In recent weeks, I have noted an extremely disturbing trend in the cumulative media consciousness – which in recent articles, I have referred to as “lazy”, “complacent,” and “indifferent” journalism. Perhaps this is why I so passionately railed against Twitter yesterday – which in many ways, is “replacing” journalism as a principal method of information dissemination. Even the mainstream media – whose ratings have been destroyed by the internet irrespective – has lost so much credibility due to such practices – and blatantly political bias, to boot – few are listening anymore. Heck, even the “modern Tom Brokaw,” Brian Williams, has turned out to be a liar. In other words, the days of your parents sitting at the breakfast table, reading the New York Times and discussing the issues affecting our lives is decidedly over – in favor of entire families addicted to social media, gossip, online gaming, and other brain-draining nonsense.
Financially, there’s not a doubt in my mind that the parallel “deformation” of the financial communities’ collective analytical process has been caused by relentless Central bank market intervention – some of it overt, but increasingly more so, covertly. Heck, it seems like a lifetime ago since I stopped looking at technical charts; or, no disrespect to Ted Butler, analyzing fraudulent COMEX data. I mean, this whole ado about JP Morgan’s supposedly surging physical silver inventory makes me want to puke; as honestly, how can anyone in their right mind believe a word they say? JP Morgan – and countless other TBTF banks and politically cozy corporations – have become de facto government “partners” in fleecing the “99%” with all manner of corrupt, unregulated practices; and given their maniacal, sociopathic desire to maintain a status quo in which they remain “the 1%,” they will say and do anything to appease, assuage, cajole, and deceive.
And nowhere more so than paper Precious Metals, where for the past 15 years the Cartel has mastered the art of creating hope – and then, like Lucy with her football – violently yanking it back. Monday and Tuesday’s seemingly un-catalyzed PM surges – albeit, as blatantly capped as usual – were perfect examples of such “carrot-dangling”; as following an horrific GDP report and mega-dovish FOMC statement Wednesday, which would have accelerated PMs’ momentum in freely-trade markets – gold and silver prices were, of course, smashed. And here we are Thursday morning – following a better than expected, “island of lies” weekly job claims report, and a horrific personal spending and consumption report – watching gold being again blasted back under the Cartel’s maniacal, two-year “line in the sand” at $1,200/oz. Meanwhile, the “oil PPT” relentlessly pushes crude higher despite relentlessly bearish data, in order to prevent the collapse of America’s only profitable industry; whilst the “stock PPT” and “bond PPT” try to prevent confidence from declining toward the actual level of economic activity – at least, for the 1% that own the majority of financial assets.
I mean, for the past six months we have been relentlessly propagandized how gold will collapse when the Fed “raises rates” – despite the fact that they, and essentially all Western Central banks, have been stuck at the zero bound since 2008; including major players like the ECB, which just launched a 20-month QE program last month; and the BOJ, which this week claimed that even considering an exit from Abenomics would be a “nightmare” scenario. Meanwhile, even heavily book-cooked U.S. GDP has been flat for three years, at levels well below historical averages; and this, despite seven years of ZIRP, and countless trillions of QE – with yesterday’s 1Q GDP number putting 2015 on trend to be still lower. For two months, we were told the Fed was getting closer to raising rates because they substituted “considerable time” with “patient” in their policy statement – even though the Fed explicitly claimed they meant the exact same thing. Then, because they got rid of “patient,” this was supposed to be bad for gold, too – even though they explicitly claimed that removing patient did not mean they were now impatient. And now, yesterday – amidst an uber-dovish statement, in which the Fed essentially admitted it’s cluelessness about what’s wrong – they stopped predicting when rates might be raised altogether. And yet, not a peep from the financial media at all – and yet another gold attack. And what ticks me off most is that during this time of extreme, unprecedented market manipulations, the PM newsletter writer community – desperate for subscriptions – become an even more virulent force of misinformation then the Cartel itself. Between petty analysis of meaningless charts – often claiming “proprietary expertise” – LOL; flimsy logic, that an average ten-year old can spot; and eternal promises of the riches to be made after the upcoming “bottom,” the spirit – and integrity – of Precious Metals investing has come under attack from even the supposed “good guys.”
