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Tuesday November 25th 2014

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Decision of a Lifetime

It’s my last article before Sunday’s “decision of a lifetime” – in which the Swiss people not only have the ability to save their finances, reputation and currency but deliver hope to the billions suffering from Central bank monetary atrocity.  Sadly, the vast majority don’t understand how divergent the potential paths of humanity that hinge on this vote could be; kind of like in Back to the Future, when Marty McFly’s future is one of misery when he chooses to drag race – and bliss when he doesn’t.  However, we assure you the “99%” will take notice of the people taking a stand against TPTB – as they just did in Catalonia and nearly so in Scotland.

We’re certainly not prognosticating “Swiss Bliss” in the event of a yes vote – or, for that matter, Swiss Apocalypse otherwise.  After all, Switzerland is still pound for pound, the world’s most powerful financial nation.  However, what made it so was the world’s most conservative monetary system – i.e., backed by gold; as well as prudent financial management, a culture of privacy protection, and most importantly political independence and military neutrality.  These past 15 years, all of these benefits save military neutrality have been either lost or materially eroded.  However, unlike the rest of the world, Switzerland has not yet passed the “point of no return.”

Oh, they’re right on the edge as we speak – but fortunately, a “yes” vote could deliver Swiss economic salvation.  In fact, we’d venture to guess a yes vote would render 21st century Switzerland far more rich and powerful than they’ve ever been – and not just because they’d own more gold, assuming the tonnage they’d need is even available for sale.  More importantly, the Franc would become the world’s strongest currency and inflation the world’s lowest.  Capital would flock to Switzerland like never before – including, I might add, from dollar-denominated assets.  In fact, a yes vote could cause the Franc to become a de facto global “reserve currency” – until inevitably it is supplanted by the Yuan when the global fiat regime collapses, replaced by one backed by real money, either implicitly or explicitly.

As we start Switzerland’s potentially last week with a fiat currency – in which the weekend’s financial news was dominated by expectations of additional Chinese rate cuts, European “deflation” fears, the potentially catastrophic ramifications if OPEC refuses to cut production Thursday, ongoing nervousness about U.S. holiday spending (see this morning’s punk Chicago Fed National Activity Index and PMI Service readings); and oh yeah, the most negative gold forward rate in 15 years, I can’t help but recall the personal “decision of a lifetime” I unwittingly faced in 2000.

As the Bush/Gore vote approached, I was at the peak of my Wall Street career as a sell-side equity analyst at one of the most prestigious firms, Salomon Smith Barney; in one of the most successful sectors – oilfield services, equipment and drilling.  Oil prices had just recovered from their own “perfect storm” in late 1998 – when they briefly fall below $10/bbl.; and thus, I was just regaining my wits, after a year of watching my sector struggle mightily.  My career path appeared bright, and the global economy and stock markets were racing along in fifth gear.  However, every time the Presidential polls showed Al Gore gaining ground, oilfield service stocks would decline.  To wit, fears that Gore’s environmentalist leanings would hamper the oilfield service industry were heightened by political rhetoric, whilst good ol’ boy George Bush, from a long line of Texas oilmen, was perceived as the oilfield service messiah.  After all, it was rumored he’d allow the Arctic National Wildlife Preserve (ANWR) to be drilled and every imaginable drilling regulation lifted.  At the time, I didn’t know George W. Bush from a hole in the wall – other than that his father was another famous politician and fellow Texas oilman.  Conversely, after eight years as Vice President, I was well aware of Al Gore’s shortcomings; not to mention, those of his running mate, Joe Lieberman, who I had an extremely low opinion of.  And thus, in November 2000, I voted for George W. Bush and his running mate, Dick Cheney – who, incidentally, I knew well (albeit, not personally) from his role as Chairman of Halliburton, one of the companies I diligently “covered” for a decade.

As it turns out, George Bush was no better for the oil industry than Bill Clinton; or, for that matter, any prior President – “Texas oilman” or otherwise.  As it turns out, oil prices plunged as the “tech wreck” expanded; and following 9/11, a slow motion recovery didn’t enable the OSX to reach its 2000 Election Day level until Election Day 2004.  By then, the oilfield service industry had undergone a dramatic consolidation process that ultimately cost my job; as by 2005, the once powerful Salomon Energy Banking juggernaut had been dramatically weakened.

Oilfield Service Index

Not that I could have known how world events would transpire; or, for that matter, if a Gore/Lieberman White House would have acted any differently – financially, legislatively or militarily.  However, it’s clear they couldn’t have acted worse – as unquestionably, America’s finances and global reputation were more damaged by Bush/Cheney than any other “reign of terror” in its history.  Until Obama/Biden, of course; but then again, I find it difficult to discern even a modicum of material difference in their policies, certainly not the volume or scope of their lies.  Moreover, in Obama’s “defense,” the further the dollar Ponzi scheme expands the more money printing, market manipulation and propaganda each succeeding Administration must engage in if it wishes to “kick the can” four more years.

To that end, even the most determined Wall Street or Washington propagandist would have difficulty disputing that market manipulation has gone mainstream – regarding not just precious metals but all financial markets.  And if the myriad admissions, convictions, and investigations of impropriety wasn’t enough to convince you, perhaps this poignant article will – by a veteran equity trader claiming to be “100% sure Central banks are buying stock futures,” who aptly asks…

Why would the Fed prop up our stock market?  To that end, in utilizing the ‘Plunge Protection’ mandate, why not just bypass the ‘plunge’ altogether?  Can’t the definition of Plunge Protection be just that?  Protection against a plunge, instead of during a plunge?  Doesn’t propping the market equate to “Plunge Protection,” since propping alleviates plunge and “protects” us?

-Zero Hedge, November 22, 2014

Back to the issue at hand, the inspiration of today’s piece was this article describing the current “pro” and “con” issues of the Swiss referendum – which eerily parallels my own short-sighted thought process in Bush/Gore 2000.  To wit, the author surmises…

A win for the initiative would most probably imply a breakdown of the Euro/CHF floor. 

According to the polls, low income groups are in favor. Effectively their purchasing power would increase when the Franc appreciates. 

