by Andy Hoffman, Miles Franklin
It’s a quiet Tuesday morning – at least it was, before the consumer confidence report catalyzed a major PM surge, and stock plunge – a day ahead of yet another so-called “momentous” FOMC meeting. Frankly, it’s getting hard not to laugh out loud thinking about it, given how fewer and fewer people could care less what the Fed has to say. For 102 years, they have been the most destructive financial entity on the planet; and since their latest, global fiat Ponzi scheme peaked at the turn of the century, they have proven to the world that everything they say is wrong; and every action they take a miserable failure.
From 2000 to 2008, the Fed pushed the last bit of string they had; until finally, spectacularly, their ill-begotten, ill-fated monetary system – “turbo-charged” with “nuclear” financial engineering; the corporate takeover of Washington; and the end of a golden age of financial journalism; pushed the global economy to the edge of ruin. Massive overcapacity as far as the eye can see; exploding, unredeemable debt; corrupt corporations, politicians, and bankers; rampant socialism; expanding societal dysfunction (see Ferguson, Baltimore riots); and the largest wealth disparity phenomenon since feudal times. Throw in the not so invisible hand of market manipulation, and the “deformation” of global economics has never been more grotesque, or the “price discovery” mechanism more disabled. To wit, currency volatility – i.e., the “single most important Precious Metals factor imaginable” – has exceeded that of stocks and bonds themselves; whilst the only assets proven to protect one’s wealth have been suppressed below the price of production, amidst an environment of soaring global demand. Frankly, all one needs to consider, when pondering how this ugly game will end, are first, the immortal words of J.P. Morgan himself (who spawned the most immoral corporation in history)…
“Gold is Money. Everything else is just credit.”
…and next, the man most responsible for ruining the living standards of billions of global denizens; “Maestro” Greenspan himself, long before he sold his soul for power…
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.”
As for the Fed; sure, the financial media – record low readership and all – tries to convince us that what the Fed says both matters and moves markets; when in fact, markets are moved more by manipulative algorithms, executed by a handful of government-partnered TBTF banks, than anything a handful of moronic, discredited beaurocrats have to say. Hence, the titles of my recent post-Federal Reserve meeting commentaries; “the Death of Fed Credibility“; “New Lows of Fed Idiocy and Cluelessness“; “FOMC Lunacy Opens the Gates of Financial Hell“; “Laughable FOMC statement sets new Central Bank low – until the SNB one-ups it“; and “the most unequivocally dovish FOMC statement in memory.” And not to be one upped, the Fed’s “partners in crime” overseas have, if possible, attempted to drain the last drops of their remaining credibility even more rapidly – per last week’s comment by “Goldman Mario” Draghi himself; i.e., “the dumbest Central banking statement ever.”
To that end, I have no doubt these titles will need to be “one-upped” when the Fed speaks tomorrow (Wednesday) afternoon – when 120 Keynesian-brainwashed, printing press taxpayer-funded lackeys spend two days red-lining the March 18th policy statement, seeking ways to assure the world it has no intentions of raising rates, whilst simultaneously ignoring reality by pretending the U.S. economy is “recovering.” No doubt, the government’s myriad “manipulation operatives” – i.e, the “President’s Working Group on Financial Markets”; the Exchange Stabilization Fund; gold Cartel; “oil PPT”; and all “other hands” will be on deck to try and paint a market picture in its aftermath. But whether they succeed or not – and inevitably, they will spectacularly fail – we assure you, subsequent market movements will decidedly NOT be due to what the Fed says, but whether or not said manipulation operatives succeed in their goals.
And by the way, since the whole “imminent rate hike” propaganda commenced with the supposed “end of QE” last October – incorporating the hype first about removing the words “considerable time”; and next, “patient” – I have not seen an FOMC meeting with this little “hawkish hype.” In other words, the economic data has been so bad – not just domestically (see today’s horrific”consumer confidence” number) but globally (see today’s biggest ever plunge in Japanese retail sales, worst UK GDP print in three years, and Greece not having enough cash on hand to pay April civil salaries), that even the most conniving “Ministry of Truth” agencies – like Reuters, Bloomberg, and Yahoo! Finance – have been printing one ugly economic story after another. In fact, this is Yahoo! Finance’s top story this morning, which undoubtedly will be validated by tomorrow mornings first look at first quarter GDP “growth”; which, fudged and all, will be ugly. Oh well, it must have been “the weather” and the (very brief) Western ports strike. And what’s this I hear? The Western port truckers all went on strike today? Well, I guess that will be the “excuse” when 2Q GDP comes in ugly as well.