One such writer, infamous for claiming the stock market would double between 1999 and 2008, and collapse between 2011 and 2014, claims gold is falling due to ongoing “deflation” – despite global stock markets, and seven billion peoples’ cost of living – hitting all-time highs. Despite the fact that not a mining company on the planet would exist – amidst an environment of record demand, no less – he has the cajones to espouse a belief that gold could fall back to $200/oz! Another “analyst,” who last summer vehemently claimed gold’s bottom was in, has since changed his mind – claiming it will now bottom below $1,000 “in June,” before rising to $5,000. Apparently, he expects “deflation” for just another two months – but have no worries, he expects the industrially sensitive Dow to double, whilst industrially sensitive commodities like oil and copper collapse. Makes a lot of sense, right? And last but not least, an analyst infamous for going to jail for financial fraud says gold will fall well below $1,000, before rising to $5,000 “at the most” – when inflation causes average wages to be $5,000/week. Yes, the average person will earn $250,000/year – but no, that’s not hyper-inflationary enough for gold to rise past $5,000. In other words, gibberish as far as the eye can see; with even the best analyst in the sector refusing to acknowledge the biggest pink elephant in the history of pink elephants; i.e., the Cartel that relentlessly suppresses gold and silver prices – such as the attacks that occurred as I wrote this article; what a shock, right at the COMEX open.
As I look at my screen, I see that neither stock, copper, oil, or dollar futures so much as budged after the conflicting – and for the most part, meaningless – economic data at 8:30 AM EST; and yet, gold plunged from $1,205 to $1,184 – and silver, in the literal straight line seen below, from $16.60 to $15.80, with the typical “extra kick” at the 9:30 AM NYSE open. Yes, silver – of which 75% of global supply is inelastically used for industrial purposes – plunged nearly 5% in minutes due to supposedly strong economic data (at least, the data the manipulators chose to focus on, as opposed to the horrible personal income and spending data), whilst other base metals didn’t budge; in essentially the same manner, at the same time, as we have witnessed for the past 15 years. And yet, nary a peep from anyone with the ability to effect change; even Zero Hedge, which despite its penchant for smarmily commenting on the consistent, heavily suspicious PM collapses, refuses to address this paramount issue the way it does the manipulation of essentially every other market. Thankfully, the physical supply/demand balance only grows tighter with each such criminal act; and with each passing day, the relentless, horrific news flow only guarantees more and more people will be drawn to gold and silver over time. Indisputably, global physical demand is either at, or very close to, all time high levels, at a time when supply is at best flat, with nearly guaranteed declines – particularly in gold – for years to come.
Yesterday’s MUST HEAR Audioblog discussed how no one is even listening to the Fed anymore; or, for that matter, their “mouthpiece” Jon Hilsenrath at the Wall Street Journal, whose 15 minutes of infamy are officially over, now that everyone realizes that not only are his articles written by the Fed, but contain more misinformation and propaganda than truth. Again, it’s now gotten to the point that the only thing people care about now are the markets themselves, whose actions have become so counter-intuitive – care of 24/7 manipulation – it’s become useless trying to “analyze” them; particularly paper markets like stocks and bonds – which unlike physical markets like gold, silver, and oil – can be infinitely manipulated with relentless printing press funded buying and naked shorting.
In gold and silver, such manipulation has caused record low sentiment here in the States – contrary to the rest of the world, which has seen strong gains based in plunging local currencies. Meanwhile, relentless PPT equity support has created history’s greatest financial moral hazard – yielding record high valuations, margin debt, and sentiment at a time when the global economy is at its worst level in generations, with an equally ugly outlook. To wit, the deformation has become so all-encompassing, options incentivized corporate managements are spending trillions of dollars “financially engineering” their stocks each year, and nearly nothing on sustaining capital expenditures. In Europe, the entire monetary and trade union is in danger of collapsing; but care of relentless Central bank support, the consensus has now become that QE is capable of offsetting a PIIGS collapse. Heck, I even read today how collapsing Chinese steel companies have been investing what little cash they have in the stock market!
