Lately, I feel like I’m living in the “Bizarro World.” The media has been so dumbed down by rising stock markets, they have literally stopped reporting the news. And not just “bad news,” but any news – as frankly, they are so confused by the mixed signals of strong stock markets and weak economic activity, they simply don’t know what to say anymore. Sadly, such ineptitude has become most obvious on weekends; when lately, essentially zero news is reported. Which is probably why I’m having trouble latching on to a single topic this morning; instead, “throwing it all on the table.”
Encouragingly, the majority of Americans no longer use mainstream media to learn “what’s going on”; and thus, traditional outlets like CNBC and even Fox News and MSNBC are experiencing dramatic ratings declines. Regarding the former, its ratings plunge to 20-year lows is more of a function of the “average Joe” having lost his shirt in equities – and real estate – over the past decade. And regarding the latter, we believe Americans are so fed up with politicians, even die hard “democrats” and “republicans” are experiencing dramatically weaker interest in partisan propaganda.
Record low approval ratings for politicians everywhere – from the U.S. to Europe to Japan – reflect a rising “revolution” of anger; and thus, the money printing, market manipulation, and propaganda utilized to maintain the status quo is rapidly waning in its effect. Even such “Joes” and “Janes” are starting to realize that – per below – the only reason stocks are rising is accelerated “QE” programs; most of which, like the Fed’s “QE3” scheme, commenced between late 2012 and early 2013. Unfortunately, the inflation such programs export – as exemplified by collapsing currencies in the “fragile five” economies, where 25% of the world’s population reside, is more than offsetting the gains achieved for “the 1%” privy to oversized equity holdings. And thus, it’s only a matter of time before the majority not only realizes how deceptive such gains have been – when measured in REAL terms – but how bleak the long-term outlook has become.
In fact, the harder TPTB fight reality, the harder it pushes back. I mean, seriously, think of what the average European thinks when it sees Mario Draghi just won “Central banker of the year” – when in the real world, Europe is on the verge of economic collapse. This weekend alone, I read of the disastrous UK holiday season, the catastrophic Portuguese debt situation and even the French President getting caught having an affair – amidst already record low approval ratings.
Not a single shred of real data suggests anything other than bad times ahead for Europe. Yet, the year started with equity stock rallies in the weakest of the weak links which are Portugal, Greece and Spain. We cannot emphasize how alarming this trend has become; as global stock markets increasingly appear to be signaling the coming hyperinflation, that John Williams projects to emerge this year. Right now, Venezuela’s Caracas Exchange is the poster child of this ominous trend; but with each passing day, this financial cancer is spreading further and more rapidly.
Except, interestingly, in China; where either its “plunge protection team” is not as active, or its financial situation dramatically weaker than purported. Few realize China’s corporate sector is more indebted than any on Earth – thus, offsetting the government’s relatively low debt load; and consequently, it’s difficult to judge exactly where its economy stands.
Some believe its massive currency reserves and manufacturing market share guarantee above average growth – and social stability – for the foreseeable future. However, others believe the strains of supporting 1.5 billion people amidst a dramatically weakening global economy will be too much for China’s still Communist government. As for us, we could not be more bullish about China’s long-term role in global politics and economics. However, anything can happen in the near-term; and gauging by the continuing crash of the Shanghai stock exchange – to its lowest level since the 2008 crisis bottom – it’s getting increasingly difficult to ignore this giant pink elephant in the room.
Here in the states, the MSM is reeling from Friday’s “much worse than expected” NFP report. Clearly, the Fed is terrified of rates rising – particularly above the obvious “line in the sand” they have drawn at 3.0% for the benchmark 10-year Treasury bond. As we wrote on Friday, they will do anything to prevent this level from being breached – as the entire world is dependent on ultra-low interest rates and no rate has more influence than the U.S. 10-year Treasury.
Throughout 2014, we expect calls to “end tapering” to grow stronger; and eventually, to actually increase treasury and mortgage bond monetization. Hearing supposed Fed “hawk” Jeffrey Lacker claim the Fed is watching Obamacare closely – fearing a significant negative economic impact from its implementation – should make it crystal clear just how terrified they are, grasping at any straw possible to justify accommodative monetary policy. Rest assured, the pressure on Janet Yellen to step up QE to unprecedented levels will be intense; and frankly, the only question remaining is whether such increases will be catalyzed by a 2008-like crisis, or otherwise.
Consequently, the upward pressure on PHYSICAL precious metal demand should significantly expand in 2014; quite obviously in the East, and likely the West as well. Keep your eyes on the COMEX registered inventories; which still haven’t reflected the withdrawal of more than 200,000 ounces that stood for delivery of the December contract two weeks ago. Irrespective, such inventories are still 86% lower than the April 2013 level, at an all-time low; and the February contract may well have more delivery demands than the 650,000 or so ounces in December. Thus, with just 416,000 ounces in registered inventory as we speak (with 200,000+ already spoken for), something may well “give” in the very near-term.
