It’s Tuesday morning, and before I get to today’s highly thought-provoking
topic – and sigh, “horrible headlines” – it’s time for another “Miles
Franklin Book Review.” In this case, from one of the truly good guys of
the Precious Metals newsletter community, Gary Christenson; who “deviated”
from his typically forensic chart work – fitting, as his website is deviant investor.com – to write a
“mystery” titled “Who Killed Doctor Silver Cartwheel?” “Cartwheel” is a
slang term for 90% silver content silver dollars coins, before they were
de-monetized by the U.S. government in 1964. In other words, what we
today refer to as “junk silver.”
In its brief 160 pages – I read it in just three hours on the Stair Climber
this weekend – he spins an entertaining tale of a private eye detective
tasked with solving the mystery of who “killed” U.S. silver currency,
expertly entwined with his unparalleled charting skills to determine what
silver should trade at five years from now. I won’t tell you what that
price is – other than that it is higher than today – but highly
recommend you read it, as I’m sure you’ll enjoy it.
OK, let’s return to the reality of the fundamentals that all but
assure his prediction – certainly, directionally speaking – will be correct;
perhaps, far sooner than the five-year time frame in “Who Killed Doctor
Silver Cartwheel?” Starting with a topic I don’t generally spend much
time on, but is as potent a fundamental factor as anything else, when
determining whether – and how – to protect oneself from upcoming
financial calamity. Or, if you live in one of the dozens of countries
whose currencies, stocks,
bonds,
and economic
livelihoods have already collapsed, is occurring as we speak.
Which is probably why, contrary to the historically blatant suppression of paper
Precious Metals, physical gold
and silver
are experiencing record worldwide demand.
In October 2014’s “crashing
oil prices portend unspeakable horrors,” I predicted that the upcoming
oil implosion (WTI crude was $81/bbl at the time) would not only be decidedly
not “transitory” – as Janet Yellen stillbelieves
– but would catalyze worldwide financial, geopolitical, and social tensions
not experienced since World War II. And of course, economic
and human
rights-destroying draconian government policies. Only this time,
the world is bankrupt beforehand – just as the “worst
global economy of our lifetimes” is starting to really implode to
the downside. Throw in the terrifying fact that the entire world is
tethered to a fiat currency Ponzi scheme in its final, cancerous stage – as
evidenced by the exploding worldwide “final currency
war” – and the table has never been more “set” for destruction.
Which is probably why this weekend’s headlines were dominated by the growing
drumbeats of war; and why this year’s embarrassingly expansive list of
student-athlete exploiting “bowl
games” – 42, to be exact, including three sporting teams with losing
records – features blatant
government recruiting efforts like the “Air Force Reserve Celebration
Bowl”; the “Military Bowl, sponsored by Northrup Grumman”; and the “Lockheed
Martin Armed Forces Bowl.”
To that end, OPEC took the prospect of said “unspeakable horrors” a giant
step closer to reality on Friday, by not only NOT lowering its production
quotas, but raising them 5%. Which, I might add, I vehemently
predicted a yearago;
not to mention, in Thursday’s
Audioblog, espousing “for any (nation or corporation) hoping OPEC will
save them with production cuts, I suggest you save your prayers for something
more likely – like pigs flying.” Which is probably why yesterday’s
article was titled “forget
the Fed, OPEC just sealed the global economy’s terrifying fate” – and why
this weekend’s “horrible headlines” were chock full of social unrest,
terrorism, and military escalation stories, per below. Topped off, of
course, by Obama’s first prime time national address since 2010’s “we’re
leaving Iraq” address – to discuss the growing “war on terrorism,” mere days
after troops were after not only sent back to Iraq, but Syria
as well.
- Britain started bombing ISIS mere hours after voting in
favor of airstrikes
- Greece loses last trace of sovereignty, after EU takes
control of its borders
- ISIS makes major move, assassinates Aden’s governor and
two dozen Houthis
- Turkey detains Russian ships in Black Sea, blasts Moscow
brandishing rocket launcher
- Putin accuses U.S. of ISIS oil cover-up
- Jordanian screaming he wants to join Allah tries to open
Lufthansa airplane cabin door
- Terrorist in London subway slashes man’s throat
screaming “this is for Syria”
- Father of San Bernardino shooter: Son supported ISIS
- Iraq may seek direct military intervention from Russia
to expel Turkish troops
- Netherlands pressed by France, U.S., own lawmakers to
join bombing of ISIS in Syria
- Assad slams U.S. bombing of government troops as Turkey
accuses Russia of violating Montreaux Treaty
Not to mention, the most important story the MSM won’t dare tall – which
frankly, few such “journalists” even understand. Which is, the massive
victories of Marine Le Pen’s “National Front” party in this weekend’s
French regional elections – which not only positioned it to take over
France’s Parliament in the coming years, but nearly guarantees Le Pen’s ascendancy
to the Presidency. Which, when it occurs in 2017 – likely, amidst an
economy far weaker, and geopolitical and social tensions far more chaotic –
will all but assure France’s independence movement explodes; very likely,
from the European Union and Euro currency.
