Category Archives: Precious Metals

“Gold Is Money – And Nothing Else”

– JP Morgan on December 18, 1912 in testimony to Congress

Crush The Street’s Kenneth Ameduri invited to discuss why I believe the current stock market is the most overvalued in history.  We also chatted about the movement by western Governments to a digital currency system and, of course, the precious metals market.  It’s my view that the pullback in the precious metals sector that began in late July was over by the end of December.  I also believe that there’s good probability that the next move in the sector will be more powerful than the 2016 move.

You can listen to our conversation here:

If you want to have access to my proprietary precious metals market analysis and junior mining stock ideas you can subscribe to the Mining Journal with this link:  MSJ Subscription Link.   The subscription is email-based and new subscribers get all of the back-issues.  The next issue will be published Thursday this week and I have an extraordinarily intriguing high risk / high return, 10-bagger potential stock idea.

 

Gold! The Next Big Move Is Starting

The HUI index has bounced 21% since December 15th. It’s important to keep in mind that the precious metals sector tends to be very volatile. Yes, it’s pulled back 43% from its August 4th high of 284, but at that point it had been up 184% from January 19th low close. This type of volatility is characteristic of the sector and 40% pullbacks after triple-digit moves up have been not uncommon occurrences over the last 15 years.

Obviously the miners will not move higher unless the expectation of the market is that gold
and silver will move higher. The gold/silver ratio hit 84 in early 2016 and dropped down to 64 by July. It bounced back to 74 right before Thanksgiving. Currently the GSR is 71 and is forming a beautiful downtrend formation (click to enlarge):

Just to clarify, a falling GSR is one of the signatures of a powerful bull market move in the
entire sector. In 2008 the GSR hit 100 and by early 2011 it had hit the low 30’s. We’d like to
see this ratio go below that 64 reading sooner or later to extend the downturn pattern.

Another catalyst that will help drive the sector higher is the bond market. The metals have
been correlated with long term bond prices this year. That’s not to say that the sell-off since August was caused by higher interest rates per se, but the correlation has been present. In our opinion, the Fed is boxed in still and can’t raise rates anymore this year despite its threat to implement 4 rate hikes this. We saw how a similar threat played out in 2016. Once the market fully understands that short term rates are not going to be pushed higher by the Central Banks, there will be a torrid rally in bond prices that will help fuel an extended move higher in the metals. This will also be accompanied by decline in the dollar.

Shanghai is extremely busy. Just a brief summary of the fundamental factors affecting the
physical market in the east. Despite all of the misinformation about India’s gold market being freely disseminated by the western media, the demand for gold in India has picked up considerably. It appears Modi’s move to reduce cash in that economy has stimulated demand for gold. No shock there. HOWEVER, and this is where it could get very interesting, India’s trade ministry has proposed a cut in the gold import duty to 6% from 10%. That’s not to say it’s a done deal, but India’s Budget announcement is scheduled for February 1st, which is when we’ll find out if the import duty will be cut. This would trigger huge demand for gold imports.

In today’s episode of the Shadow of Truth, we discuss the factors that we believe are “brewing” to drive the next leg of the gold bull market:

Trump Dump Coming To The Stock Market

The stock market shot up like a Roman candle for idiotic reasons after the election.    The candle may have reached its apex when the Dow hit 19,999.67 last week.   As I stated in my Short Seller’s Journal, I was “stunned that bank traders were unable to push the index up to the holy grail number of 20,000.   Of course, in and of itself, the “Dow 20k” watch was moronic.  Thirty stocks do not an economic system make.  Sorry Fox, CNBC, Bloomberg, CNN etc.

I also stated in my Short Seller’s Journal, in the issue two weeks ago,  and long before Zerohedge posted the comment from some guy named DeMark who predicted the Dow would never hit 20k, that 20k might not happen.  In fact, I titled the issue, “Is Dow 20,000 Now Out Of Reach?”

The “Dow 20,000” financial media promotion has bordered on vulgar.  Fox Business (which I keep on mute at all times) kept a “Dow 20,000 watch” banner at the bottom of its broadcast during the entire trading day for the last 2 weeks of 2016.  It disappeared last week.  In the context of the entire stock  market and the U.S. economy, it’s meaningless for the Dow to hit 20k other than as a powerful propaganda tool.

The housing market is one of the most important segments of the economy.  The DJ Home Construction Index is down 9.7% today from its 52-week high in July.  Retail spending may be even more critical to generating GDP than housing.  The XRT retail ETF is down 9% from hits 52-week on December 8th.    This stock index has literally tanked during a period of time that is supposed to be the best seasonal period of the year for retail sales.  There’s a serious message there.   THAT’S where the rubber meets the road – not from meaningless platitudes and soundbytes from a President-elect.

Essentially Trump promised on election night to spend trillions and cut taxes deeply and to pay for those  based on borrowing trillions. These are  policy proposals that are destined to fail from the moment the words left Trump’s mouth.  But the stock market went nuts to the upside, culminating in what I would argue – based on using “apples to apples” accounting comparisons – the most overvalued U.S. stock market in history.   Perhaps in the modern era only the Weimar German and Zimbabwe stock markets were more overvalued.  Stay tuned because I am very confident that the Fed is not done printing trillions.

This is not the kind of stock chart in which I would want to be invested:

Yes of course this stock market could break up or down. But since Christmas, every attempted assault on 20k has been rejected. And the Dow opens higher every morning only to sell off every afternoon into the close. Monday was a perfect example.

Today (Tuesday, January 11) it looked the Dow was going to make another assault on 20k. But during Trump’s highly anticipated press conference, the Dow sold down hard from 19,970 to 19,840.  That is a preview of what is likely coming in the months ahead, as the U.S. economic fundamentals continue deteriorate, notwithstanding the barrage of economic fake news coming from the Government and certain industry pimp associations.

If you like the analysis laid out above, you can get similar commentary with even more in-depth analysis and research by subscribing to my Short Seller’s Journal.   I also present at least two short sell ideas along with ideas for using options.

