It’s early Monday, and let’s start by clearing our heads of the ramifications of yesterday’s first round of the French Presidential election process – in which, as expected, 39-year Emmanuel Macron, a former Rothschild Bank investment banker whose only political experience was miserably failing as “Economy Minister” under outgoing President Francois Hollande (whose approval rating was so low – principally because the French economy has collapsed – he didn’t run for re-election); running under a new Independent political party, just established in September; came in first place, a mere 2.5 percentage points ahead of Marine Le Pen.
For all the talk of the impending election cataclysm, the relentlessly PPT-supported “Dow Jones Propaganda Average” entered the weekend barely 2% below its all-time high. To that end, its overvaluation is unprecedented, no matter what metrics are utilized to analyze it. I mean, per this must read article, not only are essentially all U.S. equity valuation metrics pegged off the charts; but after having largely ignored the surging stock market since the 2008 crisis, retail investors have finally re-entered the fray. To wit, in 2017’s first quarter; coincident with the PPT-orchestrated bubble catalyzed by the patently fraudulent – and for all intents and purposes, already disproven – “Trump-flation” meme; retail brokerage accounts were opened at the fastest pace since the first quarter of 2000 – i.e., the top of the dotcom bubble.
Of course, now that history’s largest, most destructive fiat Ponzi scheme is global, the bubbles are far larger, broader, and more deleterious. In China alone, there’s no precedent for such unmitigated credit profligacy, which has created the world’s largest debt/GDP ratio. Yes, larger than even Japan when considering that most of China’s debt is held by “corporations” that are in actuality, state-owned. By the way, note that the chart below; created by none other than the Bank of International Settlements and IMF; suggests China entered a “major downturn” in 2015 – after which, said “social financing” has exploded further. This, compared to “official” Chinese GDP growth of roughly 6.5% per annum; which, I might add, is the lowest “growth” the Chinese government has reported since it started publishing such statistics 30 years ago.
Yes, a global phenomenon, as Central banks have “monetized” $1 trillion in the first four months of 2017 alone, nearly quadrupling their cumulative balance sheets via freshly printed “money” since the 2008 financial crisis. And that’s just the “on balance sheet” amount, ignoring “off balance sheet” acquisitions via derivatives, swaps, and offshore slush funds. In fact, as you can see here, global QE has never been higher. China’s “social financing” is running at its highest-ever pace; and just last week, the heads of the ECB and BOJ reiterated, based on their comically ridiculous logic that “inflation” is too low, that the below, historic QE pace won’t end any time soon. Consequently, global debt to cash flow valuations are at an all-time high, at a time when real economic activity is imploding and debt is parabolically exploding. Which, I might add, must continue rising, at an accelerating pace no less, to prevent history’s largest Ponzi scheme from instantaneous collapse. Which, in turn, can only be sustained by record-low interest rates – in Europe and Japan’s case, negative rates – ad infinitum.
Ironically, the delusional liars known as Federal Reserve governors continue to lie about the economic “strength” that their own calculations disprove – such as its own estimate that 1Q GDP “growth,” to be reported on Friday, will be just 0.4%. Not to mention, the experience of 99% of Main Street America – as evidenced by, to name a few examples, the ongoing “Retail Armageddon“; exploding subprime delinquencies; negative commercial lending growth; plunging iron ore and crude oil prices (the latter, despite relentless “oil PPT” support); year-over-declines in government tax revenues; and relentlessly weak economic data – like this morning’s Chicago Fed National Activity Index report, which plunged from 0.34 in February to 0.08 in March.
Fed Vice Chairman Stanley Fischer – armed with the “strength” of a blatantly PPT-supported stock market – said on Friday that he still believes two more rate hikes are likely in 2017. This, despite the market itself no longer discounting such a possibility; as evidenced by the 10-year Treasury yield plunging last week to a low of 2.17%, from December’s post-Election high of 2.61%. Not to mention, the dollar falling from 103.2 over this period, to this morning’s 99.0. Comically, he attributed much of the economy weakness – and “inflation rate,” despite the core CPI being over 2% for more than a year now – to “seasonal factors.” This, despite the fact that not only are such “seasonal factors” adjusted for in GDP statistics; but just two years ago, the government initiated “double seasonal adjustments,” to make sure GDP calculations are fraudulently inflated twice as much as usual.
As for the French election, the powers that be made it crystal clear that they would be “supporting” the stock market at all costs – per this damning article from this weekend, featuring such admissions by governors of the ECB, Swiss National Bank, and Bank of Italy. Remember, the world’s leading Central bankers met at the Bank of International Settlements the day before the BrEXit referendum; and unquestionably, having “learned” from the experience, were even more prepared to intervene following Trump’s election; in the latter case, reversing real market reactions (like rising gold, and plunging stocks) in mere hours, as opposed to the week it took them to reverse the post-BrExit market reaction.
