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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!

Splintering

According to this chart, the Fed’s favorite “inflation barometer” – the “five-year forward five-year inflation expectations index” – has fallen to its lowest level since the 2008 financial crisis; you know, when oil was $40/bbl. and no one bought anything, as a cumulative “deer in headlights” syndrome engulfed the world.  Quite amazing , considering U.S. stocks – which theoretically, should be the worst performing assets during deflation – are at (nominal) all-time highs; as well as high-end real estate, rare art and other “1%” assets.  Then again, when Central banks are not only monetizing bonds – pushing rates to all-time lows – but stocks as well, it’s not so difficult to understand.  Hence, the broadest “chasm of destruction” – between economic reality and rigged financial markets – in history.

Unfortunately, wages – both nominal and real – haven’t kept up; nor have “99%” homes, personal savings, capital investment, or any of the things that required to sustain economies specifically, and society in general.  Which wouldn’t be so bad, if “need versus want” items” – like food, for instance – weren’t so highly correlated to money printing.  To wit, last week’s comment from Tilman Fertitta, the billionaire chairman of Landry’s Restaurants, which owns national restaurant chains operating in 35 states.

(I just had dinner with Ben Bernanke), who said ‘there’ no inflation.’  Well go buy something, whether at the grocery store, the drug store, the broom and mop store, and there is inflation everywhere. I have many types of businesses, so I buy everything from labor, to mops, to food, shrimp, and steak – and everything is more expensive. We are raising prices: that’s why right now you pay more for an airline ticket, a hotel room, a pot of coffee. There is huge inflation going on right now.

-Zero Hedge, November 13, 2014

Unfortunately, the Fed’s favorite “inflation barometer” doesn’t gauge this; or, for that matter, the inflation I experience in my own “business” – i.e., the neighborhood HOA I have been President of for the past five years.  To wit, we will be ratifying our 2015 budget this week – and yet again, are forced to raise dues to meet the inexorable increase in operating costs.  We have resisted this trend as best we could but have been forced to raise dues by 10%; and frankly, we probably should raise them by 15%, but will likely do so in stages for “political reasons.”

Sadly, such cost pressures are across-the-board – including management fees, insurance, social committee, landscaping, electricity, water and waste removal.  And oh yeah, for the first time since I moved in seven years ago, the neighborhood has abandoned homes requiring maintenance and legal expense; not to mention, the associated reduction in dues collection and increased demand on the board’s time.  And thus, two glaring examples of the inflation reality – from a small town HOA to a big city restaurateur; which unfortunately, will only worsen dramatically, as the Fed responds to said “multi-year low inflation” with unfettered money printing.  Not to mention, the expanding currency wars engulfing the planet as the ultimate “race to debase” accelerates.

True, commodity prices are crashing as the global economy collapses into the abyss.  However, money printing Ponzi scheme only support the “1%,” yielding nothing but the “need versus want” inflation for everyone else.  This is why government approval ratings have never been lower, despite the so-called “recovery” suggested by rising stock prices.  At least, those included in PPT-supported indices like the “Dow Jones Propaganda Average,” and borrowing at Fed-subsidized rates to repurchase stock.  Hence, our belief that the global economy, for all intents and purposes, is amidst another “2008, with one temporary difference.”

To that end, we are “happy” to notice that with each passing day, the “propaganda leg” of the “evil tripod” of money printing, market manipulation and propaganda creeps closer to its deathbed.  In other words, the aforementioned economic reality is overcoming the façade of Central bank supported equity markets; and subsequently, the world is experiencing a “splintering” unlike any before it.

It started with rebellion at the polls (see, U.S. elections 2014) – but that pesky word “war” is permeating all aspects of global society, both internally and externally; no more so than the aforementioned “currency wars,” as exemplified by Japan’s “Abenomics II” announcement last week.  Not to mention, this morning’s delay of Japan’s planned 2015 sales tax increase, which was supposed to pay for Abenomics.  Heck, Japan is not only actively buying bonds and stocks but issuing “free” gift cards to the public, in the height of money printing, currency destroying frenzy.  Consequentially, the Yen is in freefall, and the entire world considering retaliatory currency debasement schemes – again, to the benefit of the “1%” at the expense of all else.

