Investment Research Products
Powered by Kranzler Research
Articles
SoT #88: The U.S. Govt Terrorizes The Masses With Terror Propaganda
The horrifyingly tragic mass killing in Orlando was immediately branded as “domestic terrorism,” well before any investigation of the shooter’s background or motive was conducted. This is standard operating procedure in the U.S. anytime bullets fly in a public space. Shortly thereafter “ISIS” issues a statement taking claim for the event. But anytime more than one person gets shot in a public space ISIS seems to be on the phone line immediately with Fox News taking credit.
It’s quite formulaic. Lost in the propaganda, of course, is the now-confirmed fact that the U.S. Government’s Deep State (CIA, NSA, Defense Department, Homeland Security Department) created ISIS in the first place.
Fox News and Fox Business have been featuring a banner all day that proclaims “Terror in Orlando.” How come Charles Manson or Charles Whitman (U of Texas sniper) were never labeled “domestic terrorists?”
We’ll never know the truth about the Orlando shooter’s background and motives. It will be drowned into obscurity with a flood of media-driven propaganda and fear porn. The motive of the Government in this endeavor is to terrorize the citizens into begging for even more funding of the “war on terror.” Furthermore, it’s an opportunity for the Government to confiscate even more of our rights in the name of “security.”
The Shadow of Truth’s Market Update segment explores this sad tragedy in an attempt to brush away the Orwellian smoke blown around it by the Government and the Government’s presstitutes plus some bonus coverage of the MSFT/LNKD tragedy:
If you ever wonder why people question the government and their motives all one needs to do is ask themselves the questions that are posed above. It becomes quiet clear that something is out of balance. Either someone is lying or these agencies need to be shut down today. Those are the only two answers to the questions we ask. If these agencies can not stop a single mass shooting incident, while gathering 100% of our digital footprint, what purpose do they serve? Who do they serve? – Rory Hall, The Daily Coin
Microsoft’s Acquisition Of Linked-In Is Beyond Idiotic
I will say right off the bat that Microsoft’s stock is now one of my favorite short-sell candidates. This is the 2000 tech bubble on steroids. MSFT itself is extremely overvalued given that its revenues are down over 7% on a trailing twelve month basis compared to its FY 2015 ended June 30th. Its net income is down 16% on the same comparison basis. MSFT itself trades at a 38x trailing p/e with declining revenues and income. It trades at 4.7x sales and 5.4x book value.
It’s been issuing debt like the U.S. Government in order to buy back shares, with its debt load increasing nearly 50% since September, from $27 billion to over $40 billion. Since June 2013, MSFT’s debt load is up 333% (from $12 billion).
MSFT’s valuation is in and of itself is insane given it’s debt-addled balance sheet and deteriorating business model. Microsoft Windows 8 was a total abortion and Windows 10 is not much better. Anyone with two brain cells to rub together uses the bare bones Windows 7 and the freeware Linux-based Microsoft surrogate software, which can can be downloaded for free (or a gratis donation) and is superior to MSFT’s crap (see OpenOffice.org, for instance).
Now Microsoft has decided to layer nuclear waste on top of its own toxicity by acquiring Linked-In for over $26 billion. This is a tragic, if not catastrophic, use of shareholder cash. Here’s LNKD’s net income history: It reported GAAP net income going from $11.9 million in 2011 to $26.7 million in 2013. Then it decided to use the Silicon Valley private equity unicorn stock valuation model and spend as much money on “R&D” as possible in order to generate losses. And it has generated massive losses: in 2014 it reported a $15.7 million loss. This ballooned to a $164 million loss in its FY 2015. On a TTM basis, LNKD’s net income has plunged to nearly a $170 million loss.
And MSFT is paying for what? This is from MSFT’s press release announcing the tragedy:
- 19 percent growth year over year (YOY) to more than 433 million members worldwide
- 9 percent growth YOY to more than 105 million unique visiting members per month
- 49 percent growth YOY to 60 percent mobile usage
- 34 percent growth YOY to more than 45 billion quarterly member page views
- 101 percent growth YOY to more than 7 million active job listings (LINK)
Anyone see ANY mention of those attributes generating any revenue, cash flow or operating income? Remember when Maria Bartiromo and Joe Kernan used to crow about “clicks and eyeballs” to justify multi-billion market caps for internet businesses with nary a business model? That’s what this acquisition is all over again. Small businesses looking to sort their own cap table out can do so with something like this cap table management software so that they will be able to demonstrate the value of their company, when necessary.