High income earners and stock owners are rather against it – If the CHF improves Swiss stocks could collapse, and this explains their voting intentions.

-George Dorgan, November 2, 2014

In other words, the “1%” that have benefitted from Central bank money printing are dead set against an event that “on paper” will cause their investments to shrink – just as the “common knowledge” that George W. Bush would be a boon for oilfield service stocks.  Worse yet, 2014 Switzerland’s “common knowledge” has far less basis than my flawed Bush 2000 thinking – as unlike oil prices, which were essentially immune to Bush and Gore’s foolishness, the Swiss economy – and nation itself – will be badly damaged by a “no” vote, and dramatically improved by a “yes.”  And yes, I know Switzerland’s “1%” is larger than the global average.  However, the fact remains that holders of fiat currency denominated wealth want the status quo to continue, no matter how destructive it may be; whilst those in favor of political, economic and price stability vehemently support the initiative – although perhaps a bit less vehemently, as the tangible benefits of a “yes” vote are more difficult to envision than the perceived losses if the SNB can no longer print money at will.

At the end of the day, we have not a clue which way the vote will swing.  However, as noted in yesterday’s “ECB (and many others) vs. the SNB,” we are quite sure the true polls will enter Sunday’s vote in essentially a dead heat.  And one more thing to ponder, to empower gold bulls and alleviate their Thanksgiving weekend fears.  Which is that the gold price’s fate decidedly does NOT depend on this vote, irrespective of the relentless Wall Street/Washington rhetoric – and likely, “technical analysis oriented” newsletter community – a “no” vote would undoubtedly yield.  For one, the reasons to own PMs have never been more powerful, with prices well below the cost of production as global demand achieves new record highs, and mining output appears on the precipice of an historic plunge.  In fact, we’d argue that very powerful financial forces have worked overtime pushing prices down ahead of this vote – accentuated, no less, by the one-time sale of Ukrainian gold that likely, as we speak, sits in Chinese deep storage.

And thus, whilst Swiss citizens face the “decision of a lifetime” regarding the fate of their nation, the rest of the world sits in economic purgatory waiting for the inevitable spark that blows history’s largest fiat Ponzi scheme sky-high.  Hopefully, you realize the uniqueness of the opportunity presented, enabling you to protect your assets at historically subsidized prices – amidst an unstable monetary system that could implode any day.  And if you do decide to capitalize on this situation, we humbly ask you to call Miles Franklin at 800-822-8080 and give us a chance to earn your business.

Gold Confiscation & Windfall Profit Taxes?

Andy Hoffman joins Elijah Johnson of Finance and Liberty and Chris Duane of Silver Shield Xchange to discuss the gold to silver ratio, housing and will there be a windfall profit tax on precious metals.  To listen to the interview, please click below.

Video: Gold Confiscation & Windfall Profit Taxes? | Duane & Hoffman (Part 3)

Swiss Time Bomb Ticking Away

Andy Hoffman joins Kerry Lutz of the Financial Survival Network to discuss the Swiss referendum, the stock and bond market, the Dutch repatriation announcement, most negative GOFO rates since 1999 and Chinese gold imports likely will exceed 2013.  To listen to the interview, please click below.

Andrew Hoffman – Swiss Time Bomb Ticking Away

The ECB (And Many Others) vs. The SNB

Watching Friday’s “trading,” I had a “V for Vendetta moment” – as if a long chain of world-changing events was building to its inevitable crescendo.  Perhaps I’m being dramatic, as V for Vendetta is one of my all-time favorite movies; which, no doubt, Miles Franklin Blog readers will love.  However, in watching the intense domino scene for the umpteenth time, it couldn’t be eerier when the film’s villain, Chancellor Adam Sutler, warns his inner circle that “every day brings us closer to November.”  In that case, he was referring to the “Fifth of November, when the people planned to revolt against his vicious, oppressive government on Guy Fawkes Day.  However, it rang way too coincidental for my blood that financially the 30th of November could yield an equally dramatic establishment Waterloo.

I’m referring, of course to Sunday’s “Save our Swiss Gold” referendum; which, in my mind, is at worst, a dead heat.  Consequently, modern day “Sutlerites,” led by the Swiss National Bank’s evil Chairman, Thomas Jordan, are doing everything possible to convince citizens a Swiss gold standard will be “fatal.”  Meanwhile Egon Von Greyerz’s “freedom fighters” courageously spread truth.  Depending on which poll one views, both sides have solid chances of winning – particularly as roughly 15% remain “undecided.”

Frankly, I don’t believe any polls predicting a material “no” lead – as just two weeks ago, a “more reliable” poll had the “yes” contingent comfortably ahead; whilst last week, Deutschebank analysts wrote of the yesses’ “clear but narrow lead.”  To that end, when an admittedly “less reliable” poll depicting a sudden increase in “no” support was “coincidentally” leaked at EXACTLY the Cartel’s 10:00 AM EST “key attack time” on Wednesday – as the Cartel maniacally defended $1,200/oz. for the third straight day – it couldn’t be more obvious what was going on.  In other words, TPTB are flat out terrified of a “yes” vote; and thus, even by their unethical, amoral standards are sinking to new lows of criminality.  To that end, this is exactly what they did in Catalonia – where just three weeks before 81% of citizens voted to secede, propaganda like this claimed “polls show around half of Catalans favor ending centuries-old ties with Spain.”  Last I checked, “half” and “81%” were about as far apart as the ten sigma difference between Thursday’s “Philly Fed” report and consensus expectations; i.e., the “lie to end all lies.”

For that matter, how “coincidental” is it that so many “market moving” events occur at or around 10:00 AM EST?  You know, when the Fed conducts its daily “open market operations” in the bond market and global physical PM trading concludes.  Be it scheduled Fed Chairman testimony, key economic data releases, Russian “tank invasions” into the Ukraine, or even Malaysian plane crashes; for some reason they occur at or around 10:00 AM EST with remarkably high frequency.  As was the case, Wednesday when the aforementioned “less reliable” survey claimed the no’s had jumped ahead.

