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Central Bankers With Itchy Trigger Fingers

IMG Auteur
Published : May 04th, 2017
1736 words - Reading time : 4 - 6 minutes
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Category : Opinions and Analysis

In Rocky’s fights with Apollo Creed (2), Clubber Lang, Ivan Drago, and even Tommy Gunn, he looked like he would lose in the early rounds.  And yet, he came away victorious each time, to the chagrin of detractors, “experts,” and bettors alike.  Ditto for Donald Trump and the BrExit – even if, in those cases, the betting lines were rigged, and the audience “over sampled.”  Thus, don’t be surprised if Marine LePen – who for some reason, is considered a “longshot” despite having barely lost “Round One”; wins “Round Two” this weekend.  Let alone, running against a pathetically lame candidate who, in boxing terms, doesn’t hold a candle to Creed, Lang, Drago, or Tommy Gunn.  Frankly, even Hillary Clinton’s stature is Churchill-esque compared to Emmanuel Macron.

In yesterday’s “how will history’s largest bubble (and anti-bubble) end?”, I noted how outrageous it was that the stock markets of some of the world’s worst political and economic basket cases were rising – care of the most egregious market rigging in global history.  Clearly, it will end badly – very badly; and whether the losses are entirely in real terms – or both real and nominal; is immaterial.  The timing is the biggest wildcard, but when even Apple is missing earnings; and Amazon “smashing” earnings solely due to accounting gimmicks; as the economy is flat-lining at best; clearly; said timing is far more likely to be “sooner” rather than “later.”  Perhaps much sooner, if Marine Le Pen – with the political tide at her back, and France on the verge of economic collapse – can pull off a “BrExit” this weekend.  And if not France, a handful of other European nations hold similar catalytic potential, if this 18-34-year-old response to the below question is any indication.

Consider that since November’s Italian Constitutional Reform Referendum – in which, the political status quo was dramatically defeated, and the pro-EU Prime Minister decidedly overthrown; the Italian stock market has surged, whilst its unemployment rate has remained stubbornly near its highest post-War level; which I assure you, won’t be helped any by yesterday’s Alitalia bankruptcy filing.  Sometime soon, elections will need to be held to replace Matteo Renzi as Prime Minister – and per this chart, despite the “surging” stock market, Italian political risk is surging far faster.

“Risk” of all kinds has never been higher; which is why Central bankers have NEVER worked harder to rig markets, knowing full well that “history’s most overdue financial crisis” is inevitable; and, if they take their foot off the gas pedal for a nanosecond, imminent.  That said, NOTHING is riskier than going “pedal to the medal” with a Formula I race car; as if you don’t crash into something when going straight, you certainly will at the first curve – which is a mathematically certainty for both race cars and economies; particularly ones like the U.S., which according to the government’s comically rigged data, is amidst its second longest “expansion” of the 47 since the Declaration of Independence was signed.  Not to mention, the weakest, per this “scariest chart ever,” of the relentless GDP decline over not just years, but decades.

2016’s (government-goosed) 1.6% GDP “growth” was the lowest since…drum roll please…2009, at the heart of the Financial Crisis; whilst 2017’s first quarter “growth” of just 0.7% (compared to the Fed’s initial forecast of 3.5%) was the worst since the first quarter of 2015 – when the reported 0.5% “growth” was deemed “wrong”; and thus, “double seasonally adjusted” to make it “right.” In other words, the first quarter of 2017 would have been significantly lower if said “double seasonal adjusting” wasn’t utilized to goose it higher.

That said, the past week’s horrific economic data may well push the final tally into negative territory irrespective, as all subsequent March data releases have been negative; particularly, construction spending (negative 0.2%) and personal consumption (zero).  But don’t worry, the Fed has made its initial forecast for second quarter GDP growth; which, despite not a shred of logic behind it, or evidence to support it, is – I kid you not…wait for it…4.3%!  And please don’t consider yesterday’s horrifying April automobile sales “bloodbath”; or collapsing oil prices, as OPEC’s fraudulent “production cut” implodes upon the world’s largest revenue-producing industry.  Or, for that matter, Trump’s failure to “repeal and replace” Obamacare; propose a viable tax cut plan; or even outline the “yuugge” fiscal stimulus that’s supposed to “reflate” the rapidly dying economy.  You know, the “reasons” why the stock market has been propelled since the election to dotcom-like valuations and sentiment.

Before I get to today’s principal topic – mere hours before the Fed issues its newest; and likely, far more dovish than anticipated policy statement – consider just how egregious the most recent Precious Metal attack has been; which, irrespective, leaves dollar-priced gold and silver 9% and 7% higher for the year, respectively.  Not to mention, 20% and 25%, respectively, from their December 2015 lows.

