Financial Survival Network
It’s time for another What Can Possibly Implode Next Wednesday with Andrew Hoffman:
- Commodity collapse, currency implosion
- Global economy about to take a MAJOR stair-step down
- Geopolitics – ISIS, etc.
- Historic dislocation of “markets” (at least, last to go markets like stocks and PMs) and fundamentals
- ECB about to take historic NIRP/QE step
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This audioblog is hosted by silverfarmaudio.com, a leading website in the field of alternative financial media
It’s early Monday morning at the San Francisco airport, eight hours after leaving Bix Weir’s fabulous “silver conspiracy event”; hosted by my indomitable long-time GATA compadre Bix Weir – who happens to be a fabulous singer - and his charming wife Amy, dressed to the nines in 1860s gold rush attire. On hand were 50 or so die hard believers in the noble, and eminently winnable causes of real money and free markets. Including, to name a few, my friend and mentor Bill Murphy; the veritable Precious Metals encyclopedia David Morgan; Jeff Lewis of Silver Coin Investor – who I did my first podcast with last week; and money manager Brent Johnson of Santiago Capital, who publishes some of the finest Precious Metals’ research around. The evening was a lot of fun, as it was a great pleasure to be around my “peers.”
That said, what’s going on the world isn’t “fun” for the billions suffering from the “worst global economy of our lifetimes” – which terrifyingly, is dramatically worsening with each passing day; and the accelerating destruction of their “money” by sociopathic Central bankers and politicians. Economic activity, for all intents and purposes, is grinding to a halt – as evidenced by the Chinese containerized freight index – which measures the volume and pricing of Asia/Europe trade routes – plunging an unfathomable 70% in the past three weeks alone, to an all-time low. Not to mention, the Baltic Dry Index – which measures the costs of global seaborne shipping – breaching its all-time low Friday. And this, two months before the seasonally weak first quarter.
This morning, the CRB commodity index is in FREEFALL, having just broken below its “heavily defended” 40-year low two days ago. Led by, I might add, copper and zinc – as it has taken just two days for Thursday’s blatant “copper and zinc PPT” effort to officially fail; as opposed to the one on October 9th, which took three weeks. And geez, nickel is down 5% this morning, to a new 13-year low. That said, with an ugly, blaring Yahoo! Finance “top story” of “oil companies brace for big wave of debt defaults,” the newly-formed, but equally ill-fated “oil PPT” is doing everything in its power to prevent “Economic Mother Nature’s all-out victory.” Specifically, the inevitable collapse below $40/bbl they have been blatantly defending for weeks. In this case, by “synchronizing” a run-of-the-mill OPEC press release – stating absolutely nothing incremental – with a yet another patented paper oil goosing; hoping and praying that traders are gullible enough to believe a “whatever it takes” moment has occurred.
Of course, the fact that Saudi Arabia last week increased its selling discount (to global crude prices) to the highest level since 2009 – whilst vehemently stating that the oil price needs to be set by the market – is supposed to be ignored, just as the all-time disparity between equity prices and fundamentals; and heck, prices of the top ten or so equities with all the others! Or, for that matter, the irony of the fact that what Draghi meant when he made, 3½ years ago, the fateful statement that the ECB would do “whatever it takes” to save the Euro, he literally meant to destroy it. Which is exactly what he did; as not only is the Euro – neck and neck with the dollar as the world’s most utilized toilet paper currency – down nearly 20% since, but the entire European Union is on the brink of collapse – as evidenced by this weekend’s “secret” meetings regarding the elimination of passport-less European travel. And if you think the “every man for himself” nature of European politics, economics, and monetary policy is extreme, just watch what low- cost oil producers – like Saudi Arabia, crumbling economy and all – are about to do to high cost producers like the U.S. shale producers, and the $500 billion of collapsing “high yield” bonds and “leveraged loans” financing them.
And it won’t take long before my points are widely understood, given that OPEC’s bi-annual meeting is December 4th – just one day after the ECB meets; most likely, to expand its dismally failing, Euro-destroying QE and NIRP schemes. That said, it’s entirely possible the Fed itself will have shaken the world’s monetary system to its core – and with it, geopolitics – by then; as given today’s well-choreographed “emergency meeting” – specifically, to discuss the Fed Funds rate – anything is possible at this point. And trust me, with global economic activity and commodity prices collapsing – whilst political and social revolutions explode like serial time bombs – “anything” can only mean MORE MONEY PRINTING. And potentially, the long-awaited, inevitable “Yellen Reversal” – when Whirlybird Janet is forced by collapsing markets to admit the economy is floundering; and thus, in need of “moar” monetary stimulus. And as I write – wow – the PMI Manufacturing Index just “unexpectedly” plunged to a new two-year low, putting such an ugly, eminently hyper-inflationary scenario one step closer to reality.
Whilst still on the topic of government/Central bank desperation to keep history’s most blatant; politically, economically, and socially destructive “can-kicking” game into perspective, I see that this weekend, the Japanese government announced plans to unleash the ultimate goal seeking exercise – in not only eliminating “volatile” (i.e, falling) energy prices from its CPI calculation (as the U.S. did years ago); but selectively omitting the types of food prices that are rising, whilst eliminating those that are falling! I mean, what more proof one need that the Bank of Japan intends to hyper-inflate the Yen to oblivion – and with it, the “Land of the Setting Sun?”
For that matter, how many of you believe the terrified Japanese citizenry aren’t going to do everything in their power to get their hands on real money, to protect themselves from this horrifying, eminently predictable fate? Let alone, billions of citizens in dozens of nations whose “money” is collapsing at freefall speed – from the BRICS’, to Europe, South America, Southeast Asia; and even “first world” economies like Canada, Australia, and Switzerland. I mean, what part of the political and social revolutions going on in – to name a few – Brazil, Argentina, Greece, Portugal, Spain, Turkey, the UK, and half the Middle East are people missing? Which, I assure you, will exponentially worsen in the coming months and years – in direct correlation to the irreversible, historic collapse of global economic activity. Caused, of course, by the largest, most destructive – and for the first time in history, global – fiat Ponzi scheme.