As you can see below, the market demonstrated its disbelief in the report by immediately reversing the “associated” waterfall decline.  Of course, I write “associated” in quotes because the concept that gold prices sitting near four year lows are somehow “anticipating” a yes vote is patently comical.  That said, the Cartel was intent to paint such a picture; and thus, “doubled down” their naked shorting efforts with a 2:00 PM EST “crybaby attack,” coincident with the tried-and-true “key attack event” of FOMC minutes publication.  And by the way, note how the initial post-minutes raid was again reversed within minutes – to EXACTLY the unchanged level (see DLITG or “Don’t Let it Turn Green”); when, voila!, a third paper raid “finished the job” of getting the brain-dead MSM to write of how “gold declined on fears of a no vote.”

24 Hour Spot Gold Bid 11-24

As for Friday, just how PM-bullish could the day’s events – and outside market movements – have been?  To start, we awoke to news that not only had the PBOC executed completely unanticipated rate cuts, but Mario Draghi gave one of his most forcefully dovish speeches yet – comically, replacing his “whatever it takes” catch phrase with “whatever means necessary.”  Whilst John Williams of Shadow Stats published his expectation of a dramatic downward revision of 3Q GDP and potentially negative 4Q print, the Fed’s daily “New Hail Mary Trade” failed miserably with Treasury yields plunging all day to a multi-week low of 2.31% by day’s end.

Global equities, crude oil, base metals and even platinum and palladium surged.  Meanwhile, it was reported that October Indian silver imports were so strong, they are on pace to shatter last year’s record levels despite the Reserve Bank of India’s onerous tariffs still being in effect.  Meanwhile, gold forward rates declined to a new 15-year low, depicting unprecedented physical market tightness.  And thus, naturally, gold and silver prices suddenly plunged at EXACTLY the 12:00 PM EST “cap of last resort” we have written of for years; “coincidentally,” pushing gold below the $1,200/oz. “line in the sand” the Cartel has maniacally defended all week, ahead of this week’s Swiss referendum and COMEX futures and options expiration.

24hr Charts 11-24

Back to the aforementioned “V for Vendetta moment,” it appears that whilst the “bad guys” are maniacally attempting to create a “no” victory, equally powerful forces are desperate for a “yes.”  And I don’t mean small-time “goldbugs” like us but powerful, global financial interests – for myriad reasons.

Most prominently is the ECB itself – whose actions this past week appear to be begging Swiss citizens to vote yes.  To start, I remain speechless by ECB governor Yves March statement Monday that the ECB is considering gold purchase.  In other words, screaming that gold is a valuable monetary asset, and doing so in the SNB’s time of greatest propaganda need.  Next, we have Draghi’s over-the-top bearish comments Friday; no less, on the very day the ECB’s official “QE” program commenced operation.  Subsequently, the Euro plunged to a new 2½ year low; i.e., to the spike lows of summer 2012, which prompted the ECB to bail out Spanish banks and Draghi to utter the aforementioned, infamous statement that he would do “whatever it takes” to save the Euro – and “believe me, it will be enough.”  Given that the Franc is pegged to the Euro, the Franc closed Friday at its lowest level since the peg was initiated in September 2011 – just one week before the referendum.

Thus, care of Goldman Mario, Swiss citizens this weekend are pondering why they should support the SNB, when its actions have taken the Franc down 16% whilst swelling its balance sheet by nearly three times; as Swiss GDP has averaged a meager 0.4%/quarter growth; and inflation has risen so strongly, the “Decent Salary Referendum” was voted on earlier this year as to whether the Swiss minimum wage should be raised to an astounding $25/hour.  Heck, even the least financially illiterate Swiss – which frankly, equates to some of America’s most literate – are smart enough to be terrified of the hyper-inflationary connotations of Draghi’s comments, that “We (the ECB) will continue to meet our responsibility, by doing what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires.”

Subsequently, and frankly, even more shocking in its content and “coincidental” timing, was Friday’s announcement that the Dutch Central bank recently repatriated 122 tonnes of gold from the Federal Reserve.  How they were able to do accomplish this whilst the far more powerful German Bundesbank only received 37 of the 300 tonnes it requested two years ago is another story entirely.  However, the fact that the Dutch Central bank chose now – just one week before the Swiss referendum – to make this announcement, could not be telling.  In other words, just as Yves Marche was flat out screaming to the Swiss that gold is a valuable asset, the Dutch were making them well aware that repatriation is both prudent and timely.

And why, you ask, would the ECB and its member nations make such “yes-friendly” statements, mere days before the referendum?  Simple because the “final currency war” has gone nuclear; in this case, with Draghi hell-bent on destroying the Euro, utilizing the referendum as a “weapon” to break the Franc/Euro peg.  Which, if you haven’t noticed, has been bid by speculators to its breaking point anticipating a “yes” vote.

Simultaneously, we learn of MASSIVE Chinese and Russian gold purchases; the aforementioned explosion of Indian silver imports; unprecedented negative gold forward rates; and sky-high COMEX silver open interest ahead of this Friday’s first notice day; atop the recent months’ massive drains of COMEX gold and silver inventory, as well as the GLD ETF.  Without “speculating,” or trying to name “conspirators,” it appears an awful lot of “coincidental” things are occurring in the world of real money; and this is amidst an environment of “unprecedented skepticism” amidst the PM community.  Throw in the “shocking” PM upside reversal of November 14th – which eerily reminded me of November 21st, 2008, when gold rocketed higher from its ultimate bottom – and it doesn’t take much imagination to believe “something” may be afoot.

As you know, we are against “speculating” about what’s going on behind closed doors, particularly regarding near-term gold and silver movements.  However, it’s not a stretch to claim a “yes” vote could forever alter the world’s perception of fiat vs. real money; and in the process, potentially destroy a Cartel whose actions have not only maintained a destructive status quo for six ugly years, but did so for the benefit of the “1%,” at the expense of all else.  As noted above, there are numerous motives by numerous groups to see a “yes” vote; in many ways, like Murder on the Orient Express, when all the suspects wanted to see Monsieur Ratchett die.  Yes, the Fed and SNB are powerful financial terrorists.  However, so are the ECB, the PBOC and the Russian government.  In other words, a titanic battle is ongoing for the fate of this vote – so don’t for a second be lulled into believing TPTB are in control.  By this time next week, the world as we have known it – for generations – may have changed; and if you didn’t protect yourself beforehand (at prices well below the cost of production, no less), you may not get another chance – certainly nowhere near today’s Cartel-subsidized prices.

