapering mirage,” and October 2014’s “end of QE – LOL,” mathematically must be the Federal Reserve. No other entity on the planet has such “money” to spend, nor the motivation to buy securities of the insolvent U.S. Treasury at record high prices. In other words, it’s the U.S. government is unquestionably the “buyer of last resort” – of Treasury bonds; stock and crude oil futures; and naked short positions in paper gold and silver.
And how about the European economy – having plunged so sharply in the six months since the ECB commenced its historic QE gamut, that most nations are either in, or on the cusp of, renewed recessions. Frankly, the only reason any European nation can still purport to be “growing” is data manipulation – which, in the coming months, is unlikely to be enough to offset the accelerating collapse of global trade, from East to West. This year, the European unemployment rate has barely budged – at 11%, barely below the upper bound of the 20-year range of 7% to 12%; whilst debt continues to explode, no matter what country one speaks of. Greece is on the verge of collapse. Catalonia will likely secede from Spain, as will the UK from the European Union. And putting the icing on the cake, the Volkswagen “Diesel-Gate” scandal will have a dramatic negative impact on Germany, the so-called “strongest economy in Europe.”
And yet, in one of the most idiotic, credibility-destroying speeches in financial history, “Goldman Mario” Draghi – today – claimed the gargantuan, open-ended QE scheme launched seven months ago has “surpassed our initial expectations.” Better yet, he cited “a drop in oil prices” as the principal reason why inflation hasn’t reached the ECB’s 2% target level – as opposed to the massive deflationary forces enveloping the planet, following decades of Central bank fostered overcapacity. Honestly, I don’t believe he has a single bit of data to prove this purposefully ambiguous statement; as no matter what objective measure one uses, Europe’s economic environment – like the rest of the world’s – has dramatically weakened since QE was launched in March. And by the way, if QE was doing so well, why has it been either directly or indirectly expanded three times already?
Next up, the ongoing comedy that is the BLS, or Bureau of Labor Statistics’, politically-motivate scheme to purport a “recovering” labor market at any cost, no matter how transparent their unprecedented data manipulations become. For years, I have been dissecting the farce that NFP employment reports, weekly jobless claims, and the JOLTS (or job openings and labor turnover survey) survey have become – cumulatively, posing not even a semblance of the true, historically miserable state of the U.S. labor market (although ironically, the September JOLTS survey, released today, purported the biggest job openings plunge since 2009).
To that end, long-time readers know I have split gallons of “digital ink” refuting the most pathetic, jobs-goosing manipulation of all – i.e., the “birth/death model” the BLS uses to fabricate millions of “jobs,” under the assumption thousands of “businesses” are created each year, despite not a shred of evidence to prove it. One of the main objective points I have used to refute its validity has been the fact that net U.S. business formation has been negative since the 2008 crisis – when the global economy permanently broke. And reading this fantastic article, you’ll know exactly what I mean. As will the millions of global denizens who, thanks to the exponential growth of “alternative media” sources like the Miles Franklin Blog, and the inexorable inertia of reality, are simultaneously realizing the same sad truth; i.e., the U.S. economic situation is as ugly as anywhere on the planet. I mean, geez, Mattel Toys reported its eighth straight quarterly revenue decline today, citing – in what can only be described as epitomizing the dismal state of America’s economy – poor Barbie sales.
And last but not least, there’s the past two weeks’ non-stop, PPT-orchestrated equity surge – following the Fed’s “unexpected” maintenance of ZIRP, or Zero Interest Rate Policy; one of the ugliest NFP employment reports on record; and of course, the ubiquitous NYSE “options expiration” surge – which, like all of today’s manipulated market movements, is based on no rational reason, other than PPT intervention.
Given the plummeting “odds” depicted by money market futures trading, Wall Street has finally realized the Fed is not raising rates this year – which, as you know, I have vehemently predicted since QE supposedly “ended” a year ago. Which is why the market is supposedly rallying –although I assure you, if the September NFP came in at +250,000 instead of the actual +142,000, and said rate hike odds surged rather than plummeted, the “Dow Jones Propaganda Average” would have rose by far more than the 200 point PPT-orchestrated goosing it received on October 2nd. In other words, care of the PPT, “bad news is good news” for stocks, and so is “good news” (if we ever had any).
