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All Cartels Collapse, And This Will Be No Different

IMG Auteur
Published : March 11th, 2017
1499 words - Reading time : 3 - 5 minutes
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Category : Opinions and Analysis

Unequivocally, we are living through an era featuring the most disjointed financial market valuations in global history.  Care of the most maniacal manipulation ever – supported by the most advanced “manipulative machinery”; economic data “cooking”; and psy-ops propaganda from the “evil Troika” of Washington, Wall Street, and the (fake) MSM; the handful of remaining “market participants” have been 100% brain-washed into believing a “new normal” of epic bubble valuations, amidst the worst – and increasingly uncertain – political, economic, and monetary environment in modern times.  And by “modern times,” I’m talking about post-War; as in, World War One, when the Federal Reserve was created via a secretive Christmas recess Congressional vote.

Valuations are so egregious, that a hideously unprofitable social media blight like Snapchat went public at valuations above what Facebook afforded; even as the social media venture capital bubble already burst.  Meanwhile, the rigged casinos that have replaced financial markets are dominated by the algorithms of “too big to fail” banks utilizing inside information; to the point that, for example, JP Morgan’s trading desk has only lost money on two trading days in the past four years.  Simultaneously, the population has been so dumbed down, the average person has lost the ability to discern right versus wrong; let alone, truth versus reality.  To wit, after having list his shirt in the 2000 and 2008 market crashes; and his savings, and financial hope, in the ensuing economic depression (which the Ministry of Truth labels the “third longest expansion in U.S. history); “Joe Sixpack” is finally re-entering the stock market, per recent fund flow data, at said all-time high valuations.  This, whilst institutional money is leaving the casino, and corporate insiders sell stock at the most rapid pace in 29 years.

Not that the institutions are so smart, as “hedge funds” are rapidly disappearing after having under performed the market for every year since 2008 – due to the simple fact that their “genius” managers don’t realize it’s only the market-cap-weighted indices that are rising – due to Central bank buying; whilst the vast majority of stocks are acting exactly like the weak real economy around it.  Heck, institutions had record long crude oil futures positions going into this week, despite the ugliest fundamentals in energy market history; and BAM!, down went oil prices.  Similarly, they now have record short positions in Treasury bonds, just as the dying economy is being strangled by the minuscule rate increase the fraudulent, soon-to-implode “Trump-flation” propaganda meme has catalyzed.  Let alone, the, for lack of a better word, suicidal gambit the Fed commenced last week, in telegraphing a rate hike next week, whilst its own economists lowered their 1Q GDP “growth” forecast to 1.3%.

Let alone, as the retail industry implodes, capital expenditures vanish, and an historic debt ceiling crisis is “scheduled” to commence, ironically, the very day of next week’s FOMC meeting, on the Ides of March.  Not to mention, the Dutch election, kicking off what will likely be the most politically tumultuous era since World War II.  And if there’s one chart that best depicts how weak the U.S. economy has become; and thus, how dependent it is on low interest rates, it’s this one; showing how 2016’s GDP “growth” – double seasonal adjustments, non-revenue producing inputs, and all; of a minuscule 1.9% – utilizing an historically understated “price deflator”; required a whopping $4 of incremental debt, to achieve each $1 of incremental GDP.

True, the Fed has not, quantitatively speaking, been this far “behind the yield curve” since the late 1970s – after which, the most virulent inflation outbreak in post-Civil War history arrived.  And yes, U.S. stocks are demonstrating dotcom-like “irrational exuberance” – this time, LOL, assuming Donald Trump to be the equivalent of the internet boom (even if, until the very evening of his election, the polar opposite assumption prevailed).  However, unless the Fed actually has an agenda far more sinister than even I could imagine – like purposely tanking the economy to sabotage Donald Trump – there is no rational explanation of raising rates; particularly when all other Central banks are going the opposite direction – like the ECB yesterday; amidst the worst political and economic fundamentals in generations.  Which in turn, causes the “too strong” dollar Trump (rightfully) claims is “killing us” to get stronger; and emerging market’s already perilous debt traps to become more inescapable.  Which in turn, fosters additional currency and trade wars, social unrest, and inflation.