Is COMEX Being Cornered?

It is with a deep sense of gratitude that I have had all of you as friends and associates during what has been a long war, not a good war, but a very long “financial war.”  As you know from these writings; this has been a war conducted by the Federal Reserve against the entire world, aided and abetted by major international banks via the manipulation of most every market on the planet.  The ethics and morals our country was originally built on …be darned!

The events mentioned herein relative to the suppression of gold and silver using dollar hegemony as the tool indicate a major international monetary crisis is dead ahead, this is obvious.  Power in the hands of the few have made massive gains for those at the top of the economic ladder while the average man has become a debt slave to the few.  There are of course the laws of Mother Nature and “unintended consequences”.  Those at the top who intend to “rule the world” are being challenged from the East in what I believe to be almost a winner take all “war.”  It did not have to be this way but the “West” has forced this.

I have never written “this is my most important writing ever!” but that day has now come.  So many events have all aligned at once which point to something very bad happening, very soon.  In fact, “very soon” could be as soon as the Monday following this Thanksgiving.  We saw many different events unfold over this past week which I believe are all connected in one way or another, I will try to connect them for you.  That said, please understand that we are and have been in a financial war for many years now.  This “war” is one between the East and West where the West’s paper financial system which has been in control for so many years is seeing its power wane.  It is this “wane” of the West versus the rise of the East that I believe is now, finally coming to head.

If you recall, we had two Fridays in a row where gold and silver prices were smashed early in the overnight hours and into the morning, only to turn around violently and close very strongly for the day and the week.  This action is called an “outside reversal day” which over the years has been an extremely rare event in the precious metals.  It has been rare in precious metals because it was not “allowed.”  When I say “allowed,” please remember that COMEX is a paper exchange where possessing metal is not necessary to sell gold or silver.  All you have to have is “money” to post as margin and you are allowed to sell as many contracts as you have margin for.  There are “limits” to how many contracts one can buy or hold, these limits do not seem to have been enforced on the sell side …JP Morgan’s short position in silver as an example.

So we had two outside reversal Fridays in a row, this was followed by the action this past Wednesday.  80 tons of gold was sold over a 15 minute timespan which knocked gold down $20 in the blink of an eye.  Please see the chart below courtesy of Dave Kranzler of IRD.

Dec Comex Graph

80 tons!  Let me put this in perspective.  80 tons is equal to two weeks’ worth of global gold production …sold in just 15 minutes!  This is nearly 2.8 million ounces. The interesting thing is COMEX only claims to have 865,000 ounces of gold available for delivery so more than 3 times the amount of ounces were sold in 15 minutes than is even claimed as available for delivery! What followed however was the real stunner, very shortly afterward gold dug in its heels and started to recover …recover to unchange in price!  Do you see the importance here?  Though this was not another outside reversal day, it may have been even more important.  The “paper” market absorbed two weeks’ worth of production in just 15 minutes without breaking!  I’ll get back to this shortly and tie it in to the rest.

If you recall, I wrote a piece back in August entitled “Kill Switch“ where I put forth a hypothesis that the high and rising open interest in silver was actually the Chinese via proxies cornering the silver market.  The huge open interest in the nearby contract rolled out to the December contract.  At that point, the open interest in gold was at multi year lows as one would expect with prices down.  This has changed, just over the last 4-6 weeks, the open interest has steadily built in gold …while continuous pressure still on the price.  Before going any further, I have never seen the open interest rise to multiyear highs while the price was pushed to multi year lows in ANY commodity.  This is truly an anomaly and one that looks like it could be resolved very shortly.

This coming Friday is the 1st notice day for both Dec. COMEX gold and silver contracts.  COMEX in my opinion has a potentially huge problem where a default in both contracts is a distinct possibility!  As of this past Friday, 61,763 contracts still open, this represents 308 million ounces of silver.  The COMEX claims a registered (deliverable) inventory of just under 65 million ounces.  With only four days left there are roughly 5 silver ounces contracted for every one ounce available!

The situation in gold has quietly become much worse than silver, there were 162,509 Dec. gold contracts open which represent over 16 million ounces of gold.  The “registered” (deliverable) category at the COMEX inventory shows only 868,910 available to deliver!  Do you see the problem here?  There are only 4 days left until this contract goes into the delivery process, yet there are 20 ounces contracted for each ounce available!  I have one other amusing thought for you, remember the 80 tons sold in 15 minutes last Wednesday?  This was almost 2.8 million ounces compared to a deliverable inventory of just 869,000 ounces, in my opinion, “FRAUDULENT” in capital letters!

Yes I understand, there are still four days left for the open interest to bleed down and roll out to the next contract month but we now stand in totally uncharted territory.  Never in the past has this much open interest been still outstanding with deliverable inventory as low as it is.  It is also astounding that total open interest could have risen to these levels while the price dropped.  For open interest to increase and the price to drop, the “initiation” to the opening of contracts has obviously been done by sellers.  This is exactly what I have been saying all along, the dropping price has been dictated by paper sales of COMEX contracts …but now there is a problem.  So much paper has been sold to dictate the price that the contracts outstanding simply dwarf the available metal to deliver.  Put another way, COMEX gold and silver look like they have been cornered!  Let me rephrase this, COMEX gold and silver are now “very cornerable.”  We will know shortly if this is true and “who” did the cornering.  I suspect we will find out that this has been a Chinese/Russian hand holding consortium and one that was carefully planned and done within legal bounds.  I think we will find out they in fact did play by the West’s rules and it was the “sellers” of nonexistent metal who fell into their own price fixing trap.  It has been a financial war, one that was declared by the West and looks to have been possibly won by the East.

Another huge event this past week was the surprise announcement by Holland of their repatriation of 122.5 tons of gold from the FRBNY.

