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Friday April 18th 2014

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Chinese Gold Reserve Update?

Yet another day with lots to cover, whilst the “New York Gold Pool” defends $1,300 gold as staunchly as “battlefield $20 silver.”  Yesterday, its “Cartel” utilized prototypical DLITG, or “Don’t Let it Turn Green” algorithms to keep both gold and silver negative; and today, following the 206th2:15 AM” paper raid in the past 232 trading days, “Cartel Heralded” prices when they attempted to break out naturally, at exactly the 8:20 AM open of the COMEX paper market – and again, at exactly the 10:00 AM EST close of the global physical markets.  And as I write, the paper battles rage on.

24hr Gold Silver 4-17-2014

Meanwhile, “Dow Jones Propaganda Average” futures had their usual “pre-market” surge at 7:00 AM EST; as always on equity options expirations days – as the Fed ensures its masters the “TBTF” banks, profit on call option positions.  In this case, the Dow futures ramp occurred despite its largest component, IBM plunging 4% after a miserable earnings report featuring its lowest global revenues since 2009.  To wit, U.S. equity option expiration period performance is typically the polar opposite of what occurs during COMEX option expiration periods; as said “masters” are ensured profits on their gold and silver put option positions – whilst traders are still foolish enough to buy Paper PM calls, time and again lose their shirts.

Of course, the Physical PM market is another story; as U.S. Mint silver Eagle sales again surged this week – putting 2014’s pace 26% above 2013’s record level, despite weekly rationing; whilst gold forward, or GOFO rates, have, for the first time ever, gone into backwardation for the one month, two month, three month, and six month terms.  In fact, this latest month-long paper attack has been so transparent even propagandized Westerners are starting to get it.  By far, this has been Miles Franklin’s strongest week in some time; and trust me, once Americans re-awaken the inevitable, Cartel-destroying product shortages won’t be far behind.

The big question, of course, is how long can Americans, Europeans and other holders of hyperinflating currencies be “pacified” by relentless campaigns of money printing, market manipulation, and propaganda – when cumulatively, their abject failure becomes more obvious each day?  I mean, when Janet Yellen stands before the public – as she did yesterday – espousing expectations of “full employment” and minimal inflation by 2016, does anyone really believe her anymore?  The Fed has not only been dead wrong about every prediction it’s ever made, but proven to lie about what it’s really doing, in its eternal quest to fool the world into believing the twin myths of “deflation and recovery” under a fiat currency regime.

Five Years of Hard Work

Worse yet, it candidly admits its policies have been highly inflationary, making the rich richer and the poor poorer.  Tell me, can anyone look at these two horrifying, damning charts and conclude anything other than that the Fed is utterly clueless?

FRED Charts

Even the highly secular Japanese have lost faith in their despicable, nation-destroying Central bank – which is why finally, they are lining up to buy gold.  So why not Americans and Europeans, whom clearly are experiencing the same hideous economic trends?  In the U.S., for instance, at what point do people stop listening to propaganda that all bad economic data is “weather-related” – after it’s been proven otherwise, time and again?  I mean, the chart below clearly depicts 2014 to be the worst retail sales environment – barring early 2009’s Global Meltdown I – in the last 15 years, by a wide margin.  Throw in the fact that inflation is higher now than at any time in that period, and you can bet “inflation-adjusted” figures would be even uglier!

Alhambra Partners

Don’t believe me about inflation?  I’m not sure anyone disagrees anymore, as prices for items we “need versus want” are rising so rapidly, it’s hard to keep one’s head above water anymore.  And just wait until Obamacare is fully implemented – when the true meaning of “taxation nation” is fully understood, as in ALL socialist societies before it!  Day after day, we discuss the utter explosion of food and energy prices which couldn’t be more ominous given the dire economic environment.  U.S. food prices rose 20%, across the board, in the first quarter alone with – among others – beef, bacon, chicken, shrimp, and milk surging to all-time highs.  Today, it’s orange juice and egg price surges making headlines; the latter, ironically, as we head into the Easter weekend.  As for the other half of “non-core” expenses, crude oil is again pushing $105/bbl., presaging what could be shocking driving season gasoline prices.

As for the rest of today’s headlines – before I get to today’s primary topic – how about this one, of Obama’s latest “non-GAAP” budget proposal?

Congressional Budget Office says Obama’s FY 2015 budget plan would reduce U.S. deficits by $1.05 trillion over ten years versus current CBO current-law estimates.

-CRFB.org, April 17, 2014

As always, it anticipates savings “over ten years,” with the large bulk occurring in the final years, long after Obama’s out of office.  Better yet, the absolute amount, $1.05 trillion, represents no more than a 10% decrease in the roughly $10 trillion of deficits likely under the current plan; that is, assuming the economy “recovers” without interest rates simultaneously increasing from nearly all-time low levels when the national debt approaches $30 trillion; not including, of course, “off-balance sheet” debts and “unfunded liabilities.”  But then, again, since when have U.S. “non-GAAP” projections meant anything in the real world?

Total US Fed Govt

Then you have the “deadly dollar demographics” that will dramatically compound the aforementioned taxation issues; as like Japan, America’s aging population cannot support the weight of a rapidly expanding pool of entitlement dependents.  Throw in the fact that in recent years, the only economic “bright spot” has been a housing bubble created by Fed money printing – which per this week’s bank earnings reports, is clearly collapsing – and you can see how the Fed’s “tapering” propaganda campaign is nearing the end of its useful life.  Oh well, I guess “the 1%” that benefitted from the housing bubble will again be bailed out by “the 99%,” whose only “benefit” from said bubble was a higher cost of living; or perhaps, “bailed in.”

And finally, the inexorable movement out of dollars by dozens of nations, led by the emerging BRICS economies – which are in the process of creating their own trading blocs, central banks, and settlement systems; led, of course, by the Russians – who based on Putin’s speech this morning, will stop at nothing to destroy U.S. hegemony and the dollar’s “reserve currency” status and, of course, the world’s wealthiest, most powerful nation – China.

Which brings me to today’s topic, that of the People’s Bank of China’s “official” gold reserves, and whether or not they’ll update the public as to what they really are.  Or better yet, what they want the public to think they are.  The reason I’m writing of this topic are persistent “rumors” that, since April 24th marks the five-year anniversary of the last such update, the PBOC is planning to give an update imminently.  As you can see below, there is no precedent for specific time intervals between announcements and given that the legal structure of the Chinese gold market was radically liberalized in 2002, it makes historical comparisons even less relevant – particularly given that before 2002, not only was China a non-entity in the global economy, but said dollar hegemony wasn’t even questioned.

PBOC Official Gold Reserve Announcements

First off, I once again need to emphasize that the Miles Franklin Blog deals solely in the realm of fact, not “conspiracy theory.”  Secondly, I have not heard – or read of – any such rumors personally other than readers emailing that they “heard” such rumors.  And finally, if such an event were imminent, how would anyone know beforehand; unless, of course, they were a Chinese insider with an agenda to “leak” such news – which in my view, makes no logical sense.

Personally, I don’t believe there’s a chance the Chinese would show their hand at their critical juncture in history – as if they ever did.  To wit, if you actually believe they had exactly 1,054 tonnes in April 2009, I have a bridge to sell you – given that not only does that number sound incredibly low, but the Chinese government notoriously “cooks” official data.  And if ever there was a piece of official data worth misleading the world about, it’s this one.

Again, it doesn’t take a “rocket scientist” to interpret the buying power emanating from China; as simply viewing this astonishing chart of Shanghai Gold Exchange withdrawals, its quite clear demand is skyrocketing – and thus, “official” reserves well above 1,054 tonnes.  In 2013 alone, a whopping 2,100 tonnes were withdrawn from this one exchange; and thus, given the countless pro-gold comments of Chinese government official in the past decade – let alone, the fact that none of China’s 400+ tonnes of mining output is exported – I wouldn’t be surprised if the real reserve number is ten times, or more, the 1,054 tonne official figure.