On Friday afternoon, the pathetically impotent “oil PPT” did everything in
its power to protect the key support level of $40/bbl on WTI crude, amidst
the historically bearish OPEC decision. They managed to close it at
just about that level; but this morning, the “floodgates” have been opened,
with oil down to $38.60/bbl as I write – potentially, en route to Goldman
Sachs’ $25/bbl prediction by early next year. And with it, the CRB
Commodity Index, to a fresh
40-year low. Which is probably why – pathetically disingenuine
“Fedspeak” of a “recovering” economy notwithstanding – Citigroup’s forecast
of a 65% chance of recession in 2016; JP Morgan’s of a 76% chance; and mine,
of a 100% chance – are far more likely than what the Fed prays for, and
propagandizes daily, with the help of manipulated economic data like Friday’s
historically
doctored employment report. Heck, in her Atlas Shrugged
inspired speech Thursday, Whirlybird Janet had the cajones to tell Congress
of her staunch belief in “continuing GDP growth” – two days afterthe
Atlanta Fed’s “GDP Now” forecasting model slashed its 4Q “growth” expectation
from 2.3% to 1.4%! I mean, if that’s not perjury – for the entire
world to see – what is?
Speaking of economic implosion, how about the Finnish government
announcing the ultimate in hyperinflationary policies this week – in taking
George W. Bush’s one-time economic “booster shot” concept of February 2008
one step further, by offering a “helicopter drop” of the equivalent of
$900/month of Finnish Markka (which is already at an all-time low) to every
citizen, every month, indefinitely! Sadly, this is
par for what the entire world’s “course” is about to be; which heck, even
Citigroup itself predicted three months ago – when its Chief Economist
espoused “only helicopter money can save the world now.” That is, if
“save” is defined the way “Goldman Mario” Draghi defines it; i.e., doing
“whatever it takes” to increase currency-destroying inflation.
Which is why even the concept of a Fed “rate hike” next week is so
comical. Let alone, if they are stupid enough to actually go through
with what I three months ago deemed the “only
financial event as potentially cataclysmic as a significant Yuan devaluation.”
Not to mention, as said Yuan devaluation – which I not only predicted in April,
but the day
beforeit was announced in August – is quietly being expanded (to a
new 4½ year low this morning), whilst China continues to overtlyincrease
its gold holdings. And oh yeah, as the ECB is simultaneously extending
its suicidal NIRP and QE programs; following Japan’s decision to essentially
extend Abenomics “to infinity”; whilst essentially all global Central
banks are amidst their own hyper-inflationary monetary policies, despite
essentially all currencies trading at or near all-time lows.
Which I probably why headlines like these are flooding the internet
this weekend, which I whole-heartedly agree with.
- BIS warns, a Fed rate hike may unleash the biggest
dollar margin call in history
- The Fed doesn’t get it – a rate hike means people will
be carried out on stretchers
Which brings me back to Precious Metals; which despite the aforementioned
litany of ultra-bullish factors; not to mention, China’s announcement this
morning that in November alone, it bought five times more gold than the
entire registered inventory of the 300:1 paper-to-physical-leveraged COMEX;
and “counter-intuitive” surges following Thursday’s “disappointing” ECB
announcement, and Friday’s “explosive” NFP jobs report and “deflationary” OPEC
announcement; the terrified Cartel went right back to the well, with its 124th
“Sunday Night
Sentiment” raid of the past 129 weekends, 564th “2:15 AM” “cap and attack” of
the past 642 trading days; and of course, the ubiquitous COMEX-opening
waterfall decline we have all come to know and hate.
That said, the aforementioned, wildly bullish fundamentals that have
spawned record
global demand are clearly putting the physical market at risk of
exploding to the upside – as evidenced by collapsing above-ground
inventories, such as on the COMEX and the GLD ETF.
However, no chart tells the story of where prices are likely going better
than this one – based on data I have diligently updated weekly for the past decade.
Which is, the so-called “commercial” traders of the COMEX – in reality,
“bullion banks” like JP Morgan and Goldman Sachs – on the verge of going net
long the gold futures market for the first time in 14 years.
That is, for the first time since the gold bull market commenced at the turn
of the century. To wit, as reported in the weekly “COT” report Friday
afternoon – said “commercial” short position was reduced to a measly 2,911
contracts, worth a measly $314 million, as of last Tuesday (just before
Thursday’s and Fridays’ “counter-intuitive” PM surges); completing a manic
five-week short covering binge entailing 162,937 contracts, putting their
cumulative short position at the lowest level since December 2001, when gold
was just $277/oz.
No one is more distrustful of such data than myself – particularly given
the “disclaimer” conveniently added to COT data two years ago; i.e, that such
data is only for “informational purposes” – and thus, not necessarily
accurate. That said, there is no reason I can imagine that would
explain why such data would be rigged so “bullishly”; particularly when all
related data – such as COMEX, GLD, and Shanghai and Mumbai demand and supply
reports – suggests the exact same thing. Not to mention, the periodic
shortages we have seen in numerous physical markets – such as the retail
silver market this summer. Which is, expanding physical Precious Metals
tightness the world round – which charts like this would only encourage
global investors, corporations, municipalities, and sovereign nations to “get
ahead of.” Throw in the fact that this chart incorporate 16 years of
data – and thus, is far more difficult to manipulate than shorter term charts
– and it becomes increasingly difficult to believe this chart doesn’t mean
something wildly bullish, likely in 2016.
To that end, I’ll simply leave this chart for you to digest – not to
mention, the countless hundreds of pages of related commentary the Miles
Franklin Blog and others have published over the years, and let you decide
if it has meaning. And if so, what meaning?