PHYSICAL GOLD AND SILVER MARKET UPDATE – INTERVIEW WITH ANDY SCHECTMAN, MILES FRANKLIN’S PRESIDENT AND CO-FOUNDER
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TRANSCRIPT OF PHYSICAL GOLD AND SILVER MARKET UPDATE – INTERVIEW WITH ANDY SCHECTMAN, MILES FRANKLIN’S PRESIDENT AND CO-FOUNDER
ANDY HOFFMAN: Hi, this is Andy Hoffman, Marketing Director of Miles Franklin Precious Metals, in our 26th year in business. It’s Thursday night, August 27th; and given the extreme volatility of global markets – or should I say, the historically undefeated forces of “Economic Mother Nature” taking on the manipulative forces of crumbling Central banks head on – I figured it was the perfect time for another special podcast with Miles Franklin’s President and co-founder, Andy Schectman.
Given the Cartel’s maniacal efforts to suppress gold and silver prices – in light of historically PM-bullish events, from the Chinese Yuan devaluation; to collapsing global equities and commodities; and the pending closure of dozens of gold and silver mines, we are again faced with a potentially dangerous shortage situation. Not so much in gold – not yet – but certainly in silver, where supply shortages always develop first, as global inventories are far, far smaller. In fact, it has essentially become “common knowledge” that no more than two billion ounces of above ground inventories exist in the entire world – worth a measly $29 billion at current prices, nearly all of it in very strong hands, such as mine. Back in October of last year, I hosted Miles Franklin’s “Silver All-Star Panel” webinar to discuss such topics, which you can access for free at our website.
As for physical silver bullion, back in 2008 we saw the first signs of what was to come – when the Cartel viciously attacked Precious Metal prices in the early stages of the financial crisis. However, by October 2008, essentially all silver products sold out worldwide, with all major Mints suspending sales. Delivery times stretched out to months; and believe it or not, physical premiums rose to nearly 100% over the fraudulent paper prices derived on the New York COMEX. Gold, too, sold out, with premiums closer to 30%. However, it was the shortage of physical silver that exposed the Achilles Heel of a price suppression scheme destined to end spectacularly, just as the London Gold Pool did in 1968.
Fast forward to 2011, when the Cartel nearly lost control again – as silver prices rose to their 1980 spike top high of $50/oz. Only a blatant paper attack in the wee hours of Sunday night, May 1st, 2011 – when China was closed for a holiday; enabled the Cartel to escape that episode intact – as, like in 2008, supplies were close to – or in some cases completely, sold out.
In the ensuing four years, we have seen multiple situations in which temporary silver shortages broke out – such as in April 2013, after the April 12th and 15th, 2013 “alternative currency destruction” paper raids; and last month, when the U.S. Mint suspended silver Eagle sales for two weeks due to surging demand. Irrespective, demand has continued to grow, with 2014 U.S. Mint and Royal Canadian Mint silver sales setting new records, and 2015 on a pace to set new records again. Worldwide, the demand picture is even stronger – particularly in the Eastern Hemisphere. And given that roughly half of all silver production is byproduct from lead, zinc, and copper mines – which, due to collapsing prices are likely to start closing en masse in the coming months, the outlook for silver supply has never been bleaker. Let alone for the world’s primary silver miners, nearly all of which are hemorrhaging money – with massive write-offs and production and capital expenditure-reducing mergers likely in the coming months.
Which brings us to today; when after six years of relentless post-2008 money printing and market manipulation, the historic bubbles in global stocks, high yield bonds, and commodities are serially collapsing – fostering not only an economic environment weaker than any since the Depression, but an unprecedented debt edifice that can only be repaid via equally unprecedented Central bank monetization. The average currency has fallen by more than 50% in the past four years alone; and now that the “final currency war” has gone nuclear – care of the People’s Bank of China – the only possible outcome is dramatically debased currencies, zero interest rate policy, and “QE to Infinity.”
As discussed in recent articles, we at Miles Franklin – from both clients and blog readers alike – have never witnessed a level of cumulative fear so acute; at least, not since late 2008. And thus, the current silver shortage situation appears far more like 2008 than the others. Not to mention, as global demand – if the U.S. Mint and Royal Canadian Mint are any indication – is more than double what it was in 2008. And with the world’s largest silver buyers – India and China – clearly experiencing record demand as well, the odds of a debilitating physical shortage – which could prevent you from protecting yourself against relentless, accelerating Central bank money printing – have never been higher.
To that end, I have once again brought in Andy Schectman to update you on what he sees – just as he did in July’s “State of the Bullion Industry” podcast – as well as supplying information for my August 13th article, “silver supply a 1.5 or 2.0 out of 10.” Andy was selling Precious Metals before the bull market commenced at the turn of the century; and given Miles Franklin’s position as one of the nation’s largest bullion dealers – and a primary dealer to the U.S. Mint – he has as good information of how the real-time supply/demand situation looks as anyone in our industry. Andy, how are you doing tonight?
ANDY SCHECTMAN: I’m alright, Andy. Thank you. A little weary, though. Tired, but hanging in there.
ANDY HOFFMAN: Yes, he’s weary, from Miles Franklin receiving so many calls from people asking silver.
OK, let’s start, generally speaking, with your view of how this silver shortage situation “feels” compared to 2008; as well as 2011, when supply dried up due to rising prices. In other words, what are clients telling you today vs. then, and how are you responding?
ANDY SCHECTMAN: First, I think it’s very important to get it out there that right away, first and foremost. This is not about trying to entice people to hurry up and buy…and twist their arm, and force people into making a decision, based upon something that isn’t true. However, in 26 years of business, I’ve never experienced anything quite like this, on many, many levels. If we look at the difference, really, between now and 2008, they’re similar in some respects, but very different in others.
In 2008, you had several years of increasing gold and silver prices behind you. And so, when we saw the correction that led to all the product disappearing, it was a different environment. We had more optimism that prices would continue to move higher; and thus, people were buying gold and silver at that point, I think, more for profit than safety. And so, there were a lot of people back then there were a lot of people jumping on the bandwagon.
We were getting at the high point, leading up until 2011 – at that point, it had been 12 or 13 years of rising prices, we were getting up to 200 calls a day, with a lot of people placing very small orders, of people buying gold and silver for what I would have thought to believe, basically, the wrong reasons…doing it to profit, and capture a rising bull market.
Whereas now, we see a similar environment, in which product is beginning to disappear – just as in 2008 – but this time, what I see is vastly different. In all of the years I have done this, I have never seen, cumulatively, so much concern from so many different levels of clients, and people, and classes, and backgrounds. And just about everyone I talk to, from Wall Street financial advisors to the most diehard goldbugs, people are very concerned right now. Now you throw into the mix what I would tell you is the beginning of a really, really, really difficult silver market, in terms of supply – and you have the makings of a very interesting market.