In Gold We Trust

Equally important, don’t forget that China is a communist country and thus, the government owns essentially everything.  In other words, there’s a blurred line between “official” and “unofficial” holdings – particularly in the corporate world, where most companies are either government-owned or “affiliated.”  That’s why I think the analysis of the great Koos Jansen is so credible; as he incorporates – in this report – a reserve estimate incorporating various elements of supply, including both “official” PBOC holdings and other, “non-official” supplies likely to be held by government-controlled entities.

Per below, he estimates “official” PBOC holdings – if reported today – would be around 3,500 tonnes but the “unofficial” level, closer to 13,000 tonnes.  In my view, the latter amount is likely reasonably close to reality but no matter what it is, there’s no doubt it’s significantly larger than 1,054 tonnes.  And equally importantly, it no doubt exists – unlike the supposed 8,133 tonnes held by the U.S. Treasury; the supposed 3,387 tonnes held by the Bundesbank (much of it, LOL, housed at the New York Fed); and best of all, the 2,814 imaginary, double-counted tonnes “held” by the IMF.

In Gold We Trust

To conclude, I ask the question – will the Chinese give a gold reserve update on this, the fifth anniversary of the last one?  My guess is no, as frankly, I don’t see why they would purposely sabotage their own efforts to acquire as much gold, at Cartel-subsidized prices, as possible.  Remember, the Chinese government has more than $3 trillion of foreign currency reserves – including $1.2 trillion of toxic U.S. Treasuries and thus, have more to lose, other than the U.S. itself, from a dollar collapse than any entity on the planet.

The fact that the PBOC recently stated “it’s no longer in China’s favor to acquire foreign exchange reserves” should tell you all you need to know about their intentions; and thus, it makes absolutely no sense that they would “shake up” markets with the equivalent of a 10.0 Richter scale financial earthquake by volunteering ownership of massive gold holdings.  Of course, the one caveat to such analysis is that, if it turns out China has already reached the point where it no longer believes it can source material amounts of physical metal, the PBOC may determine that now is the time to end the dollar’s hegemony with such an announcement.  It has to happen sometime and per above, with GOFO rates in record backwardation, there’s no doubt physical markets are extremely tight.  Just how tight, we don’t know; but inevitably, we assure you, we most certainly will.

Frankly, we don’t see the purpose of speculating on such an event which as sure as night follows day, will inevitably occur.  If it happens to be this month, you sure as heck better have already protected yourself with your own stash of physical metal; as in the aftermath, it may be impossible to acquire it, certainly at prices anywhere near today’s historically depressed levels.  And if it’s next year, or two or three years from now, the same situation will present itself.  That is, either you are ready for the new monetary order – backed by real money – or you aren’t.

My Back and Forth Yesterday With John Embry

I received a reply to my article and a question yesterday from John Embry of Sprott Asset Management.  He asks, “Where” the silver has come from to supply the excess demand over these past years.  I have reprinted his question and then my response to John.  I will follow my reply at the bottom with some parting comments and a more in depth explanation.

Bill,

I agree with your premise totally but remain baffled by how the PTB are able to access enough physical silver worldwide to meet demand at such a remarkably depressed price. I was talking to Eric Sprott about it yesterday and he can’t understand how they’re doing it. The world experts Ted Butler and David Morgan are at a loss also. Any ideas on your part? 

Best, 

John

Hi John,

I suspect that China leased out silver 10 years ago.  This was done because they wanted and preferred to have gold, it was a better deal to suppress silver prices (and thus gold also) than to just swap it one for the other because even if it was 2 billion ounces you were only talking $10-12 billion at the time.  Also please remember that nearly 100 years ago we (and the British) devalued silver versus gold which stung them badly, the Chinese have memories for millennia, this was only a century ago which is like yesterday to them.  They (the Chinese) have now gorged on gold and done it with large dollar amounts…not to mention they have emptied the West’s official reserves.  They have built a very large gold position off of the foundation of their large silver position.  In a nutshell, I believe the silver could have only come from China.

Now let me explain my theory, we saw the open interest in COMEX silver surge a couple of years ago like we are again seeing today.  I believe that it originally was “the plan” that turned into a “test” because we did not default on delivering gold.  The whole thing is/was a “trap” to be sprung by the Chinese (the East) on the U.S. (the West).  They knew how much gold that they had purchased and calculated that we were close to running out.  What they did not calculate in my opinion is that in order to keep the game going, we (the U.S.) would steal other western gold that was held in custody and use it to satisfy demand (desperate people do desperate things).  I believe the silver “longs” were unwound last time once they realized that other sovereign (German, Dutch etc.) custodial gold was coming to the market.  Now, we are close to running through even that “custodial gold” and the Chinese know it which is why the open interest in COMEX silver is rising again…the Chinese through proxies are lining up to “call” silver.  I believe the leases were 10yrs in duration which would make sense thinking back to 2003 (Buffet’s silver) and the onset of ETF’s to be used as a pressure valve to divert some of the demand into paper that did not procure the physical metal.  China is merely reloading or re preparing to spring the trap now that it looks like the gold well is drying up as evidenced by GOFO rates.

I believe that the “call” will come on 2 separate fronts for silver.  One with the 10 yr. leases expiring and China calling those which will coincide with massive contracts standing for delivery on the COMEX for a double whammy.  Will they get all of their silver back?  No, but they have stockpiled gold in much more numerous “dollar” figures than their silver could have ever been worth.  Enter Russia and the Saudis who for sure will (Russia) and probably will (the Saudis) begin to price oil in currencies other than dollars.  This will cut the legs of demand out from under the dollar…simultaneously with a call on silver …at a time where gold reserves have been depleted.  Can you say “re set?”

Can I prove any of this?  No, but I can prove that there were only two large hordes of silver in the past (3 if you include Buffet’s ham sandwich 129 million ounces).  We know of 2 billion ounces procured from the scrapping of the “Manhattan Project” and we also know that the Chinese had at least 300 million and probably more like 1 billion silver ounces…which would have gotten us to where we are now if you look at the supply deficits filled for the last 30 years.  We know that China had 300 million silver ounces in 1930 and that they have been mining ever since without ever exporting any of it…they surely must have gotten to 1 billion ounces by the turn of the century in another 80-90 years of mining.

This has been “economic war” literally since the 1970′s, we just didn’t know it…the East did.  While we “thought” we were winning the war with battles along the way (i.e. collapsing Russia) we lost track of their “troops and their strategy.”  This I believe was evidenced by Dick Cheney’s quote that “deficits don’t matter.”  They do matter; they always have and always will matter.  James Turk by the way is reporting that silver is now also in a negative GOFO structure which would also argue that silver is finally becoming tight.  I may be wrong but I see this entire episode as many battles within a giant war where the Chinese have allowed us more and more “rope” to hang ourselves while we won “battles” here and there…until they spring the final trap and win the war.  The old saying of “he who has the gold makes the rules” still applies…the Chinese know this and we forgot it.  When all is said and done, I believe that the Chinese will “tell us” what the prices of gold and silver are after the system resets.  We messed up big time!

OK, so that was my back and forth with John Embry yesterday, I apologize for the hopping around style of writing but it was written off the cuff and is a little difficult to follow.  We spoke at length on the phone afterwards where we talked on this and several other subjects.  John’s response to me was that he had never heard this take before; I thought that he had because Harvey Organ and I have discussed this several times and they are both from Toronto.  In any case, I think I got John (and hopefully others like his partner Eric Sprott) scratching his head on this one.  Like I said, I cannot prove it all except that the U.S. depleted their silver reserves that were amassed from scrapping the Manhattan Project.  They had roughly 2 billion silver ounces that were expended (sold) prior to the turn of the century.  I also can prove that China at 1 time had a hoard of over 300 million ounces of silver (1930) and probably at least 1 billion ounces (2000).  The rest is connecting these dots because the metal had to come from somewhere.

