Friday was a rare “quadruple witching” day – in which stock options, stock index options, stock index futures, and individual stock futures all expired simultaneously. Consequently, trading volumes were elevated – and as usual, market movements sharp. Given the omnipresent PPT, which maniacally prevents equities from gaining material downside momentum, it was nearly guaranteed it would be a significant “up day”; yielding dramatic “short-covering” in stocks, bonds, oil, copper, the Euro – and even gold and silver. However, with the obvious exception of Precious Metals – which according to Andrew Maguire, are now “permanently backwardated” – Friday’s surges were completely unrelated to fundamentals.
Obviously, the various “manipulation operatives” won’t stop trying to move markets. However, they clearly have lost control of most commodities and currencies – and for the most part, sovereign bond yields (which continue to plunge, providing the “most damning proof yet of QE failure“). In other words, all that stands between 100% global recognition of the expanding, irreversible economic collapse are the manipulation of “last to go” markets like the “Dow Jones Propaganda Average” and paper gold and silver. Heck, even Ed Yardeni, a career Wall Street “strategist” – with as much incentive to pretend markets are freely traded as anyone – admitted Friday “This is not investing. It’s all about central bankers, as these markets are all rigged. I just say that factually…I love these central bankers, as they’ve been very good to the stock market.”

Now that such “noise” has been addressed, let’s discuss what’s going on in the real, actual world; which, whether you believe markets are freely traded or not, is clearly “whistling past the graveyard.” Frankly, it’s utterly incomprehensible that anyone of sound mind could believe financial “markets” could be “trading” where they are given the terrifying, rapidly expanding political, economic, and monetary developments dominating the headlines, both here and overseas.
For instance, “that other Achilles Heel” of plunging crude oil prices, which is relentlessly destroying jobs, capital expenditures, earnings, balance sheets, and sovereign budgets – not to mention, expanding geopolitical tensions and collapsing currencies. Here in North America, rig counts have plummeted at their most rapid rate in 30 years; yet, production remains at all-time highs, and rig counts (and jobs) have far more to decline before reaching long-term, pre-shale bubble averages. To that end, when one considers that close to 20% of all new U.S. office building construction is in Houston, it becomes painfully obvious just how much damage the U.S. economy – at best, flat-lining as we speak – is about to endure; let alone, when North Dakotan tax incentives (to increase production) kick in this June, just as U.S. crude oil storage is projected to reach full capacity. Worse yet, the Middle East rig count is surging to new highs – as the aforementioned budgetary deficits are desperately being countered with increased oil production, at increasingly lower prices. Just Thursday, the Kuwaiti oil minister confirmed what I have been practically shouting for months – i.e, OPEC production cuts are not an option – in claiming “we don’t have any other choice than maintaining production, as we don’t want to lose market share.”
Consistent with the tripartite horrors addressed in last week’s “oil, Greece, and the Fed,” the “Greek Tragedy” is going downhill more rapidly than an ice cube on a Vermont ski slope. In true MSM form, Friday’s meetings between Alexis Tsipras and the most important politicians in Europe – including Angela Merkel of Germany and Francois Hollande of France – were hailed as “successful”; when in fact, not a shred of “progress” was made. In fact, all that was actually “agreed” upon was that Greece would submit more details of the comically vague – and completely untenable – “reforms” the Euro Group wrote for them to stave off the inevitable “Grexit” four weeks ago. Worse yet, both sides continued to viciously snipe at each other – including Tsipras saying no new reform proposals would incorporate “austerity.” However, as Greece needed €2 billion by Friday night to avoid default, the Euro Group published a pathetic press release claiming “progress” was made, as an excuse to give Greece the €2 billion – with printed money that Greece simply used to pay them back. I mean, how much better can Ponzi scheme be defined?