I am a subscriber to both of your journals. I just want to say “WOW” to this post on your site. Thank you for all your work. As a financial professional of 28 years’ experience, I can tell you why there is no churn in your journal subscriptions. Your work is extremely sound and well done even in a massively
manipulated environment. – subscriber “Kevin”

Fake Economic News + Overvalued Stocks = Recipe For Market Disaster

Think you know what will happen this year?  What would you have said to me on January 1st last year if I told you:  ” the S&P 500 would hit several new all-time years this year and Donald Trump will be elected President?”

Craig “Turd Ferguson” Hemke invited me on to his “A2A” webinar with his subscribers last week.  We had a spirited and (I think) entertaining discussion about abundance of fake economic news that permeates the financial media, the true state of the U.S. economy and the growing risks to the stock market.  And of course we chatted about precious metals an mining stocks.

And of course his subscribers had some interesting and thought-provoking questions. You can listen to our conversation here:  A2A with Dave Kranzler and you can access Turd’s webite here:  TFMetals Report.

Stewart Dougherty: Government Bail-Ins, Asset Confiscations And The Gold Sword Of Self-Defense

[Preface: In Part 1 of our report, “Goldman to Trump: Situation Assessment, Government Bail-ins and the Precious Metals Threat,” we inferred what Goldman Sachs’s second in command Gary Cohn might have said to President-elect Trump during their meeting on November 29, 2016. Cohn met again with Mr. Trump on December 2, 2016, and this time, we have inferred that he was accompanied by a second person. Here is Part 2 of our intuited, fictional report.]

Mr. Cohn: It is a pleasure to see you once again, Mr. Trump. I have been pre-empted. I was asked by important friends of our firm to introduce to you their envoy, Dr. Hugo Ehrlich. I can vouch for the fact that he represents extraordinarily powerful people with whom you will be working closely going forward. Let me turn it over to Dr. Ehrlich so he can explain.”

Dr. Ehrlich: “Thank you for meeting with me, Mr. Trump. Our time is short, so let’s respect it and get straight to business.

“I represent a global, privately held corporation known as Globanque. I doubt you have heard of it; we have a strict code of secrecy and silence. Globanque’s Directors would like to congratulate you on becoming president of the largest corporation in the world, the United States Government. Globanque, which owns the Bank for International Settlements and has meaningful stakes in numerous governments and other corporations, is also the majority shareholder of USG, Inc. Our friends at Goldman are intimately familiar with USG, Inc.’s ownership structure, because several years ago they helped Globanque acquire its controlling interest of your nation.

“While the Globanque Board does not wish to be disrespectful, a point of clarification is in order: the Directors would like me to note that the CEO and Chairman positions at USG, Inc. are distinct from yours, and that the executives are appointed by Globanque. The names of the incumbents are confidential, for reasons of optics and security. We doubt that the American people would understand why the two most powerful positions in what they mistakenly believe to be ‘their’ government are held by people whose names they have never heard of, and whose faces they have never seen. Perhaps in due course you can come meet your colleagues in Basel, and play a round of golf with them so you can get to know one another.

“If we were to portray USG, Inc. in geometric form, it would take the shape of a pyramid with a razor thin top and a very wide base. The base would represent the people, whom we ask to pay all the company’s bills. The middle would reflect the government staff who handle day-to-day logistics and the enforcement personnel who ensure the people don’t get out of line. And the top would represent the very few shareholders and cronies who control the corporation and make all the money. It is a fitting shape for USG, Inc., which happens to be the largest pyramid scheme civilization has ever known.

“In addition to being the largest corporation in the world, USG, Inc. is also the most profitable. You are looking at me quizzically, as if to say, “How can a corporation that is losing more than $1 trillion per year (as reflected by its deficits) be profitable? I’ll explain.

“While USG, Inc.’s deficits might look like losses, they actually represent dividends paid to its owners. Last year, the corporation had over $1,000,000,000,000 in deficits, which in fact were payments to Globanque and the other shareholders. The payments are made in many ways, including interest on the corporation’s massive debt; military contracts for contrived, enormously profitable wars; a broad variety of government contracts extended to cronies; so-called foreign aid which actually constitutes disguised payments to affiliates; and dozens of other ways to compensate insiders. USG, Inc. spends trillions of dollars each year, and no one really knows where all the money goes, even though the corporation does a good job of creating the impression that its accounting is accurate, which it is not.

“The deficits, in other words the shadow dividends funneled to shareholders, are funded by debt, which relentlessly rises at USG, Inc. The deficits and the debt increases move in unison. Dividends are extracted, and debt is injected. Forensic accountants would have a different term for this capital extraction; they would call it looting. Which is why forensic accountants are not permitted anywhere near USG, Inc.’s books. The corporation’s actions, just like those of the Fed and BIS, are completely immune from formal or actionable audit.

Over the past decade, more than $12 trillion dollars have been paid out by USG, Inc. in the form of dividends, making the shareholders extraordinarily wealthy. There has never been a dividend payout of this magnitude in commercial history. As you might imagine, Globanque spends a great deal of intellectual capital figuring out how to keep this trillion plus dollar game going. If USG, Inc. were to fail, it would be virtually impossible for Globanque to replicate it, and its earnings would be punished. Globanque’s Directors are not going to let that happen, if there is any way they can prevent it. If this means human casualties, so be it. They are people who do whatever it takes to win, with emphasis on the world whatever.

“There is a problem that concerns the Directors. There are unmistakable signs that the United States is approaching a state of what we call Peak Debt. While up until now we have had no problem saddling USG, Inc. with an ever expanding mountain of debt, and while we had planned on adding an additional $10 trillion of it during the next eight years or so, a faint but foul scent of debt revulsion seems to have seeped into the air.

“If we are not persistently able to increase USG, Inc.’s debt, it will become obvious that the company is bankrupt and that there is no viable means whatsoever by which to save it. USG, Inc. will have to be dissolved.

“The Peak Debt problem is compounded by the fact that in our view, the probability of a 2008/09-like financial crisis or worse occurring in the United States and beyond during the first two years of your presidency is close to 100%, which will hurt and possibly crush tax receipts. Therefore, there would be less money coming into USG, Inc. from taxes and debt issuance, a rabbit punch that would throw the corporation into a financial crisis.

