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Ticking, (Short-Fuse) Time Bombs For The “Challenging” Central Banking Industry

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Published : May 09th, 2017
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Category : Opinions and Analysis

In yesterday’s “who’s more bullish for Precious Metals – Macron or Le Pen?,” I started with nearly five pages of cold, hard facts – proving across-the-board market manipulation of essentially all Western markets.  Which, for the sole purpose of prolonging a terminally ill monetary status quo – in which 1% benefit, at the expense of not just the “99%,” but future generations of “99-percenters” – has created “dotcom-like valuations in a Great Depression Era.”  Not to mention, sentiment – per yesterday’s 24-year low close of the VIX volatility index.  Thankfully, the Fed Governors has everything under control – like St. Louis Fed President James Bullard, who claims “equity valuations are high, but nothing like the (2008) housing bubble.”  Which is correct, in a way – given that they are more like the valuations seen atop the 2000 dotcom bubble.

I learned well from my mentors at GATA, Bill Murphy and Chris Powell, way back in the early 2000s; and in the 13 years I’ve been publicly commentating, have used my Wall Street analytical background to expose such fraud, with the ultimate goal of demonstrating why it’s unsustainable; and ultimately, irreversibly destructive to the entire world.  And I do mean the entire world – as not only do “leading” banks like the Fed monetize stocks covertly – via daily “open market operations,” in partnership with official government entities like the “President’s Working Group on Financial Markets” and “Exchange Stabilization Fund”; but overtly, too, like the Bank of Japan and Swiss National Bank, per official monetary policy.  And don’t forget the ECB, which is rapidly running out of sovereign and investment grade corporate bonds to buy – which consequently, recently discussed equity monetization as well.  Which I ASSURE you will occur, at the first sign of “history’s most overdue financial crisis.”

Such manipulation, increasingly blatant with each passing day – and per above, admitted; accelerated in what I deemed the “point of no return” moment in 2011.  When, following three years of chaotic, post-2008 “market-saving” policies failed – as highlighted by that summer’s European sovereign debt crisis; the U.S. government having its Triple-A credit rating stripped; and dollar-priced gold hitting an all-time high; “they” decided the only way to kick the can further was via 24/7 market manipulation.  Coupled, of course, with unprecedented economic data fudging, unrelenting “fake news” propaganda; and oh yeah, stealth capital controls, and police state activities – like monitoring the populations’ phone calls, emails, and text messages.

Unfortunately, the slower moving “East” didn’t initially get the message; and thus, the PBOC-fostered equity “echo-bubble” spectacularly collapsed in early 2015 – when the Shanghai Composite plunged from 4,600 to 2,600 in a few months’ time.  This is when it became painfully apparent that the Chinese “national team” – i.e, PPT – was created, to prevent such “free market atrocities” from being repeated – as documented by my September 2015 article, “Eastern Point of No Return.”  In other words, just as the Bank of Japan “buys the dip” nearly every time the Nikkei declines, the Chinese have taken a similar tach, in making sure early Shanghai weakness ends in late-day “Hail Mary” strength; via the exact same “dead ringer” algorithm that has propped the “Dow Jones Propaganda Average” for at least the past five years, as we saw yesterday in both the Dow and Shanghai Index.

In China’s case, the most loudly ticking “short-fuse time bomb” is its collapsing shadow banking industry – by far, history’s largest, and most dangerous.  Which is why the Shanghai Composite’s recent decline from 3,250 to nearly the “national team’s” 3,000 “line in the sand” is so troubling – particularly when Chinese bonds and commodities are freefalling simultaneously.  Not to mention, the all but shutting down of the Chinese “corporate” bond market – yielding last weekend’s “emergency meeting” of the nation’s top Financial Ministers.  In other words, the Chinese are having difficulty “managing” their collapsing, historically overvalued financial markets.  Too bad they don’t have the world’s “reserve currency” – which the Fed, PPT, and their Wall Street partners-in-crime have masterfully abused to prevent similar “time bombs” from going off in the equally overvalued U.S. markets.

That said, the Chinese do have a currency pegged to said “reserve currency” – and now that the French election is over, the dollar, as I vehemently predicted, has resumed its upward surge agains the Euro.  In fact, now that commodities are once again plunging – as they SHOULD, as highlighted by the CRB Index breaking year-long support – take a guess what else is plunging?  Yep, dozens of “commodity currencies” – most of which, barely budged off their all-time lows in recent months, only to re-start their plunges into ultimately, the burgeoning dustbin of failed fiat currencies.  And that goes for the Yuan, too, which “silently” has crept back to 6.914/dollar; i.e., its lowest level since the all-time low of 6.99/dollar in early January – yielding an avalanche of capital outflow that spurred the Chinese government to issue draconian capital controls; including the banning of Bitcoin withdrawals from Chinese exchanges – which has miserably backfired, given today’s all-time high price.  Which, in light of the fact that Chinese citizens have since realized they can purchase Bitcoin outside of formal exchanges, on peer-to-peer websites like localbitcoins.com; not to mention, yesterday’s horrific Chinese trade data; may well be signalling the “upcoming, cataclysmic financial big bang to end all big bangs” is imminent – i.e., a significant, world-destroying Yuan devaluation – as I suggested in January.  This, after having predicted, within 24 hours, the initial Yuan devaluation in August 2015.  Which, I might add, caused Precious Metal prices to rocket higher.  In other words, the ultimate “ticking, short fuse time bomb.”