I have many questions about this transaction and very few answers.  We may or may not ever get some of the answers but here is what I’d like to know.  Was the gold which was delivered the “original” gold that was deposited?  Same serial numbers and hallmarks?  If not, where did it come from, who refined and processed it?  And when?  One must also wonder why the Germans did not get their promised gold.  Did Holland work out a deal prior to the German request?  Or is this a case of the Dutch “smelling smoke” and quietly exiting the theatre before anyone else?  Other questions might include whether or not any of this gold was of Ukrainian origin and now what might happen in the derivatives markets?   Remember, derivatives outstanding are probably in the range of 100-1 versus the real metal, taking 122 tons of “collateral” away could affect 12,200 “tons” of paper derivatives.  With the leverage factor, this is equal to better than 4 years’ worth of global production and could affect close to $1/2 trillion worth of paper contracts!  While on this subject, prior to the Dutch news, GOFO rates were at almost record backward levels.  Has this come about because 122 tons of “collateral” was withdrawn from the pool?  Just thinking out loud here…

Other notable events this past week were many.  First, Congress began questioning the banks on “manipulating the commodities markets,” and the Federal Reserve leaking inside information to Goldman Sachs, is the timing of this a coincidence?  Also, President Obama unilaterally has now thrown our borders open, is it possible that the long spoken of “Amero” is really in the works?  One necessity to a North American currency unit would be open borders right?  Again, just thinking out loud.  We also heard Russia announce a decline to import ANY GMO food products from the West for at least 10 years.  They also announced the import of another 55 tons of gold for the quarter for good measure while ISIS announced their intent to use gold and silver as money.

To tie all of this up, let me say that I believe the very long anticipated “market corner” of precious metals may possibly and finally be at hand.  Contrary to what happened back in the late 1970′s with the Hunt brothers in silver, the current “corner” was actually facilitated by the sellers.  The Hunt’s in fact did set out to corner silver, I don’t believe the Chinese/Russian/Indian alliance initially set out to do this …they were “forced to.”

You see, we have been in a “financial war” for years, the U.S. has trod heavily on the rest of the world financially.  We settled our grotesque annual trade deficits by sending freely created dollars as payment.  In order to support the dollar and keep interest rates low, we have suppressed the prices of gold and silver.  Without low metals prices, none of the other markets could ever make any sense.  PE ratios could never be at the current levels without low interest rates, interest rates could never be at these low levels if gold and silver were shooting upward …so the rest of the world has played the only card they could to prevent a World War, a financial card.

They “carried” us and let the game go on and on as they accumulated bigger and bigger stacks of gold.  Much of this gold “was once” Western gold.  They have legally purchased it and in many cases sent our own dollars back to us as payment.  Now, we will sit with lots and lots of dollars while they have lots and lots of gold.  I believe they have now cornered both COMEX gold and silver if they choose to stand for delivery.  They will say “hey, we did not make up the rules, you did.  You sold us contracts, we bought and paid for them.  Now we would like the contract settled, please send us our metal”.  This was all legal and they did not step up with the intent of busting the market, they simply “bought what we were selling.”  If they do stand for delivery, can they be faulted if they ask for the contract they paid for to perform?

Let me finish by saying this, we very well may wake up after Thanksgiving “fat and happy” only to find out the entire financial system was a fraud.  The East, by asking for delivery may in a “polite” way expose the entire game.  This would accomplish much, first and most importantly, this will go almost all the way in ending the dollar as the world’s reserve currency.  The U.S. will no longer be able to trade “something for nothing.”  It will also hamper our ability to financially and militarily put our thumb on the rest of the world.  If we became hampered financially, this would also make military operation much more difficult to fund or pay for.  In essence, if I am correct and we do see failure to deliver and a COMEX default …the world may be a safer place!  This past week for example, President Obama secretly extended our stay in Afghanistan, how will this operation be funded by a bankrupt Treasury and a central bank that issues unwanted currency?  The Chinese/Russians in my opinion may be on the verge of winning a war without ever firing a shot and playing the game by our own rules!  We clearly have been the aggressors in both Syria and then in funding a coup in Ukraine.  Could crashing our financial markets be a way to put us on a financial leash and thus lessen our abilities at aggression?  I am sure this thought process has already been discussed.

Please do not call or write me Monday morning and say “see, nothing happened …again.”  All I am saying here it that the COMEX is now “cornerable” and in a very vulnerable position.  Maybe it will not be now, maybe it will?  All I can say is history is rife with “bank runs,” sooner or later the longs will stand for the delivery of an inventory too small to satisfy them, this will be nothing different than a bank run when it happens.

Paper Currency Collapse & New Gold Rush

Andy Hoffman joins Elijah Johnson of Finance and Liberty and Chris Duane of Silver Shield Xchange to discuss the collapse of all paper currencies, Japan’s debt, gold and silver, and Greenspan says that gold is the supreme currency.  To listen to the interview, please click below.

Video: Paper Currency Collapse & New Gold Rush Duane & Hoffman (Part 2)

The Lie to End All Lies

On Thursday morning, whilst taping this week’s Audioblog, I discussed how overnight, the PMI Manufacturing reports in China, Japan and essentially all of Europe were not only miserable but well below expectations.  Heck, even the PMI report in the United States of Economic Lies came in at just 54.7, down from 56.2 last month and well below expectations of an increase to 56.5.  In fact, it was the lowest print in ten months, validating with this week’s slew of 4Q GDP estimate downgrades.  Which, by the way, were predicated on myriad factors from weak exports, to declining capital investment and even “Polar Vortex 2.0.”  In other words, a broad mosaic of data suggesting America is succumbing to its terminal debt addiction, amidst global economic weakness not inappropriately compared to the Depression.

Consequently, the 10-year Treasury yield was on the verge of breaching the Fed’s current “line in the sand” at 2.30% yet again, whilst stocks were in danger of actually declining; and, for the third time this week, gold was about to take out $1,200/oz. (after having been turned back by “Cartel Herald” algorithms the prior two days, at exactly 6:00 AM EST).

