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.