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It’s Tuesday morning; and today’s “horrible headlines” are so lengthy, no less than nine items are so glaringly PM-bullish, we could write full-length articles discussing them.  Each one, in its own rite, is an extremely important reason to own physical gold and silver.  However, the choice of which to choose as the most important reason stuck out like a sore thumb.

The Cartel, of course, came back from the holiday with guns-a-blazing; but as has been the case all year, a global “realization of reality” is causing such raids to be increasingly shallow, and short-lived.  The new “lines in the sand” appear to be $1,330/oz. for gold and $22/oz. for silver; and despite my distaste for short-term predictions, I get the impression such hurdles won’t be as formidable as those witnessed for three months at $1,250/oz., and eight months at $20/oz.

24hr Gold Silver 2-18-2014

I could be wrong, but this morning alone, TPTB must contend with the following, horrific headlines:
1.  Surging oil prices, with WTI crude surging above $101.50 and Brent crude approaching $110/bbl. – per “Prediction #4” from our year-end “2014 Predictions
2.  As we forecast, the Indian government is on the verge of at least partially – and likely, wholly – repealing the draconian import restrictions that slowed 2013 gold imports.  Of course, black market gold smuggling went berserk; and what do you know, Indians simply shifted their gold buying to silver, which consequently saw record 2013 buying.