On April 13th – one week after the U.S. attacked Syria, and three days before it sent a nuclear-powered warship to North Korea – gold and silver prices were roughly $1,290/oz and $18.50/oz, compared to their recently-upwardly-breached 200 week moving averages of $1,239/oz and $17.89/oz, respectively.  “Coincidentally,” the Cartel, as of April 18th, had established its largest-ever (naked) silver short position.  Which, as we learned on Friday, they’ve started to aggressively unwind.  However, in the process, they’ve knocked paper silver down – in true “COMEX 101” manipulative fashion; amidst the most violently PiMBEEB news flow imaginable; by 9% since, whilst gold – still, well above its 200 week moving average – declined less than 3% (and the HUI, FYI, 13%).

This, as the 10-year Treasury yield has barely budged – from 2.27% to this morning’s 2.28%; whilst the U.S. dollar index has declined 1.5%; “Dr. Copper” 2%; and WTI crude, a whopping 9%.  In other words, not a shred of “Trump-flation” to be seen – much less, following Friday’s horrific GDP report, and the even worse economic data since.  And oh yeah, if technical analysis is to be trusted, silver’s hasn’t been this “oversold” since the aforementioned December 2015 bottom; let alone, amidst an accelerating mining industry cataclysm assured to yield declining production for years to come – per the conclusion of not only Miles Franklin’s “all-star silver panel,” but mainstream firms like Credit Suisse and Standard & Poor’s.  And did I mention that including this morning’s early “trading,” silver is down for a record 13 days in a row?

The upshot being, that the Cartel’s all-time high silver short could not have more blatantly signaled the fear the powers that be are experiencing; and subsequently, their desperation to avert the inevitable implosion of confidence in the fiat toilet paper their “partners in crime” at the “leading” Western Central banks print; and simultaneously, an explosion of demand for “alternative currencies” like physical gold and silver.  And oh yeah, Bitcoin, whose all-time high yesterday is indicative of what will inevitably occur in Precious Metals, given their (inadvertently) complimentary roles as “twin destroyers of the fiat regime.”

As for today’s principal topic, it was catalyzed by this article, discussing how the Bank of Japan’s balance sheet “value” – of assets purchased way above their true values, which can never be sold – has reached 90% of Japanese GDP.  Incredibly, at $4.4 trillion, the BOJ’s balance sheet is now the same size as the Fed’s, despite Japan’s population being barely a third of America’s; and it’s GDP, a mere quarter.  Yes, I know the Fed owns countless trillions of “off balance sheet” assets that we’ll never learn of – including who knows how many stocks, given that the “Dow Jones Propaganda Average” bottoms nearly every day at the 10:00 AM time stamp of the Fed’s covert “open market operations.”  Irrespective, Haruhiko Kuroda’s “itchy fingers” have put Japan in an historically self-destructive situation, which must end with the cataclysmic “deflation” that will destroy the “land of the setting sun” more thoroughly than the Fukishima tsunami ever could.  Unless, of course, they resort to what they, and every fiat-currency-administering Central bank of the last 1,000 years – has utilized, to kick the dying status quo’s “can” that last “precious” inch.  I.e, hyper-inflation.

Which sadly, is the same situation all Central banks face today – with the only reason Japan got there first being the “demographic hell” I first warned of five years ago – when Japan’s population was nearly a decade older, on average, than the rest of the world.  Which ominously, much of the world has caught up to; particularly Germany, Italy, and Greece, which are today, nearly as old as Japan.  Which explains why the ECB is “monetizing” assets as rapidly as the BOJ; and consequently, why every imaginable manipulation is being attempted to prevent Marine Le Pen from winning this weekend.

As trust me, if such a “BrExit times 100” event transpires, it will be game over for the ECB, forever.  Which will only make things dramatically worse, as it will cause splintering European nations – like France, Italy, and Greece – to hyper-inflate their own, far more inferior currencies; until inevitably, the entire worldwide fiat regime implodes – causing investors, worldwide, to flee toward the only monetary safe havens the world has ever known, physical gold and silver.  And oh yeah, Bitcoin; but I assure you, there’ll be more than enough monetary hard asset demand to go around.

As for the Fed, they too are on their last monetary “legs.”  And now that Donald Trump has joined the ignominious company of Shinzo Abe, in being the only “first world” heads of state to explicitly order their Central banks to print money, it’s only a matter of time before they, too, re-ignite the itchy monetary trigger fingers they so proudly displayed in 2008-14 – in taking interest rates down to zero, and enacting QE’s I, II, and III.  Remember, Trump can appoint an entirely new FOMC board by the end of 2018; which I assure you, will be done full consideration that the “too strong” dollar is killing us; and consequently, that a “low interest policy” must be maintained.

Thus, I ask, do you think the record string of Precious Metal “declines” – amidst the most violently “PiMBEEB,” or Precious Metal bullish, everything-else-bearish” news flow imaginable – is a good time to insure your wealth against the most “itchy” Central banking trigger fingers of modern times?

Data and Statistics for these countries : France | Georgia | Germany | Greece | Italy | Japan | Syria | All
Gold and Silver Prices for these countries : France | Georgia | Germany | Greece | Italy | Japan | Syria | 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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