Said “splintering,” like money printing itself is as contagious as Ebola; as bankers, politicians, and sundry hangers-on seek to protect their interests.  To that end, watching Greenspan attempt to whitewash his legacy as the Sith Lord of Money Printing – by extolling gold and denigrating QE, no less – was not even conceivable a few years ago.  Not to be upstaged, just yesterday the “godfather of Abenomics” repeated the Maestro’s performance, in calling his brain-child a “Ponzi game, which may well yield a Japanese taxpayer revolt.”  In other words, the rats are racing from the sinking ship positioning themselves for survival when said “temporary exception” departs.

The accelerating “secession movements” we discussed two months ago – and initially predicted three years ago – are another form of splintering; from Scotland, to Catalonia, to Venice, Italy.  And don’t forget pending secessions from the cancerous monetary regime, which next week’s Swiss referendum could rapidly catalyze on a global basis.  Which brings me back to yesterday’s incredible comment from ECB board member Yves Marche (of Luxembourg), that “the ECB could purchase other assets such as gold, shares, and ETFs to fulfill its promise of adopting further unconventional measures to counter a longer period of low inflation.”

Why am I bringing this up two straight days?  Because, frankly, no statement exemplifies such “splintering,” on so many levels.  For one, it flies in the face of the ECB itself, as rising gold prices will clearly serve as a blaring “inflation siren” to the public, making it nearly impossible to execute additional QE schemes.  Additionally, it implicitly admits gold is a valuable asset, serving as a “slap in the face” to the Swiss National Bank in its moment of greatest propaganda need – as we discussed yesterday.  And last but not least, it affronts the ECB’s most important “partner in crime,” the Federal Reserve, which openly despises gold and will do anything to denigrate it.  Keep in mind, European banks have benefitted more from the Fed’s off-balance sheet “swaps” and “on-balance sheet” ZIRP than any other entities on the planet.  And thus, it’s not too difficult to see the rapidly spreading rift, as the dollar/Euro currency war accelerates.  Not to mention, the pound, Swiss Franc and all other currencies affected by Fed policy.

Even within the ECB itself, we are seeing massive splintering of its most powerful member, Germany; which is resisting Draghi’s “whatever it takes” QE plans tooth and nail.  Without it, the PIIGS (and others) will instantaneously implode – taking with them, by the way, a German banking system with enormous PIIGS exposure.  However, if Draghi gets his way, Germany may well experience a reincarnation of the 1920s Weimar Republic.  In other words, the ultimate “Hobson’s Choice.”  And Germany is not just revolting against ECB QE, but extending economic ties with the burgeoning Sino-Russian economic axis; as like the rats on Titanic, it knows full well that the economic future will not be dominated by relics like England, France and Spain but BRICS like China, Russia and India.

Speaking of India, how about this year’s expulsion of the anti-gold “Congress Party,” following a year of unprecedented black market PM activity on the heels of prohibitive tariffs enacted to support India’s dying fiat currency regime?  It’s only a matter of time before the other BRICS act likewise, given their currencies have plunged, on average, by nearly 60% in the past three years, yielding dramatic inflation increases for the 42% of the world’s population residing there.  Of course, the Chinese could significantly improve the BRICS’ lot by removing its destructive dollar peg; but to successfully do so – that is, without an instantaneous economic shock wave – the PBOC would need to simultaneously announce its true massive gold holdings.  Hmmm.

As the global fiat Ponzi scheme fulfills its irreversible destiny of widespread poverty, inflation and unrest, the world will experience political, economic and social turmoil unprecedented in history.  The “splintering” of TPTB’s delicate smoke and mirrors game is expanding at an alarming pace; and eventually, will explode in a horrific blaze of glory.  Frankly, I cannot see how anyone cannot consider financial protection right now – particularly as history’s most reliable economic insurance has been suppressed to “bargain sub-basement” levels.

To that end, Miles Franklin has been selling (and buying) precious metals for 25 years – with an A+ Better Business Bureau, and not a single registered complaint since opening its doors in 1990.  All we ask is an opportunity to earn your business – which I assure you, we will if given the chance!

