Never have I had more to say – as literally, my pre-article notes contain a record-setting 14 pages of “horrible headlines.” I’d love to devote my daily entirely to the Swiss referendum; and in fact, today’s title refers to this weekend’s abject failure of the 0.1% of the global population Switzerland’s citizens represent. However, upon learning from overseas colleagues that Swiss bankers, politicians and media were as universally “anti-yes” as America’s worst propaganda pushers, it couldn’t be clearer the referendum was doomed from the start. Then again, as we predicted in Wednesday’s “decision of a lifetime,” many Swiss that truly understood the long-term decidedly positive ramifications of a “yes” would likely avoid “rocking the boat,” given current “common knowledge” that Swiss stocks are correlated to SNB money printing.
Even in Switzerland, the “world’s smartest 0.1%” in the topic of monetary discipline didn’t care enough to do what’s best for their future. And given Switzerland has been hovering near recession for three years with inflation so high that a referendum to raise the minimum wage to $25/hour was voted on earlier this year, my guess is there are far fewer “1%-types” there than one might expect. Let’s face it; this was the one and only chance for the people to strike a death blow to TPTB. And instead of doing so, the Swiss not only neglected their own best interests but those of billions of people the world round. In other words, our most likely scenario of the markets ultimately doing TPTB in has now been elevated to the only possible scenario. To that end, the referendum’s failure increases the odds of such an event exponentially now that Western central bankers have been given the “all clear” to hyper-inflate.
Next, I could spend pages writing of this month’s historic pre-referendum PM attacks – in both the markets and media, in which no “weapon” were spared to minimize gold and silver sentiment. Even as the ECB and BOJ dramatically expanded their monetization schemes – as global growth ground to a halt – TPTB expanded their manipulations by taking Western stock markets like the “Dow Jones Propaganda Average” to record nominal levels whilst commodities, currencies and bond yields crashed. Frankly, I’m so disgusted with the blatancy of Friday’s pre-referendum PM raids – on one of the year’s thinnest trading days, no less – I’m going to only write of them briefly.
And no, gold and silver did NOT plunge due to Friday’s crude oil implosion; as not only are PMs decidedly not “commodities,” but in gold’s case, its price barely budged on Thanksgiving, when the vast majority of oil’s losses occurred. No, it wasn’t until the COMEX opened Friday – “conveniently,” on “First Notice Day” for the December contract – that the real carnage was unleashed; as usual, in quick algorithm bursts like the below 2% waterfall decline in paper silver – whilst the PPT wouldn’t allow the Dow to even decline amidst the “all-important” Black Friday shopping spectacle (which was an UNMITIGATED CATASTROPHE); even as bond yields, commodities and currencies crashed like an actual Black Friday market crash. Then again, this is “2008, with one temporary exception”; which, when the PPT inevitably fails, either via deflationary crash or hyperinflationary explosion, will make the 2008 implosion look like a “day in the park.” In fact, it was quite surreal watching Friday’s “trading”; as everything related to borrowing and spending was higher – whilst, across-the-board, industrial stocks sharply declined. And no, I’m not just referring to oil companies!
Back to oil, in anticipation of the inevitable propaganda characterizing this Fall’s – and particularly, Friday’s – gold plunge as “oil related,” we put together these chart of how oil and gold have fared since the Cartel’s September 2011 “point of no return,” when it went “all in” suppressing PM prices. In the ensuing 2½ years as the global economy plunged from bad to worse, oil prices rose 20% whilst gold plunged 35%; in other words, demonstrating a relatively high negative correlation. Heck, even taking the series through this Fall’s horrific oil plunge, you can see gold’s decline was far larger; and still, the correlation was negative.
Frankly, the Swiss vote doesn’t even rank in our top two stories this weekend – as whether “yes” or “no,” PMs will eventually break the Cartel’s shackles. Nor, for that matter, does this week’s ECB meeting make the list – in which QE or NIRP may be expanded; or the Ukrainian President saying he “doesn’t fear World War III.” No, this weekend’s undisputed “horrible headline” champion is the historic oil plunge; which in just the 24 hours following OPEC’s decision (which I predicted) to commence a bloody price war with the high-cost, heavily depleting, massively overleveraged U.S. shale industry – plunged by more than 10%, to close the week at $65.99/bbl. (as I write Sunday night, $64.70/bbl)!
