SUNDAY NIGHT PAPER MASSACRE II – AND THE UPCOMING, GUARANTEED PHYSICAL SHORTAGE
by Andy Hoffman, Miles Franklin
It’s Monday morning, and there’s no rest for the weary. And by weary, I don’t just mean last night’s lack of sleep – notwithstanding the prudent investment choices that have kept me from real insomnia – but 13-plus years of fighting a war with reality I neither chose nor relish. Yes, I love what I do – perhaps, more than ever before – and it’s for people like you that I wake up earlier than ever, bright eyed and bushy-tailed. But no, there is nothing “fun” about manipulated markets, which in many ways have rendered moot 26-years of academic and practical experience analyzing fundamentals – and subsequently, choosing appropriate investments, for myself and others.
Here at Miles Franklin, we do not “recommend” anything, but simply tell the truth as we see it – which, manipulation or not, must eventually be reflected in financial (and physical gold and silver) markets. That said, the “short-term,” in a world amidst the most hideous, blatant episode of money printing, market manipulation, and propaganda, has turned out to be far less “short” than imagined – care of the unprecedented advancement of “weapons of mass financial destruction,” far beyond anything imagined during previous bubbles. Of course, no such “previous bubble” involved the end of the economic and monetary world as we have known it, which is precisely what we are dealing with today. And fortunately, those holding physical gold and silver have actual supply and demand forces on their side; as opposed to “paper PM investments,” and nearly all other financial assets – which cumulatively, have never been so overvalued, or vulnerable to the relentless, expanding strength of “Economic Mother Nature” and the “unstoppable tsunami of reality.”
Last week, the Wall Street Journal started to be thrown on my driveway without prompting, marking the first time I have seen this vile publication since I stopped reading it 17 years ago. Back in the formative years of my career – starting with my first internship during college (selling CD’s via cold calling, yielding 8% compared to 0% today), the Wall Street Journal was a veritable text book for learning about financial markets. Today, it has become such a blatant propagandist rag, it takes all my strength to not call their offices and tell them I’d prefer a free subscription to Satan’s handbook. Such as, for instance, the stunningly ignorant, aggressively vicious articles they published this weekend, titled “gold bugs getting exterminated” and “let’s be honest, about gold – it’s a pet rock” – the latter of which stated, with a seemingly “straight face,” that “gold is supposed to be a haven amidst hard times and soft money. So why, even as Greece has defaulted; the euro has sunk against the dollar; and the Chinese stock market has stumbled; has gold been sitting there like a pet rock?”
The reason, of course, for anyone with a pulse; an interest in truth; and the ability to discern reality from fraud; is that – per Michael Pento’s spot-on comments this weekend, “there are no free markets left in this world, and it’s becoming increasingly evident that most people on Wall Street prefer it that way. To wit, we have grown so accustomed to market manipulation; we have completely lost sight of how a free market is supposed to function.”
Regarding Precious Metals – which, over several millennia, have represented the polar opposite of the fraud paper money has proven to be – no one has better reported the manipulative horrors that have brought the global economy to its knees better than GATA, via the courageous, unyielding leadership of Bill Murphy and Chris Powell. To wit, even before last night’s heinous Cartel “hit,” GATA published this must read article – of how, with each passing day, more and more people are first realizing, and then publicly admitting, the truth. Such as, for example, John Hathaway of the Tocqueville Fund; i.e., one of the oldest, most respected mainstream portfolio managers. Who, despite his specialty in Precious Metals, has for years ignored the most important factor affecting the market he is mandated to invest in; that is, until now.
“At some basic level, all investors are aware of the gold price, as its unruly behavior could render the (government’s) ‘Truman Show’ dysfunctional. Allowing free-market expression of gold prices (poses) a serious risk at the highest policy levels; (and thus), gold’s strong increase amidst liberal doses of QE post-2008 through 2011 (struck) a note discordant with an otherwise happy fable, confirming what many investors suspected: i.e, QE and ZIRP failed to produce economic growth, and may well have jeopardized future prospects for a return to solid economic footing.
(Thus), it makes us wonder whether we are witnessing the final moments of a second, more sophisticated version of the 1960s London Gold Pool; i.e, a scheme organized by the U.S. and European governments to suppress the free-market gold price, to camouflage the growing, adverse fundamentals for the U.S. dollar. The present-day magnitude of fiscal and monetary irresponsibility, in our view, exceeds the precedent of the 1960s by multiples. And thus, it is only fitting that the elaboration and complexity of disguise required to beautify the underlying reality would be proportional. Government intervention via price suppression (interest rates, currencies) or price inflation (financial assets) seems to pervade all financial markets, so why should gold be exempt?”
I mean, at some point even the most die-hard “mainstreamers” have to admit to the reality that all they have been taught – in many cases, providing the means to earn a living – no longer exists. Like, for instance, the use of fundamental, technical, and sentiment metrics to gauge entry and exit points for financial assets. As now that governments are overtly manipulating markets – be it via traditional, “accepted” means like Central bank QE; or new, “unconventional” methods like the outright purchase of stocks (as documented here, here, here, here, and here), it’s no longer “conspiracy theory” to speak of market intervention – particularly when those executing it are being caught red-handed, in everything from stocks, to bonds, interest rates, currencies, and – what do you know – gold. And as for government participation in such schemes, one doesn’t have to an inordinate amount of “research” to realize such policy exists – as the U.S. government, for example, admits to regarding bonds (i.e., Federal Reserve interest rate policy); stocks; and oh yeah, gold and foreign exchange. Heck, the Chicago Mercantile Exchange – which in many ways, has acted as a de facto government agency for years, now offers “volume discounts” for Central bank trading in commodity, equity, currency, and fixed income futures!
