The Fed, The Cartel, And The Powers That Be On The Precipice

It’s early Saturday morning – and I do mean early – and I have a lot to say, about a great many things.  I’ll try to be as brief as possible – but irrespective, I’m sure you’ll enjoy it.  Starting with a brief description of my “voting history” – starting with November 1988, when I had just turned 18 years old.  A freshman at SUNY Albany in upstate New York, I was still living in Long Island – in a broken, but decidedly Democratic household.  I didn’t know much about anything; and thus, the decision to vote for Michael Dukakis was a no-brainer.

In 1992, the beginnings of “Ranting Andy” were evident – as I not only voted for Ross Perot, but passionately so.  And anyone that doesn’t realize just how great a man Perot was, I strongly urge you to read Ken Follett’s On the Wings of Eagles – about how, during the 1979 Iranian hostage crisis, Perot snuck into Iran, at great personal peril, to visit imprisoned EDS employees in Iranian jails.

At that point, I was “0 for 2,” – but I made up for it in 1996; when I helped re-elect Bill Clinton, as not only did the world appear “fine” at the time, but I despised Bob Dole.  Then came 2000 – when I voted for George Bush for three reasons.  One – as a Wall Street oilfield service analyst, the stocks I covered rose when Bush led in the polls, and fell when he floundered; as if, in hindsight, it mattered a whit.  Secondly, I despised Al Gore.  And finally, I didn’t know Bush from a hole in the wall – so I couldn’t possibly imagine what an abysmal failure of a person, and President, he would be.

Care of a Clinton and a Bush, I was up to 2 for 4, for an even 50% “success rate.”  But that was the last election I voted in for a reason other than to prevent someone I hated from winning – starting in 2004, when I voted for John Kerry in a futile attempt to prevent Bush from being re-elected; and 2008, when I voted for Obama – another guy I didn’t know from a hole in the wall – to prevent “neo-con” John McCain from taking office.  And then came 2012 – when I was so disgusted with the state of the world, I voted for Libertarian Gary Johnson; who seemed like a nice enough guy when I met him in person that summer (coincidentally, his booth was directly next to Miles Franklin’s at “Freedom Fest”).  Which coincidentally, none other than Donald Trump served as the keynote speaker at!

Which brings us to today, with my “election record” of three “wins,” and four losses.  I believe Gary Johnson is running again – and like last time, he has not a chance in hell of winning.  No, this is going to be Trump vs. Clinton, in an election that will not only shape the future of the dying U.S. Empire, but the entire world.  Either way we lose – as best described by Gerald Celente, who describes it as “Hitler vs. Hitlery.”  As in the big picture, as I see it, the only real difference is that if Hillary wins, at least some semblance of diplomacy will remain.  Whereas, if Trump wins – which I strongly believe will be the case – America’s foreign policy strategy will potentially regress not just by decades, but centuries.  After all, this is a man famous for insulting people to their faces – damn the consequences.

So what will I do this November, assuming this “Gordian Knot” of a choice?  Contrary to what the prior paragraph suggests, I’d vote for Trump without reservation – given that I, like hundreds of millions of Americans, are sick and tired of a political system that has not only destroyed our nation, but gone out of its way to damage me personally.  Thus, on November 8^th, I expect to be “4 for 8” – but such a “victory” will be Pyrrhic at best, as America will really start going downhill on November 9^th, if the “snowball effect” of crashing economic activity, financial markets, and currency confidence, hasn’t started already.

After all, Trump is a man who – this week alone – did the following…

1. Hired a campaign finance chairman named Steven Mnuchin, following 17 years as a partner at…wait for it…Goldman Sachs

1. Vowed to spend trillions to expand America’s war machine, no matter the (printing press-financed) cost.  To wit, “we will spend what we need to rebuild our military.  It is the cheapest, single investment we can make.  We will develop, build and purchase the best equipment known to mankind. Our military dominance must be unquestioned, and I mean unquestioned, by anybody and everybody.”

1. Last but not least – in perhaps the most ironic statement a politician could make, in a nation with more debt than all other nations combined…”Don’t forget, I’m the king of debt, I love debt.  I know more about debt than practically anybody.”  Yes, the “King of Debt” is about to become President, on a platform of unfettered fiscal spending – including not only unrestrained military spending, but an (equally printing press funded) infrastructure investment spree he likens to a modern version of FDR’s “New Deal!”

My friends, this is the sad truth of where America is heading; and sadder yet, I will unquestionably vote for Trump – as I, too, will do anything to prevent a mainstream politician from winning, particularly one with Hillary Clinton’s sordid track record.