And “off topic,” how much more terrifying can the global geopolitical climate be? Just one week since the worst Western terrorist attack since 9/11, terrifying headlines such as the below are dominating the airwaves and online media – depicting a world on the brink of war, as always occurs in the aftermath of such horrifying economic implosions. As long-time readers know, I don’t spend much time on the myriad geopolitical reasons to own PMs…but man, look at these headlines!
- Belgium PM Maintains Maximum Terror Alert, Confirms Threat Still “Imminent, Serious”; Civilians Urged To “Remain At Home”
- Obama Blames Social Media As Russian PM Blasts “Irresponsible US Policy” For Strengthening ISIS
- ISIS Cover up: US Centcom Accused Of Lying To President, Congress, Public About Airstrikes, Ground Fight
I mean, we’re supposed to be “civilized” nations – and yet, we’re devolving into pure chaos. Which, as has always been the case throughout history, invites charismatic demagogues to take power, to the detriment of all parties imaginable. Which, as you might expect, always causes printing presses to run wild, and the desire for real money to explode.
TRUMP: “I would bomb the s— out of” ISIS.
TRUMP: “Knock the hell out of (Iran),” and “take the oil.”
Of course, the principal focus of the Miles Franklin Blog has always been, and will always be, the financial impact of political, economic, and social events. Which sadly, have been dominated by the aforementioned, historic attempts to manipulate markets with “weapons of mass financial destruction” like derivatives and high frequency trading algorithms. And in the case of Precious Metals, of course, unfettered, unregulated naked shorting.
Which brings me to today’s principal topic, catalyzed by a research report by none other than Europe’s largest derivatives purveyor (which itself is amidst intensifying financial straits), asking how the current, (my word, comical) equity rally is not being validated by “anything” else – from commodities, to currencies, to the vast majority of stocks themselves. And of course, the “canary in the coal mine” that are “high yield” – i.e. junk – bonds, which are freefalling at an alarming rate.
The answer, as any quasi-sentient being is rapidly realizing, is the aforementioned, unprecedented manipulation of everything imaginable – but particularly, “last to go” equity markets like the “Dow Jones Propaganda Average,” whose alarming breadth collapse is alarmingly similar to the unmanipulated top of 1999. And, of course, paper gold and silver; to mask the biggest canary in the history of coal mines; i.e. the physical PM markets, which have never been tighter; and shortly, will be experiencing historic, and potentially irreversible supply shortages. The likes of which, in our view, will make 2008’s, 2011’s, and last quarter’s shortages appear modest in scope.
Which is why the (paraphrased) quote I gave in the aforementioned Jeff Lewis podcast could not be more appropriate; and from an “investment perspective,” timelier…
“Today’s Precious Metal valuations represent the dream investment in history. Can you imagine if, in 2008, you were able to buy S&P 500 or NASDAQ put options for nearly nothing? That’s what buying physical gold and silver are like today.”
I’m sorry if my Friday-written articles are less cohesive than the rest. Technically, it’s my day off; but given the relentless carnage in the global economy – and the most maniacal Precious Metal suppression in the 13½ years I’ve been watching – I feel as compelled to help you as to relieve myself by venting. And particularly this Friday, as I have seven pages of “horrible headlines” to filter in just the 18 hours since recording yesterday’s Audioblog, “crumbling before our eyes.” In other words, another day where it’s difficult to pinpoint a single topic – as literally, I could write separate articles on a half dozen “horrible headlines.”
To wit, Zero Hedge summed it up perfectly with today’s market-closing quote, that “stocks soared by their most in 13 months, after the worst European terrorist attack in over a decade.” And they could just as easily have written “stocks complete best month in years, on heels of the Fed suggesting it would raise rates”; or “stocks explode as the Baltic Dry Index hits an all-time low,” the CRB Commodity Index a 40-year low, and commodity capital spending an unprecedented low, with no hope in sight.” Or heck, “Precious Metals plunge, via the same algorithms as always, following relentlessly positive news – regarding surging demand, plunging inventories, and the worst production outlook in decades.
Heck, even the second “zinc PPT” sighting in a month failed miserably, with zinc losing nearly all its comical 5% early morning by day’s end – with all five major base metals finishing at or near their post-2009 crisis lows. Not to mention, the zinc PPT’s primary benefactor, Glencore, not only gave up all its early morning stock gains, but closed 1.4% lower – en route to its ultimate, commodity-derivatives destroying destiny with ZERO.
Of course, per the red arrows on the below charts, the newly formed “base metal PPT” – as they have been doing increasingly lately – “magically” changed the closing prices to make them look higher; in today’s case, with all five metals! Let alone, the comedy of the “oil PPT” taking crude prices dramatically higher any time the U.S. rig count falls – as if the rig count has had the slightest impact on the shale industries burgeoning “frack-log.” Which, too, miserably failed today, with WTI crude closing – for the third straight day – right above the key psychological level of $40/bbl; i.e., the oil PPT’s current “line in the sand,” which will fail barring the outbreak of Middle Eastern war. And not in Syria, I might add, but an actual oil-producing nation like Iran.
Heck, even perma-bull economic cheerleader Goldman Sachs predicts $20/bbl oil this winter – whilst partner in crime Bank of America suggests that if Saudi Arabia de-pegs the Riyal, $25/bbl is possible. Which, given Saudi Arabia’s catastrophic financial problems – and the exploding, global “final currency war” – is not only plausible, but likely. And trust me, if oil comes even close to such horrifying levels, not only will whatever’s left of the global economy be vaporized, but the “unspeakable horrors” I warned of a year ago will be certain to occur. But don’t worry, the Fed’s going to raise rates in December; as these historically tragic deflationary winds – which their policies were most responsible for creating – continue to be deemed “transitory.”
