It’s early Monday morning at the San Francisco airport, eight hours after leaving Bix Weir’s fabulous “silver conspiracy event”; hosted by my indomitable long-time GATA compadre Bix Weir – who happens to be a fabulous singer – and his charming wife Amy, dressed to the nines in 1860s gold rush attire. On hand were 50 or so die hard believers in the noble, and eminently winnable causes of real money and free markets. Including, to name a few, my friend and mentor Bill Murphy; the veritable Precious Metals encyclopedia David Morgan; Jeff Lewis of Silver Coin Investor – who I did my first podcast with last week; and money manager Brent Johnson of Santiago Capital, who publishes some of the finest Precious Metals’ research around. The evening was a lot of fun, as it was a great pleasure to be around my “peers.”
That said, what’s going on the world isn’t “fun” for the billions suffering from the “worst global economy of our lifetimes” – which terrifyingly, is dramatically worsening with each passing day; and the accelerating destruction of their “money” by sociopathic Central bankers and politicians. Economic activity, for all intents and purposes, is grinding to a halt – as evidenced by the Chinese containerized freight index – which measures the volume and pricing of Asia/Europe trade routes – plunging an unfathomable 70% in the past three weeks alone, to an all-time low. Not to mention, the Baltic Dry Index – which measures the costs of global seaborne shipping – breaching its all-time low Friday. And this, two months before the seasonally weak first quarter.
This morning, the CRB commodity index is in FREEFALL, having just broken below its “heavily defended” 40-year low two days ago. Led by, I might add, copper and zinc – as it has taken just two days for Thursday’s blatant “copper and zinc PPT” effort to officially fail; as opposed to the one on October 9th, which took three weeks. And geez, nickel is down 5% this morning, to a new 13-year low. That said, with an ugly, blaring Yahoo! Finance “top story” of “oil companies brace for big wave of debt defaults,” the newly-formed, but equally ill-fated “oil PPT” is doing everything in its power to prevent “Economic Mother Nature’s all-out victory.” Specifically, the inevitable collapse below $40/bbl they have been blatantly defending for weeks. In this case, by “synchronizing” a run-of-the-mill OPEC press release – stating absolutely nothing incremental – with a yet another patented paper oil goosing; hoping and praying that traders are gullible enough to believe a “whatever it takes” moment has occurred.
Of course, the fact that Saudi Arabia last week increased its selling discount (to global crude prices) to the highest level since 2009 – whilst vehemently stating that the oil price needs to be set by the market – is supposed to be ignored, just as the all-time disparity between equity prices and fundamentals; and heck, prices of the top ten or so equities with all the others! Or, for that matter, the irony of the fact that what Draghi meant when he made, 3½ years ago, the fateful statement that the ECB would do “whatever it takes” to save the Euro, he literally meant to destroy it. Which is exactly what he did; as not only is the Euro – neck and neck with the dollar as the world’s most utilized toilet paper currency – down nearly 20% since, but the entire European Union is on the brink of collapse – as evidenced by this weekend’s “secret” meetings regarding the elimination of passport-less European travel. And if you think the “every man for himself” nature of European politics, economics, and monetary policy is extreme, just watch what low- cost oil producers – like Saudi Arabia, crumbling economy and all – are about to do to high cost producers like the U.S. shale producers, and the $500 billion of collapsing “high yield” bonds and “leveraged loans” financing them.
And it won’t take long before my points are widely understood, given that OPEC’s bi-annual meeting is December 4th – just one day after the ECB meets; most likely, to expand its dismally failing, Euro-destroying QE and NIRP schemes. That said, it’s entirely possible the Fed itself will have shaken the world’s monetary system to its core – and with it, geopolitics – by then; as given today’s well-choreographed “emergency meeting” – specifically, to discuss the Fed Funds rate – anything is possible at this point. And trust me, with global economic activity and commodity prices collapsing – whilst political and social revolutions explode like serial time bombs – “anything” can only mean MORE MONEY PRINTING. And potentially, the long-awaited, inevitable “Yellen Reversal” – when Whirlybird Janet is forced by collapsing markets to admit the economy is floundering; and thus, in need of “moar” monetary stimulus. And as I write – wow – the PMI Manufacturing Index just “unexpectedly” plunged to a new two-year low, putting such an ugly, eminently hyper-inflationary scenario one step closer to reality.