Logically, if demand has outstripped supply by 100-200 million ounces or so per year…it had to come from somewhere, right?  Like I have said many times before with gold (where central banks were the big holders), you must look to the biggest hoards to see where the physical metal MUST have come from if the supply and demand numbers do not add up…which they have not for many years and do not today.  I know of no other large deposits of silver that could possibly have plugged the gap between excess demand and the limited supply other than these 2 sources…one of which we know has been long gone (some will say also the LBMA, they may be correct but I am skeptical of this source).  Logically, if the Chinese wanted gold but knew that physical silver was the “suppressors” Achilles heel, then they knew that providing physical silver was their road to purchasing large amounts of gold at subsidized prices.  China has known all along that there are no large silver hoards left and that the West could never keep the price of gold down without keeping silver in check.  In other words, you can’t have $1,300 gold if silver is trading at $500 or $1,000 per ounce.  I believe that they used their silver as “bait” because they knew that the West needed it to suppress silver…  In other words, they leveraged their massive silver holdings into an avenue to accumulate gold at suppressed prices

I believe that they have now trapped the West.  I believe that much of the Western gold already resides in the East and that the losses of some physical silver will be more than made up for.  I and many others have wondered for years, why hasn’t someone blown up the COMEX silver pit with a mere $3-5 billion?  If the real “prize” was gold then wouldn’t you wait to blow up silver until there was no more gold forthcoming?  This is common sense I believe and could explain why and how silver has been “carried” for so long.  Seriously, there are certainly countries, states, companies, hedge funds, mutual funds and even individuals that could come up with $5 billion.  This small sum would be enough to completely upset (to the upside) the pricing structure, it will be easily done when it happens.

I would also like to add that I also believe that much of whatever physical silver has been held and vaulted has also been “used.”  I believe that it has been hypothecated, re hypothecated, and even the physical metal (the collateral) itself has been sold off to meet the demand.  I truly believe that we will wake up one day only to find out that 99%+ of all “paper receipts” for gold and silver don’t even have the original metal behind them.  At one point they surely did but since then the original ounces were sold or “pledged” on paper many times over…but now in many cases even the original metal has been sold.  You either hold it in your hand or have deposited it in a non-bank storage facility or you don’t really have it in my opinion.

The above is merely my opinion so please, if you disagree with it tell me how and where the logic is wrong rather sending fired up e-mails at me.  I have thought about this topic for many a moon and always come up to the same conclusion.  “Silver (or gold) can only come from where it was or is held” …which in this case I have narrowed down to China.  I think it makes sense and I also think that this is your answer as to who is now behind the record open interest in silver with 3 year lows in prices.  Nothing else makes sense to me.  For what it’s worth.

 

 

Taxation Nation

Lots to get to today, as aside from my daily topic, I feel it imperative to commentate on the recent, “counterintuitive” market action.  With so many cataclysmic political and economic events occuring simultaneously, TPTB have gone into “manipulation hyperdrive” in their ongoing, inevitably doomed task of maintaining the façade of stabilty, “recovery,” and “low inflation.”

And no example of such “ball juggling” could be more evident than the past two days’ “hail mary” equity rallies, coupled with vicious Paper PM “caps and attacks” – ironically, marking the one-year anniversary of last year’s “alternative currencies destruction” raids – when gold and silver were violently attacked to quell burgeoning PM sentiment.  Not so coincidentally, last year’s blatant April raids yielded Miles Franklin’s best day of 2013 – just as yesterday’s equally transparent raids yielded its best day – by far – of 2014.

Let’s start with global equity markets, which were on the verge of a major, well-deserved decline.  The Fed-generated equity bubble was finally starting to collapse upon itself, as the weight of historically high valuations, record margin debt, and blind, momentum-based speculation reminiscent of the late 1990s, amidst an environment of dramatically weakening global economic activity, created a “perfect storm” of equity weakness.  In fact, the only missing component was the fact that the Fed had successfully engineered the benchmark 10-year Treasury yield from 2.80% before last week’s horrific NFP employment report to 2.61% yesterday morning, care of “back door QE,” via miraculous “Belgian buying” that only a blind man can’t see.  Again, we can’t emphasize enough how realistic the premise of our “3.0% – Nuff’ said” piece is; as the Fed simply cannot allow rates to rise without triggering an immediate, catastrophic economic collapse.

That said, equity sentiment was getting pretty until – even more “miraculously” – Monday’s swoon was rescued by a violent PPT “hail mary” rally; exceeded only by yesterday’s more blatant support operation – again, when the “market leading” NASDAQ fell below the key round number of 4,000.

NASDAQ Charts

Keep in mind, the reasons underlying this month’s tech stock plunge – aside from the aforementioned, bubble-like characteristics fostered by five years of unfettered money printing, market manipulation, and propaganda – were rapidly escalating Ukrainian tensions and miserable global economic data.  Thus, how comical can it be that the “market” suddenly reversed sharply when a report emerged of the Japanese government preparing to dramatically reduce its economic outlook?  Yes, we’re supposed to believe that “news” that an economy that saw an unprecedented 25% retail sales decline over the past two weeks – as the government imposed a crippling 3% tax increase, amidst surging inflation and plunging income – caused global equity markets to surge?

Japan Economic Downgrade

Oh, that’s right, such “sudden bullishness” must be due to the expectation of expanded global QE announcements.  I mean the last time the Russell 2000 – an index composed of small, highly speculative stocks – fell below its 200 DMA was December 2012, causing the Fed to immediately announce its $85 billion/month “QE3” program.  And since Japan’s “Abenomics” has been such a “success,” clearly the BOJ is about to expand it, causing unending, global stock market gains.  Right?  Actually, not really – as given surging Japanese consumer inflation, amidst plunging incomes and corporate earnings, the BOJ has pinned itself into a corner, fearful that further QE increases could catalyze a catastrophic loss of confidence in the Japanese government, currency and bond market.  But let’s not allow reality to get in the way of good propaganda, OK?

In fact, a consensus is rapidly growing that the BOJ cannot expand Abenomics any further, due to the aforementioned ramifications; and thus, it doesn’t take a “rocket scientist” to realize the reason the “market” reversed yesterday was nothing but PPT intervention – as was the case Monday, when no “Japan economic weakness” news coincided with the late day “Hail Mary” rally.  Better yet, can someone explain why PMs plunged in the same market conditions that caused them to (albeit, in capped manner) surge the past three days?  Not to mention, if equities suddenly rocketed higher at 1:00 PM EST anticipating increased QE, why didn’t gold and silver do so as well????

24hr Gold Silver 4-15-2014

Of course, the answer couldn’t be simpler – as yet again, the Cartel was “doubling up” its “market calming” manipulations; in supplementing the vicious, nonsensical equity rally with a violent Paper PM raid commencing at 8:27 AM EST, seven minutes after the COMEX open, and three minutes before the publication of wildly PM-bullish CPI and Empire State Manufacturing data – per the below Zero Hedge commentary.  And heck, how much more “telegraphed” could this have been – as it was just a day earlier when Goldman Sachs reiterated its ridiculous, self-serving $1,050/oz. gold prediction just as it did last year, two days before the aforementioned “alternative currencies destruction.”

It seems the two words “fiduciary duty” are strangely missing from the dictionary of the new normal’s asset management community. This morning, shortly before 8:27 am ET, someone decide that it was the perfect time to dump thousands of Gold futures contracts worth over half a billion dollars notional. This smashed Gold futures down over $12 instantaneously, breaking below the 200DMA and triggered the futures exchange to halt trading in the precious metal for 10 seconds.

-Zero Hedge, April 15, 2014

Fast forward to today, where the overnight news was even more PM-bullish; as China’s GDP growth came in well below expectations, prompting calls for increased PBOC stimulus amidst a cratering trade balance and crashing housing bubble.  In the report’s aftermath, the Yuan fell to a new multi-year low which will not only accelerate Chinese inflation, but negatively impact the entire Western world’s competitiveness.

