A reader contacted me earlier today after seeing the absurd article on the Wall Street Journal heralding in the “7-year bull market” in stocks:
Absolutely amazing they can put out crap like this: “Still, with GDP growth expected to be 2.3% this year, according to a group of more than 60 economists surveyed by the Journal, market strategists project the current bull market has more room to run.” The WSJ editors just lost all credibility they may have had with that end to the article. How could they find more than 60 delusional [or shill] economists that all say the sky will be blue for years? I’m tired of worrying for myself and my family. Where can I find what they are smoking? Must be some really good hopium.
It has not been a seven-year “bull market” in stocks or housing prices, it has been the biggest bull market in money printing and credit creation in history.
While the media clowns and Wall Street shills celebrate the seven year “bull market” in stocks, the fundamentals underlying the U.S. economic and financial system continue to deteriorate – quickly.
The most recent economic activity “end zone” dance was over February’s domestic auto sales, which seem to be occurring at an all-time high when viewed on an “annualized rate” basis. Of course, no one wanted to discuss the fact that Ford’s sales would have been flat or negative if their huge jump in rental fleet deliveries were stripped out of their numbers. GM’s sales were down slightly, and dealer inventories continue to balloon.
What’s worse, subprime auto loan delinquencies are spiking up to their 2008 pre-financial collapse level (click to enlarge):
It’s no secret that the banks have been willing to extend to auto loans to anyone who can fog a mirror. Credit score is largely irrelevant and there’s no requirement to show proof of income.
The prelude to the 2008 de facto financial system collapse, washed by trillions in QE and added credit, is now starting to repeat again. An article in the Wall Street Journal (source: Zerohedge) is reporting that used car prices are headed lower again. With over 32% of all car “sales” accounted for by leases, as these cars come off lease and flood the used car system, prices fall. This in turn affects the amount for which someone with a used car can get paid in order to “buy” a new car. Add that inventory to the already sky-high repo inventory, and the auto sector is set-up for a huge “pile-up” crash. But go ahead and just conveniently ignore the record level new car inventory sitting on dealer lots…
Meanwhile, the wholesale trade “gap” – the difference between the level of wholesaler 
inventory and sales – is now at a record level. Furthermore the wholesale inventory to sales ratio has spiked up to its late summer 2008 level (click to enlarge):
This ratio is spiking up from both excessive inventory accumulation at the wholesaler level of the distribution system and declining sales of this inventory to the retail sector, reflecting weak consumer spending and an outlook for continued weak consumer spending.
What’s perhaps the biggest factor contributing to what I believe is a rapid deterioration in economic activity? “Americans are buried under a mountain of debt:” LINK Per findings in the article from Gallup: “The amount of debt Americans carry is staggering and grows every day.”
The “celebration” of the seven year “bull market” is emblematic of the degree to which propaganda is being used to cover up the truth. If you give me a printing press to print money or an ability to issue an unlimited amount of credit, I can make any object increase in value. The big run-up in the stock market and home prices and in auto sales was enabled by $4.5 trillion in printed money from the Fed and the enabling of an insane amount of credit creation, including derivatives which are nothing more than another form of credit.
When this hits a wall – and I think the gold market action is telling us that the collision is occurring or is imminent – it will cause a systemic upheaval that will make 2008 look like a civilized tea party.
I am still of the firm believe that the elite banksters in bed with the corrupt politicians will provide an external shock event (outside the financial system) to the people to bring this gigantic house of cards to it’s knees. I am located in Germany, and I tell you what my worst case scenario is: They will target and hit a nuclear reactor within the centre of Europe, say France or Belgium, buy taking a surface-to-surface missile and blow this hole thing up. False flag of course, what else. Then making a ISIS story out of hit. “Huhuuu, these ISIS terrorists have done…..bla bla bla) I’ve got a strange feeling that something big will occur. Something that will make the collapse of the entire financial system look like a walk in the sunhine. People will have different worries when the day of reckoning will be at hand.
I am more and more ‘convinced’ (to use yesterday’s troll’s word) that counter-intuitive falling of the silver price in the last 2 days is, in part or in whole, a psyops to lull the majority into avoiding buying gold and, especially, silver. There can be no other explanation as virtually every chart indicator was pointing to silver continuing its rise in price – or at least continue to complete the cup and handle pattern which has been forming since the beginning of November. The down-flushes therefore serve two purposes: one, a crude attempt to scare people away from PMs or flush ‘weak hands’ out of their positions and, two, a subtler but no less devious and thoroughly conscienceless ‘painting of the charts’ with the intention of making it difficult, if not impossible, to glean anything remotely helpful to trading silver in a ‘normal’ way (as was possible prior to the outright smashing of silver prices on the COMEX at the end of April 2011. That event ushered in a new era of manipulation which is now culminating in these two effects mentioned above.