Or perhaps, Zero Hedge could have written “stocks explode higher on news that Greece is official dead” – as per today’s catastrophic 50% plunge in the National Bank of Greece’s stock, towards its guaranteed date with zero (likely by year-end), you can bet that the massive economic carnage, and social and political unrest, racking the “bailed-out” PIIG (with a realistically accounted for $600+ billion of debt) will go exponential – just as it is, or shortly will be, in the hopelessly indebted nations of Portugal, Brazil, and Puerto Rico – and heck, even Finland. Not to mention, the increasingly welfare-dependent United States – including its “wealthiest city,” New York. And of course, the granddaddy of coming economic implosion – China. Trust me, the Fed wouldn’t have called an EMERGENCY, CLOSED-DOOR MEETING for this coming Monday if things weren’t that bad. Let alone, as the House of Representatives passed a “Fed Transparency Bill.” Which, while it will clearly be vetoed by Obama, may NOT be if a Republican President is elected next year.
And how about “stocks rocket to the stratosphere as junk bonds plunge” – as I first warned of two months ago. Or “stocks explode on news that America’s largest healthcare organization, United Healthcare, may be ‘opting out’ of Obamacare.” Again TRUST ME, if that actually occurs – assuming it’s “legal” – what I wrote last week of Obamacare being the “bullet hole to the head of the 2016 economy” will be upgraded to the “shotgun shell” – whilst last month’s “unmitigated disaster that 2016 will be” will be upgraded to catastrophe.
And last but not least, the quote that “inspired” today’s article – from none other than “Goldman Mario” Draghi of the ECB; who this morning, said the ECB will “do what it must to raise inflation quickly”; as “the economy will need more aid if the recovery is determined to be, left to its own forces, non-self-sustaining.”
Yes, “left to its own forces.” Gee, I wonder what said “recovery” would have looked like without the ECB’s gargantuan QE and NIRP policies. Which, despite the ECB’s comical assertion that it has been “successful,” has not only left Europe at the brink of economic collapse, mass default, currency implosion, and unprecedented political and social unrest, but all such tragic trends are just getting started. And I wonder if “markets” like gold and silver, and the “Dow Jones Propaganda Average” – to name a few – would be trading at levels historically decoupled from reality if they were “left to their own forces,” for even an hour. Or if anyone would even listen to Central bankers’ drivel if they didn’t expect “markets” to be manipulated to suit their message. Or if we’d have been taken so far down this economic, political, and social “rabbit hole to hell,” that we could never, ever emerge. Which is exactly where the entire world stands today.
Fortunately, “Economic Mother Nature” always wins – as she is decidedly as we speak. And nowhere will she win more spectacularly than in the tiny, historically tight “canaries in the coal mine” that are the gold and silver physical markets – when inevitably, the global mad dash for real money ignites. Which, in my view, has, due to recent events, been upgraded to much “sooner” than “later.”
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What’s imploding next Wednesdays with Andrew Hoffman:
Unprecedented economic collapse, vs. unprecedented market manipulation.
Today is Fed Minutes Day, my article this morning was “since the October 28th FOMC meeting”…
Paris attacks, and much, much more.
Just three weeks ago, the FOMC left the Fed Funds rate at a “range of 0.00% to 0.25%” for the 83rd straight month. A week earlier, the PBOC “unexpectedly” reduced its own benchmark rate; and, as discussed in “the peak of monetary lunacy? You ain’t seen nothing yet,” Mario Draghi suggested the ECB is ready to use “all available tools” to meet its objective of “returning to price stability over the (ever-ambiguous) medium-term.” These Central bank actions, combined with similar policy adjustments the world round – like the Reserve Bank of India cutting rates after the Rupee had already hit an all-time low – suggest the “final currency war” I warned of three years ago is in full-swing, on the verge of going nuclear.
That said, without question, the FOMC clearly decided that, as the de facto Central bank “leader” – i.e., the institution more responsible for destroying the world than any other – its window for replacing its “recovery” jawboning with action was rapidly closing. After which, any remaining shred of “credibility” it still had would be gone. Consequently, it launched the last, and most intense, salvo of its 2½ year propaganda/market manipulation war – in suggesting it might, on a “data dependent” basis, of course – raise rates at its December 19th meeting; in what I subsequently deemed a “December rate hike or bust” campaign, and I do mean bust.
Consequently, its kindergarten-worded “policy statement” was altered to give the impression of increased economic confidence – even if it not only made little sense, but had more qualifiers than a pharmaceutical infomercial. To wit, for the 11th straight month, the FOMC deemed the plunge in oil and other import prices “transitory.” And incredibly, omitted “recent global economic and financial developments may restrain economic activity somewhat, and are likely to put further downward pressure on inflation in the near-term” - just one month after putting it in, despite not a shred of evidence suggesting such worries have abated. Last but not least, it changed the prior months’ (as in, eleven months’) “in determining how long to maintain the zero to 0.25% Fed funds target range” to “in determining whether it will be appropriate to raise the target range at its next meeting.”
The latter, from an institution that in the past year has suggested imminent rate cuts with a variety of similar “word cloud” changes; each time, trumpeted by its MSM “partners” at the Wall Street Journal, CNBC, and the like. Which, without fail, never panned out; from the the ballyhooed replacement of “considerable time” in December 2014 with “patient” – which supposedly meant the Fed was getting ready for a March 2015 rate hike. To, in March 2015, removing “patient” – in lieu of “the Committee judges that an increase in the target range for the Federal Funds rate remains unlikely at the April FOMC meeting.” In other words, suggesting a rate hike was possible shortly thereafter – which of course, didn’t happen. And equally comically, when April arrived, they simply took out all reference to specific meetings, by adopting a temporary, unofficial policy of ignoring timelines entirely.