To that end, the Fed’s embarrassingly childish handling of the removal of “patient” from Wednesday’s policy statement was actually “up-staged” by the infantile transparency of Friday’s Greek “agreements.” And again, what’s most horrifying about these issues is that the fate of billions of people – financially and otherwise – rests in the hands of these morons. Like Angela Merkel, for example, who the MSM spins as “conservative,” when her fiscal policies have been as suicidally dangerous as the ECB’s monetary policy – which, what do you know, is largely guided by Germans. She was dead right when three months ago – with the Euro/dollar exchange rate at 1.23 versus 1.08 today – she said “if the Euro falls, Europe falls. However, what she clearly didn’t – and never will – understand is that Europe would have done just fine without the Frankenstein experiment the Euro has been; when, at the global economy’s peak in the late 1990s, a handful of misguided, financially motivated politicians decided to merge the finances of nearly two dozen diametrically opposed cultures. And worse yet, said “union” was completed despite nearly all nations out of compliance with the strict financial requirements imposed by the Maastricht Treaty (including Germany) – just months before the U.S. “tech wreck” commenced a 15-year plunge into global economic hell.
Just before Friday’s pathetically choreographed meeting, Merkel reiterated her fears of Euro collapse – and expectation that “no quick solution” was likely. And yet, just as on the February 20th “four month extension” deadline date, “progress” was magically reported less than 24 hours later, even though the average ten year old can probably see through this ruse. Frankly, such patronization of the masses isn’t a heck of a lot different than the U.S. BLS publishing a “5.5% unemployment rate,” and expecting the world to believe it – despite their own data being so blatantly flawed, the same ten year old could see through it. Oh well, I guess we’ll just have to wait and see when said “four month extension” expires this summer – or perhaps, a lot sooner; when inevitably, Greece runs out of money; and either its politicians, citizens, or both run out of “patience.” To which we say to anyone holding their wealth in Euros, “good luck with that.” Which, sadly, will be remembered as a so-called “gold standard” compared to the currency conflagration waiting next in line, when numerous European nations to their former, potentially hyper-inflating currencies.
And then there’s the Federal Reserve, which surely will be consumed by the collapsing global economy before Janet Yellen is afforded the chance to retire into obscurity like Helicopter Ben Bernanke; or, like “Maestro” Greenspan, to viciously attack her successors in a vain, pathetic attempt to distance herself from the carnage she fomented.
According to CNBC’s Friday morning headline – again, I kid you not – the “Fed removed ‘patient,’ but is in no hurry to raise rates.” Which, frankly, is the logical equivalent of saying one is no longer hungry, but desperate for food. Not to mention, as the current FOMC voting committee is a veritable “all-star team” of monetary doves – led by Whirlybird Janet, of course, but supplemented by hyperinflation hopefuls like Charles Evans of the Chicago Fed, who on Friday said “the central bank should adopt a looser policy when there is uncertainty – and in the current context, a delayed liftoff is optimal.”
Yes, the “current context” of data point after data point – including the Fed’s own economic model, currently signaling ZERO first quarter GDP growth – depicting an economic environment on a par with the 2008-09 mega-crisis; such as, to quote a few of Friday’s headlines, the “biggest global earnings plunge since Lehman”; “Philly Fed Index signals worse margin compression since Lehman”; “Zillow says underwater homeowners here to stay”; and “Global Cooling Alert: Iron Ore keeps plunging, to $57/Ton, while supply surges and demand withers.” Throw in the economic decimation – to both the U.S. and China – of the surging U.S. dollar, and it doesn’t take a rocket scientist to realize “QE to Infinity” is not only guaranteed, but likely, about to re-take center stage in the so-called “recovering” States of America – as the so-called “tapering” Federal Reserve is forced to unveil QE4. And speaking of rocket science, if I hear the propaganda gem “lift-off” to discuss the mythical possibility of a quarter-point rate hike one more time, my head is going to explode.