3.  A “back door” increase in Japanese money printing; as following the Bank of Japan’s two-day meeting, they doubled their present bank lending scheme (amazing how only the banks get free money).  Simultaneously, the BOJ characterized Japan’s economy in the same manner as every lying Central bank on the planet, claiming it “continued to recover moderately.”  Yes, if the third quarter’s massively overstated 0.40% GDP growth, and the fourth quarter’s 0.25% rate, are considered “recovery.”  As we recently wrote in “the Japanese noose continues to tighten”; not only is there no recovery in the “Land of the Setting Sun”, but Japan’s economy is on the verge of all-out collapse.
4.  Better yet, in a news report even I was shocked to read, the supposedly “conservative” German Bundesbank publicly supported the suspension of ECB government bond sterilization; i.e., offsetting ECB bond purchases with simultaneous sales of other assets.  In other words, the Bundesbank is OK’ing ECB bond monetization; which, in our view, was a fait accompli when last week, the German Constitutional Court deferred the final decision on the OMT’s constitutionality to the EU itself.  Remember, just last week the ECB stated it was considering everything from outright QE to negative deposit rates; and given the recent spate of increasingly recessionary data, it’s only a matter of time before the OMT, or “Outright Monetary Transaction” monetization scheme is officially launched.
5.  Quietly, the Chinese government was forced to bail out a second shadow-banking entity in the past week; as clearly, their historic credit bubble is collapsing – which, in turn, will likely cause an explosion in Chinese money printing.  Remember, PBOC printing hit an all-time high last month, when it printed nearly three times as much as the Fed and the Bank of Japan combined; and now that its multi-trillion shadow banking industry is collapsing, it’s difficult to believe this printing rate won’t at least be maintained.
6.  Yesterday, we published long-term technical data suggesting gold was more oversold than at any time since the gold standard was abandoned.  This incredible chart follows-on perfectly with what we published on January 2nd, in “Charts even we can appreciate”; and January 8th, in “The most lopsided trade in financial history.”
7.  U.S. economic data was beyond abysmal; with the Empire State Manufacturing Index plunging from 12.5 in December to 4.5 in January, and the all-important TIC, or Treasury International Capital report depicting foreign net sales of $46 billion of “long-term U.S. securities” in January, compared to net sales of $29 billion in January.
On that note, does anyone really believe the Fed is “tapering” QE?  I know we don’t; and for all intents and purposes, proved it last month!  And WHOA, WHOA, WHOA!  I wrote this paragraph just before the 10:00 AM EST publication of the NAHB, or National Association of Home Builders, Housing Index.  My gosh, it just came out; and the result…drum roll please…was a veritable collapse, from 56 in December to 46 in January; i.e., the worst collapse in the 23 years the report has been published.  And what was the market “expecting?”  Yep, an unchanged reading at 56!
7A. As I’m editing, another WHOA, WHOA, WHOA! – As my gosh, China sold its second-most Treasuries in one month ever, at a whopping $48 billion.  And per this amazing chart, it appears the only reason the TIC number wasn’t significantly more negative was because – of all countries – BELGIUM took up the slack by buying more than $55 billion of Treasuries.
Does Belgium even have $55 billion to spend?  Of course not.  Certainly, no more than the “Caribbean Banking Centers” that mysteriously showed up last decade to monetize; er, “buy” U.S. Treasuries.  Oh, wait a second, I know what’s in Belgium.  Yep, the European Union’s headquarters; where no doubt, it’s leaders are “communicating” with ECB printing presses!
8.  All-out social chaos as inflation explodes, yielding collapsing currencies; riots; and the prospect of civil war in the Ukraine and Venezuela.  Don’t think it matters?  Well, consider that these two nations – one, a major OPEC oil producer that expelled three U.S. diplomats yesterday for “promoting instability” – have a combined population of 80 million; i.e., the same size as Germany.  As we wrote last month, the “carnage is just starting”; and as currency after emerging market currency topples, the odds that the “big one” at last arrives increase exponentially.
Which brings me to “reason #9”; i.e., the “most important reason to own precious metals.”  Given the aforementioned, formidable list, I’m guessing many of you are scratching your heads, and/or waiting with baited breath for what’s coming.  Not that the first eight reasons – and countless others – don’t have strong merits in their own rite.  However, when it comes to gold and silver, the main reason we own them is their impeccable, 5,000-year track record as the world’s best store of value against inflation.  In other words, no matter what governments tell you inflation is, gold and silver have enabled you to actually buy things with constant amounts of metal over time.  And in this, unique snapshot in time, they will eventually enable you to buy many more things with constant ounces; as not only is the entire fiat monetary system on the verge of collapse, but gold and silver prices have been suppressed at unprecedented levels for the past 15 years.  And thus, here’s “#9”…
9.  Back in February 2011, I penned “Rice, not oil: the most important commodity in the world”; and in July 2013, “Population growth supersedes all.”  In both cases, I was highlighting the massively upward, long-term pressure on food prices; of which, only gold and silver have been able to “hedge” against throughout time.  And now, with global money printing at unprecedented levels – frankly, on the verge of explosion, simultaneous with “extraneous factors” such as the historic California drought – food prices could surge uncontrollably in the very near term.
Regarding such, we could not be more vehement about the dire situation California is in; as the worst drought in 500 years shows no signs of letting up.  And no, it’s not just California, but ten other Western States suffering the same fate.  Consequently, the U.S. cattle herd has fallen to its lowest level in 63 years – resulting in all-time high beef, chicken, and milk prices; and equally ominously, Americans’ exposure to potentially exploding produce prices has never been higher.
To wit, the below chart depicts just how dependent Americans are on “normal” weather conditions in a State known for century-long droughts.  Heck, it’s not just food prices at stake here, but the viability of large cities in reclaimed deserts receiving the majority of their water from other States – many of which are also experiencing rapidly depleting reservoirs.  Living here in Colorado, where my fingers, ankles, and lips have been cracking for the six months due to a lack of humidity; trust me I understand how bad this could get!
Produce grown Chart
Food inflation is the one thing everybody can relate to; and no matter what the government says prices are, a combination of record real unemployment, falling real wages and a rising real cost of living cannot be glossed over with propaganda.  Even MSM outlets like CBS news are discussing this potentially cataclysmic topic – as in this article titled “Food prices soar, as incomes stand still.”  And thus, while the Fed guarantees savers will receive ZERO interest rates until “at least mid-2015,” Americans – and European, Japanese, etc. – are doomed to exploding consumer prices for items they “need versus want.”

And thus, when ordinary “99 percenters” like Jane Singer, mother of two from New York, aver that “the things going up in price are the things I absolutely need to buy.  It’s the meat, it’s the milk, it’s the eggs – and it’s getting out of hand” – Take heed, and realize that amidst all the noise, you are witnessing the “most important reason to own precious metals.”