Not that an infinitesimal “rate hike” would have the slightest impact on global economic activity; and certainly not Precious Metals – from a fundamental perspective. However, the desperation to portray a semblance of control – instead of the “ten ring circus of Keystone Kops” Central banking activity has been increasingly viewed as – was clearly atop the Fed’s agenda, irrespective of the fact that since the September meeting, global economic activity had clearly deteriorated. To wit, in its infinite wisdom, the Fed believed that since their PPT partners had been able to engineer a ridiculous, 1,700 point “Dow Jones Propaganda Average” rally – ironically, commencing the day of the abysmal October 2nd NFP employment report (enabling it to temporarily reclaim its 200 day moving average of roughly 17,600) – it had enough “cushion” to jawbone of “recovery” and “imminent rate hikes.” And thus, buy a bit more “credibility time” – whilst, of course, qualifying such optimism with the standard “in determining whether it will be appropriate to raise the Fed Funds rate, the Committee will take into account a wide range of information – including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.” In other words, it will be, as always, “data dependent.” And man, has the ensuing “data” been bad!
Since that fateful day, every imaginable piece of economic news – on a worldwide basis – has deteriorated, and dramatically so. That is, except the blatantly fraudulent “sixth sigma” beat of the October NFP employment report; which, as usual, was far worse than expected once one actually reads it. And oh yeah, the “Chicago PMI Index” – which is so comically volatile and useless as an economic indicator, I last year wrote an entire article about it – was similarly “much better than expected.” And this, in a city that was recently downgraded to junk status, within a state that technically defaulted on its debt this summer.
In the U.S. alone, the following economically reports – all upwardly goosed, I might add – were either worse than expected, or outright negative…3Q GDP; the Bloomberg Consumer Confidence Index, the National Association of Realtors’ Pending Home Sale Index (-2.3%); personal income and consumer spending; Consumer Sentiment; the ISM Manufacturing Index; September Factory Orders (-1.0%); the October ADP employment report – which completely contradicted NFP; the Challenger Layoff Report; September Retail sales (+0.1%, atop a downwardly revised August figure); the Empire State Manufacturing Survey (-10.7); October industrial production (-0.2%); the October PPI
(-0.4%, versus an expected +0.2%); the National Association of Homebuilders’ housing index; and as I write Wednesday morning, October Housing Starts – which “unexpectedly” plunged 12%. And don’t forget, the myriad negative September data points will only serve to push the BLS’ initial estimate of 3Q GDP “growth” of 1.5% – i.e., one of the lowest GDP prints in years – lower; potentially to less than zero before all is said and done.
Not to mention, one of the few “positive” indicators to emerge (not positive, as in good; but simply, above zero) was yesterday’s October CPI reading of +0.2%; which, in true economy-killing “need versus want” fashion, featured declines in discretionary items like apparel, but large increases in non-discretionary items like healthcare (the biggest component of said “GDP growth”); and “shelter,” as the cost of renting hit an all-time high. Regarding the former, nearly all Americans – myself included – were informed in early November that their health insurance premiums would skyrocket in 2016, putting a dramatic dent in an already moribund retail sector – as evidenced by catastrophic earnings reports, since October 28th, from bellwethers like Macy’s, Nordstrom, and JC Penney.
However, that’s the “good news,” compared to what’s going on elsewhere; as since October 28th, every imaginable measure of global trade has plunged to either its 2008-09 financial crisis lows, or lower. I mean, you name it, and it’s collapsed – from China’s containerized freight index; to U.S. trucking, railroad, and port activity; to the U.S. sales-to-inventory ratio. And of course, the “grand-daddy” of all global trade indicators, the Baltic Dry Index, which yesterday crashed to within a hair’s breadth of its all-time low – comprising 30 years of data. And this, before we’ve even reached the seasonally weakest first quarter of the year!
And oh yeah, the CRB Commodity Index is in FREE FALL, under the weight of the greatest oversupply in history; the result, as I have long-written, of two decades of maniacal Central bank money printing and Wall Street financial engineering. Commodities – i.e., the world’s top revenue source, for corporations, municipalities, and sovereign nations alike – are now, on average, at or near all-time lows; with the CRB Index, at 183 as I write, trading below the 40-year low of 185 it first attempted to breach in late August. Led into the abyss by, OH NO, copper and zinc; the two commodities Glencore relies on to survive. Consequently, most commodity currencies – i.e., most currencies – have plunged anew, in nearly all cases to, or near to, all-time lows. In some cases, such as dying “BRICS” like Brazil, to the point of economic collapse, social revolution, and/or political coup. Which of course, means the “dollar index” has exploded higher, to not only the chagrin of “final currency war” participants on Main Street, Wall Street, and Pennsylvania Avenue, but the Fed itself – as none other than Vice Chairman Stanley Fischer admits. And don’t forget the Chinese, whose record string of daily Yuan devaluations, following horrifying trade data released after the October 28th FOMC meeting – suggests the “cataclysmic financial big bang to end all big bangs” I predicted to the day back in August – i.e, a significant Yuan devaluation – is just getting started.
As for the granddaddy of global revenue producers, crude oil, it’s “transitory” decline has extended by an additional 10% since the October 28th FOMC meeting – with WTI crude having plunged from $45/bbl to $41/bbl as I write, following another massive Cushing build last night, but Saudi Arabia raising its selling discount to its highest level since…drum roll please…crude’s financial crisis low in early 2009. And as for the “unspeakable horrors crashing oil prices portend” – which I warned of 13 months ago – does it surprise anyone that Europe is facing an historic “migrant crisis” from collapsing Middle Eastern nations? Culminating in, last weekend, the worst Western terrorist attack since 9/11? Or that – again, since the October 28th FOMC meeting – Obama officially authorized “boots on the ground” in Syria; joining long-time arch rival Russia; and as of this week, France; as clearly, the makings of World War III are in place.
Socially speaking, the secession movement in Catalonia, Spain – where 25% of Spain’s GDP emanates from – took a giant Parliamentary step forward last week; following the prior week’s historic political coup in fellow “PIIG” Portugal, and expanding unrest in Greece. And given what occurred in Paris, undoubtedly the burgeoning secession movements – from the European Union and/or Euro currency – in France, Italy, and the UK will take giant steps forward as well. Not to mention, in the de facto European leader Germany; which, whilst still reeling from the historic Volkswagen “Diesel-Gate” scandal,” sits on the cusp of social chaos, given Angela Merkel’s insistence on accepting a million Muslim emigrants into the country.
