Where to start on this Monday morning amidst myriad “horrible headlines” from around the world? How about the damning quote from one of the world’s most manipulativecriminal powerful organizations, the “Central bank’s Central bank” itself –the “Bank of International Settlements.” Their latest quarterly report was just released, containing perhaps the most prophetic comments imaginable of the imploding global financial situation – which we assure you, with their abundance of inside information wasn’t published for “show”…i.e., “the highly abnormal is becoming uncomfortably normal” and “there is something vaguely troubling when the unthinkable becomes routine.”
So the stock markets of recessionary economies rising to record highs; and bond yields of bankrupt nations, municipalities and corporations to record lows; whilst real money plunges against dying fiat currencies like the dollar is just “highly abnormal?” How about impossible in freely-traded markets – which commenced their exodus from the Western world at the turn of the century, permanently disappearing after 2008. In other words, news flow that historically catalyzed violent negative stock market reactions – and positive PM flows – have been turned 180 degrees by market rigging, yielding previously unfathomable headlines like Zero Hedge’s this morning, that “China equities Surge, Japan closes Green on Horrible Economic Data, as Oil Tumbles to Fresh Five-Year Lows.” Then again, the story directly below it reads “We’ve habituated to a Rigged, Fraudulent Market”; and below that, “Even the BIS is Shocked at how Broken Markets have Become” – from which the aforementioned quote was gleaned.
Or how about the headline below that, that “NIRP arrives in the U.S., as TBTF Banks tell Customers to Move their Cash or be Charged Fees?” Which, for the layman, means even the largest institutional clients of JP Morgan, Citibank and Bank of America, to name a few, will now be charged for the “privilege” of holding deposits in insolvent institutions that can “bail them in” at any point. In other words, yet another example of those “barbarous relics,” gold and silver, yielding more than bank accounts with NONE of the risk.
Then, of course, there’s the next headline – that “oil prices collapse to new cycle lows”; conveniently, aside “BP set to slash hundreds of jobs.” This morning alone, oil is down another 2+%, to levels not seen since 2009 – whilst the “dollar index” has convincingly breached its Fall 2008 highs, exploding against essentially all currencies as financial fear accelerates. In turn, sovereign bond yields are plunging to new record lows, front running the worldwide “QE to Infinity” schemes the terminal stage of all fiat Ponzi schemes bring.
To that end, we cannot be more emphatic of the dire ramifications of what was discussed in last week’s Audioblog, “crashing oil and currencies, America’s death knell.” Regarding the former, there aren’t words to describe the political and economic cataclysm that will result from Saudi Arabia declaring war on high-cost energy production, amidst imploding worldwide economic activity. To wit, U.S. shale oil producers are largely financed with high-yield debt enabled by six years of ZIRP monetary policy – to the tune of $210 billion – were massively cash flow negative at $100/bbl. oil, so take a guess how they’re doing today, at $64/bbl! As for the latter, the entire world is scrambling into the supposed “safe haven” status the dollar holds as the world’s de facto “reserve currency,” as history’s largest “liquidity vacuum” gains strength amidst a proliferation of depression-like economic data – such as McDonalds reporting its biggest sales decline in 12 years; Chinese imports imploding; and what’s this, the U.S. “Labor Market Conditions Index” plunging precipitously, just one day after the biggest lie of an NFP employment report in history. Yes, the “lemmings” are racing towards their financial deaths at an historic pace, care of the market manipulation that has “turbo-charged” their natural instinct to “buy high and sell low.” Heck, even the MSM is starting to recognize that “all economic data are lies,” per this morning’s top story at head financial cheerleader Yahoo! Finance. As you can see, they still haven’t fully embraced reality in saying “since the recession.” But rest assured they shortly will – and then some.
In turn, physical precious metal demand has never been higher – and not just from individuals, but sovereign nations. Trust us, it’s no “coincidence” that the Swiss Gold Referendum – which was only defeated by history’s most blatant, intensely concentrated propaganda and market manipulation scheme – has awakened governmental fears of being caught without their citizens’ gold. Given that the Germans have not been able to repatriate their gold from the Fed, we’re still mystified as to how the Dutch managed to do so – assuming they weren’t lying. Next up, 22% of the Swiss voted to repatriate, followed by an urgent demand from the leader of France’s emerging opposition political party to do the same. And now, this weekend’s news that Belgium is on the verge of demanding its foreign-held gold (assuming it hasn’t been “re-hypothecated) be returned to Brussels.
