Well, the five-year anniversary of the “Sunday Night Paper Silver Massacre” came and left with a whimper – as despite the 141st “Sunday Night Sentiment” capping of the past 147 weekends; the Cartel has not been able to prevent gold from rising above $1,300/oz, which is where it stands as I edit just after Monday’s COMEX open. In fact, aside from a brief moment in early 2015 – before the Cartel orchestrated the final phase of the four-year “bear-market” that ended in December 2015 – gold hasn’t been above $1,300 for nearly two years.
Per below, the massive “reverse head and shoulders” pattern the Cartel’s manipulations inadvertently created over the past nine months is on the cusp of pushing the price above an even more massive, equally artificially created “resistance level” at roughly $1,400/oz. And when it does, the 2011 high of $1,920/oz will be firmly in “Economic Mother Nature’s” sights. Not to mention, silver’s inevitable, “ultimate quadruple top breakout” above $50/oz. Upon breaking $1,400/oz – and equivalently, roughly $22/oz for silver – the world at large will realize the PM “bear market” is over – and start buying en masse, as they did in 2011. What the world will look like then – politically, economically, and socially – is another story, but my sense is it will be quite ugly.
To wit, this weekend’s “horrible headlines,” portending what awaits for years to come…
1. Puerto Rico will default today; which, when all is said and done, will, due to its status as a “U.S. territory,” saddle American taxpayers with an additional $70 billion of unpayable debt.
2. Italy, mere weeks after forcing its insolvent banking system to fund the €5 billion “Atlas” bailout fund, has already run through more than a third of the funds – enroute to the world realizing the entire Italian banking system, with its €360 billion of cumulative bad loans, is on the verge of collapse
3 . The “democracy” the U.S. government attempted to create in Iraq, after having completely destroyed the country over 15 years’ time, is on the cusp of imploding into chaos
4. China reported an “unexpectedly” weak 50.1 PMI print on Saturday, depicting an economy either in, or on the verge of, recession, “6.7% GDP growth” notwithstanding.
5. Japanese stocks continued to plunge, down a whopping 8% in the three trading session since the Bank of Japan’s historic “policy error” Thursday morning; of LOL, NOT extending QE further.
6. The U.S. government inaugurated a “monitoring list” of five Central banks (China, Japan, the ECB, South Korea, and Taiwan), which it deems to be manipulating currencies downward – as the “final currency war” I first warned of 3½ years ago goes nuclear.
Sadly, such headlines are a mere appetizer to today’s “main event” – of the “exploding unintended ramifications” of three years of expanding negative interest rates; which cumulatively, have consumed nearly $8 trillion of global sovereign bonds, and counting.
To that end, NO ONE has more emphatically warned of the carnage negative rates would wreak, since July 2012’s “NIRP vs. Gold, Part I,” just after Mario Draghi promised to do “whatever it takes” to “save” the Euro. Which, ironically, has entailed hyperinflationary monetary policies on a par with the world’s most destructive Central banks. Regarding such, “NIRP vs. Gold, Part VI – the horrific end game of a cashless society” was written 2½ months ago, when the “war on cash” commenced with this anonymous quote from a “major global policy maker” at Davos, according to a top Morgan Stanley analyst. This must read article gives a detailed chronological description of the evolution of global “negative interest rate policy” – since that fateful day in 2012 – as described by “NIRP vs. Gold” articles, parts I through V.
Clearly, the “war on cash” has returned with a vengeance, on the cusp of going parabolic. In March 21st’s “where there’s smoke,” I warned it would return as soon as the historic, PPT-orchestrated market goosing ran its course. Which, per the Japanese equity plunge noted above (no less, as we learned the Bank of Japan has become a top ten holder of more than 90% of Nikkei stocks), has decidedly occurred. To wit, the exploding proliferation of NIRP “unintended ramifications,” such as…
1. Some of the Western world’s largest pension funds, like the U.S.’s Central States pension fund (CSFP) and the UK’s Universities Superannuation Scheme (USS), announcing major benefit cuts to avoid insolvency
2. Talk about “exploding unintended ramifications!” UPS – as in, United Parcel Service – apparently reached a collective bargaining agreement with the CSFP in 2007, promising to cover any shortfall if fund benefits were cut. Well, in what promises to be an exploding, ongoing theme for years to come, UPS is taking a $3.2-$3.8 billion charge (nearly a year of free cash flow) to cover this shortfall.
3. Munich Re, one of the world’s largest reinsurance companies, is not only publicly hoarding cash – but in a sign of what’s to come for hundreds, if not thousands of “yield-starved” institutions, in a world of negative rates, physical gold.
4. Charles Schwab, where I personally keep my cash, started sending notice to certain customers that it will be “sweeping” money market funds into government money market funds. In other words, as it can no longer identify enough money market instruments to maintain a positive yield for clients (I’d estimate the yield I receive at around 0.1%), it has decided to allow market forces to “break the buck” on its clients’ funds. In other words, if governments continue to force rates into negative territory, Schwab – and thousands of other financial institutions – will be forced to “pass them along” to clients.
5. Putting the “icing on the cake,” this ominous quote from none other than the world’s most insolvent bank – and newly admitted gold and silver manipulator – Deutsche Bank; which takes the aforementioned Morgan Stanley quote to a whole new plateau of ominousness, of where the immediate future is headed…
“It is becoming increasingly clear that the level of yields at which credit expansion in Europe and Japan will pick up in earnest is probably negative, and substantially so. Therefore, the ECB and BoJ should move more strongly toward penalizing savings via negative retail deposit rates, or perhaps wealth taxes.”
Yes, “negative deposit rates” – like Interactive Brokers announced yesterday for all Yen-based clients – and “wealth taxes.” In other words, the “exploding unintended ramifications” of negative interest rates – not to mention, the viral spread of socialism, fascism, and communism – are right in front of our faces. Which is why Precious Metals are rocketing higher, as global investors seek any available avenues to PROTECT themselves. Frankly, I have NEVER been more fearful of what’s coming – or bullish about the prospects for gold, silver, and platinum. As unquestionably, the “war on cash” is about to go, like the simultaneous “final currency war” amongst Central banks, thermonuclear.