I mean, they might as well have trotted Alan Greenspan out to reiterate that “Central banks stand ready to lease gold in increasing quantities, should the price rise” – as he infamously told Congress in 1998, “coincident” with the launch of the modern-day “New York Gold Pool.” I.e., the illicit, fraudulently-acting Cartel that supports the “strong dollar” propaganda meme created when former Goldman Sachs CEO Robert Rubin became Treasury Secretary. A “policy,” I might add, that is officially dead – per Donald Trump’s vehement claims that a “too strong” dollar is “killing” us; and thus, he prefers a “low interest rate policy.”
Consider that amidst historic, Central bank-created asset bubbles – in both stocks and bonds – the Cartel has gone berserk holding paper Precious Metal prices down, as evidenced by COMEX “commercials”‘ record-high silver short position, despite no visible “crisis” to note. This, after global PM “paper trading” increased by a whopping 50% in 2016, in a blatantly desperate attempt to slow gold’s and silver’s worldwide price rises, amidst an environment of serially collapsing fiat toilet paper. To wit, another 2,418 “commercial” silver shorts were added last week – nearly taking their cumulative short position “off the chart”; and another 23,700 gold short positions.
Seeing such data, many still wonder when “the bottom” will be hit. This, despite gold and silver prices having bottomed in dollar terms 16 months ago – ironically, the very day the Fed first raised rates – at $1,050/oz and $13.50/oz, respectively; and in non-dollar terms, well before that. To that end, Craig Hemke put it perfectly this weekend, in stating that in this case, “capitulation” has nothing to do with price, but sentiment. To wit, despite prices having bottomed in late 2015, PM sentiment has continued to plunge here in the States (i.e., the “Ground Zero” of price suppression); to the point that, despite rising prices, U.S. Mint bullion sales have plunged to nine-year lows.
Clearly, someone is buying a lot of gold and silver, or they wouldn’t have risen by 20% and 30%, respectively, from their lows. But equally clearly, someone is not the U.S. retail consumer – whose “sentiment” is at rock bottom; ironically, at a time of maximum global political, economic, and monetary risk. Heck, this month alone, we’re not only facing the prospect of a French political “nuclear bomb” – although for now, in true pre-BrExit and pre-Trump propaganda mode, the powers that be are trying to convince us a LePen victory is “impossible”; but wars in Syria and North Korea; a U.S. government shut down and “debt ceiling” crisis; and a 1Q GDP print approaching zero.
The Trump Administration is doing everything in its power to pretend all’s well – like promising “massive tax cuts” despite no financing or Congressional support; and a “new and improved” healthcare bill to try and fool America – and “Freedom Caucus” Republicans – into believing Obamacare can be “repealed.” However, the fact remains that such attempts – by Obama, Trump, and anyone else in power – are but smoke and mirrors, relying solely on unsustainable market manipulation to prove their “worth”; like goosing stock valuations to all-time highs, and suppressing Precious Metals to historic, inflation-adjusted lows.
For anyone “worried” that the post French “market” reaction presages a new phase of market ignominy, consider that despite the post-Trump-Election-like spin, last night’s PM “trading” was no different than any other. I.e., the 181st “Sunday Night Sentiment” raid of the past 191 weekends; followed by the 823rd “2:15 AM” raid of the past 942 trading days; prototypical “Cartel Herald” algorithm and all.
In this case, once and for all proving what I have long discussed about the comically fallacious propaganda regarding gold and silver prices’ relationship to the “dollar index”; which essentially, represents nothing but the exchange rate between the devaluing dollar and the disappearing Euro. To wit, said “dollar index” is down from 99.7 on Friday afternoon to 99.0 this morning, solely due to “relief” that the “nightmare scenario” of a Le Pen/Melenchon victory didn’t come to pass; or, for that matter, a more dramatically higher Le Pen vote tally. To that end, according to the relentlessly perpetuated propaganda meme, gold should be dramatically higher, right? I mean, “Trump-flation” calls for a higher dollar index and lower gold prices, right?
In other words, per my four “if a nuclear bomb destroyed Europe articles” – the latest, in February – anyone that tells you PM prices are correlated to “the dollar” are either ignorant or lying. Just as anyone who claims any single factor is responsible for PMs’ daily, rigged movements – like interest rates, oil prices, stock markets, the Yen/dollar exchange rate, or any other trading pair utilized in the Cartel’s ongoing “gold is whatever is down” manipulation scheme. To that end, this morning’s proverbial “nuclear bomb” hit the dollar; just as multiple “monetary warheads” will hit all worthless fiat currencies in the coming months; until inevitably, the Cartel’s dam breaks, justifying why we have PROTECTED ourselves with the only asset class proven, throughout five millennia, to preserve wealth.
If you hold physical gold and silver, sit back and relax – or perhaps, add to your positions; as like all of the Cartel’s increasingly futile attacks, this too shall pass. And if you don’t, what better time to use such a “gift horse” to initiate such an historically effective insurance policy, at such historically cheap prices?