When I think of all the vacations, holidays, and market “slow periods” the
Cartel has deprived me peace of mind during, by attacking when everyone else
is taking it easy; over a 15-year period, no less; you can see why I have
never been angrier. That said, per what I wrote earlier this week, I
have no regrets about my career or investment decisions – and frankly, have
never been less
worried.
This week is a perfect example – as heading into today’s COMEX options
expiration, a Cartel desperate to inflict “maximum pain” on those that still
buy short-dated gold and silver calls knew full well that an enormous amount
of “open interest” existed at the $1,300 and $1,310 levels – which not only
would cause great financial loss if exercised deep in the money, but could
catalyze a run on the extremely thin supply of actual, available-for-delivery
inventory. That, and the barrage of “PM bullish,
everything-else-bearish” headlines that relentless rain down on their
historic price suppression scheme, which with each passing day hangs by a
thinner and thinner thread.
It started with Friday’s surreal $0.40/oz smash of silver, for no reason
other than to “get the ball rolling” on this week’s COMEX expiration; and
hopefully, enable them to cover some of their historic, off-the-charts short
position. Next, the $0.40/oz Sunday night silver smash – at the open,
with not a shred of news anywhere; followed by massive capping efforts Monday
and Tuesday; yesterday’s COMEX-opening dump of $1.5 billion of paper gold
(followed by an additional $1.0 billion in the ensuing ten minutes); and
finally, this morning’s “2:15
AM” and COMEX-opening waterfall declines – the first, for absolutely no
reason; and the second, “covered” by a supposedly “strong” durable goods
report.
Which, just like any of the (extremely scarce) “better than expected”
economic reports of recent years, was due entirely to accounting
chicanery. As it turns out, the headline gain only “beat expectations”
because last month’s figure was revised lower. Moreover, core durable
goods orders were down for the month; and for the second straight
month, down nearly 10% year-over-year. This, including the data-goosing
“seasonal adjustments” that the government itself just admitted to be flawed,
regarding both their GDP and personal income calculations. And by the
way, isn’t it funny how no one is discussing yesterday’s “four for four”
economic data misses – of existing home sales, mortgage applications, the
FHFA home price index, and DOE oil inventories?
To that end, per what I wrote in this week’s “charting for
dummies” article, silver has been pushed to levels as oversold as any
we’ve seen in the past year – in this case, without even a propagandized
“catalyst” to explain it; demonstrating the prototypical bull market behavior
of higher highs and higher lows we have seen in PMs all year; unlike Deutsche
Bank stock and crude oil prices, for instance, which continue to post lower
highs and lower lows.
Regarding the latter, a reader recently asked for more “supporting
evidence” of my beliefs regarding crude oil oversupply – NO ONE in the
PM community has written more of the poor commodity outlook than me, starting
with my thesis on the topic two years
ago. That said, in a nutshell, this chart – depicting the unprecedented
explosion of U.S. product inventories – is all you need to know, about why
crude oil prices have nowhere to go but down. That, and the
catastrophic “feedback loop” that causes the dollar to surge when market
turmoil arrives. Which, given the historically perilous political, economic, and monetary environment, could emerge any day,
at any time. And oh yeah, the explosion of industry-wide debt – which inevitably, must
lead to production maximization; particularly in financially collapsing
OPEC nations, like Saudi Arabia. Production freeze, you say?
ROFLMAO.
Which brings me to today’s principal topic, a day before Janet Yellen’s
“all-important” speech at the Jackson Hole symposium tomorrow morning.
Which historically was a non-event, until the collapsing global economy
caused the Fed to turn all Fed Chairman speeches into de facto FOMC
statements. Not to mention, the, LOL, “minutes” of meeting held three
weeks prior.
In my view, tomorrow’s speech will be a non-event, as far as content,
based on the fact that nothing material has changed in recent weeks – nor
will it, as the global economy continues to collapse. Today’s headlines
alone feature the Deutsche Bank CEO himself warning of the “fatal consequence
to savers” of Central bank policy (red flag, anyone?); as well as the
imminent collapse of Obamacare; global trade declining for the second
straight quarter; and investors pulling $109 billion out of hedge funds this
year (gee, I wonder who has been buying).
Not to mention, stellar two- and five-year Treasury auctions the past two
days, suggesting not a whit of “rate hike fear.” Plus, long-term rates
hovering near all-time lows, and a Treasury yield curve on the verge of
inversion. Let alone, countless articles about crashing pension and
insurance funds; and oh yeah, news that the (“adjusted”) U.S. budget deficit
will be $600 billion for the fiscal year ending 2016, well above the CBO’s
year-ago estimates. The CBO’s own forecast – which like last year’s,
will prove to be woefully optimistic – anticipates an average deficit
over the next ten years of $850 billion. Throw in the fact
that the Fed not only has the world’s largest balance sheet – at $4.5
trillion, not including “off balance sheet” holdings – but amongst the
highest duration portfolio imaginable (in other words, highly leveraged to
rate rises), and the mere concept of raising rates is patently
ridiculous. Then there are the nearly catastrophic experience of
what happened the last – and only – time they attempted a rate hike last
December. Or the fact that a Presidential election is just three months
away, for which Janet Yellen needs the status quo to be maintained.
As for Whirlybird Janet’s speech, it frankly has far more of a chance of
sparking a significant PM rally than a decline; as 1) prices are highly
oversold; 2) options expiration will be over; and 3) per the reasons cited
above – and countless others – there is essentially no incentive to even hint
at being incrementally “hawkish,” relative to the “safe play” of
speaking in platitudes, but volunteering nothing material. After all,
it isn’t even an actual FOMC meeting, but a mere symposium about monetary
policy in general. That said, the extreme, 20-year low market volatility
TPTB have created during the August doldrums – as the political and economic
world crashes and burns around it, with the end of the summer looming mere
weeks away – could turn this speech, no matter what is said, into a
significant launching point for an extremely volatile (read: ugly) Autumn,
unless one holds assets proven to protect investors from such
environments.
To that end, the dictionary definition of “red herring” is “something
that is, or is intended to be, misleading or distracting.” And if
anything describes Janet Yellen’s role in the U.S. government – er, the
“privately owned Central bank” – it’s just that. In other words, her
principal job responsibilities are to pretend all’s well; convince
gullible, clueless, and blatantly compromised investors that Fed policy
“works”; and, in partnership with Wall Street “henchman” like Goldman Sachs
and JP Morgan (whose former officers dominate the FOMC board), manipulate
markets to promote said lies. Particularly, stocks, bonds, and
Precious Metals.
However, with each passing day, Yellen’s “red herring effect” is wearing
thinner and thinner, as the entire world realizes all’s decidedly NOT well;
Central banks are not only not the solution, but the primary source of the
problem; and financial markets are blatantly manipulated – like when $1.5
billion of “paper gold” hits the bid for no apparent reason, amidst a
veritable blizzard of PM-bullish news flow.
In other words, it won’t be long before Central bank credibility is
permanently dead – led by that of the “ultimate red herring,” Whirlybird
Janet herself. To that end, will tomorrow be the Fed’s “Jimmy Shaker Day?”
Or September 4th, per Jim Rickards? Or “the coming weeks,” per
David Stockman? I guess we’ll have to wait and see, but shame on you if
you’re not prepared for something with just as much likelihood of being
imminent as it is inevitable.
