I'm not going to speak here of how far below the cost of production gold and silver are trading at as we have countless times over the years. The fact that Newmont and Barrick again failed to merge due to excessive management egos only proves that - just as the U.S. government always does what's "best for gold prices, but worst for America," mining companies have a consistent track record of doing what's best for gold prices but worst for shareholders. The mining industry, quite literally may have been permanently destroyed by the past decade of price suppression; but particularly the past five years, since TPTB realized the inevitable collapse of their ill-fated fiat Ponzi scheme would be accelerated dramatically if "gold fever" were allowed to assert itself.
Of course, nothing we'd seen in 2000-2012 - aside from May 2011's "Sunday Night Paper Silver Massacre," September 2011's "Operation PM Annihilation I," December 2011's "Operation PM Annihilation II" and February 2012's "Leap Day Violation" - even compares to what commenced a year ago. To wit, on April 12th, 2013, Obama had a closed door meeting with the CEO's of the 15 largest "TBTF" banks including Goldman Sachs and JP Morgan, of course. The preceding evening, Goldman "coincidentally" put out a short sale recommendation on gold and lo and behold, for absolutely ZERO reason, gold and silver suddenly plunged by $250/oz. and $6/oz., respectively over the ensuing two trading days.
Since then the "manipulation stratagems" we have observed through the entire 14-year PM bull market kicked into hyper-drive; which is why we have seen "2:15 AM" paper raids on 213 of the past 240 trading days, and "Sunday Night Sentiment" attacks 38 of the past 39 weeks - with the only "non-attack" occurring the Sunday before President's Day, when markets were closed the following day. This week's incessant paper attacks are a perfect example and tactics like the yesterday's DLITG, or "Don't Let it Turn Green" algorithms (below) are as blatant as they are consistent - just as the signature "Cartel Herald" algo that appeared at exactly the Cartel's $1,300/oz. "line in the sand," at exactly the 10:00 AM EST close of the global physical markets, after gold had risen exactly 1.0%, at exactly the same time of day such increases are typically "allowed."
Whilst this was occurring global physical buying continued at the frenzied pace it has been at for years - but particularly since that ill-fated day a year ago. Global gold and silver purchases have skyrocketed, and the fact the U.S. Mint itself is rationing silver Eagles should tell you all you need to know. In fact, while paper silver was tattooed in the past 48 hours - whilst no other metals budged - the U.S. Mint sold a million silver Eagles on Monday alone - or 85% of its weekly ration putting it on pace to exceed last year's non-rationed record by nearly 30%!
This morning alone, as the "all-important" FOMC meeting approached, in which it is widely, broadly, universally expected to reduce QE from $55 billion per month to $45 billion (not that they're actually "tapering" at all) and maintain guidance of holding rates at ZERO until at least mid-2015. PMs have been under attack again - and this, amidst a veritable ocean of PM-positive news. In the U.S. alone, the shocking revelation that GDP only increased by 0.1% in the first quarter should alarm even the most jaded government apologists particularly given that only increased government spending for Obamacare enabled the number to be positive at all; and oh yeah, corporate capital spending was negative for the first time since the bottom of the 2008 financial crisis. Not to mention, the embedded 1.3% "GDP deflator" was the lowest in memory - as the government continues to not only fudge the growth-related data but accelerate the spread of "deflation" related propaganda.
But don't worry, the talking heads will of course say, it's due to "the weather." And we also shouldn't worry because the ADP report, at +220,000 was slightly better than the +210,000 estimate. ADP, of course, puts out infamously inaccurate data always "seasonally adjusted" and always recalculated in future periods. Not to mention, with an incredibly low correlation to the equally inaccurate, seasonally-adjusted fudged NFP report; which, care of the "birth/death" model is schedule to add roughly 235,000 phantom jobs to Friday's report. And finally, please ignore this morning's Mortgage Bankers' Association weekly data reportinganother 6% sequential decline to another 20-year low. After all, Wall Street's doing fantastically thanks to the free ZIRP money and "Yellen Put" that will never allow rates to rise; although, as I wrote last week, ultimately it won't matter what rates do, as said "hot money" rushes out with the recessionary tide. As for "Joe Six Pack," what has he gained from the Fed-generated real estate "echo bubble?" Well, let's see a 17-year low in home ownership as the cost of living and mortgages costs have skyrocketed; and record high rents, as the Wall Street "buy to rent" craze cripples him further.
Zero HedgeZero HedgeYes, "all's well," which is why PMs - after again rising back to the unchanged "line in the sand" for this FOMC meeting day were smashed to new lows as the Cartel's COMEX-opening paper algorithms kicked in. And what did "Dow Jones Propaganda Average" futures do amidst this flurry of "market moving" employment, mortgage, and GDP data? You know the type that caused inert PMs to "gyrate wildly?" Absolutely, utterly nothing as the PPT held them at exactly the unchanged level they were at when I awoke, following yesterday's predictable "pre-FOMC drift" gains.
