THE DEATH OF GOLD
by Andy Hoffman, Miles Franklin
It’s Monday morning; and despite every “cap” and “attack” algorithm imaginable, gold has rallied more than $50/oz in the past week, and silver nearly $1.50/oz. That said, even Zero Hedge, by far the world’s best alternative news outlet, cannot get past its eternal “blind spot” towards the most blatant, world-destroying manipulation of all. To wit, it posts dozens – if not hundreds – of articles discussing every market “intervention” but Precious Metals; despite dramatic evidence proving such, including countless admissions spanning not just years, but decades. Consequently, I wasn’t surprised to see its mindless headline this morning, of “gold jumps despite stronger dollar.” I mean, my god, the gold price has had essentially ZERO correlation with the dollar index for the past decade – as it rightfully shouldn’t, given that the “dollar index” simply refers to the dollar/Euro and dollar/Yen exchange rates. In last year’s “if a nuclear bomb destroyed Europe,” I discussed how it matters not how the dollar performs against other fiat trash – but to the contrary, how it stands up against real items of value like gold and silver – over the long-term. And yet, Zero Hedge still succumbs to the propagandists’ #1 gold myth!
To that end, the ECB and BOJ – issuers of the two largest currencies in the dollar index – are amidst the most maniacal money printing schemes of all time; which is probably why Yen-priced gold is at nearly an all-time high, and Euro gold not far behind. In fact, in the vaunted “BRICS” – where more than 40% of the world’s population resides – gold prices, on average, are just 5% below the all-time highs established between 2011 and 2013. That is, except China, due to the PBOC’s suicidal pegging of the Yuan to the dollar. Eventually, as we have discussed ad nauseum, said peg must be broken – yielding exploding Chinese, and worldwide, gold prices. To wit, if the peg is broken without China simultaneously disclosing its massive gold holdings, the Yuan will plunge, yielding skyrocketing Yuan-priced gold. Conversely, if China simultaneously announces its gold holdings, prices will likely rise parabolically – as the entire world realizes gold is no longer the “speculative investment” it has been propagandized to be for four-plus decades; but instead, the real money it’s represented for thousands of years.
That said, Zero Hedge not only consistently misses the giant pink elephant that is Precious Metals suppression, but the fact that the dollar is decidedly NOT strengthening! I mean, yes, the dollar index is up a measly 0.5% this morning. However, in the past month – despite an imminent “Grexit“; expanding Abenomics; and a spate of similarly “dollar positive” news flow, the dollar index has plunged 7%, to levels not seen since January. And thus, the international gold bull market depicted above remained in a holding pattern, even as “dollar-priced gold” has crept higher. Clearly, the Cartel is laboring under the pressure of a collapsing global economy, exploding worldwide money printing, surging international gold demand, plunging COMEX inventories, and the rapidly spreading realization that “peak gold” is upon us.
Not to mention, the ominous storm cloud hanging above the entire world; i.e., the massive, exponentially growing mountain of debt now estimated to exceed $200 trillion. Which, by the way, incorporates only the amount visible to investors – excluding “off balance sheet” debt (like the $5 trillion owed by nationalized entities like Fannie Mae and Freddie Mac); “unfunded liabilities,” such as pensions, social security, and Medicare requirements. And of course, countless trillions of over the counter derivatives; “shadow banking” liabilities; “peer to peer” loans; and who knows what else.
As the Toronto Global and Mail put it this weekend, said “global debt binge casts a shadow over the fragile recovery”; getting it 100% correct, other than the silly notion of a “recovery” that only exists in Washington, Wall Street, and MSM propaganda. And frankly, “binge” doesn’t do justice to the worldwide financial hell Central banks have wrought since the unprecedented fiat Ponzi scheme launched in 1971 broke in 2008 – as sovereigndebt alone (again, the “on balance sheet” portion only) has skyrocketed by 76% since; whilst total worldwide debt/GDP has surged from 269% to 286%. And don’t forget that in recent years, nearly all countries, the U.S. included, have “adjusted” GDP calculations higher to prevent this ratio from rising – by including all manner of non-productive investments, “intangibles,” and illegal, non-tax generating “businesses.” On an absolute basis, I wrote of the incredible $57 trillion of global debt incurred since the 2008 crisis in February’s “inevitable global sovereign debt collapse“; and now that mainstream publications like the Globe and Mail are writing of it as well, it’s just a matter of time before the entire world realizes we are headed for the largest, most comprehensive debt default – or hyperinflation – in global history.
