The age-old debate rages on. Are we heading into deflation accompanied by a strong dollar, or hyperinflation and the demise of the dollar? I was writing about this issue, and taking the deflation side of the argument, in the late 1980s. At the time, the late great Murray Rothbard called the deflationist arguments “a veritable tissue of error.” He maintained that as long as the Fed can create money out of thin air, they will never allow deflation to take over. That is the position Jim Rickards takes in the following video. I strongly urge you to watch it – he presents a logical and convincing argument. Then, check out the short video, which is a debate between Rickards (anti-dollar, inflationist) and Harry Dent (pro-dollar, deflationist). Who do I think is correct? Sorry, Harry, I have to go with Jim.
CIA Insider Warns: “25-Year Great Depression is About to Strike America” … In an exclusive interview with Money Morning, Jim Rickards, the CIA’s Financial … claim a free copy of his New York Times best selling book, The Death of Money.
On Wednesday, September 17, Harry Dent was at the Yahoo! studios in New York, where he debated the future of the dollar with James Rickards, author of The Death of Money. Harry is very bullish on the dollar And Jim is certain the dollar will collapse, so this turned into a heated discussion.
As dollar pushes to new highs, will the Fed halt its run?
Here is an email below from one of our readers.
Brandon, thank you – and you are correct and I agree with you! We made a great choice when we brought Andy Hoffman on board, and another one when we hired Bill Holter. I don’t think you can find two better writers anywhere in our industry – and I don’t think you can find a better firm to work with than Miles Franklin. I’ve spent the last 25 years making sure it would be so.
Subject: RE: Silver delivery
To: Andy Hoffman,
It is my pleasure. Thank you for taking the time to respond. Please take the two minutes it will take to read this – it will be worth your time.
I feel compelled to share with you how I feel regarding something you are already aware of: hiring ‘Ranting Andy’ was one of the smartest things your firm could have done. I cannot even begin to tell you how influential he has been in my career, my life and the benefits that influence has had on my family. I feel genuine gratitude. I doubt even Andy knows his impact – he is a sincerely genuine and humble man… even though I have suggested that he run for POTUS! He rightly balked at the idea. His influence was on par with some of the greatest names in the gold space. I expect he is feeling deeply uncomfortable with this praise right now… get over it Andy and just feel the good kind of pride that comes from a job well done.
I used to build houses… thousands of them. Literally. When the bottom fell out of the market, in ’08, I realized that all of my 30a+ experience in my market was based on the assumption that, “There is nothing safer than houses.” I now know better. Previously, I had consulted with our Federal gov’t, local gov’ts, banks, engineers/architects, trades and lawyers. I realized that it was all based on a lie. I had to leave that industry because of what I learned – the system’s foundation is broken and, maybe, one in one hundred had any idea of what happened or how it will end. I have made it my mission, since then, to protect those who are willing to objectively examine the current monetary paradigm and to help educate them on how to protect themselves… and maybe wake up one or two. Just like Andy. Entering the securities industry was a completely new experience for me and I am now even less trustful of the system. What I now understand keeps me up at night. I feel comforted by the money managers across the country who are open to ‘The Story’. The experience has been fulfilling… to say the least.
I direct customers to MF, who wish to deal with an American firm, because of my trust in Andy. I trust him and, therefore, trust you.
I will continue to direct people to your firm based on his efforts and what MF does as a beacon of hope for ‘We the People’. I often consider the plight of Americans and hope a return to a Constitutional Republic happens… alas, I fear the damage may be irreversible. Hence, my support for what you, Andy and MF are about.
The gold community is a small one, relatively speaking, and if we don’t support each other then who will? Enjoy your weekend and thank you for taking care of my friend.
With Sincere Regards,
I had planned to write a piece entitled “Gold and Silver Can Never Go Up” but will defer that until tomorrow. Don’t worry, it’s not what you are thinking I assure you. Instead, I will expand on my “Kill Switch” theory a bit and for a lack of better term call it “checkmate!”
Before getting into this I want you to understand the relationship between the U.S. and China… from China’s point of view. They view us as an adversary, they always have and always will. Sure they will smile and do business with us but to what end? The answer of course is “theirs.” I have posited in the past that China has been absolutely brilliant in playing our “debt game” over the last 10-15+ years. They used the American consumer as end sales for their production of goods. This created cash flow and allowed them to build out their production and manufacturing base at a rate much faster than any civilization in history.
