A Stock Market Crash: A Matter Of “When,” Not “If”

Given group-think and the determination of policy makers to do ‘whatever it takes’ to prevent the next market ‘crash,’ we think that the low-volatility levitation magic act of stocks and bonds will exist until the disenchanting moment when it does not. And then all hell will break loose, a lamentable scenario that will nevertheless present opportunities that are likely to be both extraordinary and ephemeral.  –  Highly regarded hedge fund manager, Paul Singer, in his latest investor newsletter

Singer has apparently has unloaded $5 billion worth of stock, which is 15% of his funds management.

Anyone happen to notice that several market commentators have argued that Bitcoin is  a bubble but the same stock “experts” look the other way as the U.S. stock market becomes more overvalued by the day vs. the deteriorating underlying fundamentals? Bitcoin going “parabolic” triggers alarm bells but it’s okay if the stock price of AMZN is hurtling toward parity with the price of one ounce of gold. Tesla burns a billion per year in cash. It sold 76,000 cars last year vs. 10 million worldwide for General Motors. Yet Tesla’s market cap is $51.7 billion vs. $48.8 billion for GM.

This insanity is the surest sign that the stock market bubble is getting ready to pop. If you read between the lines of the the comments from certain Wall Street analysts, the only justification for current valuations is “Central Bank liquidity” and “Fed support of asset values.” This is the most dangerous stage of a market top because it draws in retail “mom & pop” investors who can’t stop themselves from missing out on the next “sure thing.” There will be millions of people who are permanently damaged financially when the Fed loses control of this market. Or, as legendary “vulture” investor Asher Edelman stated on CNBC, “I don’t want to be in the market because I don’t know when the plug is going to be pulled.”

A friend/colleague of mine is a point and figure chart aficionado. He sent me an email on Thursday in which he said even with the five horsemen (FANGs + AAPL) and the SPX and Dow up today (and the SPX setting a new all-time high), the bullish percent index (BPI) of the NYSE is negative which means there are more stocks generating a point and figure sell signal than a buy signal. This has been fairly consistent over the past couple of weeks. (Note: the bullish percent index is a breadth indicator based on the number of stocks on point & figure buy signals). When the BPI is negative over an extended period of time, it reflects the fact that a lot more stocks in the NYSE are trending lower than are trending higher. When a declining number of stocks are participating in the move higher of a stock index, it is a bearish signal.

As my friend says, “in reality this will continue until it doesn’t.” He goes on to say: ” what this shows me is that at this time it’s much better to be strategically short than broadly short. This will change too at some point…”

Picking out strategic shorts has been the focus of the Short Seller’s Journal. Not all of the ideas have worked and a couple back-fired – in defiance of the company’s underlying fundamentals – but many ideas are well below the price at which they were presented either the first time or presented again thereafter. One idea that has declined 39% (declined $42) since August 2016 is Ralph Lauren, which was presented on August 14, 2016 at $108.19. It closed Friday at $66.11, down 41 cents on a day when the SPX hit another all-time high. RL has closed lower on 12 of the last 13 days.

One subscriber emailed me earlier this week to let me know he had shorted 200 shares at $108 and covered 100 of it this week. He’s hanging on to the other 100 share short. I mentioned to him that my 12-18 month target was $50 and that he should hold the other 100 short at least until August because it’s only going to get worse for the consumer and retailers.

Currently there’s a a large percentage of stocks trading below their 50 and 200 day moving averages.  Many stocks are close or at 52-week lows.  Some stocks, like Sears Holdings (SHLD) are no-brainer shorts.  Sears is going to file for bankruptcy – it’s down 32% from April 2nd, when it was presented as a short idea in the Short Seller’s Journal.  Similar to the probability of a stock market crash, it’s  a matter of “when,” not “if.”

Bitcoin, Propaganda, Fake News And Unmitigated Idiocy

I want to show two quotes from commentators in related areas of financial analysis because they illustrate the difference between truthful commentary and unmitigated idiocy.