Heck, even I’m starting to consider the possibility that something much larger than logic is “behind the curtains”; and clearly, many of you think so, too – based on the astonishing number of views my SGT podcast from yesterday has received (once you see what it was titled – without my input – you’ll know what I mean).  And if you think this morning’s “jobs” report signals economic strength, consider that it, too, is heavily influenced by the soon-to-be-decidedly disproved “Trump-flation” meme, based on citizens’ – albeit, in modest numbers – actually joining the labor force for the first time in years.  However, aside from the 124,000 fictitious “birth-death” model jobs supposedly created, the vast majority of new February “jobs” were of the same, low-paying type as usual – which is exactly why average wage growth yet again disappointed.  Still, despite the sore lack of wage inflation; let alone, plunging prices in energy, the sector most responsible for “inflation” rising above the Fed’s arbitrary 2.0% “rate hike threshold” (you know, like the 6.5% unemployment “rate hike threshold” Janet Yellen eliminated the second she became Fed Chairman three years ago); we’re to believe that after all these years, the Fed is actually worried about inflation now.  As in, the second Donald Trump became President, claiming the dollar is “too strong”; and thus, begging for dovish monetary policy.

On the all-important topic of energy – which for the past year, I, more than perhaps anyone in the investment community have harped on the all-time weak fundamentals, it appears that the chickens are finally coming home to roost on OPEC’s last ditch effort to save prices, via the lie of a “production cut” that no one, aside from Saudi Arabia itself, appears to have actually enacted.  The reason being, in Saudi’s case, that if the proposed $100 billion IPO of state oil company Saudi Aramco doesn’t go through as planned later this year, the possibility of a dramatic Saudi financial crisis exists.  Which I assure you, is a major reason the “oil PPT” magically appeared this year to support prices (particularly at its blatant “Maginot Line” of $50/bbl); undoubtedly, with U.S. government support, given that Saudi Arabia is our last remaining (albeit, not for long) Middle Eastern “friend.”  And oh yeah, the principal purveyor of the dying Petrodollar standard.

Quite obviously, said “oil PPT” is losing the war against the forces of an historic energy glut, which will only become more pervasive with each passing day.  Heck, just read this article from yesterday, about Saudi Arabia’s Finance Minister trying to “bluff” U.S. shale companies into submission – if you want to see just how dire the situation has become, for a Cartel on the brink of extinction.  And trust me, as a Wall Street energy analyst from 1995-2005, I’m well aware of OPEC’s modus operandi; and as well, how their competitive “leverage” has dwindled for decades, to the point of being nearly destroyed.  Which is exactly what will occur in the coming months, when consumers the world round start singing “ding dong, OPEC’s dead!”

As will be the case with the heinous “gold Cartel” – whose illegal actions have not only enriched its members at the “99%’s” expense, but massively destroyed the global economy.  “They” have been suppressing gold and silver far longer than OPEC has been supporting oil prices, and their machinations – which have been “on and off” for the past 50 years, depending on “situational need” – have never been more intense, or blatant.  But in the end, everything they’ve previously attempted has failed – as will be the case now as well.

The “London Gold Pool” of the 1960s was a perfect example of the fail of an overt suppression scheme to overcome the immutable, undefeated forces of “Economic Mother Nature”; whilst today’s “New York Gold Pool,” operated 100% covertly, will fail equally spectacularly, given that the inadvertent “ramifications” of such suppression have sown the seeds of its failure.  I.e., record high demand; record low above-ground, available-for-sale inventories; and inexorably, irreversibly declining production.  This, amidst the backdrop of the terminal stage of history’s largest, most destructive fiat Ponzi scheme; which at this point, must be hyper-inflated to be continue, at an increasingly destructive rate.  Frankly, I’d be shocked if something doesn’t “give” soon – as per the title of yesterday’s Audioblog, “history’s most overdue financial crisis” could arrive at any moment.  And when it does, you’ll be kicking yourself for not having purchased history’s best financial hedges – physical gold and silver – at historically “subsidized” prices.

Data and Statistics for these countries : Georgia | Saudi Arabia | All
Gold and Silver Prices for these countries : Georgia | Saudi Arabia | 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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