It’s Friday night, after another week of financial market ignominy has passed; fortunately, without further damage to those holding REAL money. Which fortunately, is likely to be extremely limited going forward, given how low Precious Metal “valuations” have been driven, amidst the most bullish fundamental environment imaginable. Heck, whilst the paper gold price has been mercilessly attacked – as countless fiat currencies crash, amidst an environment of unprecedented economic and political instability – physical demand has exploded.
Physical gold is trading around $1,700/oz in India; whilst Chinese physical premiums have surged to their highest level since April 2013’s “Alternative Currencies Destruction” raid; which, I might add, caused May 2013 to be Miles Franklin’s best ever month. To that end, yesterday was the single strongest day of Shanghai Exchange physical gold offtake all year; and November, the year’s strongest month for U.S. Mint gold Eagle sales – surpassing…drum roll please…October, which saw a dramatic demand surge following the Cartel’s blatant October 4th attack, just after China’s markets closed for the “Golden Week” holiday.
Just as I espoused in this week’s three podcasts that I have NEVER witnessed such disjointed, illogical “markets,” I have NEVER seen Precious Metal prices dissociate so egregiously from not only political, economic, and monetary fundamentals, but actual physical demand. Case in point, the “Dow Jones Propaganda Average”; which, in the last three days alone, had the exact same “dead ringer” trading pattern – despite surging interest rates; a punk “jobs” report; and the NASDAQ plunging 110 points.
The rate at which “fake news” has exploded both pre- and post-election; even from the relentless, heinous levels witnessed since the 2008 financial crisis (particularly regarding Precious Metals); is frankly, unfathomable. I mean, official mainstream media outlets are actually labeling Zero Hedge and other bona fide TRUTH tellers “propagandists,” despite having themselves been caught red-handed lying about every imaginable fact regarding the election.
I mean geez, the Republican-controlled House of Representatives today passed a bill targeting “Russian Propaganda” websites and other “counter active measures by Russia to exert covert influence” – despite the fact that their guy won the Presidency (in the process, handing the Republicans Senate control), despite not a shred of evidence the Russians had anything to do with WikiLeaks, Anonymous, Project Veritas, or any media outlet seeking to influence the election. To think, that when I read 1984 in- yes, 1984; or Atlas Shrugged, just two years ago; that America would advance that far down those theoretically fictional rabbit holes so quickly, and identically; is incomprehensible. I guess life does imitate art; however, I’m quite sure Orwell and Rand based their fictional works on the actual history of countless real civilizations.
It’s “unfortunate” I wound up in a business – and investments – so heavily “targeted” by the State; which frankly, has permanently weakened my view of humanity, no matter how many good people I meet. Then again, nothing about life is easy – and as they say, what doesn’t kill you, makes you stronger. Which unquestionably I am, after 15 years of fighting the gold Cartel and its minions. Which, in turn, has put me in the fortunate position I’m in today – of working for good people; in a good business; with the primary responsibility of providing TRUTH to a world sorely lacking it; and PROTECTION to investors with few such viable options. In many ways, the Miles Franklin Blog has defined my existence, giving me a sense of worth few people ever enjoy.
Let’s get to the reasons “lame duck Yellen” will be in a very, very hot seat on December 14th, when markets are discounting a 100% chance of a Fed rate hike. Yes, she has the excuse that the “bond vigilantes” have already done it for her. However, by raising just 25 basis points when said vigilantes have taken rates 75 points higher, the Fed will be hopelessly behind the curve – to the point that 25 beeps will be considered a de facto “easing.” Let alone if, as I expect, their “language” is as dovish as any rate-hiking Central bank has ever proffered.
