Maybe They Just Don’t Want To Buy Them!

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Published : May 11th, 2017
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Category : Opinions and Analysis

Wasn’t it yesterday that I showed charts of “Dow Jones Propaganda Average” trading of the past week – during which, the PPT’s signature “dead ringer” algorithm held it up every day?  And the day before, when I showed how the exact same algorithm has been used in China since its early 2015 stock market crash?  Well, lo and behold, let’s take a look at this morning’s Chinese stock trading – whilst Chinese commodity prices plunged to new six-month lows; right next to yesterday’s U.S. close.  See if you can tell the difference (Hint: China has a “lunch break,” when stock markets are closed).

This, as Precious Metals continue to be subjected to “sixth sigma” price suppression algorithms at a half-dozen “key attack times” each day.  Plus any time deemed “necessary” to prolong history’s largest; most destructive; and for the first time global, fiat Ponzi Scheme – which must inevitably implode in the “first world,” as it already has in much of the second and third.  To that end, the historic financial bubbles created are so enormous, the ultimate crash will be thermonuclear in scope – certainly in real terms; and potentially, in nominal terms as well.

The five largest NASDAQ stocks – Apple, Alphabet, Microsoft, Facebook, and Amazon (“coincidentally,” the Bank of Switzerland’s five largest holdings) – have a market capitalization of nearly $3 trillion!  This compared to $7 trillion for all the gold ever mined – most of which, will never be sold; $700 billion for all the silver ever mined – most of which, has been consumed by industrial purposes; and $30 billion for little ‘ol Bitcoin.  Gee, I wonder how this unprecedentedly large chasm between over- and under-valuation will ultimately resolve.  Let alone, the ugly pink elephant in the room, of the lowest (PPT-orchestrated) volatility (i.e, fear) indicators in three decades.

Everywhere one looks, economic prospects are weakening – with zero chance of improving, given the historic overcapacity caused by four-plus decades of Central bank fueled capital misallocation, with “a little help” from Wall Street, whose “financial engineering” breakthroughs since the 1999 Glass-Steagall repeal have in fact, in Warren Buffet’s words, acted as “weapons of mass financial destruction” on the global political, economic, and monetary realms.  Per this fine article, the world’s largest revenue-producing, and government-sustaining industry, crude oil production, will be hopelessly glutted for years to come; which apparently, even OPEC itself realizes, per this damning article.  Heck, even Trump’s own Commerce Secretary, Wilbur Ross, admitted yesterday that 3% GDP growth this year is but a pipe dream.  And what’s this?  The capital of one of the nation’s most Wall-Street-suckled states – Hartford, Connecticut – is about to declare bankruptcy?

Which brings me to today’s principal topic – U.S. interest rates, as symbolized by the  benchmark ten-year Treasury yield.  Which, as long-time readers know well, I called the top on twice in early 2013 – when the Fed’s now four-year propaganda scheme regarding “tightening” monetary policy commenced.  Not uncoincidentally, at exactly the time of the April 2013 “alternative currency destruction” Cartel raids, that pushed gold and silver below their respective 200 week moving averages for the first time in ten years.  First, in January 2013, at 3.0%; and subsequently in May 2013, at 2.6%.

Similarly, I “called” the current “top” in early January this year, in my “2.5%, Nuff’ Said” article.  The reason being, the exact same reason I said 3.0% was the top in January 2013, and 2.6% four months later.  I.e., the U.S. (and global) economy simply cannot handle rates any higher – given how debt service costs multiply exponentially with rising interest rates; particularly in an historically, hopelessly indebted society that must borrow more, at increasingly rapid rates, to remain “solvent.”  Gee, that sounds like the definition of a Ponzi Scheme, huh?

Since that “call,” the 10-year Treasury yield has fallen as low as 2.17% – and currently, sits at 2.41% as I write.  The “reason” it’s risen from said lows, according to the fake news MSM and Wall Street “analysts,” is the Fed intends to raise rates a quarter point each in June and December – irrespective of collapsing, across-the-board, hard economic data.  Not to mention, surging bond defaults in today’s triple “subprime” bubbles of automobile, student, and credit card loans – coupled with the exploding debt fallout of the unfolding “retail Armageddon” (see today’s abysmal Macy’s earnings).  And oh yeah, the ticking time bomb of the unprecedented (high-yield) debt accumulation in the energy industry – which, aside from “waiters and bartenders,” is the only U.S. business sector to have generated positive job growth since the 2008 crisis.