Tomorrow’s article will be devoted entirely to this globally important topic; but frankly, no amount of writing can do justice to its horrific, long-term ramifications. To wit, when we wrote “crashing oil prices unspeakable horrors” six weeks ago – with WTI crude at $81/bbl., no less – we could not have been more serious. Unlike precious metals, which are falling due to manipulation, whilst physical demand surges and supply is on the cusp of collapsing, oil is freefalling due to the deadly combination of imploding demand and exploding supply. A situation, we’re sorry to say, that will dramatically worsen in the coming years, yielding inconsequential “positives” relative to the terrifying political and economic negatives collapsing oil prices portend. When you see the title of tomorrow’s article, you’ll know exactly what I mean; as in our mind, the convulsions the entire world will endure at $65/bbl. oil – let alone, significantly lower levels – will be catastrophic no matter what ridiculous propaganda TPTB generate.
Last, but far from “least,” I want to discuss just how unfathomably wide the chasm between paper and physical PM fundamentals has gotten, following this month’s historic “pre-referendum” Cartel raids. This incredible dichotomy was on full display Friday, prompting thoughts of 2008 – when nearly all the world’s Mints closed as gold demand exploded and silver supply disappeared.
Not only did gold forward rates continue their freefall into negative territory Friday – with even the six-month rate turning negative, and the one-year rate on the verge of such for the first time ever; but the Indian government unexpectedly removed the “80/20” import/export restrictions that have served as a severe impediment to gold demand (at least, the official non-smuggled type) this past year.
Better yet, U.S. Mint Silver Eagle sales ended November with a bang, whilst “paper prices” plunged $1/oz; at 3.4 million ounces, on a pace that would have challenged last month’s record non-January level if the Mint didn’t suspend sales for 12 days when it sold out of silver. Even with the supply suspension, 2014 demand is on pace to exceed last year’s record level; as is the Royal Canadian Mint, which released its third quarter sales figures on Wednesday. Not to mention, the world’s largest silver consumer, India, which is also on pace to exceed 2013’s record silver import levels this year.
As for “inventories,” nearly a third of the COMEX’s measly 67 million of registered silver inventory was stood for on Friday’s “first notice day” – although I think we all know such numbers are bogus, as little or no actual available silver likely exists. That said, the pressure will likely get turned up further at today’s unconscionably low prices well below the cost of production, as global money printing explodes amidst Depression-like global economic conditions, unprecedented debt accumulation, collapsing currencies and sovereign bond yields, and broadening geopolitical tensions.
As for Shanghai silver inventories, last month’s “$50 million of inventory, that’s it?” article is back in play; as in the past two days, an astounding 25.5 tonnes were withdrawn, representing 21% of Shanghai’s total silver inventory – taking total inventory back down to just 93 tonnes, worth less than $50 million. This is nearly the exchange’s all-time low level, down 95% from when the April 2013 “alternative currency destruction” raid was initiated a day after Obama had a “closed-door” meeting with the top ten “TBTF” bank CEOs.
And last but not least, a quote from the great Egon von Greyerz – fittingly, one of the leaders of the “Save our Swiss Gold” campaign. Putting to bed any remaining doubts as to how strong global physical gold demand has been, it appears Swiss gold refiners are again working round the clock to meet insatiable global demand – which we assure you, will NOT stop growing until inevitably it swamps any and all remaining supply.
In the last few weeks Swiss gold refiners have been working around the clock because of extremely strong demand from the Far East, India, and the Middle East. And they have indicated to me that they expect the strong gold buying to continue into next year. So despite the recent weakness in price, 2015 is setting up to be an explosive year for the gold market.
–King World News, November 28, 2014
For those of us that believed and/or hoped the “world’s smartest 0.1%” would make a difference, I guess we’re all a bit disappointed. Fortunately, a “no” vote doesn’t change PM fundamentals in the slightest – and frankly, makes them stronger yet as the entire world realizes the supposedly most “prudent” money managers are fully committed to debauching their currency. At prices well below their respective costs of production, it is difficult to see how anyone would not want to own physical gold and silver today. And for those that don’t, what more do you need to see to realize what direction the world’s 182 fiat currencies are headed?