A LOT may occur between now and then, which could dramatically influence their thought process. Not to mention, said 100% odds of a rate hike, which will unquestionably plunge if Sunday’s Italian referendum and Austrian elections catalyze a stock market and/or foreign currency plunge, giving the Fed an “excuse” to hold off yet again. To that end, it’s incredible how complacent markets have become, in the face of the unprecedented manipulation that has the few remaining bona fide market participants (the majority of hedge funds have been bankrupted) believing stocks can NEVER decline; just as they believed of dotcom stocks in 1999, and real estate in 2007. I mean, the Euro is trading barely above its 14-year low; and after Sunday, it’s entirely possible it will careen toward the U.S. dollar parity – or lower – it’s destined to reach; in turn, catalyzing accelerating inflation in the EuroZone, and plummeting U.S. trade exports; which in turn, will put further pressure on Whirlybird Janet to consider the necessity of not raising, but easing monetary policy. Let alone, in light of the fact that surging rates have made the U.S. governments’ upcoming financing’s dramatically more expensive (let alone, if Trump want to dramatically cut taxes and raise spending); whilst simultaneously, wreaking havoc on the Fed’s $4.5 trillion, high duration balance sheet.
Given the massive, unmatched-in-importance interest rate surge I warned of yesterday, it’s unlikely the Fed will even consider today’s “jobs” report – particularly as it theoretically “beat expectations” with 178,000 “jobs”; and a jaw-droppingly unexpected plunge in the “unemployment rate” to a new nine-year low of 4.6%. Unfortunately, even said “market participants” realized just how horrific this report was, particularly when viewing the horrifying “non-seasonally adjusted” data.
In a nutshell, the reason the “unemployment rate” plunged by a whopping 30 basis points, from 4.9% to 4.6%, was because the labor force contracted by 446,000, yielding a record-high 95.1 million able-bodied Americans that have given up on looking for a job, atop the 7.4 million who are technically “unemployed.” Worse yet, manufacturing jobs again contracted, whilst the part-time jobs surged, and multiple jobholders hit a new all-time high. In other words, it’s highly likely many of the “jobs” were actually the same people holding two, or even three part-time positions. And putting the icing on the spoiled cake, average hourly earnings actually declined – which makes sense, given the horrific, relentlessly accelerating trends regarding the decimation of full-time employment – in lieu of part-time, in many cases minimum wage paying, positions. Frankly, this was one of the ugliest “jobs” reports in memory; although I’m sure, so long as the PPT can support stocks in the Italian referendums’ aftermath, the Fed will not only ignore such ugliness, but spin it as a “strong labor market.”
Plenty of “other” issues could wind up derailing the Fed’s “100% certain” rate hike as well, as the financial system has never been more unstable; the political environment more fluid; or the monetary balance so perilous. I highly doubt OPEC’s fake “deal” will be called out by December 14th, given how much undeserved faith investors have demonstrated since Wednesday. However, when Saudi Arabia’s former oil minster admits it “cheats” on such deals (on average, by 40%), it can’t be long before this week’s OPEC “lie to end all lies” is called out – particularly in light of surging U.S. shale production; and likely, declining Chinese demand, now that its Strategic Petroleum Reserve is, for all intents and purposes, full.
However, what occurs in Italy certainly will affect the Fed’s thinking; and perhaps, India, if the explosive reaction to Narendra Modi’s psychotic, suicidal “cash ban” worsens. Or perhaps China, whose desperate, draconian capital controls to dampen the pace of the Yuan’s devaluation are wreaking havoc on global liquidity. Or maybe even here, given the increasingly disruptive Democratic response to Trump’s victory. Or heck, the fact that Trump’s initial Cabinet appointments are as far from “draining the swamp” as could be imagined. But irrespective, it’s plunging U.S. stock and bond markets the Fed fears most; and secondarily, a dramatically rising dollar. Thus, the “odds” of one or more of these markets not “co-operating” with the Fed’s grand propagandistic plans couldn’t be higher. Including, I might add, Precious Metals, which are like heavily inflated beach balls pushed 20 feet underwater.
To conclude, never before has such political, economic, and monetary instability simultaneously prevailed in our lifetimes – which I assure you, will NOT stabilize anytime soon; certainly, not before the December 14th Fed meeting. Thus, in light of the aforementioned plunge in paper Precious Metal prices; at a time when physical PM value has never been higher; gold, silver, and platinum may well represent their most favorable reward/risk trade-off in memory. And if such PROTECTION is what you choose, we hope you’ll give Miles Franklin the chance to earn your business. Which I assure you they will, given that they may well be the only bullion dealer to meet all the criteria Jeff Clark described in this article, of how one should choose a bullion dealer.