“We have simulated in detail every possible response we might make when these problems manifest themselves. In the past, several temporary fixes were available to us, and we used them. But they were like bullets; they could only be shot once. Now, the ammunition box is empty, save for one remaining shell. Which is the outright confiscation of the people’s wealth in order to fund USG, Inc. and keep it alive; in other words, government bail-ins. We realize this measure is extreme and will be socially incendiary, but it is literally the only remaining option open to us next time around.

“The bad news for us, the dirty secret that must be kept a secret at any cost, is that as things stand right now, the people hold all the cards. The good news for us is that they don’t know it. If they were to understand and exert the financial power they possess, they could not only avoid the government bail-ins that are going to financially wound and ultimately impoverish them, but guarantee for themselves a level of financial freedom and personal well-being unmatched by anything they have ever before experienced. But they do not understand, at least not yet, and therefore they do not act. We need to keep it that way.

“The solution of which I speak is extraordinarily straightforward, and while it might sound simplistic, we at Globanque are almost certain it would work: for them, not us. All that the people need do is convert a portion of their digital fiat currency into precious metals. Now, while they still can. If they were to convert a mere 2% of their bank balances, roughly $200 billion, into gold, this would produce incremental demand of 167,000,000 ounces, assuming a price of $1,200 per troy ounce, which it won’t be for long. But incremental demand of that magnitude would obliterate supply, and prices would have to increase, possibly surge. This would convince many more people that it is a good idea to convert bank balances into real money. Which would lead to more buying, driving prices even higher. Ultimately, this could lead to a buying stampede, which is the exact last thing USG, Inc. and its fraudulent, exploitive banking system can withstand at this time. Such action by the people would deal a deadly blow to our strategy, which is to trap their money within the banking system, which we control, and keep it available for expropriation.

“We need to prevent the people from seeing the simple financial solution that is right before their eyes. It is vital that we keep them from moving their liquid assets outside of the banking system, either by withdrawing cash or purchasing precious metals. Accordingly, we have dramatically intensified actions designed to severely restrict or make it outright impossible for them to redenominate their liquid bank assets. The campaign is named “Operation No Exit,” and I will summarize some of its more important components.

“In Europe, we are radically expanding the definition of “cash” to include prepaid Visa, Eurocard, MasterCard and American Express cards, in addition to prepaid Merchant Gift Cards. Additionally, precious metals are being re-defined as cash. By including prepaid cards and precious metals under the “cash” umbrella, they will become subject to existing and soon to be broadly expanded controls. These cash equivalents will be confiscable on demand by authorities, with no probable cause other than suspicion of some kind of illegal activity or intent, which of course they can just invent.

“Prepaid cards present opportunity because we have rolled out and are perfecting a powerful technology known as ERAD: Electronic Recovery and Access to Data. ERAD devices enable us to swipe any prepaid card and determine its available balance. We can then instantaneously transfer that balance to the specific government bank account programmed into the ERAD terminal. The transfer is irreversible, so there is nothing the card holder can do about it.

“ERAD terminals also enable us to swipe bank-issued ATM, Visa Debit and MasterCard debit cards, determine the cardholder’s exact bank balance, and then seize that amount, in whole or in part. Banks’ daily withdrawal limits will not apply; they are superseded by ERAD. So we could instantaneously remove $100,000.00 from a cardholder’s bank account in one step, if the money were there. This is not a “future” technology, Mr. Trump; ERAD is already operational, and the technology improves every day. You can Google it, if you’d like.

“Several years ago, we expanded the Civil Asset Forfeiture program in the United States. This was a daring step, because CAF completely shreds the most basic and fundamental protections guaranteed by the Constitution. It is unique in that the victim, in other words, the person whose assets have been confiscated, is presumed guilty until they prove themselves innocent via an extremely complicated, specialized and costly legal process for which they themselves must pay. Which is often impossible for them to do, because in many if not most cases, the money they require to retain an attorney has been seized. Few attorneys will even touch a CAF case, due to its byzantine legal technicalities and hurdles, so those who will routinely charge $2,000 per hour or more. Most victims are therefore unable to legally fight for the recovery of the funds that have been stolen from them, resulting in a windfall for the seizing agencies. Which gives the agencies an increased incentive to further expand their CAF activities.

“We expected a strong backlash to CAF. But the fact is, there has been very little, other than from some of the victims. Certain courts have judged the method to be legal, which of course makes no Constitutional sense whatsoever. Those verdicts were only rendered because we paid or extorted judges hearing critical cases to legally ratify CAF. Given the unexpected success of CAF in the United States, we are rapidly expanding it throughout the west, particularly in Europe, where until now the practice has been illegal. CAF is a swift and efficient means by which to seize assets. It also enables us to zero in on specific targets, such as people we know to possess wealth.

“In 2013, we launched Operation Choke Point in the United States, a program that forced banks to summarily discontinue doing business with companies we wanted to cripple and shut down, including gun, ammunition and precious metals retailers. Unfortunately, the implementation of Operation Choke Point under Eric Holder was heavy-handed and sloppy, and it did generate some backlash. The Justice Department was forced to take a pause 18 months later, at least publicly. The program is still very much alive, and we are making the electronic processes more effective. Our objective is to be able to financially disconnect from the banking system and destroy any business that presents a threat to our agenda. If, for example, we cannot get gun control via the courts, then we can simply have the banking system impose it, by financially shutting down the dealers.

“In the United States, we have contracted with the Group of 30 to begin the process of demonizing and eliminating cash. Summers, Rogoff and Krugman are the principle spokespersons for this part of the campaign and we are paying them very well. They have all written articles, and Rogoff has written a book arguing that cash is a menace to society and that it should gradually be eliminated. They posit that drug dealers, terrorists and other undesirables use cash; therefore, it must be banned. There is literally no end to that kind of reasoning, which is exactly why we like to invoke it. By their logic, automobiles, gasoline and food should be prohibited, too, because drug dealers and terrorists drive cars and eat. The cash elimination campaign is based on Goebbels-style propaganda and demagoguery, but history proves that such techniques work, so we gladly use them even when the arguments are ridiculous. Currency elimination is a critical part of “Operation No Exit,” because it forces people to either spend their money, which produces tax revenue, or keep their money in banks, which are digital prisons that we guard and control, and that we intend to lock down when the time comes.