As always, PPT-supported stock markets rocketed higher – while the Cartel used residual “technical weakness” to continue attacking paper gold and silver, at the same times as usual; in gold’s case, creating a “battlefield $1,300” in the same manner as silver’s current “battlefield $20.”  Of course, in doing so, they are catalyzing massive physical demand – as we experienced at Miles Franklin yesterday – as evidenced by significant futures market backwardation.  And as Bill Holter so presciently points out, the ability to maintain “weak PM sentiment” after prices have clearly bottomed – amidst a wildly bullish fundamental environment, no less – will clearly be a difficult task for a Cartel that has expended most, if not all of its manipulative “ammo” in pushing prices below their respective costs of production for more than a year’s time.

24hr Gold Silver 4-16-2014

Let’s get to the real reason we write this blog i.e., presenting the long-term case for holding physical precious metals as insurance against the inevitable hyperinflation of all fiat currencies.  Given that the first 599 such regimes failed, it makes logical sense that the current 180 will as well – particularly as, for the first time in history, they are all anchored together, by equally unbacked “derivatives.”

In today’s terrifying political and economic climate, the reasons to hold gold and silver are too numerous to list.  And thus, we like to stick to “the basics,” as discussed in “The Most Important Reason to Own Precious Metals” – which, of course, are led by the price inflation of items we “need versus want.”  In other words, food, energy, healthcare, and other items necessary for survival.  These are the first items that Central bank monetary inflation funnels into, which is why those that spend the highest percentages of their incomes – such as citizens of the “Arab Spring” nations – are the first to be affected. We have expended a tremendous amount of “digital ink” on the topic; particularly in recent weeks, as global food prices have gone berserk due to a combination of Central bank “QE” programs and historic droughts in major producing regions like California and Brazil.

On a global basis, food prices are closing in on all-time highs as we speak.  However, here in the United States, the near-term outlook is far more dire – as the prices of many major food items – from beef, to pork, milk, chicken, and shrimp – have surged to all-time high levels.  Not to mention, gasoline prices are approaching their own all-time highs, and we’re not even in the peak driving season.  Heck, my wife and I decided this week to switch most of our diet to vegetarian dishes; except, unfortunately, due to the aforementioned droughts, vegetable prices may well rise more than meat!

S&P GSCI

Of course, when one caclulates the total impact of “inflation,” it’s not just consumer prices that should be considered.  Yes, they are a major component, but it’s amazing how the giant pink elephant in the room – i.e., the costs of a rapidly expanding “taxation nation” – are not discussed as well.  In “Californ-inflation,” for example, we noted how the costs of creating a habitable environment in the desert has caused California’s taxes to be the nation’s highest.  And similarly, the cost of funding the “dependency nation” America has become will quite obviously put it among the world’s highest taxed nations in the coming years.  In other words, as we have repeatedly stated, if we want (or better put, need) to become the Socialist States of America, our already sky-high taxes, fees, and surcharges must increase to levels seen in other socialist regimes – such as Canada and most of Europe.  Remember, such reductions in one’s purchasing power are NOT incorporated into the already suppressed, government-generated CPI figures; and thus, the myth of “low inflation” becomes even more embarrassingly incorrect under such circumstances.  Below, for instance, is a list of simple income and estate tax changes in 2013 alone; which, particularly for the “wealthy,” are like inflationary daggers through the heart.

2013 US Tax Changes

But this is just a small sampling; and as demonstrated by the incredible 442 tax increases Obama alone has thus far proposed – including draconian, European-style taxes on gasoline – the likelihood of such a total socialist transformation occuring sooner rather than later is extremely high, not withstanding political “assurances” otherwise.

I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase.  Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.

-Candidate Barack Obama, 2008

As the U.S. economy continues to crumble, whilst the inflationary pressures caused by ceaseless money printing accelerate, Congress will become more vigilant in its quest to commandeer the nation via onerous taxation and regulation.  This has been the case in essentially every dying regime throughout history, and particularly those with out of control printing presses.  And thus, the reasons to PROTECT one’s life’s savings from the resultant inflation – and potentially, hyperinflation – with the only assets proven to do so throughout history, are rapidly mounting.

Never before have such reasons been so powerful, and never before have PM prices been so “subsidized” by suppression, in an environment where it’s still legal to purchase them.  At some point soon, the entire world will realize this and when it does, it will be too late to protect yourself as such.  And thus, if you consider this possibility while supply still exists, we hope you’ll give Miles Franklin a call at 800-822-8080 – and “give us a chance” to earn your business.

Happy Anniversary!

Live Spot Gold

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Apr 15, 2014 09:00 NY Time

Chart 2

I pulled the two above graphics off of Kitco’s homepage. I copied the first one last Thursday in anticipation of today.  First let me explain what they are and secondly I will explain why it will be a problem.  If you recall, it was one year ago that all of a sudden gold dropped from the $1,600′s into the high $1,200′s over 3 days…for no apparent reason.  I say “no apparent reason” because the “excuse” given was that the Fed would maybe taper later in the year which was supposed to be bearish for gold and silver…even though the latest QE was not “bullish” to begin with.  Don’t get me wrong, “QE” was and is bullish for gold but… the metal was capped with the sale of naked futures to “show you” that it wasn’t.  In any case, let me wish you all a “Happy Anniversary” tongue in cheek.

Please study the above graphic closely (and sorry it is not formatted better but I am a computer dinosaur).  Focus especially on the “1yr change.”  You will notice that as of last Thursday, the number was a -$262.  As of today (after the $30 “forced” smash) that number is only -$58.  Without hitting the price today we would be looking at -$28.  Do you see where I am going with this?  Markets are now all about “momentum.”  They always have been but they are more so now and with the use of futures and derivatives…the “momentum” can be created, aided or halted to paint a picture that “proves” the (ir) case.  Never mind earnings, supply and demand or any other fundamentals…they can be masked or hidden and then you are told …”See?  Look with your own eyes.”  It doesn’t matter how obvious it is that “counterintuitive” explains everything.

So gold is now down year over year $58 today vs. $262 just 3 trading days ago, all this means is that gold was down a couple hundred bucks in 3 days last year, right?  Well yes it was but now the problems begin because “year over year” comparisons will again start to stick out in the public’s eye.  For 12 years straight, gold rose and in many of those years was the best performing asset on the planet.  I believe that the decision was made that gold (and silver) had to be smashed to break the “momentum.”  By breaking momentum…”sentiment” would also get a dent which was important because the bottom of the barrel was coming into view.

But…here we are now and the “year over years” is going to turn “up.”  They are going to turn up at a time where stockpiles have been depleted AND mining supply has shrunk because of price.  Price (low) has also enticed demand from all over the world.  If you recall the exponential gold and silver price rises of the late 70′s, it was U.S. centric…now it is global.  It is global and there is now wealth all over world as opposed to being concentrated in the U.S. …which is a very big problem for the money printers.  The more that they print…the more they are putting ammunition in the hands of potential buyers… all 7 billion of them!

In my opinion, what we have been through over the last year to 2 years should be equated to one last “haymaker” thrown by a tired and aging “ex-champ.”  Supply and demand does not lie.  We know (and have known for 15 years per Frank Veneroso and others) that demand was far outstripping supply.  We also logically know that the supply to meet the demand had to come from somewhere.  That “somewhere” could only logically have been from Western central bank holdings.  We also know that this supply by definition is “finite” and will one day run out.  Smashing prices one year ago did only one thing, it bought some time.  So far this “time” has equaled 1 year in duration.

So how much time is left?  I nor anyone else knows, what I do know is that the “sting” a year later doesn’t hurt so much anymore and we are entering a point where if you bought a year ago, you are a “winner” (you really shouldn’t think this way but everyone does).  Here is my point, we have seen demand increase dramatically because value buyers stepped up to the suddenly much lower prices…now (soon) I suspect we will see the “momentum” buyers again step up to the plate.