MSFT on the surface is paying: 5.4x sales, 4x book value, 4.8x enterprise value (market cap + debt) AND 58x enterprise value to EBITDA. Wait, anyone notice there’s no implied p/e ratio? That’s because there’s no “e.” But of course Wall Street has stuck a hockey stick net income forecast for FY 2017, so the implied “forward” p/e is 45x.
Microsoft’s acquisition of LNKD is about as idiotic as it would be to try and convince someone that the sun rises in the west and sets in east. If anything, this deal is emblematic of an American systemic Ponzi scheme that has gone “off the rails.”
Linked-In is nothing more than a glorified jobs networking bulletin board. Sure, as the system continues to unravel and more “business services” people lose their jobs, there might be a big jump in “clicks and eyeballs” on Linked-In. But this will be out of desperation trying to find anyone on the Linked-In board who might offer a ray of hope for employment. But no one will spend their unemployment check on LNKD’s idiotic premium services. That will be money much better spent on whiskey and weed, which is exactly what MSFT’s upper management and board of directors must be ingesting to have come up with this idea. MSFT is my lowest risk short-sell idea of the year.
The best part is that Jim Cramer is pounding the table hard with bullish commentary about this deal. This makes the idea of shorting MSFT a slam-dunk. It reminds me of his bullish call on Bear Stearns before Bear collapsed.
If you like this analysis, you might benefit from my Short Seller’s Journal. Every week is present what I believe to be somewhat unique market insight, a minimum of two short-sell ideas, recommendations for using options and capital/trade management strategies. My picks greatly outperformed the S&P 500 when the market dropped from early January to mid-February. You can access the SSJ using this link: Short Seller’s Journal.
SoT #87: Is China Part Of The New World Order Operation?
The short answer: No. A commonly discussed conspiracy theory is the military tensions between the U.S. and Russia/China is part of a Kabuki Theatre show being played where the “truth” is that all three nations are cooperating to implement an NWO plan.
On the surface, this idea is silly. Upon further examination – including an in-depth discussion with the Shadow of Truth’s man in Beijing – Jeff Brown (China Rising website) – it can be concluded that the theory is outrageously absurd.
China, together with Russia, has in fact been patiently building out the foundations of commerce, finance, trade and geopolitical cooperation for several years. This is despite the United States’ NATO’s best efforts to derail the “new world order” being fashioned in the eastern hemisphere. It’s a systematic effort to dismantle U.S. military hegemony and remove the petro-dollar as the global reserve currency.
As the the BRIC/SCO consortium progresses toward this goal, the propaganda all out lies emanating from the U.S. plutocracy becomes more desperate and dangerous. For instance, last week U.S. Defense Secretary, Ash Carter, responded to China’s efforts to protect its South China Sea territory from U.S. imperialistic aggression:
Any action by China to reclaim land in the Scarborough Shoal, an outcrop in the disputed sea, would have consequences, Carter said…”I hope that this development doesn’t occur, because it will result in actions being taken by the both United States and … by others in the region which would have the effect of not only increasing tensions but isolating China,” Carter told the Shangri-La Dialogue, a regional security forum in Singapore.
“The United States will remain the most powerful military and main underwriter of security in the region for decades to come – and there should be no doubt about that.” LINK
There’s no question which country is the aggressor here. Ironically, it’s in fact the United States that is increasingly isolating itself from the global community. China has one military base outside of China – in Djibouti. Russia has military bases in nine countries, mostly countries which were part of the former USSR. The U.S.? More than 800 military bases in over 70 countries around the world.
The Shadow Truth spent some time with our man in Beijing to discuss the “5th Column” topic – in which western (U.S.) educated Chinese and Russian nationals operate in colusion with the U.S.’ Deep State in an attempt to overthrow the current political regimes in Russia and China. Jeff helps explain this dynamic and why it’s failing, at least in China.
The System Is Rigged To Blow
There’s nobody looking for value out here [in the stock market] – there is none. It’s obvious the Fed is holding up the stock market. This is one of the reasons the Fed will never be audited. – Friend and colleague of Investment Research Dynamics.
The money printing by the Fed has created the most overvalued stock and bond market in history. The stock market overvaluation is even worse if you use real accounting. But it’s not just outright money printing. The supply of money includes credit creation. This is a fact that surprisingly is overlooked by most, even those I consider highly intelligent: debt behaves like money until that point in time when the debt is extinguished by repayment – not “restructuring.” Take a look at this:
(click to enlarge – source: Wolfstreet.com with IRD edits). The auto debt used to finance car purchases since 2010 hits an all-time every month. The debt issuance behaves like printed money until it’s repaid. But I would bet at least half of that $1 trillion debt will default. That’s how much has been issue to sub-prime and deep sub-prime and comatose borrowers. That debt created an inordinate amount of artificial economic activity. “Artificial” because it would not have occurred otherwise and was created by printed money that will have no value when the debtor defaults.