Yesterday, James “Mc” wrote in Bill Murphy’s nightly “Midas” report:

“The sexiness of Bitcoin, Tesla, Netflix, and hundreds of other techie things will become FAR less sexy in a good old fashion economic crash. Reality will quickly set in, and real stuff, made by real people will prevail. As history has shown everything else becomes superfluous. Millennials, or even Gen-Xer’s for that matter have never experienced truly hard times. Many will be shocked to learn when TSHTF a plumber is far more marketable than an IT guy. Bartering with Bitcoin might prove problematic.”

I doubt there’s anything with that statement with which anyone could dispute. Murphy prior to that made the valid points that Central Banks and sovereign nations will never incorporate Bitcoin into their currency reserves like they do with gold. The point being that, while Bitcoin is accepted as a form of currency by its users, it is not considered a wealth storage asset.

It would be tough to classify James’ comment as propaganda or fake news. Gold is the world’s second oldest form of money (silver is the oldest). Bitcoin may or may not become a passing fad but it certainly has not stood the test of time. Its use can be eliminated by shutting down the global power grid.

Here’s an example of propaganda, fake news and unmitigated idiocy from Citicorp’s “respected” strategist, Tom Fitzpatrick:

“…markets ultimately will be driven by the economic backdrop rather than by headlines. US labor and housing markets remain robust and should continue to drive growth. European growth is picking up. China remains stable in our view despite recent volatility.” LINK

China remains “stable?” I doubt anyone would disagree that China has fomented the second biggest debt and asset bubble in the world, with the U.S. bubble the largest, and its financial system rests on the precipice of systemic collapse resting on a pyramid of debt and derivatives that requires a flood of printed money and credit creation in order to defer the inevitable financial and economic implosion. That’s the truth, in contrast to Fitzpatrick’s moronic assertion.

As for the remark that the U.S. labor market is “robust.” My guess is that a majority of the 95 million working age people (37% of the working age population) in the U.S. who are no longer considered part of the “labor force” would have a different set of adjectives to describe the labor market here (they would also have a set of adjectives to describe Fitzpatrick that would make some blush).

A “robust” housing market? Total home sales are running two-thirds of the long run average and about 50% the last peak in sales. This is despite a steady long term growth in the population. Furthermore, in order to for a home to sell, in general buyers have to resort to using a 0-3% down payment mortgage and use at least 50% of their monthly income to service the mortgage. An oversupply of housing in New York City and Miami is beginning to crush those two housing markets, a dynamic that will soon spread to most major metro areas across the country. Flippers and “investors” were about 35% of all home sales in 2016.

These are unequivocally NOT the attributes of a “robust” housing market, not to mention the fact that the even the monthly manipulated home sales data series published by the Government and the National Association of Realtors have been trending lower this year. Tom Fitzpatrick’s remarks embody the attributes of Wall Street propaganda,  outright fake news and total unmitigated idiocy.  I hope you get rich selling lies and feel good about it, Tom.

There’s been a lot of debate over the meaning and significance of the parabolic move in Bitcoin.  Allhambra Investments’ Jeffrey Snider has come the closest to the truth by equating the Bitcoin move as the manifestation of Gresham’s law.

While this encapsulates the Bitcoin frenzy, beneath the surface represented by Bitcoin is an even bigger movement  of bad money (fiat currencies) piling into physical gold that is occurring in the eastern hemisphere, specifically in India and China.  The evidence of this movement in the form of a higher price expressed in dollars is being hidden by the continuous intervention in the western gold market implemented by the western Central Banks using paper gold derivatives.

The point of this is that the price of Bitcoin is behaving the way price of gold would be behaving in the absence of manipulation.   The rush into both is a rejection by the market of  the continuous devaluation of fiat currencies that is occurring from the trillions of paper currencies that have been created since 2008.

At some point, and there’s not anyone who can predict when, Tom Fitzpatrick’s fake news and unmitigated idiocy will be exposed for what it is as global financial markets and economies crash and money that is pulled out of bubble assets floods into the safety of physical gold and silver.   At that point the Central Bank effort to suppress the price of gold and silver will fail.

