OK, where to start following a weekend of unabashedly PM-bullish,
everything else bearish news? Following which, the Cartel executed,
amidst the slowest global trading period of the year (U.S. markets closed
Friday, and Europe today), its 137th “Sunday Night
Sentiment” raid of the past 143 weekends, and 611th “2:15 AM” attack –
featuring the ubiquitous “Cartel Herald”
algorithm, of course – of the past 701 trading days. And I’m talking
about dead trading activity – with U.S. stocks, bonds, and crude oil
futures flat overnight, and base metals not even trading due to the LBMA
holiday.
Which leads me to thisincredible
“debate” between Harry Dent and Peter Schiff – in which the former, once and
for all, proved his utter cluelessness of how markets work; whilst the
latter, despite being, along with David Stockman, the most talented economist
of our time, again displayed his gaping flaw of not realizing – or admitting
– the gold markets is rigged. Aside from that, Schiff utterly destroyed
Dent, point by point – with Dent, yet again, demonstrating his mastery of the
art of misinformation. Which is a shame, as he too is a brilliant
economist; but a terrible market forecaster; with frankly, a
Cartel-like attitude toward gold. Don’t believe me? Check out thislist
of his “amazing” track record – which doesn’t even incorporate his mid-2011
prediction, with the Dow around 12,000, that it would plunge to 3,000
in 2013; as opposed to what it actually did – start 2013 at 13,000, and
end at 16,000.
As for Schiff, it is difficult to criticize a word he says about the
economy. However, his insistence that the “dollar will tank” is what
baffles me – as in doing so, he continues to focus on perhaps the most
meaningless market indicator of all, the “dollar index” that essentially
measures its value against the Euro, and to a lesser extent the Yen.
For more than two years, I have shouted from the rooftops of the near
impossibility of this occurring – as the collapsing European Union, and
demographically imploding Japanese society, cannot possibly see their cancerous
currencies surge against the dollar, no matter how overvalued the latter
is. That said, I have equally shrilly predicted the dollar’s surge
against other currencies, – which most certainly has occurred, to the
point that gold is trading at, near, or in many cases well above, previous
all-time highs in nearly all currencies. And yet, neither of the two
even mention – let alone highlight – this giant pink elephant in the
room. Let alone, that the only reason dollar-priced gold hasn’t,
too, is relentless, 24/7 price suppression.
Meanwhile, Dent continued to espouse his age-old fallacy that gold will
fall due to “deflation” – despite the fact that amidst the biggest commodity
collapse in modern history, gold is not only five times above its
turn-of-the-century lows, but nearly twice its 2008 crisis bottom low –
which, I might add, was caused 100% by a vicious Cartel raid, that caused physical
gold and silver premiums to surge to roughly 25% and 100%, respectively,
amidst massive, global shortages. And equally fallacious, his
ridiculous belief that gold will fall to $700 (ignoring the fact that the
mining industry wouldn’t exist at that price) because the “dollar will
surge.”
As noted above I agree that the dollar will rise against other
fiat currencies (particularly “emerging market” and third world toilet
paper) as the historic economic depression unfolds – not due to U.S.
“strength,” but superior liquidity. However, Cartel suppression
notwithstanding, gold has dramatically outperformed “the dollar” since the
global fiat Ponzi scheme peaked at the turn of the century, with its
strongest periods of relative strength during the worst “deflationary” scares
– such as, for example, early 2016 and, yes, the 2008-08 financial
crisis. Regarding the latter, it’s quite comical how so many people
focus on the initial Precious Metal slam down in late 2008; ignoring entirely
the physical shortages that ensued. Even more so, that Cartel
attacks irrespective, gold was actually higher in 2008; and
furthermore, that when the Dow finally bottomed in March 2009 (due to massive
Central bank intervention), down 50% from its April 2008 highs, gold was 6% higher
than its April 2008 level.
Speaking of fallacy – and in the process, the final nail in the coffin of
the great American empire, Obama actually made the below, traitorous comments
this weekend, in essence supporting socialism and even communism; in a
speech in, of all places, the economically collapsing and currency
hyper-inflating Argentina.
“So often in the past, there has been a division between left and
right, between capitalists and communists or socialists – especially in the
Americas, where it’s been a big debate. Those are interesting
intellectual arguments – but I think for your generation, you should be
practical and just choose what works. You don’t have to worry about whether
it fits into socialist or capitalist theory. Just decide what works.”
