I have lots to discuss ahead of a big weekend – when I travel to New York, to attend a party celebrating my mother’s 70th birthday and 25th wedding anniversary. Between now and my flight this afternoon, however, I’ll discuss an exponentially growing list of “horrible headlines” – both in thus forum, and my weekly Audio Blog. Frankly, I’m not sure where to start, as the list of reasons to avoid paper currencies – and embrace real money – knows no geographic borders; given that, for the first time in history, all nations are beholden to the same, tragically pre-destined fiat Ponzi scheme. Thus, I’ll simply default to the Far East, starting with one of my “favorite topics,” the demise of the “Land of the Setting Sun.”
One year into “Abenomics,” the Nikkei is badly breaking down; as the Japanese economy is imploding into oblivion, amidst a massive inflationary surge and astounding collapse in spending and investment. Like the “Dow Jones Propaganda Average” in the States, the Nikkei’s BOJ-fueled rise has been essentially the only positive result of Abenomics. However, it is now down 15% in the past three months, prompting calls for increased money printing particularly as the BOJ has failed to break the Yen as much as hoped, as part of its misguided goal of “increasing market share” with a debauched currency.
Ominously, Japan’s economy was in freefall before last week’s national sales tax increase, from 5% to 8% – rising to 10% next Fall. However, Japanese citizens are now looking at last month’s “good old days” with longing hearts, per the catastrophic economic plunge since then, as described by a Japan based Miles Franklin Blog reader.
On NHK World TV tonight, they reported TV sales are down 30% after the consumption tax hike, while sales of DVD recorders and similar devices plunged by 41%, and digital cameras 30%.
All I can say is WOW and gravely fear what Japan’s suicidal government might do next. The fact that “kamikaze” is a Japanese word – and philosophy – is no coincidence; as what we are seeing today literally defines self-immolation. Which, by the way, is what America appears to be doing as well; in inciting the growing power of the Eastern bloc with petty sanctions, expanding militarism, and even threatening Russia – on its own turf!
To wit, barely two months after the Ukrainian crisis erupted, Russia signed a “holy grail” natural gas agreement with China – as symbolized by its primary gas company, Gazprom, issuing its first ever Yuan-denominated bond offering. Simultaneously, Russia’s threats of cutting off Europe’s natural gas flow if it joins America’s sanctions are being heard loud and clear – as highlighted by Germany’s Vice Chancellor realizing Germany has no viable alternative to Russian gas imports.
It’s becoming clearer each day that Germany’s necessity, and ability, to shift its “allegiance” from dying Western powers to emerging Eastern ones – both politically and economically – may well define the inevitable “new world order” when the U.S. dollar, once and for all, loses its “reserve currency” status. As for China itself, it could not be asserting its growing power more assertively; in not only aggressively selling U.S. Treasuries – after stating that “accumulating foreign exchange reserves is no longer in China’s interest”; but outwardly warning the U.S. military complex to back off, per the following comment from a Chinese diplomat associated with its foreign ministry.
The United States is moving in a direction we don’t want to see – taking sides with Japan and the Philippines – and China is extremely unhappy about this.
– Ruan Zongze, April 9, 2014
Then there’s the doomed European Union, whose stock markets, too, are in freefall – whilst a fake, imploding Greek bond offering is propagandized to the MSM. The growing consensus is that the ECB’s key lending rate will be reduced from 0.25% to 0.00% by June; and right now, in an unprecedented display of desperation, Western “leaders” are all but pleading for Draghi to admit defeat and turn up the printing presses – from IMF chief Christine Lagarde, to U.S. Secretary of the Treasury Jack Lew, to the Council of Foreign Relations itself.
And then there’s the United States of Misery, where the NASDAQ briefly touched 4,000 this morning, down 10% in a month’s time. Meanwhile, Treasury yields are literally collapsing, just as we predicted – as not only is “tapering” a mirage, but the complete opposite of what’s actually occuring. Frankly, the negative headwinds for the U.S. economy – and dollar, currently trading at a multi-month low – are so numerous, I could write a book on the topic. This morning alone, we saw catastrophic earnings results from everyone from the Gap to JP Morgan itself – following Wednesday’s disaster from Alcoa, kicking off what will likely be another abysmal reporting season. Coldwater Creek filed for bankruptcy and the fact that the “dollar store” retailer Family Dollar is closing 370 stores – while fellow “low end” retailers Walmart and McDonalds post miserable sales figures – should tell you all you need to know about the so-called “recovery”; let alone, this chart – fresh from this morning’s Well’s Fargo earnings report – regarding the trend in U.S. housing demand.
