For years, we have highlighted the catastrophic global ramifications of Central bank generated inflation, particularly following the unprecedented post-2008 money printing spree that continues unfettered today. First to experience its horrific consequences were “Arab Spring” nations whose citizens spend the highest proportion of their incomes on food. Since those 2010-11 uprisings, the fiat cancer has spread worldwide, catalyzed by dramatically escalated money printing following 2011’s Financial Meltdown II. Led by the Fed’s QE3, Japan’s “Abenomics,” the ECB’s LTRO and NIRP, and China’s $25 trillion “shadow banking” explosion, the world has been flooded with worthless currency to “save the banks” and promote economic “recovery.” Unfortunately, such goals have decidedly not been met; but instead, surging inflation of food, energy, and other “need versus want” goods. Consequently, social unrest has spread like wildfire, yielding a series of potentially cataclysmic revolutions and wars.
Late last year, only Vladimir Putin’s masterful diplomatic skills prevented the U.S. from potentially starting World War III in Syria. However, the “Cold War” has grown more frigid since, care of the expanding Ukrainian crisis we initially discussed in March 3rds “This Is Why We Do What We Do.” Moreover, the Iraqi societal collapse America caused threatens to explode out of control at any moment; while in Israel, the most vicious fighting in decades is further destabilizing the world’s most historically volatile region. In the process, crude oil prices have surged to multi-year highs; and following last week’s MH-17 tragedy, the odds of a meaningful energy price decline appear slim.
As for today’s title, it’s appeared in numerous articles over the past week. However, nothing is more prevalent on our minds, as pertains to the urgency to protect oneself from what may morph into a “worst-case scenario.” After all, countless major wars have been catalyzed by “black swan” events that could not possibly have been predicted; none more so than the seemingly innocuous event of Austrian Archduke Franz Ferdinand’s assassination in June 2014 – which ultimately marked the beginning of World War I.
In Friday’s “Coincidence,” we didn’t give an opinion of who was behind the MH-17 airline tragedy; but instead, simply presented the available facts. Typically such events give rise to countless, unsubstantiated theories; and often, the truth is never completely revealed. However, as time passes, and more and more evidence is presented, said truth typically becomes more visible.
As for MH-17, we are not saying the true story will ever be learned. However, the initial evidence does not bode well for Western propaganda that the “Russians did it.” Perhaps they did; but to a man, I can’t comprehend a single reason why they would want to down a commercial airliner carrying Dutch and Malaysian passengers – much less, the motivation for “pro-Russian rebels” to do so. Irrespective, as further details are circulated – starting with the contents of the “black box,” which frankly, I don’t expect to say much – the potential for the situation spiraling out of control is extremely powerful. “Official” efforts – both American and Russian – to “spin” or even lie about the truth will be equally strong, as will efforts to stabilize financial markets to “prove” all’s well. However, in the face of such cataclysmic events, manipulations have always been overwhelmed by reality. When all is said and done, MH-17 may in fact prove to be the 21st century’s “Archduke Ferdinand Moment”; but even if it’s not, the day of reckoning for the dying fiat currency regime is coming and soon.
Again, the goals of the Miles Franklin Blog are not to conclude what happened, but help you to come to your own conclusions. Clearly, the initial evidence does not bode well for America’s initial propaganda blitz blaming the Russians; and if additional evidence points in this direction – i.e., the perpetrators were more likely U.S.-backed Ukrainian government forces; global sentiment and economic policy will further isolate the already vilified, financially vulnerable United States of Money Printing.
Yesterday, the Russians released a detailed forensic analysis that strains the credibility of said U.S. allegations including photos showing Ukrainian government forces deploying anti-aircraft BUK missiles. If so, this is quite damning evidence, so we’ll see how the U.S. responds to the ten pointed questions the Russians have posed. Ominously, the Chinese government vehemently attacked the U.S. response to blame Russia; and after reading MH-17 commentaries from patriotic Americans like Ron Paul and Paul Craig Roberts, it’s increasingly difficult to believe global consensus will form behind the U.S., to the detriment of the Russians. And the more anti-U.S. sentiment increases, the higher the likely that the inevitable “end game” commences sooner rather than later. To wit, when I saw Jim Sinclair speak a month ago, he rationalized his $2,000 gold by year-end prediction with expectations of a “significant attack on dollar hegemony”; which, given the current geopolitical (and economic) circumstances, sounds more probable than possible.
As for yesterday’s financial market “response” to the weekend’s news, what could be more blatant than said “official efforts” to whitewash reality. Overnight, Treasury yields plunged along with Western equity markets, whilst crude oil prices surged nearly $2/barrel to $105/bbl. as I write Tuesday morning. However, as you can see, gold’s logical rally was capped by a prototypical “Cartel Herald” algorithm at exactly the 8:20 AM EST COMEX open, “coincidentally” at that same $1,320/oz. “line in the sand” the Cartel has defended since Whirlybird Janet’s massively dovish post-FOMC press conference last month. Meanwhile, the “Dow Jones Propaganda Average’s” decline was capped at -1.0%, which I long ago deemed the PPT’s “ultimate limit down.” And voila – following an equally prototypical “dead ringer” algorithm it was nearly turned positive by day’s end!
This morning, the only “news” thus far is catastrophically bad earnings from global consumer spending bellwether McDonalds; but in true manipulative form, the Cartel attacked first at the ultra-thin “2:15 AM” open of the London paper pre-market session, and again at the COMEX open creating yet another battle for the key round number of $1,300/oz. where significant international buying interest clearly resides. But wait; just 20 minutes later – at this point, due to no “news” item I can see gold just surged back to $1,313/oz., whilst silver’s ongoing war for $21/oz. continues to rage.
Only time will tell if MH-17 serves as a catalyst for escalated global geopolitical and/or economic warfare. However, as regards precious metals it matters not; as ultimately, the war between real and fraudulent money always ends the same way. Worldwide physical demand will inexorably increase no matter what happens in the Ukraine; and as we discussed yesterday, mining costs are rising exponentially.
To that end, let’s end today’s discussion with the ugly charts below, depicting the utter disappearance of gold mining discoveries and simultaneous dramatic increase in the “time to production” of the few viable projects. Last year, we wrote of the collapse of the only significantgold mining discovery in the past 12 years; and after viewing the below charts, we think you’ll be further emboldened by our conclusion that not only has global gold mining peaked, but will likely precipitously decline in the coming years.
In our view, the collision between falling PM supply and surging demand will be historic; sadly, amidst a very difficult world where owning gold and silver may represent the difference between “financial life and death.” Hopefully, you are considering such possibilities as well; and subsequently, acting on them.