“The ECB is actively pursuing the cash elimination agenda in Europe. They have already stopped production of Euro 500 notes, and all existing Euro 500 notes are being segregated and destroyed if they are deposited into the banking system. Euro 200 and 100 notes will be eliminated next, then the 50s. Ultimately, there will be no cash in Europe. This goes for Australia and New Zealand, as well, where we are making gratifying progress. Control-freak bureaucrats are a Godsend to us.

“Sweden has actually stated its intention to be completely cashless within the next two years or so, which has been helpful to our agenda. We like to work with politicians and bureaucrats in smaller countries, because they can be bought off for less money than those in the bigger countries. We are having similar success in Uruguay, which is regarded as the “Switzerland of South America.” A lot of South American money finds refuge there, so it is an important country for us.

“Everyone knows about India by now. Modi was specifically instructed to conduct the Indian currency demonetization in a slow, methodical manner, as recommended in Rogoff’s book and as Draghi is doing it in Europe. Raghuram Rajan, former head of the Reserve Bank of India informed us that Modi was being pig-headed and would not listen. He wanted to be theatrical so as to look to the Indian people like a great crusader in a righteous cause. He is also a believer in the Politics of Envy, and told the phalanxes of poor Indians that he was rooting out the corrupt wealth of the rich. The hopeless love to hear that their oppressors are being taken down, even if what they hear is a lie. Rajan could not control Modi, so we airlifted him out of India and installed him at the BIS, as Vice Chairman. He will manage Indian recovery operations from there, and remains an important steersman for the overall agenda.

“By acting rashly and stupidly with his wholesale currency demonetization that has wreaked economic and personal havoc throughout India, Modi did severe damage to our cash elimination plans. His actions have provoked broad skepticism throughout the world about the risks of government-monopoly-controlled currencies and private, for-profit central banking systems. This has come at the exact wrong time. We need the people to have blind faith and confidence in fiat currencies and the banking system, because we need bank deposits to be at peak levels when we enact the government bail-ins. Time is already repairing the damage; it always does, as the memories of those struggling simply to survive are predictably short.

“Obama has immeasurably aided our cause by broadly expanding the provisions of the NDAA, which gives the U.S. government dictatorial powers over the people on any pretext whatsoever, even if the pretext is 100% fabricated to fit an agenda. If the American people actually took the time to read the NDAA, they would think they had been transported back in time to Stalinist Russia or Maoist China, but of course, they don’t take the time. They are too busy shopping, watching sports, gorging at all-you-can-eat buffets and texting mind-numbing gossip, which is exactly what we want them to do.

“We are rapidly introducing NDAA-like legislation throughout Europe, Australia, New Zealand, Canada and parts of South America. When the crisis occurs, we will be able to lock down much of the world in a matter of a few hours. Far too little time for the people to be able to react or protect themselves in any effective manner. We have financial interests in and influence with most of these governments, so progress is swift.

“In that our remaining time has grown short, it is not possible for me to go into detail about companion initiatives such as FATCA, Fusion Centers, FinCen, new financial disclosure requirements in Greece that will soon to be extended throughout Europe, FBARS, data collection and sorting projects such as Echelon and Prism, or any of the literally hundreds of additional steps we are simultaneously taking to convert to a 100% digitized economy fully subject to our control. But I can assure you that these efforts are synchronized, global and highly effective.

“Let me just say that the true purpose of the NSA’s Utah Data Center is to create an electronic dossier on all American citizens, with a particular focus on their financial affairs. The UDC will know exactly what assets they own and where, their earnings from all sources, their spending patterns, their medical condition, the medicines they buy and take, the foods they eat, their hobbies and travel patterns, their addictions, the social networks they use and what they say on them, the emails they send and read, the Internet searches they conduct, the people they call and text, the people they see, and in particular, anything they do that compromises them and makes them susceptible to special forms of extortion and/or control. The slightly longer term objective is for the UDC to be able to predict people’s behavior. In this way, we can neutralize targets before we expect they might go into action in some inimical way.

“For us, the UDC’s most valuable innovation is the ability to financially turn people off, as if they were table lamps, should that be in our interests. By digitally decommissioning them, we can render them helpless in a world where all transactions must be made electronically, and cash no longer exists. Imagine if none of your payment cards worked, and there was no other way to make payments; if you could not buy gas or food, pay your utility bills, or eat in a restaurant; if your bank suddenly had no record of you whatsoever; if you had been completely erased from the digitized system that is the only means by which to function in society? In South America, they have a reputation for physically “disappearing” the undesirables; we are going to electronically disappear them, which will be far more efficient and deadly.

“We view it as highly unlikely that citizens will act out if they realize they can be turned off, like table lamps, not just for an hour or a day, but forever if we so choose. Now you exist; now you don’t. Poof! Gone! This will be a critical power for us to have during the government bail-ins; we will make it clear up front that anyone who opposes them will be turned off. And that we will not reactivate them. In time they will starve to death. So what?

“The UDC is being replicated throughout Europe, where significant wealth has accumulated over the centuries, which we plan to seize. The UK and Australia, too, are moving fast to deploy UDC technology in their countries. So there is much progress on many fronts.

“As you can see, this is a massive, multi-faceted, globally coordinated project. We estimate that within three years, the infrastructure for a completely digitized economy will be in place throughout the west. But during these three years, we are at extreme risk that the people will figure out what is happening, and take steps to resist it. Which would be very easy for them to do at this stage, as I pointed out earlier in my comments. We want their money, but at this point, they could easily remove it from our grasp. We are doing everything possible to keep them financially blind.

“The only reason we have been able to make the full-spectrum progress we have made, without any meaningful popular backlash is that the vast majority citizens don’t see the overall agenda. They read about one thing we’re doing in one area, another thing somewhere else, another thing in yet another place. But they are discrete data points and sightings. The people are too busy trying to survive to sit down, put all the puzzle pieces on the table, and then assemble them into the complete picture. If they did, they would be stunned and angry. And they would take action. But they don’t see the picture, they just see little fragments of it, so we are able to push on. When they finally do see it, our system will be in place and it will be too late for them to do anything about it.

“That summarizes where we are, but there’s one last thing. Our friends at Goldman are an important “boots on the ground” resource in for us here in the United States. We rely on them regularly. We do think you should bring Gary on board. Let him do his work from the inside. We will all be able to move a lot faster that way.

