Andy Hoffman joins John Stadtmiller of the Republic Broadcasting Network to discuss JPMorgan recent fines, U.S. dollar reserve, London Gold Fix, Germany, Russia, U.S. housing market, gold and silver. To download the audio, please click on the link below:
The biggest news last week was that the BRICS bank has been formed and being funded. Some may argue that the downing of the Malaysian airline flight was bigger but I don’t think so. From a money and banking standpoint, the formation of the BRICS bank is the BIGGEST news since either 1971 or 1973 when the U.S. defaulted off of the gold standard or when the Saudis stepped up to the plate for the petrodollar.
The formation of the BRICS bank is in direct competition with both the IMF and The World Bank. Both of these are “U.S.” controlled banks and the currency that they lend to “help” or “save” countries with are dollars. During our lifetimes these two banks have been the lender of last resort for troubled banks, banking systems and sovereign countries. Often the loans led to alleviating liquidity problems in the short term but then created bigger problems for borrowers in the long term.
Stepping back to look at what has happened and “why” the BRICS decided to form this bank is an important exercise. This will allow and facilitate trade between nations without using dollars. This is important because of the recent “fine” paid by French bank PNB Paribas and the looming fines for both Commerzbank and DeutscheBank of Germany. They transacted business for customers which broke U.S. sanction “rules” regarding Iran and Sudan. These fines as I understand it were levied because the money transfers were in dollars. Anyone even simple minded would understand that to avoid any future “fines,” you just don’t use dollars. It is this simple and foreigners will now use fewer dollars because they don’t have to use them and it is “safer” for them from a “risk” standpoint.
The BRICS bank has been a long time coming and certainly not done in secret. This news has been widely known by foreigners in real time. It has been a different story for Americans. Mainstream U.S. press has barely even whispered the news yet it is the most important event for at least a generation. To put it in perspective, this is the nullification of Bretton Woods outright.
I think that it’s important to understand that the action of forming a non-dollar competitive bank could only have been done if “everyone” went along with it. We have seen in the past what has happened when a country spoke of no longer using the dollar. Their “ruler” was displaced and the country as in the case with Iraq was bombed back into the Stone Age. This is now a simple case of all the schoolyard kids lining up against the bully and “saying” (not asking) “what are you going to do about it?”
I have been very boisterous in my opinion that Saudi Arabia would be the final straw that breaks the back of the dollar. They have had top level talks with both Russia and China with very little comment or “statement” after the meetings. What was said? What was decided? My guess is that Saudi Arabia was “told” what was going to happen. This is no different than a marriage that breaks up or even when “Mafioso” migrate from a weakening family to one that is strong and getting stronger. Saudi Arabia will move to the East.
If you recall the movie “Rollover” from 1981 you will remember the scene where Kris Kristofferson talks about the Arab’s selling Treasuries and dollars. Any announcement by the Saudis that they will accept currencies other than dollars will make “Rollover” come true …exponentially! I say “exponentially” because the system is now 35 years into the futures and at least $1 quadrillion more bloated with debt and derivatives. The system will implode and “wealth,” paper wealth will evaporate overnight. As is said in the movie, “$2,000 gold will be cheap by tomorrow morning,” gold at the time if you remember was $400-$500.
Please understand the “what and why” of the BRICS bank. The Chinese, Russians and the rest of the world know that the petrodollar system is on its last legs. The case can even be made that the rest of the world has “carried” the U.S. for a few rounds so that they could get their ducks in a row ahead of time. The BRICS bank has been put into place because there has to be “something” to “start over with.” Prior to this bank being formed, were the Western banking system to implode the rest of the world had no alternative. When I say “alternative” I am talking about no other clearing system and no place to “hide” so to speak.
It is clear to me that the BRICS bank formation and the massive accumulation of gold over the last several years has gone hand in hand. “The rest of the world” has known for some time that the dollar, the U.S. and the entire Western financial system was on shaky ground and had finite lives. A plan to distance them from the inevitable was formed and has been carried out. All that now remains in my opinion is for Saudi Arabia to defect from the U.S. and knock the last remaining leg out from under the dollar.
