• Gold: 1,283.57 -2.68
  • Silver: 16.91 -0.11
  • Euro: 1.176 -0.001
  • USDX: 93.434 -0.217
  • Oil: 48.91 1.97

It's All About Reality-Physical PM Style

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May 15, 2017 - 11:27am

Following up on the theme of this week’s lowest market volatility in decades; due solely to the all-out commandeering of financial markets  that cannot, and will not, last forever; consider the “dead ringer” algorithms I highlighted yesterday morning, of Wednesday’s “Dow Jones Propaganda Average,” and Thursday’s Shanghai Composite.

Here’s Thursday’s “trading” of the Dow, and Friday’s of the Shanghai – which frankly, is difficult to discern from the prior day’s “action.”  I mean, how much more obvious can it be?  Particularly, considering that this occurs nearly every day; and that conversely, I have NEVER seen it in gold or silver, in the, as of this month, 15 years I have been observing them.

And a few more fun facts, following up this week’s epic articles Monday and Tuesday, proving that the only reason “stock markets” are up is relentless Central bank buying of the largest capitalization stocks – both overt, and covert.  Starting with that fact that, just ten of the companies in the S&P 500 account for half of 2017’s gains; and better yet, in the past 10 weeks, the five “FAANG” stocks – Facebook, Amazon, Apple, Netflix, and Google – have gained a cumulative $260 billion in market capitalization (this, despite Amazon and Apple reporting weak earnings); whilst the other 495 stocks in the S&P 500 have lost…wait for it…that same $260 billion!  Per the title of my four interest-rate-predicting articles of the past four years, “Nuff’ Said!”

As for the day’s news, it’s equally “calm” – but only due to the Central-bank-induced haze that has washed over “markets,” leaving them incapable of responding to the real, unprecedented dangers that threaten to destroy them each day; as has already occurred in the vast majority of global commodity and currency markets.  To wit, “Goldman Mario” Draghi’s speech yesterday, when he espoused that the ECB’s monetary policy – of three years of NIRP, and nearly two of hyper-inflationary QE, has been “successful.”  And yet, “the time hasn’t come yet” to end it.  Better yet, in prototypically delusional, self-aggrandizing Central banker mode – akin to “Bernanke the Hero”; “Maestro” Greenspan; and the “Committee that saved the world, of Greenspan, Robert Rubin, and Larry Summers; Draghi “humbly” espoused “it’s not my job to be a hero, but to follow our mandate – of (my comment, LOL) price stability.”  Yes, “price stability,” of a currency that just last month, touched a fresh 14 year-low – amidst a bankrupt economic union, experiencing the most dramatic political and social chaos since its inception.

Meanwhile, the Chinese yield curve inverted for the first time ever yesterday, signaling imminent recession despite the 6.5% GDP “growth” they purport.  Meanwhile, in the United States of Fraud, Lies, and Propaganda, while our historically dysfunctional government debates fabricated Russian espionage claims, the economy is completely falling apart – from auto sales; to bank lending; to the still operating, but soon-to-implode Obamacare monstrosity.

Heck, it was a “double-whammy” day for Obama’s failed legacies yesterday – on a day when he received $3.2 million for giving one speech, in which he patronized Americans by claiming “you get the politicians you deserve.”  For one, Aetna, entirely left the Obamacare Exchanges, ensuring massive premium increases for all Americans next year.  And better yet, the Obama Administration’s brilliant scheme of tying student loan payments to Treasury yields started to backfire – as of this summer, all government-owned student loans will reprice their interest rates nearly a point higher.  This, in an environment where student loan defaults are already skyrocketing to record-high levels.  Oh, and did I mention that Puerto Rico filed for bankruptcy last week? and thus, the past five years’ Obama-sanctioned policies of having Wall Street load it up with still more debt have spectacularly failed – resulting in this “territory” putting U.S. citizens on the hook for Puerto Rico’s $70 billion of debt?