“Well, my time is up. It has been a pleasure speaking with you, Mr. Trump. I need to get back to Teterboro for the return flight to Switzerland; the Falcon and flight crew await. Next time we meet, I hope we won’t be so rushed, and that perhaps we can have a nice meal and let our conversation take us beyond business. There is more to life. With that, let me thank you again and bid you farewell for now.”

Ehrlich approaches the office door, then turns. “Something I almost forgot to mention. In the spirit of what they believe is going to become an excellent friendship, the Directors authorized me to share with you an inside tip, something they almost never do. They wanted you to know that they are buying gold in the millions of ounces. They think you should be buying, too. And particularly your children, whom they respect. It will be a home run for them, given the magic of time. Feel free to tell your kids to take a look at gold, but don’t tell them anything about our meeting. Your first loyalty test, my new friend.” He opens the door and is gone.

Trump turns to Cohn and says, “I guess the good Doctor’s just said ‘You’re Hired.’ I’ll get the process moving right away. And Good God, I had no idea all of this was going on.” The men shake hands and Cohn leaves the office.

[Seven days later, Donald Trump announced that Gary Cohn would become Director of the National Economic Council of the United States of America, one of the most powerful financial positions in the world.]

Stewart Dougherty is the creator of Inferential Analytics (IA), a forecasting method that applies to events proprietary, time-tested principles of human instinct, desire and action. In his view, forecasting methods not fundamentally based upon principles of human action are unlikely to be reliable over time. He is a graduate of Tufts University (BA) and Harvard Business School (MBA), is a 35+ year veteran of the business trenches and has developed IA over a period of 15+ years.

Trump Fiddles While The United States Burns

If history is any guide, global changes of this magnitude mean that the entrenched systems run by central banks and Deep State politics are set to be destabilized on a level we may have not witnessed in our lifetimes, which means assets like bitcoin, gold, and silver could become the safe havens of choice for investors.  – Mac Slavo, SHTFplan.com

Mac’s comment above was in response to the news that First Majestic CEO, Keith Neumeyer, is prepared to join the legal battle being waged against the world’s largest banks for manipulating the gold and silver markets.   Good luck with that.

But even if the plaintiffs make some headway against the banks, this fight will take years to wage and it will likely do little more than provide some temporary relief from the financial market’s equivalent of pancreas cancer.

While the precious metals community engaged in a celebratory end-zone dance when Deutsche Bank admitted to malfeasance in its paper silver trading business, the insolvent bank coughed up a fine that was mere pittance of the billions it made over the years rigging the LBMA.

To make matters worse, JP Morgan was mentioned nowhere in Deutsche’s testimony.   JP Morgan has by far the largest silver vault on the Comex, with an alleged 82 million ozs in its custody.  The next largest is Brinks with 25 million.  I say “alleged” because it’s quite doubtful that a large portion of JPM’s reported holdings exists anywhere other than as an entry on its daily vault report.  Ask Germany about that…

JPM also happens to be the largest market maker in Comex silver futures, it’s part of the bank cartel that fixes the price of silver on the LBMA everyday and it’s the vault custodian of the alleged silver that is supposed to belong to the SLV trust.   Does it make sense that JP Morgan went unnamed in the Deutsche Bank confessional?   If that happens to pass your smell test then we would suggest that you blow your nose thoroughly and take another sniff.

With regard to the manipulation of precious metals, if you want to kill a snake, you have to cut off its head. Similarly, if you want to end precious metals manipulation, you need to destroy the BIS.  The directive and authority to manipulate the metals comes from the mother of all Central Banks.  JP Morgan is the BIS’ chief agent in executing the directive. Deutsche Bank was given explicit instructions to omit all references to JP Morgan from its superficial mea culpa.

Mac is correct in his assertion that systems run by Central Banks are becoming destabilized.  And he is correct in his implied assertion that this will lead to much higher precious metals prices.  Bitcoin?  Who knows?  Bitcoin is a de facto digital currency and thus yet another fictitious form of money with a computer system as its counterparty.

The problem is that as the destabilization process unfolds, the Establishment will fight back hard in an effort to maintain control.   This blow-back will be in the form of a further advancement toward Governmental totalitarianism. With the geopolitical and economic wheels beginning to fly off rails, at this point it’s fait accompli.    In today’s episode of the Shadow of Truth, we discuss the general systemic decay of the U.S. and Trump’s role as the modern day Nero:

Will The U.S. Hit The Wall In 2017?

The parabolic move in the stock market, housing prices and the U.S. dollar, while touted by the media and Wall Street as evidence that “all is well and getting better,” is perhaps the most visible signals that the U.S. financial and economic system is “melting up” before it collapses.

Yes, I know the truthseeking community has been playing “Chicken Little” since the internet stock bubble days, and admittedly the powers that be have been able to extend and pretend for a lot longer than I would have bet on 15 years ago.

James Kunstler has written an epic year-end essay that is a must-read.  He discusses why 2017 may be the year of reckoning for the U.S. – here’s an appetizer:

When mortgage rates go up, house prices go down, because fewer people are in a position to buy a house at higher mortgage rates, and rents go up (more competition among people who can’t buy a house). Zero Interest Rate Policy (ZIRP), in force for ten years, has driven house prices back to stratospheric levels. They are now primed to fall, perhaps severely, leaving many homeowners “underwater,” with houses worth way less on the market than the amount of mortgage left to pay off.

You can read his entire piece here:   Forecast 2017:  The Wheels  Finally Come Off

In addition, take seven minutes and watch this video put together by Crush The Street (I’ll be a podcast guess this week and next week).  It’s an engaging seven minuted encapsulation of the fate that awaits the U.S.:

Goldman to Trump: Situation Assessment, Government Bail-ins, Precious Metals Threat: Systemic Collapse

A guest post from Stewart Dougherty. Stewart included some thoughts in his email to me that I thought should be shared as a preface to his essay:

——————–

Hi Dave:
Some pretty heady stuff, particularly the part about the Fed’s balance sheet being a lie. (I am 100% convinced of this, but cannot prove it, at least not yet.) And remember, Bernanke was caught issuing $10 trillion in swaps to foreign banks, all of which was supposed to remain a complete secret. It is not as if they haven’t been caught doing what I am saying they are still doing, to an even larger degree.