As of tonight, American Silver Eagles are four weeks backordered. At least for us – one of 27 companies on the United States Mint website, so we do have the ability to straight to the top, we are 3-4 weeks backordered, at best – with premiums as high as I’ve seen them in a very long time. The Royal Canadian Mint…at this point, we are not taking any orders on silver Maple Leafs. They are minimum 6-8 weeks back ordered. Again, rising premiums. The Austrian Mint, which sells silver Philharmonics – we sold somewhere in the neighborhood of 155,000 ounces to two clients last week, and we cannot get any more Philharmonics from the Austrian Mint. The only place that we have had any success in getting product is the Perth Mint in Australia. They are producing the one ounce Funnel Web Spider, which is a fantastic coin – and we have been having pretty decent luck getting supply of. Short of that, and some 100 ounce bars, just about anything else I would aspire to get, is either back-ordered or really, really delayed, with rising premiums. And so, the only similarity between now and 2008 – or leading up to 2008, setting aside the real panic that ensued when markets collapse, the one real similarity is that in 2008, product started to disappear.
It started with the U.S. Mint (in 2008), just as we recently saw here, when it shut down in July…and preceded to just about everywhere else, where silver disappeared completely and totally. We’re not there yet (today)…but if we do, in the backdrop of extreme anxiety in the people I talk to – perhaps, rightfully so, and justified if nothing else – very quickly you will see (silver) become impossible to get. And I say that with 100% sincerity, as I am not trying to get people to buy based on a perceived fear that (silver) is disappearing – as they are disappearing in silver, which is becoming very challenging for us to get. That to me is my biggest concern as a company. How do we get product, in an environment where it is very difficult to get?
ANDY HOFFMAN: OK, I was going to ask about those products secondarily…so why don’t I just go to what I was going to initially talk about, junk silver – which I have long described as the “ultimate fear asset,” given its potential for use as a bartering tool under the worst case scenario of hyper-inflation. From what I see, the industry is essentially sold out, with no certainty that material supply will ever return. Andy, what do you see, and how does the junk market differ from 2008 and other times of significant supply stress?
ANDY SCHECTMAN: Well, you really can’t get junk silver now. It’s all but impossible to find. You know, the term “junk silver” referred to the fact that there was never any extra premium on top of the silver…it was just dimes, quarters, and half dollars for their melt value. In fact, I used to be able to buy bags of junk silver for under melt value, and sell them to clients at melt value or just a few cents above…and it was always the easiest product to get. And now, it’s anything but junk. In fact, if I were able to source it now, you’d pay more for a few bags of junk silver than you would for a brand new Mint Box of silver Eagles. I don’t know that I’ve ever seen that…ever, as a matter of fact…thinking out loud, of all the years I’ve done this.
Even 2008, when things went crazy, and absolutely disappeared, the premiums on Silver Eagles and Silver Maple Leafs at the height of drought of product was basically 100%. We had $9 silver, it had fallen from $21. Eagles and Maple Leafs, when they finally came back online for us to sell, were trading at 90%-100% premiums. However, junk silver at that point was about a $4-$5/oz premium, or roughly 50%. So at the peak of things being impossible to get in 2008, the premiums on junk silver were just half of what they were on silver Eagles and Maple Leafs. And now, the premium on junk silver is more than that of Eagles and Maple Leafs. And perhaps that is a function of the fact you just can’t get it, because it just isn’t made – and hasn’t been since 1964.
So it’s very much indicative of where I think things are going. You know, when people buy gold and silver for these type of preparations…these types of events…they aren’t apt to sell them, to go back into dollars.
ANDY HOFFMAN: Andy, can I cut you off here? As what you’re saying, goes right into what I was going to ask you next – not just about junk silver, but bullion in general. Because what you’re saying is that junk silver is not only the ultimate fear asset, but it’s developing a numismatic value as well. Which even a few years ago, people didn’t even think of. But as I see it, everything is becoming a numismatic – because my next question was, even 2013, 2012, 2011 silver Eagles and Maples now have high premiums. Can you tell us about the (diminishing) secondary market – which, frankly, you have been warning of for years?
ANDY SCHECTMAN: I think the term numismatic in this case is misleading…because for me, a numismatic is a coin with historical significance, or value in and above its melt content – for significant reasons, like it’s an old coin or an old historical piece. So in this case, the disconnection if you will, or what you call numismatic, to me is more of a disconnection. And that disconnection is between the paper price and the real price.
So yeah, I guess you could call it numismatic – but I think the more appropriate way to look at it, or to view it as a whole, is that the paper price that is engineered and manipulated relentlessly on the markets is becoming more and more detached from just about anything. It’s one thing when you talk about junk silver, where people are really afraid. I mean, I haven’t been offered a bag of junk silver to buy in probably over a year. So I think we’re heading into a period of time where everything will become “numismatic” simply because it is completely and totally detached from the paper price. In other words, what is something worth when you can’t get it? What is something worth when you need it, and can’t get it? And that’s what we’re really getting at here, as I think the prices will further detach, and move away from the paper price, based on peoples’ need for protection.
ANDY HOFFMAN: And this dovetails with what you were saying from essentially the first conference I went to you with, when you spoke of a lack of a secondary market. Which, just a few years later, you’re seeing. I see all of these coins, across the bullion industry websites – where a 2011 is much more expensive than a 2012; and a 2012 more expensive than a 2013. And it shows you, there really is no secondary market.
ANDY SCHECTMAN: Well, it’s interesting, because leading up to when we started speaking around the country…about six or seven years ago…and the three or four years after that, until recently. Before the last three years, anyway. The price of gold and silver continued to rise. And it was a situation where people were confident prices would continue to rise, and they were buying gold and silver because it was the next great place to make money. But what has happened over the last three years, interestingly enough – and it’s very difficult for most people to understand – is that the last three years of carnage in this industry…the price carnage…the relentless drubbing of the price…has I think, shook so many people that in the first three months of this year (2015), we had more stuff sold back to us than I can remember in the entire preceding ten-year bull market run.
And so, what’s interesting, what so many people find hard to grasp, is that there is a whole segment of the populace…most of the mainstream, who view stocks and bonds as the path to retirement…who only notice the fact that gold and silver have been down. And not as a good place to be. In fact, just about everyone I talk to that doesn’t understand gold – other than that I sell it – will say to me, “gold’s been down a lot lately, hasn’t it?” In other words, what I’m getting at is that most people in this country, the only thing they notice about gold – if anything – is that it’s been down for the last three years…and thus, not a particularly attractive investment. And in such an environment, we can’t just about anything (silver related), without a long delivery delay.
If you go back to 2008, everyone said to me “boy what a great run you’ve had.” People noticed gold was up, and was climbing, and became difficult to get. But what happens now, is no one notices it, other than to consider it has been a bad place to have had one’s money for the past few years, compared to the stock market. And if it’s that difficult to get now, when most people don’t look at it…and those that do, view it as a bad place to be…what happens when everyone wants it. So, I think we are really on the cusp of something that could turn ugly very quickly, in terms of getting product. Really, really ugly.