Which is exactly why, in yesterday’s “maybe they just don’t want to buy them,” I suggested that, although not here yet, the first signs of the long-dormant “bond vigilantes” returning are being witnessed.  Yes, the Fed continues to covertly monetize Treasuries whenever pressure on them grows too strong – such as, when the Chinese, Russians, and Saudis were massive sellers last year.  However, when you’re trying to convince investors of a “strengthening” economy – to the point that you actually raise  rates three-quarters of a point to “prove” it, damn the economic consequences; rates are going to rise, if not modestly.  Which, for a government that as of last month, was for the first time spending more than $500 billion annually on interest payments alone, makes an enormous impact on budget deficits; and thus, future debt issuance requirements.  This, as rates remain near, for all intents and purposes, the lowest levels in the nation’s 240-year history, with nowhere to go but up.  Unless, of course, “history’s most overdue financial crisis” causes one last knee-jerk rate plunge – aided by heightened QE, of course; before the resulting debt conflagration ultimately yields hyperinflation fears; and with it, the surging interest rates bond vigilantes always bring.

Yesterday’s 30-year Treasury auction proved that point further, as it was a giant mess – with massive oversupply relative to demand.  And yet, as I write early Friday morning, the 10-year yield is down to 2.35%, compared to 2.41% a day ago, having just plunged following the horrific, far worse-than-expected April retail sales report.  The reason being, that the markets can’t figure how to reconcile the cratering economy – and thus, potential QE expansion noted above – with the Fed’s fraudulent “tightening” meme, given that the economy plunges further with each basis point interest rate rise.  Pretty soon, this will all come to a head; and either way – rates way up, or down – it will be “PiMBEEB,” or Precious Metal bullish, everything-else-bearish.”  In other words, the reality of the immense damage rising rates do to history’s largest debt edifice can’t be ignored – as discussed, among other similar topics, in this week’s “it’s all about reality.”

Today, in my last article of this pneumonia-addled week (thanks for all the notes of support, by the way), I’m going to take this reality angle a step further.  This time, to that of the physical Precious Metal markets; which recently, have been suppressed to historically undervalued levels, no matter what metric – qualitative or quantitative – you use to measure them.  The reason being, that “the powers that be” have never been so scared of the loss of control they know must inevitably arrive.  Which, I might add, the recent surge in crypto-currencies may be starting to indicate.  In my view, Precious Metals and Bitcoin are the “twin destroyers” of the dying fiat regime.  Thus, the more the latter rises, the more difficult it will be for the Cartel to control the “other” threat to its fiat hegemony; which in reality, is not utilitarian money, like cryptos promise to be.  But instead, the same, unparalleled store of value they have been for the past 5,000 years; i.e., physical Precious Metals.

As for said Precious Metal reality, two articles published yesterday re-emphasized my ongoing thesis further – that tightening physical conditions will ultimately prove the Cartel’s undoing.  Unlike the markets for “paper PM investments,” I might add; in which, like the aforementioned example of Central bank equity buying, they can be unabashedly short-sold into oblivion.

The first, was this one confirming that for the first time in 14 years, global silver production declined in 2016, confirming what was first predicted three years ago in the initial “Miles Franklin All-Star Silver Panel Webinar” – which re-convened, with similarly bullish conclusions, last month.  And the second, this one from All-Star Panel participant, and mining analyst extraordinaire, Steve St. Angelo, regarding how “something big changed in the U.S. gold market in 2017.”

In it, he describes how U.S. gold exports have doubled in early 2017 versus a year ago – with essentially all shipments going to Hong Kong/China and India.  In fact, said exports were more than the amount of U.S. gold production and imports combined, suggesting (historically low) “inventory” was liquidated to meet surging foreign demand.  In other words, relentless paper shorting; to the aforementioned, historically undervalued levels; is causing physical demand to surge.  Let alone, in today’s historic “PiMBEEB” environment, where trillions of “smart money” capital is seeking the insurance and safety of physical Precious Metals.

This is the theme I, and GATA, have harped on for years – which ultimately, must end the Cartel’s reign of terror; and with it, aided by the aforementioned rise of crypto-currencies, history’s largest, most destructive fiat Ponzi scheme.  In my view, dramatically tightening supply/demand fundamentals are the principal reason for the Cartel’s recent, desperate paper-shorting efforts – which still haven’t been able to push gold far from its 200-week moving average of $1,239/oz.  To that end, it’s only a matter of time before something – perhaps, the exploding Home Capital Group bank run in Canada – catalyzes the aforementioned “market coma” to lift.  And when it does, the reality of the tightest global physical gold and silver markets in generations will be a sight to behold!

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About Andrew Hoffman / Media Director

Andrew C. Hoffman, CFA is the Media Director at Miles Franklin Ltd. Call 877-685-4705 or email ahoffman@milesfranklin.com, visit www.milesfranklin.com

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