It’s been occurring slowly since 1971 (and really since 1913) and will at some point happen all at once.  Have a great Memorial Day weekend and try to enjoy what you can, as much you can, while you still can.

Beat Your Meat With The “Street”

Best Buy reported its earnings this morning for its Q1.  Revenues were up year over year for the quarter (qtr/qtr) by a scorching $85 million, or 1%.  But this came at the expense of price competition, as its gross profit declined 5.7%.  Operating income plunged 19.4%.  Net income dropped 18%.  Earnings per share declined 15% (share buybacks translated into a lower decline in e.p.s. than net income).  Cash provided by operating activities (from the Company’s “statement of cash flows,” not from the Jeff Bezos “free cash flow” comic book) took a 51% cliff dive, dropping $249 million qtr/qtr.

But because Best Buy “beat the Street” estimates, the stock jumped $8 this morning, adding over $2.4 billion in to BBY’s market cap.  To say this is absurd does an injustice to the word absurd.

When a stock gains $2.4 billion on declining economics and profitability because it “beats the Street,” you know it’s end of days for the stock bubble. This is quite similar to the late 1999 – early 2000 timeframe, when a Maria Bartiromo would breath the name of a tech stock and it would jump $10 almost instantaneously.

Those who cannot remember the past are condemned to repeat it. – George Santayana

Analyzing Gold & Silver Stocks: Avoid Barrick

Lior Gantz of the Wealth Research Group invited me onto this show to review Barrick Gold as an investment.  It was an interesting proposition because I was not given advance notice in order to prepare notes or review Barrick’s financials.  The exercise forced me to focus on an overview of my reservations about the quality of Barrick as an investment and point to the critical financial metrics I review when doing a “drive-by” analysis of a prospective mining stock investment.

Investing in the largest mining companies is like investing in IBM instead of the promising emerging technology stocks during the 1990’s technology revolution. The best geologists at the big companies, after they’ve reached a level of financial security, leave to develop new gold and silver projects that are often overlooked or rejected by the big companies. These are the types of investment opportunities that offer the best upside in the sector and these are the opportunities that present in the Mining Stock Journal. In the last 8 weeks two of the companies presented in the Mining Stock Journal have agreed to be acquired (Exeter Resources and Mariana Resources).

New Home Sales Plunge 11.4% In April

So much for the jump in the builder’s confidence index reported last week.  The Government reported a literal plunge in new home sales in April.   Not only did the seasonally manipulated adjusted annualized sales rate drop 11.4% from March, it was 6% below Wall Street’s consensus estimate.

Analysts and perma-bulls were scratching their head after the housing starts report showed an unexpected drop last week after a “bullish” builder’s sentiment report the prior day.

The Housing Market index, which used to be called the Builder Sentiment index, registered a 70 reading, 2 points above the prior month’s reading and 2 points above the expected reading (68). The funny thing about this “sentiment” index is that it is often followed the next day by a negative housing starts report.  Always follow the money to get to the truth. The housing starts report released last Tuesday showed an unexpected 2.6% drop in April. This was below the expected increase of 6.7% and follows a 6.6% drop in March. Starts have dropped now in 3 of the last 4 months. So much for the high reading in builder sentiment.

This is the seasonal period of the year when starts should be at their highest. I would suggest that there’s a few factors affecting the declining rate at which builders are starting new single-family and multi-family homes.

First, the 2-month decline in housing starts and permits reflects new homebuilders’ true expectations about the housing market because starts and permits require spending money vs. answering questions on how they feel about the market.  Housing starts are dropping because homebuilders are sensing an underlying weakness in the market for new homes. Let me explain.