As for the “tectonic market shifts” I warned of last week, this morning’s renewed Treasury bond plunge – the third such episode in two weeks – highlights how precariously the aforementioned, unprecedented debt edifice sits, as even the slightest rate increase will destroy the global economy like a nuclear bomb. Predictably, 99% of the financial community – and for that matter, Westerners in general – has not a clue what’s coming, as demonstrated by the fact that yet again, every single economic data release this week is predicted to improve. To that end, they’re already “0 for 1″ – as the massively upwardly-biased National Association of Homebuilders’ “Housing Market Index” not only didn’t rise as expected, but instead plunged. And this, just two days ahead of publication of the April 29th FOMC meeting “minutes” (likely to be doctored to account for current market conditions); and four days before Whirlybird Janet gives a heavily scrutinized speech on the Fed’s present “economic outlook.”
OK, now on to more “fun” topics; like the king of financial propaganda, the Economist, yet again making a call that in hindsight, will be as unequivocally wrong as its “drowning in oil” article of March 1999 – in which it claimed oil would fall from its then price of $10/bbl to $5/bbl over the “long-term.” Instead, it nearly bottom-ticked the oil bear market to the week, before it surged 15-fold over the ensuing nine years. Trust me, I know the story well – having been an oilfield service equity analyst at the time, suffering through the same misery I have endured as a Precious Metal advocate since 2011.
Now, let’s fast forward to Sunday, December 1st, 2014 – the day after ”Lady Macbeth” Thomas Jordan of the Swiss National Bank successfully duped the Swiss people into rejecting the “Save our Swiss Gold” referendum. That night, gold and silver prices were smashed to $1,140/oz and $14.10/oz, respectively – prompting MSM ringleader Yahoo! Finance to on Monday herald the end of the gold “super-cycle,” just hours before PM prices surged, ending the day at $1,205/oz and $16.50/oz, respectively. However, at least Yahoo! had the common sense to shut up afterwards – as opposed to the Economist, which two weeks ago, with gold and silver trading at $1,165/oz and $15.90/oz, respectively, posted an article even more devoid of logic than 1999’s “drowning in oil.” In their view, gold prices were, for all intents and purposes, permanently “buried.”
Unlike “drowning in oil,” gold’s “burial” story was not on featured on the front page. However, the Economist went out of its way to find a photo “representative” of gold’s death; and in true propagandist form, this is what they came up with – with an equally depressing by-line suggesting “an ever more marginal existence.” Which it certainly has been for gold miners – and likely will be even after prices surge, when worldwide governments nationalize everything in sight.
That said, the premises of the article are so outlandish, it’s hard to even think about such lunacy without laughing – let alone, to write about it. To wit, not a single point made has even the remotest link to reality – from a supply, demand, economic, demographic, cultural, or monetary perspective. Which is why, thankfully, I don’t need to personally take this propagandist drivel apart point-by point – but instead, can point you to Pater Tenebrarum‘s dissection of it in his aptly titled article, “a proven contrary indicator.” Which, frankly, is EXACTLY what I expect this article to represent – as if the Economist innately seeks to maximize its humiliation.
This weekend, someone posted a comment on the Miles Franklin Blog’s investor forum that “we all know manipulation is going on. But if it can’t be stopped, why worry about it?” Why? Because such manipulation not only can, but always has been stopped; and in this case, it’s not just gold and silver prices that are way out of whack, but all financial markets. Inevitably – and perhaps, imminently – the mirage portrayed by the bastardized progeny of unprecedented global money printing, market manipulation, and – as depicted by the aforementioned Economist article – propaganda, will be destroyed in epic fashion. And when it is, only those who were wise enough to see through it – and prepare for what’s coming – will be in a position to financially survive; let alone, thrive.
Hopefully, you will be one of the lucky few that joins the “new 1%” of the coming monetary age. And also, they you recognize that the road to such “utopia” will be extremely scary. Remember, gold and silver are not “investments” held with hopes of “appreciation”; but to the contrary, the only time-honored methods of shielding your savings, and insuring them from political, economic, and financial cataclysm. Miles Franklin has been selling such protection for decades – and would be honored to have the opportunity to earn your business.