In other words, since the Fed’s October 28th meeting, a mere three weeks ago, global “horrible headlines have gone parabolic, as Economic Mother Nature nears all-out victory.” Which is probably why any sentient being with a pulse and an uncompromised agenda knows that not only is the Fed’s supposed “agenda” for raising rates (which has been altered countless times already) has not only decidedly NOT been met; but to the contrary, the case for “NIRP” and “QE to Infinity” – both of which must inevitably happen – has never been stronger. Which is why I’m so intrigued as to what today’s (doctored) October 28th FOMC “minutes” will say. Which, sadly, is more likely a function of how successful the PPT is at supporting the stock market than all the aforementioned factors combined.
“The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium-term.”
Back in July, I wrote that the “only difference between late 2008 and today” was historically manipulated “last to go” markets like the “Dow Jones Propaganda Average” and paper gold and silver. Well, that’s nothing compared to today; as not only has global economic activity dramatically weakened – and Central bank money printing proportionately increased; but unprecedented market manipulation has caused a complete and utter break from fundamentals. To wit, global PPT efforts have (temporarily) rescued stocks from their well justified August lows – even as commodities, currencies, and bonds have plunged below those lows. And as for Precious Metals, even I have not seen anything like this in my 13½ years in the sector – with prices now down by a record 17 days in a row or so; “coincidentally,” commencing the second the FOMC’s October 28th policy statement was released. Which, equally “coincidentally,” was exactly the moment both metals had finally exceeded their 200 day moving averages, following five months of vicious Cartel resistance. Which, in silver’s case yielded the worst retail industry shortage since the 2008 financial crisis.
And as this has occurred, data from around the world – from East to West – has revealed record PM demand and plunging inventories; whilst gold and silver mine production has been confirmed to have fallen in 2015, en route to what I anticipate will be catastrophic declines for years to come.
In other words, on all imaginable fronts, “since the Fed’s October 28th meeting,” the impetus to not raise, but lower rates has expanded dramatically. As have the fundamental reasons to own Precious Metals, and not financial assets like stocks. To which, I can only reiterate for the umpteenth time, that “Economic Mother Nature” always wins. And this time, given the unprecedented manipulative efforts to usurp her, her inevitable “victory” will be more spectacular than ever.
For years now, bad news has been deemed “good news” by government manipulation of stocks, bonds, Precious Metals, and anything else they can wrap their HFT algorithms around. And for at least the 13½ years that I’ve followed Precious Metals, all negative geopolitical events – you know, the types that have catalyzed investors to rush to gold and silver’s “safe haven status” for centuries – have been met by intense Cartel selling; as always, led by naked shorting on the New York COMEX market. A “market,” I might add, that not only has essentially become all paper, no physical; but doesn’t even purport to have any actual gold.
Heck, in just the last 2½ months alone, the amount of the already unfathomably high paper/physical ratio has nearly quadrupled, to a record high 298:1 – with the Cartel having particularly dug in its heels when gold and silver finally breached their 200 day moving averages to the upside in late October, to make sure such a significant technical achievement didn’t lead to a major rally.
Of course, the “end all, be all” of geopolitical Precious Metal suppression was 9/11 itself. As you can see below, gold started that fateful day at $271/oz; and spiked 6.6%, to $289/oz, when the attacks occurred. However, at exactly the 12:00 PM EST “cap of last resort,” the time-honored “Cartel Herald” algorithm showed up to smash it down. By day’s end, it was back to $278/oz; and by the following day’s end, $276/oz. And the same for silver, which spiked from $4.15/oz to $4.37/oz, or 5.3%, when the attacks occurred, only to have those gains totally erased by day’s end. The fact that both metals went on an historic run in the coming years is, of course, ignored by anti-PM propagandists – in favor of focusing on gold and silvers’ (Cartel-orchestrated) inability to immediately provide safe haven protection.
In today’s “market,” the Cartel is far more technologically advanced – with far more powerful manipulative “tools.” As noted above, that hasn’t helped it in its quest to mask collapsing gold and silver inventories – both here and abroad. Moreover, it has inadvertently spawned record physical demand; as in China, which year-to-date, just exceeded 2013’s annual record for Shanghai Exchange physical gold withdrawals. Which, I might add, accounts for nearly all of global mine production. Which, as I have discussed ad nauseum, will not only be lower in 2015; but, care of the Cartel’s relentless destruction of the mining industry since the turn of the century, significantly lower in the coming years.
That said, said manipulative tools are indeed powerful; even if they are simply accelerating the Cartel’s – or as I call it, the “New York Gold Pool’s” – inevitable demise. Which is why it shouldn’t surprise anyone that on a day when “Europe’s 9/11” occurred, the manipulators were not only out in full force suppressing Precious Metals, but goosing stock markets; including France’s, which not only was unchanged yesterday, but is soaring this morning! Let alone, the farce that was yesterday’s WTI oil “trading.” When, after nearly taking out $40/bbl to the downside, it suddenly rocketed to $42.20/bbl within an hour’s time – via the same, prototypical “dead ringer” algorithm that has been used to “rescue” the “Dow Jones Propaganda Average” for years on end; including yesterday, when it dared try to go negative – following its equally blatant usage to “kick the trading day off” in China.
And this, whilst all other commodities were in freefall mode; particularly base metals like “Dr. Copper” and zinc (say goodnight, Glencore) – which plunged to new six-year lows. And oh yeah, the high-yield credit markets, which continued their plunge into the abyss. I mean, think about it; the VIX, or “volatility index,” actually declined yesterday – and measurably so; when not only did France’s 9/11 occur; but Japanese GDP was massively below expectations, plunging Japan into its fifth recession in seven years; the Empire State Manufacturing was massively below expectations, remaining deep in negative territory; and of course, the CRB Commodity Index remained perched right around its 40-year lows – “oil PPT” surge notwithstanding.
