As usual, I have extremely timely, eminently actionable topics to discuss. And while I’d love to simply talk “big picture,” the collapse of history’s largest, most destructive fiat Ponzi scheme is moving too rapidly to be complacent. Trust me, I’d love to take a well-deserved rest – and man, is it well-deserved. However, the so-called “race to the finish” is on; and as I not only love my job, but feel compelled to do it as well as possible, there’s no way I’m going to slow down any time soon. In return, I ask for nothing but your goodwill, and help in spreading such “gospel” as rapidly as possible. That said, Miles Franklin would clearly appreciate the opportunity to earn your business, if you happen to be considering the purchase, sale, or storage of Precious Metals.
This week, it’s been a pleasure spending time with Miles Franklin’s first class team here in Vancouver – led by my “twin brother” Andy Schectman, who provided the Yin to my Yang at today’s presentations; with me answering investors’ questions about the markets and economy – and he, the “State of the Bullion Industry.” To that end, Andy and I have hosted numerous private meetings for investor groups throughout the country – and would be thrilled to do so for you, if you can put one together in your home town.
Due to my maniacal aversion to roaming charges, I kept my phone off for much of the day. And thus, when I returned to my hotel room to learn of Whirlybird Janet’s antics at the FOMC meeting, I was oblivious to not only its content, but subsequent market movements. That said, I wasn’t particularly interested, given my 100% expectation of “more of the same” dovishness – which is exactly what the Fed delivered, and then some. Moreover, I was itching to pen today’s primary topic, which I’ll get to momentarily.
Actually, the first thing I noticed when I turned on my computer was the appalling, expanding plunge in the National Bank of Greece’s ADR, ticker NBG. Not to mention, an equally ugly implosion of Greek sovereign bonds; as per what I continue to cover with laser like focus, it’s looking more and more like not only a “Grexit,” but the all-out political, economic, and perhaps social collapse of Greece may shortly occur. To wit, the IMF appears on the verge of backing out of the “bailout” negotiations before they even start – making it more and more likely that not only will Greece default on hundreds of billions of debt, but that its economy might disintegrate to dust. Reports of plans for “parallel currencies”; “new Drachma”; collapsing business activity, and even barter situations are expanding at an alarming pace. And trust me, once the world starts to refocus on Greece – and how not only was nothing fixed, but things are much worse than before – the already powerful downward pressure on stocks, bonds, and currencies will inexorably strengthen.
Which, in turn, will serve as a powerful impetus for the Fed to not only give up its charade of pretending to consider rate hikes – but reverse course 180 degrees, in inevitably announcing QE4, and potentially Negative Interest Rate Policy (NIRP) to boot. To that end, today’s FOMC statement was as dovish as I imagined; albeit, tempered by yet another successful “application” of the pre-FOMC drift – in goosing the “Dow Jones Propaganda Average” by more than 300 points in the hours surrounding the decision, as the PPT has done in nearly every such situation for the past two decades.
In fact, the sheer “laziness” I have noticed in recent FOMC statements – as clearly, the Fed has become way to confident in the PPT’s ability to “interpret” its word clouds positively – has caused it to let down its guard. To that end, despite continuing, unrelenting propaganda of how the Fed is “laying the groundwork” for a late 2015 rate hike, not a peep was made regarding such intentions. Or, for that matter, anything incremental; as, for all intents and purposes, the only material change relative to the June 17th FOMC statement was substituting…
“The Committee anticipates that it will be appropriate to raise the target range for the Federal Funds rate when it has seen further improvement in the labor markets and is reasonably confident that inflation will move back to its 2% objective over the medium term.”
“The Committee anticipates that it will be appropriate to raise the target range for the Federal Funds rate when it has seen some further improvement in the labor markets and is reasonably confident that inflation will move back to its 2% objective over the medium term.”
Yes, with the global economy collapsing around them, the best the hundred-plus taxpayer funded Fed wordsmiths could come up with was adding the word “some,” whilst changing not a single other word regarding the Fed’s economic forecast and updated monetary policy expectations. And thus, 53 Fed meetings since rates were taken to zero, not even the slightest inkling of a change in policy – which of course, must remain until “infinity” given the massive, unprecedented debt load incurred as a result of said policy. Not to mention, the horrific “unintended consequences” of ZIRP and QE, like the lowest U.S. home ownership in 48 years, and the highest average rents.