Did the big drop hurt sentiment?  Of course it did.  Did it kill sentiment dead?  No it did not because just like the Spring season when plants start to grow again, so again will sentiment.  The only way to retard sentiment and keep it from growing from this point forward is to keep knocking the price down…year after year after year.  This cannot be done as the mine supply will not come forward if prices drop further and further below the cost of production.  “They” shot themselves in the foot by smashing price because it created the unintended consequence of pulling value investors off of the sidelines in huge fashion.  Now they have the loaded gun of manipulation pointed at their other foot, they can fire it again but either way they will create more demand.  They can allow prices to move higher from here and invite the “MoMo’s” to hop on board or they can retard prices further and create more value buyers to step on board.

Since we are now very close to the year over year price turning upwards, they will soon need to figure out which “foot” to aim at.

Great Things Keep Happening

Andy Hoffman joins Kerry Lutz of the Financial Survival Network  to discuss platinum and palladium, sales tax hike in Japan sales down 25%, in the U.S. 20 percent food price increase and gold physical demand.  To download the audio, please click below:

Andrew Hoffman – Great Things Keep Happening

The “New York Gold Pool” – Revisited

I have to admit, I was already in a somber mood when I awoke; as every imaginable Cartel stratagem had been used over the past three days to cap gold and silver’s advances, setting up the “no doubter” overnight attack that was first “signaled” by last night’s “mysterious” gold weakness at the 8:00 PM EST open of the “Globex” trading platform; i.e., the thinnest period of the global trading day, which the Cartel traditionally utilizes to launch paper raids.  At 8:00 PM EST, Americans are eating dinner, Europeans are asleep, and Asians are just waking up.  Thus, you can be sure that when gold prices fall at this time, it can only be due to pre-programmed computer algorithms.

While at the gym this morning, I watched PMs attacked further, whilst U.S. and European equities had their typical “walk up” when the New York “pre-market” opened at 7:00 AM EST.  And by “typical,” I mean every day – just as PMs are hit at the 2:15 AM open of the London “pre-market” session nearly every day; this morning, for the 204th time in the past 230 trading days.  And thus, what looked like this when I awoke…

April 15 Stock Market

…became this when I got back from the gym two hours later, for absolutely ZERO reason other than daily PPT operations, as operated by the “President’s Working Group on Financial Markets”…

April 15 Stock Market 2

…i.e., the same group that produces blatantly obvious “Hail Mary” rallies whenever the “Dow Jones Propaganda Average” threatens to turn red; in yesterday’s case, following an unthinkable two straight down days, after an early morning “dead ringer” algorithm failed to achieve the desired effect – not to mention, as MSM “Tech Wreck” commentary reached a fever pitch, with the NASDAQ “crashing” below 4,000…

Dow NASDAQ Charts

Such “price action” was accompanied by a litany of global “horrible headlines,” signalling economic deterioration, political strife, and a surging cost of living – including the following:

1.  Significant overnight intensification of the Ukrainian crisis, with on-the-ground violence and U.S./Russian aggression dangerously escalating

2.  A report highlighting Japan’s “demographic hell” front and center; as amidst its worst economic outlook in decades, and the world’s highest debt to GDP ratio, it was learned that the Japanese population declined for the third straight year, with a record 25% of the population above 65 years old.

3.  An early gauge of Chinese GDP growth was well below expectations prompting the Yuan to fall to new multi-year lows.  Typically, the truth-seeking crew at Zero Hedge does its best to report what’s really going on. For instance, highlighting the “13 YEAR LOW” in Chinese year-over-year M2 growth – when in fact, at 12%, it’s higher than nearly every nation on the planet.  Not to mention, the fact that Chinese economic data – such as this year’s PBOC-projected “7.7% GDP growth projection” – is notoriously unreliable.

4.  An unprecedented 15th straight daily decline in the Baltic Dry Index, a widely watched measure of global shipping activity.  The BDI is now down 60% since year-end, representing its worst ever start to a calendar year.

5.  A report concluding that 85% of all U.S. pension plans could fail in the coming three decades.  The simple, irrefutable math behind this horrifying conclusion is that at the current, gargantuan rate of underfunding, a 9% annual return on investment would be required to meet  projected obligations.  Given the Fed’s “ZIRP to Infinity” policy – which we assure you, will never end – and pension plans’ typical 30% allocation in Fixed Income assets, it becomes nearly impossible to meet such lofty goals; let alone, when 55% of assets are held in equities sporting historically high valuations, amidst historically weak fundamentals and record margin debt.

6.  A report that, depsite the so-called “recovery” of the European economy (LOL), European banks laid off an astounding 80,000 workers in 2013

7.  A perfect “four-for-four” of weak U.S. economic data, including:

a)  Higher than expected CPI inflation, at 0.2% versus the expected 0.1%; which would be a lot higher if real data were used, let alone, “ignored inflationary items” like surging taxes.

b) The worst Empire State Manufacturing miss in 15 months, at 1.3 versus 5.6 last month and the 7.5 expectation;

c) A flat NAHB Housing Index – at 47 versus the 49 estimate, compared to 56 two months ago;

d) Last but not least, a comically fudged Treasury International Capital, or “TIC” report – reporting a monstrous inflow of $85.7 billion of foreign capital in March.  If there was anyone left that believed the Fed is not monetizing much more than it purports – i.e., QE “tapering” is but a mirage, than read the below “explanation,” discussing the so-called “Belgian buying” Bill Holter and I have mocked for some time now…

After several months of tepid interest, foreigners became big buyers of long-term US securities in February, to the tune of a net $85.7 billion. The buying was centered entirely in US Treasuries, with other investment categories flat to negative.  The heaviest Treasury buying came from Belgium, where accounts now hold $341.2 billion of US Treasuries, up more than $30 billion in the month.  Belgium now ranks third in U.S. Treasury holdings above Caribbean banking centers at $299.7 billion. The number one and two holders of US Treasuries, China and Japan, show little change in the month at $1.27 trillion and $1.21 trillion, respectively.

Meanwhile, in the world of PHYSICAL gold and silver, the day’s “news” included the following:

1.  Per Harvey Organ, “We had an increase in negativity in all months, and as mentioned above, the first 3 month GOFO rates are in backwardation.”
-HarveyOrgan.blogspot.com, April 14, 2014

2.  U.S. Mint Silver Eagle sales, yesterday alone, were 753,000 ounces, equating to 2.5% of annual U.S. mine production putting such sales on pace to exceed last year’s record level by 25%, and the post-2008 pace – in which every mint on the planet sold out for four months – by nearly 100%.

Amidst this wildly PM-positive environment, with gold and silver prices trading well below their respective costs of production, the “financial Nazis” running the “New York Gold Pool” were attacking Paper PMs with a particular viciousness; as following the past two days’ blatant defenses of $1,325/oz. gold and “Battlefield $20 Silver”…

24hr Gold Silver Charts 4

…they went into “attack mode” this morning; starting at 2:15 AM, and accelerating at the COMEX paper market opening.  Check out silver, falling 2% in five minutes for absolutely ZERO reason – unless, of course, higher than expected inflation and the abysmally weak Empire State Manufacturing Index reading should be construed as “silver negative”…

24hr Gold Silver 4-15

…which as you can see, had ZERO impact on PPT-supported stock futures, whilst Fed-supported Treasuries blissfully rose amidst the “so-called recovery”; and oh yeah, the “white knight” Belgian buying that’s – LOL – offsetting the Fed’s “tapering.”  And thus, in less than 24 hours, the Dow was trading at the exact same 16,130 level – amidst the aforementioned litany of global “horrible headlines” – whilst paper gold plunged from $1,331/oz. to $1,290/oz., or 3.1%; and paper silver, $20.10/oz. to $19.25/oz., or 4.2%.  Heck, in silver’s case, the bulk of the decline occurred in just two hours.

Futures April 15

To wit, when supposedly PM-supporting media cites gold being not lower, but sharply lower due to the universal catch-all of “profit taking” – let alone, a “firmer dollar,” when in fact the dollar index is unchanged…

Gold Sharply Lower On Profit Taking, Sell Stops, Firmer U.S. Dollar

Tuesday April 15, 2014 8:26 AM

…while the largest gold “trade organziation,” the World Gold Council, acts as if its prediction of 2014 Chinese gold demand being “at best” on a par with 2013’s record level (as if it knows what Chinese gold demand will ultimately be)…

“We’re looking at best for it to be on par with 2013,” said Albert Cheng, managing director for the Far East at the World Gold Council.

