It’s Monday morning, and I cannot overemphasize the importance of the
topics discussed in Friday’s “Emergency Podcast”
with Bix Weir – including Thursday’s Federal Reserve and Bank of Japan policy
statements; Obama’s “damned if he does, damned if he doesn’t” signature or
veto of the JASTA, or Justice Against Sponsors of Terrorism Act, also on
Thursday; the first Presidential debate, a week from today; the
much-ballyhooed, but likely all-bark-but-no-bite Algiers oil producers
meeting a day later; and oh yeah, the accelerating Deutsche Bank stock
collapse. Not to mention, upcoming referendums and/or elections across
Europe; the looming GrExit crisis and Catalonian secession; and the
unquestionably intertwined ramifications of all of the above; particularly as
relates to Precious Metals, which equally unquestionably, will experience a
dramatic demand surge if the “powers that be” lose control of any or all of
the above. Or, for that matter, countless “black swan” events that cannot
possibly be predicted, despite logic suggesting anything that can go wrong
under such circumstances, likely will.
Above all, “it’s the debt, stupid.” To which, I feel compelled to
highlight Bix’s quote that “no country in the history of countries has ever
paid off its debt…as they either devalue their currency, or default.” This is
the gist of the problem affecting all the world’s fiat currencies; each of
which, is amidst its final, catastrophic stage of collapse – although
clearly, some are further along than others. No matter, all will eventually
get there – including those at the top of the “monetary totem pole” – once
Central banks realize there is no alternative to all-out hyperinflation, rate
suppression, and asset monetization. In other words, the definition of how a
Ponzi scheme, which is exactly what fiat currency is, implodes.
The principal catalyst for Friday’s podcast was the incomprehensible act
of financial sabotage – and frankly, political warfare – that was the
Department of Justice’s decision to charge Deutsche Bank $14 billion for
committing the same crimes as all other banks have received ZERO penalties
for. An amount, I might add, identical to what Apple is being penalized by
the European Union for “tax evasion.” Not to mention, this amount is roughly
two-thirds of Deutsche Bank’s remaining market capitalization. To that end,
I’ll leave it to you to decide why such an incredibly destructive decision
was made, just six weeks before the most important election in U.S. history.
But irrespective, no one can deny that “whoever” made such a decision, knew
full well the potentially devastating political; economic; and above all,
financial market ramifications.
To that end, the weekend’s news was wrought with chaos. Again, making one
wonder if such events are connected – or alternatively, the rapidly
progressing symptoms of a world at the edge of dramatic political, economic,
and social changes. Such as, random bomb attacks in New York and New Jersey;
an ISIS-claimed stabbing spree in Minnesota; the U.S. military “accidentally”
killing 62 Syrian troops, who were theoretically fighting against ISIS;
Angela Merkel’s Christian Democratic Party (what happened to the separation
of church and state?) suffering a stunning defeat in Berlin’s elections, at
the hands of the resurgent, anti-EU “Alternative for Deutschland” party;
300,000 Germans protesting the globalist TTIP and CETA trade proposals; a
report showing that Central banks, led by China, sold a whopping $343 billion
of U.S. Treasury bonds in the last 12 months; Russia cutting interest rates,
marking the 673rd Central bank easing since the 2008 crisis; and Donald
Trump’s continuing polls surge, despite “betting lines” stating otherwise.
Just as they did hours before the Brexit, when equally rigged “betting lines”
suggested a strong “Bremain” victory. Last but not least, the “Land of the
Setting Sun” continues to lead all “first world” nations in its cumulative
plunge down the rabbit hole to mediocrity – as it’s government hit a new low
of lunacy, in lambasting its shrinking population’s “sexual apathy.”
Apparently, the equivalent of “sexual stimulus” – i.e., offering financial
incentives, with printed money – isn’t causing Japanese citizens to have more
children. Perhaps it’s because the Bank of Japan’s hyperinflationary
policies, including negative interest rates, have made the cost of raising
children too expensive?