24 Hour Spot Gold 11-20

Consequently, the U.S. government decided to go as “all-in” on economic data manipulation as Japan has with its hyperinflation strategy.  To that end, recall when Forest Gump told the man at the bus stop that he owned the Bubba Gump Shrimp Company; to which, the man replied “Boy, I’ve heard some whoppers in my time, but that tops them all!”  To a man, I’d be more inclined to believe Forest could be a CEO than what the government proclaimed this morning; i.e., the “Philly Fed” business conditions index not only rose significantly from last month’s reading of 20.7 but exploded to 40.8.  In other words, a ten standard deviation “beat” of the consensus expectation of 18.0, whose theoretical odds occurring at just one in 1.5×10^23.  And not only did this “survey” print its strongest reading since 199 but strongest new orders component since 1988!

I doubt anyone in the investment world believes that’s even remotely true, particularly as it not only contradicted the PMI report published just 15 minutes earlier but essentially every real data point imaginable.  I mean in the past two weeks alone, it was reported that durable goods orders, factory orders, construction activity and industrial production declined in October, whilst retail sales rose a scant 0.3%.  Throw in the aforementioned, grisly international data and it’s difficult to believe any increase occurred – let alone, of the magnitude this travesty of a report depicted.

Of course, the “Dow Jones Propaganda Average” was treated to its 20th straight “dead ringer” algorithm – as it prepares to hyper-inflate, Venezuela-style.

2 Graphs 11-21

However, a funny thing happened in the world of “recovery”; as not only did Treasury yields decline, but closed just three basis points from the aforementioned “line in the sand” the Fed is so terrified of.  After all, it borders on comical that the Fed is pretending to consider rate hikes – even if not for a “considerable time” – when rates are plunging.  Let alone, when rate declines occur as their data cookers purport the “best economic conditions” since 1993; and oh yeah, the “stock market” is trading at record highs.

$TNX Number

Better yet, despite relentless capping and attacking – no less, with the potentially Cartel-destroying Swiss referendum just ten days away; gold and silver not only recovered yesterday’s Cartel orchestrated losses, but closed at the day’s highs – setting up gold for a fourth attempt to take out $1,200 in four days.  Could we actually have three straight strong Friday’s – which frankly, NEVER happens?  Much less with the Swiss referendum next Sunday?

24hr Charts 11-21

For some time now, we have discussed how the “propaganda leg” of the “evil tripod” of money printing, market manipulation and propaganda is permanently broken.  In other words, no matter what propaganda is reported, the world is starting to realize the true state of the U.S. economy.  For example, auto sales cannot be characterized as “strong” when they are either leases or subprime loan financed; let alone, amidst an environment of record “channel stuffing.”

Subprime Auto Loans

Zero Hedge

Better yet, the “sentiment” of trade organizations like the National Association of Home Builders has as much credibility as a fox in a henhouse; particularly when it explodes to multi-year highs when both home sales and housing starts (in the latter case, principally rental units) remain at recessionary levels.

Housing Charts 11-21

And thus, the issue of the boy who cried wolf.  At some point, people stop listening; and in this case, global fixed income and commodity markets decidedly aren’t buying America’s “recovery” propaganda.  Not to mention, the physical gold and silver markets, which are both experiencing record demand.  Given the reality that “Economic Mother Nature” is revealing, it won’t be long before the money printing and market manipulation “legs” break as well.  And when they do, if you haven’t already protected yourself with real money, you may never get the chance; certainly, not at prices anywhere near today’s historically suppressed levels.

 

Cartel Desperation Exposed

On his weekly podcast, Andy Hoffman discusses the Swiss gold referendum, Japan, gold and silver prices, manipulation of the precious metals market and the Fed is defending the 10 year Treasury yield.   To listen to the audio, please click below.

Download the Audio File: Cartel Desperation Exposed

Video: Cartel Desperation Exposed

Unprecedented Skepticism

For 12½ years, I’ve fought on the front lines of the “gold wars.”  Nearly every day has in some way, shape or form been difficult; as aside from unrelenting Cartel attacks, I’ve endured the mental strain of propaganda, lies and ignorance from everyone from the baddest “bad guys” to the “best and smartest” of the lot.  From my experience, so-called “good guys” can be as treacherous, or more so, than the bad – such as pied piper newsletter writers; bullion dealers promoting overpriced numismatics; or in the case of one particular dealer with an extremely popular website, consistently highlighting anti-PM propaganda as if they were JP Morgan or the Federal Reserve themselves.  Heck, for seven years they employed a Marketing Director of sorts – in many ways, my peer – who was famous for his PM negativity.  During his employ, I might add, gold rise from $600/oz. to $1,650/oz.

To that end, this morning’s topic relates to the powerful, overwhelming skepticism such surrealism has produced in the PM community; which in the scheme of time, will ultimately be a faded memory for those wise enough to have “bought and held” physical gold and silver today.  Why did I focus specifically on that particular website, you might add?  Because this morning, their “top headline” takes the cake.

Silver Demand to Drop

For those not aware, GFMS is the former “Gold Fields Mineral Services” – a leading precious metals industry consultant.  Over the years, I have found their work woefully inadequate; in many ways, paralleling that of fellow industry consultant CPM Group, run by none other than the infamous Jeffrey Christian.  In other words, GFMS and CPM – and similarly, industry trade groups like the “World Gold Council” and “Silver Institute” – completely ignore the giant pink elephants in the room of price manipulation and the surreptitious leasing, swapping and dishoarding activities of Western central banks.

As for the aforementioned headline, it is pure madness that such data could be published, when essentially all empirical data confirms record demand across the board.  Sure, Chinese silver demand data is not readily available; but given their monstrous gold imports and policy of NEVER exporting silver, it’s fair to say Chinese silver demand has not declined.  As for India, the world’s largest silver importer, data has been more difficult to obtain than in the past due to the massive black market that has developed since last year’s ill-advised PM import tariffs were enacted.  That said, officially reported first half Indian silver imports were down just 3% from last year’s record pace, and no doubt increased since prices were since smashed.  Heck, even the leading MSM cheerleader, the Wall Street Journal, said so last week – highlighted by the following quote from the director of a leading Indian bullion dealer…“there is a tsunami in silver. Investors are pouring in.”