As today's title connotes, the "World of Economic Rot" is far-reaching starting with rankcorruption for all too clearly see. Reading how Larry Summers, Obama's top economic advisor at the height of the 2008 crisis - not to mention, the man who literally "wrote the book" on gold manipulation - candidly told Elizabeth Warren who to his dismay became a noted whistleblower, that "you can be an insider or an outsider," and "insiders have one unbreakable rule"; i.e., they "don't' criticize other insiders," is a depiction of how America now works as you will find.
America, the so-called "superpower," is as hopelessly broken as any other dying empire throughout history. This rebuke of the so-called recovery tells you all you need to know of how far America has fallen; but complementing it with this depiction of pork-barrel lobbying andthis commentary on America's bloated, corporate-owned prison system only drives the point home more poignantly. As for the "employment recovery," how about this article depicting how 20% of all American households have not a single worker among them; and this article - from yesterday's New York Times, no less - of how the majority of new jobs are minimum wage fast food workers further expands on this desperate theme.
Regarding corporate "earnings," the poor quality that has been condoned by Wall Street, Washington and the FASB itself is growing grosser with each passing quarter. To wit, fraudulentrevenues, earnings, balance sheets and, of course, "growth" are making it increasingly obvious that not only are major equity indices trading at bubble-like valuations due to easy Fed money, but historically stretched valuation metrics are grossly understated. Throw in the fact that the "new economy" is now dominated by society-draining social media companies - particularly Twitter, down 10% to new all-time lows this morning - only accents the decline of America's former leadership and thus, the fact it is overtly provoking Russia into a potentially catastrophic World War shouldn't surprise anyone. Last night, the Chinese government overtly scolded America for doing so, in what the MSM should be picking up as a major geopolitical story you know the type that would cause freely-traded gold and silver prices to soar. Yet, they are as usual eerily silent. But trust me, they decidedly won't be silent when the ramifications of provoking Russia and China inevitably express themselves.
In fact, the entire world appears to have finally had enough of the U.S. and its dollar which is why the Chinese and Russians have signed dramatic "anti-dollar" trade agreements in the past year - particularly since the Ukrainian crisis broke out in February. Last night alone, the new Indian central bank chief unleashed a scathing attack on Western-led QE programs and specifically, the Federal Reserve. Money printing is rapidly draining the world of its financial and human resources; and as he so accurately states the cascading, global currency war it has fostered will end in tears if not arrested quickly. Sadly, it's too late to "save" the system as like all Ponzi schemes, they must grow larger - at constantly increased rates - to avoidinstantaneous collapse. TPTB can create all the fake "stress tests" they want - such as the laughable one released by the ECB yesterday, as it inches closer to its own QE announcement but they can't change the reality of insolvency - and thus, the guaranteed Central bank response of more money printing.
Just look at Japan, which last night reported not only their 22nd consecutive monthly decline in base wages - amidst record CPI inflation, last month's 3% national sales tax increase (with another 2% increase scheduled for next year) and a now falling stock market. Not to mention, a catastrophic plunge in its manufacturing PMI to a new 14-month low from 53.9 to 49.4. Per the below chart, the false "wealth effect" created for a few months by the launch of QQE, or Quantitative Qualitative Easing last April - when the Nikkei surged and "recovery" propaganda proliferated - is now completely gone. And thus, Shinzo, what to do next? Triple the money supply? Quadruple it? How about quintuple?
Zero Hedge Quite obviously, whatever they do will fail as doing nothing will cause a 1989-style economic crash, while increasing QQE will only foster increased inflation, social unrest, entitlement spending (and hence, debt growth), and a heightened global currency debasement response. To wit, the Chinese Yuan fell to a new multi-year low last night as amidst the dissemination of horrific provincial GDP figures - signaling a significant slowdown from "official" estimates - the PBOC is obviously stepping up its own participation in the global currency war. Think it's a "coincidence" that Chinese and Japanese disputes over everything from territorial rights to wartime debts have amped up in recent months? Think again, as clearly an "East versus West" cold war is brewing with China representing the new world power in the East, and Japan squarely in the corner of the declining West.
And so, as we head into yet another FOMC propaganda fest this afternoon; let alone, Friday'sNFP employment smokescreen, TPTB are doing everything in their power to keep Paper PMs under pressure. I mean, think about it; GDP was reported to be zero this morning (sorry +0.1%), and mortgage related purchase and refinancing activity at 20-year lows. And yet, we're to believe that demand for Precious Metals is plummeting, and the FOMC can state - with a straight face - that the economy is "recovering." Not that it matters, of course, as gold and silver trade where they do solely due to manipulation as physical demand is at record levels whilst production declines. Ironically, TPTB are so terrified of the economic "Achilles Heel" that is silver - given its extraordinary tight supplies, and historic monetary value - that they are attacking it more than any other metal. If indeed they want to purport an expanding "recovery," surely they realize that outside crude oil, silver is the most widely utilized industrial commodity on the planet!
Oh well, I guess we'll just have to sit on our PHYSICAL stashes and wait knowing that eventually - and perhaps, imminently - the powers that be is "can kicking" game will finally hit the wall, unleashing parabolic gold and silver demand as the "world as we have known it" permanently ends. And if you haven't positioned yourself for such beforehand, you'll likely never get the chance.