Most of the housing sale activity is occurring in the under $500k price segment, where flippers represent a fairly high proportion of the activity. When a flipper completes a successful round-trip trade, the sale shows up twice in statistics even though only one trade occurred to an end-user. The existing home sales number is thus overstated to the extent that a certain percentage of sales are flips. The true “organic” rate of homes sales – “organic” defined as a purchase by an actual end-user (owner/occupant) of the home – is occurring at a much lower rate than is reflected in the NAR’s numbers.

Although the average price of a new construction home is slightly under $400k, the flippers do not generally play with new homes because it’s harder to mark-up the price of a new home when there’s 15 identical homes in a community offered at the builder’s price. Flippers do buy into pre-constructed condominiums but they need the building sell-out in order to flip at a profit. Many of these “investors” are now stuck with condo purchases on Miami and New York that are declining in value by the day. The same dynamic will spread across the country. Because flipper purchases are not part of the new home sales market, homebuilders are feeling the actual underlying structural market weakness in the housing market that is not yet apparent in the existing home sales market, specifically in the under $500k segment. This structure weakness is attributable to the fact that pool of potential homebuyers who can meet the low-bar test of the latest FNM/FRE quasi-subprime taxpayer-backed mortgage programs has largely dried up.

Second, in breaking down the builder sentiment metric, “foot-traffic” was running 25 points below the trailing sales rate metric (51 on the foot-traffic vs. 76 on the “current sales” components of the index) In other words, potential future sales are expected to be lower than the trailing run-rate in sales. This reinforces the analysis above. It also fits my thesis that the available “pool” of potential “end-user” buyers has been largely tapped. This is why builders are starting less home and multi-family units. The only way the Government/Fed can hope to “juice” the demand for homes will be to further interfere in the market and figure out a mortgage program that will enable no down payment, interest-only mortgages to people with poor credit, which is why the Government is looking at allowing millennials to take out 125-130% loan to value mortgages with your money.  We saw how well that worked in 2008.

Finally, starts for both single-family and multi-family units have been dropping. The multi-family start decline is easy to figure out. Most large metropolitan areas have been flooded with new multi-family facilities and even more are being built. I see this all around the metro-Denver area and I’ve been getting subscriber emails describing the same condition around the country. Here’s how the dynamic will play out, again just like in the 2007-2010 period. The extreme oversupply of apartments and condos will force drastic drops in rent and asking prices for new apartments and condos to the point at which it will be much cheaper to rent than to buy. This in turn will reduce rents on single-family homes, which will reduce the amount an investor/flipper is willing to pay for an existing home. Moreover, it will greatly reduce the “organic” demand for single-family homes, as potential buyers opt to rent rather than take on a big mortgage. All of a sudden there’s a big oversupply of existing homes on the market.

The quintessential example of this is NYC. I have been detailing the rabid oversupply of commercial and multi-family properties in NYC in past issues. The dollar-value of property sales in NYC in Q1 2017 plummeted 58% compared to Q1 2016. It was the lowest sales volume in six years in NYC. Nationwide, property sales dropped 18% in Q1 according Real Capital Analytics. According to an article published by Bloomberg News, landlords are cutting rents and condo prices and lenders are pulling back capital. Again, this is just like the 2007-2008 period in NYC and I expect this dynamic to spread across the country over the next 3-6 months.

This is exactly what happened in 2008 as the financial crisis was hitting. I would suggest that we’re on the cusp of this scenario repeating. Mortgage applications (refi and purchase) have declined in 6 out of the last 9 weeks, including a 2.7% drop in purchase mortgages last week. Please note: this is the seasonal portion of the year in which mortgage purchase applications should be rising every week.

The generally misunderstood nature of housing oversupply is that it happens gradually and then all at once. That’s how the market for “illiquid” assets tends to behave (homes, exotic-asset backed securities, low-quality junk bonds, muni bonds, etc). The housing market tends to go from “very easy to sell a home” to “very easy to buy a home.” You do not want to have just signed a contract when homes are “easy to buy” because the next house on your block is going to sell for a lot lower than the amount you just paid. But you do want to be short homebuilders when homes become “very easy to buy.”