We’re seeing that same dynamic in all sectors of the economy: housing, commercial real estate, education, healthcare, general corporate purposes (primarily stock-buybacks). According to the Fed, as of March 25, total credit market debt outstanding was $63.4 trillion. This is up about 20% from its low-point after the Great Financial Collapse Crisis. To put this in context, this number was $30 trillion at beginning of 2000. It represents 350% of GDP – a staggering fact. Even more horrifying when you consider that the GDP metric is highly inflated with the application of a potpourri of statistical manipulation techniques.
NOT included in that number, but should be, is the degree to which the nation’s public and private pension funds are underfunded. A conservative estimate would be 50%. I know of some studies which suggest it’s a lot higher when you take into account the use of proper mark to market pricing for illiquid assets, like private equity investments. Some pension funds have as much as 20% of their asset base in private equity. The mark to market on this investment class will be somewhere between zero and 20 cents on the dollar when the next big stock market accident is set in motion. Pension funds will wiped out completely. But the underfunded portion is technically debt. It’s money owed to the pension fund beneficiaries. At this point, its a massive transfer of wealth from current contributors to current receivers.
If you are in a 401k fund, I would highly advise looking into what it would take to get your money out now, even if it means taking a net present value payout. 70% of something is much better than 100% of zero. That’s where the nation’s pension fund is headed. I said in 2002 or 2003 that the elitists would hold up the system with printed money until they had wiped every last crumb of wealth off the table and in to their own pockets. I also said the retirement assets would be the last leg of this endeavor.
A friend of mine and I were discussing how much of his investment portfolio should be in precious metals (or mining stocks). I low-balled with 30% because I knew he would recoil from that number – which he did. The reality is that eventually the dollar, like all fiat currencies, will be devalued to zero. That would suggest that you should keep everything in physical gold/silver and some in mining stocks for wealth appreciation.
He asked me if I thought “it was that bad.” To which I replied:
John, it’s probably worse than I think. It’s amazing how blind most are to it. That’s why it’s gotten so bad. For god sakes, look who’s running for President. Two criminals. Hillary is a confirmed criminal and Obama is obstructing the investigation and prosecution of her by telling the Justice Dept to leave it alone. That tells us how corrupted the system. It’s been largely hollowed out – our rights and our wealth. Right now they’re picking at the carcass. It’s a house of cards that could collapse at any time. If the Fed stepped away from the stock market, the Dow would get cut in half quickly and still be overvalued by any rational historical measures.
The bond market is telling us that the global economy is headed into depression. Despite the efforts of the Fed to convince everyone that they are going to raise rates, the yield on the long-maturity Treasury debt continues to head lower. The yield curve is become flatter by the day, which historically has signaled the onset of recession. The Fed has made every effort to prevent other traditional measures of economic turmoil from sending up systemic warning flares – most notably the stock market and gold – but it appears to be powerless to stop the compression of Treasury bond yields. Something really ugly is brewing in the horizon.
Paper money eventually returns to its intrinsic value – zero. – Voltaire, 1694-1778
Gold Is Signalling A Fed-Induced Systemic Catastrophe
The media is doing it’s part to cover up the unexpectedly bullish trading action in gold and silver. It’s a given that the Fed is making an all-out effort to keep a lid on the price gold. But we found this headline from Investing.com to be a head-scratcher: “Gold pulls back from 3-week highs on U.S. jobless claims data.” Here’s the truth:
As you can see, the price of gold shot up $9 right after today’s jobless claims data was released (it’s a useless statistic anyway). If the headline said: Gold price hit on London a.m. fix, that would have been the truth.
In the latest Shadow of Truth Market Update, we discuss the extreme corrupted nature of the Federal Reserve and why the price of gold is signalling an eventual systemic collapse:
Gold: Welcome To The Weimar Death Spiral
For starters, I want to re-emphasize the importance of getting your money OUT of fiat currency and OUT of U.S. banks. If you read this article and do not come to that conclusion, you will end up getting what you deserve: Commerzbank To Hoard Euros The Fed is devaluing the dollar every day. My solution for day to day cash management is Bitgold. I am not an “ambassador” or “affiliate.” But I am convinced that it’s the best viable means of managing money that requires “fungability” – i.e. that you need for daily expenses. You can sign-up for Bitgold here: Gold-Backed “Checking” Account. Bitgold operates OUTSIDE of the global Central Banking system.
