by Andy Hoffman, Miles Franklin:
After 15 years in Precious Metals – and 27 in financial markets – I thought I had seen everything. Yes, manipulation has dramatically morphed over that time – starting with the creation of the “President’s Working Group on Financial Markets” in 1987 – just before my career started – from an “as needed” function, to a 24/7, “every day worse than the last” mainstay. And yes, the self-destructive ramifications of history’s first global fiat currency regime didn’t first appear until the turn of the century – when the temporary “positive” of abandoning the gold standard “peaked”; or become a major issue until said regime broke in 2008; prompting the aforementioned explosion of money printing, market manipulation, and propaganda that has spread through the world’s governments, corporate establishment, and Central banks like the Ebola virus. However, even I, who have spent 15 years documenting market manipulation, have recently been “shocked and awed” by the levels of egregiousness recently undertaken.
And nowhere more so than in the markets for the dying regime’s most despised arch-enemies, the “barbaric relics” gold and silver – where manipulation reached a “temporary peak” during the 2008 financial crisis, when the powers that be attacked them during its early stages to prevent investors from viewing them as the safe haven assets they have always been; only to be thwarted when the physical response to their paper naked shorting was so powerful, supply literally ran out in a matter of weeks. You know, like what is clearly occurring in large swaths of the world today – such as hyper-inflating nightmares like Venezuela; and, for whatever reason you choose to believe, the world’s largest Precious Metal consumers, India and China.
We’re talking about a $42/oz premium in China for physical gold today, compared to usual levels of less than $10/oz. And even if you believe the reason is government-instituted gold import restrictions – which as I noted yesterday, Andrew Maguire doesn’t “buy” – why has physical silver traded at a $2.10/oz, or 13%, premium since the heinous post-Trump Cartel raids, despite not a single restriction to its purchase even rumored – in China, India, or anywhere else?
The reason, of course, is that gold supply is in fact dramatically constrained; and as I discussed last week, it will only get tighter, to the tune of a whopping 20% over the next decade, no matter what the price does. This, as fiat currencies the world round continue to be destroyed by money printing – in this, the terminal stage of history’s largest, most destructive fiat regime. Which, if you think 2016 was bad – featuring Japan’s launch of negative interest rates; the BOE’s QE expansion, as the British Pound hit a multi-century low; the ECB’s massive QE expansion, including corporate bonds, as the Euro – the world’s second largest currency – hit a 13-year low; the BOJ and Swiss National Bank officiallymonetizing stocks; and countless other Central banks cutting rates to zero or below, despite their currencies hitting multi-year, and in many cases all-time lows; then get ready for 2017 – i.e., the “year of money printing.”
And oh yeah, draconian government measures – such as the “war on cash,” which will unquestionably explode as the global economy craters further; currencies continue to serially crash (as they are again doing so this morning); and social revolutions parabolically surge. To wit, consider that aside from the French Presidential election in April, the Dutch Prime Ministerial election will be held in March. In which, a man who just last week was convicted of inciting violence against Moslems, Geert Wilders, is leading the polls by a wide margin. Which frankly, shouldn’t be a surprise given what occurred in the UK in June and Italy this month; not to mention, when terrorist attacks like yesterday’s – when a Pakistani drove a truck into a crowded shopping mall in Germany, killing or injuring dozens – have become, for all intents and purposes, mainstream. All of which, are reasons why everyone should consider protecting their wealth from inflation – and in some cases, hyper-inflation; which they most assuredly will, given the alternative. And if physical premiums continue to be $42/oz for gold and $2.10/oz for silver – or more – people will gladly pay them, as they did in 2008, once they realize what’s coming. Which in many places, they already realize; and per the aforementioned premiums, supply is in some cases already too tight to help them.
Conversely, as debts explode, currencies implode, economic activity weakens, and political regimes tumble, the “Trump-flation” bubble has inexorably inflated. No matter that real economic data has not improved a whit. Or that Trump’s promises, to anyone without an agenda, become more unrealistic with each passing day. Or that even if they were to come to fruition, they wouldn’t make the slightest bit of difference – other than to explode the nation’s historic debts and deficits further; and unprecedented wealth inequality.