ANDY HOFFMAN: Well, I’ll say that in my 26 years in financial markets – including 15 on Wall Street itself – I’ve never seen anything that’s been more of a “contrary” play…where everything is going against it sentiment wise, when the fundamentals have never been better; including the fact, that we can’t get silver supply. Just to consider that silver is a market at a six-year low, where you can’t get supply – which is essentially what happened in 2008 all over again, except the world is a far different place. By the way, seven years later, the global demand for silver is twice what it was in 2008. So that should give people some food for thought.
Now, Andy, my next questions is what about larger sized bars – such as 10 ounce and 100 ounce bars – the latter of which tend to be more associated with institutional buying?
ANDY SCHECTMAN: I really don’t like 100 oz bars much at all, to be honest with you. I’d by them only as a last resort, and that’s kind of what I believe will be all that’s left. We have 100 oz bars in stock, but the one and ten ounce silver bars are all but impossible to get. Most of the refiners are making one ounce rounds and 10 oz bars, are back-ordered two to four weeks…at least, those I consider reputable.
Sunshine Mint is the mint that produces blanks for the U.S. Mint. All of their products are suspended right now, and to me they are the most respected company that produces generic rounds. And everything I’d ever buy from them is suspended. Right now, I have a halfway decent supply of Perth Mint and Royal Canadian Mint 100 oz bars. But to me, that is the second choice to one ounce coins. Whether you are playing poker, or driving on a crowded highway, or investing, you can never be too flexible, or too liquid. And I believe liquidity is compromised considerably with 100 oz bars. I’d much rather pay a few hundred bucks more for the same amount of silver, but in 100 one ounce pieces, rather than one 100 oz bar.
So 100 oz bars are available, but the 10 oz bars are lumped in with the one ounce rounds, where delivery delays abound. I mean, I can get all of this stuff, but the wait is 3-4 weeks, based upon a promise from someone to deliver. Is this the beginning of silver becoming impossible to get? I don’t know, but all I can tell you is in all of the years I have done this, I have never seen a more crazy demand market. We have done roughly 3½ to four months of business in the past six weeks. And thus, it’s an environment in which, if all you did was listen to the mainstream, you’d have absolutely no clue that gold and silver are flying off the shelves. But you can talk to anyone in this industry, and they’ll tell you that they have never, ever seen anything like this.
ANDY HOFFMAN: And finally, what does the physical gold market currently look like? Are there any areas of particular tightness, or is gold for the large part still available?
ANDY SCHECTMAN: For the most part, it’s still pretty good. But if silver disappears, the next thing in line is gold. And it’s pretty decent right now, ironically enough; albeit, we’re starting to see the Mint sales drastically pick up on the gold Eagles, and anything coming out of the Royal Canadian Mint right now is difficult – as for the most part, they are a mess, and back ordered on lots of stuff.
Gold Maple leafs are still available. We prefer, as you know, the Wildlife Series, and the “Cougar” is a coin we have been focusing on for the past year. They are available, but running at a week to ten days back ordered.
In general, gold is still OK. Silver is the primary concern. And if you’re thinking of buying silver, people who are listening to this, I urge you, if you want one ounce pieces – and more importantly, if you want possession of it in a timely fashion, I would urge you to act. If you don’t mind waiting, it’s really not that big of a deal. But the interesting thing is, that all the business we have been doing lately is tied to one central theme. Which is, a concern as to where we are headed this fall. And whether it be prophecy – like the Shemitah; or the IMF meeting; or elections; or what’s happening around the world – like the Ukraine, or the South China Sea, or Greece, or Puerto Rico, or the Middle East. People are as concerned as I have ever seen them, and there is a universal thread of concern…and really, an inability to really articulate what it is that’s bothering them – but all tied to this fall, which is really strange – eerie, actually, that everyone I talk to wants possession before mid-September, when all these things start to happen.
So it could be a few real interesting weeks. I think we should all prepare, and buckle up…as never, in all the years I’ve done this, have I seen more people, more concerned, about what’s coming in a very, very short period of time. For different reasons, but nonetheless concerned enough to act in ways I’ve never seen.
ANDY HOFFMAN: Thanks so much, Andy, this is great – and timely – information. And to those listening, if you have any questions, please give Miles Franklin a call at 800-822-8080. Or, as always, you can email me at firstname.lastname@example.org. And remember, each and every day Miles Franklin posts free content on our blog, from both myself and Andy’s father David, who co-founded the firm with him back in 1989. Thanks very much.
The Miles Franklin Blog’s primary goal is to encourage long-term thinking, regarding the “big picture” of what’s going on in the global economy and financial markets. However, as we are currently amidst one of the most chaotic trading environments of our lifetimes – certainly, since the 2008-09 crisis – it’s difficult to avoid discussion of what’s going on each trading day. I do my best to tackle both areas – as readers’ need to have a few of market movements to create a comprehensive “mosaic” of “what’s going on.” Moreover, given the recent desperation of “manipulation operatives” mandated with “stabilizing” markets – and more importantly, maintaining the cancerous, fiat currency-dominated status quo – it’s particularly relevant to observe how “successful” their efforts have been. Or lately, haven’t.
Before I get to the past few days’ (largely unsuccessful) efforts to delay the “unstoppable tsunami of reality” with all-out, unabashed support of “favored” markets like stocks; and equally blatant efforts to suppress “public enemies” like gold and silver; I’m going to prove, unequivocally, what we have said all along. First, of the reality of exploding PM demand; and second, that “deflation” has nothing to do with monetary commodities like gold and silver – other than in fraudulent paper markets, where the government’s “bullion bank” henchman have naked shorted so relentlessly, for so long, physical demand is hitting new record highs; whilst inventories are vanishing; and production, on the verge of an historic, catastrophic collapse.
To wit, as the PPT was rescuing the “Dow Jones Propaganda Average” with a 500 point rally in the last three hours of trading – just as it was about to turn negative, and strike the fear of god into global markets – the CRB Commodity Index was simultaneously plunging to a 40-year low – at which, it had only traded for a few brief days in 9/11’s wake. Good thing the Chinese finally figured out the “Hail Mary” algorithm as well; as following a two-month, 43% plunge – including 26% in the last week – China’s “national team” was on the verge of failing to capitalized on the U.S. PPT’s laughably blatant efforts. And then, Voila! A 6% surge in just over an hour’s time. Hallelujah!
Of course, the above manipulations simply demonstrate short-term noise - in a long-term battle that “Economic Mother Nature” will inevitably win. And frankly, in essentially all but “last to go” markets like the Dow and paper gold and silver, she already has. As for said “long-term,” take a look at the CRB Index’s plunge from its all-time high of 435 in May 2008, to yesterday’s close of 185, down an astounding 57% in just seven years’ time. Next, take a look at the chart of the sum total of silver demand from the three largest. transparently publicized silver demand sources; i.e., U.S. Mint Silver Eagles, Royal Canadian Mint Silver Maples, and Indian Imports. As you can see, not only has it grown at a 20% compound rate whilst the CRB Index was imploding; but this year, appears likely to grow at nearly twice the 2008-2014 rate.