This – ironically, on the day California approved a 50% minimum
wage increase; amidst a week when relations with still-communist Cuba
were renewed, and a year in which “healthcare” nearly overtook housing
as the nation’s largest engine of “growth.” This, from a nation
that spent decades; killing millions; at a cost of trillions;
in the name of destroying Communism. Trillions, I might add, that not
only catalyzed the explosion of an unpayable U.S. national debt, but the end
of a gold standard that for decades prevented the Federal Reserve from the
hyperinflationary monetary policy it has since destroyed the world, and
America, with. Which, I might add, will likely immolate the “Land of
the Setting Sun” first amongst “first world” nations, if today’s rumors of
upcoming “major fiscal stimulus” have any truth to them. But don’t worry,
Shinzo Abe said Friday he is “not thinking about a supplemental budget at
this time”; just like his Central bank governor, Haruhiko Kuroda, said Japan
would NOT implement a negative interest rate policy two months ago – one
week before doing so!
Last but not least, on this early Monday morning “rant,” a final word
about rapidly spreading newsletter writer fear-mongering about the “imminent
collapse” of Precious Metal prices because the Cartel – er, “commercials” –
have taken an out sized short position on the paper COMEX exchange. In
last week’s “the
COT’s don’t matter, Part II,” I invalidated such fallacy with actual facts,
updating an article from 2012 which did the same thing. And today, I’ll
do so further – admitting, of course, that in the very short run (such as,
for instance, today’s COMEX options expiration), anything is possible.
To wit, the below chart depicts COMEX commercials’ net short position in
silver futures over the past 17 years. As you can see, throughout a
raging bull market, that started at $4/oz in 2001; temporarily peaked
at $50/oz prior to May 1st, 2011’s “Sunday Night Paper Silver
Massacre”; and sits above $15/oz as we speak, said “commercials” have never
been long, not even for a day. And again, “commercials” is in quotes
because essentially none of their trading has anything to with actual commerce.
As you can see, after nearly turning net long in mid-2015, they have
engaged in their singularly largest incremental bout of (naked) shorting of
the entire 17-year period. Quite obviously, in response to silver’s bottoming,
despite their most egregious suppressions yet,amidst an environment of record
global demand; vanishing above- ground supplies; peak production; and
parabolically rising, hyper-inflationary monetary policy.
In this chart, I put red arrows at each “maximum commercial short”
position of the past 14 years. And as you can see below, over the
entire 14-year period, the average three-month silver price change following
“maximum commercial short” positions was just 5%. Or, more accurately,
a mere 2%, when excluding the massive, Cartel-induced 46% plunge in the Fall
of 2008 (described above); as given the roughly 100% premiums actual physical
silver traded at at the time, it’s disingenuous at best to claim silver
“fell” –let alone, “plunged.” Moreover, the Cartel is far less
“infallible” as many believe – if its near-spiritual experience of late 2010
to early 2011 suggests.
Following last Wednesday’s “Post-Brussels
Bombing” Cartel raid – amidst the slowest trading week of the year thus
far – silver is already down 4% from Tuesday’s “maximum commercial
short” position; which likely, won’t get much larger, given that it is
closing in on its highest-ever level. Thus, it’s quite difficult
to envision, amidst the aforementioned environment of wildly bullish Precious
Metal fundamentals, anything other than significant gains in the coming three
months – or at the least, far more muted losses than said fear mongers
suggest.
We won’t know what actually happens for another three months, of
course. However, given how far below the industry’s cost of production
prices have fallen – per the fact that mining companies lost more money in
2015 than they made in the prior eight years combined; and the
aforementioned hyper-inflationary monetary policy environment; amidst the worst
global economy since the Great Depression; the reasons to own PMs not as
“investments,” but insurance has never been greater. Or better
yet, for their principal utility as money – as proven by thousands of
years of human experienced; as opposed to the hyper-inflating scrip Central
banks have been flooding the world with at a record-breaking pace.
P.S. Remember what I wrote in yesterday’s article, “the most transparent lie of all time,
part II” – of how various Fed governors’ post March 16th FOMC
meeting claims that rates “might” be raised in April due to expectations of a
significant 1Q GDP jump? Which as of last week, as now expected, by
the Fed itself, to be no more than the fourth quarter’s pathetic
gains? Well, let’s just see what the Atlanta Fed’s 1Q “GDP now”
forecast churns out after the news that just came out as I edit – that
like the massive downward revision of January retail sales (from +0.2% to
-0.4%), the supposedly massive surge in January personal spending (due
entirely to minimum wage hikes, I might add), was just revised from +0.5% to
+0.1%!