-Wall Street Journal, April 14, 2014

…and even Zero Hedge publishes headlines like “gold tumbles its most in four months on China slowdown fears” – whilst U.S., European, and even Asian stocks are flat to slightly higher, you can see why the Miles Franklin Blog expends so much energy telling its readers to locate the handful of “good, smart people” on the planet, and ally yourself with their beliefs.

In May 2013’s “New York Gold Pool,” we wrote of how the U.S.-led “Cartel” has been covertly suppressing gold and silver prices for the past 15 years; which in my view, the Miles Franklin Blog, GATA, and countless others have sufficiently proven through years of diligent analysis.  The catastrophic impact of such market manipulation is self-evident, as this attempt to mask the political, economic, and social destruction wrought by history’s first global fiat currency regime has been catastrophic – getting worse each day as its Ponzi-esque characteristics play themselves out.

Quite obviously, the impact of suppressing real money’s value – whilst artificially propping up fake, fiat money’s “value,” is exponentially more negative than the 1960s attempt to overtly do so via the U.S.-led “London Gold Pool” – which spectacularly failed in 1968, after tens of thousands of tonnes were vaccuumed from Western vaults in a failed attempt to hold prices below the government-mandated level of $35/oz.  Today, such gold (and silver) is being vaccuumed at an even faster rate; but in this case, it’s going to the Eastern hemisphere, where it will continue to go until there is nothing left for the West to suppress with.  Meanwhile, the inflation created by enabling the dollar and other “leading currencies” to print with impunity is setting the stage for hyperinflation and inevitably, civil and national wars.

Similarly, simple math tells us the global fiat currency regime must inevitably collapse – likely, sooner rather than later; while the blatantly obvious “New York Gold Pool,” too, will eventually be destroyed.  Remember, after the London Gold Pool was disbanded in 1968, gold rose by a factor of 25 in 12 years time.  This time around, anything goes from a nominal point of view with the only “guarantee” being that in real terms, gold’s (and silver’s) gains will be historic.

A Change in My Perspective

I recently had the opportunity to visit and view a very large North American vault which changed my perspective on the U.S. financial condition.  As you know, when I see something, I generally don’t take it at “face value.”  I generally like to see something and “compare it” to something else.  To me, everything needs to be “compared” in order to get a true perspective.  An example would be a 3 ft. child seeing a 6 ft. adult for the first time and believing that the adult surely must be the fabled Gulliver.  As a side note, I was 10 years old in 1970 and got to meet Emerson Boozer and Matt Snell (N.Y. Jets running backs) in person, my perspective at the time was that each one of their thighs was bigger than I was; they were giants beyond my comprehension!

One vault room that I viewed was filled with silver, 1,000 oz. bars that were stacked high and right up to the walls.  The whole room if it was completely filled may have been able to hold 20 million ounces.   The “pile” that I saw was a little over 10 million ounces, I did a little bit of math in my head and to my disappointment the total was only a little over $200 million.  I say my “disappointment” because of the “perspective” it gave me.  This was a huge stack of silver yet it had such little value.  I say “little value” and will get to that in a minute but stay with me.  Suffice it to say, this room inside the vault was my “Gulliver” moment.

OK, so I got to see 10+ million ounces of silver sitting in a room and beginning to tarnish, what was I actually looking at?  I will speak in terms of the U.S. only rather than “global” terms because I want to show you just how out of whack we (the U.S.) really are financially.  Upon checking, the total of all U.S. mines dig up between 30-35 million silver ounces per year (Silver Production | The Silver Institute), let’s call this $700 million worth.  What I viewed in one single room was nearly 1/3rd of ALL U.S. silver production for a year!  Was the room “impressive?”  You bet it was but…

…But, really?  The U.S. doesn’t even produce more than $1 billion worth of silver per year?  $1 billion?  Now, let’s put this in a little perspective.  “QE” as you know has been reduced to $55 billion…per month; let’s call this $2 billion per day.  Our “debt” is increasing at least $1 trillion per year…or rounded off, $3 billion per day.  Let’s add these two “sources” of our “standard of living” and we get 2+3=5…”5″ as in $5 billion per day of either borrowing and or printing “wealth.”  If we compare this number of $5 billion per day to the total annual U.S. silver production of $700 million…the U.S. “spends” 7 times each DAY the amount of silver mined in 1 YEAR.  Put in final terms, the U.S. “over” spends 2,500 times the amount of silver that it produces.  Yes, yes, let’s add in gold too and we still have an “over” spending of 200+ times our mining activity.  Please keep in mind that this exercise only accounts for the “over” part of spending and thus only a percentage of “total” spending.   And yes I know…I’m an idiot because none of these matters since everyone “knows” that gold and silver aren’t “money” anyways so I am comparing apples to oranges…but am I really?

Getting back to silver, did you realize that the U.S. is actually an importer of the metal silver (money)?  That’s right; we “use” more silver than we produce.  In fact, as of 2012, 57% of all the silver used in the U.S. was imported …  Another little tidbit that you might not know is about those pretty little Silver Eagle coins that you have bought (or should buy)… more Silver Eagles have been produced and purchased since 2010 than our mines actually produced silver for.  Do you see the irony here?  The mint has been selling more Eagles than our mines are producing… oh, but wait, there’s more.

The amounts that the U.S. mint has sold each year have been “rationed” many times.  There have been many “halts” to production for weeks at a time.  (As a very funny side note, I can still remember Jeff Christian saying that there was “plenty” of gold and silver to be had, it was just that the mint couldn’t get enough “blanks.”  At the time (I and several others explained his error to him) he thought that “blanks” were actual “molds or stamps” rather than the blank “rounds” of raw product and that once these were fabricated…the plentiful gold and silver coins would start rolling off the line again!)  In any case, think about this, investors are and have been buying more Silver Eagles than ALL of the silver produced in U.S. mines combined.  Where is the silver coming from for photography?  Mirrors and solar panels, hi tech applications etc.?  …We are “importing” it and paying for the imports with …you guessed it, dollars…lots and lots of dollars!  I guess the simple and logical question is how will we import needed silver once the dollar is no longer accepted internationally?  …But that’s just “crazy thinking” on my part huh?

Suffice it to say, I was awed to see so much silver in one place yet also surprised that the U.S. only produces 3 times as much as what I saw in one room in a single year.  What really blew my mind was the “minuscule” dollar amount that uses a measly “m” when we now live in a world where “b”s (billions) are thrown around regularly, “t”s (trillions) come up quite often and we now even hear about the dreaded “q” word (quadrillion for total derivatives).

To wrap this up, I never really knew just how small that total U.S. silver production really was.  Yes, I “knew” but I didn’t really know until I got to see this one single stack of silver with my own eyes for a perspective.  Yes it looked like a lot of silver but I could have in the past seen this pile and believed it to be the production from just one company.  Once I realized that this pile of metal (x3) was equal to total annual U.S. production…and put a dollar figure on it…now I really get it.  There is not that much silver around and from a “dollar” standpoint…it is foolish and CHEAP when compared to the paper outstanding and continually being created!  I do not see how there is any way that if production does not equal demand and this demand is continually “stoked” by excessive dollar creation…that price does not absolutely explode from here.  This doesn’t even include the documented fact that silver production is slowing because the mines are being forced to produce at a loss…”Price” will be determined by real supply and real demand…the current pricing by COMEX will go down in history as some sort of bad joke on those who never bothered to purchase at COMEX prices.

Buying Gold and Silver At These Prices Is A Very Safe Investment

Thank you to all of our readers who sent in comments today supportive of David’s article on Backwoods Jr.  To be clear on the matter, I have no issue with anyone whose beliefs are different from ours.  We are, after all, in the minority.

But I take offense when someone makes insulting remarks and mocks anyone who would actually pay for being told to buy gold and silver, investments that he gleefully points out have lost a great deal of money lately.