Even MSM lackeys like Bloomberg are starting to understand the racket – in realizing, for instance, that China’s gold reserve announcement on Friday, comically understated as it was, was wildly bullish for long-term Precious Metals demand. That said, how ironic is it that, of all the media outlets on the planet, the one most antagonistic to gold has been Kitco? Which, whilst its bankruptcy protection approaches its fifth year, continues to publish the most anti-gold propaganda imaginable; such as, unsurprisingly, it’s “top story” following last night’s Cartel raid being Reuters’ unmitigated drivel that gold was down due to “dollar demand.” And this, whilst the dollar index, which is up solely due the collapse of the European Union, and self-immolation of the Bank of Japan, was completely unchanged from its Friday afternoon close; as were, by the way, all other markets.
That said, it’s time to focus on the “end game” playing out right before our eyes – firstly, for history’s largest, most destructive fiat Ponzi scheme; and secondly, investors’ diminishing ability to protect themselves with increasingly scarce Precious Metals. To wit, for 15 years the Cartel has run roughshod over the supposed “markets” for gold and silver; not only creating the grossest “deformations” in global economic (and financial markets) history, but destroying miners’ long-term survivability – as I discussed at length last week. That said, even Friday’s egregious Precious Metals paper raids couldn’t prepare us for what we witnessed last night; when, out of the blue, the Cartel attacked gold with a vengeance not seen since May 1st, 2011′s “Sunday Night Paper Silver Massacre.” Only this time – unlike then, when a “catalyst” was feigned in the form of the supposed capture of Osama bin Laden – there was absolutely, positively no news to account for, in the thinnest of Sunday night Asian trading, gold plunging by an astonishing $52/oz, or 4.6%, in one minute. Below I have placed, side by side, silver “trading” from May 1st, 2011 (a night, by the way, when China was closed for a holiday) and gold last night. Look familiar, does it?
Frankly, now that the Cartel has attacked on 107 of the past 109 Sunday nights, it’s difficult to be surprised. That said, we are talking about a $52/oz plunge in one minute – which, as noted above, won’t be lost on a world increasingly aware of the fraudulence of financial markets; increasingly fearful of the aforementioned “end game” of global currency collapse; and increasingly knowledgeable of the expanding, gaping chasm between physical Precious Metals demand and supply.
And again, there is absolutely nothing about this raid – from a time and method perspective – differing from dozens of others over the years; including the 478th “2:15 AM” EST raid the past 544 trading days, to additional attacks at the 8:20 AM and 9:30 AM EST opens of the COMEX and New York Stock Exchange, respectively. In fact, just as a whopping $1.4 billion of “paper gold” – or 2% of worldwide annual production – was dumped at the COMEX open on Friday morning, $2.7 billion hit the Asian markets “at one fell swoop” last night, with the obvious intention of taking prices down.
Holding physical gold and silver, the impact of such a raid is minimal – particularly in the case of silver, which as we speak is still amidst a major shortage, causing premiums and delivery times to significantly expand. However, regarding “paper PM investments” like mining shares, the end game I have for four years vehemently warned of is in sight. This weekend’s Audio blog discussed the utter annihilation of mining shares on Friday; and as I write this morning, the HUI is down another 8%, to levels not seen since 2003. In other words, discounting what I have long predicted; i.e., the utter collapse of supply – of both gold and silver – that likely, for all intents and purposes, will be permanent. Frankly, if prices don’t rebound significantly, and imminently, I’m not sure that even a massive consolidation wave will save Precious Metals mining; particularly in silver, now that base metal prices, too, appear headed to multi-decade lows. Not to mention, the world’s most important commodity – crude oil – and commodities in general, which this morning, cumulatively, hit a new 13-year low, causing global currency markets’ ongoing, Federal Reserve-fostered crash to accelerate. As long-time readers are well aware, I believe commodity markets have been so egregiously “deformed” by decades of inadvertent Central bank propping, it could be years, if not decades before they return to equilibrium. And in the process, the countless corporations, municipalities, and sovereign nations dependent on their sale – which cumulatively are already in more debt than at any time in history – will go bankrupt.
Here at Miles Franklin, we couldn’t be more aware of what Precious Metals holders have been through over the past four years, and are going through right now. We, too, have suffered, but our business couldn’t be more stable, and our desire to protect clients far beyond the “profit motive.” To that end, we simply ask you to call us at 800-822-8080, and give us a chance to earn your business. In our view, the physical shortages of 2008, 2011, 2013, and today are “culminating” – and when they do, the all but assured long-term shortages, certainly at prices resembling today’s comically suppressed levels, will make it difficult for most, if not all of the “99%” to protect themselves from the hyper inflationary Central bank nightmare that’s rapidly approaching.