They also built “ghost cities” and all of the infrastructure that goes with it. Had they not played the “debt game” this could never have been done. Remember, earlier this year China made crystal clear their stance on derivatives. They announced that should they choose, they will default on any derivative at their prerogative… because they know. They know the derivatives game is a naked sham and “product” does not for the most part exist behind many contracts. I believed and now believe more strongly than ever, China played the game knowing full well the debt would collapse. They also created new infrastructure and manufacturing capacity while ours is old and in decay. They looked 100+ years into the future while we were still looking at the past.
That said, I believe China has set up via incredible chess management a trap that even the best fictional writers would envy. First, they have purchased and amassed well over $3 trillion worth of U.S. dollar reserves and Treasury securities. This position alone makes them our largest banker and puts them in a position of power over us. It has been speculated the Chinese could just start dumping Treasuries and dollars to short circuit our financial system and thus the economy. I don’t think so …all by itself. Yes this would probably put a serious wrench in our system but what if it didn’t completely do the job? What if the Fed stepped up (they will) and magically bought everything China sold? The Fed has already quadrupled their balance sheet in 6 years, what would another doubling be? What would stop the Fed from simply bidding for anything and everything being sold? They’ve pretty much already done this with the various “QE’s” so what is another $3 trillion or so? My point is this, it could be done by the Fed and China knows this.
China has also accumulated an absolute minimum of 6,000 tons of gold since 2008 and more than likely have 10,000+ tons which would make them the largest holder in the world even if our 8,133 tons exists…which it does not. This speculation does not even include “legacy gold” which was mined and accumulated over 100′s if not several thousand years. Their total very well could be in the 15-20,000 ton range but let’s assume they only have 6,000 tons. This amount makes them number one in the world no matter what the Fed, the Treasury or the Wizard of Oz has to say.
Next is the silver side of it. I have told you my theory on why open interest would rise as the price fell. Some are saying that each time the open interest rose the price then followed and got killed. This is true but “it’s different this time.” I know “scary words” but it really is different this time because in the past, open interest rose …along with price…and sentiment …into what we’ll call “peaking action.” Now, open interest has steadily risen while price and sentiment were ground into the dirt, there is no “froth” whatsoever. In fact, a better description would be “despair.” So it really is different and the longs must also be very different entities because they have stood tall and increased their positions while taking billions of $ in losses, who could or would do this?
The answer of course are the Chinese. They “could” withstand major losses because they have the money to do so. They also look very very long term down the road and couldn’t care less if some margin clerk hits them over the head with daily calls, they just fund them and know the Sun will rise tomorrow. The situation in COMEX silver has gotten very lopsided as the open interest for Dec. silver is a staggering 700 million ounces while the registered inventory is only 60 million. Obviously this is a very big potential problem.
The Chinese also just opened their physical exchange Friday only to see gold hit for another few dollars and silver attacked for .50 cents. The gold community is scared witless because the usual suspects have all turned up as traders on the Shanghai exchange. I would like to point out that the Chinese do not put up with “fraud” very well. In fact, they just executed a billionaire 2 months or so back because he was involved in fraud. How many Americans other than Stanford and Madoff got jail time not to mention being executed over the fraud involved leading up to 2007 and ’08? None. Nobody. Can you say “Jon Corzine?”
Also of note is the inventory of silver now held in Shanghai. What was nearly 1,200 tons a year ago is now a measly 92 tons. This for round numbers works out to only $50 million. $50 million? I know several individuals personally who could write a check of this amount. Unless we see metal entering their vault very shortly an arbitrage is going to begin in earnest. Maybe I should just call it a transfer but what will happen logically is a search at other vaults will begin. The LBMA, COMEX, and SLV are obviously the most visible and logical places. If demand from Shanghai, Singapore, Hong Kong or even Dubai cleans out THEIR inventories then “no worries,” it can be sourced at these locations…or can it? And if it can, for how long?