Moreover, an additional, extremely dovish statement emerged from the FOMC meeting – in this case, from the Fed’s “mouthpiece” at the Wall Street Journal, Jon Hilsenrath; who for the first time since the Fed’s “tapering mirage” commenced in early 2013, wrote a post-statement article backing off the relentless “upcoming rate hike” propaganda he has clearly been paid to espouse.
“The Federal Reserve on Wednesday kept interest rates near zero but cited progress in the U.S. job market, a sign it remains on course to raise interest rates in September or later this year. At the same time, however, it flagged a nagging concern about low inflation, which is creating caution among officials and could convince them to delay the day of the first increase.“
Not that I could care less what Jon Hilsenrath has to say – as being the Fed’s “mouthpiece,” essentially all he has hinted at since “getting the job” two-plus years ago has proven wrong. However, given that he clearly has his words put in his mouth, the fact that he is writing of FOMC “doubts” for the first time speaks volumes. Not to mention, as a “blistering” five-year Treasury auction was simultaneously priced – and oh yeah, a CRB commodity index on the verge of breaching 40-year lows, which certainly doesn’t foster expectations of the Fed’s “2% medium-term inflation goal” being exceeded anytime soon. Or, for that matter, “further improvement” in employment, when said commodity collapse is causing massive layoff announcements in mining, energy, and countless other sectors.
Which brings me to today’s primary topic, of which I can’t help but thank Doug Casey. Which is, the surprising content of his Sprott Conference speech, directly following Andy Schectman’s passionate discussion of Miles Franklin’s commitment to protecting clients with conservative investments in physical gold and silver. In it, he spoke of why mining is a “stupid, 19th century choo-choo train business” – which not only destroys capital at an unprecedented rate, but likely will disappear entirely in the not too distant future.
Frankly, he couldn’t have espoused better what I have been screaming for the past four years, after having witnessed it first-hand working for mining companies. Aside from the fact that mining shares are speculations – as opposed to physical gold and silver, which cannot be destroyed, wasted, or depleted – the mining business has become so difficult, it is next to impossible to profit from. Which, even if a miner is one of the “precious few” lucky enough to do so, still doesn’t guarantee equity investors will benefit. And if Casey’s contention that gold and silver prices are not manipulated turns out to be wrong – I think you know where I’m going with this – making money with such “paper PM investments” will be that much harder.
In his view, surging exploration, development, environmental, production, and tax expenses make it all but impossible for the industry to survive; much less, as Central bank money printing exacerbates these horrifying trends. He actually believes modern mining will ultimately be replaced by mining of the sea and asteroids, via nuclear fusion and nanotechnology methods that have yet to be invented. I’ll let you decide if and when this will occur (I’ll side with never and never); but either way, if you “bet” on such speculations, keep in mind that Casey has been one of the mining industry’s biggest advocates for a long, long time. Fortunately, he agrees that physical gold is one of the only commodities likely to rise in the coming years, due to said money printing. And as for mining shares, he ended his speech with what I deemed a “tongue in cheek” attempt at gallows humor, in claiming mining share owners are “waiting for a bubble to bail us out.”
I don’t know about you, but the last thing I’m looking to invest in is a bubble – let alone, one that hasn’t shown a glimmer of hope of commencing. And if Casey’s right about the mining industry’s “imminent demise” – and wrong about gold and silver prices being freely-traded – it strains credibility to believe there’s even a tiny chance of an imminent mining share bubble. As opposed to gold and silver themselves – which not only are experiencing record demand and vanishing inventories the world round, but will be the primary beneficiaries of the collapsing mining industry he himself forecasts.
And thus, as the Cartel continues to exacerbate such trends by relentlessly capping prices – as it’s currently, nonsensically doing at $1,100/oz gold (and how about the below “flash crash” while I was editing?), ask yourself 1) why you are invested in the sector in the first place, and 2) do you want to guarantee the long-term preservation of your wealth, or “wait for a bubble to bail you out?”
You deserve a break for sure, however your daily updates are greatly appreciated.
Either governments are the stupidest people on earth or they are playing a NO WIN game.
SIMPLY, YOU CAN NOT HAVE A CONSUMPTION ECONOMY WITHOUT A MIDDLE CLASS !!!
The middle class is being wiped out, but yet the governments talk about recovery. HOW STUPID CAN THEY GET ?????
