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“Markets” In The Post-Trump Era

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Published : March 01st, 2017
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Category : Opinions and Analysis

Yesterday, I wrote of “why the Cartel is so (rightfully) terrified”; i.e., because after six years of post- “point of no return” price suppression, including four since the April 2013 “alternative currencies destruction” raid pushed gold and silver prices below their respective 200 week moving averages, both metals are on the verge of breaching these key technical resistance levels (of $1,260/oz and $18.59/oz, respectively).  This, with above ground, available-for-sale supply at an all-time low; production in, for all intents and purposes, terminal decline; and physical demand – spurred by said price suppression, and the collapse of countless fiat currencies – at an all-time high.  Heck, even major currencies are experiencing gold price surges – like the Euro, where the financial equivalent of a “nuclear bomb” is hitting its economic and political spheres.  To that end, Andrew Maguire this weekend espoused that the physical market has become so tight, he’d be shocked if we don’t see a major gold rally within the next 90 days.

Aside from the heart of the 2008-09 financial crisis, I have never seen such a diverse, and relentless stream of “PM bullish, everything-else-bearish” headlines in my 28-year career.  And it’s not just the day-to-day headlines, but commentaries regarding their cumulative impact.  Such as, from the past 24 hours alone…

  1. “Wal-Mart quietly cutting prices, squeezing vendors in deflationary supply chain shock”
  2. “Half of all global debt created since 2005 was in China, and here are the implications”
  3. “Minimum wage massacre, as Wendy’s unleashes 1,000 robots to counter higher labor costs”
  4. “Americans now hold over $4.1 trillion in consumer debt, compared to $2.5 trillion just before the 2008 crisis”
  5. “Trump – Nobody knew (overhauling) healthcare could be so complicated”
  6. “Trump seeks historic increase to defense spending”
  7. “Swap spreads surge to five year highs, as debt ceiling despair strikes”
  8. “50% of college students believe their student loan debts will be forgiven”
  9. “Bank of America explains why agricultural economy isn’t likely to get better”
  10. “Target plunges 12% after missing lowest EPS estimate, slashing outlook”
  11. Bundesbank head says “”Given that debts are still high in some euro zone countries, it could cause the ECB to keep interest rates low for longer.”
  12. “U.S. Pending home sales tumble to lowest in a year,” and…
  13. “Real estate markets will never be the same (MUST READ)

And yet, despite a veritable blizzard of “hard” economic data screaming recession – like yesterday’s durable goods and pending home sales reports – the “Dow Jones Propaganda Average” has now risen to a fresh record high for 12 straight days, for the first time in hits 150-year history.  Quite obviously, due to the most egregious market manipulation in recorded history; supported by some of the most blatant “hail mary” rallies ever – as on Friday, when after having been down all night in the futures market, and all day in the cash market, the Dow was turned positive with, I kid you not, seven seconds remaining in the trading day!

Do you think it’s a “coincidence” that the complete decoupling of the Dow from economic reality coincided precisely with the unprecedented “closed door meeting” between Obama and the “too big to fail” bank CEOs on April 11th, 2013, exactly one day before the “alternative currencies destruction” raid on paper Precious Metals that pushed their prices below their 200 week moving averages?

Of course, even the best laid plans of mice and men go awry; and in the case of paper markets underpinned by actual physical fundamentals, like Precious Metals and crude oil, manipulating their prices down (or in the case of oil, up) only creates imbalances that must inevitably reverse.  As well, in paper-only markets like stocks and bonds, due to the egregious economic distortions they cause; and consequently, the political, social, and monetary carnage that develops in their wake.  To that end, I assure you that Dow “dead ringer” support algorithms and Precious Metal “12:00 PM cap of last resort” raids – like yesterday’s over-the-top blatant examples (in gold’s case, at exactly its 200 DMA of $1,264/oz), can’t last forever!

On the morning of Trump’s widely anticipated policy update to Congress – to be delivered this evening – I thought I’d update you of just how out of whack “markets” have become since his election.  When, in the wee hours of November 10th, the powers that be, blindsided by Trump’s “surprise” election, went “all in” manipulating markets on a 24/7 basis.  In the process, creating a stock bubble that has not only blown away the 2007-08 version like it wasn’t there, but surpassed, on nearly all quantitative metrics, the 1999-2000 dotcom bubble – whilst simultaneously, wildly distorting countless other “markets,” from Precious Metals, to base metals and crude oil.

Here’s the Dow, which spent all summer “worrying” – rightfully so – about the “BrExit times ten” ramifications of a Trump Presidency; until “magically,” it became wildly bullish on Trump mere hours after he was elected.

Next, we have the U.S. dollar index – which again, only reflects the dollar’s purchasing power against other fiat toilet papers (particularly the collapsing Euro); NOT items of real value, per the multi-year highs in (U.S. government suppressed) inflation readings of recent months.  Which, irrespective of all the hype – like interest rates below it – peaked in December.  Which I assure you, isn’t being helped any by Trump’s de facto ending of the fallacious “strong dollar policy” in January, by claiming it’s “too strong.”

Next, we have two of the biggest bubbles outside stocks and bonds – base metals and crude oil.  Regarding the former, they have surged from post Financial Crisis lows – despite nearly all other commodity prices remaining mired in bear trends – on the comical hype of Trump’s politically unviable fiscal stimulus plans.  This, after two decades of China’s epic infrastructure spending had ZERO positive impact on base metal prices.

As for the latter, just how much more proof that OPEC’s December “production cut” agreement is a scam can I supply?  As in its wake, demand inexorably weakens, supply continues to rise, and inventories make new all-time high after new all-time high.

Last but not least, we have Precious Metals.  Which, despite the cacophonous hype of their post-Trump demise, have nearly reached the prices they were at the night of the election.  Moreover, as noted above, due to the plunge of countless currencies in the election’s wake, prices have surged in the 180-plus currencies not “managed” by the gold Cartel…

…to the point that silver has decidedly surpassed its 200 DMA; gold is on the verge of doing the same; and both – as discussed yesterday – are closing in on their respective 200 WEEK moving averages.

Thus, in light of the impact of tonight’s Trump speech; the upcoming “Ides of March” arrival of the debt ceiling, FOMC meeting, and Dutch election; and countless other potentially “PM bullish, everything-else-bearish” headlines; I simply ask you to observe what’s going on around you, analyze its cumulative effect, and invest accordingly.

Data and Statistics for these countries : China | Georgia | All
Gold and Silver Prices for these countries : China | Georgia | All
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Andrew Hoffman was a buy-side and sell-side analyst in the United States (including six years as an II-ranked oilfield service analyst at Salomon Smith Barney), but since 2002 his focus has been entirely in the metals markets, principally gold and silver. He recently worked as a consultant to junior mining companies, head of Corporate Development, and VP of Investor Relations for different mining ventures, and is now the Director of Marketing for Miles Franklin, a U.S.-based bullion dealer.
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