But it was O.K. for Backwoods Jr. to hold onto his large blue chip stock portfolio -during two massive sell-offs in the 2000s.  It’s laughable that Jr. is in his stocks for the long-haul but we who own gold are foolish for doing the same thing.

I can’t speak for all of the financial writers and sellers of precious metals, but I suspect most are very serious about what they write and the recommendations they make.  They believe deeply and with great conviction in what they present to the public.  I know for a fact that this is exactly what goes on at Miles Franklin.

I take GREAT OFFENSE that Backwoods Jr. accuses people like John Williams, Paul Craig Roberts and Bill Holter of using scare tactics to sell gold and silver in order to sell product.

There is a “put” on gold and silver.  They cannot sell for less than cost of production for any prolonged period of time, and today’s prices are below the level necessary to explore for new metal.  Buying gold and silver at these prices is a very safe investment, one with limited downside and unbelievable upside potential.  The stock market is in bubble territory and legendary stock market guru Richard Russell warns his readers to lighten up now – and to buy gold.  I’ve followed Russell for 30 years and when he speaks, I pay attention.

The Ultimate Insider Tells It Like It Is

In last week’s “Conspiracy Theory,” we highlighted how the Miles Franklin Blog deals solely with fact, not speculation.  My background as a classically-trained financial analyst guides every word I write; and in Bill Holter and myself – who both cut our blogosphere “teeth” on the GATA website, you are reading two of the world’s foremost “gold manipulation experts.”  And when I say foremost, I truly believe you can count the amount of people that know more on the fingers of two or three hands.  Thus, when we speak so confidently of the fact that PM prices are manipulated – and, frankly, all financial markets – we back up such assertions with undisputed facts.

Over the past 15 years – yes, the manipulation has been ongoing that long – anyone who’s read GATA’s website realizes that proof of gold and silver manipulation is plentiful – including flat out admissions from some of the world’s most powerful bankers, including “Maestro” Greenspan himself (“Central banks stand ready to lease gold in increasing quantities should the price rise”).  However, my favorite of all such admissions is from William White, who in 2005 was Head of the Bank of International Settlements’ monetary and economic department.

The BIS, as it is better known, acts as the “Central bank’s Central bank” essentially, acting as a storehouse for Central bank assets and coordinator of major market interventions.  For example, recall the December 2011 “Operation PM Annihilation II” PM raids, commencing an hour after the ECB cut its benchmark interest rate from 1.50% to 1.00% (today it is 0.25%, en route to 0.00%), in what can only be described as a wildly PM-bullish development.  “Mysteriously,” gold’s subsequent surge was stopped cold when it breached the very key round number of $1,750/oz. – what a shock, just after the 8:20 AM EST COMEX open.  Just an hour later, gold had nonsensically plunged by $40/oz. – and silver $1.70/oz. – in an attack so blatant, it could only be compared to May 2011’s “Sunday Night Paper Silver Massacre” and September 2011’s “Operation PM Annihilation.”

2 Black Graphs

Lo and behold, just hours later, the infamous “gold sale headline” came across the tape reporting that the Fed (which lies about having significant gold reserves), the Bank of England (which doesn’t even claim to have material gold reserves), and the Bank of International Settlements were “selling gold” after it reached a session high.  The statement was later retracted by Germany’s MNI news service, but never refuted by the Fed, BOE, or BIS.  I have no doubt they sold something to quell the markets – most likely, naked shorted paper gold on the London or New York futures markets.  But either way, the BIS showed its hand, for posterity, as an active gold manipulator.  I mean, how much more desperate could one get?

Market sources report BIS, BOE, and Federal Reserve were selling gold after it popped to session high at GMT 1335 – MNI News via Bloomberg.

-Zero Hedge, December 8, 2011

And thus, William White’s speech from six years earlier became corroborating proof that the BIS actively suppresses gold prices, per below…

The intermediate objectives of central bank cooperation are varied.  “First, better joint decisions, in the relatively rare circumstances where such coordinated action is called for.  Second, a clear understanding of the policy issues as they affect central banks.  Hopefully this would reflect common beliefs, but even a clear understanding of differences of views can sometimes be useful.  Third, the development of robust and effective networks of contacts.  Fourth, the efficient international dissemination of both ideas and information that can improve national policy making.  And last, the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful.

-Gata.org, March 9, 2006

Clearly, White was not “whistleblowing” in 2005, when still an active member of the BIS’ staff.  Moreover, gold manipulation – outside of GATA, of course – was not a widely discussed topic; and thus, he probably didn’t realize the historical significance of what he was saying.  Kind of like Jim Cramer, in this infamous 2006 video, giving a non-television broadcasted interview in which he admitted illegally manipulating markets was obviously unaware that YouTube technology would eventually come back to bite him.

However, White obviously has inclinations toward speaking the truth just as former Fed governor and PPT member Kevin Warsh.  Just before resigning from the Fed in early 2011, Warsh wrote a scathing Wall Street Journal op-ed piece, opposing the Fed’s temporary fix monetary policies – and a year later, admitted Fed policy manipulates market values.  Better yet, in early 2009, while still a Federal Reserve Board member, he admitted to GATA that the Fed engages in off-balance sheet gold “swap” agreements with foreign banks; essentially, proving the U.S. government doesn’t have the 8,133 tonnes it claims – while at the same time, refusing to share details of such agreements, based on the financial equivalent of “national security.”

In connection with your appeal, I have confirmed that the information withheld under Exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you.

-GATA.org, September 17, 2009

Back to said “rogue” William White, it was literally shocking to read his current assessment of Central bank policy – as well as the fragile, dire outlook for hyper-inflated financial markets.  White, who retired from the BIS in 2008, now acts as Chairman of the Economic Development and Review Committee of yet another international bureaucratic organization, the OECD.  In this tell-all interview, he eviscerates fellow Central bankers and their insane policies, with a series of damning quotes such as this.

The honest truth is no one has ever seen anything like this. Not even during the Great Depression in the Thirties has monetary policy been this loose. And if you look at the details of what these central banks are doing, it’s all very experimental. They are making it up as they go along. I am very worried about any kind of policies that have that nature.

-Fuw.ch, November 4, 2014

White couldn’t be more correct that today’s Central bankers are literally “making up” new policies as they go along.  However, the over-arching goal of hyper-inflating the money supply to devalue escalating debts and prevent instantaneous collapse of the fiat currency regime dates back 1,000 years, to the first fiat currency collapse in 11th century China.  And thus, you can be assured that when “Goldman Mario” Draghi states that “a stronger Euro will trigger looser ECB policy,” as he did this morning, he is simply following the age-old precedent of currency corruption that has doomed all 599 prior fiat currencies; and which ultimately, will wipe out all 180 of today’s fiat regimes.

As for this morning’s “trading,” there really aren’t words to describe the aforementioned blatancy of TPTB’s attempts to “calm” markets by propping up desirable assets like stocks and suppressing undesirable ones like gold and silver.  On Friday, amidst the exact same market conditions that prompted Thursday’s (capped) PM surge, gold and silver closed in very slightly negative territory via prototypical DLITG, or “Don’t Let it Turn Green” algorithms.  Remember, “Cartel Rule #1” is “thou shalt not allow PMs to surge whilst the Dow plunges” – let alone, for two straight days, as would certainly have occurred in freely-traded markets.  And as for silver, I’ll bet you can guess which key round number the Cartel made sure to close it below, in the final minutes of trading no less.

24hr Gold Silver 4-11-2014

This weekend, the big news was that not only is the Ukrainian crisis dramatically escalating – to the point of imminent military confrontation but Russia and major Western nations openly feuded about it in the United Nations.  Precious metals, of course, opened higher in Asian trading that is, until a prototypical “cartel herald” algorithm was executed to commence the 35thSunday Night Sentiment” PM raid in the past 36 weeks – followed by the 203rd2:15 AM” raid in the past 229 days, as stock futures declined and oil surged.  And wouldn’t you know it, silver was stopped not once, not twice, but three times at the “$20/oz battlefield” level – whilst Cartel lackey Goldman Sachs again trotted out its comically ridiculous $1,050/oz. gold forecast.