My opinion as you already know is that within two weeks of a Saudi announcement, our world will change. The purchasing power of the dollar will crash; this in turn will mean that more dollars will be needed to pay for foreign imported goods. This will affect you directly when you “shop”… for anything. The inflation which we have been exporting for all these years will wash back onto our shores. The “baton” of world reserve currency issuance is being passed right before our eyes. Actually I should reword this; the baton is being TAKEN from us because we have so badly abused the privilege.
Andy Hoffman joins Alan Butler from the Butler on Business show to discuss BRICS, the U.S. dollar, Ukraine and the Middle East, markets being manipulated,stocks plummeting, oil prices surging, gold and silver. To listen to the interview, please click below.
For years, we have highlighted the catastrophic global ramifications of Central bank generated inflation, particularly following the unprecedented post-2008 money printing spree that continues unfettered today. First to experience its horrific consequences were “Arab Spring” nations whose citizens spend the highest proportion of their incomes on food. Since those 2010-11 uprisings, the fiat cancer has spread worldwide, catalyzed by dramatically escalated money printing following 2011’s Financial Meltdown II. Led by the Fed’s QE3, Japan’s “Abenomics,” the ECB’s LTRO and NIRP, and China’s $25 trillion “shadow banking” explosion, the world has been flooded with worthless currency to “save the banks” and promote economic “recovery.” Unfortunately, such goals have decidedly not been met; but instead, surging inflation of food, energy, and other “need versus want” goods. Consequently, social unrest has spread like wildfire, yielding a series of potentially cataclysmic revolutions and wars.
Late last year, only Vladimir Putin’s masterful diplomatic skills prevented the U.S. from potentially starting World War III in Syria. However, the “Cold War” has grown more frigid since, care of the expanding Ukrainian crisis we initially discussed in March 3rds “This Is Why We Do What We Do.” Moreover, the Iraqi societal collapse America caused threatens to explode out of control at any moment; while in Israel, the most vicious fighting in decades is further destabilizing the world’s most historically volatile region. In the process, crude oil prices have surged to multi-year highs; and following last week’s MH-17 tragedy, the odds of a meaningful energy price decline appear slim.
As for today’s title, it’s appeared in numerous articles over the past week. However, nothing is more prevalent on our minds, as pertains to the urgency to protect oneself from what may morph into a “worst-case scenario.” After all, countless major wars have been catalyzed by “black swan” events that could not possibly have been predicted; none more so than the seemingly innocuous event of Austrian Archduke Franz Ferdinand’s assassination in June 2014 – which ultimately marked the beginning of World War I.
In Friday’s “Coincidence,” we didn’t give an opinion of who was behind the MH-17 airline tragedy; but instead, simply presented the available facts. Typically such events give rise to countless, unsubstantiated theories; and often, the truth is never completely revealed. However, as time passes, and more and more evidence is presented, said truth typically becomes more visible.
As for MH-17, we are not saying the true story will ever be learned. However, the initial evidence does not bode well for Western propaganda that the “Russians did it.” Perhaps they did; but to a man, I can’t comprehend a single reason why they would want to down a commercial airliner carrying Dutch and Malaysian passengers – much less, the motivation for “pro-Russian rebels” to do so. Irrespective, as further details are circulated – starting with the contents of the “black box,” which frankly, I don’t expect to say much – the potential for the situation spiraling out of control is extremely powerful. “Official” efforts – both American and Russian – to “spin” or even lie about the truth will be equally strong, as will efforts to stabilize financial markets to “prove” all’s well. However, in the face of such cataclysmic events, manipulations have always been overwhelmed by reality. When all is said and done, MH-17 may in fact prove to be the 21st century’s “Archduke Ferdinand Moment”; but even if it’s not, the day of reckoning for the dying fiat currency regime is coming and soon.
