My good friend John Embry – one of the smartest analysts I know – said it best yesterday in writing…
September has traditionally been the strongest month for gold. So the central planners, who run the Western banks, had to defuse this potential enthusiasm, and that’s what they have done with yet another high-frequency driven algorithm attack.
–King World News, September 4, 2014
Trust us, TPTB are terrified of what’s coming and know full well that rising PM prices – i.e., the “Financial World’s Achilles Heel” – will destroy six years’ worth of highly sophisticated, relentless deceptions in an instant. So have no fear, PM holders; you are not only right for the right reasons, but on the verge of “winning” a war that mathematically must be won. Not that “winning” won’t come with its own ugly ramifications – like a potentially very scary world. However, in owning physical gold and silver – and otherwise preparing for what could be a very difficult period in human history – you at least possess a chance at financial survival.
The week started with a vicious takedown in the wee hours of Labor Day, as well as a blatant Fed attempt to bull Treasury yields higher; and thus, avoid what we have long deemed the “most damning proof yet of QE failure.” To that end, Zero Hedge wrote of what we have highlighted for the past six weeks; i.e., the “new hail mary trade,” in which the Fed covertly pushes rates higher at the end of the New York trading day, just as it has been doing with the “Dow Jones Propaganda Average” for the past three years.
Yesterday, TPTB pulled off a day of manipulative infamy topping even the blatant August 18th gold capping when PM prices were prevented from materially rising amidst the Russian “convoy attack” that could have potentially catalyzed World War III. To wit, not only did another major military confrontation occur in the Ukraine – yet again, “conveniently” just before the Cartel’s principal “key attack time” of 10 AM EST – but the ADP employment report was way below expectations; and oh yeah, the ECB not only “shocked” the world by further extending its negative interest rate policy, but unveiling the $1 trillion QE program we have long predicted. Kind of makes the subject of Tuesday’s article, “Thursday’s ECB meeting could destroy Europe, if Ukraine doesn’t first” look prescient, huh?
To counter all that horrible news, the best the U.S. government could do was publish another deceptive “diffusion index” – in this case, masking the worst “unadjusted” reading of the year with a “seasonal adjustment” that magically made it the strongest! Again, we are talking about “seasonally adjusting” yes and no questions; which strangely, always seem to be adjusted upward. Subsequently, every imaginable “manipulation tactic” was utilized to suppress gold – including attacks at every single key attack time from 2:15 AM EST to 7:00 AM, 8:20 AM, 10:00 AM, 12:00 PM – and per what we wrote in last week’s “Sixth Sigma PM Manipulation Proof,” 4:00 PM. All they ultimately accomplished was a delay of the inevitable; and in the case of silver, pushed it to nearly its most oversold condition in years.
In a nutshell, the ECB signed the Euro’s death warrant, in not only reducing its institutional deposit rate from -0.1% to -0.2%, but its main refinancing rate from 0.15% to 0.05% – prompting “Goldman Mario” to infamously declare “we are at the lower bound.” Simultaneously, both the Bank of England and Bank of Japan maintained their own ZIRP policies, prompting the Bank of Denmark to extend its NIRP policy in “emergency fashion” – as the “final currency war” aggressively expands. Moreover, despite vehement opposition from the German Constitutional Court, Draghi announced the commencement of what will ultimately be a $1 trillion QE program in October focused principally on mortgage-backed and other asset-backed bonds held by insolvent European banks. In other words, irrespective of the covert QE activities ongoing for the past two years – such as the Fed’s “swap agreement” with European banks and QE monetization well above published levels, such as via the mysterious “Belgian Treasury buyer” – the mantle of overt QE leader, outside the Bank of Japan, of course, was handed to the ECB.
Like Helicopter Ben, Whirlybird Janet and Shinzo Abe before him, Draghi’s comments represented nothing more than psychobabble claptrap about “deflation” – despite the European cost of living at or near its all-time high. As you can see below, the Euro has been weakening since hints of said QE commenced this Spring; and after yesterday’s plunge, the Euro appears on a crash course with the July 2012 lows – coincident with Spain’s €100 billion bank bailout, which catalyzed Draghi’s rhetorical comment about doing “whatever it takes” to save the Euro. Quite ironic; as per what we wrote in Wednesday’s “European Financial Collapse In Simple Math,” Spain – and Europe in general – is in far worse condition today. And thus, when the Euro inevitably collapses to unfathomable lows in the coming months – in the foreign exchange markets, but more importantly, against real items of value like imported food – the ECB’s “deflation fallacies” will be exposed for the entire world to see.
Most ominously of all, was the aforementioned expansion of the “final currency war” – as Bank of Japan Governor Haruhiko Kuroda’s aggressively dovish comments regarding the intended destruction of the Yen (which incidentally, hit a six-year low yesterday)…
The U.S. economy is recovering steadily, and the country’s monetary policy is about to complete tapering (its asset purchases). On the other hand, ultra-loose monetary policies are set to continue in Europe and Japan. Judging from fundamentals, it won’t be that surprising if the dollar strengthens. I don’t think dollar rises against the yen would be particularly negative for Japan’s economy.
–Reuters.com, September 4, 2014
…nearly exactly mirrored Draghi’s at Jackson Hole…
We have already seen exchange rate movements that should support both aggregate demand and inflation, which we expect to be sustained by the diverging expected paths of policy in the US and the euro area.
–European Central Banks, August 22, 2014
Considering that the U.S. reported yesterday an all-time high manufacturing trade deficit; including, ominously, an all-time high deficit with China, you can bet your bottom dollar (pun intended) that the Fed is already preparing a new set of dollar-debasing measures to be released when the slightest weakness in its market manipulation scheme is exposed.
Subsequently, European stocks and bonds surged; as what’s better for a collapsing economy than more money printing – particularly when it’s miserably failed for six years running? Ironically, as the Euro collapsed and the Fed goosed Treasury yields higher – trying to prove the U.S. economy can somehow expand whilst the entire world contracts – European bond yields plunged, with many nations’ largely insolvent bonds moving into “NIRP territory.” In other words, expanding the greatest financial bubble in history, as exemplified by the self-explanatory charts below (left chart is the S&P 500).
And for the coup de grace of this ugly episode of Central bank desperation; as I write, the BLS just published the August NFP report. And WOW, was it horrible – printing at just +142,000 jobs (including 102,000 phantom birth/death jobs) versus the +230,000 estimate! The Cartel is attempting to cap gold’s initial surge, and the Fed has initially stopped the 10-year Treasury yields’ initial plunge at – what do you know – exactly 2.4%. This report is so unbelievably horrible – and so validating of the “significant underutilization of labor resources,” Janet Yellen so desperately feared, even I am in shock. But then again, as all U.S. economic data is cooked, there clearly was a motive behind such ugliness – such as, per above, enabling the Fed an excuse to accelerate dollar debasement.
Irrespective, the sum total of yesterday’s cataclysmic actions – and comments – by “leading” central banks like the ECB, BOJ and BOE; combined with this morning’s hideous NFP report, highlight just how dire the global economic situation has become. In our view, the “stability” created by six years of unprecedented global money printing, market manipulation and propaganda will shortly unravel – potentially, yielding the “big one” that inevitably implodes history’s largest fiat Ponzi scheme. And for those smart enough to use the potentially tiny window of time when precious metals are still available – let alone, at such depressed prices – we hope you’ll call Miles Franklin at 800-822-8080 and “give us a chance” to earn your business!