Am I angry, disheartened, disgusted, frustrated, and enraged? You bet I am, as are David Schectman, Bill Holter, and the rest of the Miles Franklin team. I may be a paragon of logic, and a relentless, passionate fighter for what’s right – but I’m also a human being, who has put in more time, effort, and zeal into the 26 years my career has spanned than most people put in in a hundred. I never asked to be a freedom fighter, or a leader in the cause of truth; but simply, a successful businessman making a good living for my family. By most standards, it would be hard to dispute that I have. However, the amount of money the Cartel has stolen from me over the past 13 years – not to mention, sleep (until I sold my mining shares four years ago), peace of mind, and credibility, is immeasurable. Not to mention, I haven’t truly taken a day off in years; as not only do I feel obligated to “handhold” readers and listeners – from dozens of countries – but my innate fear of financial failure causes me to work harder when times are tough. And mentally speaking, times have never been tougher – no matter how powerful, confident, and right-sided our articles and podcasts are.
Hopefully, this outpouring of emotion turns you more on than off. I find it empowering and heartening – as based on what I noted above, truth – and passion – in the staid financial world should be at a premium in today’s times of mass criminality and inequity. To that end, we promise that no matter how hard TPTB try to avert their inevitable destiny with evil, amoral market manipulation – the Miles Franklin Blog will remain your rock in stormy waters, and sounding board against the relentless lies and propaganda attempting to separate you from your money.
My plan for today was to write a very basic piece hitched to the one written yesterday “the money has to go somewhere”. The plan was to point out that gold (and silver) will be the final destination for monies dislodged from crashing markets all over the world. Along came the Q1 figures for U.S. GDP, a disaster on many levels. So switching gears, let’s look at the first quarter, how quickly the economy has deteriorated and what it means in the future and in relation to the past. I do plan to tie this together at the end because no matter how you look at it, gold is a magnet for what will be shaken loose.
Q1 GDP came in at .2% growth, this was a whopping $6 billion worth of growth for the quarter . This number was an obvious disappointment as estimates were around 1%+. Of course the apologists were immediately out in full force to remind us of how terrible the winter was and “weather” was to blame. I would ask, isn’t that what “seasonal adjustments” are for? Steve Liesman of CNBC even posed the question why seasonal adjustments are “not working”. The obvious answer is because you can only stretch, massage and outright lie about economic numbers so far before you cannot any longer …because even the blind will see it.
Breaking the quarter down and looking under the hood, were it not for the biggest inventory build of any quarter in history, the quarter would have shown a negative 2.6% growth rate . What exactly does this mean? It means the consumer or final user has shut off their purchases. It means “stuff” was produced but wasn’t sold. The inventory build number was over $120 billion, can this happen again in the 2nd quarter? And what if the end buyer keeps their pocketbook shut again? Something must give, either the inventory gets sold or the producers must cut back production drastically.
It is worth mentioning that QE 3, the “final QE” ended in the fourth quarter. Is this an example of the economy convulsing because the juice was taken away? And let’s not forget, today (yesterday) was a Fed meeting and announcement, can they possibly even hint about raising rates and actually withdrawing some of the previous “juice”? Another “blame” is being pinned on the strong dollar, can the Fed really raise rates and put a further bid under the dollar?
What does this mean for the future of the economy and more importantly the financial markets? The markets are at record high valuations, the news of an economy going in reverse can only augur for lower earnings. The strong dollar can only augur for a Fed who doesn’t want a stronger dollar. The leverage in the financial system is so thin already, can the risk be taken that something will snap? I don’t believe so, I also believe it will not be long before QE 4 gets floated seriously and then implemented.
As I wrote yesterday, “the money has to go somewhere”. It looks to me like some sort of come to Jesus moment is close in both the economy and the markets. If you have been awake, you understand the economic and financial systems, are dichotomized yet so intertwined, a spark anywhere means a fire everywhere! Literally hundreds of $trillions will be shaken, some of it “shaken loose” and will look for a safe place to hide.
All the gold ever mined in history is worth some $6 trillion, what do you suppose will happen when $10′s of trillions seek the safe harbor of gold? No matter how you look at it, the Fed is in a box of their own making, any action or inaction has the possibility of shaking the tree and dislodging capital, forcing it to look for safety. The result will be your “no offer” moment in time. As capital floods toward the only monetary asset that cannot default, owners will pull their wares off the shelf and withdraw their offers. This only makes sense because the movements will be so large and so fast, no one will even know what various assets are worth or where they will settle until after the dust clears.