 

Worldwide War For Physical

Andy Hoffman spoke with SGT Report to discuss the Ukraine gold is gone, currencies collapsing around the world, the Swiss referendum, the stock market, Japan, gold and silver.  To listen to the interview, please click below.

Video: Worldwide War For Physical – Andy Hoffman

Why Don’t You Believe Them?

David Cameron, Prime Minister of Britain wrote an article which was published in The Guardian yesterday.  The headline “Red lights are flashing on the global economy” in my opinion is very true what he followed the headline with was not.  In this article which was penned after leaving the G-20 summit, Mr. Cameron went on to mostly tell the truth about the global woes but was very careful to exclude Great Britain.  To me, this sounded like some sort of “whistle stop” campaign about how well Britain is being managed and their risk is the possibility of being tipped over by global events.

“Well managed” he purports?  This is not even close to being so and the “austerity” he speaks of is only a pipe dream and no longer even an option.  I would ask him a few questions were he willing to take any, such as “didn’t Britain try austerity for 6 months or so only to find out it cannot be implemented without an economic and financial implosion?”  I might even ask him how he feels now that Britain sold 60% of their gold reserves at the worst prices possible since 1979 …but that wouldn’t be a gentlemanly question would it.

In any case, let’s look at the headline  …”red lights are flashing on the dashboard of the global economy.”  This is true nearly all over the world.  As a matter of fact, the “engine” for global growth just announced one of their diesel tanks as empty.  It’s been discovered that China’s “shadow banking system” had a huge increase in bad debt.  Understand that this is not the “core” banking system but this did add to China’s growth acting as an afterburner of hot and easy credit.  A reversal of this credit will surely drag on the economy and will probably even surprise the complacent as to where it shows up.  “Where” being further news on hypothecated, re hypothecated and re re re hypothecated commodities.  We still don’t know fully how the warehouse frauds uncovered earlier in the year will fall, a decline in credit from the shadow banking system can only reveal more fraud!

So David Cameron “covered his butt” with the headline, when the time comes he can now say “I told you so, you should have listened to me.”  Unlike David Cameron who is still in office and trying to cover his reputation, there are two ex U.S. government officials who are and have been telling you the truth for years, Paul Craig Roberts and David Stockman.  Mr. Roberts was Asst. Treasury Secretary from 1975-1978 and David Stockman was the Director of OMB under Reagan.  When I read or first heard their opinions I can remember thinking “WOW, this guy is from the government and telling the truth!”.  This is still so today and both of these men seem to be getting louder and much more urgent in their warnings.  Neither hedges nor flip flops in their opinions which I respect as much as I do their logic.  They have been and are telling you the absolute truth and doing so in my opinion out of pure “character!”  They both say “it’s over” from a mathematical standpoint, I don’t understand why anyone even questions what they say?

Another ex “federal” employee who has been boisterous lately is Alan Greenspan.  I have recently written how he is out selling books and trying to clean up his legacy.  Part of this has been to admit gold in fact is money, it is better than any fiat ever and that there will be “great financial difficulties” at some point.  Mr. Roberts and Mr. Stockman, unlike Alan Greenspan, are not out on the speaking circuit trying to clean up their legacies, they are firmly and cleanly intact.  They I believe are trying to help anyone who would listen while Alan Greenspan’s motive in my opinion is one of “don’t blame me, I warned you.”

There are others of course but these four will suffice for what I am trying to get across to you.  “Why don’t people believe them?”  Yes I know, if you are reading this then you probably do believe them but why don’t the masses?  I have an opinion on this, I think most people know “something” is wrong, VERY wrong.  Many don’t really know what it is and wouldn’t really understand it unless handed to them on a platter.  Most people are not “wired” to understand economics or finance.  Some, many, are just too worn down by daily life to bother “figuring it out” while others (MANY) just want to bury their heads in the sand …because the truth is just too ugly to bare!

I do understand the concept of the masses being slowly and methodically being “dumbed down” over the years.  Notice I used the word “methodically” which in my mind includes “intent.”  I say this because a knowledgeable and well informed population is hard to pull the wool over their eyes …a dumbed down population on the other hand will (has) stand by and accept things the “way they are.”  This is important because our “money” system is fake and fraudulent, sadly only one or two out of 100 in the West understands this.  The rest of the world still “gets it” which is why Western vaults are being raided by Eastern buyers.