Next up, let’s take a look at where the world at large is trending – as the “powers that be” rapidly head toward the precipice of comprehensive, catastrophic failure.  In Asia, we just learned that retail sales in Hong Kong, one of the world’s most affluent cities, plunged by an astonishing 19% in March.  In Europe, a June 23^rd “Brexit” is an odds-on possibility; as is a summertime “Grexit,” now that the IMF has officially threatened Germany that if it doesn’t agree to debt relief, it will no longer participate in the “bail-out” of Greek banks that has put Greece in worse financial shape than at any time in its 5,000 year history.  Meanwhile, on June 5^th, Swiss citizens will vote as to whether the average family of four should be given the (printing press funded) sum of the Swiss Franc equivalent of $78,000 per year, tax-free, for life.  Can you imagine what Swiss price inflation will look like under such a scenario – in a nation that is already one of the world’s most expensive?

Meanwhile, Europe’s “migrancy crisis” is getting worse by the day – with anti-Muslim sentiment starting to take on an ominously post-World War I Germany flavor.  Will Muslims be the 21^st century’s scapegoat, as the Jews were in the 20^th?  Sadly, that’s the direction the world is heading – and the unrelenting pressure on oil prices that the expanding global glut portends will only accelerate this trend, as countless millions of Middle Easterners scramble for “higher ground” that doesn’t exist.  And then there’s the expanding global currency crisis that, despite not a peep from the mainstream media, worsens with each passing day.  South America, in particular, looks ripe for a viral spread of hyperinflation – which is why it’s so symbolic that the Olympic Games are scheduled for Rio DeJaneiro this summer, if they happen at all.

Regarding said crisis, the “final currency war” officially went thermonuclear when the Chinese started the process of devaluing the Yuan last summer – or as I deemed it, the “upcoming, cataclysmic, financial big bang to end all big bangs.”  That was a mere tremor portending what will be eventually be a 10.0 Richter Scale financial earthquake, as the plunging Chinese economy prompts the PBOC to devalue further.  And this, as China dramatically steps up its gold ownership and market domination, as symbolized by last month’s establishment of the Shanghai gold fix.

But it’s not just China, of course – as the entire Central banking world is rapidly destroying itself.  To that end, even I was shocked to learn that in just one month’s time, the amount of global sovereign bonds trading at negative yields surged from $7.8 trillion to $9.9 trillion.  Yes, a whopping $2.2 trillion of additional negative-yielding bonds – and that’s just through April 25^th, so we’ve had another two weeks of “QE to Infinity” front-running since.  Which will only go parabolic following yesterday’s horror show of a U.S. “jobs” report; which, at one fell swoop, validated not one, but both of the premises of my article from Thursday, “the fraudulent BLS, versus the real PM bull market – the final showdown.”  To wit, here’s what I wrote just 24 hours beforehand…

“Regarding tomorrow’s NFP report, my bold, cocky guess is that by the weekend, either the U.S. “recovery” propaganda will be dead and buried (and with it, the Fed’s ability to pretend it plans to raise rates); or the fraud that is the BLS’ “jobs” report will be, once and for all, completely and utterly discredited.”

Regarding the former, just 160,000 “jobs” were created in April, versus the “expected” 200,000 – which it’s hard to believe no one anticipated, given that Wednesday’s ADP report came in at just 156,000.  Heck, Goldman Sachs raised its NFP estimate from 225,000 to 250,000 on Thursday, after the aforementioned ADP report!  But that was just the “tip of the iceberg” as far as just how bad the report actually was.  Not to mention, how far it went toward depicting not only a collapsing U.S. labor market, but exposing the BLS’ unprecedented accounting fraud as starkly as imaginable.  To wit…

1. Of said 160,000 “jobs,” 233,000 were fabricated by the archaic “birth-death” model – which assumes unreported jobs are continually being created, despite the fact that more private companies have “died” than been “birthed” for eight years running.

1. The accompanying “household survey” violently disputed the claim of 160,000 “jobs” being created, by depicting a loss of 312,000 jobs.

1. All of said jobs were in the “service” sector – led by non-productive sectors like education, healthcare, and “leisure and hospitality.”  I.e., the part-time, minimum wage-paying “waiter and bartender” positions that have been America’s only labor “growth sector” since the 2008 crisis.  And the beauty of the BLS’ accounting, is that when a 40 hour per week job becomes two 15 hour per week jobs; and two 15-hour per week jobs become four five hour per week jobs, the number of reported “jobs” multiples like a cell undergoing mitosis!

1. The labor participation rate plunged to a near record low of 62.8%, as a whopping 562,000 Americans exited the Labor Force – in most cases, permanently – compared to the supposed 160,000 “jobs” created.

1. Not only were all incremental jobs in the “service” sector, but all were, as usual, in the 55+ age category – as the “American dream” of retirement continues to rapidly die.  In fact, like “waiters and bartenders” as a “job category,” the only age segment to experience growth since the 2008 financial crisis is 55+.  And I assure you, such people, desperate to pay bills because they have no savings, are not taking jobs as corporate CEOs.

After the horrific report was announced, the money market “odds” of a 2016 Fed rate hike plunged to ZERO.  Actually, no rate hike is now expected until mid-2017 – so clearly, said “recovery” propaganda is dead and buried; and with its, the Fed’s ability to even pretend it’s in control, or that its next move will be “tightening.”