I’m not going to rehash what I’ve said countless times already – of the Fed’s true motivation for “raising rates” in such an ominous economic environment.  But suffice to say, they are well aware that America’s second longest-ever “expansion” must soon end; and so long as the PPT can support the “Dow Jones Propaganda Average” whilst it raises rates, Whirlybird Janet is extremely anxious to re-coup some “ammunition” to lower rates anew, when said recession inevitably arrives – let alone, “history’s most overdue financial crisis.”  That said, the thought that a handful of quarter-point rate decreases will matter – from today’s already historically-low level of 0.87%, which has failed to revive real economic activity for a decade – is flat-out comical.  But then again, until said PPT – along with its partners-in-crime at the Exchange Stabilization Fund and Gold Cartel – loses control, the fraudulent “narrative” will suggest the Fed can indeed “save the world” by re-lowering rates.  That, and launching a “bazooka” of a QE4 bombshell, of course.

In recent weeks, interest rates have – counter to investors’ historic “knee-jerk” reaction to nearly a decade of overt and covert quantitative easing – crept higher despite said horrific economic data.  Not that 2.17% to 2.41% makes a trend, but it is clearly something to note – particularly when both yesterday’s U.S. import prices and today’s U.S. PPI readings came in way above expectations.  You know, the higher-than-expected inflation indicators that, in a freely-traded market, would make gold and silver prices soar.

Clearly, recently declining energy prices were not the reason for such increases – so perhaps the dollar’s (modest) decline in recent weeks, pre-French elections, had something to do with it.  But perhaps not, as I KID YOU NOT, the largest component of today’s “unexpected” 0.5% April PPI surge was…drum roll please…financial and investment banking costs.  My friends, if that doesn’t mark the top of an historic bubble – let alone, the peak of societal hubris – I don’t know what does!

That said, it remains to be seen if the 10-year yield can in fact pierce 2.5% to the upside – as given U.S. financial markets’ recent, sordid history, every time the economic going gets tough, sheep-like investors flock into the world’s most overvalued asset class en masse, due to the knee-jerk belief that economic weakness equals Treasury bond strength.  Never mind that the issuer is the world’s most insolvent entity, demonstrating parabolic, irreversible debt growth; and a long-standing ability and willingness to use its all-powerful printing press to monetize it.  Which of course it will – as not only has every fiat-currency-issuing Central bank done so throughout history, but every “reserve-currency” manager.  Not to mention, the aforementioned, giant pink elephant in the room; i.e., even modest rate increases will destroy what’s left of said “recovery.”  Which, I might add, posted barely positive “growth” in the first quarter, despite the government’s typically epic data-goosing efforts.

Yes, I know the Fed – and foreign Central banks, too – monetize countless trillions of Treasury bonds, both overtly and covertly, each year.  And yes, investors will continue to buy Treasuries to “hedge” economic weakness – particularly given the fact that U.S. rates, unlike those in ECB- and BOJ-controlled markets, are more than ZERO.  However, at some point the “bond vigilantes” will inevitably arrive; when investors – perhaps, amidst a singular “a-ha” moment; realize that real Treasury bond returns will be decidedly negative; and equally possibly, capital losses could be catastrophic.  Ultimately, that moment must inevitably arrive – particularly, with U.S. rates near 250-year lows, with a Federal government is on the verge of dramatically escalating history’s largest, most eminently unpayable, debt edifice.

Perhaps last week’s milestone, of U.S. government annual debt servicing costs rising above $500 billion for the first time ever, is the catalyst for said “vigilantes” to finally, inevitably arrive – claiming, “we just don’t want to buy them anymore!”  But even if it’s not, I assure you said catalyst is coming; likely, sooner rather than later.  And when it does, if you haven’t yet protected your portfolio with the best “inflation protection assets” the world has ever known – i.e., physical gold and silver – it may become very difficult to do so, at any price.

Data and Statistics for these countries : China | Georgia | Switzerland | All
Gold and Silver Prices for these countries : China | Georgia | Switzerland | 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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