Whilst still on the topic of government/Central bank desperation to keep history’s most blatant; politically, economically, and socially destructive “can-kicking” game into perspective, I see that this weekend, the Japanese government announced plans to unleash the ultimate goal seeking exercise – in not only eliminating “volatile” (i.e, falling) energy prices from its CPI calculation (as the U.S. did years ago); but selectively omitting the types of food prices that are rising, whilst eliminating those that are falling! I mean, what more proof one need that the Bank of Japan intends to hyper-inflate the Yen to oblivion – and with it, the “Land of the Setting Sun?”
For that matter, how many of you believe the terrified Japanese citizenry aren’t going to do everything in their power to get their hands on real money, to protect themselves from this horrifying, eminently predictable fate? Let alone, billions of citizens in dozens of nations whose “money” is collapsing at freefall speed – from the BRICS’, to Europe, South America, Southeast Asia; and even “first world” economies like Canada, Australia, and Switzerland. I mean, what part of the political and social revolutions going on in – to name a few – Brazil, Argentina, Greece, Portugal, Spain, Turkey, the UK, and half the Middle East are people missing? Which, I assure you, will exponentially worsen in the coming months and years – in direct correlation to the irreversible, historic collapse of global economic activity. Caused, of course, by the largest, most destructive – and for the first time in history, global – fiat Ponzi scheme.
And “off topic,” how much more terrifying can the global geopolitical climate be? Just one week since the worst Western terrorist attack since 9/11, terrifying headlines such as the below are dominating the airwaves and online media – depicting a world on the brink of war, as always occurs in the aftermath of such horrifying economic implosions. As long-time readers know, I don’t spend much time on the myriad geopolitical reasons to own PMs…but man, look at these headlines!
- Belgium PM Maintains Maximum Terror Alert, Confirms Threat Still “Imminent, Serious”; Civilians Urged To “Remain At Home”
- Obama Blames Social Media As Russian PM Blasts “Irresponsible US Policy” For Strengthening ISIS
- ISIS Cover up: US Centcom Accused Of Lying To President, Congress, Public About Airstrikes, Ground Fight
I mean, we’re supposed to be “civilized” nations – and yet, we’re devolving into pure chaos. Which, as has always been the case throughout history, invites charismatic demagogues to take power, to the detriment of all parties imaginable. Which, as you might expect, always causes printing presses to run wild, and the desire for real money to explode.
TRUMP: “I would bomb the s— out of” ISIS.
TRUMP: “Knock the hell out of (Iran),” and “take the oil.”
Of course, the principal focus of the Miles Franklin Blog has always been, and will always be, the financial impact of political, economic, and social events. Which sadly, have been dominated by the aforementioned, historic attempts to manipulate markets with “weapons of mass financial destruction” like derivatives and high frequency trading algorithms. And in the case of Precious Metals, of course, unfettered, unregulated naked shorting.
Which brings me to today’s principal topic, catalyzed by a research report by none other than Europe’s largest derivatives purveyor (which itself is amidst intensifying financial straits), asking how the current, (my word, comical) equity rally is not being validated by “anything” else – from commodities, to currencies, to the vast majority of stocks themselves. And of course, the “canary in the coal mine” that are “high yield” – i.e. junk – bonds, which are freefalling at an alarming rate.
The answer, as any quasi-sentient being is rapidly realizing, is the aforementioned, unprecedented manipulation of everything imaginable – but particularly, “last to go” equity markets like the “Dow Jones Propaganda Average,” whose alarming breadth collapse is alarmingly similar to the unmanipulated top of 1999. And, of course, paper gold and silver; to mask the biggest canary in the history of coal mines; i.e. the physical PM markets, which have never been tighter; and shortly, will be experiencing historic, and potentially irreversible supply shortages. The likes of which, in our view, will make 2008’s, 2011’s, and last quarter’s shortages appear modest in scope.
Which is why the (paraphrased) quote I gave in the aforementioned Jeff Lewis podcast could not be more appropriate; and from an “investment perspective,” timelier…
“Today’s Precious Metal valuations represent the dream investment in history. Can you imagine if, in 2008, you were able to buy S&P 500 or NASDAQ put options for nearly nothing? That’s what buying physical gold and silver are like today.”