China nearly doubled its unprecedented (except in Japan) debt load from 2008 through 2016, from 150% of GDP to 270%, amidst the most egregiously extravagant, fiscally destructive construction bubble in global history. However, base metal prices actually declined during this period, by a whopping 50%!
And yet, we’re to believe that the mere expectation that Trump will commence a program dramatically smaller in scope; in a supply environment (unlike Precious Metals) featuring no shortage of product; as the dollar explodes to multi-decade highs; and China admits it has entered a prolonged economic downturn; that base metal prices could possibly surge in the real world as violently as they have in the bubble-infested futures markets?
And if your argument – or the lying mainstream medias’ – is that the “Trump-flation” meme is causing base metal prices, and interest rates, to surge due to rising inflation expectations…the last time I looked, the asset classes most likely to benefit are gold and silver! Then again, the CRB Index is barely above the multi-decade lows set earlier this year, even with the “help” of the base metals bubble and OPEC’s egregious “production cut” lies – which along with the “oil PPT,” have caused crude oil prices to double. Which only makes the base metals bubble appear that much more egregious; and the global currency and bond market collapses that much more obviously catalyzed by inflation expectations (i.e., “2017, the year of money printing). Which again, represents the best-case scenario for Precious Metal demand; and clearly, is occurring everywhere but in the U.S., where the dollar surge – due to global economic, political, and monetaryfear, NOT “economic strength” – has yielded raging gold bull markets in nearly all currencies, post-Trump Cartel raids notwithstanding.
Even the 1999 dotcom and 2007 real estate bubble peaks don’t compare, in my view, to what we’re witnessing today – as back then, the world was amidst historic political stability and economic prosperity; massively lower debt levels, and massively higher fiat currency purchasing powers. As opposed to today, when on all fronts, such trends are at their ugliest in generations; and in some cases, like debt, ever. To wit, yesterday alone, here were the headlines in which Precious Metal prices were again capped – via prototypical “Cartel Herald” algorithms, at the prototypical “key attack times”; whilst stock prices again rose – via the prototypical “dead ringer” algorithm…
- CALPERS (America’s largest pension fund) announces plans to sell $15 billion of equities over the next two years
- GM and Fiat Chrysler announced plans to idle seven plants, 10,000 workers affected
- Truck plows into Berlin Christmas market, multiple death and injuries
- IMF Board expresses full support for Christine Lagarde, despite conviction for criminal negligence
- American credit card debt nears all-time highs of 2008
- Italian cabinet seeks authorization to raise national debt, fund bank bailouts
- Monte Paschi private bailout on edge of collapse, as “potential anchor investors balk”
- Russian Ambassador to Turkey assassinated
- Energy Information Administration admits huge decline in U.S. proved oil and gas reserves
- “Everyone nervous,” as Chinese Treasury market bloodbath continues, Hong Kong stocks go red for year
- S. PMI Service Index unexpectedly falls to three-month lows
- Deutsche Bank shares stumble, as DOJ settlement looms
- Australian government looking into cancelling A$100 bill
And as this occurred – into this morning, amidst another dollar and interest rate surge that is further impoverishing billions – the world’s “most hated asset” (as described in this article by Kevin Muir), gold, continues to be trashed by a Cartel hell-bent on maintaining the dying status quo for as long as possible; and in the process, milking the world of whatever wealth it hasn’t yet stolen. This, as the aforementioned physical premiums in the East remain at levels last seen during the 2008 crisis, setting 2017 up for an historic change of fortunes – negatively for the LIARS, and positively for TRUTH.
As painful as it seems, both financially and mentally, consider what happened during similarly Cartel-orchestrated “dark times” for Precious Metals in the past – such as during the height of the 2008 crisis; and heck, last December. And know that, in today’s environment, demand is much higher than at any of those points; supply much tighter; and debt and money printing parabolically higher, with nowhere to go but up. Truly, 2017 will be a monetary year for the ages, which is why I couldn’t be more comfortable holding physical gold and silver – as opposed to today’s historically bubblicious financial assets.
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