I’ve stated that the “conversation” is imagined, intuited and fictional, so the small living parts of the shredded Constitution might actually protect my freedom of speech; wouldn’t that be amazing.

I believe “government bail-ins” is fresh terminology … people hear about bank bail-ins all the time … but they don’t hear about government bail-ins, which are going to affect far more people and are inevitable. (As I’ll explain in Part 2, government bail-ins are not going to be about taxes … tax increases are too slow, and oftentimes don’t even work.) Since it’s new, the term government bail-ins might gain a lot of attention.

——————–

Despite Goldman’s avid support for Hillary Clinton, fewer than three weeks after the election, Gary Cohn, the number two executive at Goldman Sachs met privately at Trump Tower with the President-elect. Ten days later, he was named to one of the most powerful financial positions in the world, Director of the National Economic Council of the United States of America.

As they say, knowledge is power, and power is knowledge; both open doors, ears and minds when they decide to. What could Cohn have said to Trump that resulted in his near-immediate hire? Using the Inferential Analytics methodology, we have synthesized a message a visitor of Cohn’s stature might have conveyed to Trump on November 29, 2016. And while it is inferred, intuited and fictional, the following transcript is deeply grounded in the nation’s current and prospective fiscal, financial, monetary and economic situation.

The Visitor: “I appreciate your invitation and it is a pleasure to meet with you today. Permit me to convey Lloyd’s congratulations. He would like to assure you that you have Goldman’s full support going forward.

“Our time is short, so I will give you a very high level situation assessment. Thousands of person hours and millions of dollars’ worth of research and analysis stand behind each of the themes I will touch on, and we can provide additional details if you wish. As one of the U.S. government’s closest financial allies for decades, particularly when it comes to the placement of the nation’s sovereign debt, we have a deep understanding of the financial dynamics at work. When I use the term “we,” it is because Goldman and the United States government have been close business partners for many years.

“As you correctly stated to the American people during your campaign, the situation is not good. It is containable at this time, but only if we continue to run substantial deficits and create large sums of new dollars, in other words, debt. With all due respect, we believe the U.S. government is going to need our help as never before in the coming months and years.

“I will briefly touch on nine topics. There are others we could discuss, but these tell the most important part of the tale. They are: 1) Deficits; 2) Debt; 3) Reporting; 4) War; 5) Perception; 6) Stocks; 7) Money Creation; 8) Currency; and, 9) Precious Metals.

“As you may know, I started my financial career as a Comex trader, and Lloyd began his as a gold dealer at J. Aron, which was acquired by Goldman. We both have extensive experience in the Precious Metals markets, and believe they are going to be of incalculable significance in the near future. I will review this topic later.

“All I ask is that you not shoot the messenger. Much of what I tell you is troubling.

“First, the deficits are structurally non-containable. The OMB itself confirms this, projecting escalating deficits for the next 50 years, with not one year of surplus during that entire time. The aggregate deficit during the next decade alone will be at least $10 trillion. If there is a slowdown or recession, it will be greater or even much greater. The deficits can only be reined by a massive political reset and wholesale reneging on the entire social contract, including Medicare, Social Security, public pensions and welfare. Such a reset would result in an economic collapse. Therefore, it is not feasible, although it could be forced upon us by endogenous or exogenous events that would take the situation out of our hands.

“The debt has gone vertical, rising from $10 to $20 trillion in eight years. Obama created more debt than all other presidents in the previous 230 years, combined. This amount does not include the federal government’s net, unfunded liabilities, which are an additional $150+ trillion, and growing by trillions per year on a GAAP accounting basis. Please understand that his shadow, unfunded debt is net of projected tax receipts; in other words, it is completely out of control.

“Debt is now increasing at an accelerating rate, with $1.4 trillion added last year alone. This debt can never be paid in future dollars having value anywhere even close to today’s, but for now at least, we are still able to peddle it. We do know that for us to successfully distribute the debt in the future, interest rates will have to go higher, which will compound the fundamental deficit and debt problems. Otherwise, we will have to print money on a scale never before seen, which will further damage the value of the dollar. There is a limit to how badly currencies can be damaged; they can and do go into freefall. Several are, as we speak.

“The so-called economic recovery has been false. The Obama administration, with the full support of the Fed created $10 trillion in counterfeit dollars and threw them at the economy, funding everything including non-stop wars, Food Stamps, a vast expansion of government, subsidized Obamacare, solar panel cronies, fund-raising and golf trips, you name it. It’s all included in the nation’s deliberately and, frankly, fraudulently inflated GDP. We understand; it had to be done, and we helped make it happen by being expert debt pushers.

“Some like to think that we can grow our way out of the deficits and debt, but our analysis disagrees. Assume 4% GDP growth. Given an $18 trillion economy (ours is not, as explained above, but let’s say it is), 4% growth means a GDP increase of $720 billion in Year 1. Let’s say the federal government is able to collect in taxes 25% of the gross GDP increase, a wildly optimistic assumption. That would produce $180 billion in incremental revenue. But the structural deficits, as reflected by the increases in debt, exceed $1 trillion per year. Even 4% GDP growth will hardly make a dent in the fiscal hemorrhaging. And to prime the pump for such growth, the government will have to spend a few hundred billion dollars per year on infrastructure spending and the like. This will fully negate the incremental taxes. So we have to dig a deeper fiscal hole for the privilege of digging an ever deeper fiscal hole.

“This leads to topic #3, Reporting. At this point, out of necessity, virtually every government economic statistic ranges from being “massaged” to outright false. GDP is particularly misleading. If we deducted government deficit spending and the multiplier effects it creates, the United States economy would immediately collapse. If that were to happen, we cannot credibly forecast a scenario that would restore it to growth. Economically, it would constitute an existential event.

“Obviously, we cannot openly admit the reality of the situation, or even let it become known. Therefore, the government must doctor the reports. Given the interrelationships among economic reports, we now have to lie about everything. If we just lied about certain metrics, say, GDP and employment, then the other metrics, if not similarly fabricated, would contradict the fabricated reports. We would be unable to explain the inconsistencies and contradictions. We have to lie about unemployment, GDP growth, retail sales, wages, money supply, the cost of Obamacare subsidies, current deficits, current debt, the true fiscal trajectory of Medicare, Medicaid and Social Security, government pension underfunding, projected deficits and debt, and all the rest. When it comes to false reporting, we’re in a box; there’s no alternative to it.