More importantly, the troubling fact that – as in Japan – inflation is exploding whilst demand implodes which is exactly what we said would occur, and why John Williams anticipates hyperinflation this year. As we recently wrote in “The Most Important Reason to Own Precious Metals” and “Californ-inflation,” food price inflation is skyrocketing, with no hope of slowing down any time soon. Part of the reason is money-printing; however, in a world teeming with people, with production costs surging following the harvesting of all “low-hanging fruit,” the marginal impact of near-term factors like droughts and disease are exponentially magnified. This morning, even the government-suppressed PPI came in at a whopping +0.5% – and the “core” index +0.6% – compared to expectations of +0.1% and +0.2%, respectively indicating how even the government is having trouble disguising the horrific ramifications of its out-of-control money printing. As Marc Faber noted this morning, the market – at least, what’s left of it – is clearly starting to realize just how clueless the Fed is per this telling, horrifying commentary from Art Cashin.
Thus far, much of the money we have pushed into the economy has been stored away rather than expended to the desired degree. For example, we have seen a huge buildup in the reserves of depository institutions of the United States. Yet depository institutions alone have accumulated a total of $2.57 trillion in excess reserves—money that is sitting on the sidelines rather than being loaned out into the economy. That’s up from a norm of around $2 billion before the crisis.
–King World News, April 10, 2014
As for Precious Metals, physical demand continues to surge – as evidenced, yet again, by negative gold forward rates. And yet, paper prices continue to fight daily wars at Cartel “lines in the sand”; particularly, the “Battlefield $20 Silver” that, when inevitably lost, could catalyze a veritable frenzy of PM buying.
Yesterday was a perfect example of said “war,” with gold peaking at exactly the 8:20 AM EST COMEX open before being capped again at the 10:00 AM EST physical market close and the 12:00 PM EST “cap of last resort.” In fact, as you can see below, Cartel algorithms were clearly set up at numerous other “round number” times – such as exactly 9:00 AM, 11:30 AM, 1:00 PM, 1:30 PM and the 2:00 PM “crybaby attack” time. With equities crashing, the Cartel felt an urgent need to cap what would have been a powerful PM rally, whilst “ultra-QEing” Treasury bonds higher to “prove” they are the market’s best “safe haven” assets. By the way, do ya think the Cartel didn’t pick $1,320 as its “line in the sand” yesterday – and, for that matter, today?
Today, both metals again peaked at the COMEX open; ironically, just minutes after the catastrophic PPI miss. Stocks continue to be pummelled, worldwide, as physical metal prices are essentially flat; in silver’s case at exactly $20/oz. – after having initially been capped at that level by the 202nd “2:15 AM” raid, at the open of the Western paper markets, in the past 228 days. Think about how comical this is becoming, given that today alone, copper is rising, oil and Treasury bonds surging, and the dollar at a new multi-month low!
And thus, today’s principal topic, the “new 1%.” As you can imagine, the global “shadow world” is abuzz – and aghast – at Jamie Dimon quoting Martin Luther King, Jr. in JP Morgan’s annual shareholder letter. Like his “partner in crime” at Goldman Sachs, Lloyd Blankfein, whom claims to be doing “god’s work,” Dimon suggests JP Morgan is a beacon of justice in an increasingly corrupt financial world.
The arc of the moral universe is long, but it bends toward justice. Progress, sometimes painful and slow, has been happening all around us all the time, and the optimist in me believes it will continue.
–Zero Hedge, April 10, 2014
Of course, anyone cognizant of how the world really works realizes this smokescreen is nothing but propaganda. JP Morgan, Goldman Sachs, and the rest of the “1%” benefitting directly from Fed money printing have sacrificed billions of people in the name of power and ill-begotten wealth. And thus, nothing will be sweeter – and scarier, as the world crumbles around us – than when the “new 1%,” whom hold significant amounts of physical gold and silver – become the world’s new masters. By and large, they will emanate from Eastern environs but fortunately, enough is still available that a handful of propaganda-evading Westerners will benefit as well.
Again, I don’t look forward to the horrifying political, economic, and social environment that will accompany this historical wealth transfer – at least, until the “dust settles,” and a new, more stabilized financial order emerges, based on real money. However, when said dust settles, we have not a doubt that the “once and future” kings of money – i.e., gold and silver – will retake their thrones. When that inevitably occurs, those smart enough to have protected their wealth with such will become the “new 1%”; and all else, the destitute “99%.”