And don’t forget those Japanese.  Who, four years into the “Abenomics” hyper-inflation scheme that has quadrupled the Bank of Japan’s balance sheet to a Fed-equalling $4.4 trillion, reported yesterday that inflation-adjusted real wages plummetted by 0.8% in March to a two-year low; and 0.4%, on a nominal basis; prompting soon-to-be-deposed  Bank of Japan governor Haruhiko Kuroda to proclaim “the job of a Central banker is challenging.”  Yes, “challenging” – as in, impossible, unless your goal is to destroy one’s currency and economic prospects, by hyper-inflating the cost of living, mis-allocating capital, and causing historic industrial oversupply that will take generations to unwind.  Which in the “Land of the Setting Sun’s” case, will never occur, due to the horrifying “demographic hell” washing over it like a Fukishima tsunami.  Which I assure you, wasn’t helped any by the Bank of Japan’s hyperinflationary policies of the past three decades.

Here in the United States of Market Rigging and World Destruction, the Fed’s insistence that it will tighten monetary policy – albeit, from historically low levels; to barely higher, still historically low levels; has caused the benchmark 10-year yield to creep back to 2.39% from last month’s 2.17% low.  Still well below the 2.5% level I four months ago claimed to be “the top” – assuming no “bond vigilante” hyperinflation fears – given that whatever’s left of the 0.7% “growing” economy, and $20 trillion in debt Federal government, would be annihilated above that level.  Not to mention, the aforementioned, post-French election surge in the dollar index – which will not make corporate America happy, amidst seven straight quarters of declining year-over-year earnings; nor our “gold-supporting” President, who claims the “too strong” dollar is “killing” us.

Throw in the exploding deficits last week’s hideous Omnibus spending “compromise” guaranteed; let alone, what they will become of Congress is crazy enough to enact tax cuts or elevated infrastructure and/or military spending plans, and you can see why said “short-fuse time bombs” are ticking so loudly, it makes one’s ears bleed.  Not to mention, exploding student, automobile, and credit card debt defaults; the virally spreading “retail Armageddon”; a four-decade low in Labor Participation; and the increasingly desperate plight of financially-strapped Millennial’s and (non)-retirees; and you can see why something has got to give, sooner rather than later.

And my favorite of all, the multi-year low in “household spending plans” reported yesterday – by the New York Fed, no less.  Which somehow, doesn’t mesh with the all-time high “confidence” we’re told consumers have had since the election.  This, despite the fact that actual retail sales have since plunged; and oh yeah, said spending expectations experienced their biggest decline after the election!

But don’t worry, as Apple hit a new all-time high yesterday!  Most likely, due to more Swiss Central bank buying, given that the SNB bought $3.9 billion of Apple shares in the first quarter alone.

As for Precious Metals, they remain under attack, as the Cartel aggressively covers its largest-ever silver short position, amidst an unrelenting explosion of PiMBEEB headlines, that I assure you, won’t improve any time soon.  Every market suppression tactic imaginable is being used – like suggesting falling base metals are “bad” for silver after spending months claiming surging base metals are bad for silver; just as “they” suggested a Hillary Clinton Presidency would be “bad” for PMs and “good” for stocks – until Donald Trump shockingly won, when said propaganda meme was changed – to a Trump Presidency also being “bad” for PMs, and “good” for stocks.

Unfortunately, the “Trump-flation” meme underlying such lies is dying; as is the global economy, and political and geo-political civility the world round.  Which is why physical Precious Metal demand is as strong as ever – and no doubt, will continue to grow as “the dollar” continues to destroy lesser fiat toilet paper the world round, in advance of the aforementioned “most overdue financial crisis in history.”

As for my personal Precious Metal holdings, I couldn’t be calmer – given not only the aforementioned tidal wave of PiMBEEB news flow, but the hard floor on prices I don’t just think, but know is in the very near vicinity.

Yes, I know the price suppression feels more suffocating, and unfair, than ever.  However, it is decidedly failing, given that 1) prices in nearly all non-dollar currencies are in strong uptrends – in many cases at or near record-highs; 2) the ongoing, global economic collapse will foster additional hyper-inflationary money printing; and 3) per this MUST READ article by Stewart Dougherty – frankly, one of the best I’ve ever read – if after all the Cartel has thrown at gold, the “best” it could do is push it down to $1,220/oz (and per above, much higher in other currencies), they clearly have reached their effective “suppression limit.”

Not to mention, per this Cartel-damning chart from Steve St. Angelo, they have NEVER been able to push gold (and silver) prices below their cost of production.  This, during a period when production was rising – as opposed to now, when it is in terminal decline, to the tune of 25% over the next 7-8 years.  In other words, all-in production costs will skyrocket for years to come.  Not to mention, the fact that Barrick and Newmont, as the world’s two largest gold producers, have by far the industry’s lowest cost of production – which in 2016, was roughly $1,150/oz.

As for silver, as discussed on April 20th’s must listen, “Miles Franklin All-Star Silver Panel Webinar, Part III,” the physical silver market is in a similar position as gold – with production in decline; and production costs, for the vast majority of miners, at or above today’s historically suppressed paper levels.  In other words, the “downside” of physical gold and silver prices is nominal at best, compared to the blue-sky upside that must inevitably be realized, as physical supply tightens amidst the most PiMBEEB political, economic, and monetary environment of our lifetimes.

To summarize, never have so many “ticking, short-fuse time bombs” threatened the increasingly “challenging” Central bank manipulators.  To the point that, the inevitability of one (or more) going off has never been more obvious; nor the imminence, more likely.

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