Being a teenager in the 1960s, my early formative years
were all about the Beatles, JFK's assassination, sex, drugs, rock and roll,
and hockey, but when it came to entertaining myself, thanks to my mother, who
was a voracious reader, I learned to love to read books. I remember the day
that Mum handed me Ian Fleming"s "To Russia with Love" and
since I was barely into my teens, I think it was the first time I was ever
introduced to soft "porn" (which was predominant in all of the Bond
books), which may have been Mum's way of quietly giving me a Sex Ed lesson.
As I grew older and moved away at 16 to play junior hockey with and against
men in their 20s, I would ride the buses between St. Catharines and Ottawa
with two or three paperbacks tucked into the zipper compartment of my
carry-on bag.
Later in university, the road trips were usually on
airplanes and buses where my preferred reading topics included J.R.R.
Tolkien's "The Hobbit" and Ken Kesey's "One Flew Over the
Cuckoo's Nest," but nothing captured my heightened appreciation of
depravity in humor and journalism more than Hunter S. Thompson's many works
ranging from his anecdotal account of life with the Hells's Angels (1967) to
the 1972 Nixon-bashing "Fear and Loathing on the Campaign Trail
'72." Hunter S. Thompson was to the 1960s and 1970s what Matt Taibbi is
to the current Western "narrative." While Matt Taibbi coined that
marvelous description of Goldman Sacks as "a great vampire squid wrapped
around the face of humanity, relentlessly jabbing its blood funnel into
anything that smells like money," Hunter S. Thompson would lob
invectives like "In a nation run by swine, all pigs are upward-mobile
and the rest of us are f***d until we can put our acts together. . ."
In every generation, there are always those journalists
that capture the national collective in print such that you need only read
one of their books and you are immediately transported back in time whether
it is James A. Michener's "Hawaii" or Steinbeck's "The Grapes
of Wrath," but Hunter Thompson's works include passages that are
literally timeless; the people he describes are found in every era and in
every part of the globe since the dawn of creation. In light of the rise of
the name "Donald Trump" to the point of total global dominance of
the airwaves and the blogosphere, you really do have to appreciate the
following passage written in the 1970s near to the end of the presidency of
Richard Nixon:
"We've come to a point where every
four years this national fever rises up - this hunger for the Saviour, the
White Knight, the Man on Horseback - and whoever wins becomes so immensely
powerful, like Nixon is now, that when you vote for President today you're
talking about giving a man dictatorial power for four years. I think it might
be better to have the President sort of like the King of England - or the
Queen - and have the real business of the presidency conducted by. . . a City
Manager-type, a Prime Minister, somebody who"s directly answerable to
Congress, rather than a person who moves all his friends into the White House
and does whatever he wants for four years. The whole framework of the presidency
is getting out of hand. It's come to the point where you almost can't run
unless you can cause people to salivate and whip each other with big sticks.
You almost have to be a rock star to get the kind of fever you need to
survive in American politics."
After I re-read that for the first time a few hours ago,
I immediately thought of this Gong Show currently transpiring in the United
States and wondered how, if he were alive today, Hunter S. Thompson would
react to the Trump Phenomena and concluded that the timelessness of the above
quote allows one to substitute "Trump" for "Nixon" and it
would be pretty much relevant to 2017 and the myriad of issues we all face.
You know what I miss about the current state of the
political narrative? I miss maniacs like Hunter Thompson tearing apart the
public consciousness with his blistering attacks on the status quo which,
here in 2017, would most certainly include the elitists that run the show -
the banks, the two-party system, the Koch Brothers and their John Birch
Society support of "free market capitalism" (where the definition
thereof is "any business they are in"). Today, the younger
generation would not allow a Hunter S. Thompson to invade their "safe
space" with his psyche-bludgeoning sarcasm, his fa�ade-melting insults,
or his inane gift for telling us how "blotter acid with room-temperature
Jack Daniels" would improve one's perception of a particular political
point of view or clarify an argument made against impeaching a president.
Today, we have far too many wimps out there trying to be politically correct
and perpetually non-invasive so as to keep everyone comforted in their own
persuasions and preferences.