As I started out with, China maybe could put some pretty serious hurt on us by dumping Treasuries but as in the “Art of War” by Sun Tzu, they will not go off halfcocked and everything must be fully planned down to the minute details. Putting this all together I believe China has engineered a masterpiece. They are our banker and we owe them trillions of $. China has built out their manufacturing base and productive capacity unlike any civilization ever. They have accumulated massive amounts of gold which could have ONLY come from Western vaults …so “their imports” were “our depletion” and came at our expense. I believe they also have their finger on the trigger of the silver market by cornering the December contract which will now be followed by their own “pricing mechanism” of a physical exchange. What will be the “real price” of silver if a physical exchange runs out of silver? I believe COMEX will ultimately be embarrassed by non-delivery and the exposure of massive fraud, this will be just one of the punishments China sends West.
While I’m at it I might as well add a “cherry on top” for appearance sakes. What just happened this past Friday? Well, Alibaba of course. Alibaba raised nearly $22 billion in capital which valued the entire company at $168 billion. It has since risen in value to that equal to Walmart …only a handful of U.S. companies are larger. Is Alibaba really worth this much? No matter opinion, the Chinese “sold” at what they believed to be a good price and sucked up $22 billion worth of capital in the process.
You can say what you want, say “it’ll never happen” or whatever. The chess pieces are on the table and our “opponent” is not in this for bragging rights or loose change, they are in it for all the marbles! China is our biggest banker and supplier of capital, our biggest supplier of consumer goods, they have been the biggest hoarder of gold and I hypothesize the “mystery owner” of huge positions in Dec. silver. Every move they have publicly made for over 2 years has been dollar negative and yuan/trade positive. They have built cities, infrastructure, plant and equipment which is clearly beyond current needs for capacity. China has done deals with our friends and foes alike, they have supported geopolitically nearly anything and everything contrary to public U.S. views and policy. They are supporting Mr. Putin financially while the U.S. tries in vain to punish him financially. Would, could, the U.S. place “sanctions” on China for breaking the “sanctions” on Russia? I know, that was a bad joke but it’s a real question.
Before finishing let’s not forget about the “cherry on top,” did China just dump the largest IPO in U.S. history at the top of the market? A market, financial system and economy that I believe they are now in a position to destroy at the flip of a switch and the timing of their desire? Like I said, laugh at this, laugh at me, do whatever you’d like, all I am doing is pointing out the very obvious. No country or nation should or would ever put their adversary in a position to destroy them, we have allowed it and even encouraged it. We are broke, we depend on our adversary for funding, trade, and we have given them all of our real money, what’s next? Trading them Manhattan for a few trinkets? The danger to their plan in my opinion is this, just as it is dangerous to corner a wild animal it is more dangerous to bankrupt and financially corner a nuclear power.
Andy Hoffman joins Anthony Wile of The Daily Bell to discuss the Scottish Independence referendum vote, currencies the world round are declining, the ECB, gold and silver prices and China. To listen or read the interview, please click below.
Andy Hoffman joins Alan Butler from the Butler on Business show (1:32:50) to discuss the FOMC meeting on Thursday, gold and silver prices, the stock and bond market, Spain, debt levels and unemployment. To listen to the interview, please click below.
Yes, I know human nature is resistant to change. And I know the near-term economic ramifications of a Scottish “yes” vote would have been difficult to some and unpleasant to others. However, let me just start by saying this. The Scottish people blew a generational opportunity to escape from the political and financial tyranny of London, which has caused more damage than any institution in human history; and today, is more of a global threat than ever – albeit, using modern “weapons” like derivatives, instead of ancient ones like cannonballs. The vote was roughly 55% to 45%, largely in line with pre-election polls. However, the nation’s youth tally was more than 70% “yes,” whilst its elderly vote was more than 70% “no.” As Zero Hedge so aptly put it this morning, what will Scotland’s political climate look like in the coming years when said youth are the nation’s primary demographic?
But enough on this specific vote, as the real story isn’t Scotland, but – as we wrote in last week’s “secession movements gain momentum” – the “99%” are increasingly angry by what London, Washington and other bureaucratic agencies have done to their standard of living; largely, due to the unfettered money printing of history’s largest fiat Ponzi scheme. Scotland’s secession movement is far from the last; and frankly, what’s going on in Catalonia, Spain appears to be a far more determined effort with a potentially greater political and economic impact. Nearly two million Catalonians rallied for secession last week; and thus, the odds of a “yes” vote November 9th appear far better. In fact, just today, Catalonia’s parliament is expected to approve a measure giving regional leader Artur Mas the power to call a referendum, despite vows by Prime Minister Mariano Rajoy to block it. But again, specific votes are not what we should focus on; but instead, the fact that as the global economy inexorably weakens, social and geopolitical instability will become the “new normal.” In other words, “Pax Americana” is dead; sadly, due principally to its own abusive actions.