Once all is said and done, the majority in the West will finally get it but unfortunately this will be too late.  I have always said that “one second too late is equal to a lifetime,” unfortunately this is the case.  “We” cannot save the masses as they will not listen for whatever their personal reasons.  What we can do is try.  I would urge anyone reading this to pass my writings along to friends and loved ones that you care about.  When you come across Paul Craig Roberts or David Stockman’s writings or anyone else “who makes sense” …forward it!  Yes I know, you have tried this and either lost friends or became the “black sheep fool of the family.”  All you can do is try!  Time is very short now, we know this because the Achilles Heel, gold supply has become very tight.  We know this because even career politicians like David Cameron have told you.  We know this because many Western nations have already proposed and signed “bail ins” where bank balances will be stolen upon the financial collapse.  We know this for so many various reasons, not the least of which is your own common sense.

To finish, I want to link to Mr. Roberts and Stockman’s latest work.  Does it sound like things are a “little bad?”  Or does it sound like the system is hopelessly broken?  Please understand this if nothing else, Stockman and Roberts have no ax to grind whatsoever. They worked in government during a time when “serving your country” was still the mindset.  Please read their latest, David Stockman On Monetary Breakdown & Skyrocketing Gold and A Global House Of Cards — Paul Craig Roberts these are their honest opinions!  It’s over …and only a matter of time until our world reflects this fact!

Miles Franklin Q & A: Gold and Silver Market Suppression Scheme

Q: I have a question for your Q&A day on Wednesday. 

Leonard Melman seems to think it may be a very long time before gold and silver recover and then go up substantially.  What do you think of his analysis?  



David Schectman’s Answer:

Checking our records, I see that you have been receiving our newsletter since 2009 and spoke with one of our senior brokers in 2013.  One would think that, after all this time and exposure to Andy Hoffman, Bill Holter and myself, you would already know the answer to the question.  Our views are very clear and consistent.

You are not asking for a guaranty here, you are asking for our “opinion” of Melman’s views.  I don’t follow his work but did a bit of checking.  It appears he is primarily involved with exploration and junior mining company analysis.

Melman’s view is not one in isolation.  The thing is, I am not sure what he bases his views on.  The Elliott Wave people have their own reasons.  So do the deflationists, like Harry Dent.  I don’t know where he is coming from but I can assure you, regardless of how he got to his conclusion, all of us at Miles Franklin strongly disagree.

It’s one thing to take the position that gold and silver could fall further.  Anything is possible in the short-term, but to think that gold and silver will languish for a prolonged period of time is, in our opinion, laughable.

We base our views on the following:  The Fed continues to recklessly expand the money supply, which will prove to be very inflationary.  Supply is contracting while demand is increasing.  To assume that gold and silver will be in a long-term decline goes against these strong supply/demand fundamentals.  It totally ignores the reams of information that strongly imply the prices are low, not due to fundamentals, but due to market manipulation.

Do you think that Richard Russell, Jim Sinclair, Bill Murphy, Ted Butler, David Morgan, Eric Sprott, Rick Rule, Gerald Celente, Bill Fleckenstein, Paul Craig Roberts, Jim Rickards, Jim Willie and Doug Casey, to name but a few highly creditable folks all got it wrong?  And to that list you can add Andy Hoffman, Bill Holter and myself.  We have a combined 60+ years’ experience in the precious metals industry.

Look, anything is possible.  I give Melman a 5% chance of being right, because anything can happen.  But I tell you straight that my son Andy, Bill Holter, Andy Hoffman and I all have close to 100% of our portfolios in gold, silver and platinum.  And a few mining shares.  That does not mean that we will be proven correct, but we sure think so and put our money where our mouth is.

I guess it is disappointing to think that you have been exposed to our excellent commentary for nearly five years and still allow Melman to make you feel so uneasy about the future of gold and silver.  I spend nearly $250,000 a year to publish our newsletter, whose goal is to help educate you (and all our readers) and give you comfort in a difficult marketplace.  We can’t control short-term pricing, but we can and do explain what is happening and why – and where this will all end up.  I find it hard to believe that anyone who has read our material for several years would even bat an eye at Melman’s viewpoint.  You should know better; you read the views of most of the people I mentioned above, whom I frequently quote for our readership.  I am certain that all of them would tell you that Melman’s view is preposterous!