Meanwhile, as such political, economic, and monetary madness continues, global Precious Metals demand continues to rise, and supply to fall; or better put, plunge. That said, here in the States, a combination of unprecedented price suppression and relentless propaganda has slowed gold and silver demand to a crawl, a trend that has been significantly exacerbated by the global flight to the dollar – NOT, by the way, due to its superiority as a currency, but the superior liquidity it affords as history’s most terrifying, world-destroying economic and monetary meltdown unfolds. Which, of course, includes dollar-destroying policies like ZIRP to infinity – and inevitably, QE4.
In time, TPTB will lose control of “last to go” markets like paper gold and silver. Perhaps, a very short time, given the aforementioned global demand and supply trends; let alone, as the London gold Fix is usurped by Eastern entities. And when they do, people will be kicking themselves for not having protected themselves with the only money the world has ever known – which they could have bought today, at prices well below the industry’s cost of production; let alone, its long-term sustainability.
For those that see the writing on the wall now – i.e, while it’s not too late, as product is still available at historically inexpensive prices – we urge you to call Miles Franklin at 800-822-8080, and give us a chance to earn your business. Remember, the Miles Franklin Blog, which in my (admittedly biased) view is the best economic blog in the industry, is not only published at great expense, free of charge to the public, but puts out as much quantity as it does quality. And thus, we only ask you to consider this when choosing who to do business with. Well, this, and the fact that we have been in business for 26 years, holding an A+ Better Business Bureau rating, with not a single registered complaint since opening our doors in 1989. Our brokers have more than two decades of industry experience – in most cases, three – and care as much about your financial well-being as blog authors David Schectman and Bill Holter; and of course, myself.
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KISS Formula..
Andy in the end everything you state reminds me of the Keep It Simple Stupid. formula. KISS
If a leader of a Country tells you the country is bankrupt….IT PROBABLY IS….Greece
If your country has a debt load approaching GDP it is probably in trouble.
If any Country banks cannot provide a realistic return on its clients holding cash.. ie:zirp policy then it is likely in TROUBLE
Lets get real here folks.
Trouble is brewing in RIVER CITY.
The FED has milked Americans out of every cent they can and have expanded their reach into Europe.
The fleecing is over.
Now we pay the price for going to sleep and allowing this to happen while we watched the BALLGAME.
Right on the money, Andy & Mike! But I can already hear the voices in the background saying, “The Government will NEVER let these things happen!”
How’s that for an investment philosophy?!
Right now the oil companies are acting like other commodities producers when they say “we don’t have any other choice than maintaining production, as we don’t want to lose market share.” Isn’t this what corn farmers in American always have said for the last 20 years? Isn’t this what gold/silver miners have said for the last 80 years?
Thus very shortly we will either see a “corn” solution – government subsidization; a “precious metals” solution – large companies eating smaller ones that go out of business; or outright nationalization, like Venezuela, Cuba, etc.
Yep, except now the oil companies and sovereign nations producing it are more broke than ever, with better oilfield extraction technology than ever before. Thus, everyone will produce till they drop – and thus, absent hyperinflation (losses in real terms), nominal prices will likely be under pressure for years, IMO.
Merkel is not stupid or naive.
We know Greece is bankrupt.
Its just that nobody in Europe wants to dip that Domino stone, which brings the US and their $$$ and therefor the world monetary system to the end and chaos.
Thats the reason Greece will get money and will not default.
Not have to carry such a burden makes it easy to judge.
In the end you are right, PM might be the last place to go ….. until they come for it.
Frank,
It’s not like “the powers that be” have the power to hold back “the unstoppable tsunami of reality” forever. It’s never been done, and never has said tsunami been so powerful. In time – perhaps a lot sooner than most can imagine – they will be humbled in spectacular fashion. And as for them “coming for” your gold, that’s why we prepare beforehand. and “coming for” it is not going to be so easy, that you can be sure of.
a
Do you think Yellen knows the light at the end of the tunnel is a train? I mean, all of these “high-profile” economists and prime ministers (most likely their minions) must have some kind-of clue what is going on.