As for Western demand, U.S. and Canadian sentiment may be at historic lows, but demand is on pace to exceed last year’s record levels.  At the Royal Canadian Mint (where sales data is released quarterly with a two month lag), first half silver Maple Leaf demand was 10% above last year’s record pace; while at the U.S. Mint, despite this month’s 12-day shutdown, 2014 is on a pace to exceed 2013’s record Silver Eagle sales by 8%.  In fact, it just released updated November sales data yesterday afternoon, following the aforementioned 12-day sales suspension; and lo and behold, November Silver Eagle sales have been a whopping 2.57 million ounces in just the five days they were available, putting the month on a pace of nearly 4.3 million ounces, which would make it the eighth largest month ever!  Throw in the fact that the severe PM backwardation – which hit new 14-year lows this morning – suggests massive physical tightness; let alone, the otherworldly open interest in the COMEX December silver contract that expires Monday, and you can see why one would be incredulous that a “leading authority” on silver demand could claim demand will be lower in 2014 than 2013.  Then again, if it turned out to be just “6.7%” lower than last year’s record level, how on Earth can the price be down 17% – atop last year’s 36% decline, when demand was higher than at any prior time in history?

Yes, the lies are thick, the thieves thicker and the naked shorting unrelenting; even more so in mining shares, where the large caps breached 2008’s crisis lows last week, and juniors have continuously plunged since mid-2007.  Thus, it’s not difficult to see why many have lost heart, even those who appropriately bought gold and silver as savings and/or insurance, as opposed to investments like stocks and bonds.  Of course, nothing in life is easy, and “getting to the other side” of history’s largest wealth transfer, opposed by the powerful entities intent on preventing you from doing so, is as difficult an undertaking as is imaginable.  Which is why adherence to the wisdom of the handful of “good, smart people” in our sector is so important – which in my view, the authors of the Miles Franklin Blog should be deemed.

Before I get to the “punchline” of today’s article, I thought I’d barrage you with TPTB’s cumulative foolishness, to empower you with the knowledge of just how far off the track reality has been pushed – and thus, how close we are to “Economic Mother Nature” re-asserting herself and then some.  To that end, let’s start with the blatantly compromised Standard & Poor’s “warning” of how the ECB has just “one last arrow in its quiver of quantitative easing of €1 trillion.”  Even I am floored by such lunacy, as the world’s leading credit agency is claiming Europe’s only hope for salvation is massive, unprecedented money printing.  And this is after six years of the most maniacal, global money printing ever has produced a veritable debt explosion, and the worst European economy since World War II.

Speaking of the shear incompetence and foolishness of Central banks and rating agencies, how about the Bank of Japan “warning” Shinzo Abe about fiscal irresponsibility, just days after enacting the most hyperinflationary monetary policy in history?  Which, by the way, has the Yen in utter FREEFALL this morning, and yen-priced gold within 10% of its all-time high.  To that end, recall a year ago, when S&P warned it would downgrade Japan’s AA- rating if it didn’t demonstrate greater fiscal responsibility?  In fact, they specifically cited planned sales tax increases as a potential fiscal savior – but “strangely,” they haven’t downgraded Japan now that the sales tax was cancelled.  Mark our words, Japan will be the first “first-world” nation to experience hyper-inflation; and when it does, I wonder if S&P will have anything to say about it.  Then again, recall what happened to S&P when they downgraded the U.S. in 2011 – i.e., they were sued by the U.S. government.  For the record, they threatened further downgrades if the U.S. didn’t get its fiscal house in order.  However, today, barely three years later, the U.S. national debt is $3.8 trillion higher and the “debt ceiling,” for all intents and purposes, abolished.  Yet, not only did they maintain America’s credit rating but upgraded its fiscal outlook!

Then we have China, which claims to be growing by “7.5%” per annum, despite crashing investment, home prices, commodities and credit quality.  This week, both iron ore and steel prices plunged to their 2008 lows, whilst bad loans surged at their most rapid pace in a decade, and home prices had their largest year-over-year price decline in years – ominously, in an economy where three-quarters of all household assets are represented by real estate holdings.  And yet, we’re told Chinese “housing starts” rose by – this is not a typo – 39% from a year ago, in a nation that has already become the universe’s largest “ghost city.”

Oh, shoot!  I just don’t have enough space to write of the irony of Greek bonds plunging in the face of imminent default, whilst the MSM says Greece is not only “fixed,” but the “fastest growing economy” in Europe – as following a six-year, 23% plunge, Greek GDP supposedly increased 0.7% last quarter.  Or the propaganda machine that is the “North American Home Builders Association” claiming homebuilding “sentiment” has quadrupled in the past three years, despite the fact actual home sales have barely budged; mortgage purchase applications are at 19-year lows (despite record low interest rates and a “recovering” economy); home prices are declining; construction activity contracting; and the equally biased industry cheerleader, Zillow, claims housing will be weak for at least three years.  Or the “common knowledge” that the Ukraine has “de-escalated,” when both sides are speaking of imminent war.  Or that plunging oil and industrial commodity prices are a “good thing,” when producers (particularly shale producers) and sovereign nations alike are amidst massive political and economic upheaval – which will only worsen as the historic plunge in commodity currencies like the Ruble, Real, Rupee and Rand accelerates.  Or my favorite lie, that the world is awash with “deflation,” when not a single country is reporting a declining cost of living – with key “need versus want” staples like milk and beef hitting all-time highs.

Within this context, and this week’s painfully blatant Cartel defense of $1,200/oz. gold, we fully understand your frustrations.  However, said “Economic Mother Nature” has decidedly not gone away, so we can only warn PM holders to relax; particularly as the mining industry teeters on all-out collapse, GOFO rates contract further and demand rapidly escalates globally.

To that end, for the first time in years, even my skepticism is starting to abate.  To wit, just weeks ago, we were told the Catalonian “no’s” would win the day; yet, an astounding 81% voted for secession whilst just 4% voted against.  Meanwhile in Switzerland, even a Goebbels-esque propaganda campaign – led by “Lady Macbeth” Thomas Jordan, the Swiss National Bank’s Chairman – appears to be floundering as the “yes” contingent, which could alter monetary history remains in the lead.  To that end, Alan Greenspan himself is publicly supporting gold’s virtues; as is Yves Marche, the ECB board member that stated that the ECB is considering gold purchases.  Not that I believe they actually would or could buy gold, but the fact they are even mentioning it speaks volumes of the evolving global mindset.  Meanwhile, in the Eastern Hemisphere, precious metal demand has never been higher; and quite vocally, the emerging Sino-Russian economic bloc is promoting its intention to utilize gold as its primary monetary asset.