3 gold Silver Charts

As for todays’ U.S. “news,” Citibank joined Well Fargo in reporting a record plunge in mortgage originations; quite the omionous development, given that interest rates, thanks to “QE to Infinity,” have barely budged from their all-time lows.  Moreover, the first quarter earnings bloodbath continues, with most reports well below expectations, and overall EPS growth – fudged accounting and all – bording negative year-on-year change.  But have no fears, as amidst GM’s all-time high channel stuffing activity last month, whilst auto demand plunged, we’re told that March retail sales rose 1.1% due to – get this – surging automobile sales!  Yeah, in today’s decrepit labor market, I’m sure auto sales were 9% higher than last year’s level.  Don’t you agree?

Percant Change Graph

As you can see above, the Cartel waterfall declined gold by $4/oz. when the so-called “bullish” retail sales number was published; as when the manipulators are determined on producing a desired result, they’ll use any excuse to attack.  If retail sales came in a full percent below expectations, gold would likely have gradually risen by a few bucks, before being violently capped and attacked.  However, with retail sales “beating expectations” by a whopping 0.1%, the Cartel attacked with impunity, aiming for their “holy grail” of MSM headlines proclaiming “stocks soar, gold plunges on evidence of strengthening recovery.”

However, holding prices below the cost of production – amidst the most bullish fundamental environment in generations – is not so easy; given that such actions simply yield higher physical demand, and dramatically reduced physical production – per Harvey Organ’s comments below

Today,the front one month GOFO’s rates went into backwardation with a negative GOFO.  However the rates are so low in all months, as it is still signalling a lack of  London good delivery bars that the criminal bankers use to attack gold.

-HarveyOrgan.blogspot.com, April 10, 2014

And thus, PMs are now moving sharply higher biding time, and fighting off an increasingly weakened Cartel, before they inevitably explode higher, in what may one day be viewed as the most violent price surge in financial history.  By the way, notice how gold is now up exactly 1.0%; i.e., the Cartel’s “limit up” level on roughly 99% of all trading days.  Let’s see what happens throughout the week; especially if, as we wrote in “this is why we do what we do,” the Ukrainian crisis does in fact morph into a significant military confrontation.

24hr Gold Silver Charts 4-14-2014

As the saying goes, “no one rings a bell at the bottom.”  However, in the case of Precious Metals, the odds that this occurred late last year are as strong as can be; as aside from ever-increasing expectations of global, hyper-monetary inflation, gold and silver mining are simply not viable at the current, ultra-depressed levels.  Moreover, no one will “ring a bell” before the next “2008-like” crisis begins; which is why now is the time to protect your life’s savings with the safety of physical gold and silver – much less, at historically undervalued prices.

 

He Will Get Paid

My title refers to Vladimir Putin.  “He will get paid.”  Actually, he will probably end up getting paid many times over if he plays his cards right.  He probably will, because he is holding almost all of them anyway.  The latest is that Ukraine must come up with some $5 billion in order to get a continuous flow of natural gas.  First, I used a “$” but only because I am an American and my readers for the most part think in dollars.  Russia will be paid most probably in euros, maybe rubles…or would gladly accept gold, but that’s not going to happen.  Please understand that when you read headlines with dollar signs attached that it does not necessarily mean that even a single “dollar” will be involved in the transaction.

I have seen two separate estimates of how far in arrears Ukraine has gotten on their “accounts payable.”  I have seen the number $17 billion and also $35 billion… it doesn’t really matter which one is true.  I say that it doesn’t really matter because Ukraine doesn’t have it no matter what the number is.  Before delving any further into the broad matter, I have a question or two.  I assume that the Ukrainian citizens who use gas to heat their homes and businesses do actually make payments each month.  What happened to this money?  If the gas was not paid for by the end user, did the gas get shut off or not?  I know, these are simple questions but simple answers would suffice.

In any case, here is Mr. Putin’s stance as I see it.  Ukraine is in very serious arrears to Gazprom.  I am sure that as they began to go into arrears that Mr. Putin began smiling from ear to ear because he knew that this would give him leverage.  I say this because a great majority of the gas that arrives in Europe must flow through Ukraine.  Now, Ukraine’s financial problems have become Europe’s problems.  Will Europe come up with the money to pay Ukraine’s bills?  Please don’t forget that Europe already has the Greek problem, the Cyprus problem, now the Ukraine problem (or the gas gets shut off) and don’t forget Turkey’s problems.

One would think that Europe will come up with the money somehow or some way before the cool October winds arrive.  Another alternative would be for the IMF to step in and “lend” Ukraine the money.  This would work right?  Well yes, it will work, but for who?  Stepping back and looking at this, we have played right into Mr. Putin’s plans.  Does he want to use dollars for his commerce?  No, of course not, but he HAD TO because “those were the rules” since the early 1970′s.  Now in our very own homegrown foreign policy brilliance, we are telling him that he HAS TO DO exactly what he has wanted to do all along…not use dollars…AND we (the West) will be the ones paying him the arrears in something other than dollars.

Before going any further I want to point out that there have been theories bouncing around that the Obama meeting with the King of Saudi Arabia was about crushing the prices of oil and gas to squeeze the Russians.  I can only laugh at this logic.  First off, our relations with Saudi Arabia have never been worse than they are now and this is not 1985 and President Obama is not Ronald Reagan even if he does get to sit behind the desk and pretend to be.  Also, let’s assume that this deal was struck and that Russia were to get squeezed… is this a big deal?  What’s the worst that could happen to Russia?  They default?  Again?  To whom?  In what currency?  Dollars?  They have their own “home grown currencies” called oil and gas.  Even if they declared bankruptcy and defaulted on everyone (which would probably be enough to detonate a system ending derivatives chain nuclear explosion)…they will still have when all is said and done their oil and gas.

Mr. Putin will probably sign a multi-year deal with China next month which will create further construction of pipelines and further cash flows.  Like I said in my title, “He will get paid.”  He will be paid by Europe or the IMF or the Chinese or whomever, but he will be paid.  He will be paid because Russia has a “product” that is a necessity.  Yes I know, there are also theories that the U.S. could supply Europe the gas that is necessary.  Do you see a little flaw in this line of thinking?  The little flaw being “when?”  Could we supply Europe this decade or maybe the next….or maybe even next century?  We are talking about “real” gas that needs a real transport and delivery system to arrive where intended.  Futures contracts, words, deals and promises will not fire up as temperatures drop below freezing.  Only gas (oil) will do this trick but it has to actually be delivered to be used.

I ask you this; do you believe that Vladimir Putin or even the Chinese for that matter are happy with “the West?”  Are they happy that the U.S. has caused regime changes all over the globe for many years?  Are they happy that all of their communications have been monitored?  Are they happy that we have warred wherever and whenever we’ve pleased based on false flag events, untrue “intel” or for no reason at all?  Are they pleased that we get the privilege of printing the world’s reserve currency and can kick back, relax and enjoy the advantage?  The answer of course is “nyet” to all of it.

So far all of what Russia has done has been to take “the high ground” from an international perspective.  They have not shed blood and not even shut off gas supplies due to non-payment.  They have however gotten exactly what they have desired… to be shut out of using dollars.  You must ask yourself whether or not if the Saudis feel the same way?  Are they happy with a deal that was struck over 40 years ago?  Is it still a fair deal to all parties involved?

Let me leave you with these thoughts.  As I have maintained, we will have a reset of values one way or another.  The reset will more than likely be preceded by some sort of bank holiday, shutdown or whatever you’d like to call it, but the important thing is that everyone will be “locked” into place with whatever they are holding.  In Russia’s case, they will emerge from the reset with the ability to provide oil and gas and get paid in whatever the new “currencies” happen to be.  They WILL get paid and they will get paid in something more to their liking.  Mr. Putin is merely giving this process a little “push” by having sanctions placed on him.

 

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