Having just returned from China, I was amazed at the stark differences in culture between East and West. Not that I hadn’t heard of such – or frankly, known that Easterners mindset was in many ways the polar opposite of what I have witnessed in my four-plus decades. However, as they say, “seeing is believing”; as discussed in “THE IRREFUTABLE PHYSICAL GOLD REALITY – LIVE FROM CHINA!”
Of course, I’m not just speaking of how the Chinese, Indians, and others view the difference between PAPER currency and REAL money; but instead, the long-term nature of the business cycle (as viewed by the East), and the short-term profit motive of the West – consequences (and peons) be darned. In China, an irrepressible work ethic puts America’s to shame; at least, today’s America, in which citizens have developed an unwarranted sense of entitlement following decades of the misleading, debt-generating impact of temporarily holding the world’s “reserve currency.”
Prior to World War II, Americans didn’t have the Fed’s MONEY PRINTING safety net; nor Treasury-draining entitlement programs like Social Security, Medicaid, Disability, and Food Stamps. China has NEVER had such programs; as despite still having a “Communist” economy, the people must still work hard to survive. Competition has never been stronger; and while some things are still provided for – such as gasoline, which is heavily subsidized – others are not. More importantly, the basics that are provided are not enough for the average person to live a high quality life; and thus, the Chinese people work to better themselves – unlike Americans, who – generally speaking – increasingly strive for the mythological “free lunch.” Frankly, the only thing Eastern and Western cultures seem to share is lying, thieving nature of their governments; as exemplified by the Chinese government’s “COMEX-like” announcement this morning that it “can’t ensure industry-specific data can reach accuracy requirements.” In other words, the sole reason recent Chinese PMI reports have consistently been just above the 50-point “expansion level” is because they are pure, unadulterated LIES.
In both hemispheres, the mythological “second-half recovery” is not only a pipe dream, but already D.O.A.; and thus, I expect the MONEY PRINTING spigots to be turned up full blast before the Autumn leaves change colors. Frankly, I didn’t think Friday’s 21% month-on-month decline in U.S. new home sales could be topped – or should I say, “bottomed”; until I saw today’s durable goods report; depicting a whopping 7.3% August plunge. Consequently, summer complacency – and government market control – are likely to go the way of the dodo in the coming weeks; and in their absence, don’t be surprised if Precious Metals not only regain all their first half, Cartel-orchestrated losses – but conversely, end the year as the market’s top sector.
Denizens of the East saw this coming long ago; in fact, utilizing this year’s Western PAPER raids to load up on as much PHYSICAL gold and silver as possible. Conversely, Westerners only bought aggressively directly after said smashes; particularly following the April 12th-15th “ALTERNTIVE CURRENCIES DESTRUCTION,” when the Cartel took gold down $200/oz. in just two trading sessions. Many Miles Franklin clients used the opportunity to add to positions, while a handful of “traders” thought they were brilliantly “playing for the bounce.” This is why April was Miles Franklin’s best month in its 24 years of business – by nearly 50%; although subsequently, U.S. retail demand has cliff dived, partly due to the summer doldrums (as fostered by incessant Cartel PAPER capping), and partly because the aforementioned “bounce” never happened. In the end game, our clients are sitting tight on their PHYSICAL coins – which this month, finally returned to the late April price levels; while said “traders” likely sold out at much lower prices, such as the low $1,200’s for gold, and sub-$20 for silver.
Aside from periods of “direct crisis” – such as the August 2011 debt ceiling fiasco (to be repeated this Fall), our business typically slows down in the summer; again, due to the prevailing Western mindset that gold and silver are simply “investments” – to be speculated on during periods of typically heavy market volume like the Spring and Fall. During the summer, Americans – and truth be told, most Europeans; falsely believe nothing bad can happen – certainly not to their precious dollars, Euros, and Pounds. To them, currencies are still considered “money”; despite the fact said money has not only lost MASSIVE purchasing power over the years, but is now in danger of being “bailed-in” if the insolvent institutions they hold them in cannot be “bailed out.”
However, across the globe in the East, the quest for REAL MONEY knows no bounds. Ask the people of China – who have been buying coins and bars in RECORD amounts; or Japan, where its government is overtly doubling the money supply; or India, where the Rupee is tumbling so fast, its insane government is actually trying to prevent citizens from PROTECTING themselves with the time-honored safety of gold bullion.
Earlier this month, you saw the pictures I published of Chinese gold shops; dozens of which were filled with eager buyers, serviced by expert teams of bullion and jewelry salespeople. Now picture what they’ll look like as the full extent of the worldwide economic CRISIS sweeps the globe in the coming months and years. Frankly, one of the most amazing stats of the summer is the fact that despite slow U.S. Mint sales of gold Eagles, silver Eagle sales have been OFF THE CHARTS; and since I know first-hand that it is not the U.S. retail public buying them, it MUST be foreigners seeking the safety and liquidity of silver Eagles. Frankly, I wouldn’t be surprised if the majority of recent silver Eagle buyers were either Chinese, Japanese, Russian, Middle Eastern, or Indian…
And don’t forget “junk silver”; which even more ominously, has maintained nearly all the premium it gained in the April demand frenzy. Aside from rare, crisis-driven price spikes – as in 1999 and 2008 – junk silver essentially NEVER trades at a premium to spot prices; never, that is, until now. I consider inaptly named “junk” to be the “ultimate fear product” – as the world’s most “barterable” currency; and thus, the fact such premiums are so persistent should speak volumes as to what the masses are starting to fear…
Sadly, the supply picture is far worse in the East than the West; and thus, the mismatch with demand will be even starker. I cannot emphasize how little supply – of both metals – actually exists above ground; and given today’s suppressed prices, how little will actually be mined in the coming years. In my very strong opinion, the “supply crunch to end all supply crunches” is coming in the very near future; and when it does, we’ll realize the desire to PROTECT purchasing power will be no different than that of the rest of the world – but instead, that it’s decidedly UNIVERSAL!