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Now let’s discuss the unprecedented money printing, market manipulation and propaganda that is clearly marking the terminal phase of history’s most destructive monetary policy; i.e., the global fiat currency regime that has destroyed – or at the least, impaired – billions of lives, with the worst yet to come. This morning, stock futures are higher with the MSM claiming it’s due to investors “buying the news” of yesterday’s Crimean referendum, after having “sold the rumor” last week. Honestly, even I’m blown away by such blatant propaganda; as not only was a Crimean secession vote a fait accompli (in other words, far more than “rumor”), but the ramifications – if anything – could be significantly direr than even the most pessimistic could imagine.
That, and oh yeah, the blatantly obvious PPT algorithms that for months have tied Western equity movements to, of all things, the dollar/yen exchange rate. We have for some time noted how utterly ridiculous it has become that the minute-to-minute correlation of Western stock markets and the dollar/yen cross have become essentially 100%; and frankly, why this particular “signal” was created we have no idea. However, suffice to say that in the current snapshot in time, the 102 level on the dollar/yen cross has become the de facto “San Andreas Fault” of Western stock markets; which inevitably will, crack like an earthquake when its tenuous, manipulative grip gives way. Frankly, we have no material view which direction the stock market will ultimately go in nominal terms; but in real terms, have no doubt that even the PPT’s grandest schemes will not be able to save it.
This weekend, the stage was set for further, potentially calamitous gyrations in the global political, economic and social landscape. I’m guessing little will occur this week –unless, of course, one of the multitude of potential “black swans” emerges – as Congress is on vacation, while Russia and the Ukraine agreed to a “truce” until Friday. Moreover, with “Whirlybird Janet’s” first FOMC policy statement on Wednesday, you can bet the PPT will be out in full force trying to make it appear she knows what she’s doing.
However, regarding the former, the U.S., the EU, and United Nations declared the Crimean secession referendum – which passed with a 95% majority – to be ‘illegitimate’; so clearly, John Kerry’s threat that “there will be consequences” will likely yield a confrontation with the Russians at some point soon – perhaps, by month’s end. As for the latter, the Fed’s unmitigated failure to improve the U.S. economy – while conversely, the “1%” it supports have been treated to massive, artificial financial market gains – can no longer be hidden. And thus, with foreigners having sold a whopping $104 billion of Treasuries last week alone, it won’t be long before everyone realizes that not only is “tapering” not feasible, but an acceleration of Treasury monetization must eventually be announced.
And no, the Crimean referendum and foreign Treasury sales weren’t even the weekend’s most momentous, dollar-negative events. That honor, of course, went to the acceleration downward of the Chinese death spiral – first discussed in last month’s “Chinese financial torture,” followed by last week’s “Most Terrifying Article I’ve Ever Read” and “Doctor Death.” Apparently, incremental “shadow banking” credit has plunged to ZERO; perhaps, permanently ending the world’s most maniacal, suicidal credit expansion scheme. It cannot be exaggerated just how catastrophic a further decline in Chinese economic activity will be – globally; and seeing yet another “shadow banking” default this weekend, it’s starting to look like the Chinese government may allow trillions of such loans to do so in its wake, further crushing industrial activity and causing a painful economic contraction that will make the aforementioned “San Andreas” tremors feel like mere quivers.
Putting an exclamation point on this terrifying situation is that fact that, this weekend, the PBOC expanded the daily trading range of the dollar/Yuan exchange rate from 1%-2%; clearly, signaling a distinct policy shift toward weakening the Yuan for the foreseeable future – utilizing the “full faith and credit” of its printing presses to accomplish the task. Consequently, the Yuan has weakened from 6.04/dollar last month to 6.18 this morning, putting it squarely in the 6.15-6.20 range where significant Western banking derivative losses should start kicking in. Remember, the derivatives horror that nearly destroyed the world five years ago has only grown larger since; and thus, at some point, no amount of accounting gimmickry will be able to hide the fact that the entire Western banking system is hopeless insolvent – and becoming increasingly so with each passing day.
As “Whirlybird Janet” prepares her inaugural FOMC statement Wednesday afternoon, she is faced with a dilemma of historic proportions. After five years of unprecedented money printing, market manipulation and propaganda – abetted by her peers at all the world’s central banks – the global economy is easily in its worst shape of our lifetimes. To wit, even “QEing” 10-year Treasury rates down from the 3.0% “line in the sand” to the current 2.67% hasn’t prevented the housing market from further plunging into the abyss; as indicated by today’s NAHB Housing Index – which after last month’s historic plunge from 56 to 46, defied expectations of a strong rebound by barely budging higher, to just 47.