I feel sorry for anyone who is fooled into hesitating over the purchase of silver because of the constant price declines (although if new to the silver market, that may also have ‘unintended consequences’ in that buyers might be more encouraged rather than less encouraged by the low prices even to buy more silver than they had originally planned to buy)! Who knows? That does not mean that the intention of those who control the paper silver market do not have the explicit ‘desire’ to chase people away from physical silver ownership. What it means is that their plan, as far as that part is concerned, may not be working as well as they had hoped.
I have also noticed that the manipulation in silver which most people view only in UD$ terms has been having a strong affect on the GB£ price in that every time it rises above £11.00 an oz., it is pushed back down, preferably as far as the manipulators as concerned, to £10.60 or lower. I have mentioned this spilling over of the ($) price of silver into other currencies (I happen to live in Britain so I look at the effect on the pound) but I am sure it is happening in other currencies as well as the pound. It is just one more indication of their ‘desire’ (‘ability’) to control all (or most?) markets.
I don’t think, as some do, that we will have a gentle rise, or even an aggressive rise in the $ price of silver from here. The macro-economic and international financial situation has deteriorated so much that the only way out now is to re-price silver (and gold, too, of course) at a much, much higher price. Some are saying this is coming and will happen in stages: the first ‘price re-set’ will take gold to either $2500 or $3000 (take your pick) and silver to around (or a round) $100. It needs to happen because the new system ‘waiting in the wings’ requires it. The basis of the new international trade system is gold: a new form of gold standard based on so-called ‘gold trade notes’ which are a variation of centuries-old method of financing trade: the bill of exchange. This is something I know about as I managed (at the age of 21) the complete bill of exchange system of a merchant bank in the City of London in the early 1970s. So this ‘gold trade not’ will be a modernised, electronic form of bill of exchange with one important difference: these gold trade notes will not rely upon banks for disbursement (payment) of the sum written by the issuer of the note and underwritten (guaranteed) by one or more banks, including the merchant bank. (If you want to learn more about gold trade notes, please refer to Jim Willie’s public articles and recorded interviews. What is fascinating about this change is the undeniable effect it will have on gold and silver prices for the simple reason that everyone will be able to see gold being used as money in trade and with this will come the acceptance, slowly at first, that silver is money, too! I am sure that eventually, silver will be used/accepted for payment in localised transactions just as much and as easily as gold will be in trade between nations.
However, this will not happen at current price – laughable prices in the case of silver with a risible ratio of silver to gold of over 80 to 1. That ratio has only been seen in the last 100 years and then only 4 or 5 times, I believe. Before 1913, the ration was never more than 20 ounces of silver to one of gold as they were both considered, and used as, money. No one, before 1913 (unless they were drunk or barking mad would have given 80 ounces of silver for one ounce of gold! It would have been the ‘hard money’ era equivalent of burning paper money notes or flushing them down a toilet. And yet now we have brainwashed into accepting this abomination on a daily basis. I wish you would think about that a little because it is one more indication of how warped our ‘reality’ is. Very warped indeed.
Whether you agree with me or want to ‘convince’ me otherwise (using disingenuous or just plain stupid arguments, gold and silver prices are going to go up: either in a sustained, relentless uptrend (something which I think is unlikely) or by a sudden ‘re-set’ or series or ‘re-sets’ to higher and higher prices: $100, $250, $400, $800, $1000 and more for silver. It is this latter scenario which I think is likely, initially to facilitate and to balance trade between nations. It will also have the effect of regulating that trade as trade imbalances will become very rare for the reason that those countries that do not have gold to trade will not be able, or allowed, to trade with dramatic, or even disastrous, consequences.
“The amount of debt Americans carry is staggering and grows every day.”
Do you really think they going to repay it ????
Government lives on credit and they spend trillions of dollars.They preparing now themselves using others money on technology , military etc.They will use anything to survive and beat others.