I blasted Bill Maher a few weeks back and now I'm looking
to blast Jimmy Fallon whose "I'm too cool for words" persona gives
me a total pain in the ass. However, since as a Canadian I have no real right
to obsess over strictly American public figures of prominence, I'll give you
a Canadian megalomaniac, KEVIN O'LEARY, who now thinks that his ill-fated 1999
sale of Softkey to Mattel qualified him as a "business genius" such
that the only businesses he is now involved with are those that utilize his
self-engineered "star power" to promote the brand. What the world
forgets is that as a salesman, O'Leary is unparalleled because only four
years after selling Softkey to Mattel, Mattel had to settle a class-action
lawsuit for $122 million after the projected $50 million of accreted profit
wound up being a $105 million loss.
Now, O'Leary is running to head up the Canadian
Conservative Party and vows to displace Justin Trudeau as Prime Minister of
Canada. As much as I would love to see anyone remove our current prime
minister, a trust fund baby that has never graduated from university and
never met a payroll and most-certainly qualifies as a card-carrying member of
the 1% elite, I pray that his vanquisher is anyone but Kevin "Look at
me!" O'Leary. We need a Canuck Hunter S. Thompson to smack sense into
these frozen northern brains that are all tweeting their "selfies with
Justin" and plastering them all over their Facebook pages as O'Leary
does photo-ops with air-brushing as a prerequisite for inclusion.
I usually try to capsulize the trading week in gold and
silver by doing a breakdown of the COT report but this week was a
non-sequitur because with only a modest rise in open interest and the
aggregate commercial short interest, there isn't much to talk about. What IS
significant in the precious metals arena for me is the terrific action in
silver last week with the GTSR (gold-to-silver-ratio) going out for the week
at 68.74 which means to me that, despite the fact that a pseudo-anonymous
Peruvian "tout sheet" (featuring a failed Bay St. mining analyst)
thinks silver is in over-supply, it is now well on its way to $25/ounce by
mid-year. The evidence for me is the terrific action in copper and zinc (both
highlighted in this publication for years) with the late-week explosion in
copper through $2.75 paving the way for the copper-silver correlation to kick
in.
Especially exciting is the fact that my number one
holding for 2017 is a little Mexican silver project called Santa Rosa Silver
Mining Corp. that is finally merging with Canuc Resources Corp. (CDA:TSX.V) with
the $2.0 million financing about to close this week. In my watershed issue
from a year ago entitled "Patiently Climbing Aboard the New Golden
Bull," I provided a rationale for a $1,450
gold price by the end of 2016 (which was wrong) such that with a GTSR of 50,
silver could trade up through $72.50 (which was ALSO wrong).
Now, since the Crimex criminals were as usual allowed to
cap the precious metals rally in the late summer by flooding the paper market
with over 36.6 MILLION ounces of phony, synthetic, paper "gold,"
which completely usurped any and all momo from the breathtaking rally from
the prior January, it in no way denies me from re-stating my 2017 target for
the GTSR at 50 and a gold price at $1,450. Should that be the case and should
the base metals continue to scream higher led by copper, silver is going to
dominate the precious metals landscape.
On the topic of silver, I read a piece over the weekend
written by my GATA pal Mike Kachanovsky
who goes by the moniker of "Mexico Mike" who has graciously allowed
me to re-post. You all know that in addition to being a guest contributor to
the website lemetropolecafe.com I am also a subscriber to the website because
of one simple reason: GATA has the most informed precious metals content of
any newsletter on the web. To wit, here is a great example of a concise
analysis of the current silver market by a gentleman far more cynical than
even yours truly:
"Silver launched out of the gate
this morning like a scalded cat, after testing lows of $17.50 in Asian
trading, the metal surged in NA trading and actually rose above $18 an ounce
for a few minutes before the bankers slammed the door shut on that move.
Nonetheless, the GSR is now back below 69 and silver is holding most of its
gains, on a day when the dollar is well in the green.
The only fundamental driver for this move that I can think of is the closure
of Escondida due to the strike. About half a million ounces of silver
production a month comes from this mine, and since its owned by BHP you can
be assured that silver by-product was forward sold in a hedging deal. I do
not think this strike will drag on more than a few weeks, and so the net
removal of silver bullion from the bankers will not amount to a big deal.
The banks buy silver at a discount in these forward contracts, and then use
that silver as part of the rigging game to depress silver spot prices, which
then enable them to buy the next round of mine production contracts even
cheaper. See how this little game is played? Since most silver output is
produced as a by-product from base metals mines, the operators are happy to
lock in a price even if it's below the cost of production for primary miners.
And the regulators look the other way as many multiples of world silver
output are then dumped in the paper silver market to fleece specs.
Silver has been driven below the $18 range since Trump was elected. Somehow
the market is able to cheer on industrial stocks due to economic recovery
hopes, and yet the industrial metal silver, which is in a long term supply
deficit, is driven lower. To keep the spot price in this price range, a huge
new layer of paper shorts has been dumped in daily trading, such that the
open interest for silver is now approaching record levels again.
Any unexpected breakout for silver will put these contracts in danger. There
is not enough silver on the planet to make good on a delivery demand for even
a portion of the outstanding contracts. COMEX is a fraud because the
'contracts' are not legitimate and there is no remedy for a failure to deliver.
In fact, the crooks that run this rigged little casino frequently change the
rules to ensure contract holders are screwed, and that a cash settlement
option is available to deal with spec longs in the event the banks cannot
effectively destroy spot prices ahead of an option expiry window.
The best possible upside for silver involves having a frenzy develop such
that the market is not contained with further paper. At the end of the day,
industrial demand will drive the silver market. Price is what it is, but for
critical components that MUST have silver to function, demand will compete
for bullion no matter what the rigged price may do. Adding in investment
demand from speculators will put a further crimp in bullion supply. If the
bullion inventory is insufficient to meet this demand, all of the paper
contracts in the world will just dig a bigger hole for the banks.
Not a goddamn word of this commentary is anything new to this sector. I do
not suggest that the day of a supply squeeze is at hand. I do believe the
rigged markets will continue to fleece idiot spec longs that want to gamble
against bankers with unlimited leverage. But I also believe the drawdown of
physical silver bullion is approaching critical levels and at some point the
scam breaks down.
We have seen silver under a constant intervention lockdown since 2011.
Meanwhile rising imports from China and India, plus the rising incremental
demand for industrial consumption, plus several years of record bullion sales
from worldwide mints, are having an effect.
The GSR was hovering around 70 for most of the last year or two. The total
silver production worldwide is about 9 times the amount of gold. Does this
GSR seem reasonable or sustainable to you?"
This is the kind of commentary that remains priceless. Of
course we all know that "not a goddamn word of this commentary is
anything new to the sector" but I, for one, simply enjoy being reminded
of a) the incredibly-bullish fundamentals for silver and b) the
outrageousness of the bullion bank interference in that market. Thanks
to GATA and Mike for a wonderful refresher.
As for the miners and, in particular, the GDXJ, I am long
the ETF (unleveraged) and flat the call options going into the new week and
looking for a near-term correction in order to attempt to re-enter the option
trade designed to add some torque to the position. To clarify, I am NEVER out
of the precious metals markets; I am ALWAYS in possession of a multitude of
shares in some "penny dreadful" junior ExploreCo that is going to
become the next Newmont or the next Barrick on the basis of a brand new
discovery. I also will never attempt to trade the physical metals that are
strewn around the world in safety deposit boxes and vaults the location of
which is kept under lock and key in the fire-proof safe in my home right next
to the Remington Sparton 100 guarding it.
Of course, my partner disallows me from keeping the
shells anywhere near it so as a backup, I have the same "personal
protection device" I carried around in the middle of the Saint Louis
going to attend a Richard Prior concert in 1974. She is a 1957 model and the
same one used by Hank Aaron - superb for hitting home runs and errant thugs.
I end this week's missive with a final quote from my
dear, departed friend/mentor/hero, Hunter S. Thompson, who actually does make
a rather timeless commentary on the mainstream media's inability to report
anything vaguely resembling accuracy in either politics or finance:
"As far as I'm concerned, it's a
damned shame that a field as potentially dynamic and vital as journalism
should be overrun with dullards, bums, and hacks, hag-ridden with myopia,
apathy, and complacency, and generally stuck in a bog of stagnant
mediocrity."
.and that just about sums up the genius of Hunter
Thompson.