Sitting right next to the Belgium repatriation article is Koos Jansens’ discussing another massive withdrawal from the Shanghai gold exchange – which, for all intents and purposes, suggests Chinese gold demand will end 2014 above 2013’s record level. As will Indian silver imports, U.S. Mint Silver Eagle Sales – and likely, Royal Canadian Mint Silver Maple Leaf sales. In fact, the only major demand category set to end the year below 2013’s record level are Indian gold exports – but only because last year’s onerous import tariffs have caused a significant amount of official to shift to the unreported rapidly growing black market. Now that the banker-friendly Congress Party has been unceremoniously swept out of office, it’s only a matter of time before those tariffs are eliminated, just as the “80/20” gold import/export rule was last week. And by the way, even withthe 10% import tariffs still in place, Indian gold imports have exploded higher in the past two months even as the “dreaded” trade deficit has surged, and the worthless rupee plummeted. As I write, rupee-priced gold is just 24% from its all-time high – and we assure you, as it inevitably approaches the hallowed level of 100,000 Rupees/ounce, demand from the world’s most voracious gold lovers will go “off the charts.”
And this is as the mining industry is on the verge of the same type of production paralyzing consolidation the energy industry is about to undergo – as demonstrated by Steve St. Angelo’s latest analysis of the silver industry – depicting the world’s largest producers owning the world’s lowest cost mines with a third quarter breakeven level of nearly $20/oz. And this, after massive cost cuts that leave no other options but mine closures and production paralyzing mergers. And oh yeah, silver prices are a full $3/oz. lower in the fourth quarter than they were in the third – just in time for year-end reserve revisions – which in our view, will be so catastrophic, it’s difficult to believe anyone won’t realize how dire the production outlook has become. Again, on the “Miles Franklin Silver All-Star Panel Webinar” we hosted in mid-October, it was predicted that at current prices – let alone, if base metals continue to weaken, which they since have – silver production declines of 25%-50% are not out of the realm of possibility over the next 3-5 years. As for gold production, it likely won’t decline that much; but certainly, enough to make a significant impact in a market where demand already exceeds supply. Irrespective of the exact numbers, we all agree that both “peak gold” and “peak silver” are “baked in the cake.” So are the ramifications of extremely challenging exploration conditions and more than a decade of Cartel price suppression – creating the potential possibly imminently for history’s most “perfect” financial storm.
Back to today’s principle theme, never in history have so many been so thoroughly brainwashed by propaganda – care of the most sophisticated “weapons of mass financial destruction”; i.e., off-balance sheet derivatives, “dark pools,” high frequency algorithms, “shadow banking,” and the complete abdication of regulatory safeguards, as the world’s “TBTF” banks effectively “partner” with the government. True, the vast majority of the “99%” no longer even participate in stock, bond, or real estate markets having “lost their shirts” in the 2000 and 2008 crashes, as well as the two-decade decline in real employment, wages and net worth. However, for those that still do, the lure of ever-rising stock and bond markets has created history’s largest-ever “buy high” wave; surpassing, in our view, even the 2000 internet-mania top.
To wit, both stock and bond valuations, objectively, are trading at all-time highs; and this, amidst the weakest global financial conditions of our lifetime. Central banks have become so brazen in their manipulations, that several – including the Japanese, Israeli, Danish and, yes, the Swiss – have openly admitted to monetizing equities. The rest do so covertly – perhaps, owning as much as half of the world’s equity capitalization. However, given the trend toward ignoring any semblance of conservatism, it shan’t be long before the Fed, ECB, and BOE, among others admit the same; or better yet, initiate formal equity monetization schemes. After all, what could possibly go wrong?
Last week’s failed Swiss referendum was a direct vote for the printing press – and specifically, the emerging “common knowledge” that “QE to Infinity” and rising stock markets must go hand-in-hand. This weekend, the Japanese citizenry holds perhaps the last remaining hope to even slow the inexorable plunging of lemmings into the financial sea, when Shinzo Abe’s “snap election” gives them the option of nixing “Abenomics” before the Yen completely, and permanently implodes. Given the utter collapse of the Japanese economy and inflation surge caused by the 40% (and counting) Yen plunge Abenomics has caused; let alone, that this is Abe’s second failed attempt to “save” Japan’s economy with money printing, one would think the Japanese would be smart enough to run as far from Abe as possible, as fast as they can. However, amazingly, it appears he will convincingly win – again, as the manipulated, hyper-inflating stock market – despite a horrifying, expanding recession – gives a false signal of “success.”
In our view, a “vote of confidence” in Abe will be as damning a statement for the Yen’s outlook as the Swiss “no” vote was for the Franc. One by one, the “lemmings for the ages” are impaling themselves on the altar of money printing – whilst their only financial protections, physical gold and silver are slowly but surely removed from the store shelves. Only the when and how of the “big one’s” commencement remains to be seen; and until then, the few that see reality for what it is have a unique opportunity to save themselves.
Andrew C. Hoffman, CFA is the Media Director at Miles Franklin Ltd. Call 877-685-4705 or email firstname.lastname@example.org, visit www.milesfranklin.com
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