They are masters of bullshit !! and manipulation.
hey Jack.
i’m not saying that you are wrong. but anytime someone is 100% sure of something i usually try to find if there is a risk in the thinking that is either not communicated or ignored.
why couldn’t blockchain technology replace silver/gold to balance trade within and between nations?
i know the technology isn’t fast enough right now to be able to facilitate the enormous number of transactions per second that it needs to be able to handle. but as with all technology there’s is only a question of time before it’s fast enough.
i’m not saying that silver and gold won’t go up a lot in the coming months and years but to reach the astronomic price levels some people are talking about it probably would need to become the base for balance of trade. just like you point out.
so i’m wondering if you have assessed the future competition of blockchain technology, and if yes: what are your thoughts about it.
the number so called “fin-tech” companies that gets funded now is blowing up. and although i understand that only a small number of them will be successful, some of them will. and innovative breakthroughs will happen.
lastly. i’m not saying that blockchain tech or any other “fin-tech” will actually make everything right again (because they’ll probably be manipulated too once in place) but only that i think there is a risk that the financial establishment might be more eager to rely on a technology than a metal when a “reset” is needed.
just saying that it might be bad news for silver and gold prices..
Rob, I think your position on gold and silver ignores what other countries are doing. Russia, India, China and others are acquiring gold in a big way. Jim Willie predicts we will see a gold trade note to be used in international trade.
Everywhere except the US, gold is considered a monetary metal, and gold is rising to near all time highs in most other currencies. Faith in crypto, digital currencies controlled by central banks is like faith in fiat. When faith in fiat ends, will populations seek to place their faith in another currency backed by nothing other than digital mining?
I’m not saying that there isn’t a place for crypto currencies. But I think most prefer crypto outside of the establishment’s central banking system. That is the reason people like it now. How will people react to a crypto currency forced upon them by central banks? If faith and trust is waning in fiat, what will give people faith in crypto fiat? Negative interest rates? Can it be forced upon us? Perhaps the sheeple in the US will accept forced change to crypto. But does that work in India, China, Russia who are accumulating gold like there is no tomorrow?
So, one last comment. How would a shift to crypto work in practice? How would fiat currencies be exchanged for crypto? How would Russia view a fiat exchange when they have large stockpiles of gold? How about China? How do the estimated $1.4 Quadrillion in derivatives get settled? Since derivatives have become the largest game in fiat history, and they are only some 30 years old, how are they valued against precious metals which have a history of thousands of years as a trusted form of money?
I don’t have the answers, just a few of the many questions that would have to be answered. I think central bank crypto is a long way off. Trust in government would have to precede trust in another fiat, whether it is crypto or not. Russians may be the only citizens on the planet today who are trusting their government.
RE: WSJ on new bull mkt. Just like homebuilders gotta build, the Wall St. sell side’s gotta sell, else no income. They don’t care if clients (i.e. GS “muppets”) lose money along the way. It’s pretty clear that general U.S. stock indicies are already in a bear mkt., and have been since last summer. To say we’re in a bull mkt. is self-serving, disingenuous, and outright BS. I have a thesis that the severity of bear markets/contractions/recessions is proportional to the debt increase during the preceding boom/growth/expansion phase. Based on the re-leveraging since ’08-’09 by both public and private sectors – when the correct response was to deleverage – suggests that the current down cycle will be severe. I hope this is not the case, but hope is not a great investment strategy. If I had to choose a recession mascot here, I’d pick the Honey Badger. While everyone would like a mild downturn, Honey Badger don’t care. I also believe that Hillary (The Big House in 2016) will lose the election for the same reasons the Geo. W. Bush lost in 2008. The stock market will kind of suck this year, IMHO. This outcome is already baked into the cake, in spite of the best efforts of the blue model gov’t., including the Fed. Based on history, the eighth and final year of a two-term president has historically been negative for the markets in 5/6 cases since 1920. The odds are that history repeats and it’s not different this time.
“How could they find more than 60 delusional [or shill] economists that all say the sky will be blue for years? ”
Denial is a self defense mechanism when everything is falling apart and an individual or group needs words of encouragement to keep the panic from setting in.
consider these quotes-
“There will be no interruption of our permanent prosperity.”
– Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928
“There may be a recession in stock prices, but not anything in the nature of a crash.”
– Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929
“This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”
– R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929
And on and on and on. More quotes can be found here-
http://www.gold-eagle.com/article/1927-1933-chart-pompous-prognosticators
ECB cuts rates and injects more QE stimulus. The markets rally in pre-market trading. The dollar spikes upward, the euro falls. PMs are tanking. All that matters to the markets these days is what the central banks do. Period. Fundamentals, schmundamentals. Who cares if the recession signals are flashing red? Its Super Mario to the rescue! Reduced rates and money printing here to save the day…