by Andy Hoffman, Miles Franklin:
Before I get to today’s highly provocative topic – so much so, many of you are likely “fast forwarding” to it – I’d like to address several equally important issues. Starting with a polite criticism of an economist I deeply respect; who, incredibly, doesn’t believe BrExit is a material issue.
Frankly, I’m flabbergasted how such a thought could be considered, much less believed, given its powerful political, economic, social – and above all, monetary – ramifications. To start, how can anyone ignore the fact that global currency markets were crashing before BrExit – with the average currency at, near, or in many cases well below previous all-time lows. And conversely, gold prices, on average, were at, near, or in many cases well above previous all-time highs. Again, before BrExit. Or that the global economy activity was at its weakest level of our lifetimes – and debt, its highest level ever – before BrExit. All of those horrific trends were accelerated last Thursday; and watching the chaos of yesterday’s European Parliamentary meeting, it couldn’t be more obvious that the already dead-in-the-water European economy is about to go into an indefinite “deer in headlights” halt, kind of like the U.S. economy after 9/11.
Then there’s the terrifying political possibilities – starting with the break-up of at least the Eurozone; and likely, the ill-conceived, ill-begotten, fiat-cancer-plagued Euro currency itself. I mean, what part of the explosion of “leave” referendum demands from France; to Italy; the Netherlands; Finland, and others can anyone miss? Or the “anti-austerity” -read: pro-default – Podemos’ election success in Spain two days later? Or the prospect of a massive Greek default as soon as July – as even if Greece’s government has thewill to accept a new “bailout,” there may not even be a functional “Troika” to administer it. Or the explosive anti-establishment sentiment that rapidly engulfed the globe post-BrExit; and likely, put the ultimate wild-card, Donald Trump, in position to claim the U.S. presidency? And above all, the cataclysmic ramifications of crashing currency markets; which even Mario Draghi warned of yesterday, in uttering the following prophetic words – describing not only what he, but all Central bankers are about to commence.
“(I’m concerned that) reactions of countries trying to correct with what they view as wrong exchange rates could start competitive devaluations, and may increase risk premiums and turbulence.”
And NEVER forget that when financial markets materially decline, draconian government responses get bandied about – and followedup upon, if said declines are not arrested. Such as, in late 2008, the Congressional debates about confiscating IRAs. Or heck, this February’s trial balloons regarding a “cashless society.” Which, if it were to occur, would very likely coincide with negative interest rates. To that end, on queue, Larry Summers – who “suggested” the $100 bill should be eliminated back in February – was prognosticating gloom and doom yesterday morning on CNBC. And I assure you, “where there’s smoke, there’s fire.” As in, we’re going to see a lot more of his ilk in the coming months, if markets are not “saved.” Which frankly, I don’t see in the cards – particularly when I see a day like yesterday, when despite blatant PPT and Cartel efforts, bank stocks and Treasury yields still ended the day lower.
Bond yields are lower still this morning – whilst not only has gold recouped most of its Cartel-orchestrated losses as I write at 8:30 AM EST, but silver has surged above the Cartel’s long-standing “line in the sand” at $18/oz, to $18.30/oz as I write. This, with COMEX “Commercial” shorts at an all-time high as of last Tuesday; as in, we’re likely to learn in this Friday’s COT report, that said “Commercials” went A LOT more short capping prices amidst, and in the aftermath of, BrExit. To the point that, it’s becoming crystal clear to the world’s “big money” that not only does the COMEX Emperor have no clothes, but none are available – no matter how intent they are to beg, borrow, and steal them.
Which brings me to today’s main point; which is, that the convictions I had in June 20th’s “finally, the long-awaited ‘Commercial Signal Failure’ is nigh” – penned before BrExit – have since been multiplied a thousandfold; particularly following lastFriday’s COT data – which, as noted above, will likely becomedramatically more PM bullish in this Friday’s report, a mere two days from now.
To that end, I can’t help but consider incredulously the “analysis” of yet another Precious Metal expert I respect greatly; who first, told readers last week to be leery of the build-up of “Commercial” shorts, just before prices surged post BrExit. Next, he warned of a “deflationary” plunge in gold just just before it exploded to multi-year highs, whilst all other markets declined. And last but not least, he warned that silver’s more modest post-BrExit rise had not “validated” gold’s bigger surge – just before this morning’s dramatic silver increase.
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