first majestic silver

The Fed's Own "Minutes" Threaten To Destroy It

May 18, 2016

Wednesday morning – and my head is not only spinning from the swarming, worldwide tsunami of “PM bullish, everything-else-bearish” news; but the most egregious – and ultimately, self-defeating – market manipulation of all time.

As for said “news,” just how much uglier can it get? Between exploding rent, healthcare, and now gasoline prices (despite some of the ugliest energy supply/demand fundamentals imaginable); collapsing economic data (Target joined the ranks of retailers reporting abysmal earnings, and an even weaker outlook); and a renewed plunge in nearly all commodities (except “oil PPT” supported crude); currencies; and even stock markets (particularly China); it couldn’t be clearer that if the “Big One” isn’t already upon us, it’s arrival has never been closer.

As my good friend Craig Hemke writes in this excellent article, an “Epic Battle” for control of Precious Metals prices – which the physical market must, and will, win – has begun, as the COMEX “commercials” have quite obviously “gone for broke,” in an historic attempt at throwing “good” fiat currency after bad. Which ironically, only digs them deeper into the historic supply/demand hole they’ve created for themselves, by causing an unprecedented explosion of physical demand; the “untimely” onset of peak production; and the collapse of above-ground inventories to record lows.

To wit, the “commercials’” record paper gold and silver short positions, amidst record open interest (read, naked shorting). This, mere weeks after Deutschebank admitted the PM market is suppressed; whilst the Shanghai Fix was launched to compete with the Western criminals. In other words, the “New York Gold Pool’s” days are numbered; as every imaginable fundamental factor – from an extreme supply/demand imbalance, to negative interest rates and parabolic money printing – are going against it. Heck, even JP Morgan admitted that a “new, and very long gold bull market” has commenced; as quite obviously, it’s becoming impossible to ignore the raging PM bull market.

Heck, even after the desperate efforts to reverse the past two days’ Cartel-killing “key reversals” – including Monday’s comically blatant “dumping” (read, naked shorting) of $2.3 billion of paper gold when it threatened to approach $1,300/oz; and today’s equally obvious COMEX-opening raid; gold prices in nearly all currencies are near, at, or above previous all-time highs.

Don’t believe me? Well here’s a list of how various, key currencies are doing this morning relative to gold. As whilst the “powers that be” try to pretend the Fed is, LOL, preparing to raise interest rates – whilst economic data collapses, interest rates are plunging, the yield curve is historically flat, $10 trillion of global sovereign bonds are trading at negative yields, next month’s “BrExit” vote has the potential to lurch financial markets into chaos, and money markets themselves are predicting no such action until mid-2017, currencies around the world are freefalling. As you can see, not only is gold up in most currencies today; but compared to previous all-time highs (invariably, from 2011-12), prices are doing just fine. And I assure you, it’s not just the selected group of highly watched currencies below where gold is surging, but all currencies.

And again, I cannot emphasize more how institutional PM demand is exploding – even here in the United States of Fiat Currency Fraud. This is why gold ETFs had more inflows in the first quarter than at any time since the 2008-09 crisis (when global physical supply “sold out”); why mining stocks are surging; and why the premiums on closed-end funds, which I have exhaustively written of for months, continue to rise.

To wit, Sprott’s PSLV silver fund has already digested its recent offering, causing it to again trade at a premium to Net Asset Value; whilst its PHYS gold fund is trading at its highest premium in three years; as the much larger Central Fund of Canada, ticker CEF, closes in on trading at a premium itself. In other words, there’s going to be a LOT more institutional buying in the coming months; such as, for instance, the State of Texas, which is rushing to complete the first state-owned, state-run gold depository!

Regarding today’s publication of the “minutes” of the FOMC’s April 27th meeting – which are invariably, and unquestionably, doctored in consideration of market conditions at the time of publication, the Fed will clearly be “playing with fire” if it attempts to peddle anything other than the aforementioned economic and financial market facts. And the scary thing is, that amidst such carnage, even the Fed’s own, suppressed inflation statistics are surging – creating a toxic, stagflationary cocktail that at some point soon, must be addressed. And since higher interest rates are an absolute impossibility – to the contrary, negative rates are far more likely – it shouldn’t be long before whatever remaining shards of hope in the Fed’s ability to “control” the economy and markets will permanently die. At which point, if you haven’t secured your personal stash of real money already, it will be forever too late.

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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