As pertains to “goldbugs” –who use it tend to have little understanding of the historical significance and stability of sound money – there is, of course, a specific vote that could have dramatic ramifications on the “world order”; far more so than Catalonia. And that, of course, is Switzerland’s November 30th referendum regarding the re-implementation of a Swiss “gold standard.” Right now, it is difficult to determine which way the vote will go. However, given that Egon von Greyerz is one of the world’s pre-eminent sound money experts – and Swiss to boot – I’ve attached his current thoughts here. In a nutshell, there are no more sophisticated financial experts anywhere in the world; and following the Swiss government’s decision to “sell its financial soul” a decade ago, the nation’s standing – and currency – have fallen dramatically. A “yes” vote would require Switzerland to buy a whopping 1,700 tonnes of gold, and additional metal for each Franc the Swiss National Bank prints, ad infinitum. Even the most determined Cartel effort yet would not be able to staunch the tide – of physical demand and even paper prices – under such a scenario; and thus, stay tuned as November 30th is but two months away.
I’m eager to get to today’s very important commentary, but I’d be remiss if I didn’t mention last night’s news that Japan’s government – which has staunchly supported its own “recovery” propaganda despite mountains of evidence to the contrary – turned tail and admitted its comical economic outlook is overly optimistic. Apparently, yet another quarter of negative GDP growth is in the cards; and after this week’s Yen implosion – to more than 109/dollar last night – it will be significantly more so, assuming the oncoming irreversible inflation tsunami is properly accounted for. This is a unique time in human history, as we are watching the slow motion march of a “first world” nation to hyperinflation; which, of course, will be followed by countless other nations in the coming years.
And now, the “reality” referred to in today’s title, which I was inspired to write of following last night’s Scottish vote. Not to mention, what Bill Holter wrote in the eighth and ninth paragraphs of yesterday’s article – of one of the world’s leading PM advocates showing “distraction” from the Cartel’s relentless “psy ops” campaign of the past three years – and frankly, the past fifteen. I know exactly who he is referring to; and in his asking, “What do you think they will do to PMs after the FOMC announcement,” he is clearly responding in the Pavlovian manner we have all been “conditioned” to expect of gold and silver trading particularly around “key attack events” like major geopolitical dislocations.
Last night’s Scottish vote was a perfect example, and several reader emails last night validated such. In other words, we find ourselves “praying” for anything that might “beat” the Cartel, no matter how “bad” such events might be. Simultaneously, we “live in fear” that if “bad news” emerges, we will be subjected to another frustrating, humiliating paper raid. The way I’ve described it is being subjected to a “financial concentration camp,” where hope dies and evil reigns – that is until they are inevitably liberated. During such seemingly hopeless times – as exemplified by what a reader emailed me last night, that he’s “never seen things this dark in our camp” – the big picture gets obscured; in this case, that the world is no different with or without an independent Scotland and certainly precious metal fundamentals. Actually, as noted above, the simple fact that such a vote even occurred is wildly PM-bullish, as it symbolizes the commencement of an “age of discontent” that will only worsen with each printed dollar, Euro, Yen – and oh yeah, British Pound.
To that end, my 12½ years of precious metal ownership, employment and commentating – not to mention, being one of the few understanding economic reality in a delusional world – has taught me much about human nature. Life is hard to start with, but bad times make it exponentially more so. And nothing is harder than being decidedly right, but having your attempts at capitalizing on your convictions – and in this case, protecting yourself – dashed by powerful, corrupt forces. Fortunately, I long ago “climbed to the top of the totem pole” of “financial defense” by eschewing “paper PM investments” for real physical metal. However, it’s still been a rough journey that has dramatically weakened my faith in humanity i.e., an “innocence lost” that will never be recaptured.
