I rarely write on Fridays, but here I am Friday afternoon, writing my second article of the day. The first, discussing how today’s LOL, “jobs” report permanently destroyed the BLS’s credibility. The reason being, that for the first time in my 14½ years in this sector, I believe the Cartel’s demise is imminent. As in, I would be shocked if they survive July.
Yes, you are reading this correctly. I, Andy Hoffman, who rarely predicts the precise timing of anything, am “calling” the imminent end – or at least, a dramatic defeat of, the Cartel. This, after having shouted from the rooftops for the past five months, that the world “will not survive 2016 without a catastrophic financial event.” Which, care of Brexit, it most certainly is.
Yes, I could be “wrong” about the timing – in that it could certainly take longer than a month. Which, given the powers that be’s seemingly endless string of successful can-kicking exercises, would seem to be a logical bet. Not to mention, the “stakes” involved if the gold Cartel is overrun; i.e., the collapse of the global monetary system – and with it, extreme political, economic, and social instability. That said, I am not, and have never been, a Precious Metal “trader,” so it matters not. However, if I’m right that the end game has arrived – and per Tuesday’s “emergency” Audioblog, I strongly believe that to be the case – you need to protect yourself, both financially and otherwise, NOW.
Last week, I received an email from a reader not keen on my touting predictive successes, such as the Chinese Yuan devaluation, the Brexit result, and countless other macroeconomic events. And while I see his point about modesty, I believe it matters a lot to readers, to know that events are becoming so predictable, it’s entirely possible to anticipate the majority of them. Predicting rigged markets is nearly impossible, however – like the U.S. stock market closing today at an all-time high, despite nearly all other bourses being mired in bear markets; all-time high valuations, amidst all-time low fundamentals; and the fact that while the PPT was making this happen, terrified investors were taking U.S. Treasury yields to all-time lows. Not to mention, as institutional equity flows were negative for the 17th straight week – which tells us all we need to know about “who” has been buying.
Normally, I presage my principal topic with discussions of various “horrible headline” topics – and god knows, there’s plenty to go around today, from plunging Japanese and German retail sales and industrial production; to the unprecedented plunge in UK real estate; the accelerating devaluation of the Chinese Yuan; and the incredible fact that $14 trillion of global sovereign bonds now trade at negative yields. However, given how important today’s topic is – heck, it’s been the focal point of my personal and professional life for 14½ years – I’m going to get right to it.
Frankly, today’s historic “call” is not due to an epiphany I suddenly had, but the culmination of a multitude of factors observed over the past two months; starting with February 22nd’s “institutional gold and silver demand – the final piece of the puzzle” – in which I noted the return of institutional investors to Precious Metals after four years of absence; culminating in April 8th’s “PSLV secondary offering – a major, major blow to the Cartel!” And FYI, after today’s silver surge, PSLV’s premium to Net Asset Value is back up to 2.5%, just three percentage points below the 5.5% premium it traded at when the aforementioned, $86 million offering was priced.
Building on the theme of a rising tsunami of worldwide demand – against a backdrop of peak production, razor-thin above-ground inventories, exploding money printing, a collapsing global economy, and surging social unrest – I penned “it’s the commercials who should be scared” on May 10th. In which, I rebuked myriad naysayers’ belief that since the Cartel “always” achieves prices smashes when “commercial” shorts reach extended levels, prices were “certainly” headed down. Of course, none of these naysayers mentioned that in April 2011, the “commercials” were in fact routed in the silver market; i.e., forced to cover shorts manically as prices ran up to $50/oz. Only the May 1st, 2011 “Sunday Night Paper Silver Massacre” saved them that time – but I assure you; no, guarantee; that this cannot, and will not, happen again.
Well, it was just a week later when I first realized the real possibility of a favorable Brexit result. And thus, on May 16th, wrote “the most important – and Precious Metal bullish – election in history.” Sure, I can be modest, and pretend I didn’t realize what gold and silver might do in its aftermath. However, given the article’s title, I think it’s quite obvious I expected Brexit to cause exploding PM prices – which is exactly what has happened, and then some. And yet, we’re just two weeks past it, and most investors have not yet grasped its politically and economically cataclysmic ramifications. In fact, the first article I wrote in its aftermath – at 1:00 AM, mere hours after the “leave” faction unexpectedly prevailed – was titled “historic Brexit vote marks commencement of the end game – of global currency collapse; the demise of the European Union; and imminently, the gold Cartel itself.” Yes, I used the word imminently, for the first time in more than ten years of public writing about Precious Metals.