The above analysis is an excerpt from the latest Short Seller’s Journal.  My subscribers are making money shorting stocks in selected sectors which have been diverging negatively from the Dow/S&P 500 for quite some time.  One example is Ralph Lauren (RL), recommended as short last August at $108.  It’s trading now at $67.71, down 59.% in less than a year.  You can find out more about subscribing here:  Short Seller’s Journal information.

The Foundation Of The Stock Market Is Crumbling

The S&P 500 and Dow have gone nowhere since March 1st. The SPX had been bumping its head on 2400 until Wednesday. The Dow and the SPX have been levitating on the backs of five tech stocks: AAPL, AMZN, FB, GOOG and MSFT. AAPL alone is responsible for 25% of the Dow’s YTD gain and 13% of the SPX’s.  Connected to this, the tech sector in general has bubbled up like Dutch Tulips in the mid-1630’s. The Nasdaq hit an all-time high (6,169) on Tuesday.

But, as this next chart shows, despite a handful of stocks trying to rain on the bears’ parade, there’s plenty of stocks that have been selling off:

The chart above shows the S&P 500 vs the SOX (semiconductor index), XRT (retail index), IBM and Ford since the election. The SOX index was used to represent the tech sector. You can see that, similar to the culmination of the 1999-early 2000 stock bubble, the tech stocks are bubbling up like a geyser. IBM is a tech company but its operations are diversified enough to reflect the general business activity occurring across corporate America and in the overall economy. The retail sector has been getting hit hard, reflecting the general decay in financials of the average middle class household. And Ford’s stock reflects the general deterioration in U.S. manufacturing and profitability. Anyone who believes that the unemployment rate is truly 4.4% and that the economy is doing well needs to explain the relative stock performance of the retail sector, IBM and F.

Despite the levitation of the SPX and Dow, the “hope helium” that has inflated the stock bubble since the election has been leaking out since January 1st. While many stocks in NYSE are either below their 200 dma or testing 52 week lows, the price action of the U.S. dollar index best reflects the inflation and deflation of the Trump “hope bubble:”

I’ve always looked at the U.S. dollar as a “stock” that represents the U.S. political, financial and economic system. As you can see, U.S.A.’s stock went parabolic after the election until December 31st. Since that time, it’s deflated back down to below its trading level on election day. This has also been the fate of the average stock that trades on the NYSE. In fact, as of Friday’s close, 55% of the stocks on NYSE are below their 200 day moving average. Nearly 62% of all NYSE stocks are below their 50 dma. Just 4.37% of S&P 500 stocks are at 52-wk highs despite the fact that the SPX hit a new all-time high of 2402 on Tuesday. These statistics give you an idea of how narrow the move higher in the stock market has been, as the average stock in the NYSE/SPX/Dow indices is diverging negatively from the respective indices. The foundation of the stock market is crumbling.

The above analysis was a portion of the latest Short Seller’s Journal released last night. SSJ recommended shorting IBM in the April 23rd issue at $160.  It’s down 4.6% since then. The primary short idea presented in the latest issue was down 2.3% today despite the .5% rise in the SPX.  This idea is a stock trading in the mid-teens that will likely be under $5 within a year.  You can find out more about the Short Seller’s Journal here:  LINK

Forget GDXJ – Follow The Real Money Into Gold, Silver And Juniors

Silver Doctors / The News Doctors invited me onto their weekly SD Bullion Metals and Markets show to discuss why both the technicals and fundamentals are setting up for an unexpected rally into the summer in gold, silver and the mining shares, specifically the juniors.

Subsequent to our recording, the weekly Commitment of Traders report released Friday showed that the bullion banks continue to cover their net short positions in both gold and silver rather aggressively and the hedge funds are unloading long positions and piling into the short side.  Historically, this has been a set-up for big moves higher in the sector.  The hedge funds chase momentum and they are almost never right in the precious metals sector.  When they pile into short positions, like they are now, it’s always a valid contrarian indicator.  We also discuss why the “summer doldrums” in the precious metals sector is no longer a valid seasonal play.

