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Cataclysmic Observations

September 1, 2014

The global macroeconomic – and geopolitical – situation is deteriorating so rapidly, it is literally impossible for my hyper-stimulated brain to slow down.  It’s still Thursday night and I wanted to pen a few observations, starting with today’s “are you kidding” manipulation moment.

As we have said all along, TPTB can huff and puff all they want – but the more they do, the more cataclysmic the inevitable end game becomes.  Frankly, I am speechless at times – of not only worldwide governments’ collective desperate behavior and Central banks creating bubbles dwarfing the late 1990s internet mania, but of the societal decline such policies have engendered.  Just reading David Stockman’s latest article about Venture Capital firms colluding to drive the “pre-IPO” valuation of a company called “Snapchat” to $10 billion – nearly as much as the $13 billion valuation of Newmont Mining, the world’s second largest gold miner – I literally wanted to puke; as not only does Snapchat have no revenues (or for that matter, a cohesive business plan), but its business is enabling 100 million college-aged students to post “selfie” pictures online, before they disappear 15 seconds later.

Then we have the real world, where no less than a half dozen extremely ominous headlines surfaced in the Ukraine.  Frankly, it amazes me how powerful the short-term “market manipulation spell” has been, as clearly Ukraine is headed for something extremely wicked – as well as Iraq, Syria and countless other geopolitical hot spots.  The fact that oil prices have fallen from $107 to $94 in recent weeks, yet my local gasoline price remains near its highs, should tell you just how ugly the potential economic damage could be from these cumulative “black swan” hot buttons.  And sadly, the world wouldn’t be much better if all was quiet on the Middle Eastern front.  Of course, the principal reason wars are breaking out globally is the inflation exported by maniacal Western money printing, so there really isn’t a way of separating their collective influences.

Of course, the most important story of the day – and year – is the ominous collapse in global interest rates we have shouted from the rooftops about all year.  In our view, there is no more “damning proof of QE failure” than collapsing rates amidst hyperinflationary money printing, which must continue given the gathering global consensus that what we predicted all along – “QE to Infinity” – is a fait accompli in the terminal stage of fiat currency Ponzi schemes.  To wit, essentially all nations are stuck in the same “QE trap,” which after 43 years has finally been universally sprung.  Watching the benchmark U.S. 10-year Treasury implode today to 2.34% – amidst the “good news” of a (fraudulent) upward GDP revision, we couldn’t be more validated in our views, nor more terrified of their ramifications.  And by the way, embedded in the 2Q GDP numbers was a price deflator of 2.1%; in other words, above the 2.0% “rate rise” threshold Janet Yellen, just last week said wouldn’t occur until years down the road.  But hey, we told you the “2.0% inflation threshold” would be dropped as speedily as the “6.5% unemployment rate threshold,” so no one should be surprised.

Worldwide economic activity is rapidly approaching 2008-level freefall speed with the only remaining “cushion” being history’s most blatant, heavy-handed, hyperinflationary money printing and market support.  Heck, look at Japan’s economic data from tonight, including a much higher than expected 3.4% inflation rate, a 5.9% collapse in July household spending and a 0.5% decline in retail sales – combined with surging unemployment to a nine-month high.  Thank god the BOJ is now overtly buying stocks, or else tonight’s miniscule losses would probably morph into a 1929-like crash.  Hey, just a few months left until Abenomics must be “doubled up.”  Gee, what could go wrong?  Then again, at least they can wait a few months – as opposed to “Goldman Mario” Draghi, who if he can’t goose markets in the next few days, will be forced to commit Europe to its own version of “QE to Infinity” next Thursday.

And last but not least, under the heading of “how foolish do they think the entire world is?” is today’s comically blatant paper PM raids.  In gold’s case, what a shock, capped at exactly the Cartel’s 1.0% upside cap at exactly the COMEX open…

…with a second decline at precisely the 10:00 AM EST “key attack time number #1” (when global physical markets closed), coincident with interest rates plunging to their low of the day, whilst the PPT executed a perfect “dead ringer” algorithm to defend the Dow Jones Propaganda Average.

As for silver, it does not get more obvious how terrified the Cartel is of the “financial world’s Achilles Heel” destroying them – which we assure you, it will.  I mean, seriously, we are at the end of the COMEX delivery period; and despite every attempt to attack silver, roughly half the miniscule 60 million ounces of silver is spoken for (as if that matters, as the Cartel hasn’t allowed a single ounce of the hundreds of thousands demand this year to be delivered).  Geez, this doesn’t even qualify as an exchange anymore, it is getting so obvious.  Think about it, what are the odds that – on a week, when massive physical demand threatens to destroy the Cartel’s silver naked shorting scheme entirely, that silver would be attacked at the exact moment the COMEX opened every day of the week?

Oh well, we’ll just have to sit tight with our holdings of real money – which care of record U.S. Mint and Royal Canadian Mint statistics are flying off the shelves at rates above last year’s records.  Moreover, I noted last week that Miles Franklin has seen surging demand all month; and given such an environment going into the year’s busiest period, the Cartel appears to be on or close to death’s door.  Heck, the Sprott Physical Silver Trust (PSLV) closed at a year-high premium of 3.0% – putting it dangerously close to levels where “Admiral Sprott” can launch a Cartel-killing offering, whilst Euro Gold is on the verge of breaking above the very, very key round level of €1,000 – as it completes a massive year-long reverse head-and shoulders pattern.

Frankly, we cannot conceive a more cataclysmic set of circumstances for both the global economy in general, and the gold Cartel specifically.  Act now, before “traders” return from summer vacations next week or you may be locked out of the most important “protection trade” of all time!


Courtesy of

Andrew ("Andy") Hoffman, CFA joined Miles Franklin, one of America's oldest, largest bullion dealers, as Media Director in October 2011. For a decade, he was a US-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005. Since 2002, his focus has been entirely on precious metals, and since 2006 has written free missives regarding gold, silver and macroeconomics. Prior to joining the company he spent five years working as an investor relations officer or consultant to numerous junior mining companies.

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