Again, the goals of the Miles Franklin Blog are not to conclude what happened, but help you to come to your own conclusions. Clearly, the initial evidence does not bode well for America’s initial propaganda blitz blaming the Russians; and if additional evidence points in this direction – i.e., the perpetrators were more likely U.S.-backed Ukrainian government forces; global sentiment and economic policy will further isolate the already vilified, financially vulnerable United States of Money Printing.
Yesterday, the Russians released a detailed forensic analysis that strains the credibility of said U.S. allegations including photos showing Ukrainian government forces deploying anti-aircraft BUK missiles. If so, this is quite damning evidence, so we’ll see how the U.S. responds to the ten pointed questions the Russians have posed. Ominously, the Chinese government vehemently attacked the U.S. response to blame Russia; and after reading MH-17 commentaries from patriotic Americans like Ron Paul and Paul Craig Roberts, it’s increasingly difficult to believe global consensus will form behind the U.S., to the detriment of the Russians. And the more anti-U.S. sentiment increases, the higher the likely that the inevitable “end game” commences sooner rather than later. To wit, when I saw Jim Sinclair speak a month ago, he rationalized his $2,000 gold by year-end prediction with expectations of a “significant attack on dollar hegemony”; which, given the current geopolitical (and economic) circumstances, sounds more probable than possible.
As for yesterday’s financial market “response” to the weekend’s news, what could be more blatant than said “official efforts” to whitewash reality. Overnight, Treasury yields plunged along with Western equity markets, whilst crude oil prices surged nearly $2/barrel to $105/bbl. as I write Tuesday morning. However, as you can see, gold’s logical rally was capped by a prototypical “Cartel Herald” algorithm at exactly the 8:20 AM EST COMEX open, “coincidentally” at that same $1,320/oz. “line in the sand” the Cartel has defended since Whirlybird Janet’s massively dovish post-FOMC press conference last month. Meanwhile, the “Dow Jones Propaganda Average’s” decline was capped at -1.0%, which I long ago deemed the PPT’s “ultimate limit down.” And voila – following an equally prototypical “dead ringer” algorithm it was nearly turned positive by day’s end!
This morning, the only “news” thus far is catastrophically bad earnings from global consumer spending bellwether McDonalds; but in true manipulative form, the Cartel attacked first at the ultra-thin “2:15 AM” open of the London paper pre-market session, and again at the COMEX open creating yet another battle for the key round number of $1,300/oz. where significant international buying interest clearly resides. But wait; just 20 minutes later – at this point, due to no “news” item I can see gold just surged back to $1,313/oz., whilst silver’s ongoing war for $21/oz. continues to rage.
Only time will tell if MH-17 serves as a catalyst for escalated global geopolitical and/or economic warfare. However, as regards precious metals it matters not; as ultimately, the war between real and fraudulent money always ends the same way. Worldwide physical demand will inexorably increase no matter what happens in the Ukraine; and as we discussed yesterday, mining costs are rising exponentially.
To that end, let’s end today’s discussion with the ugly charts below, depicting the utter disappearance of gold mining discoveries and simultaneous dramatic increase in the “time to production” of the few viable projects. Last year, we wrote of the collapse of the only significant gold mining discovery in the past 12 years; and after viewing the below charts, we think you’ll be further emboldened by our conclusion that not only has global gold mining peaked, but will likely precipitously decline in the coming years.
In our view, the collision between falling PM supply and surging demand will be historic; sadly, amidst a very difficult world where owning gold and silver may represent the difference between “financial life and death.” Hopefully, you are considering such possibilities as well; and subsequently, acting on them.
I thought about choosing a topic to write about today and decided that the downing of the Malaysia Airlines plane needs to be discussed because it is being thrown around like a political football. Before beginning to write, I received an e-mail from my mentor in which he said “It is obvious that we are on a manufactured collision course with destiny” which I unfortunately think is 100% correct. I will explain the quote later, first let’s look at the tragic “political football”.