Another contrarian indicator is the negative sentiment connected to the GDXJ ETF.  Adam Hamilton wrote a non-compelling critique of GDXJ and made the assertion that GDXJ was diverting the flow of capital away from junior companies that deserve to get funding. The problem with this analysis is that retail investor buying of junior mining stocks on the secondary market is not a source of capital for junior mining companies. The secondary trading of stocks is not a source of capital for any stock, for that matter.  ETFs are a “derivative” of the secondary trading market and thus are also not a source of capital for companies.

Junior mining stocks get their capital from new share issuance or from direct investment by strategic investors.  If Hamilton bothered to call on the companies themselves rather than take quarterly filings and throw numbers into a spreadsheet as his primary tool of analysis, he would discover that many junior exploration CEO’s would tell him that they are getting a lot interest from strategic investors. Furthermore, many junior mining companies with investment-worthy stories are having no problem raising capital  through primary share-issuance, notwithstanding the recent turmoil connected to GDXJ. GDXJ is a derivative security. Derivatives are a source of fees for their issuer/sponsors, not a capital raising conduit for companies.

The Mining Stock Journal focuses on the emerging junior exploration mining companies that are seeing an elevated level of investment interest from sophisticated private investment funds and from strategic investors.  These are the stocks that offer the greatest upside-potential in the junior segment of the sector – not the larger-cap, developed companies in the GDXJ Trust.  The latest issue features a company with a potentially prolific gold property that is in negotiations with a strategic investor.  Two juniors featured in the Mining Stock Journal were acquired recently.  Looking at companies one-by-one, not en masse, is how you find the potential home run stocks.  You can learn more about investing in these opportunities here:  Mining Stock Journal information.

Here’s the download for the latest SD Bullion weekly show:  MP3 download  and here’s the podcast:

Phenomenal movement lately with one of your stock picks, Dave, and I have no doubt it’s still in the first inning of what will be a very long game. Superb. Thank you! – subscriber “Mark”

Trump’s Treasury Capo Is Against Breaking Up The Big Banks

Steven Mnuchin addressed the Senate Banking Committee and opined that breaking up the big banks would be a “huge mistake.” According to the Financial Times:

Mr Muchin said forcing a split in the banking business would lead to significant problems in the financial markets and the provision of liquidity to the economy and would be a mistake. “We do not support a separation of banks and investment banks,” he said.

The threat that breaking up the big banks would lead to liquidity problems in the economy is getting tired. A study showed that during the 2008 de facto financial collapse, Main Street corporations had no problem tapping into the various short term funding capital markets, primarily the commercial paper market.

Breaking up the Big Banks would be a huge benefit to the entire system, which is why the DC Swamp creatures are against the idea. It would take away the control of the financial system that has been consolidated into the hands of a few entities.   Healthy competition in the banking industry would benefit everyone.

One of the primary reasons the Federal Reserve was founded was to consolidate control of the banking system at the time into the hands of the banks which founded the Fed, as the business model and profitability of these big banks was being attacked by the fast-growing regional banks.

The underlying implication of Mnuchin’s statement is that, just like the Obama administration, the Trump administration supports maintaining the status quo.  The “status quo” is a well-grease wheel that extracts billions from the public and redistributes it to the people running the big banks.   The DC Swamp animals are well-paid to support this status quo.    What this means is that the banks are going to bailed out again when the next crisis seizes-up the markets.  A crisis that is inevitable.

Stock Bubbles, Propaganda And The Deep State

At the close of the Constitutional Convention of 1787, someone asked Ben Franklin: “have we got a Republic or a Monarchy?”  To which Dr. Franklin replied, “A Republic – if you can keep it.”  – from the notes of Dr. James McHenry, one of Maryland’s delegates to the Convention

A “Republic” is defined as a State in which the supreme power is held by the people and their elected representatives.  The critical foundation of a Republic is Rule of Law.  When a person or group of people transcend the Rule of Law, and therefore “rise above” the sovereign power, a Republic no longer exists.