I leave you with this thought, if you need to build a fire or light a cigarette, how much would you pay for a BIC lighter? The same could be asked about “money”, if one needs to put capital somewhere that cannot ever default (which is gold only), what is one ounce of gold worth? It is crystal clear to me, when this question gets asked, it may take some time for the physical market to clear and give an answer! The true value of gold will shine as a vortex of defaults occurs.
Financial Survival Network
Time for another Whatever it Takes Wednesday with Andrew Hoffman of Miles Franklin. This week, Andy talks about:
- Fed meeting!
- All about death of their credibility
- Can’t let stocks fall for even a few percent
- Confidence collapsing
- GDP report, and ALL economic data – worldwide!
- Chinese QE? – global game changer
- Yuan devaluation (and likely gold reserves announcement)
- WAR ON MONEY! – yesterday’s article
- Capital controls, NIRP, FATCA/FBAR
- JPM no coins in safe deposit boxes, no big cash withdrawals
- Switzerland, closed all loopholes to NIRP
Andy Hoffman from Miles Franklin is on the line to dissect today’s breaking news about the collapse of the US economy as illustrated by today’s GDP report. The REAL numbers which now fully reveal how sick the economy is, despite artificially low interest rates and TRILLIONS in Fed “stimulus”, are absolutely frightening.
Please CLICK below to listen to audioblog
Q: I have been receiving a lot of email ads about Home Storage Gold IRAs? I
was wondering if you are familiar with these? One question I have
specifically is what happens if the gold is stolen in a burglary? Would
the IRS still want their money even though it was gone?
Thanks for your great newsletter,
David Schectman’s Answer:
You have to open up a limited partnership but it goes against the spirit of the law. It also is a red flag with the IRS. We strongly advise against this. You should store with an approved entity that offers you the judiciary responsibility.
This is a question for an attorney, but I bet you would be up a creek without a paddle. You would lose both ways – the value of the stolen coins and to the taxman.
Bottom line: No reason to do it. Use an approved source.
Q:There seems to be a lot of discussion about JP Morgan’s motives in relation to their huge recent stockpile of physical silver.( By the way, if there is a silver shortage, where did all this silver come from ? ) .The simple argument is that they anticipate a price explosion, so they will profit handsomely. A more sinister motive might be that this silver could be provided to the market, even at a low price, to enable the current financial system to be further prolonged, and the fiat dollar not destroyed. This could yield more to them than a single windfall on the sale of their silver.
What are your thoughts ?
Andy Hoffman’s Answer:
A lot of discussion, yes; but frankly, nothing new or novel. I go into great depth regarding my views in my latest SGT Report podcast, which is scheduled to be published on Wednesday evening, April 29th. Essentially, I talk of how it makes sense – on paper – for JP Morgan to short paper silver and buy physical, to profit from the manipulation and prepare for the future. However, at this point JP Morgan is as much a government entity as a private firm; so frankly, I think its management cares solely about how to manipulate the market to keep the fiat Ponzi scheme going.
Moreover, with due respect to Ted Butler, why anyone would believe a single thing JP Morgan reports to the public – of its silver inventories, COMEX short positions, earnings, balance sheet, or otherwise, is beyond me. They are a criminal operation funded by – or better put, partnered with – the U.S. government, with a rap sheet longer than Charles Manson. In other words, don’t pay attention to what they say – particularly on the COMEX, as since June 2013, the following disclaimer has been inserted in every position and inventory report…
“The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only.”
Aside from curiosity, I could care less what the COMEX, JP Morgan, or any other Wall Street/Washington entity claim about their PM positions or inventories. I trust them like a fox in a hen-house.
Q: I’ve heard the IMF will re-calibrate the currencies making up the SDR
this year, to take effect 1st Jan 2016. Will this move ‘revalue’ the
worlds currencies (including asset prices) therefore saving the
currencies after most probably a devaluation.
I’m from the UK and would like to know how this unfolds for the UK
All the best….Peter Baillie
Bill Holter’s Answer:
I believe the IMF will reconfigure the SDR in Sept. or October. I spoke of this in yesterday’s writing. I believe gold will be brought toward the system rather than away and the yuan will be part of it. Very possible, even probable in my opinion the yuan will be equal weighted with the dollar. As for the pound, I think it will have a lesser importance within the SDR than it does now.
The following chart from the Federal Reserve’s own data pretty much sums up America.
The rate of home ownership and the labor participation rate peaked about 10-15 years ago and it’s been downhill since. Do you have any wonder after looking at this chart why if it “feels” different now? Yes the stock market is up, but could that be a function of all the funny money pumped into the system since 2008? Pumping money into the system was in response to the “peaking” of America, the money (inflation) had to go somewhere, we see the “somewhere” currently as the equity markets.
In my opinion, the housing market which was used as an ATM machine by so many going into 2007 had to give way (as pricing outstretched the ability to carry) and has only tread water back to earlier levels. Interest rates have been zeroed out which has allowed stagnant and even lower incomes to carry more debt. The obvious problem is employment, or the lack of. Jobs, real and good jobs are simply no longer available and not being generated by creating thin air money. If the real economy had jobs available, “it” wouldn’t feel as bad as it does and the rolling social unrest we have been experiencing might not have happened.
Capital “rolls” from sector to sector, it always has and always will. Too much “capital” results in a bubble (or bubbles plural). China’s real estate market qualifies as one of these bubbles in the bursting phase . Their stock market is working on another … for the ages. Last week alone China saw over 4 MILLION new brokerage accounts opened, …while margin debt is escaping the stratosphere! Chinese bubble mania is no different than any before it (except maybe in scope) and as all before it will eventually burst wide open. Why does this even matter? This is important because once it does burst, the money has to go “somewhere”. If you don’t believe China has a manic stock market, the following chart shows how many NEW accounts are being opened, is this a mania?
My point? Quite simply I believe logical and obvious …these Chinese shareholders will soon panic out and look for a new haven, probably a “safe haven”. Hundreds of millions will be looking for a safe place to hide. Will they “default” (pun intended) and run into U.S. Treasuries? Jack Lew can hope but I highly doubt it. Or will they rather choose something more familiar, like gold?
Let me point out the obvious, the Chinese population already has an affinity for gold, this is indisputable. Ask yourself some very basic mathematical questions, like how many Chinese equity investors are there? 100 million? 200 million? More? What kind of balances do they carry in their accounts? The equivalent of $1,000? More? I know you can see where I am going here! What if 50 or 100 million investors with just $1,000 in their accounts were “panicked” into gold? Could the market absorb this? Or would the fractional reserve nature of the gold market be cracked open like a watermelon? I might remind you, the world produces only 80 million gold ounces per year, where will the metal come from?
Before you go off on me and say I am going “pie in the sky”, why does this thought process not make sense? Is my number of possible investors at 50-100 million people too high? Or the account size too high at $1,000? And ask yourself this, if there were a bevy of Chinese retail investors to flood the gold market, might the rising price and scarce availability prompt others around the world to do the same? Do you see? A burst equity bubble in China has the very real ability break the fractional reserve nature of the West’s gold market because the money has nowhere else to go! Gold is the final destination, a familiar and comfortable one at that for the Chinese. Everyday Chinese investors can break it by exposing the flaw of miniscule and fractionally reserved inventory. Please don’t tell me “the Chinese will not buy from COMEX nor LBMA” because the demand will find its way to WHEREVER ANY gold is available, and very fast! What would that do to the “face” of Western finance? Will the West not then be exposed as a fraud if they can no longer meet demand?
Will China be blamed for blowing the lid off the game? Did a sovereign country “do it” or did it just happen by a stampede of “uncontrollably panicked” investors? Could China or Russia or anyone else be blamed for busting the market purposely? Much pain and loss will occur amongst Chinese speculators, I am sure the leadership of China already knows this. They also know the money has to go somewhere and the “somewhere” will expose the very heart of Western fraud. I would think a response of “oops, sorry, but we didn’t do it” might be all that is heard!
It’s a quiet Tuesday morning – at least it was, before the consumer confidence report catalyzed a major PM surge, and stock plunge – a day ahead of yet another so-called “momentous” FOMC meeting. Frankly, it’s getting hard not to laugh out loud thinking about it, given how fewer and fewer people could care less what the Fed has to say. For 102 years, they have been the most destructive financial entity on the planet; and since their latest, global fiat Ponzi scheme peaked at the turn of the century, they have proven to the world that everything they say is wrong; and every action they take a miserable failure.
From 2000 to 2008, the Fed pushed the last bit of string they had; until finally, spectacularly, their ill-begotten, ill-fated monetary system – “turbo-charged” with “nuclear” financial engineering; the corporate takeover of Washington; and the end of a golden age of financial journalism; pushed the global economy to the edge of ruin. Massive overcapacity as far as the eye can see; exploding, unredeemable debt; corrupt corporations, politicians, and bankers; rampant socialism; expanding societal dysfunction (see Ferguson, Baltimore riots); and the largest wealth disparity phenomenon since feudal times. Throw in the not so invisible hand of market manipulation, and the “deformation” of global economics has never been more grotesque, or the “price discovery” mechanism more disabled. To wit, currency volatility – i.e., the “single most important Precious Metals factor imaginable” – has exceeded that of stocks and bonds themselves; whilst the only assets proven to protect one’s wealth have been suppressed below the price of production, amidst an environment of soaring global demand. Frankly, all one needs to consider, when pondering how this ugly game will end, are first, the immortal words of J.P. Morgan himself (who spawned the most immoral corporation in history)…
“Gold is Money. Everything else is just credit.”
…and next, the man most responsible for ruining the living standards of billions of global denizens; “Maestro” Greenspan himself, long before he sold his soul for power…
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.”
As for the Fed; sure, the financial media – record low readership and all – tries to convince us that what the Fed says both matters and moves markets; when in fact, markets are moved more by manipulative algorithms, executed by a handful of government-partnered TBTF banks, than anything a handful of moronic, discredited beaurocrats have to say. Hence, the titles of my recent post-Federal Reserve meeting commentaries; “the Death of Fed Credibility“; “New Lows of Fed Idiocy and Cluelessness“; “FOMC Lunacy Opens the Gates of Financial Hell“; “Laughable FOMC statement sets new Central Bank low – until the SNB one-ups it“; and “the most unequivocally dovish FOMC statement in memory.” And not to be one upped, the Fed’s “partners in crime” overseas have, if possible, attempted to drain the last drops of their remaining credibility even more rapidly – per last week’s comment by “Goldman Mario” Draghi himself; i.e., “the dumbest Central banking statement ever.”
To that end, I have no doubt these titles will need to be “one-upped” when the Fed speaks tomorrow (Wednesday) afternoon – when 120 Keynesian-brainwashed, printing press taxpayer-funded lackeys spend two days red-lining the March 18th policy statement, seeking ways to assure the world it has no intentions of raising rates, whilst simultaneously ignoring reality by pretending the U.S. economy is “recovering.” No doubt, the government’s myriad “manipulation operatives” – i.e, the “President’s Working Group on Financial Markets”; the Exchange Stabilization Fund; gold Cartel; “oil PPT”; and all “other hands” will be on deck to try and paint a market picture in its aftermath. But whether they succeed or not – and inevitably, they will spectacularly fail – we assure you, subsequent market movements will decidedly NOT be due to what the Fed says, but whether or not said manipulation operatives succeed in their goals.
And by the way, since the whole “imminent rate hike” propaganda commenced with the supposed “end of QE” last October – incorporating the hype first about removing the words “considerable time”; and next, “patient” – I have not seen an FOMC meeting with this little “hawkish hype.” In other words, the economic data has been so bad – not just domestically (see today’s horrific”consumer confidence” number) but globally (see today’s biggest ever plunge in Japanese retail sales, worst UK GDP print in three years, and Greece not having enough cash on hand to pay April civil salaries), that even the most conniving “Ministry of Truth” agencies – like Reuters, Bloomberg, and Yahoo! Finance – have been printing one ugly economic story after another. In fact, this is Yahoo! Finance’s top story this morning, which undoubtedly will be validated by tomorrow mornings first look at first quarter GDP “growth”; which, fudged and all, will be ugly. Oh well, it must have been “the weather” and the (very brief) Western ports strike. And what’s this I hear? The Western port truckers all went on strike today? Well, I guess that will be the “excuse” when 2Q GDP comes in ugly as well.
Meanwhile, as the Cartel’s relentless capping – and the resultant mining industry collapse – inadvertently build an utterly massive price floor around the $1,200/oz level, the inexorable growth of global gold demand continues – per the “staggering” volumes flying from West to the East described here. As for supply, I’m not sure how much more loudly I can scream that “peak gold” has arrived, NOW; validated in spades by last night’s ugly first quarter earnings report from the world’s largest gold miner – “evil personified” itself – Barrick Gold. As discussed earlier, Barrick, which produces 7% of the world’s gold, saw its production plunge from 7.4 million ounces in 2013 to 6.2 million in 2014. In the first quarter of 2015, it produced just 1.4 million ounces – i.e., a run rate of just 5.6 million ounces; and though it expects to ramp up production in the second half of the year, its big first quarter miss draws visions of “the check is in the mail” as regards its supposed second half plans. Irrespective of whether it can maintain flat production in 2015, it is estimated that Barrick’s production will plummet to just 4.5 million ounces by 2020, and even lower thereafter. And this, from the world’s largest gold miner. Gee, I wonder what global demand will look like in 2020, when the average currency has dramatically declined in value, and gold (and silver) supply simply isn’t to be found.
On that note, on an otherwise quiet morning – except in Baltimore – where the world is fixating on how many iPhones Apple sold to the Chinese – I figured I’d discuss a topic that, like yesterday, has long ripened in my “notes” file; not that I haven’t discussed it in various ways, shapes, and forms countless times before. Which is, the fact that the world is not “de-dollarizing,” but de-fiatizing.
To wit, the Miles Franklin Blog has expended countless reams of digital paper – and airwaves – discussing how so many people misguidedly focus on how “the dollar” is doing relative to other currencies, when the real issue is how fiat currencies in general are faring against items of real value. For the millionth time, there is simply no way the dollar can meaningfully collapse during a global financial crisis – particularly this, the worst such crisis in history – given that its superior liquidity causes a worldwide flight to “safety” whenever markets turn turbulent. Consequently, the Fed is able to fight the “final currency war” with a bigger bazooka than its competitors; which is exactly why, despite having printed trillions of fiat currency units via ZIRP; QE’s 1, 2, 3; and “Operation Twist”; not to mention, countless “off balance sheet” dollars – such as $16 trillion of “secret loans” post 2008; endless “swaps” with insolvent European banks; and who knows how much “capital” for the PPT, ESV, and gold Cartel; the dollar index has surged to 12-year highs.
Meanwhile, the cost of living for every Earthling continues to soar; and for those secular Americans only experiencing creeping “frogs in a boiling pot” inflation, take a look at the experience of the world’s other 6.9 billion people – many of whom live in net importing nations – whose average currency has plunged by more than 40% since the Fed commenced its “point of no return” money printing spree in 2011. Remember, by definition fiat regimes are Ponzi schemes; and thus, whatever horrific currency trends you see today will only be magnified in multiples in the months and years to come. To that end, the Chinese, Russians, and Arabs – among others – can do whatever they like to reduce trade with pariah nations like the U.S. and UK; but until and unless their currency has intrinsic value (making it money), the bigger trend of “de-fiatization” will engulf the globe like the Ebola virus.
Remember, it matters not if – and when – a new “gold standard” is developed. Of course it must, but that time and place may be far, far away. Instead, we own Precious Metals to preserve our wealth until that place and time – be it within our lifetimes or not. Gold and silver will still be standing long after the dollar, Yen, and especially the Euro. And if you don’t have them when said crises really destroy said currencies’ value, you may never get the chance to protect yourself, and those you love.
Bill Holter of MilesFranklin.com gives a U.S. dollar and gold update.
Holter warns there is a biggest short squeeze in history coming for gold and a big reset for the U.S. dollar coming sooner than later
Please CLICK HERE for the interview!
Several people have asked me “why doesn’t a cartel form to take on the suppression schemes on the COMEX and LBMA?”. This is a very good question. One I believe can be answered with some common sense, a little bit of thought and a very broad view.