Moreover, since India’s psychotic, inflation-loving government – since deposed by an equally evil group of financial “wolves in sheep’s clothing” – raised silver (and gold) import tariffs in response to the Rupee hitting an all-time low of 66/dollar in August 2013, from 2% to today’s 10%, a massive black market has developed. Thus, even the below depiction of surging official imports – anticipated to rise nearly 40% in 2015 -understates what is likely actually entering the country. And thus, to those that claim – some fraudulently; some due to reliance on propaganda; and some, plain old ignorance – that silver is down due to “deflation” – we rest our case. And oh yeah, guess where the Rupee is today, following two years of supposedly “deficit-reducing” gold and silver import tariffs? Yep, 66/dollar, back at its all-time low!
And, while still on the topic of silver, the Miles Franklin Blog has another pleasant surprise in store for you – as tonight, I plan to tape another “special podcast” with our President and co-Founder, Andy Schectman; to give you a detailed update – replete with historical background – of today’s ultra-tight physical silver market.
Back to “financial markets,” how fitting is it that the blockbuster news of China selling $106 billion of U.S. Treasuries – or 8% of their total holdings – in the past two weeks was confirmed today, as the vile, taxpayer-funded Jackson Hole Central Bank symposium commenced? At which, the comically moronic debate as to whether the Fed should raise rates by a measly eighth of a percent rages on. To wit, demonstrating just how clueless Central banks are, Bloomberg claims the PBOC needs to “raise dollars to support the Yuan, in the wake of a shock devaluation two weeks ago.” Wait, let me get this straight. The PBOC is trying to devalue the Yuan, but are so concerned that it will fall, they need to raise dollars to support it? And by the way, since the Yuan/dollar rate is fixed by the PBOC, why would they need to “support” the Yuan in any circumstance?
Unless, of course, they’re implicitly referring to the “offshore” Yuan – a/k/a, the “non-deliverable forward” market, where investors traders can speculate on the Yuan’s future, without actually being able to take delivery. You know, like the COMEX gold and silver markets – where investors traders government henchman can not only bid on metal they have no intention of taking delivery of, but naked short “sell” metal that doesn’t exist, on massive amounts of margin. In other words, the Chinese government is more fearful of what the “paper” market for non-deliverable Yuan forecasts, than the actual peg they determine! And thus, believe it necessary to build as much “cash” as necessary to manipulate this paper market, to the end of creating a false perception of control. Yes, my friends, this is what Central bankers do with their time – and your money.
Again, let’s get this straight. Said manipulators – in the U.S., led by the President’s Working Group on Capital Markets (stocks); the Fed (bonds); and the Exchange Stabilization Fund – i.e., the “Cartel” (currencies and gold) – think there’s a chance they can raise rates when commodities are hitting all-time lows; the weighted average dollar index an all-time high; and, amidst the weakest global economic conditions in generations, the world’s second largest Treasury holder actively selling bonds? And better yet, they think they can reverse the massive, hyper-deflationary unwind of global equity, credit, and commodity markets by simply “tripling up” on money printing and market manipulating algorithms, without alerting the whole world to what they’re doing? Let alone, without formally announcing their scheme – i.e., QE4 – as the PBOC, BOJ, ECB, SNB, and countless others have done?
As for Precious Metals, the most consistent of all the Cartel’s long-term “rules,” is its insistence on violently suppressing Precious Metal prices when dramatic, PM-bullish events occur – so as to prevent them from being recognized as the true safe haven assets they are, and always have been. This year alone, we have seen this blatantly obvious stratagem at least a half dozen times (such as intermittent stock, commodity, and currency collapses; the breaking of the Franc/Euro peg; and the exploding Greek crisis, to name a few) – with its “tell” being that when first announced, gold and silver’s initial reactions were to rise.
In extremely terrifying situations – like this week’s stock collapse, it sometimes takes a day or two for the Cartel to “gain control”; as it did this time, after gold rose during Friday’s 530 point Dow plunge, and barely declined (despite every Cartel naked shorting algorithm imaginable) during Monday’s 590 point bloodbath. As always, they went into “Cartel hyper-drive” to make up for lost time on Tuesday and Wednesday. And thus, by Wednesday afternoon, with the Dow not far from its lows; European and Asian stocks in freefall; and commodity indices at 40-year lows; the Cartel “miraculously” managed to take gold down by nearly $50/oz from its highs, and silver $1.50/oz. Let alone, on what “coincidentally” turned out to be a COMEX options expiration day; during which, as long-time readers know well, the Cartel attacks with 100% certainty.
Of course, such historic manipulations guarantee the manipulators’ inevitable demise, by creating massive, unsustainable economic and financial “deformations.” In Precious Metals, the rapidly tightening – and thus, extremely vulnerable to short squeezes – silver market appears highly likely to experience a 2008-style shortage situation, if prices don’t rise significantly from today’s ridiculous prices, and quickly. To wit, the HUI mining index essentially closed at a 13-year low yesterday (0.5 points above the actual low, set earlier this month), with the average miner down a whopping 6%; and many, by much more. Care of 15 years of price suppression, the mining industry is now a “dead man walking”; and at current prices, I fully expect the year-end (or sooner) reserve revisions to catalyze countless bankruptcies, starting with the entire South African mining industry; which, ironically, will catalyze inflationary chaos, as the Rand is already at an all-time low – crashing nearly daily, in freefall mode. And LOL, South Africa is one of the “BRICS” that was supposed to lead the global economy into the 21st century.
For once, I feel a bit speechless, as I watch the combined “manipulative operatives” attempt to kick the can one more day. That said, such feelings typically don’t last too long; and often, as today, something “new and exciting” emerges before finish editing. To wit, demonstrating just how clueless the PBOC is – and equally ominous, how desperate the entire world is for zero interest rates to infinity; a top PBOC official just claimed China’s Yuan devaluation was due solely to the Fed’s supposed plans to raise rates, even if by a mere eighth of a percentage point.
Moreover, it “altruistically” claims Fed rate hikes will injure “emerging market” nations further – when in fact, the only “emerging market nation” it is concerned with is itself! In other words, following up on what I wrote above, the PBOC wants to gradually weaken the Yuan, but is fearful a (mere one-eighth percent) Fed Funds rate increase will cause the aforementioned “offshore Yuan” to crash. I mean, I thought the Twilight Zone analogy was relevant yesterday; but that doesn’t hold a candle to this version of Central banking lunacy!
- CHINA CENTRAL BANK OFFICIAL SAYS CAN’T BLAME YUAN DEVALUATION FOR GLOBAL MARKET TURMOIL
- U.S. FEDERAL RESERVE SHOULD DELAY RATE HIKE, COULD PUSH SOME EMERGING MARKETS INTO CRISIS – CHINA OFFICIAL
Oh well, that’s enough for now. I need to rest up, and prepare for tonight’s special podcast with Andy Schectman. That is, if he can find a second to breathe, in between manic calls from clients trying to buy silver; and to our distributors, trying to source it.
What’s Not Imploding Now Wednesdays With Andrew Hoffman:
- Market crash
- Commodities! Currencies!
