Now that the “transition year” between economic purgatory and hell is
over, ask yourself exactly what happened in 2015, and what it means.
Ask yourself, is there something wrong when stock markets are “supported” every
second of every day, yet not only end the year lower – for the first time
since 2008 – but with the worst “breadth” in decades. To wit, following
Friday’s bloodbath of an “anti-Santa Claus rally,” the Dow, S&P, and
Russell all ended the year lower – with the average U.S. stock down
20% from its highs; i.e., in bear market territory. Then again, such a
“breadth anomaly” is hardly surprising, given that outside the U.S., the
average stock marketwas down as well – and far more so, when priced in U.S. dollars.
Worse yet, the so-called “FANG” stocks – Facebook, Amazon, Netflix, and
Google – gained $500 billion of market cap in 2015, whilst the other 496
members of the S&P 500 lost $520 billion. To that end, if
you want to understand just how insane 2015’s “tech bubble 2” has been, read
David Stockman’s latest
article on Amazon’s ludicrous valuation.
Next, ask yourself what it means that in nations with the most powerful
Central banks, interest rates are either at, or near, 500-year lows;
as in Europe, where nearly $2 trillion of sovereign bonds have negative yields,
despite a collapsing economy, expanding social unrest, and political
chaos. Meanwhile, yields on bonds of all kinds are surging
elsewhere. Let alone, in the “high yield” space, which is amidst a
2008-like crash as we speak – helped none the more by the Fed’s insane
decision to raise rates, even if by a mere quarter percent. To that
end, exactly one year ago – with WTI crude, the CRB Commodity Index, and the
Baltic Dry Index trading at $54/bbl, 231, and 780, respectively, versus
$37/bbl, 176, and 478 today, I espoused “2015 shale oil equals 2008 subprime
mortgages.” Yet, even I couldn’t have imagined how much
“potential damage” the post-2008 money printing/financial engineering bubble
has created – and consequently, how much worse the upcoming crash will be.
Regarding the Fed’s historic “policy error” – in fueling further
commodity, currency, and corporate earnings collapses, by simply threatening
to tighten policy (not actually doing it, as the Fed Funds rate is
still 0.12%) – ask yourself why it would even dream of “raising
rates” into the worst global economy of our lifetimes, as highlighted by the
last economic data points of the year; i.e., the Chicago Fed’s horrifying
November print of 42.9 – featuring the lowest new orders and backlogs since
early 2009; and one of the largest weekly jobless claims surges on
record. Throw in the economy-destroying expansions of Obamacare and the
minimum wage that commenced January 1st; the expanding Middle East
war; and the recent spate of destabilizing worldwide political developments –
and it becomes increasingly more puzzling why the Fed would take such an
arrogant, self-defeating stance. I mean, take a look at this chart of
how the world looked a year ago, versus today, and tell me if you think
a prudent Central bank would opt to raise rates.
Which brings me to the last question you should ask yourself, as we
commence what I believe will be the most tumultuous political and economic
year of our lifetimes. Which is, why have dollar-priced gold and silver
declined for the past four-plus years? I mean, weren’t we told that the
U.S. breaching its $14.1 trillion “debt ceiling” was why dollar-priced gold
surged to $1,920/oz, and silver to nearly $50/oz? Not to mention,
explosive money printing; European political deterioration; worldwide
economic collapse; and oh yeah, surging physical demand? I mean, if you
think the above chart is damning, consider what a chart comparing the
aforementioned issues, from 2011 to today, would look like! In other
words, an “anomaly” of epic proportions; i.e, a veritable “perfect storm” of
Precious Metal bullish factors, amidst an epic (paper) price crash.
Which, like all other anomalies, must inevitably “revert to the mean”;
particularly when such factors are only becoming more Precious Metal
bullish with each passing day.
In other words, the epic “deformation” caused by four years of historic,
unparalleled market manipulation – of not just Precious Metals, but stocks,
bonds, and any “markets” governments could get their hands on – is ripe for
reversal, as said perfect storm passes through its “eye,” exposing the world
to its deadly “back end.” And not just any reversal, but one
more violent, and terrifying, than any in recorded history – politically,
economically, and socially. To which, we simply suggest you “ask
yourself” what you think are the most likely scenarios. And
equally importantly, are you prepared for what’s coming?