Afterwards, with prices making new high after new high – this, despite manic Cartel shorting, every second of every trading day – I started to focus on how COMEX “commercial” short positions were breaking all previous highs, yet producing no material price declines. In other words, the Cartel was having trouble covering short positions on dips, due to the aforementioned explosion in institutional demand; and likely, surging Central bank buying as well, most of it covert. This is why I wrote “finally, the long-awaited ‘commercial signal failure’ is nigh!” on June 20th. And, when the first post-Brexit COT, or Commitment of Traders report, showed the Cartel’s – er, “commercials’” – record shorts had grown still larger, “spread the word, the Cartel’s in deep, deep trouble” on June 29th. Which brings me today, which I didn’t think, but knew beforehand, had the potential to be an historic day in the war against the Cartel.
To that end, I am 100% sure that had the government been dumb enough to publish a truthful NFP jobs report – you know, like last month’s utter disaster – the Cartel would have been overrun today. However, they obviously decided to opt with an over-the-top “beat”; to the point that, per today’s first article, they likely destroyed whatever remaining credibility they still had. Either way, I was 1,000% sure that, like May’s “FOMC Minutes Attack” gambit – which at the time, I vehemently predicted would miserably fail – today’s “better than expected” jobs report was fabricated entirely to provide Custer, I mean the Cartel, one last chance to cover their shorts. I mean, the markets are already assuming no rate hikes for years to come; and following Brexit, the Fed has a built-in excuse to maintain easy monetary policy ad infanitum. Thus, why else would the government have published such a ridiculous number? Which as it turns out, not only miserably failed to push gold and silver prices down, but permanently destroyed the BLS’s credibility!
In this morning’s article, I noted that, following the initial post-NFP PM smashes, “the start of the day may have gone according to the powers that be’s plan; but who knows, in today’s environment of, putting it mildly, ‘exceptional circumstances,’ how it will end?” To which, I can now triumphantly confirm that it decidedly did NOT end well – as not only did both metals close at the day’s highs, but the “canary in the Cartel’s coal mine,” silver, showed signs of preparing for a manic, Spring 2011-like surge. Which, I might add, the enigmatic “cliff high” predicts will commence early next week – for silver, gold, and Bitcoin (the latter, following this weekend’s historic “halving” event).
That said, the most important aspect of today’s PM rise – and with it, the reason for my historic Cartel-busting “call” – was this week’s COT report, released at 3:30 PM EST. Of which, I can honestly say I was awaiting more excitedly than any other of the roughly 750 I have observed over the past 14½ years. The reason being, that like the premise of “finally, the long-awaited ‘commercial signal failure is nigh!” and “spread the word – the Cartel is in deep, deep trouble,” I was sure the Cartel had taken its already record short positions much deeper into the rabbit hole, given that this week’s report would include Tuesday’s trading; i.e., the day after the Independence Day price explosion caused silver to briefly touch $21/oz, and gold to surge above $1,350 for the first time in two years. In fact, July 5th represented the largest-ever day of institutional gold ETF demand. Which, given the size of the buying relative to global production, should tell you all you need to know about how thin real, actual physical gold and silver inventories are.
And the Cartel – er, “commercials” – didn’t disappoint, with the gold naked short rising by an additional 13,886 contracts, to a new record high of 340,207; whilst the silver naked short rose by an additional 3,567 contracts, to its own record high of 98,768. I mean, it was just a few weeks back when I had to increase the lower limit of the gold chart’s y-axis from -300,000 to -350,000; while in silver, it looks like I’m going to have to lower its y-axis bottom below the -100,000 level it has stood at for as long as I’ve graphed it.
My friends, this is what an unfolding “commercial signal failure” looks like – as trust me, the entire investment world is now watching. Finally, the coalescence of the most bullish fundamental factors in PM history is occurring; and given just how ugly the global political; economic; social; and most importantly, monetary outlook has become, it’s only a matter of time before today’s “New York Gold Pool” is blown out of the water – like the London Gold Pool in the 1960s, and hundreds of other attempts to suppress the price of real money over the past millennia. And frankly, I believe that “matter of time” is no longer just inevitable, but imminent.