- CRB hitting 40 year lows
- Surging volatility – “single most PM bullish factor imaginable”, failing PPT efforts
- Global economy crash
- Collapsing silver supply, surging demand
- Miners on verge of bankruptcy
- Comparisons to 2008 – “Just like 2008, but much, much worse – and irreversible”
Q: My questions/comments are for David re: his article on Friday about the topic on confusion. I am not confused by the likes of Dent and Edelson, as I do not subscribe to their crap! I am also not confused about my decision to be “all in” with PM, namely Silver, vs. paper equities. I am, however, somewhat confused with PMs always being identified as “insurance” by the Miles Franklin team. To my understanding, an investment is when you purchase something and hope that it provides a return on your principal, as in the theory of buy low and sell high. An investment can be defined as “the action or process of investing money for profit or material result”, or basically pure speculation, which is what I have been actively doing for the past 5-yrs, watching my speculation be devalued by as much as 50%. At this point in time, my safe full of silver does not really feel like much of an insurance policy! But hey, we are all waiting for PM to rocket to the moon, or beyond, thus I continue to patiently wait for lift off.
My other question (do I get two?) is about the Miles Franklin camp being so divided on their opinion of Mining Shares. We all know Andy Hoffman’s point of view, which is adamantly against them, but not so sure about Bill Holter’s take; however David has recently confessed as to purchasing several thousand shares of two companies with no comments as to his opinion to do so….. is now the time to be investing/speculating in mining shares? (I know, Miles Franklin is not a financial adviser). I have even quizzed Andy about his friend Daniel from FMT who has been recommending mining shares for the past year, specifically the new First Mining Finance venture, which is backed by such investors as Rick Rule and Admiral Eric Sprott.
Any comments would be appreciated.
David Schectman’s Answer:
Of course you can get two questions today. They are both well thought out.
First, regarding our opinions on mining shares – As you observed, Andy Hoffman is not a fan at all. Bill Holter is. So am I and my son Andy, but with a couple of qualifications. This will also tie into your other question. Mining shares are an investment, a speculative one at that. Physical gold, which I expect to increase by thousands of dollars above the current price, should not be purchased as an investment. It is a core “insurance policy” that hopefully you will never need. Whether it goes up or down is not part of the philosophy here, because if it were, you would be inclined to time your purchase and to sell it when it rose. That is not what we do with gold. Silver is another story. It acts sort of like a “poor mans gold” and does offer some “insurance” value but it is also an industrial metal and ebbs and flows (for now) with the strength of the global economy. Back to your question on mining shares – Whereas Andy Schectman and I will sell our mining shares for a profit; we try very hard not to sell our physicals. There will be exceptions, such as when I sold a meaningful amount of gold and silver two months ago for tax-loss purposes (to cover the tax liability from the sale of our Miami condo), but I have already re-purchased virtually all the ounces I sold, so I was only a bit underfunded in my core position for a month or two.
Andy Schectman and I use mining shares as follows. We buy them when they are very out of favor and CHEAP (like now) and when we believe a strong move up in gold and silver is imminent, which we do now. Sure, they may still go down but I do not and cannot pick a bottom, but picking an entry point that offers tremendous risk/reward is attractive to me. Currently, including my latest purchases, my mining shares represent 20% of my total metal portfolio and my physicals are 80%. The percentage changes as the shares make big moves up or down. That is a risk I can live with because the reward will make it worthwhile as long as I am correct about gold and silver going way up in price.
Also, I sell on the way up and the last time I did this, from 2001 – 2011, the gains were enormous and all of the profits were used to purchase FREE physical gold and silver. Yup, mining shares are a great way to leverage the gains in physical gold and silver and the profits can be used to build a very robust portfolio of real precious metals at no cost to you. Now you get free insurance!
Don’t feel bad that you haven’t had a chance to use your gold and silver “insurance” positions. Fortunately, you must not have had a need to and the collapse that they insure against has not (yet) happened. Try looking at it that way. That’s what I do.
As I have stated before, I hope I never have to sell my core position of physicals. I want them to go to my two children and five grandchildren. I will, however, sell my mining shares. Like I said – one is for insurance and not to be sold for profit, the other is for profit and is an investment, but timed properly, one of the best investments you can own.
Just don’t confuse paper gold and silver with real gold and silver. They are really a different asset class in your portfolio.
Q: Hi, could you explain to me,( a novice gold investor) how gold spot price has fallen today( Monday 24th ) when the stock market is in freefall. I always thought when stock markets fall precious metals gained. Am i wrong or is something unique happening?
Andy Hoffman’s Answer:
If you read this blog, you’ll understand quite quickly that the Precious Metal market is more manipulated than any other on the planet – which is saying a lot, given that nearly all markets are currently rigged, on a 24/7 basis. The (U.S. government-led) “Cartel” does this to prevent fear from spreading over the value of the fiat currency they call the dollar, as well as general uncertainty about the effectiveness of fiscal and monetary policy.
Traditionally, the Cartel attacks hardest during times when gold and silver should rise – such as the Yuan devaluation and stock market crash – but in doing so, in the paper markets, they only create more demand in the physical markets. Consequently, shortages tend to arise, as we are on the cusp on in the silver market now – and as in 2008, when the entire world ran out of both gold and silver.
In time, the metals return to where they should go – but in recent years, the constant paper manipulation has been so repressive, they have pushed prices to unsustainable levels. This is why, with record global demand, inventories are plunging, and production on the verge of freefall.
This morning, I see so many terrifying, ominous portents – coming at me from so many different directions – I actually had a difficult time homing in on a single topic. Which is why, I believe, today’s title is appropriate. And by “terrifying, ominous portents,” I mean the “Big One” has unequivocally commenced – with only the complete loss of control of “last to go” markets like the relentlessly supported “Dow Jones Propaganda Average” and massively suppressed paper gold and silver markets standing between the terrifying global mindset of late 2008, and any remaining hope of a return to some type of (miserable, decaying) “normalcy.” Let’s face it, the era of “belief that Central banks can save us” is coming to an ignominious end. And if you think last week’s historic launch of the nuclear phase of the “final currency war” was a big deal; when the Chinese commenced the globally cataclysmic, soon-to-accelerate process of devaluing the Yuan – accelerating the horrifying collapse of commodities, currencies, equities, and high yield bonds that has been raging unabated for the past year – you ain’t seen nothing yet.
And nowhere is this “economic hell” more obvious than the explosive growth of “alternative media” websites like the Miles Franklin Blog; as in an ugly world of propaganda, stupidity, and lethargy, the TRUTH “sells” at an extremely high premium. To wit, in yesterday’s “unprecedented, universal fear,” I wrote of how Andy Schectman, David Schectman and myself – as well as our team of seasoned brokers – have never spoken to so many people, from so many walks of life, with such an overwhelming fear of what’s coming. As for me personally, not only are my articles and podcasts experiencing record amounts of readership and viewership; and easily the most positive feedback since joining Miles Franklin four years ago; but my email inbox is on fire with questions from fearful followers.