@RF,absolutely,they are stupid. how can the economy be recovering when even the coal mines are closing.thousands of thousands of folks are losing their middle class jobs because of the government. you think these folks are just going to go out and spend money they don’t have? fat chance. back in 2012,hanging out on some stock and finance blogs, and pots was going for second term,so i started telling folks that if this guy doesn’t make it,you’ll see coal mines stocks jumping in price.well sure enough,it clicked in some peoples’ mind that “IF” this guy doesn’t make it,maybe just maybe,sure enough coal mine stocks were going up. you know the rest..but you see the point i’m trying to make. i couldn’t believe how people were jumping in to coal. government IS the problem,always have been,and always will be.
@RF,absolutely,they are stupid. how can the economy be recovering when even the coal mines are closing.thousands of thousands of folks are losing their middle class jobs because of the government. you think these folks are just going to go out and spend money they don’t have? fat chance. back in 2012,hanging out on some stock and finance blogs, and potus was going for second term,so i started telling folks that if this guy doesn’t make it,you’ll see coal mines stocks jumping in price.well sure enough,it clicked in some peoples’ mind that “IF” this guy doesn’t make it,maybe just maybe,sure enough coal mine stocks were going up. you know the rest..but you see the point i’m trying to make. i couldn’t believe how people were jumping in to coal. government IS the problem,always have been,and always will be.
It’s time to start building up a cache of food, water and ideas with like minded people
sorry about double post,was trying to correct the spelling of potus,and it doubled.sorry no edit button here.
The people at the top of the fiat pyramid think that as long as they get the most free fiat currency, compared to the rest of the world who has to work for it, they will always be “rich”. Any alternatives to the printing press currency are to be suppressed, mocked, ridiculed, even to the detriment of keeping society functional. But devaluation always has the same outcome in history.
Bullion was supposed to be the measuring stick for fiat currency, but the bad guys read history books too, so they were prepared this cycle. Where does it all end? I don’t know. What do you tell someone who bought mining shares in 2011 at the top, and has ridden them down to today’s lows? Cash out? Or wait for the next cycle? Will government allow the beginning of the next cycle in any of our lifetimes, or will they “stretch” the current curve for another decade or two? What is this “breaking point” people talk about, with massive printing and propaganda? Will the bad guys be able to buy all mining companies for pennies on the dollar, then allow a paradigm shift to ride them up to the top again? I don’t know.
I have been shouting from the rooftops for four years that miners are marked for death.
That said; they are simply speculations; ie, the polar opposite of the conservative investment (physical) needed during times of crisis.
Trust me, physical is “cheaper” than miners.
I just wanted to thank everyone at Miles Franklin for providing these economic summaries and insights. There is real value here and … we just wanted to let you know that it’s appreciated. There are few places that offer the clarity you provide here. We hope you’ll stay engaged in this effort as this global drama plays out. Thank you.
— Lisa Khan
Thanks, and have no fear. We aren’t going anywhere!
I just wanted to second Lisa comments, your work is greatly appreciated.
Thanks so much. Your support is equally appreciated!
I reckon the only way will get screwed in the long run
is if one of the huge asteroids that Casey is planning on
mining makes a soft Earth landing & is made of gold & silver.
I’m in Taiwan for the summer and it’s afternoon here, easy to notice that regularly, between 2pm – 4pm our time here (EST 11pm ~ 1am), the “gold price” being ground down. Day after day, like clockwork…today (31st July) it’s down US$7-10.
Someone is quite desperate and determined – and has the government on their side.
A crashing Chinese equity market prepares all those household investors chased into the market by greed to be ready to gratefully accept an offer from the Chinese State to pay them over the odds for their gold. It also enables the Chinese State to present the resulting enormous pile as a consequence of emergency measures to prevent economic collapse, rather than what it is – a coup de gras to the petrodollar, twenty years in the planning. I believe the Chinese are holding this coup de gras over Washington’s head to “encourage” them to allow the Yuan’s entry into the SDR. The Gold of Damocles we might call it.
So………how long before the Chinese offer their citizenry (and anyone else who might like to sell their gold) an unusually-high price?
After all, revaluing gold can’t just be done “for no reason.”?
Are miners marked for death or ripe for nationalization?
If prices stay down, the former. If they surge, the latter. That is why I have told people to avoid them for four years.