As for Precious Metals, which were capped from the get go Sunday night, I don’t need to show you their prototypical daily pattern for you to get the point. Instead, I’ll simply show you the charts of (paper) silver “trading” both yesterday and Friday – i.e., the previous trading day. After which, you will be 100% clear as to what occurred, given how identical the Cartel’s footprints were. And wouldn’t you know it, the “2:15 AM” EST open of the London paper market, and 8:20 AM EST open of the New York paper market, are where all the declines occurred.
Heck, here’s silver’s trading every day since it dared to decisively breach its 200-day moving average to the upside on October 28th. I.e., just as the Fed announced, at 2:00 PM EST, that it would again keep interest rates at zero. To that end, note how silver has been attacked every day since at the COMEX open! And on Thursday’s case (the 12th), when silver dared to surge thereafter, it was immediately “put back in its box” at the 10:00 AM EST close of the global physical markets. I.e., “key attack time #1.” Even I have not seen such a long streak of COMEX-opening raids, and I’ve been doing this a long time. Which should tell you just how desperate the Cartel (and PPT) have become; amidst not only the “worst global economy of our lifetimes”; and worst geopolitical tensions since World War II; but the highest amount of (parabolically rising) debt, and monetary inflation, in history!
Which brings me to the most comical aspect of the entire farce; i.e, the latest “propaganda du jour,” of how a “strengthening dollar” is going to cause Precious Metal prices to plunge. Look, this is not a new topic – as I have discussed it for years; including in December 2013, when I predicted the dollar would surge against other fiat currencies as the global economy crashed, just as it did in 2008.
“Multiple currencies will experience dramatic declines relative to the dollar. The ‘final currency war’ is clearly underway; in our view, catalyzed by the Fed’s 2012 commencement of QE3; the ECB’s 2012 announcement that if needed, it would engage in open-ended sovereign debt monetization; and the Bank of Japan’s 2013 announcement that it intends to double the money supply in an attempt to dramatically weaken the Yen. Consequently, these ‘big three’ Central banks have exported copious amounts of inflation worldwide – as highlighted in ‘the most important article I’ve ever written.” ‘Tapering’ notwithstanding, the global trend of increased money printing must continue – and eventually, accelerate – as history’s largest Ponzi scheme plays itself out. Consequently, the ‘race to debase’ will intensify, yielding increased worldwide inflation. In time, this ‘cancer’ will rise to the top of the totem pole, destroying the world’s ‘reserve currency’ itself.
Which has indeed occurred, in spades; as while the Fed has “only” maintained zero interest rates in the ensuing two years (whilst, likely, covertly supporting Treasuries), the Bank of Japan’s “demographic hell” has cause Abenomics to be, for all intents and purposes, permanently expanded. Meanwhile, in Europe, the complete collapse of the ill-fated political and trade union has caused the ECB to, equally overtly so, go berserk with its own version of QE – and “NIRP,” or negative interest rates, to boot. Consequently, the Euro has collapsed to a 12-year low, enroute to its inevitable dissolution. Perhaps, far sooner than most can imagine. And now that “France’s 9/11” has occurred, of course the Euro will fall further; as the gargantuan geopolitical forces already undermining it – such as collapsing PIIGS nations, and an exploding Middle Eastern migrancy crisis – are likely to go parabolic in the coming months. Which, as any sentient being realizes, is not only wildly bullish for Precious Metals demand, but not in the least bit a reflection of U.S. economic or political “strength.” Thus, the concept that a collapsing Yen and Euro – i.e., the principal components of the dollar index – would somehow be negative for Precious Metals is absurd at the least, and moronic at best.
Which is why I bring up “if a nuclear bomb destroyed Europe.” I.e., an article I penned in September 2014, putting Europe’s dire political issues of that time into perspective.
“Europe is not only on the verge of economic collapse, but revolution following nearly two million Catalonian secessionists rallying Friday in Barcelona – just days before Scotland’s historic independence referendum. As for the rest of Europe’s expanding instability, Air France and Lufthansa pilots are commencing massive nation-crippling strikes this morning in yet another death blow to Europe’s collapsing socialism miasma; whilst Germany’s Anti-Euro political party scored big gains in this weekend’s elections, and Spanish and Italian sovereign debt surged to fresh all-time highs.”
And that was 14 months ago, when Europe was still amidst “high times” compared to today’s political, economic, and social implosion. Since then, the Euro has of course plunged – by 21%; as not only have the aforementioned factors dramatically worsened, but the ECB has gone hog wild in destroying the currency – first, by expanding negative rates; and then, by initiating – and later on, expanding – a QE program that, as we speak, is on the verge of “going Japanese.” Moreover, now that the geopolitical equivalent of a “nuclear bomb destroying Europe” has in fact occurred – i.e, Friday’s horrific Parisian terrorist attacks – the lunacy of assuming a “strengthening dollar” will be bad for Precious Metal demand has been taken to unprecedented levels. And this, after gold and silver have already been decimated for four years, amidst the most PM-bullish events in generations. Which have, how about that, caused physical demand to hit record levels. Not to mention, put the mining industry on the brink of ruin, essentially guaranteeing falling production for years to come.
To that end, I’ll simply end today’s article just as I did the initial article 14 months ago; and let you decide if at $1,078/oz and $14.25/oz, respectively, gold and silver are worth buying – or fearing.
“Putting the ‘dollar strengthening’ fallacy in its full glory, let’s just say a nuclear bomb destroyed Europe. If such a tragedy were to occur, god forbid, no doubt the ‘dollar index’ would not only ‘strengthen,’ but surpass the 1984 and 2001 highs – and then some. I know it’s an extreme example; but in terms of real impact on gold and silver demand, it’s not a heck of a lot different than massive ECB NIRP and QE announcements, whether the Fed is ‘tapering’ or not. In such a scenario, the dollar would certainly strengthen against the Euro, but plunge against any and all items of real value – particularly real money; i.e., gold and silver. And thus, we simply want you to see the ‘forest through the trees’ as the current round of market manipulation, propaganda and general foolishness comes and goes; which, we hope will catalyze you to act now to protect yourself before it’s too late.”