Consequently, the “powers that be” did everything in their power to paint the tape – like utilizing yet another “dead ringer” algorithm on the “Dow Jones Propaganda Average,” whilst the Cartel desperately capped gold and silver at their new “lines in the sand” at $1,300/oz and $17.50/oz, respectively, care of the ubiquitous 12:00 pm EST “cap of last resort” algorithm.

To that end, if you want to see just how maniacal the Cartel has been in capping PMs amidst a world of expanding negative interest rates; exploding Central bank money printing; and virally spreading fiat currency collapse; take a look at the below charts of silver “trading” since the Cartel was taken by surprise by the overnight surge to $17.60/oz on April 21^st.  This, as we officially learned of record physical demand.  As you can see, the 12:00 PM EST (or whereabouts) “cap of last resort” – which I initially identified roughly a decade ago – was utilized on 10 of the ensuing 12 trading days

That said, the real story of the day wasn’t witnessed until 3:30 pm EST – when the weekly COT report was published, regarding COMEX Precious Metals “trading.”  To wit, whilst the Cartel’s – I mean, “commercials”’- paper silver shorts remained essentially unchanged at their (naked) shortest level ever; their gold naked shorts when hyperbolic, increasing by a near-record 55,000 contracts this week alone – to nearly an all-time high.  In fact, like silver, there’s no precedent – in the entire 16-year PM bull market – of the Cartel naked shorting so much, of both metals, in such a short period of time.  And this, by the way, only depicts such shorting as of Tuesday, which undoubtedly surged further in the Cartel’s aforementioned, maniacal defenses of $1,300/oz and $17.50/oz on Wednesday; Thursday; and particularly, Friday.

Yes, there are ramifications of hyperbolically expanding monetary policy, in a negative interest rate world gone mad – amidst the worst economic environment in generations, and the highest debt levels, by far, in global history.  One of them, of course, is parabolically expanding debt levels.  Another is the destruction of political regimes.  And last but not least, the deterioration of social stability.  Financially speaking, the trend toward real monetary alternatives, like physical gold and silver, is as inexorable as the tides.  Not to mention, any perceived means of storing purchasing power.  Such as, say, Bitcoin – which after again surging above $450 on Friday, appears on the verge of what could be a major, globally attention-garnering breakout.  Which not “coincidentally,” may occur simultaneously with what may well be a significant Precious Metals breakout; particularly if, as was the case in 2011, said “commercials” are forced to start covering their increasingly loss-generating shorts.

Last, and decidedly least, I’ve been asked to comment on Harry Dent’s latest anti-gold diatribe – as yet again, this brilliant economist, with an equally “un-brilliant” market forecasting track record, has, incredibly, chosen to attack not only the world’s most obviously undervalued asset, but the one performing better than any other this year.  To wit, his latest comments.

“So which is it?  Inflation or deflation? 

I spend a lot of time arguing with economists over gold, stocks, and the economy, but this is the biggest argument I have.  It’s usually with gold bugs like Peter Schiff and Porter Stansberry, who admittedly understand that the economy’s not all it’s cracked up to be…but they totally miss the bigger picture on what kind of crisis we’re looking at, and how to prepare for it.

So let me be clear: we are facing a deflationary crisis, not an inflationary one.  Don’t listen to these guys who tell you that “hyperinflation” will cause gold to spike to $5,000 and that the dollar’s going to fall to zero. Sorry, not happening!”

To which, I can only say thus.  Or better yet, prove my point with this 12-second clip from Revenge of the Sith – in which Obi Wan responds to a soon-to-be-Darth-Vaderized Annakin Skywalker’s claim of “if you’re not with me, then you’re my enemy,” with “only a Sith deals in absolutes.”

In other words, there’s no such thing as an “inflationary” or “deflationary” crisis – as no matter what the scenario, something is always appreciating.  Let alone gold – which not only rose during the 2008 crisis (notwithstanding the Cartel’s initial attempt to smash it, yielding severe physical shortages; and ultimately, higher paper prices); but was the world’s best performing asset class during the Great Depression.

Or how about Treasury bonds, to name another?  Sure, yields “deflated” during the 2008 crisis – aided, afterwards, by QE and other official manipulations.  However, during what was unquestionably the worst “deflationary crisis” of our lifetimes, Treasury bond prices inflated, as a perceived safe haven, quite handsomely – and have continued to do so since.

Frankly, it’s getting pretty pathetic watching Dent spend so much time fixating on the tiny, historically undervalued gold market – when there’s a whole universe, of hundreds of trillions’ worth of overvalued financial assets on the verge of collapse.  In my view, he’d be best served to focus on the latter, as they will unquestionably collapse spectacularly – in real terms, be it via an “inflationary”; “deflationary”; or “stagflationary” crisis.  Because if he continues to “fight the tape” of the world’s ultimate safe haven market, he runs the risk of being massively right about the big picture, but remembered from having told people to avoid the best means of protecting themselves.

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