“This is one reason why the Alternative Media are so dangerous to us, and why we need to eliminate them. There are many talented analysts in that domain. They know the truth, and that we’re not telling it. The fact is that fake news comes from us, not them, as they are revealing to a growing army of citizens.

“In addition to false reporting, there is War. War is just like the Fed; it is never audited. This deliberate lack of oversight is how $6 trillion can go missing at the Army, alone. The Army’s missing funds are a small portion of the total amount that has disappeared into the military spending vortex. War spending is critical to topline GDP, and we can play a lot of non-detectible games with it. The saying, “War is the health of the state,” was coined for us. If we stopped fighting wars, GDP would crater. Wars are a necessary constant going forward, even if we have to invent them.

“This brings us to Perception, one of the most important factors of all. In reality, the economy and dollar have become a confidence game. We know that if confidence in an inherently dysfunctional system is lost, only a reset plus time can restore it. But as we discussed earlier, a reset is socially, politically and economically impossible. If the 200,000,000 U.S. citizens currently dependent upon the government to some degree were deprived of even a fraction of their payments, economic and social entropy would result. In fact, the people want more, not less. Free college; free or massively subsidized health care; a $15 minimum wage; the list goes on. Politicians have told them they can have these things, so there is a vast disconnect between popular expectations and fiscal reality.

“Stock market indices are one of the few tools we can use to create positive perceptions. We have successfully created a false perception of economic health by taking stocks to new highs. We have also deliberately engineered a “wealth effect,” which has artificially spurred spending and GDP, and boosted the so-called “animal spirits.” Doing these things has disguised reality and bought us a lot of time.

“But the real reasons we have manipulated stock markets higher go further. First, without a levitated stock market, the pension funds would collapse. Which would ripple through the economy in a massively destructive way.

“Second, federal, state and local governments need the capital gains-related tax revenue produced by the artificially propped-up stock markets. Dow 20,000 will produce a 2017 tax windfall, which is required to offset the damaged economy’s tax shortfalls. The stock markets are a crucial money machine when it comes to tax generation.

“Now to money creation, which takes us deep into the Dark Side. To fund the massive deficits and levitate the stock market, we have had to create trillions of new dollars. But if the actual amount were revealed, confidence in and the value of the dollar would collapse. So we have to lie about this, too. The Fed’s balance sheet is actually trillions more dollars than what is reported.

“We inject newly digitized currency into the system by crediting trusted, proven collaborators such as the BOE, BOJ and Bank of Israel with dollar amounts that can range into the trillions, depending upon circumstances. These collaborators use a portion of these credits to buy our stocks and bonds, in accordance with strict timing, allocation and dollar amount instructions. They funnel the remainder of the funds to trusted, third-party actors, including hedge funds, merchant banks and dark pool operators, providing them, too, with specific deployment instructions. Therefore, the buying comes from many different markets and locations, which makes it look normal and legitimate.

“What exists is a small club of trusted players who deploy enormous sums of money, all of it counterfeit and undocumented, to support the positive perception, healthy GDP and strong stock market agendas. This money costs our partners nothing; we create it for them, out of nothing. The fact is that management of the dollar is far more clandestine than any of the operations conducted by the CIA or NSA, and the Fed is the most secretive and sophisticated intelligence agency on earth. Geo-financial hegemony is its mission, and dollars are its spies, operating, misdirecting and deceiving from the shadows every minute of every day, all over the world.

“While a large and increasing number of citizens now demonstrate broad skepticism about government institutions, they still have blind faith in the statistics reported by the Fed. Which is upside down, because the Fed’s figures are the most dishonest of them all. It proves the power of propaganda, particularly when billions of dollars are spent on it. If the Fed were subject to audit, which of course it deliberately and necessarily is not, none of this would be possible. And if the true size, composition and deployment of the Fed’s balance sheet were known, the entire global financial system would implode.

“That is the situation, in a nutshell. As you can see, it is fragile and untenable. We can continue to manage it in the current context, but if the context were to change, even in small ways, it could all come down. We have to prevent that at any cost because if it does come down, even our most sophisticated computer simulations cannot posit a scenario by which it could be propped back up.

There is a subtle knock on the office door. Trump realizes he is out of time. He says to his guest, “I understand what you have said, and need you to come back and finish.” They arrange for the visitor to return in three days, December 2nd. Trump asks, “So we can move as fast as possible then, please give me a brief outline of what we will discuss.”

The visitor responds: “Most people do not think about these issues at all, but the sophisticated ones do. We have deliberately misdirected that cohort’s attention. We have distracted them with talk of bank bail-ins and other financial gossip to keep their thinking off of what is actually a much more profound and necessary outcome: government bail-ins. We have before us a complex, four dimensional puzzle, in which the puzzle pieces represent events wrapped in time. Both the controlling elite and the people are putting the puzzle pieces in place as fast as they can, because they know their futures depend on it. The side that first completes and comprehends the puzzle will win; the other side will lose. Two of the most important puzzle pieces are currency and precious metals, both swaddled in time. Which is running out for one side or the other.”

[To be continued in Part 2]

Stewart Dougherty is the creator of Inferential Analytics (IA), a forecasting method that applies to events proprietary, time-tested principles of human instinct, desire and action. In his view, forecasting methods not fundamentally based upon principles of human action are unlikely to be reliable over time. He is a graduate of Tufts University (BA) and Harvard Business School (MBA), is a 35+ year veteran of the business trenches and has developed IA over a period of 15+ years.

“Buy” Signals Are Appearing Everywhere In Gold

The prediction I presented in the last Mining Stock Journal to subscribers about gold is developing even before the new year.

Although it seems like the precious metals sector has experienced another down year, the
HUI index is still up 48.6% from its 12/31/15 close and it’s up 65% from its low on January
19th this year.

The technicals in the gold market never been set up better than they are now for a contrarian move higher. On the assumption that gold closes on Friday lower for the week than last week, it will mark seven straight weeks in which gold has closed lower on a weekly basis. This has never happened before.