Amazingly, skepticism amongst the PM community has become so pervasive, even some of its wisest strongest leaders are fearful TPTB will be able to suppress gold and silver prices in the event of a Swiss “yes” vote.  Claims that “swaps” will be substituted for the real thing are a specific “goldbug fear” I have read of, and the SNB dragging their feet on mandated gold purchases another; as clearly, many of us have been lulled into a fear that somehow the Cartel will always “find a way to win.”  However, “Economic Mother Nature” assures us prices cannot stay this low for long, and the reality of a global monetary awakening is clearly occurring as we speak.  Remember, it’s always “darkest before the dawn”; and right now, the “darkness” been more pervasive.  Have faith in your insurance and don’t put yourself in a position to lose it.  As unlike health, fire and flood insurance – which may one day be needed; fiat currency insurance will be required – likely sooner rather than later.

 

Why Does Gold Have To Be So Barbaric?

Gold, that “barbaric relic” from yesteryear just won’t go away even though the central banks around the world would like just that.  I believe it was Keynes who first coined the phrase “barbarous relic” which has stuck for more than half a century.  But why does it have to be so barbaric?

Gold as you know has had a very long history, some 5,000 years or more.  Wars have been fought over it, kings and queens have won or lost over it, coup de ‘tat’s have occurred because if it, entire governments have been swept because of gold …or the lack of.  Gold has been hidden, buried, swept away and stolen over the years.  Maybe JM Keynes called it the “barbarous relic” because of the ugly lengths man has gone to throughout history to attain it?  Yes I know, I was only kidding, he was demeaning gold and tried to tar it as useless versus our “new-fangled” fiat money of the time…

I think a little bit of history is in order.  Let’s start with the “non recent” history of Europe.  We saw the leadership change many times over the last 500+ years.  The Dutch, Portuguese, Spanish, French and British all took a turn “at the top.”  Each of these countries led the world in trade and economics for various spells.  The British started (in the mid 1600′s) what is currently our fractional reserve banking system that we have today, it was however a little less “fractional” when it began.  Each one of these countries at one time or another had larger hoards of gold than anyone else …”money” and power simply flowed to the strongest economy.  It can be said that this was also a “chicken or the egg” scenario where a strong economy attracted gold and high gold balances augured well for a strong economy.  Gold attained by plunder was another ticket to the top.  On the other side of the globe, the Japanese and Chinese were the powers with the most gold and silver attained by both trade and plunder.

So why the history lesson?  Let’s fast forward to more recent times such as WWII onward.  Did you know that Germany by middle to the end of the war could not pay for any trade goods except by using gold because their paper was suspect, gold was their only acceptable currency?  Did you know the Soviet Union was selling gold bars with the “Czar’s stamp” on it in 1989?  As a side note, when I heard of this I knew the end was near.  The USSR was selling 89% pure gold bars into a 99.99% market, it was accepted and of course discounted but this wasn’t the point.  If they had any “good delivery” gold they would have sold that instead because selling the “dregs” was like laying their cards on the table.  They were demonstrably selling from the bottom of the barrel.  I mention this because back in 2011 and ’12 we were hearing stories of 90% gold hitting the market which had the “fingerprint” of coin melt from the 1930′s.  Was this the bottom of OUR barrel?

Let me add a few very recent events.  We found out yesterday that Ukraine no longer has any gold left.  Where did this gold go to?  It is speculated the gold was “flown out” (to the U.S.?).  There are also questions as to what happened to Libya’s gold after we bombed them back to the stone ages and dethroned Qadaffi.  Same questions regarding Iraq and their gold.  Do you see a pattern here?  In the case of Sadam Hussein and Qadaffi, they both made rumblings of going to gold or silver backed currencies and presto …they are gone and so is their gold?  Now, ISIS is talking about going to a gold backed dinar, who do we dethrone and where is their gold?  There is one more “recent” event regarding gold.  Germany asked to repatriate her gold in 2013 and doesn’t seem to be getting much of it.  Only 5 tons last year of a scheduled 37.  As a funny side note, if Ukraine lost 40+ tons of gold …and Mr. Putin bought 55 tons over the last quarter …might some (all?) of this gold have simply come to rest a little bit further to the northeast.  What is even funnier in my mind is that Mr. Putin may have bought exactly what once was Ukrainian gold and paid for it in dollars, did he not give the West something they can create freely for stolen goods of value.  So in essence, Mr. Putin may have sent the U.S. some of their dollars back for what may have been Soviet gold in the first place?  Sorry, I had to put that in here because it strikes me as so ironic!

To finish, let me try to tie some of this together.  Even though gold is supposedly “barbaric,” the U.S. guards it diligently (so to speak) in Ft. Knox, West Point and NYC.  We “say” we have it and to this point no one other than the Germans have asked for any of their custodian held gold.  No audits have been done in 60 years, not even Congressmen have been allowed to see it since the 1970′s.  In many cases since WWII, gold has turned up missing after “we fixed things” and despotic rulers were ousted.  If gold is so barbaric, how come it keeps turning up as “lost”?  If it is really so barbaric then why do the Chinese (Asians in general) want it so badly?  Why so much secrecy?  Is there something to hide?  The answer of course is “yes” there is something to hide.  Even IF we do have the barbaric gold we say we do, we are still broke and bankrupt.  If we don’t then we are more broke, more bankrupt and …do not have the capital (even marked up many fold) to begin repairing, recovering and picking up the pieces.

I’ll add these thoughts which I believe are worth pondering on.  “Gold is only barbaric if you don’t have any”… which means barbaric acts are taken to either hide this fact or to attain some.  For something that is so barbaric and “meaningless,” governments around the world sure go to great lengths to guard what gold they do have and to keep secret anything and everything they are doing in this particular money market!

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