Here Comes The Physical Buying!

The headline of today’s UK telegraph is “mass default looms as world sinks beneath a sea of debt.”  Meanwhile, the Wall Street Journal’s Federal Reserve mouthpiece, Jon Hilsenrath – who comically, can’t even interpret what he’s told – writes, we kid you not, that Ben Bernanke should be nominated for the Nobel Prize!  And not even for his (lack of) accomplishments as Fed Chairman, but because…

His research in the 1980s on the Great Depression proved to be a useful roadmap for how links between the financial system and the economy break down in a crisis.

-WSJ.com, October 1, 2014

Frankly, even we’re speechless; and equally so, listening to Alan Greenspan’s attempt to erase his legacy by re-introducing the staunch anti-fiat currency stance he held when he wrote “Gold and Economic Freedom” in 1966.

In his new op-end, “Golden Rule – Why Beijing is Buying,” published by the shadowy CFR or Council of Foreign Relations, he avers…

 If China were to convert a relatively modest part of its $4 trillion foreign exchange reserves into gold, the country’s currency could take on unexpected strength in today’s international financial system.

-Foreign Affairs, September 29, 2014

He subsequently kowtows to his masters in publishing the drivel that…

…gold prices would certainly rise, but only during the period of accumulation – and likely, fall back once China reached its goal.

-Foreign Affairs, September 29, 2014

No doubt, the article would not be allowed to be published otherwise – and of course, Greenspan made sure to ignore the “pink elephant” in the room; i.e., China has unquestionably been buying already in massive amounts.  However, his CFR-diluted message couldn’t be louder or clearer; i.e., gold is the center of the monetary universe and massive buying is coming.

Let’s face it, what’s going on in the financial markets is terrifying, revealing just how real “Economic Mother Nature” is.  Equally ominously, the world is witnessing that unprecedented money printing, market manipulation and propaganda can’t alter the economic reality described by the UK telegraph.  Sure, Reuters attempts to keep the bankers’ game going with headlines like “Asia down as Ebola scare hits Wall Street” – whilst commodities crash, economic data crumbles and panic creeps into the global zeitgeist; in Asia’s case, abetted by mass protests in Hong Kong, potentially threatening its status as a global financial power.  However, the reality that “QE to Infinity” is here to stay – and decidedly NOT a good thing – is what’s really spooking markets.  And thus, if one day October 2014 is remembered as the “Alibaba top,” we wouldn’t be the slightest bit surprised.  Hyperinflation will no doubt be the ultimate result; but as of now, the “most damning proof yet of QE failure” is screaming to be understood, despite the Fed’s best efforts to “paint the tape.”

Even before yesterday’s equity bloodbath – catalyzed not by the “Ebola scare,” but two days of hideous economic data – we noted how the PPT’s raison d’etre of propping up widely-watched indices like the “Dow Jones Propaganda Index” was being exposed by weakness in the vast majority of “un-manipulatable” stocks; which as you can see below, haven’t performed this poorly since – what a shock – late 2012, just before QE3 commenced.  Not that TPTB won’t “double their efforts” in the coming weeks, particularly with mid-term elections upcoming.  However, the unmistakable fact is that not only is QE miserably failing – in that global economic activity is approaching Great Depression levels – but even massively manipulated markets are straining under the weight of surging investor selling.

Conversely, gold and silver physical demand is surging, no matter how hard the Cartel attempts to slow it via paper naked shorting.  To wit, the abrupt capping of yesterday’s PM surge, amidst plunging commodities, equities and interest rates.  As you can see below, their rallies were stopped at EXACTLY the 12:00 PM EST “key attack time” I years ago deemed the “cap of last resort.”  And if ever a “cap of last resort” was needed, it was yesterday.

Subsequently, they stepped up the naked shorting in prototypical fashion, starting with this morning’s 309^th “2:15 AM” raid of the past 348 trading days and further waterfall declines at the 5:00 AM open of the New York “pre-market” session – which, as you can see, have since been reversed by early morning buying.

Unfortunately for TPTB’s best laid plans, their “financial Achilles Heel” is barking – as PHYSICAL PM demand is surging anew, abetted by the financial suicide the Cartel has committed in pushing paper prices so far below the cost of production.  To wit, the great Steve St. Angelo’s latest piece depicts dramatic reductions in silver mining margins, despite “slashed to the bone” cost structures that have reduced “breakeven” prices to $21/oz. in the past two years.  Of course, $21 only refers to the variable costs of mines already in production owned by the world’s largest mining companies; thus, ignoring the vast majority of worldwide production, which unquestionably has significantly higher breakeven costs.  Not to mention, the “all-in” cost of sustaining silver production and reserves over time – which in my mind, is much closer to $30/oz. than $21/oz.  FYI, we will be exploring these issues in detail on the upcoming “Miles Franklin All-Star Silver Panel Webinar” on October 16^th which will subsequently be uploaded to our blog.

At the U.S. Mint alone, gold Eagles sales had their second best month of the year, whilst silver sales were even stronger.  In September alone, 4.1 million silver Eagles were sold, doubling August’s level and putting the full-year pace ahead of last year’s record level.  Better yet, October started with a resounding BANG as a whopping 1.15 million silver Eagles were sold yesterday, whilst the Cartel capped paper prices at 12:00 PM.  Moreover, the gaping disparity between COMEX open interest and silver prices continues to widen, as O.I. rocketed higher during Tuesday’s Cartel-generated paper bloodbath further exposing just how vulnerable the COMEX’s measly $1 billion of supposed “registered inventory” is becoming.

Of course, as “Maestro” himself suggested, it’s not the West where the gold market is made or broken, but the East – whose insatiable, inexorable demand is exploding.  Last week, we noted Andrew MacGuire’s comments of how an astonishing 650 tonnes of gold were purchased in the London OTC markets amidst the Cartel’s September paper raids – in MineWeb’s words, “suggesting demand is near 2013’s (record) levels.”  In fact, demand at all the world’s major mints – not to mention, at Miles Franklin – is surging, and watching Shanghai’s silver inventory whittled to a paltry $40 million worth, as its “International Board” launch promises to generate dramatically higher physical demand, we can only wonder how long it will be before the silver shortages of 2008, 2011 and 2013 re-incarnate – yielding massive price, premium and delivery time expansions.  As far as the ill-fated Western Cartel is concerned the “Enemy Cometh”; and that enemy, contrary to TPTB’s propaganda is NOT just China and Russia – but instead, seven billion enraged global denizens trapped in rapidly depreciating, inevitably doomed fiat currencies.

Only you can act to protect yourself from the upcoming, perhaps imminent, “inflection point in history” guaranteed to transform said billions’ perception of what money really is.  And incredibly, you are currently being afforded the ability to do so at gold and silvers’ lowest inflation-adjusted valuations of our lifetimes – and perhaps, ever.  But such opportunities don’t typically last long, and once the “big one” inevitably arrives, it won’t be price that will define the PM markets but lack of availability.

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