Many are related to how one can go about buying Precious Metals; or transferring Precious Metals accounts; engaging our Brink’s storage facility in Montreal, Canada; or learning of how existing accounts like IRAs can be utilized to hold gold and silver. However, just as many are asking for garden variety “financial advice” – such as how to “escape” from government-sponsored retirement plans like pensions and 401ks; whether to buy a home or invest one’s savings; whether to take out mortgages; what types of mortgages; and most commonly, will debt be a “good” thing in a hyper-inflation and/or “debt jubilee” situation (to the latter question, the answer is a decided NO).
Equally telling, the percentage of young people asking such questions – many, without significant capital to handle an increasingly unstable, uncertain future – has never been higher. In other words, when we write of “statistics” like historical lows in labor participation, real wages, home ownership, and government approval; and conversely, historic highs in debt of all kinds, government entitlements, and the cost of living (notwithstanding propagandized “deflation” fears), we are not just typing words. To the contrary, we are speaking of the sheer horrors government printing presses – and other government macro-management efforts – are causing at an accelerated, in some cases hyperbolic, rate. Not to mention, the manipulation of financial markets of all kinds; which as the entire world can now clearly see, are not only “backfiring” in an historic manner, but setting the stage for the most terrifying political, economic, and social cataclysm of modern times.
As history’s largest, broadest fiat Ponzi scheme rapidly crumbles to dust – with, on a nearly hourly basis now, additional equity, currency, and commodity markets horrifically imploding – the volume of the “weapons of mass financial destruction” our “leaders” have destroyed the world with is being turned up still higher; particularly in the aforementioned “last to go” markets – like the world’s largest stock indices, and the “canaries in the coal mine” gold and silver represent.
I mean geez, Monday’s market action was so bad – following equally terrifying plunges Friday – that even the MSM was calling it “Black Monday.” The fact that Friday and Monday’s combined Dow decline was just 6.5% – compared to the real Black Monday in 1987, when the Dow plunged 22.5% – demonstrates just how jaded today’s ignorant money managers and financial journalists have become to relentless PPT support is another story for another day. That said, it’s not just equities that continued their horrific plunge Monday – but commodities, currencies, and high yield bonds, the world round. And thus, when China’s stock market plunged another 7.8% Tuesday morning, with WTI crude sitting at a seven-year low of $39/bbl, seeing European and U.S. stock futures up 3%+ Tuesday morning was truly an incredible, PPT-inspired sight to see. Let alone, as yet again gold and silver were attacked with the same tried and true algorithms, at the same times of day, amidst an environment of soaring, record demand.
By day’s end, an initial 450-point Dow gain ended in a horrific 205 point loss, with most of the losses occurring in the day’s final hour, amidst the biggest Dow intraday reversal since…drum roll please…October 29, 2008. Commodities modestly bounced – not gold and silver, of course, which “somehow” managed to lose their safe haven status, amidst an utter blizzard of paper naked shorting and ragingly bullish news developments – on Miles Franklin’s strongest, across-the-board day of physical buying all year, featuring shortages so acute, we are now quoting 4-8 week delivery times on popular products like Silver Eagles and Silver Maples.
Subsequently, Chinese stocks again declined last (Tuesday) night; and this, mere hours after the PBOC lowered interest rates and reserve requirements; further restricted stock futures selling; and devalued the Yuan to its lowest level in four years. Simultaneously, commodity prices of all types plunged; and European stocks declined another 1+%. And yet, “incredibly,” I looked at my screen as I awoke, to not only see gold and silver down (“same BAT-algorithms, same BAT-times”), but Dow futures up 300 points! I mean, this is sheer PPT insanity; as not only are global markets of all kinds going up in flames, but the global economy is amidst a freefall phase that is just starting. And just wait until this month’s horrifying crude oil, commodity, equity, high yield bond, and currency collapse incorporates itself into upcoming global economic data; corporate, institutional, and government spending plans; and oh yeah, the earnings reports of thousands of publicly-listed companies.
Even more incredibly, the financial media – such as CNBC, with its record low viewership and likely criminal collaboration with Apple’s CEO, Tim Cook on Monday – is still discussing whether the Fed will raise rates by a measly eighth of a percent next month! Yes, amidst an historic, across the board crash in essentially all types of financial markets; imploding economic data; exploding currency wars; surging geo-political tensions; the pending collapse of the European Union; and unprecedented global debt loads – with Central banks like the Fed leading the way; this ridiculous topic continues to be bandied about by the “fumes” of the miserably failed economic “recovery” propaganda campaign that started 2½ years ago.
As still more miserable economic data is reported – and this, before the impact of this month’s markets crashes insinuates itself into the economic data picture – Citibank says their September rate hike prediction is a bit more “shaky,” but still they expect it because incoming economic data remains strong. “Strong?” Really? Conversely, Ray Dalio, who runs the world’s largest hedge fund (Bridgewater), actually believes QE4 will be announced in September – which frankly, appears far more likely, particularly if financial markets continue to melt down. And geez, AS I EDIT, NEW YORK FED PRESIDENT BILL DUDLEY JUST SAID A SEPTEMBER RATE HIKE IS “LESS COMPELLING, BUT HOPEFULLY WE CAN RAISE RATES LATER THIS YEAR.”
I mean, even Twilight Zone writers couldn’t make this stuff up; particularly when the primary reason for this week’s incredible “resilience” of the benchmark 10-year Treasury yield is not due to “rate hike fears”; but to the contrary, the BLOCKBUSTER NEWS we learned last night, that China sold a whopping $106 billion of U.S. Treasuries in the past two weeks alone, or 8% of its total holdings. And trust me, it’s not “coincidence” that an explosion of selling from U.S. Treasuries’ second largest holder (with only completely bankrupt Japan holding more) occurred simultaneous with the PBOC’s nuclear devaluation strategy launch – putting incredible pressure on U.S. bond prices at a time when “traditional” investors continue to buy them hand over fist, under the increasingly diminishing premise that the Fed can keep rates at record low levels indefinitely – without stoking hyperinflation – simply by waving its “QE wand to infinity.”
Meanwhile, incredibly, whilst the “net change” in stocks, commodities, and currencies (following this morning’s PPT-inspired surge, assuming it lasts longer than yesterday’s); and utterly exploding physical demand (at least at Miles Franklin, and the U.S. and Canadian Mints); Precious Metal “prices” have been violently attacked in the same, blatantly obvious manner as always; with, as I speak Wednesday morning, paper silver having just plunged below $14/oz; i.e., a new six-year low, last seen during the heart of the 2008-09 crisis! Hence, the additional “black box” naked shorting by largely unregulated HFT traders.
My friends, all I have written of physical demand strength – and supply tightness – is as real as the aforementioned collapse of the average American’s finances. And given the combined impact of historic financial crashes, money printing, currency wars, and economy-crippling market volatility (i.e., the “single most Precious Metal-bullish factor imaginable”), I expect the current, essentially suicidal Cartel raids to yield a further explosion of physical demand, at a time when supplies are already historically tight. Once again, increasing the odds that a 2008-style shortage rears its ugly head far sooner than most can imagine.