Financial market damage control, at least early on, is in full swing; as
despite Deutsche Bank falling further, and interest rates creeping higher,
the PPT is pushing stocks up anew. The pathetically comical “reason”
scrolling across CNBC is “Venezuela confident in an energy agreement” at
Algiers next week, despite the fact that oil’s “bounce” is tepid at best. Let
alone, that such a statement, like the other hundred “oil PPT” circulated
rumors, is based on absolutely nothing. Let alone, from Venezuela – which
isn’t even a major OPEC producer anymore, and can barely survive its
horrifying hyperinflation on a daily basis. As for Precious Metals, we didn’t
see a “Sunday Night Sentiment” attack for the first time in five months; or
for that matter, a “2:15 am” raid for only the 106th time I the past 807
trading days. But don’t worry, even though silver prices surged to $19.20/oz
– where it still trades, as I write – the Cartel “recovered its senses,” via
prototypical “Cartel Herald” algorithm, in time for New York “pre-market”
trading.
At this point, I’ve said all I can say about Thursday’s Fed and BOJ
meetings – in a nutshell, that in both cases, I expect the results to be,
putting it mildly, extraordinarily dovish. And since the powers that be are
likely to throw the kitchen sink at market support before said decisions are
made – that is, unless the Deutsche Bank news represented a new,
market-destroying “strategy” – I thought it a good time to reprise the
question of “what will happen” if financial markets spiral out of control
(FYI, as I edit, Deutsche Bank stock is plunging anew).
The answer, of course, is that no one really knows – particularly if there
are indeed “agendas” in motion, such as those that Bix Weir theorizes.
However, the one thing I am sure of – and always have been – is that physical
Precious Metal demand, which is already at a global all-time high, will rise
more than any other asset class.
In 2008, the powers that be did everything in their power to make it
appear that Treasury bonds, not Precious Metals, were the “ultimate safe
haven” during times of crisis. Heck, they’ve utilized that same tactic every
time financial markets have fallen in my memory, even as markets’ tell-tale
“initial instinct” is always to take Precious Metals higher. Unfortunately,
this strategy backfired in a major way in 2008 – as by November, not only had
paper PM prices bottomed, but physical inventory sold out. Even paper gold
ended the year higher, if only by the slightest of margins, outperforming
absolutely everything except government-supported Treasury bonds. Which this
time around, are going to need a lot more government support, now that
interest rates are at all-time lows, whilst government debt and deficits
all-time highs. And per above, Central banks are selling them en masse, to
fund their own exploding deficits, and protect their imploding currencies.
That said, physical gold was up perhaps 20% in 2008, given the exploding
premiums the sold out bullion industry experienced; whilst silver, despite
paper prices falling roughly 50%, was essentially unchanged, given the
roughly 100% premiums experienced in sold out physical markets. And what do
you know, a mere three years later, paper gold had rocketed from $770/oz to
$1,920/oz, and paper silver $10 to $50.
But that was 2008, an environment when global debt was barely half of what
it is today; whilst currencies were dramatically higher; political unity and
social stability non-issues; and Central banks had both credibility and
balance sheet “dry powder.” As for Precious Metals, physical demand was
dramatically less than it is today (2008 U.S. Mint Silver Eagles sales were
19 million ounces, compared to 47 million in 2015); mine production was still
rising, and above-ground, available-for-sale inventory significantly higher.
In other words, eight years of comprehensive financial market and economic
intervention have created a “perfect storm” of potential Precious Metals
tightness; compared to the polar opposite condition – i.e., massive
oversupply – of essentially everything else, from stocks; to bonds,
commodities, currencies – and most damning of all, DEBT.
In other words, if anything even remotely close to 2008 unfolds, the
results will be as “leveraged” as Deutsche Bank’s derivative book –
politically, economically, socially, and monetarily. Few asset classes even
have a chance to avoid all-out destruction, as anything related to “risk”
will be destroyed. Which leaves just money, i.e., physical gold and silver.
Which, in a world where the very definition of money will be in question,
will likely be at the receiving end of the greatest demand surge in monetary
history. In my humble opinion, of course.
