-- Published: Friday, 28 July 2017 | Print | Disqus
By: Andrew Hoffman
It's early Tuesday, and it's hard to recall a day where complacency reigned so supremely. The product, of course, of the historic market manipulation that exponentially "stair-stepped" on Election night - when Trump's "BrExit times 10" dealt a mortal blow to TPTB, forever ending America's role as a global "superpower." Not because Trump the person makes a whit of difference - as frankly, it would be impossible for him to be worse than Hillary (and Bill) Clinton. But instead, as said "powers that be" be no longer had a puppet to forge horrific, 1%-serving deals like the TPP, Paris Climate Accord, NATO, NAFTA...and Obamacare; which unfortunately, even Trump's most passionate efforts have failed to alter - given that, now that the "socialist genie" is out of the bottle, it can NEVER be returned.
That night, with "Dow Jones Propaganda Average Futures" down 750 points and gold up $50/oz, "they" haphazardly decided to alter the course of history by not only "doubling down" their already historic market manipulations - which throughout the summer, had been "set up" to cause stock increases and Precious Metal declines whenever Hillary appeared to be winning; but creating the false meme of "Trump-flation" - which also suggests higher stocks and lower PMs - to "justify" it. A meme, I might add, that not only miserably failed, but never made sense in the first place.
Thus, even as America's economy weakened further; whilst interest rates, commodities, and the dollar declined; and not a single campaign promise was met - from the "repeal and replace" of Obamacare; to higher fiscal spending; and lower taxes, regulations, and military entanglements; Precious Metal prices have been held down, whilst stocks were literally never allowed to decline. To the point that, not only are we experiencing "dotcom valuations in a Great Depression Era," but record-low stock and bond volatility; as highlighted by the unfathomably ridiculous fact that we are amidst the fourth longest period without a 5% S&P 500 stock decline in nearly a century.
I two days ago posted the below charts, of silver being "capped and attacked" by the tried-and-true "Cartel Herald" algorithm at the Cartel's "key attack time #1" of 10:00 AM EST, when global physical PM trading ends for the day.
And what do you know, the trend continued unabated Monday and Tuesday...
...likely, enabling the Cartel - er, "commercials" - to continue their historic COMEX (naked) short-covering spree; whilst physical supply dries up, per what I discussed in Friday's "holy grail of bullish silver statistics"; as the gaping chasm of base metal overvaluation, relative to silver undervaluation, grows unprecedentedly large.
As one might have expected - based on the 100% "track record" of pre-FOMC market manipulation - said "powers that be are" attempting to "prime" the markets for this afternoon's policy statement. Which, despite mere 3% expectations of a rate hike; and just 8% in September; are as usual, being spun as a "potentially hawkish surprise"; just as the past two ECB policy statements - which in both cases, were dramatically more dovish than expected. Heck, we're barely a week past Whirlybird Janet's "ding dong, the Fed is dead" speech on Capitol Hill; and yet, despite yesterday's near-record demand at this week's two-year Treasury note auction, they still want us to believe Yellen will say something "bullish for stocks, and bearish for gold." As if anything she says means anything anyway, given that not only has the Fed been wrong about absolutely everything it's predicted, but the "exit strategy" its predicted for the past four-and-a-half years is, according to Yellen herself, already nearing its end - with 1% interest rates and a $4.5 trillion balance sheet of toxic, massively overvalued Treasury and Mortgage-backed bonds.
"Because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance."
-Janet Yellen, July 12th, 2017
As for the Fed's conundrum - particularly as Janet Yellen is mere months from Trump's decision to either re-appoint her, or replace her with former Goldman Sachs Chief Operating Officer Gary Cohn; leave it to a fellow Central bank to perfectly diagnose the paradox she faces. In this case, the Bank of England; which like the Fed, will not take an ounce of responsibility for the catastrophically dangerous environment it created.
"Ten years ago, an unsafe financial system caused financial crisis and economic disaster. Complacency gave way to crisis. The result was economic disaster. Lenders have not entered, but they may be dicing with the spiral of complacency. The spiral continues, and borrowers rack up more and more debt. Lending standards can go from responsible to reckless very quickly."
To the point that, per the below chart - depicting the "death cross of Central bank credibility" - U.S. financial conditions just hit an all-time high. Meaning, policy has never been considered easier, at a time when - LOL - the Fed considers monetary policy to be its "tightest" since...drum roll please...October 2008.
Thus, to the "most frequently asked question" I receive - of when the "sixth sigma" market manipulation, complacency, and dislocation between Wall Street and Main Street will - perhaps, permanently - end; the "answer" is not known. However, NEVER have markets been so "mis-valued"; and NEVER have the fundamentals underlying such mis-valuation been so unfavorable. Thus, holding historically overvalued assets like stocks and bonds has never been riskier - at the least, in real terms; whilst holding historically undervalued assets like gold, silver, and platinum, one is exposed, in my opinion, to one of the most attractive investment risk/reward profiles of modern times - with the added "kicker" of the Cartel failure that must inevitably happen, a distinct possibility on any given day.
Miles Franklin was founded in January, 1990 by David MILES Schectman. David's son, Andy Schectman, our CEO, joined Miles Franklin in 1991. Miles Franklin's primary focus from 1990 through 1998 was the Swiss Annuity and we were one of the two top firms in the industry. In November, 2000, we decided to de-emphasize our focus on off-shore investing and moved primarily into gold and silver, which we felt were about to enter into a long-term bull market cycle. Our timing and our new direction proved to be the right thing to do.
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