And speaking of stupidity, how could a new six-year low in paper silver prices not be accompanied by a discussion of the hapless PM miners – who continue to destroy themselves with inaction. To wit, just this morning, mere hours after WTI crude plunged below $40/bbl for the first time since late 2008, the world’s largest oilfield service company, Schlumberger (which I diligently “covered” on Wall Street for seven years) is acquiring Cooper Cameron, the world’s largest manufacture of blow out preventers (which infamously, built the “BOP” used on the Deepwater Horizon that failed when BP drilled “into hell” in the Gulf of Mexico). When I was a Wall Street energy analyst in 1999, and oil briefly dipped below $10/bbl, nearly every energy company on the planet (that didn’t go bankrupt) merged to cut costs, given corporations’ innate survival instinct. In mining, however, the current crop of moronic CEOs are clearly intent on either going bankrupt entirely, or relying on crippling debt or hideously dilutive equity (which may or may not be available in the coming months) to survive, as the Cartel kicks out what’s left of their legs.
Earlier this year, I went on record predicting a massive consolidation wave will imminently sweep over the dying mining industry like a tsunami, causing dramatic plunges in what’s left of both production enhancement strategies and capital expenditures. And given the current, 2008-like Cartel raids on paper gold and silver prices – amidst an equally 2008-like collapse of commodities and high-yield financing, it’s difficult to envision such a scenario being delayed beyond September. As frankly, at current price levels, I believe many accounting firms, as they did two years ago, will force mining clients to recalculate reserves and “resources” at the end of the third quarter, as opposed to waiting for the typical year-end revisions. In other words, many mining companies (both Precious and base) are hopelessly insolvent as we speak; as once said revisions are incorporated into miners’ balance sheets – via massive write-downs – many will see their debt covenants violated, resulting in a run on the remaining “equity.” In other words, we are about to see some massive mining bankruptcies – which will not only cause equally massive declines in both gold and silver production; but potentially, permanently disable the industry’s ability to keep up with relentlessly rising demand.
Well, hopefully this dollop of reality adds to your cumulative understanding of just how dire the global economic situation is becoming – and just how much of a gift the trapped rats TPTB have become have given you, in “pricing” Precious Metals so far below the cost of production, that not only is supply vanishing, but the entire PM mining industry.
Here at the Miles Franklin Blog, we like to think of ourselves as your “lifeline to reality” – times three. And not just because we publish each day, but due to the broad swath of knowledge and experience we bring to the table. From David Schectman, you receive some of the best big picture commentary available – with a particular focus on “what people are saying” versus “what history tells us” and “what is most likely.” From me, you receive in-depth analysis of economics; financial markets; and of course, gold and silver – from someone who not only spent a “lifetime” on Wall Street, but five years in the mining industry and four years in the bullion business. And last but not least, Andy Schectman has not only been buying, selling, and trading Precious Metals since the turn of the century, but is one of the finest communicators in the entire, largely opaque Precious Metals industry.
With few exceptions, when I awake each morning I have not a clue what the focus of my article will be. In fact, I often compile the day’s news, as well as my thoughts and observations (often inspired whilst at the gym, where I pen them on my trusty notepad); and even a rough title of my article, before even considering what to say. That said, with the combined knowledge and insight of David, Andy, and countless other blog contributors, it doesn’t take long before the “right” thing to say emerges.
Today, as it turns out, is one of those days where I was well aware of my primary topic before I awoke – care of another late night discussion with Andy Schectman, following a day so ugly regarding market performance, sentiment, and connotation, many are casually referring to it as “Black Monday.” By the time all is said and done, “Black 2015” and “Black Decade” will likely be more appropriate; and perhaps, if “TPTB” continue to lose control so rapidly, “Black August.” Remember, Miles Franklin was in the heart of the 2008 storm; as not only did paper prices initially plunge (care of the Cartel, of course); but immediately thereafter, physical supply – particularly of silver – completely ran out, as fearful global investors acquired metal so aggressively, every major Mint in the world sold out. Delivery times rose from mere weeks to multiple months, and physical premiums exploded – in gold, to around 30%, and silver nearly 100%.
To that end, many a time I have listened to Andy speak at investor conferences of the fear he experienced as a business owner back then – lying in bed each night and asking his wife “what am I going to do?”, as he simply could not source any product to sell. Let alone, the “universal fear” he – and all of us – felt in wondering if collapsing financial markets and economies would every rebound. And if not, what chilling events might stem from such chaos – politically, socially, and in terms of our own families and vocations. Speaking with hundreds of investors and potential investors during that terrifying time – as well as during the gradually intensifying crises of the ensuing seven years – no one is more attuned to the public’s awareness, fears, and beliefs about the economy, financial markets, and Precious Metals than Andy. That is, in the U.S. and Canada, where the vast majority of our clients live.
Thus, what he told me last night was as chilling, and ominous, as anything I could imagine. Which is, that never before has he felt such “universal fear” from the myriad people he speaks to – from all walks of life. In other words, be it blue collar workers, financial experts, or ultra-wealthy entrepreneurs, everyone these days appears to be scared of what’s coming. Many can’t voice exactly what’s wrong with the economy – or why they fear it has far lower to fall; whilst some, like myself, know exactly what’s wrong, and exactly why it must collapse before any hope of a rebound is possible. However, the binding tie amongst all is their belief that something is wrong; politically, economically, and especially regarding the potential for a horrifying market crash, encompassing stocks, real estate, and even the dollar themselves.
Throw in the cumulative stress long-time “goldbugs” have accumulated in watching said “powers that be” maniacally attack what was supposed to be a “foolproof” insurance policy (against exactly what has indeed occurred), and one realizes just how much angst the population, as a whole, is dealing with. And oh yeah, the fact that given the horrifying wealth destruction of the 2000 and 2008 crashes; and the relentless loss of jobs; the decline of real wages; and the increasingly draconian, dangerously populist nature of bankrupt governments the world round, people are as scared of the potential political and social futures as they are of the economic. I mean, geez, can you imagine that Donald Trump is considered by many the best choice to run America?
As you know, I have been speaking with Andy more and more about the specific dynamics of the physical PM markets, given how said fear – and recently, an accompanying collapse of stock, commodity, and currency markets – has translated to a significant safe haven bid (relentless Cartel attacks notwithstanding). Consequently, Precious Metals have been, by far, the best performing markets throughout this time of nearly unprecedented turbulence – as depicted by this week’s most violent surge in the VIX volatility index since the heart of the 2008-09 crisis. In the paper markets, just as in 2008, gold has thus far outperformed silver – simply, because its larger size and liquidity make it less “manipulatable.” However, also as in 2008, silver has clearly been the big winner in the physical markets – which is saying quite a lot, as global physical gold demand is on a pace to set a new record this year – as discussed in my “special supplemental” article of August 13th, titled “silver supply a 1.5 or 2.0 out of ten.”