Given this new-found realization of ZIRP until at least 2016, the PPT continues to take stocks higher – using the same algorithms as usual, such as the day-ending “hail mary”; the post-“open market operations” goosing after 10 AM EST; and the 9:30 AM EST “opening pump.” And the moronic, captive MSM obliges with headlines like yesterdays “Dow closes up triple digits as rate hike expectations fade,” and today’s “stocks close higher as market expects easy Fed policy.” And no doubt, Wednesday’s miserable PPI and retail sales numbers; Thursday’s horrific Empire State Manufacturing and Philly Fed diffusion index readings; and today’s hideous industrial production and JOLTS survey data made such stock market-supporting rhetoric easier.
That said, logic would tell you that no asset class should perform better than Precious Metals under such conditions – and Fed or no Fed, the fact remains that collapsing economic data is decidedly NOT good for stocks. Which is why it’s so “strange” that day after day, stock are mysteriously “supported” when they attempt to go negative – and gold and silver, “capped” when they attempt to rise.
Heck, today’s blatant PM raids were “signaled” by the Cartel’s time-honored strategy of attacking the HUI mining index beforehand – as with just one hour remaining in NYSE trading, with gold and silver essentially unchanged, the HUI was down a whopping 3%. And low and behold, in the day’s last half hour, PMs were viciously attacked, for no reason other than attempting to push them below their 200 day moving averages, or DMAs. Which, as you know, both gold and silver finally recaptured this week, after having been held below them for the past five months. That said, today’s “new” gold and silver are demonstrating tremendous resiliency under such pressure – which is why both metals held their 200 DMA’s irrespective, of $1,176/oz and $15.97/oz, respectively.
Which brings me to today’s primary topic, which I have been trying to elucidate for several days, but couldn’t properly until today. Which is, the realization that the severe silver shortages encountered last month were due to a so-called “reality put” – in which die hard Precious Metals holders instinctively realize how far to the downside the price can be effectively suppressed. At which point, they jump in, en masse, to scoop up whatever physical metal they can. Which is exactly what happened after the September 2008 paper gold and silver attacks; September 2011’s “operation PM annihilation I”; April 2013’s “alternative currencies destruction raids,” and July 2015’s “Sunday night paper massacre,” among others. This time around, countless thousands realized that silver in the low $14’s was too low for mining companies to survive – and thus, unleashed a buying frenzy catalyzing the highest physical premiums and longest delivery delays since 2009. Gold demand surged as well – particularly in the Eastern hemisphere – and consequently, both metals are on pace to shatter annual consumption records this year.
However, in the past two weeks – ironically, right after the aforementioned, catastrophically miserable September NFP report, Miles Franklin has seen steadily declining demand. And this, with gold and silver prices surging – up 6% and 12%, respectively (validating the massive gold for silver swapping activity we saw in August, including my own). To which, I can only conclude that “goldbugs” like myself are sitting with their “hands on the trigger” to buy more when prices decline – particularly to ridiculously uneconomic prices like $1,100/oz gold and $14/oz silver – whilst laying low as prices rise, due to a combination of complacency, fear of further Cartel raids, and a lack of incremental funds to increase positions.
Unquestionably, Precious Metals’ unique market “inelasticity”; in which people instinctively “buy low” – as opposed to “buying high” in mainstream markets like equities – is a major reason for such unnaturally logical investment activity. Which, in my view, is as powerful a proof that gold and silver are not speculations, but money, as one can find. That said, if there’s one thing Miles Franklin has learned in two decades of bullion trading, it’s that rising prices typically catalyze buying far more than falling prices. And thus, given that demand has slowed as prices have risen, I can only conclude that 1) traditional buyers – like me – have been “trained” to add to positions on price weakness; and 2) very few “new buyers” have entered the market (at least, here in the States), either because the don’t believe the economy is as bad as the data says; or that whatever is wrong can be “fixed” by the Fed. In other words, the recent physical buying explosion – which literally, sold out silver shelves the world round – was solely due to the same two or three percent of investors that have been buying PMs for the past 15 years. Clearly, the “reality put” that 15 years of Precious Metals knowledge has given this group has become a powerful force in supporting prices at current levels. And when the other 97% or 98% of potential buyers finally get past the propaganda and manipulation, look out above – as if supply (particularly for silver) is this strained now, think what it will be when PM buying goes mainstream.