And never are humanity’s evils more on display than times like this; when, as noted above, times are “darkest.” As they say, it’s “darkest before the dawn.” However, in the meantime, we must endure ridicule from the unsophisticated; self-interested propaganda from those seeking to capitalize on negative emotions; and, of course, the mental and financial pain of dealing with such unjustness. To wit, I rarely, if ever, receive a negative email. However, following the post-Labor Day Cartel attacks that have pushed PM sentiment to its lowest level of the past decade, I have receive a handful. One in particular, I received last night came from a person about his losses he incurred in junior mining stocks; which, in my view, is as strong an indicator “the bottom” is near than anything I can imagine.
Will this in fact be the case? No one knows, but if PM prices fall much lower – especially at year-end, when mining companies revisit reserve calculations – mining output will be reduced by such dramatic amounts, the industry will barely be recognizable. I continue to stand by my expectation of a 20%+ decline in PM production in the coming years; and if the Cartel isn’t careful, that number could be significantly larger. Which, of course, will only hasten their inevitable demise, as physical demand will inexorably grow larger. Just yesterday, I wrote of the head of the PBOC calling gold an “important part of financial markets”; and rest assured, it will only become more important as the global fiat Ponzi scheme bursts.
Well, that’s enough gloom and doom for today, so let’s end the week on a positive note. As you know, Jim Sinclair has been pounding the table of a return to $2,000 in the not-too-distant future. Two of his “gurus” are anticipating the final bottom to be reached this month, which is almost over. In other words, it may have already occurred; and given what I just wrote of mining costs – not to mention, the global economic outlook – such a conclusion is rooted in ironclad facts. For what it’s worth, here is what one of them just wrote – of how last year’s lows will not be breached, with the metals bottoming this month, and spiking sharply into year-end. Again, I have no faith or belief in charts – and thus, am neither agreeing or disagreeing with this analysis. I simply thought you’d like to see the kind of things Jim Sinclair sees.
Andy Hoffman joins Elijah Johnson of Finance and Liberty to discuss silver market, market manipulation of all markets, stock and bond markets, Spain and gold. To listen to the interview, please click below.
On his weekly podcast, Andy Hoffman discusses unemployment, housing market, global economy is weakening, Japanese Yen is collapsing, the U.S. dollar, the Scottish Independence referendum vote. To listen to the audio, please click below.
Download the audio file: Money Printing, Economic Collapse and Secession
Frankly, it’s embarrassing that we have to speak so much of the Federal Reserve whose criminal machinations are rapidly catching up to the English crown in the race for which institution has caused more damage in the past thousand years. Quite the doom considering the Fed’s only been around a hundred. I’ll get to their uber-dovish statement momentarily; but first, let’s speak of the expanding horrors they’ve spawned from the four corners of the Earth.
I mean, Scotland is today deciding if it should secede from the UK after more than 300 years. If the “yes” faction wins, the waning “British Empire” may be served a death blow with likely cataclysmic geopolitical consequences for a European continent already in dire financial straits, but the entire world. Seriously, this is Braveheart type of stuff – as in seceding, Scotland would face significant near-term economic challenges; let alone, the wrath of a vengeful English government with a history of destroying anyone that threaten it. For example, does anyone really think England won’t fight to the death for the North Sea oil fields Scotland claims?
Per Friday’s “secession movements gaining momentum,” the ramifications of the global fiat money cancer are as far-reaching and ruinous as those of the imperialistic British Empire of yore, and equally interventionist America of today. As “Simon Black” of the Sovereign Man so brilliant observed, “human nature is highly resistant to change.” And thus, just the fact today’s vote is occurring is a testament to how fed up people have become – particularly during what TPTB deem a “recovery,” featuring record high stock and bond prices; and in the UK, real estate prices as well. Yes, the “99%” are angry – in Scotland, Catalonia, Venice and countless geopolitical hotspots in which revolution, civil war and economic impoverishment are inexorably expanding.