Since that time, junk silver – or as I call it, the “ultimate fear asset” – has essentially gone “no offer.” In other words, no one is selling – yielding premiums at all-time high levels, and absolutely no certainty as to when, or if, more will be available. Yesterday, Steve Quayle, who also works in the bullion business, was told by his major suppliers that their best estimate for junk silver availability was 8-12 weeks. Which made me laugh, as such an estimate is nothing more than a “guess” – or better put, a “hope” – as no junk silver has been produced for 50 years; no more ever will be; and given today’s perilous global financial situation, it’s difficult to consider why anyone would sell. Let alone, given how onerous the process of selling giant, heavy bags of coinage can be. Sort of like “analysts” from Barclays bank – you know, the one charged with manipulating everything from LIBOR to gold – changing their expectation of a Fed “rate hike” this morning, from September 2015 to March 2016. As if they have any clue what the world will look like in 2016. Not to mention, given what is going on now in the equity, currency, and commodity markets, why would anyone – “agenda” notwithstanding – believe things will be “better” six months from now?
Back to the good that is Andy Schectman – as opposed to the evil that is Barclays – he is as fearful of a 2008-style silver shortage as at any time since those fateful months seven years ago. To wit, premiums have started to significantly rise on the most popular coins, with delivery times on Silver Eagles now exceeding four weeks, and Silver Maple Leafs 6-8 weeks. In fact, our principal distributor, for all intents and purposes, suspended all new sales of Silver Maples Leafs of all kinds – including Great Horned Owls, which I referred to 12 days ago, in “one of the potentially last great silver investment opportunities.” Not that you can’t get them if you order now. However, delivery times, as noted above, are getting extremely stretched; whilst physical premiums, despite remaining reasonable, are starting to rise. If this goes on much longer, I’m hard pressed to believe the U.S. Mint won’t be forced to again suspend Silver Eagle sales entirely. Which, given the surging delivery delays, they are “partially” doing already – in “allocating” new orders rather than taking them in the full sizes bid for.
Which only makes the past week’s blatant, egregious Cartel raids – as always, at the same times of day, via the same patently obvious algorithms – so frustrating; as clearly, people are nearly as desperate to own Precious Metals as the heart of the 2008 crisis…
“Mr. Hoffman, I would like to purchase silver as quickly as possible. What do I need to do to facilitate a purchase as quickly as possible? We are not wealthy, but do understand the need to procure precious metal assets as quickly as possible.”
That said, I’m now in an even bigger “writer’s predicament” – as I’ve already written more than two of my allotted three pages per day, and haven’t even gotten to yesterday’s historic “Black Monday” trading, or this morning’s follow up market action and commentary. Frankly, it’s days like this when I typically use the Audioblog format to cram all this information in. However, as I just did one this weekend; and taped a very thorough, MUST HEAR podcast with SGT report yesterday morning, I’m going to try and summarize in less than a page of writing. Moreover, some people don’t feel like listening to 20-30 minutes of podcasts so often – as opposed to plain old, fingers on keyboard writing.
In a nutshell, yesterday was by far the ugliest, most chaotic trading day since early 2009. Or better put, Friday plus Monday – as Friday’s action was nearly as bad. And today should have started just as ugly, if not for the all-out “Hail Mary” efforts of every imaginable “manipulation operative” imaginable – utilizing a combination of overt monetary easing, covert market rigging, and flat out financial crime (you have to read this to believe it) to reinforce investors’ brainwashed belief in “buying the dips”; care of the “Yellen Put”; the ECB’s “whatever it takes” mantra; the BOJ’s determination to devalue the Yen at all costs; and of course, the big Kahuna of them all, the PBOC – which, what a shock, reduced interest rates this morning, following an additional 7.6% Shanghai stock exchange plunge last night.
Consequently, the died in the wool “dead count bouncers” are out in full force; although, as put perfectly by David Stockman, the days of “buy the dips” success are likely over – in lieu of “sell the rips.” I mean, geez! Yesterday, at one point, EVERY global stock market was down 4%-5%; the CRB Commodity Index was at its lowest point since 9/11, with oil briefly falling below $38/bbl; and currencies the world round were in all-out freefall. And yet, the PPT actually tried to push the “Dow Jones Propaganda Average” into positive territory, after having opened nearly 1,100 points lower! Which they decidedly failed to do, yielding yet another horrifying market close.
This morning, amidst yet more dour economic news – as if past data matters a whit, now that collapsing stocks, currencies, and commodities ensure economic hell for the foreseeable future – the Fed is staunchly defending the key round number of 2.0% on the benchmark 10-year Treasury yield; in a kind of “reverse QE” aimed at preventing the all-out panic plunging interest rates tend to portend, and preventing it from being “forced” to announce QE4. That is, the inevitable “Yellen Reversal” that will likely end, once and for all, the ridiculous, propagandized belief that Central banks have a clue what they’re doing. And of course, brutally attacking paper Precious Metals with the same exact algorithms as always – despite not a single fundamental reason why they would be lower. Which, consequently, will only increase the level of already sky-high physical demand – making it more and more likely the Cartel’s “Jimmy Shaker Day” (for those that have seen Mel Gibson’s Ransom) will arrive sooner rather than later.
Not to mention, the all-out collapse of mine supply we have long warned of – particularly in silver, as imploding base metal prices make it highly likely that the largest source of silver supply will be dramatically curtailed in the very near-term. As for mining stocks – which I have vehemently warned of for the past four years – they not only were down significantly yesterday – with gold barely down – but were the market’s worst performing sector, with the HUI down more than 8% (and another 4% this morning).
Of course, with all the hype about stocks, the more ominous aspect of yesterday’s (and Friday’s) trading was the horrifying volatility that hit the ridiculously illiquid markets like a speeding freight train. With so few market participants left – following two of the worst crashes in decades and the virtual commandeering of “markets” by the government – algorithms swamped said “manipulation operatives” with alarming ease, exposing said “markets’” weakness to the entire world. As for specific markets, it’s comical that so much hype gets put into any U.S. stock decline of more than the PPT’s implicit “limit down” of 2.0%. To wit, the Dow’s losses paled in comparison to the horrifying plunges in the equities and currencies of dozens of global “emerging markets”; as well as, of course, the imploding commodity markets. Cumulatively, these losses have already destroyed entire nations – which is exactly why, in the coming weeks and months, we will likely see historic political, economic, and social upheaval in nations as diverse as Brazil, Turkey, Greece, Saudi Arabia, and China – to name but a few.
Six months ago, I wrote of how the vast majority of the world’s equity, currency, and commodity markets were declining despite TPTB’s best efforts – claiming only “last to go” markets like the Dow Jones Propaganda Average and paper gold and silver were still under their “control.” Clearly, this week’s horrifying global market action demonstrates just how close we are from such “last to go” markets being lost as well. Not to mention, the explosive demand for physical silver despite the Cartel’s best efforts to suppress it via fraudulent paper naked shorting.
In other worlds, nearly all markets are starting to reflect the reality that said “powers that be” have so desperately worked to hide since going “all in” with 24/7 market manipulation in mid-2011. And more importantly, the reality of collapsing global economies; commodities; fiat currency purchasing power; and Central bank credibility. Which is probably why Andy Schectman, David Schectman, and I – given the feedback we receive daily – sense an “unprecedented, universal fear” amongst those we communicate with. To that end, how do you feel about the future?