Meanwhile, as the Cartel’s relentless capping – and the resultant mining industry collapse – inadvertently build an utterly massive price floor around the $1,200/oz level, the inexorable growth of global gold demand continues – per the “staggering” volumes flying from West to the East described here. As for supply, I’m not sure how much more loudly I can scream that “peak gold” has arrived, NOW; validated in spades by last night’s ugly first quarter earnings report from the world’s largest gold miner – “evil personified” itself – Barrick Gold. As discussed earlier, Barrick, which produces 7% of the world’s gold, saw its production plunge from 7.4 million ounces in 2013 to 6.2 million in 2014. In the first quarter of 2015, it produced just 1.4 million ounces – i.e., a run rate of just 5.6 million ounces; and though it expects to ramp up production in the second half of the year, its big first quarter miss draws visions of “the check is in the mail” as regards its supposed second half plans. Irrespective of whether it can maintain flat production in 2015, it is estimated that Barrick’s production will plummet to just 4.5 million ounces by 2020, and even lower thereafter. And this, from the world’s largest gold miner. Gee, I wonder what global demand will look like in 2020, when the average currency has dramatically declined in value, and gold (and silver) supply simply isn’t to be found.
On that note, on an otherwise quiet morning – except in Baltimore – where the world is fixating on how many iPhones Apple sold to the Chinese – I figured I’d discuss a topic that, like yesterday, has long ripened in my “notes” file; not that I haven’t discussed it in various ways, shapes, and forms countless times before. Which is, the fact that the world is not “de-dollarizing,” but de-fiatizing.
To wit, the Miles Franklin Blog has expended countless reams of digital paper – and airwaves – discussing how so many people misguidedly focus on how “the dollar” is doing relative to other currencies, when the real issue is how fiat currencies in general are faring against items of real value. For the millionth time, there is simply no way the dollar can meaningfully collapse during a global financial crisis – particularly this, the worst such crisis in history – given that its superior liquidity causes a worldwide flight to “safety” whenever markets turn turbulent. Consequently, the Fed is able to fight the “final currency war” with a bigger bazooka than its competitors; which is exactly why, despite having printed trillions of fiat currency units via ZIRP; QE’s 1, 2, 3; and “Operation Twist”; not to mention, countless “off balance sheet” dollars – such as $16 trillion of “secret loans” post 2008; endless “swaps” with insolvent European banks; and who knows how much “capital” for the PPT, ESV, and gold Cartel; the dollar index has surged to 12-year highs.
Meanwhile, the cost of living for every Earthling continues to soar; and for those secular Americans only experiencing creeping “frogs in a boiling pot” inflation, take a look at the experience of the world’s other 6.9 billion people – many of whom live in net importing nations – whose average currency has plunged by more than 40% since the Fed commenced its “point of no return” money printing spree in 2011. Remember, by definition fiat regimes are Ponzi schemes; and thus, whatever horrific currency trends you see today will only be magnified in multiples in the months and years to come. To that end, the Chinese, Russians, and Arabs – among others – can do whatever they like to reduce trade with pariah nations like the U.S. and UK; but until and unless their currency has intrinsic value (making it money), the bigger trend of “de-fiatization” will engulf the globe like the Ebola virus.
Remember, it matters not if – and when – a new “gold standard” is developed. Of course it must, but that time and place may be far, far away. Instead, we own Precious Metals to preserve our wealth until that place and time – be it within our lifetimes or not. Gold and silver will still be standing long after the dollar, Yen, and especially the Euro. And if you don’t have them when said crises really destroy said currencies’ value, you may never get the chance to protect yourself, and those you love.