The past month alone, the so-called “dollar strength” we have soundly refuted – which, of course, has not dented Americans’ record cost of living – has caused such dramatic global currency devaluation – i.e., the “single most bullish precious metals factor imaginable – it’s inevitable “consequences” will be witnessed shortly. In Japan alone, which we predicted would see the “real yen bomb” commence when the Yen finally broke below 105/dollar, has in just three weeks plunged from this “post-Abenomics support level” to nearly 109 this morning, partly due to its 41st straight monthly trade deficit but mostly “hot money” algorithms racing into dollars as a “safe haven” following this month’s escalation of the “final currency war” – featuring the ECB’s NIRP and QE announcements; China’s second QE announcement in six weeks; and the emerging consensus that when Abenomics ends in April, the Bank of Japan will be forced to “double up,” especially with a second catastrophic sales tax increase forthcoming. Consequently, nearly all global currencies have plunged – in South Africa’s case, causing its Central Bank’s chairman to step down. And as for the collapsing Euro, it will ironically catalyze the very inflation Goldman Mario so badly wants – before QE even starts!
Meanwhile, this morning’s first of the ECB’s six TLTRO or “targeted long-term refinance operation” tranches handed out $106 billion of nearly zero interest rate, two year loans to insolvent banks – proving the so-called “recovery” of bank balance sheets from the 2011-12 LTRO tranches was but a sham. I mean geez, ask Portuguese depositors of Espirito Santo! Yes, the ECB intends to ramp up its balance sheet at a Federal Reserve-like pace in the coming years, now that Draghi has been called on his July 2012 “whatever it takes” vow. Just like the Fed’s QE, of course, the ECB’s money printing games will fail miserably; prompting the same Ponzi scheme response as every other in the long miserable history of central banking – to PRINT MORE MONEY. But don’t worry, given that today’s “bubble party” is still ongoing, European markets are soaring this morning; as apparently, the ECB changed its voting committee rotation to eliminate its biggest “hawk” – Bundesbank governor Jens Widman – not that he’s actually done anything hawkish. By the way, the Fed just did the very same thing for those that think “faster than expected” rate hikes are forthcoming.
The pressure to PRINT is growing, with this morning’s desperate IMF plea for the G-20 to take “decisive action” to promote “stronger more balanced growth” at this weekend’s meetings representing the perfect case in point. This morning’s horrific Chinese housing data puts a further exclamation point on this desperation; let alone, equally ugly U.S. housing start figures. But don’t worry, the chronically wrong industry propaganda machine called the National Association of Home Builders yesterday published its highest “sentiment index” in a decade – confounding all measures of actual housing market activity, such as the lowest level of mortgage purchase applications in 14 years. In other words, the same kind of “island of lies” reporting demonstrated by this morning’s “record low” weekly jobless claims – following not only last month’s horrible NFP report, but the lowest labor participation rate in 35 years. Quite amazing how many previously “reliable metrics” suddenly “broke” in 2008, huh?
I’ll ignore the wildly PM-bullish news yesterday that Russia is deploying a full-scale, self-sufficient military unit to the Crimean peninsula; Congress approving the arming of “Syrian rebels” against ISIS, the House passing an “audit the Fed” bill, raging California wildfires amidst a generational drought, a Gallup poll showing Americans’ trust in mass media plunged to an all-time low, Goldcorp’s CEO proclaiming “peak gold” is NOW; and oh yeah, the opening of Shanghai’s International Board (physical gold contracts) today, eleven days ahead of schedule.
In fact, amidst the second massive paper PM smash since yesterday’s FOMC statement, China unveiled the “Shanghai Gold Benchmark”; clearly, in an effort to break gold from the grip of the evil Western Cartel. Simultaneously, none other than the PBOC’s Chief Governor Zhuo Xiaochuan – i.e., Janet Yellen’s Chinese counterpart – stated flat out that gold is an “important part of financial markets.” Picture Ben Bernanke lying to Ron Paul about not being money and consider what a powerful statement – and vision of the future – this is!
As for said “FOMC statement,” I want you to look long and hard at today’s title – i.e., “NOTHING!” Yes, my friends, whilst the PPT goosed stocks and the Cartel naked shorted PMs into oblivion, Whirlybird Janet said absolutely utterly NOTHING! In fact, not only did I view her comments – such as yet again, her front and center fear of the “significant underutilization of labor resources” destined to destroy our nation – as exceptionally dovish, but so did CNBC – which gushed at how accommodative the Fed clearly aims to be; and even Goldman Sachs, which always tows the party line of “more hawkish than expected.” Heck, they even “tapered” monthly QE from $25 billion to just $15 billion instead of the “expected” $10 billion in an obvious back door effort to allow for not one, but two further “tapers” before ending QE. And despite Jon Hilsenrath’s flip-flopping, they indeed kept the words “considerable time” in their statement, maintaining the aura of ambiguity of what a “2015 rate hike” means. The Fed still expects future rate increases to be miniscule – how could history’s largest debt edifice handle anything more?; and, of course, remain as “data dependent” as ever.