The premiums for physically delivered gold in China have never been higher. Egon Von Greyers, in Switzerland, reported in his latest King World News interview that there are reports that Swiss refiners have been paying a premium to buy gold. My suspicion is that the Chinese are willing to pay $30+ premiums to world gold in order to keep the supply from Swiss refiners flowing, which is why Swiss refiners are willing to pay premiums to acquire dore bars and scrap.

This illustrates the growing disconnect between the price of gold being paid by the markets in which physical delivery is a requirement vs. the price being paid by the paper gold markets (NYC, London) in which physical delivery (i.e. removed from the exchange and received into private hands) is highly limited, if not outright discouraged or considered a peculiarity.

The above analysis is an excerpt from the latest issue of the  Mining Stock Journal.  In thi s issue, I present several technical indicators which suggest gold is poised for a big move higher.  The mining stocks have been telegraphing this since late November – I detail this point in the MSJ

The MSJ is a bi-weekly subscription-based newsletter delivered to your inbox every other Thursday. The focus is primarily junior exploration mining companies, which have provided the best upside returns since January. Bloomberg featured an article – LINK – which explained that in-ground reserves at the large gold producers are dwindling. This will make small exploration companies with demonstrated gold/silver resource in the ground a lot more valuable going forward. You can access the MSJ here:  Mining Stock Journal Subscription Info.

I am a subscriber to both of your journals.  I just want to say “WOW” to this post on your site. Thank you for all your work.  As a financial professional of 28 years’ experience, I can tell you why there is no churn in your journal subscriptions. Your work is extremely sound and well done even in a massively manipulated environment.  – Kevin B.

New subscribers receive all of the back-issues (via email) plus a glossary of terms which help explain mining technicals.  The latest issue, released yesterday, has a junior explorer that has a proved resource on the largest copper-gold deposit discovered in recent years. This stock is worth at least twice it’s current market price based on the fundamental value of the deposit.

Is The U.S. Stock Market About To “Super Nova?”

ETF flows tend to be a good contrary indicator when they become extreme, so the buying frenzy doesn’t bode well for U.S. equities.  – David Santschi, CEO of TrimTabs

If the Federal Reserve were a private corporation and did not have a money tree, it would be technically insolvent – i.e. bankrupt. As of its latest balance sheet the Fed was reporting a book value (net worth) of $40.4 billion.   But the Fed does not have to mark to market its assets.   Given the recent 100+ basis point move in the 10-yr Treasury, if the Fed were forced to mark to market its $3.8 trillion Treasuries and mortgages, it would be forced to reduce the holding value by close to $400 billion, taking the Fed’s net worth to negative $360 billion.

This is the most conservative valuation scenario.   The Fed has other holdings, on and off balance sheet, that would likely take the Fed’s book value well past negative $400 billion if mark to market accounting were applied.

Think about this for a moment:   the U.S. dollar is backed by a Government and Central Bank, both of which are technically bankrupt.   The only difference between what happened to Greece and the U.S. is the U.S.’ ability to print money unfettered.

Just like water, markets eventually find their own level of balance.  At this point the U.S. stock market, is the most unbalanced financial market in the world.  A Trim-tabs report out yesterday revealed that the public threw $98 billion into U.S. stock ETFs between November 8th and December 5th.  Compare this to the $61.5 billion that went into stock ETFs over the entire year in 2015.   Currently the rate of cash flooding into stock ETFs for December is even higher than November.

Money from the public is literally flooding into the stock market, making this the most dangerous stock market I’ve witnessed in 30+ years as a financial markets professional.  If the GAAP accounting standards enforced in 1999 and 2007 were applied now to corporate earnings, this would prove to be the most overvalued stock market in history on an “apples to apples” accounting basis.

A supernova is an astronomical event that occurs during the last stellar evolutionary stages of a massive star’s life, whose dramatic and catastrophic destruction is marked by one final titanic explosion. For a short time, this causes the sudden appearance of a ‘new’ bright star, before slowly fading from sight over several weeks or months.  – Wikipedia

The U.S. financial markets, specifically the U.S. dollar and the stock market, can be likened to fiat currency-based financial markets “Super Nova.”  The public and the momentum-chasing hedge funds are desperately chasing the “appearance” of the stock market’s “bright new star.”   Unfortunately, it’s an illusion.  The stock market is headed for catastrophic destruction.

I don’t know if this final explosion will occur early in 2017 or if there will be on last “Weimar-like” push fueled by a round of money printing substantially larger than “QE 1 thru 4.”   Either way, the U.S. financial system is heading toward a period of unprecedented wealth destruction.

I’m not going to sit here and urge anyone who will listen to move their money into the safety of physical gold and silver because I have no idea how diabolically aggressive the Fed and the banks will be in exerting downward pressure on the price of gold and silver using fiat paper gold.  No one knows and anyone who proclaims to know is full of horse hooey.   I’m moving any money not needed for expenses into physical silver.  I know a sale when I see one and sovereign-minted silver bullion coins are on “fire sale” right now.

Unfortunately, the only chance you have to financially survive what is coming at us is to get your money out of all financial “assets.”  These are not “assets.” They are fiat paper liabilities issued by a Federal Reserve that is technically insolvent by at least $360 billion and likely multiples of that when off-balance-sheet considerations are factored in to the equation.  If you don’t want to buy precious metals, at least get your money out of the stock market.

While Wall Street shills and the financial media are busy seducing the public with their incessant “Dow 20,000” rally cry, corporate insiders are busy unloading their shares hand-over-fist.  Every company (other than mining stocks) I’ve analyzed over the last month has been characterized by extremely heavy insider selling.  The parabolic rise in the dollar is annihilating corporate revenues and profitability.   Follow the money here because insiders are broadcasting this fact loudly.

China is dumping Treasuries and corporate executives are dumping stocks.  Total U.S. debt outstanding hits new highs daily.   Once again “smart money” is unloading its paper “assets” on an unsuspecting public.  The delinquency and default rates in mortgage, auto and credit card debt are beginning to spike up, according to the latest reports made available and not disseminated through the mainstream media.

The U.S. markets are going Super Nova – don’t be left holding bag…