Just Wednesday, I wrote how “horrible headlines are going parabolic, as Economic Mother Nature nears all-out victory.” As clearly, “the powers that be’s” best efforts to mask the “worst economy of our lifetimes” with unprecedented money printing, market manipulation, and propaganda are not only falling flat on their face, but making matters worse with each passing day. Just like the movie Fargo, when a simply kidnapping morphed into a grizzly scene of mass murder.
On Friday, France’s version of 9/11 occurred; only this time, the alleged perpetrators – assuming their confession is genuine – are ISIS, a group of radical Muslim nationalists spawned by America’s “shoot first, ask questions later” reaction to its own 9/11. To wit, despite George Bush admitting Saddam Hussein played no part in America’s worst-ever terrorist attack; and that Iraq did not have “weapons of mass destruction”; we still have “boots on the ground” in the Middle East 14 years later – in a futile, humiliating campaign in which more than 10,000 allied troops have been killed, the vast majority American. Not to mention, 100,000+ injured; and countless tens of thousands negatively impacted, like the families of said troops. Throw in the estimated 500,000+ Iraqis killed in combat, terrorist attacks, and the “collateral damage” of a destroyed nation-state in the 12 years since Bush declared “mission accomplished”; and oh yeah, the $2 trillion the war has cost – plus an estimated $4 trillion to be paid in veterans’ benefits in the coming decades; and a decimated Iraqi culture, which will cost at least as much to rebuild; and you can see why “someone” might be mad at those deemed responsible. I of course don’t condone this weekend’s actions one iota – as they were as despicable, and cowardly, as any in our lifetimes. However, they don’t surprise me in the least; that is, assuming the official story, like 9/11, is the correct one.
More on the Paris attacks a moment, but I’m not going to turn this post into a political commentary. My focus, as always, is on the economic and financial ramifications. Which, per last month’s “the pinnacle of monetary lunacy? You ain’t seen nothing yet,” will unquestionably involve an exponential expansion of the historic money printing orgy that is rapidly destroying the world – benefiting an increasingly shrinking “1%” at the expense of all others. Thus, when my friend John Rubino wrote this weekend that “brutal news is pouring in from pretty much everywhere,” I realized that in just a few short days, said parabolic growth in horrible headlines has already morphed into the only growth function with a steeper slope; i.e., hyperbolic. In other words, the worst-case economics scenario is clearly within view. Which, if – or should I say, when – the Syrian-based “ISIS crisis” mutates into a global battleground, would represent the “sum of all economic fears,” from the standpoint of those trying to earn a living; support their families; and protect their life’s savings from the ravages of Central-bank generated (hyper)inflation.
I didn’t think it was possible that a dumbed-down nation obsessed with “bread and circuses” like UFC fighting could actually shift their attention from Ronda Rousey’s Buster Douglas-like defeat to something real. However, what occurred in France surely did the trick. And the global ramifications will unquestionably be as terrifying; particularly in Europe, where the inevitable unraveling of the ill-begotten, ill-fated economic union may well be the least of its problems. This weekend, Michael Pento wrote of how “radical policies are about to be implemented, as chaos erupts and depression engulfs the world”; and I couldn’t agree more, per what I espoused in Thursday’s Audioblog, “yes, the sky is falling.”
“I don’t like to ‘predict’ anything, but I’m quite sure that a decade from now, the Europe as we know it today won’t even be recognizable. If the Euro currency survives that long, “whatever it takes” policies irrespective, I would be shocked. But more importantly, as I first predicted in 2011’s ‘unprecedented,’ the massive political, economic, and social crosscurrents we are witnessing today will cause the European trade bloc to break up, in favor of Depression Era isolationist, protectionist, nationalist movements – most likely of the extreme socialist persuasion.”
Clearly, the “migrant crisis” resulting from the Syrian civil war – which in many ways, can be traced to the “allied” invasion of Iraq a decade earlier – is not only here to stay; but likely, will shape European political and social policies for years, if not decades, to come. Including, with a very high likelihood, destabilizing terrorism and wars – which we can only pray don’t morph into World War III, which none other than the Pope described it as this weekend. But don’t worry, all’s well; as Friday morning, mere hours before the Paris attacks, Barack Obama claimed “I don’t think ISIS is gaining strength…as…we have contained them.” Seriously, you can’t make this stuff up.
To the contrary, as my good friend Michael Krieger of Liberty Blitzkrieg espoused this weekend, political and economic nationalism movements – in the UK, Greece, Portugal, and Catalonia, to name a few – will now become the norm rather than the exception. And now that the Paris attacks have “changed everything,” the dangers of civilian violence, draconian government decrees, and war have hyperbolically increased – particularly in the migrant crisis epicenters of Germany and France. To wit, Angela Merkel’s violently opposed goal of allowing a million migrant Muslim’s into Germany has immediately gone DOA. Whilst in France, imploding President Francois Hollande is taking full advantage of his “9/11 moment” to inflame nationalist passions – as France heads toward its inevitable destiny with an “America-like” military reaction to its worst terrorist attack since the French Revolution.
Of course, it’s unlikely that anything Hollande does will enable him to stave off the radical National Front party’s bid for the Presidency in 2017. As clearly, the attack will only strengthen it further – as evidenced by its leader, Marine Le Pen’s comments this weekend, of France’s need to “re-arm” itself; permanently control its borders; revoke Islamic passports; and “eradicate” radical Islam. In other words, a socialist nightmare of a nation is about to become a political battleground as well – which unquestionably, will “finish off” France’s inevitable, decade-long race towards bankruptcy. Which is why they’ll be one of the ECB’s most vocal proponents for NIRP and QE “to infinity” – starting, of course, with the potentially explosive, or should I say hyper-inflationary, meeting on December 3rd, just 2½ weeks away. Which is why, as loudly as possible, I’m reiterating my “urgent cry to Europeans” – first uttered ten months ago – to PROTECT your life’s savings as soon as possible, with the only assets proven to have done so throughout time immemorial; i.e., physical gold and silver. Which, I might add, became significantly scarcer this weekend, when a whopping 38% of the COMEX’s Hong Kong-stored gold was withdrawn this weekend; at 21 tonnes, more than four times the New York COMEX’ entire “registered” inventory of available-for-delivery metal.