For a little foundation work let’s look at COMEX silver inventories. They claim to have 63 million ounces available for delivery, adding in the eligible category we see a total of 175 million ounces. At current prices, it would only require $1 billion to claim the entire registered category and only $2.8 billion to wipe out all inventory. I am using silver here because the numbers illustrate how small this market really is and how easily the inventory could be cleaned out. Were we to look at their gold inventory, only $10 billion would do the trick!
Now on to our question, why hasn’t anyone taken on the suppression scheme? Why doesn’t someone just step up with $10 billion and end it all? First, once upon a time someone did. The Hunt brothers tried in the late 1970′s and came close to actually cornering silver ..but as you recall, the “rules” were changed by COMEX and only selling was allowed. Truth be known, they did “corner” silver which is why the rules were changed, the “money interests” were about to go belly up but the Hunts slightly miscalculated. The Hunts had borrowed monies and used margin accounts, when COMEX changed the rules they could no longer fund their positions, they were forced into liquidation. Please understand this, were someone to try to corner the silver or gold markets, they would in effect be challenging the biggest financial powers the world has ever seen. Trying to corner the COMEX individually or collectively would be met with some very nasty responses that would know no limits. Some say, and I believe it’s plausible if not even probable that JFK was shot because he wanted to bring silver notes back into the system. He wanted to limit or even abolish the Federal Reserve. He challenged the “money interests”. It is for similar reasons I believe an individual or individuals would be easily thwarted by threats or worse. In my opinion, an “operation” like this could only be undertaken by a country …or countries, plural.
Why wouldn’t a “country” make a try at something like this? You might ask Saddam Hussein or Mohamar Qadaffi what they received for wanting to sell their oil for something other than dollars? Your next question might be, why wouldn’t Russia try to blow the game apart and expose the fractional reserve nature of the gold market? They are already being sanctioned, so what sort of additional blowback would there be? Or why wouldn’t China do this as they surely have the ability to?
Thinking this through, why would they? Just to blow the credibility of the Western Ponzi scheme? Actually the real question is why wouldn’t they? It is my opinion they “have” been doing this, or better said, actively “preparing” to do this since at least 2008. China or even Russia could have blown up the COMEX and LBMA at any given point in time over the last many years but have not done so because they did not yet “have the prize”. The “prize” being the contents of Ft. Knox, West Point, NY Fed and BOE vaults! They have been methodically draining these Western vaults for years and accumulating our gold…”in preparation”.
Let me explain it this way, the largest client I ever did business with taught me a lesson very early in my career. He bought 20,000 shares of a stock that immediately went up 15-20%. I called him gleefully to let him know the good news, he cussed and told me to blow it all out at market. When I called to give him his fill price I asked why he was upset, he just made $50,000 in less than a week? His plan was to buy up to 500,000 shares, when he buys something he wants it to go DOWN in order to buy more and build the position without affecting the price upwards. His words were, “20,000 shares is a ham sandwich odd lot position, I’m not in this for nickels and dimes”.
Relating this to China, they have now amassed at least 10,000 tons of gold in my opinion and most likely much much more. More importantly, they have drained a good portion of this gold FROM the West. Blowing up the Western financial system at a time they had not yet “built their position” would have been foolish, doing it after building their position while draining Western reserves kill all birds with one stone!
I wrote last year an article titled “Kill Switch” where I hypothesized the very large open interest in silver was actually the Chinese (et al) holding their thumbs on a kill switch. One where they could make a “call” on more COMEX silver than is even available. The open interest has again expanded and now near record levels well over 188,000 contracts representing over well 900 million ounces versus 63 million ounces available to deliver. I still believe there is validity to this hypothesis, we will see.
I believe China is now in a position to act and it is likely they will ask for an audit of our gold reserves as they announce theirs when requesting entrance into the IMF’s “SDR”. The fraud will be exposed, China (et al) will own a significant portion of Western the reserves (significantly marked up in price) and it will all have been done within the rule of law …and as I said yesterday, “politely”.
To answer the original question, I believe there has been a cartel on the buy side all along that just bided their time and “carried” their opponent into the deep waters of the championship rounds! If this theory turns out to be correct and I fully believe it is, we will look back at the charts and understand China smiling politely and saying “thank you” after each cartel attack! This will be no laughing matter.