Zero Hedge has written several pieces on the airline missile strike, the latest missive is here http://www.zerohedge.com/news/2014-07-21/russia-says-has-photos-ukraine-deploying-buk-missiles-east-rader-proof-warplanes-mh1 . Please read this because some very interesting points are brought forth. In this, Russia claims to have photos of the Ukrainians deploying their BUK missiles in the eastern part of the country. If this is true, what will happen to global sentiment towards the Ukraine and thus their sponsor the U.S.?
I have had several questions myself along the way where the answers could be very ugly to me (as an American). I first wondered how we knew for sure who pulled the trigger on the missiles within minutes of the plane coming down. I wondered whether the Russian separatists even had any missiles that could down a plane at 33,000 feet since shoulder mounted versions apparently don’t have this type of range. I also wondered how it is possible that “we” don’t have radar tracks or photos of the missiles being launched as we have the technology and satellite ability to decipher whether you had a flour or rather corn tortilla with breakfast this morning.
There have been other alleged “oddities” so to speak such as President Putin’s plane may have followed the same path as the Malaysian Airlines flight did less than 30 minutes later. Also there have been reports that the Malaysian flight’s path was diverted to go north of Donetsk and that possibly 2 Ukrainian fighters were close by or “marking” the flight. These are all speculations and fall into the category of “conspiracy theory” until being proven conspiracy fact.
The West’s press has whipped up anti Russian sentiment into a frenzy and Russia has responded by asking 10 very good, logical and pertinent questions of the West that may or may not be answered. I guess the simplest question of all would be “why are any civilian flights routed here in the first place”? In any case, we have to await answers from the Ukraine and U.S., hopefully they will not defy logic, be embarrassing or answered with a simple “because”.
Here is how I see it and I will lead toward the quote “It is obvious that we are on a manufactured collision course with destiny”. We, the U.S. are the ones desperately looking for some sort of military action …somewhere. We tried in Syria late last year and I’m afraid that this is what we are doing in the Ukraine. As I see it, both China and Russia know and see this. It is my opinion that it is known that the dollar and debt based system is doomed and cannot be reflated again. Wars generally help “reflation” but this time I think it’s different because there is no collateral left to reflate upon. I think that those “running the show” are in need of something to point at so they can say “our policies were working and would have worked were it not for this war”.
I know that my viewpoint may not be a popular one but I have come to these conclusions because current policy in the U.S. could not have come from or been formed by sane people with America’s best interests at heart. I believe that the U.S. had to be “gutted” so to speak if the “one world order” had any chance of succeeding. The problem now is that China, Russia and the rest of the world are in the process of isolating the U.S. because of our radical policies, deeds and business practices. I don’t believe that they have any interest in a “one world order”. It is also my opinion that the rest of the world is very fearful of what the U.S. might do with our nuclear arsenal. Excellent thought and reading on this topic can be read at Paul Craig Roberts website where he fears the same, the U.S. pushing the world into or even starting a nuclear war.
The above said, I believe that China, Russia et al have the ability to pull the plug on the U.S. any time that they’d like. They are the creditors, we are the debtors. They have a banking system and clearing facilities in place so that soon they will no longer “need” us. They have set up markets, trade deals, swaps and credit lines all over the world. It is my opinion that Russia and China would far rather let the West’s financial system tip over and implode on its own rather than “pushing it”. I believe that they are very fearful of a world war and are doing what they can to stay refrained from starting anything but have been preparing for what is probably inevitable.
As I recently showed you, gold is coiled and ready to spring. Whether the cause is global war, a financial collapse or any other number of combinations, gold is set to move higher. Will it be market based or an “official” mark up? It does not matter, what does matter is that the chart is saying that here and now (or VERY soon) gold is going to a much higher level. Another way to look at chart is that something “very bad” is about to take place. Take your pick what it is or where, the bottom line is that we as Americans have lived far beyond our means for as many years as I have been on Earth. Payback is surely coming as it always and inevitably does, “payback” won’t be pleasant. By the way, “payback” could be defined as a “destiny” and it’s looking like ours is being planned and playing out from both outside and within.
Regards, Bill Holter