That said, the Miles Franklin’s focus, as always, is on the economic and financial ramifications of political events – which clearly, will be, per the title of today’s article, as terrifying as could be imagined. And given that this weekend also featured Japan “unexpectedly” entering its fifth recession since 2008 – with 3Q GDP growth of negative 0.8% versus expectations of negative 0.2%, whilst 2Q “growth” was revised from negative 0.2% to negative 0.7% – the “final currency war” I first warned of nearly three years ago will most likely, too, go hyperbolic in the coming months. Throw in the utter collapse of global exports – and this horrifying chart of the U.S. inventory-to-sales ratio – and it becomes painfully apparent that I wasn’t speaking “hyperbolically” in declaring the “worst global economy of our lifetimes.”
Then, of course, there’s the complete decimation of the world’s largest source of corporate, municipal, and sovereign revenues; i.e., the commodity crash I first warned of in September 2014 – and vehemently re-iterated last week, just before the CRB Commodity Index breached the 40-year low of 185 it had “dead cat bounced” from (with “oil PPT” help) on Friday. And looking at base metal prices freefalling as I write Monday morning, my guess is that even said “oil PPT’s” best efforts to portray a Syrian conflict as “oil bullish” will be difficult to sell, unless the powers that be are actually stupid enough to escalate the conflict toward “World War III” status. At which point, all political, economic, and financial “bets” will be off, as global hyper-inflation will become as imminent as it is inevitable – validating my worst fears from October 2014’s “crashing oil prices portend unspeakable horrors.” Which, I might add, is exactly what Europe’s “migrant crisis” is, and exactly what the world’s reaction to the Paris attacks will be.
As for early “market reactions,” you simply cannot make this stuff up. Following Japan’s horrific GDP report, global stock futures mysteriously “surged” – supposedly on the expectation of further QE, despite the fact that interest rates barely changed! Throw in across-the-board collapsing commodity prices – even oil is down, within reach of new seven year lows – and it becomes painfully obvious just how hard global “PPT mechanisms” – both West and East – are working to “mask” the French news; most egregiously in France itself, where French stocks are actually higher! Throw in the Cartel’s 120th “Sunday Night Sentiment” capping of the past 126 weekends; 550th “2:15 AM” raid of the past 627 trading days (at exactly the “key round number of $1,100/oz); and of course, the ubiquitous COMEX-opening attack that has now occurred essentially every day since gold and silver had the gall to exceed their 200 day moving averages on the morning of the October 28th FOMC meeting – and you can see just how terrified said “powers that be” have become, in their unwinnable war against “Economic Mother Nature.”
Of course, with each passing day, said manipulations become more and more transparent to the world’s 7.3 billion denizens; particularly in light of the aforementioned vanishing act of physical PM inventories, amidst record high global demand. Not to mention, the historically anomalistic behavior of rigged stock indices – like the S&P 500, for example, whose “breadth” (advancers versus decliners) has entered “sixth sigma” territory, as the ten largest stocks have now advanced as much this year as the bottom 490 have declined! In fact; in light of the recent collapse of countless “market darling” stocks; plunging venture capital valuations; the worst corporate earnings plunge since 2009; and heck, this morning’s “take-under” of Starwood Lodging by Marriott Hotels; it couldn’t be clearer that underlying the PPT’s maniacal index future buying, 2015’s version of the late 90’s “internet bubble” is bursting as we speak. To that end, I recommend reading this fantastic article about “VC” – i.e., venture capital – stocks’ unfolding collapse, which couldn’t spell out the situation better. Not to mention, its citing of one of the industry’s great retail analysts – and realists – Howard Davidowitz; who, when asked why retail earnings and equities are in freefall (like Wal-Mart, Macy’s, Nordstrom’s, and JC Penney, to name a few), he answered simply “it’s not rocket science. The customers don’t have the money!”
“Sum of all economic fears” notwithstanding, I cannot wait until the “minutes” of said October 28th FOMC meeting are published. You know, when they supposedly pondered “raising rates” despite a collapsing economy – due to imaginary “labor market improvements”; expectations of rising inflation in the “medium-term”; and of course, the anticipation of a reversal of the “transitory” declines in oil and import prices – which have since plunged to new multi-year lows. As I have noted for years, said “minutes” are nothing of the sort – but instead, fabricated statements based on what is occurring in the world when they are published. In other words, giving them yet another opportunity to jawbone and manipulate markets. And if the developing “sum of all economic fears” is as visible to them as it is to the rest of the world, it would be difficult to believe they wouldn’t start “dialing back” such propaganda in a hurry – particularly if said “PPT efforts” prove unsuccessful in the wake of the worst Western terrorist attack since 9/11.
And by the way, note that the IMF “green-lighted” the Chinese Yuan to join its pathetic “strategic currency basket” this weekend. Which, as I said back in May – when most others were claiming it would be an “end all” for the Cartel – is a complete non-event for both gold and the global monetary order. Sure, it’s a nice public relations moment for China, and propaganda event for its Communist Party – with as much sincerity as a politician giving a baby a lollipop. Yes, the Chinese long-term plan is to dominate global trade and money. However, in the short – and “medium” term – they are far more focused on preventing history’s largest economic bubble from collapsing (which it will do anyway, no matter what monetary alchemy they attempt), which includes devaluing the Yuan as much as possible. And as for their aims in the gold market, I’d bet anything they will simply continue to acquire it (and silver) as quietly as possible, until there’s no more to be acquired. At which point, if you haven’t already acquired your personal stash, it will already be too late.