The Republic to which Ben Franklin referred no longer exists in the United States.  It’s debatable as to when the Republic status was lost, but the fact that Rule of Law has transformed into Rule of Man is not debatable.   The “invisible” entity known at the Deep State is the ruling body in the U.S.

Evidence of this is ubiquitous.  For example, Barack Obama’s Attorney General, Eric Holder – the chief enforcer and prosecutor in the United States – said with regard to the obvious crimes committed by the big Wall Street banks:  some banks are too large to prosecute. With that, Holder declared that the Too Big To Fail Banks are above the law.   Wall Street, in fact, is an integral part of the Deep State apparatus.

Another essential tool of the Deep State operation is the proliferation of propaganda.  The socially accepted term for “propaganda” is “alternative facts.”  But propaganda is merely a lie that is formulated and presented in a way that a lazy-minded populace will accept as the truth.   The Iraq war is good example.  The propagandists, like Colin Powell, who helped to enable an illegal attack on Iraq by the Bush regime, have openly admitted they lied to get the public behind the invasion.

The current pre-war “alternative fact” propaganda is this idea that Russia interfered in presidential election in order to influence the outcome.  This lie was floated by Hillary Clinton during one of the debates with Trump.  That lie has disturbingly transformed into an insidious lie that is promoted by the media and happily accepted by most Americans.

Another big lie seemingly accepted as truth is the stock market.  Never before in history has the value of the U.S. stock market been as dislocated from the underling fundamental reality than now.  But as long as the Dow and the S&P 500 keep levitating higher, the politicians and economists can point to the stock market as evidence of a healthy economy and “success” with regard to their policies of money printing, credit creation an unfettered Government spending.

(Of course, don’t pay attention to the fact that the median stock that trades on the NYSE is below its 200 day moving averaging and stocks in certain sectors are testing 52-week lows).

In today’s episode of the Shadow of Truth we apply Orwell’s quote – “In our age, there is no such thing as ‘keeping out of politics.’ All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred and schizophrenia” – to 2017 America:

Silver – The Only Commodity 66% Cheaper Than 37 Years Ago

Silver has gone from being the cartel’s kryptonite to being its LHC, or Large Hadron Collider. There are a lot of theories on what is going on with silver but the reality will probably be something even more fantastic. I keep getting back to lumber by way of comparison. The OI in silver is 55 times higher than in lumber, yet the global physical lumber market by dollar volume is actually higher. – quote from LeMetropole Cafe’s “Midas” Report

Those of us who have studied and traded silver for a long time (16 years in my case), have concluded that the Western Central Banks have painted themselves into a corner with their multi-decade effort to control the price of silver. Central Banks ran out of silver to unload on the market a long time ago. As such, they’ve had to resort to using paper derivative silver in the form of Comex futures, LBMA forward and OTC derivatives in their effort to cap the price of silver. In the last year, the amount of paper silver sold short against the available supply physical silver has grown into an astronomical number. At this point the banks can only pray that less than 1% of the longs each delivery period will continue to settle the contracts in cash…

“As a fiduciary, to the extent that you own gold and are going to own it a long time, it is not a trade….in the COMEX warehouse they had $80 Billion of open interest, and $2.7 Billion of deliverables….thats an easy one, you go get it.”  -Kyle Bass

Kyle: “What if 4% of the people want delivery?”
COMEX Delivery Manager: “Oh Kyle that never happens. We rarely ever get a 1% delivery.
Kyle: “Well, what if it does happen?”
COMEX Delivery Manager: “Oh, well price will solve everything.”
Kyle: “I said thanks, give me the gold.”

Here’s the link to that interview with Kyle Bass: “I’ll Take My Gold, Please”

The Daily Coin chatted with GATA’s Bill “Midas” Murphy about the current degree of manipulation in the silver market. The banking cartel is trapped, in a sense. The only resolution of this dilemma is a much higher price of silver – the free market solution – or war: