The “Strong Dollar” Catch-22

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Published : March 01st, 2017
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Category : Opinions and Analysis

If anyone claims Precious Metals are not relentlessly suppressed – whilst the “Dow Jones Propaganda Average” is persistently supported, in an increasingly desperate attempt to delay “Economic Mother Nature’s” inevitable arrival – consider gold and silver “trading” since the election.  Let alone, since I published the “12:00 PM EST cap of last resort” six weeks ago, after watching this hideous “algo” for more than a decade.

Here’s the last three days’ “trading” – with yesterday’s suppression being particularly egregious, given that no other market budged when the Cartel did its daily dirty work.  Moreover, per this week’s “why the Cartel is (rightfully) terrified,” its “incentive” to attack PMs is particularly strong now, as gold and silver are on the verge of re-capturing their 200 WEEK moving averages of $1,260/oz and $18.60/oz, respectively.  Which, I might add, is exactly where they were trading the night of the election, when they saw their rightful post-election gains “magically” erased overnight, before a nightmare six-week smashing that as usual ended in late December, before being nearly recouped since.

Here’s “sixth sigma” proof of such – as since the election, every PM rally has been stopped in this manner.  And keep in mind, that the below, irrefutable evidence doesn’t include days when the 12:00 “COLR” algo wasn’t required, because prices had already been smashed at the “2:15 AM” open of the London paper pre-market open (on 797 of the last 914 trading days); the 8:20 AM COMEX open; the 9:30 AM NYSE open; the 10:00 AM close of global physical trading; or any other time the Cartel opened a “manipulation window.”  Which again, I don’t present to “vent” frustration, but educate you of the reality that today’s “markets” are nothing but (increasingly obvious) manipulations.  Which thankfully, always fail – in Precious Metals’ case, likely very soon, given the historically tight supply/demand balance.

Never mind the ugliest hard economic data since the Financial Crisis – government book-cooking and all; like record oil, auto, and agricultural inventories; surging debt and delinquency rates; a burgeoning “retail apocalypse”; plunging IRS tax receipts; or anything else describing the historically ugly nature of the U.S. – and global – economy.  Or, for that matter, record financial asset valuations, whilst earnings relentlessly decline; an historically bleak economic outlook, as the third longest “recovery” in U.S. history approaches its mathematically certain end; a potentially historic debt ceiling crisis just two weeks away; serial global regime collapses; and oh yeah, massively crashing fiat currencies – like the Euro, which amidst today’s post-Trump dollar rally, is back to within basis points of a new 14-year low.

Which brings me to the powers that be’s’ suicidal “game plan,” ahead of Trump’s first State of the Union address last night.  Of which, I awoke yesterday not thinking, but knowing it would be utilized as “cover” to attempt to re-ignite the fallacious “Trump-flation” meme – which had recently been flagging, given post-election lows in bond spreads, and the benchmark Treasury yield’s persistent inability to breach the 2.5% “economic line in the sand” I drew six weeks ago.  This, despite the highest (heavily understated) inflation readings in years, both here and overseas (like Germany, as reported today).

Anyhow, said “plan” started with the third “12:00 cap of last resort” PM suppression in the past three days – in each case, just as gold and silver approached their 200-week moving averages.  Then, at day’s end, an obviously synchronized barrage of Fed President speeches, utilizing prototypical “Fedspeak” to signal heightened potential for a March 15th rate hike.  This, despite continued weakness in hard economic data, and the aforementioned litany of ominous political, economic, and monetary headlines.  Which, despite interest rates closing yesterday at the bottom of their post-election trading range, suddenly caused March “rate hike odds” to surge from 30% to 80%; and the 10-year yield, from 2.33% yesterday afternoon, to this morning’s 2.45%.  Quite the aggressive strategy, particularly in light of Trump’s recent comments, reiterated to a group of America’s largest manufacturing companies earlier this week, that the “worst recovery in 65 years” is getting, reiterated to a group of America’s largest manufacturing companies earlier this week, “killed” by the “too strong” dollar.

Next up, the speech itself; which, as I expected, gave ZERO details of Trump’s actual plans.  To the contrary, you could easily have replaced him with Barack Obama, George Bush, Bill (or Hillary) Clinton, or any career politician – speaking entirely in platitudes, with ZERO substance behind it.  During which, the dollar – and interest rates – fell back anew; before reversing course, and surging in the ensuing overnight trading session.  Precious Metal prices were of course attacked, but have held up remarkably well irrespective – with silver actually unchanged as I speak, and gold down just $9.  Which is exactly what should happen, as clearly nothing Trump said was LOL, “bad” for gold.  Let alone, the fact that, as I have proved with reams of empirical data over the years, rising rates are decidedly not “bad” for gold; as proven the last five times the Fed raised rates – in the late 1970s, mid-1990’s, mid-2000’s, December 2015, and December 2016.  After which, gold and silver rose every time.

Which brings me to today’s principal topic – which I have discussed countless times in recent weeks, but not featured in a stand-alone article.  Which is, the fact that a “strong dollar” is as deleterious to U.S. (and global) economic growth, and monetary stability, as rising interest rates.  To that end, the catalyst for today’s article was yesterday’s report of a massive surge in the first quarter trade deficit, to its highest level since the height of the 2008 financial crisis.  Which I assure you, will only worsen throughout 2017, particularly if renewed dollar strength caused by the aforementioned suicidal powers-that-be strategy; and oh yeah, potentially dramatic political events in Europe; causes the dollar index to take out December 2016’s 14-year high of 103.  Let alone, November 2000’s 32-year high of 118 – at which point, the vast majority of global economies will have completely collapsed, causing skyrocketing physical gold and silver demand for the seven-plus billion people NOT using dollars.

Perhaps Bix Weir is right that a “conspiracy” to crash the global economy is afoot – as if the Fed’s fundamentally lunatic “hawkish” talk continues, this is exactly what will occur.  Not to mention, the direct affront it represents to Trump’s “weak dollar” goals; which, like the rising interest rates such talk would engender – and actions, if the Fed actually raises rates – would utterly destroy an already weak, historically indebted corporate America; as well as the U.S. government, and the Fed itself!

Not to mention, the fact that it would unquestionably catalyze the “cataclysmic financial big bang to end all bangs” I have warned of for the past 18 months; i.e., the massive Yuan devaluation that would ignite historic trade and currency wars; capital controls; and global deflationary pressures.  To that end, is anyone watching Bitcoin hitting new all-time highs, as I write?  Just as gold and silver will (in U.S. dollar terms – as opposed to foreign currencies, which in most cases are already near, at, or in many cases well above previous all-time highs) when the historically vulnerable Cartel is inevitably defeated.  Which, if they cannot prevent gold and silver from breaching their 200 week moving averages, may occur very soon; by Andrew Maguire’s estimate – for what it’s worth – within the next 90 days.

My friends, we are living in historic times – and thus, nothing short of historic financial changes are on the horizon.  Which is why now, more than ever, the time to PROTECT YOURSELF from what’s coming, has never been more urgent.

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