Frankly, the only thing more comical than their perma-dovish stance – featuring but a handful of countertrend “buzzwords,” to keep the financial community on its toes – is the below chart of the correlation between the amount of “Fedspeak” and the size of its relentlessly growing balance sheet. As for the embarrassingly blatant PM paper raids – first, when the statement was released and second, when Whirlybird Janet commenced her speech – I think we all know by now that FOMC statements represent the Cartel’s top “key attack event.” So don’t worry, as not only was NOTHING incrementally hawkish said – as if they’d ever do anything hawkish, no matter what they say – but quite the contrary, regarding both the Fed and all Central banks.
Again, we can only plead for you to ignore the historic level of misinformation as provided by Washington, Wall Street and the MSM. Unprecedented market manipulation has created the largest-ever bubble in financial assets; and conversely, the largest-ever “anti-bubble” in PMs. Fortunately, the physical market is the “financial world’s Achilles Heel”; and thus, TPTB must eventually lose. Recall what we wrote above about this month’s expansion of Chinese physical PM trading, and ask yourself what will happen when the last $60 million of Shanghai silver inventory is inevitably – and likely, imminently, given silver’s production cost of $25-$30/oz. – bought.
So many topics to choose from today, Russia is pushing back on sanctions and has already begun to cut gas supplies to Europe. The Scottish independence vote which if “yes” means the end to a 1,000 year empire and brings into question the Anglo American banking and financial systems themselves. The ISIS situation and whether (in reality “how”) we go back there with boots on the ground or not. We also have the FOMC meeting and statement coming today where we will find out whether QE will be publicly discontinued or not …I say “publicly” because the reality is such that QE will remain forever whether admittedly or in the shadows and hidden from view. We also have news of India tripling their gold demand as new physical gold exchanges open in China tomorrow. The “live” date has been pushed forward by a week or more, I can only wonder what this means because the Chinese NEVER do anything by chance or without reason.
I could have chosen any of these topics but I had a conversation with a very long time friend and client this morning and he brought up the question that seems to be burning in everyone’s mind, “when?”. When does everything come apart at the seams? Please don’t get this wrong, he was not asking me “when?” I thought, rather, he was commenting on how many people are expecting some sort of “slow burn.” He said “so many people think this will be 3 years, 5 years or even 12 years” to unravel.
Here is the point, the “fuse,” or I should say “fuses” are lit from so many different directions I don’t have enough fingers and toes to count them all. Only one fuse (cause) needs to reach the powder keg but the way it looks to me is we will more than likely see many reach the powder at the same time. When I say same time I believe all within the same week as many are interconnected and many will be advanced by the ignition of others.
When my buddy said “3 years” I immediately said to him “you mean 3 days right?” He said to me, “That’s exactly what I’m talking about, once this thing goes how can it last more than 3 days?” Let me explain this, once we “ignite” I don’t see how the markets can function for any more than 3 days (two weeks at the absolute maximum) before being closed. Today, everything relies on everything else for “value” or “foundation.” It’s like a building block tower where pulling even one block will take the whole thing down…and this happens quickly, NOT in some slow motion, slow burn or controlled collapse. This would be nice but unfortunately not the case.
Let me backtrack just a little to make a clearer picture. Back in 1998 LTCM was feared to be one of these “building blocks” that if pulled would take the whole system down. They had capital of just under $5 billion and borrowed $125 billion with derivative notionals of $1.25 trillion. So this was leverage of 25 to 1 and then levered into derivatives another 10 to 1. This was considered “crazy” and enough to crash everything so they were rescued, sliced, diced, bailed out and wound down with a huge sigh of relief. (By the way, it was rumored they had a short position of some 300 tons of gold that needed to be absorbed and swept under the rug, this I believe was only a sign of things to come but a topic for another day).