This is why the Cartel perpetrated its 21st “Sunday night sentiment” attack in the past 22 Sundays last night – yet again, as gold attempted to cross its current “line in the sand” at $1,250/oz. Not to mention, its 151st “2:15 AM” attack of the past 168 days; again, as gold attempted to cross the taboo level of $1,250/oz., and silver to hold above its own “line in the sand” at $20/oz.
Both metals are holding up beautifully as I write, with $20/oz. silver increasingly starting to look more like a “floor” than a “ceiling” (and $1,250/oz. gold on the verge of being taken out). And why shouldn’t they, given they’re trading well below their respective costs of production, with public sentiment at an ALL-TIME LOW? Yes, not only is sentiment lower than at the bottom of late 2008 – but much lower!
I guess that’s enough for today; as frankly, after having not missed a single day of writing in perhaps a year, I’m having a bit of “writer’s cramp” this morning. However, despite my “throwing it all on the table,” I think some very important points were made; namely, the reality of a collapsing global economy and surging PM fundamentals are very likely to become universally understood during 2014. Which is why you must consider your financial options now, while you still can; particularly, regarding a plan to protect yourself from the inevitable, global hyperinflation.
Your articles help me to stay focused. Before I came here to check for new articles, I checked the 10-year yield. It’s down to 2.83%! Makes me wonder if the Fed has really scaled back its monthly purchases. Either that or they’ve found some other way to manipulate that market.
Yes, it’s called QE. Per my article “Proof of the Tapering Mirage” last week, they monetize FAR more than they say. It will all implode on them one day, though. Perhaps very, very soon.
Andy,
I am starting to feel yours, Bill’s and David’s articles are becoming more urgent. I feel like you have our best interests at heart and that you are saying between the line that the game is finally on and we should get ready for the fight of our lives. Am I correct or am I just getting weak in the head?
We get more urgent with each passing day, and will continue to do so.
Andy,
When bullion banks short the gold each night, are they agreeing to sell lots of gold at current spot price or a lower price in the future, say next month? So the price drops due to more gold on the market and not many buyers at that moment of the offer. By next month do they have to sell that physical gold? Or can they just do another short ? I started researching it but got confused. How does that mechanism work by the bullion banks? If they do need to sell the gold is that why comex is drained ?
They do if they keep their positions open; but they invariably “roll” such positions to following months.
Of course, they are still at the sell side of the long positions taken by others; which as of now, they are DEFAULTING on at the COMEX (regarding the December contract).
I’m thankful you guys are always ‘on the money’, helping us to see the forest for the trees. It’s easy to lose sight of what’s happening behind the curtain. Your skillful reporting has helped me get my PM house in order this last year, and I am sleeping much better for it. Come what may, I am as prepared as I can be, which is a far cry from most of my friends and family who remain in the dark.
You’re very welcome!
+1 Andy. I’ll add 2 thoughts.
The MSM are not dumb, they do PERFECTLY what their owners want, distribute the filtered messages of the news agencies and the “massaged” lies and statistics of governments. We’re entitled to know what they are ok with. Even if many people don’t believe it, they are still influence by these “omnipresent” messages that give a feeling of “all is well”, when, well, obviously not all is well (Jim Sinclair’s MOPE concept is spot on). When a critical mass start changing their behaviour – and I think we’re close or past that by now – then things will start to accelerate for the worse fast, and may become very soon uncontrollable (IMHO things are already out of hands).
Regarding gold, the registered (deliverable at current prices) gold on the CONex is indeed low, but there is quite a bit of eligible gold that will be available at higher prices, and prices can be forced higher very quickly if need be, just as they can be forced down as we all had to witness last year. The big banks (at least JPM) will be on the right side of the trade when it turns and have quite a bit of physical metal they’ve been and are continuing to accumulate in recent times. Me thinks repricing will come before CONex breaks (relieving some of the strain in the physical market), but waddooIno ? Keep up the good work. x
CHX,
In many ways, I agree. However, most of the MSM is that dumb – as is most of the global population.
And as for the registered inventory, stating that eligible gold may be available at higher prices is immaterial. MY gold may be available at higher prices, particularly my gold STORED at Brink’s Montreal. But it’s not available now; and what is, is NOT being delivered to those that demanded it. In other words, it’s like saying “if my grandmother had wheels, she’d be a bus.”
And BTW, even the amount of eligible gold is a pittance compared to global money printed; as is the official government gold reserve of the U.S. Treasury, even if it still existed.