Gold’s “battle for $1,250” continues – just like the “battle for $1,200” before it; at which, the Cartel held the line on the $1,200/oz “line in the sand” for two weeks in mid-February, before it finally turned from (heavily naked shorted) resistance, to (heavily physical buying supported) support. To that end, it is now two weeks since $1,250 was first breached to the upside; after which, it has been “tested” nearly every day since – including the very days of the ECB’s “unexpected” QE explosion and the Fed’s equally “unexpected” dovishness. This morning, they’re at it again, in yet another last gasp attempt to avert “Economic Mother Nature’s” rapidly advancing, stronger than ever armies. To wit, on a night in which not a single market materially budged – from stocks, to bonds, base metals, the dollar, or even…silver – the Cartel executed their 136th “Sunday Night Sentiment” raid of the last 143 weekends; 614th “2:15 AM” attack of the past 709 trading days; and zillionth raid at the New York COMEX open.
Oh, there was news alright – and I assure you, it didn’t cause anyone to dump physical gold positions at the opens of the Asian, London, and New York paper markets. Which was, that Chinese car sales validated February’s unfathomable 25% plunge in exports, in plunging by…drum roll please…44% in the year’s first two months, relative to the first two months of 2015! But don’t worry, all’s well, because General Motors itself – i.e., the pathetically mismanaged government agency formerly known as one of America’s greatest corporations – predicts 3%-5% annual growth in its Chinese auto sales through the year 2020. Yes, in a nation amidst a rapidly expanding recession; in which the head of its Central bank, this weekend, warned that China’s exploding corporate debt burden poses a “macroeconomic risk”; as the automobile inventory-to-sales ratio hits an all-time high; non-performing auto loans explode above the 2008 crisis peak; and Chinese auto sales are freefalling, GM thinks it will grow by 3%-5%. Sure, and would you look at that herd of pigs flying past my window.
As the sixth week of history’s “largest ever short squeeze” commences – which miraculously, has transformed the “Dow Jones Propaganda Average’s” worst ever annual start to positive territory, despite not a shred of positive news, the PPT-fabricated “pillars” holding it aloft are collapsing further with each passing day. In fact, market breadth has become so weak, the average hedge fund remains deep in the red – as yet again, a handful of (PPT-supported) big cap stocks, both here and overseas, are “leading” the most ill-begotten, ill-fated “rally” of all time. However, as the veneer of the “NIRP Hail Mary” fades, “Economic Mother Nature” will yet again attack the lies supporting the global House of Cards – in the process, elevating already record Precious Metals demand to the financial stratosphere. And when she does, the world will realize that all those places where economic “smoke” was recently billowing, fires were in fact – and still are – raging uncontrolled.
Which leads me to today’s very important topic, of something I have discussed continually, but never coalesced into a single article. Which is, that if there’s one thing I’ve learned in 14 years in the Precious Metal sector – and 27 in financial markets – is that the markets’ “first move” is usually the right one. Such as, the near viral “rumors” that last month’s G-20 meeting likely yielded a covert “Shanghai Accord” to reduce the dollar’s exchange value – and hopefully, cause collapsing stocks, commodities, and emerging market bonds to rebound. Which, most likely, has far more truth to it than speculation.
Do I know this for a fact? Of course not, but the “coincidence” is way too perfect for my liking. Not that a modestly stronger dollar will have any material impact on imploding economic trends, mind you; but in a PPT-dominated world, where tremendous amounts of short-side leverage has been applied to the recent market decline; such efforts, “official” or otherwise, have unquestionably contributed to said “biggest short squeeze ever.”
To that end, consider the bigger picture of the type of terrifying issues that took center stage in the summer 2015 and winter 2016 market plunges. The former, characterized by plummeting emerging market currencies, dramatic devaluation announcements, and freefalling commodity prices, has seen a modest rebound of these markets at best; whilst the latter, until this month’s fortuitous “short squeeze,” was characterized by desperate Central bank actions – in most cases, miserably failing to achieve their ends. Not to mention, a continued plunge in global economic activity, to its lowest level in decades – as exemplified by today’s brutal Chinese auto sales numbers; and, as I edit, an “unexpected” plunge in the Chicago Fed National Activity Index to recessionary territory.
Back in 2002, when I watched first-hand – as an employee of Salomon Smith Barney – the collapses of Enron and Worldcom, I’ll never forget the “death throes” of those two stocks as “the powers that be” desperately tried to save them with market manipulation and propaganda. And ditto in 2008, from Bear Stearns; to Lehman; AIG; Fannie Mae; and countless others – as in each case, those stocks initial plunges presaged the reality of bankruptcy, no matter how much effort was put in to avert reality. And nothing scared me more than the Congressional hearings of late 2008, in which the confiscation of government-sponsored retirement plans – particularly, IRAs – was actively debated. So much so, I personally cashed out my IRAs at age 39, happily paying the 10% penalty to liberate my capital from the government’s reach. And trust me, if the Fed, the PPT, and the entirety of the government’s manipulative purview hadn’t successfully revived markets, they most certainly would have done so. Which is exactly what they are sure to do when the next crisis hits; perhaps, via the MyRA government IRA program created a year ago.
Today, the signs of “what’s to come” could not be more blaring – and those that ignore such signs, do so at their own peril. For example, the horrifying plunge of Deutsche Bank stock – which fortunately for its tens of millions of constituents, was temporarily stemmed by a comically transparent, government-aided effort to instill “confidence” with a fraudulent debt buyback announcement. Or how about Central banks’ concerted effort to push sovereign debt yields into negative territory, from Europe; to Japan; to shortly, a country near you? Or the “coincident” introduction of the term “cashless society” at the time of January’s Davos meeting, just as Whirlybird Janet told Congress the Fed itself is considering negative rates. Not to mention, the fact that institutional Precious Metal demand has been so strong, the IAU gold ETF saw its holdings increase by 25% of the level it took ten years to accumulate – in just the first two months of 2016. Better yet, that Blackrock, the firm that runs the IAU, was so thoroughly “surprised” by this demand surge, it ran out of authorized shares –and itself, started building a massive position in the rival GLD fund!
Time and again, the age-old saw that your “first instinct is usually correct” has borne itself out – in nearly all aspects of existence. And no less so in the political and economic realms – as well as financial markets, no matter how much they are manipulated to hide such issues. To that end, I would advise paying heed to the aforementioned signals – particularly when the so-called “eyes of the hurricane” these storms appear to have entered, have absolutely NOTHING to do with actually fundamentals. And nowhere more so than Precious Metals – where Cartel attempts to cap surging prices, amidst an environment of record demand, vanishing inventories, and declining supply, have manipulative disaster written all over them.