Be sure and read the excellent article titled “Forget Ebola, Worry About the Coconut Virus” featured in the LeMetropole Café section below.  There is an easy-to-understand explanation of how inflation really works.  It will be enlightening to many of you.  Even if you already understand the concept of inflation, the analogy used is wonderful.  I enjoyed it immensely!

Q:  Does all this news in the media about the banks being fined for collusion relate to the commodity manipulation? If so, is it the same cartel you are always mentioning?

Bill Holter’s Answer:

We don’t “know” the answer to this question but we can make a pretty good educated guess that the answer is “yes”.  Our contention has been for years that gold and silver are manipulated while the mainstream would label us as “kooks” forever even thinking this.  Now, after LIBOR, munis, Treasuries, HFT trading etc. etc. being discovered as snake pits, our contentions carry more weight.  The point is this, gold and silver are kryptonite to the central bank’s fiat monies, are we to believe that these two precious metals are the ONLY assets on the planet that are not manipulated?  Common sense tells you that yes, the same bad characters doing dirty work elsewhere are the ones in the gold and silver market suppression schemes.  The masses will figure this out AFTER they no longer have the ability to procure metals in my opinion.

Q: I have a question for your Q&A day on Wednesday.  I just watched a video with Randy Smallwood the CEO of Silver Wheaton recorded on November 12, 2014. In the video he said that he is fine with silver at these prices. Even at these prices he has margins in excess of 70% because his cost of production is around $4.50/oz. This is the second time i saw a video from a CEO of a major silver producer which stated that his cost of production was around $5 an ounce. If these guys aren’t lying, which i doubt they are, these cost of production figures are way below what i heard at the Silver Summit. These prices may not be all in costs but they are low enough that they kept silver below $9/oz for the twenty year period of 1985-2005. I was under the assumption that we would start to show shortages at these prices. However when i get costs of production of around $5/oz. right from the CEO’s of major producers I could see we could be a lot lower than $15/oz. for many years to come. Without having a financial collapse why couldn’t we have silver prices at or below $15 for another twenty years?

Andy Hoffman’s Answer:

Randy Smallwood is NOT “fine” with prices here, he is simply playing the marketing mantra that because SLW is a royalty company and not an actual producer, they are “immune” to lower prices.  LOL.

For one, SLW’s earnings are 100% correlated to silver prices.  And their cost is NOT $4.50/oz., as that is just their variable cost per ounce.  They also paid billions for the rights to $4.50/oz. silver – and sometimes, the production they pay for is a lot less than expected, or non-existent.  In the case of the Pascua Lama Project, for example, SLW paid Barrick $625 million for the right to part of the mine’s silver – which as it turns out, may never be produced – leaving SLW $625 million out in a litigation nightmare with ABX.  Moreover, when base metal prices decline, the mines SLW buys silver by-product from can be shut-in – which is exactly what occurred in 2008, when SLW nearly went bankrupt.

SLW may not have its “own” operating risk, but with the royalty model, it takes on the operating risks of dozens of mines – and still has 100% exposure to silver prices.

Frankly, if Smallwood is “fine” with rigged silver prices trading below the cost of production, causing his stock price to do this, he should be fired.

4 Year Graph

He Doth Protest Too Much – The “Best” Of Thomas Jordan

If this was a decade ago, the merger of Baker Hughes and Halliburton would dominate my attention, as I covered them like blankets from 1995-2005.  Every move they made, every step they took, I was watching them, writing of them and adjusting my multi-thousand line “earnings models.”  In other words, I was as devoted to oilfield service then as I am to precious metals now; only now, not is my career committed to gold and silver and significant amounts of my free time – but my life’s savings as well.

Today, oilfield services are no longer a part of my economic consciousness – replaced entirely by the upcoming cataclysm that global financial markets, economic activity and geopolitics are headed for.  The fate of precious metals is equally set in stone with only the when and how of Cartel failure remaining to be determined.  Thus, the next two weeks are of paramount importance in the “gold wars”; as not only is the potentially apocalyptic Swiss gold referendum scheduled for November 30th, but the much ballyhooed December COMEX contract expiration November 24th – amidst record silver open interest and unprecedented backwardation.