Andy – as you mentioned the slew of horrible stores from what is going on in North Dakota, OPEC not touching production, Iran coming online, Middle East rig counts at all time highs, homeowners under water, the talks about changing bankruptcy rules so student loans are dis-chargeable, etc. etc. etc. And the stock markets rally. None of these “smart” people see this, or are they just buying their islands off of some country, and preparing to disappear when the tsunami occurs?
If Janet Yellen does know the inevitable, as Greenspan isn’t hiding it anymore, how can she keep a straight face when she talks about the “recovery” and everything….?
On a more humorous note, I was reading an article…maybe it was one of yours Andy, but it was link to Marc Faber being interviewed by this female commentator (probably CNBC because the commentator was young, fairly attractive, but say things like “the Fed is going to keep rates ‘set’ at 0.25%” which makes me cringe – and of course, the guys with the British accents, like they are supposed to be more believable…anyway..)
So the commentator was pressing Faber on where is it better to be, sovereign bonds or stocks if he thinks the economy is going to worsen (Faber was actually saying it was already really bad), and Faber said blue chips to answer her question, since she made him chose. His rationale was that he would lose less over the long-run.
Then the commentator JUMPED ON HIM stating the specific date of their last interview where Faber said he would be in Gold. And she kept hammering him with “Why the change, when you said gold, equities have outperformed gold by % bla bla bla” – obviously a trap.
Faber, who looks just like my graduate derivatives professor who was an actual rocket scientist prior to his PhD at Northwestern, said “yes, you are correct, but the portion of my portfolio allocated to goal I bought in the 1990s.”
If was a phone interview, so when Faber was laughing, you could just imagine him giving her the one finger salute.
This week I watch half of a video ( I had to stop watching) by Mix Blier or blear Mix or
what ever his name is ( a German dude ) who said the USA
has Billions & Billions of Tons of Gold that know one knows about & we are
just waiting for it to really take off, then Blammo!!! the US will
be top dog again in a flash — Anyway that’s what he said..
And his info is very Hush Hush…so keep this to yourself ..
Dude…..Chuck Norris!?!?!?!
Huh?
These Hoffman articles are among the most well thought out and intelligently articulated of all the internet commentators who deal with economics and the PM’s. If all the other people in the PM business were as reasonable and balanced, there might be less skepticism among readers of the other sites who appear to have grown weary of all the unfulfilled predictions. It would seem however, that there is perhaps too much emphasis on how to acquire PM’s for wealth preservation and not enough treatment of the matter of how to dispose of PM’s when they ascend in price in order to acquire other assets such a rental properties, etc. Jim Rickards has warned that the government might place a windfall profits tax on PMs. Others warn of government intent to declare trade in PM’s illegal. Considering that a war against cash is surfacing from nearly all western governments, is it paranoid to worry that they will declare a war on the ultimate cash – gold and silver? Personally, I have refrained from buying until this concern is assuaged. How can we have some confidence that the PM’s will remain tradeable?
Ed,
Thanks, that was one of the best compliments I’ve ever received. And I agree completely, that more FACT is required in commentaries, and less SPECULATION.
Regarding your question about disposal, confiscation, windfall taxes, etc., I wrote an article three years ago to answer all such “what if” questions – a MUST READ titled “Priceless Precious Metals or Worthless Dollars” – which in today’s crazy, spiraling world is more appropriate than ever (/priceless-precious-metals-vs-worthless-dollars).
Basically, it discusses how the government doesn’t makes such draconian decisions in a vacuum, but in REACTION to catastrophe (such as actively discussing IRA confiscation in late 2008). Trust me, if any such laws were created, it would be AFTER gold and silver exploded higher, and fiat currencies lower. At which point, you’ll be happy to have such problems.
a
Hi Andy,
One thing I noticed yesterday that you are probably aware of is one more nail in the USD coffin…Canada opened the first NA renminbi trading hub. See here
http://www.fin.gc.ca/n15/15-026-eng.asp
Ultimately, it is not the “dollar” that will die, but the entire dollar-anchored, global fiat currency system.
a