With each passing day, further evidence emerges that “the weather” was decidedly not the cause of the recent collapse in global economic data – not to mention, exchange rates; but instead, it was the natural forces of supply and demand – which just happen to coincide with the commencement of Fed “tapering” three months ago. As the great Michael Snyder noted this weekend, the U.S. consumer is “tapped out”; and thus, without further, immediate increases in Federal Reserve “liquidity” – i.e., money printing – both economic data and financial markets alike, worldwide – will likely implode. Let alone, if the Ukraine – or another such black swan event – “joins the party.”
Five weeks ago, Jim Rickards said another $10 billion/month “taper” was “baked in the cake” for Wednesday’s FOMC meeting – based on the assumption that Yellen will not want to destroy the Fed’s remaining credibility in her first policy statement. Not that it matters either way in the long-term – and FYI, Rickards believes such a “taper” would be the Fed’s last; but a lot has occurred in the past five weeks to put such an outcome in doubt. With global financial markets in a state of near chaos, worldwide economic data rapidly declining and the specter of the Ukrainian crisis front and center, “Yellen’s Dilemma” could not be more daunting – especially given the aforementioned news that foreigners sold an unprecedented $104 billion of Treasuries last week alone.
With economic data simply not co-operating with the Fed’s desire to maintain a strong public “tapering stance,” it will be up to the PPT to boost stock markets heading into Wednesday afternoon’s policy decision to give the false impression that all’s well; which frankly, may not be enough to prevent a tapering “pause” irrespective – or at the least, an initial hint of such. Either way, I’d “bet the ranch” that regardless of whether the Fed “tapers” further or “pauses,” the FOMC’s commentary will be decidedly more dovish than what “Helicopter Ben’s” Fed purported six weeks ago. Look for more comments about “data dependency,” as well as “uncertainty about the weather” and the Fed being “ready, willing, and able” to utilize “all available tools” to improve the economy – while at the same time – LOL – “maintaining low inflation.” In the end game, it matters not what this band of banker-owned say – as the only thing “baked in the cake” is the inflation created by four-plus decades of unfettered money printing. The fiat Ponzi scheme must end in hyperinflation; and thus, whether the Fed pushes it over the edge now, or at some later date, is the only remaining question.
Clearly, gold and silver are starting to sense this; as despite historic, epic suppression efforts, they continue to rise each week – potentially, putting the so-called “golden cross” into play as early as next week. When this extremely bullish technical event inevitably occurs – i.e., when the 50 DMA crosses above the 200 DMA – thousands of traders worldwide will “jump on the PM bandwagon,” which will only put more pressure on one of the tightest PHYSICAL market situations of our lifetimes.
In the meantime – particularly given the escalating Ukrainian situation and next week’s inaugural Yellen policy statement – the Cartel has been so maniacal in its efforts to calm surging PM demand, even I am floored. As you can see below, on both Thursday and Friday, massive “Cartel Herald” algorithms were utilized to prevent runaway gold (and silver) gains – in the latter case, at EXACTLY the 10:00 AM EST close of Friday’s PHYSICAL market; and, of course, the 12:00 PM EST “cap of last resort.”
Better yet, the 29th “Sunday night sentiment” in the past 30 weeks was utilized to prevent gold from breaching $1,400 last night – followed by the 188th “2:15 AM” attack of the past 210 trading days, when gold attempted to re-assert itself in Asian trading hours. It was then blasted the second the New York paper “pre-market” opened at 7:00 AM EST – for absolutely zero reason, whilst no other market budged…
…and as I write at 11:30 AM EST, no better examples of the Cartel’s DLITG, or “Don’t Let it Turn Green” algorithms could be more obvious, for both gold and silver; in gold’s case, what a shock, at the round number of $1,380/oz. In other words, every imaginable manipulation is being utilized to prevent the inevitable breakout that two-plus years of unprecedented suppression has all but guaranteed. Will Jim Sinclair’s – and “Admiral Sprott’s” – predictions of $2,000 gold and dramatically higher silver in 2014 play out? We don’t know; but if they don’t, we suspect they will shortly thereafter – leading up to an historic, cataclysmic “shortage event” when the supply of both metals inexorably dries up perhaps, permanently.
Again, we cannot underestimate how utterly meaningless the Fed’s policy statements have become – particularly in light of the fact that it lies about essentially everything it says. Not to mention, that within the context of dramatically increasing PHYSICAL demand; declining supply, historically bullish fundamentals and a virally spreading understanding that prices are artificially suppressed, the inevitability of the Cartel’s demise has never been more imminent. And when it does eventually collapse – like its predecessor, the London Gold Pool; we assure you, the ensuing political and economic environment will make 2008 – and 1929 – look like “walks in the park.” This is why you must protect your assets before this day arrives – as when it does, it will be too late to do so.