For the third time in a week, the Cartel were hell bent on enforcing their time honored “Cartel rule #2” – i.e., “all great PM days must be followed by horrible ones.”  This following Friday’s “shocking” surge whilst the “yesses” strengthened their leadership in the Swiss referendum polls, and a slew of PM-bullish news that since expanded dramatically – starting with this weekend’s “G-20” boondoggle in Australia.  The best the world’s “leaders” could come up with was an ambiguous “promise” to grow the global economy by a measly 2% with not even a hint of a viable plan to do so.  Not that anything short of hyperinflation can accomplish such a feat anyway, certainly not on a real basis.  However, the real story in Brisbane was not petty economic propaganda, but relentless attacks on Vladimir Putin, who arrived with four warships in tow, and left early on account of being “tired.”  Yes, tired of being vilified by the very people responsible for the second Cold War – and by all means, well prepared to “knock things down, and drag them out.”

Thus, the Cartel already had their work cut out for them.  Irrespective, they executed their 74thSunday Night Sentiment” paper raid of the past 75 weeks, which was reversed entirely when first, China reported its largest bad loan surge in a decade; and second, Japan supplied one of the most horrifying “misses” on record, as 3Q GDP plunged 1.6%, compared to expectations of a 2.2% increase.  And thus, following the second quarter’s 7.1% GDP collapse, Japan is officially back in recession – which is clearly why “Abenomics II” was announced two weeks ago.

No matter, the Cartel simply executed its eighth 12:30 AM EST paper raid in the past eleven trading days, when the plunging Japanese market was closed for its lunch break; followed by their 332nd2:15 AM” EST raid in the past 375 days, and additional attacks at the 8:20 AM COMEX open and 10:00 AM close of the global physical markets.  And this is following an utter catastrophe of a U.S. industrial production report, which unexpectedly declined – following the last two weeks’ “trifecta” of declining factory orders, durable goods orders and construction spending.  But don’t worry, the “new hail mary” algo showed up as usual, to lift the benchmark 10-year yield from the Fed’s “line in the sand” at 2.30%, whilst the PPT executed its 17th “dead ringer” algo in a row on the “Dow Jones Propaganda Average” at exactly the 10:00 AM time when open market operations were supposed to be no more, care of the supposed “end of QE.”

3 Charts 11-18

And oh yeah, I neglected to mention the most PM-bullish news of all – which frankly, I’m still reeling from, given how unexpected and potentially CARTEL SHATTERING it was.  Yes, just after Draghi gave yet another speech discussing the weakness of the Euro economy, reiterating his willingness to do “whatever it takes” to save it, ECB board member Yves Mersch delivered what may one day be remembered as the “shot heard round the financial world,” in saying

Theoretically, the ECB could purchase other assets such as gold, shares, and ETFs to fulfill its promise of adopting further unconventional measures to counter a longer period of low inflation.

-ETF Daily News, November 17, 2014

For once, even I am speechless!  The ECB has been as mortal an enemy of gold as the Fed – in attempting to illegitimize it, in favor of the sacrosanct fiat currency underlying its power base.  To wit, such a statement not only legitimizes gold’s monetary value in spades, but directly affronts supposed “allies” like the Fed and Bank of England; not to mention, the Swiss National Bank at its moment of greatest need.  In our view, there is no other way to analyze such a dangerous, calculated statement than to assume significant “splintering” of TPTB’s views, particularly against the “all-powerful” Federal Reserve as the global money printing group rockets into uncharted realms.

Speaking of the beleaguered SNB, which could be two weeks from its demise as a relevant entity, we felt the need to “step up the pressure” as the potentially historic referendum approaches.  My past two articles were Friday’s “call to the Swiss” – in which we pled with the Swiss to save their country by re-linking the Franc to gold; and Monday’s “most prescient statement ever made” of Ferdinand Lips’ 2005 comment that “if the SNB does not stop its gold sales, Switzerland will have to buy it back one day – but at a higher price.”  Today, we focus on how the SNB’s villainous Chairman, Thomas Jordan, “doth protest too much” to the referendum, in his goal of not only maintaining power but delaying the inevitable realization of his policy failures.

