Normally, I’m able to put a disproportionate focus on one particular concept on any given day. However, this morning I am besieged by nearly a half-dozen items of equal “horror value” – and of course, precious metal bullishness.
Let start with the obvious – i.e., the Bank of Japan’s utterly insane “unexpected” announcement Friday morning. In August’s “decision time,” we wrote that both the ECB and BOJ were on the verge of major money printing expansions – in the former case, as the European economy collapses; and in the latter, as the miserably failed “Abenomics” approached its official termination date. Even we were shocked when the ECB expanded its NIRP policy; and political dithering aside, now that PIIGS bond yields are again rising (in Greece’s case, alarmingly so), it’s only a matter of time before the current, modest monetization rate – at least, what they tell us they’re monetizing – explodes higher. Which of course, it certainly will, in response to Japan’s watershed announcement. This is exactly what we wrote of in January 2013’s “final currency war” – which care of the BOJ and ECB is on the verge of going nuclear.
And don’t forget the Fed, which supposedly “ended” QE last week – LOL. To that end, this article by Eric Sprott demonstrates, as our December 2013 article “proof of the tapering mirage” did, that the Fed can’t even hide its own lies. Goldman Sachs themselves just lowered their 4Q GDP growth estimate from 3.0% to 2.2% due to a confluence of negative events – including the “recent appreciation of the dollar,” confirming exactly what we averred in last month’s “single most precious metal bullish factor imaginable.” To wit, whilst Japan’s announcement crossed the tape Friday morning, it was not the BOJ the Fed initially attacked but the ECB – in its fear of the aforementioned ramifications of a “strengthening dollar” against the collapsing Euro. Apparently, in a comment that should be nominated for the irony Hall of Fame, the Fed warned the ECB not to push the Euro’s devaluation “too far” – which of course it and the Fed will do so now that the BOJ has taken the global currency war to another level.
Also prominent in Goldman’s GDP estimate reduction reasoning was last week’s weak personal income and spending data, as well as its “recent downgrades of rest-of-world growth forecasts.” In other words, what the Miles Franklin Blog has been saying for some time. But have no fear, the U.S. government’s “island of lies” economic reporting is in full force ahead of tomorrow’s elections as it attempts to “paint the tape” for incumbents. To wit, only in America can the aforementioned personal spending data suggest the biggest contraction in five years, whilst government-published “consumer confidence” surveys depict the “most confident” American outlook since the real estate bubble top in 2007. The fact, by the way, that the entirety of the survey’s strength was in “future expectations” (i.e., hope), as opposed to the “current situation” (i.e., reality) – which declined; should tell you all you need to know. Incredibly, the U.S. propagandists continue to purport a “decoupling” with the rest of the global economy (such as here) that does not and cannot exist. Which is all the more comical, given that true measures of economic activity state otherwise – such as the fact that since QE commenced in 2008, U.S. children living in poverty has risen by 26 million, whilst the number of billionaires has doubled. And oh yeah, last week’s durable goods order decline and today’s construction spending decline.
As for what impact tomorrow’s mid-term elections will likely have on the future, Zero Hedge said it perfectly below. As we wrote two years back, America has essentially become a “one-party fascist” nation, in which even the line between which party offers more entitlements has been dulled. And speaking of the “U.S. banking syndicate,” I’m sure it won’t surprise you that Wall Street spent more lobbying this years’ candidates – $169 million, to be exact – than in any proceeding mid-term election. And thus, as they say in France, “plus ça change, plus c’est la même chose.”
The short answer, of course, is “nothing” – Congress, or the presidency, have been irrelevant ever since the Fed fully took over the US some time in late 2008. Since then, it has been the role of the central printer of the US, working on behalf of the US banking syndicate, to “get to work”, and cover up the fact that Congress, its make up, or its decisions, are now inconsequential.
–Zero Hedge, November 2, 2014
Back to Japan, people need to understand just how suicidal their announcement was. As the great David Stockman noted in this must read piece, the increased QE announcement was actually part of a two-pronged approach to generating hyper-inflation “2% inflation,” including Japanese government pension plans shedding 25% of their portfolios of low-yielding JGBs in lieu of wildly overpriced stocks. In other words, blatantly shunning their commitment to prudency – and likely, violating their fiduciary responsibility as well – in the name of political expediency. In other words, the BOJ will now monetize the equivalent of all JGB issuance, so that pension funds can offload this toxic junk – and at the same time, goose the stock market higher. Clearly, Japan – and the U.S. and Europe, for that matter – are on the verge of Argentine and/or Venezuelan style hyperinflation; which, as history tells us over and over again, requires very little “spark” to get started.
As for “the markets” reaction, all one needs to know is what Friday’s wildly PM-bullish “top story” on Yahoo! Finance connotes. Yes, round-the-world out of control money-printing; which, as I write, has the Euro down to 1.247/dollar – and the Yen to 113.95/dollar down an astounding 5% since Friday morning. Heck, despite the vicious COMEX attacks of the past three days, Yen-priced gold is actually up during this period, less than 20% from its all-time high.
As in Japan, Western stock markets are surging on the prospects of additional QE – led by the U.S., per this blatantly obvious chart of the S&P 500’s stunning reversal since Fed Governor James Bullard called for additional QE two weeks ago. For all the hype and volatility, interest rates have barely budged, whilst crude oil remains at its lows below $80/bbl. Paper precious metal prices have of course been smashed – as not only is the Cartel eager to portray the “end of QE” as PM-negative, but it needs to keep gold’s “danger signal” muted ahead of the elections; and of course, the November 30th Swiss referendum. However, a “funny thing occurred” whilst the Cartel was busy naked shorting; as late Friday afternoon, the U.S. Mint reported utterly astonishing Silver Eagle sales in the month’s final two days, yielding its third-highest sales month ever; and equally impressive, its highest non-January month, as January is typically the best for sales due to the annual Mint shutdown in mid-December to gear up for the next year’s issuance. And per the second chart, U.S. Mint (and likely Royal Canadian Mint as well) 2014 physical sales are on pace to exceed 2013’s record levels – during a period when paper prices have been smashed by nearly 50%! For that matter, 2014 sales are on pace to exceed the levels of 2011 – when silver nearly exceeded $50/oz. twice; as it was then that TPTB passed the “point of no return,” when they accelerated their money printing and market manipulation operations exponentially. Physical silver and gold demand have since surged to record levels – and as Andrew Maguire noted this weekend, last week’s paper attacks yielded massive physical buying. Here at Miles Franklin, demand surged in the past two days and we have observed junk silver premiums start to creep higher. And for what it’s worth, the COMEX silver open interest rose to a record high relative to the silver price creating further intrigue as to what entity could possibly be absorbing such losses, but continue to purchase more.
And I’m sorry but as a PM “manipulation specialist,” I can’t help but bring to your attention the blatancy of last night’s 73rd “Sunday Night Sentiment” attack of the past 74 weeks – in which, with no other market budging, PMs were smashed; particularly silver, despite Friday night’s bullish U.S. Mint sales data. It strongly reminded me of a similar silver raid in May 2013 – much less, the May 2011 “Sunday Night Paper Silver Massacre,” when gold opened ultra-thin Globex trading down 1% and silver an astonishing 13%, with China closed for a holiday as it also was last night.
In other words, Cartel desperation to paint PM’s in a negative light – particularly ahead of the potentially world-changing Swiss gold referendum – has never been more obvious, nor gold and silver prices more undervalued. At this point, anything could destroy the fragile house of cards preventing financial Ebola from wiping out everything in its path. And thus, how one can NOT consider a least a modicum of protection from history’s only proven money is beyond us.