October 13, 2014 ~ Andy Hoffman
It's Monday morning and the New York Fed's new "Chicago office" has been busy all night attempting to reverse the expanding collapse of global financial markets. Their pitiful efforts are attempting to mask the gaping wound of global economic collapse; and thus, whether they can will the "Dow Jones Propaganda Average" to reverse to the upside in time for next month's elections is a 50/50 shot at best. Irrespective, few people could care less, as retail participation in the equity market has plunged to record low levels, care of 15 years of stagflation and two epic market collapses.
Global financial markets are in FREEFALL, irrespective of what the world's best funded most technologically sophisticated market manipulation organizations - i.e., the U.S. President's Working Group on Financial Markets, Federal Reserve and Exchange Stabilization Fund - are doing. Sovereign yields are collapsing, led by the 16-month low 2.25% yield on the benchmark 10-year U.S. Treasury bond exposing the "most damning proof yet of QE failure." Even the "New Hail Mary Trade" - of the Fed goosing Treasury yields early in New York trading hours and again at day's end is failing miserably against a veritable tsunami of demand. Heck, just last week, U.S. bond funds witnessed their largest capital inflow ever; and this, despite massive liquidation of the world's largest bond fund group, PIMCO, after Bill Gross left. And now that the Fed itselfadmitted failure - in last week, disclosing its fears of a global slowdown - the entire world is starting to realize Whirlybird Janet is not only unable to stop it, but will shortly not only reversethe "tapering" but overtly announce QE4.
Commodities, too, are collapsing, as are global shipping indices and real estate markets fromWest to East. And more importantly, depicting what we deem the "single most bullish precious metals factor imaginable," currency markets are wildly fluctuating wreaking havoc on global trade; increasing inflation of "want versus need" items in "emerging markets"; and - of course - taking the "final currency war" to a new ominous level. Last week's FOMC minutes revealed a Fed as fearful of a rising dollar as the ECB is of a rising Euro, the BOJ a rising yen, etc. - of which, the only "cure" is more money printing.
And thus, the "race to debase" is about to launch into hyper drive, as exemplified by the shockingcomments of uber-dove Charles Evans, President of the Chicago Fed and a 2015 FOMC voting member; who this weekend, averred that a stronger dollar is an "obstacle to the Fed's ability to meet its inflation mandate" - calling it a "headwind" as it will lead to lower import prices. No, readers, that's not a typo. The Fed actually thinks falling import prices is unfavorable - and thus, will do "whatever it takes" to make sure the cost of living increases for the "99%." But don't worry, since all that ZIRP, TARP and QE money goes directly to the world-destroying banks - and the aforementioned "manipulation organizations" - the "1%" will do just fine. That is until hyperinflation "comes to town."
On the topic of cataclysmic PM-bullish developments this weekend, there were quite a few - starting with Iraq begging the U.S. to send 10,000 ground troops as ISIS is not only on the verge of taking over key strongholds in Syria, but Northern Iraq (where the massive Kirkuk oil field lies), and Baghdad itself. In Europe, whilst "Goldman Mario" complained the Germans are "impossible to work with," all manner of political and economic hell is breaking loose - as it commences its own suicidal version of Abenomics. Friday night, S&P downgraded France's outlook from stable to negative, and the ECB is considering swapping some of its U.S. dollar reserves for Yuan - as are the Russians, which not only sold $53 billion of U.S. treasuries last quarter, but signed a $25 billion currency swap agreement with the Chinese.
Here in the United States of Economic, Military and Social Devastation, "earnings season" starts this week with even Goldman Sachs forecasting disappointing results and guidance; partly due to the collapsing economy, and partly the "strong dollar" which causes foreign earnings to translate into less dollars. Meanwhile, for the first time this year, consensus economic data expectations - including "island of lies" reports like diffusion indices - are declining; and lo and behold, the Fed istoday executing a joint "war-game" effort with the Bank of England in preparing for the "potential" of a major bank failure. I mean, why would they possibly do that? And the most hilarious part of all, is that the Fed published a study this weekend warning of the potential for increased market volatility in a higher interest rate environment. Earth to Janet, rates are not only not going higher, but to ZERO - as the entire world front-runs "QE to Infinity." Only when hyperinflation inevitably results will rates go higher; but when they do, economic "policy" will be moot as social chaos, draconian government, and war will be far more pressing issues.
Last but not least, the most important headline of the weekend, strongly validating today's article title. In an environment where mine production is likely to utterly collapse, as evidenced by the shocking 50% plunge in miners' capex since 2012, the Chairman of the Shanghai Futures Exchange himself "admitted" Chinese gold demand was above 2,000 tonnes in 2013 - validating numerous private estimates and confirming, without a doubt, Central banks have secretly dishoarded reserves to avoid default. After all, just 2,770 tonnes were mined worldwide; and thus, China consumed more than 70% of all global gold production, despite having just 20% of the world's population. And given the fact the Shanghai Futures Exchange's silver inventory plunged more than 90% this year to a measly $50 million, it's safe to say private estimates that global silver demand were also at record levels are spot on as well - and accelerating as U.S. Mint Silver Eagle sales were faster in the first two weeks of October than at any time this year.
And just as TPTB slowly - or perhaps, not so slowly - lose control of paper financial markets, the same will inevitably occur with precious metals. Last night the streak of 70 straight "SundayNight Sentiment" raids was broken - i.e., a Cartel-generated "anomaly" with one in a sextillionodds of occurring in a freely-traded market. They still fought back with a typical "2:15 AM" raid - of which, I'm too tired to calculate the odds of occurring 90% of the time over 350 trading days. However, as I write at 10:45 AM EST, gold is back up to $1,230, as stocks fall sharply and the 10-year Treasury yield approaches 2.25%. In other words, the "exception" in "2008, with just one temporary exception" is on the verge of being eliminated.
The Cartel is now using every illegal tactic imaginable to prevent the inevitable precious metals explosion; which, as it appears, may well be this Fall after all. From last week's blatant DLITG or "Don't Let it Turn Green" algorithms, to attacking mining shares like never before (see the below screenshots from Thursday and Friday's "trading"), they are leaving no stone unturned in their desperation to prevent "it" from commencing - which per this weekend's podcast appears to be occurring.
All along, we've written of the "tells" that history's largest most destructive Ponzi scheme is on the verge of collapse. First and foremost is the morphing of global debt accumulation to
parabolic growth rates; and "last but not least," loss of control of selected paper markets - enroute to the total collapse of the system and liberation of physical gold and silver markets.
In June 2008, Helicopter Ben stated that "the risk the economy has entered a substantial downturn appears to have diminished," just one year after stating, "Problems in the subprime market seem likely to be contained." You'd think Federal Reserve Presidents would be smart enough to avoid such phraseology in the future; but think again, as Cleveland Fed President Loretta Mester, just three weeks ago, said, "Financial stability risks in U.S. are well-contained." Well, looking at the global paper markets - and the aforementioned Fed "war games" - it appears she may have spoken too soon. First up, the battle for the paper markets are lost, followed shortly thereafter by PHYSICAL gold and silver.