In many ways, the MSM’s incessant “assumption” of a no vote mirrors their equally callous, description of the pre-election Catalonian polls.  Despite last year’s polls, on average, depicting 55% support for secession, compared to just 20% against and 25% undecided, nearly all MSM articles suggested a Catalonian “no” vote was likely – in contrast to the actual result of 81% yes, 4% no, 15% undecided.  Which is exactly how they are writing of the Swiss gold referendum, despite initial polls putting the “yesses” strongly ahead, and Friday’s Deutschebank report that the yesses had a “narrow but clear lead.”  You know, the same type of pro-establishment propaganda that gave credence to this weekend’s toothless, baseless, G-20 “growth” communique.

As for Jordan, it’s quite amazing just how vigilantly he is publicly fighting the gold referendum, despite Swiss law proclaiming it illegal to do so.  In other words, Swiss bankers have as little regard for the law as their compatriots throughout the Western world – which we assure you, will not be lost on the Swiss people, who fiercely support the independence their direct democracy process engenders.

On September 6th, 2011, Jordan was an SNB board member when its infamous peg with the Euro was instituted at 4:00 AM EST, just as the U.S. Labor Day weekend was concluding.  “Coincidentally,” gold was trashed instantaneously from its all-time high level of $1,920/oz., in what I long ago deemed “Operation PM Annihilation I.”  Not a few people – such as our good friend Turd Ferguson – believe the Swiss were directly involved in this raid, coincident with one of the most PM-bullish events of our lifetime.  And thus, we wouldn’t be a bit surprised if the SNB’s supposed 1,040 tonne gold holding is no more real than the U.S. Treasury’s 8,134 tonnes.

2 Graphs 11-18

In recent weeks, Jordan has been campaigning against the initiative, as if for his life, despite the aforementioned law prohibiting it.  And in doing so, has made some defenses imaginable – starting with the comical hyperbole that a “yes” vote would represent a “fatal error of judgment.”

This is from a man presiding over a tripling of the SNB’s balance sheet since 2008 – mostly since the Euro peg was announced; to an astonishing 80% of GDP, compared to “just” 25% for the Federal Reserve.  In the process, the “Euro Franc” has plunged 16%, yet Switzerland’s average quarterly GDP growth of just 0.4% has been no better than the rest of the continent.  And as for the “deflation” its rigged CPI purports over this period, it’s no more fraudulent than in Japan; as before the recent 16% and 20% plunges in the Euro and Yen, respectively, Tokyo and Osaka were ranked the world’s two most expensive cities, whilst Zurich and Geneva were ranked seven and ten.

Comically, Jordan claims gold reserves should not be increased because it would make it more difficult to defend the Euro peg – i.e., the primary source of the nations’ biggest ill, the aforementioned inflation that catalyzed this year’s “Decent Salary Referendum” – which would have raised the Swiss minimum wage to $25/hour, three times that of the United States!

Ominously, he actually depicts the cap as the “main policy tool to defend the SNB’s mandate of price stability,” in perhaps the most paradoxical statement ever made.  He also claims gold is not valuable because it is non-interest bearing, despite the fact that Swiss Treasury bill rates are currently negative; whilst 10-year yields are just 0.4%; and he himself promises official negative rates if the economy continues to weaken.  Better yet, he claims gold is “one of the most volatile and riskiest investments” as the SNB admits to buying domestic and international small-cap stocks!

Frankly, we could write another two or three pages dissecting Jordan’s anti-gold arguments – as well as those of his equally desperate SNB colleagues ranging from rote propaganda, to undecipherable platitudes and flat out lies.  However, we’ll simply end with a comment representative of global Central banking hubris in general – of how “too little gold in the economic crisis was never Switzerland’s problem; but instead, the strong franc, whose massive overvaluation has led to major problems.”  Yes, Thomas, nothing is worse for a population than a strong currency, or better than a weak one.  Let’s just see how Switzerland does if the “tragedy” of gold re-linking is mandated – and conversely, how many months weeks days it will take the people to fire you for treason, assuming the current “yes” leadership wins the day.

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