Fast forward to 2008, leverage of 25-1 was considered “old school conservative” and falling behind the curve so to speak …until the Lehman moment threatened to stop the music. Again, slice, dice, bailout, raid the Treasury, print and borrow trillions of $ upon trillions of $ and another, even more huge sigh of relief… sort of. I say “sort of” because we never really recovered. Nothing has been fixed, governments themselves are now insolvent and broke, leverage is now higher, derivatives more bloated and widespread, and now no “white knight” anywhere capable of riding in to save anything.
What I am trying to say is “what happens this time?” Notice I did not say “next time?” I said this time because “last time” really never ended and was certainly never fixed. This time there will be no bailouts, no sovereign borrowings to save the world or anything else. Just look at the Federal Reserve, they are levered 77 to 1. Were they a bank or a broker …they would have already closed themselves down based on their own rules! They are THE most levered hedge fund in the world …and they do what? They issue the reserve currency that the rest of the world uses as a foundation for their banking and financial systems! You do see the folly right?
OK, before going any further I want to mention another aspect to this thought of “just three days.” I e-mail and converse with a very large precious metals money manager and one of the most well-known “gold guys” several times a week. He is as smart and well-spoken as they come and a really fun guy to throw “too many” back with. He has been in the business forever and was one of the original “voices from the woods” back at the end of the 1990′s promoting gold. He e-mailed me today and asked, “What do you think ‘they’ will do to gold and silver after the FOMC announcement this afternoon? Do you see where I’m going with this?
I mean no offense whatsoever because I really have the utmost respect for this guy but what has happened over the last two to three years has even messed with his mind. Yes I know, it is a logical question and having the answer would be nice but… it doesn’t matter! It does not matter because the system is now completely unstable and will come down and “through” the foundation itself because the “foundation” is a complete fraud. I wanted to point this out because if one of the smartest and most steadfast names in the entire business is shell shocked and jumpy by daily movements then we have to be very close to something breaking. I can say this because the “psyop” of smashing gold and silver to break sentiment has worked so well that even the smartest of the smart are questioning themselves and having their concentration broken. Don’t get me wrong, I don’t believe he has sold even one ounce of anything over the last 15 years so his resolve is not broken but his concentration has been momentarily.
Let me explain the above a little further, at this point “nothing matters” except the end game. It doesn’t matter “how” we get there. Fed this, QE that, manipulation, naked shorts, frauds galore …none of it matters because it will not change anything and can only delay the end game …but the end game does not change. The “end game” I am speaking of is the event, not the actual snapshot of a closed global financial system smoldering and worthless. The “end game” will be in my opinion a 3 day event (maybe 10, maybe just a weekend) which completely changes the psychology (and surely net worth counted in ounces) of every market participant in every market. The vast majority will be burned and the greatest transfer of wealth in ALL of history will take place …in a very very compressed time frame.
There will be no time for professionals (forget individuals) to get repositioned correctly so forget about the “I’ll do what I need to when I have to” mentality. Do NOT let your concentration be broken, do not question your logic and do not let your guard down. The rest of the world has “had it” with the fraudulent West. This is the answer to “why can’t the Fed just kick the can for another 3 to 5 years?” The rest of the world will not stand for it, they have prepared to change the world and they will do this. They have every ability to do this and we have given them every reason to do so. “Wondering” when is pointless as long as you know that they will.
I will finish by saying we now have a very good “tell” that what comes is already under way. I had speculated for several years that Jim Rickards was a CIA spook, it turns out I was correct and even he admits his ties several times in this link Senator and CIA Insider Accuse Federal Reserve of Covering Up Secret Bankruptcy. He is telling you the same thing I have for several years. Only a year ago he was saying “5 years,” now, well, he is saying “now!” Jim Rickards if you recall was the lead counsel for none other than LTCM in 1998 and oversaw their unwinding as they nearly took down the world. Please view the video, it is fairly long but for the most part I believe you are hearing the truth. He pulls very few punches by saying the dollar will die. Please understand how the elites work, it is considered very bad etiquette if you do not warn your “marks” ahead of time. If they do not listen or take heed …oh well, that’s why they are called “marks!”
Andy Hoffman spoke with SGT Report to discuss the Scottish Independence referendum vote, the economic world is falling apart, Spain, U.S. dollar, Shanghai Gold Exchange, gold and silver. To listen to the interview, please click below.