Second, a colleague of mine told me he knows why the stock market is up today – because it’s open. That’s not entirely a joke. But what is a joke is the underlying cause: rampant global money printing disguised as “quantitative easing – or Central Bank asset monetization.”
Goodbye Keynes, hello Havenstein. The Fed and the ECB have resorted to Weimar-style money printing. The lack of transparency makes it easy for them to impose various forms of disguise to hide the outright money printing. Today the ECB rolled out its program to buy corporate bonds. It prints money and buys the bonds of U.S. and European corporations. The disguised name is “quantitative easing.”
It’s a meaningless description. It’s printing money and giving that money to banks and corporations to spend. It may not increase the official tabulation of the money supply, but effectively it balloons the supply of money. After all, money is spending or lending power. That money sitting on bank balance sheets translates into “high powered” reserve credit. It multiplies the spending power by 10. That’s the real supply of “money” in the system.
The precious metals market understands this truth. The move in gold is “quantitative price appreciation.” It’s gold’s response to “quantitative easing.” For the last five years, the Fed and the ECB – and with help from China, I suspect – has been able to further disguise its money printing by using paper derivative forms of gold – OTC derivatives, Comex futures, LBMA forwards, Central Bank lease agreements and hypothecation – to hold down gold’s quantitative price appreciation.
But that ability to keep a lid on the price of gold may well be measurably fatigued. The demand for deliverable physical gold and silver is starting to offset the price dilution that has been imposed on the precious metals market with printed derivative forms of gold and silver. GATA – on the foundation of the research done by Frank Veneroso in the mid-1990s (he visited several Central Banks and discovered that they were leasing gold in large quantities to help hold down the price) – predicted that eventually the physical market would overwhelm the paper market and lead to a huge parabolic move in the price of gold.
It’s taken a lot longer than any of us could have imagined. But something different is occurring in the gold market right now, because all the technical indicators over the last 15 years that have foreshadowed a massive take-down in the price of gold are betraying their promoters. While the price-rigging schemes may not have completely run out of energy, as John Embry said yesterday: “I’d much rather be playing our hand than theirs.”
I took profits (265%) on a call option trade on a high quality mining stock that I presented to the subscribers of the Mining Stock Journal in the debut issue. It was a low-risk proposition. I rolled the profits into shares of the stock. I currently am sitting on a 25% gain in a short term trade idea presented to MSJ subscribers less than two weeks ago (a high quality junior stock). I am looking to make 30-40% in total within another week and then take the profit. Again, another low-risk trade idea. In the next issue published tomorrow, I am presenting a high-risk, high-return junior silver mining stock idea. You can subscribe and get all the back-issues (email delivery) with this link: Mining Stock Journal.
One more note: I presented a brand new silver explorer to subscribers of the Short Seller’s Journal on Jan 10th. That stock is up 663% since then and still has room to double from here.
The U.S. Gold/Silver Price Managers Strike-Out Again
It’s becoming monotonous. The precious metals get the obligatory price hit at 6 p.m. EST when the CME’s Globex electronic trading system re-opens after taking about an hour break from manipulating markets. Then gold/silver rally throughout the eastern hemisphere trading hours, which wind down around 3 a.m. EST. And then gold begins to fade going into the manipulated London a.m. gold price fix. It typically trades laterally until the Comex gold pit opens (8:20 a.m EST), which is when we get the customary “cliff dive” price drop:
For 15 years, I have been unable to understand how only the gold investing commnunity – aka “goldbugs,” or just “bugs,” as Dennis Gartman refers to it – seems to discern this daily ritualistic trading pattern in the price of gold/silver. Funny thing, that.
It’s confounding to consider that the regulatory authorities have been able to spot and prosecute interest rate manipulative activities by several banks – LIBOR Rigging – many of these banks are also considered “bullion banks.” Larry Summers updated and augmented Gibson’s Paradox by demonstrating that interest rates could not be manipulated without manipulating the price of gold – Gibson’s Paradox and the Gold Standard. How is it therefore possible that the bullion banks, who manipulated LIBOR and who were involved in the London Gold Fix, were able to accomplish the former without engaging in the latter? Let’s call this Kranzler’s Enigma.
After this morning’s obligatory Comex floor opening price hit, gold bounced back in “V” formation. I emailed GATA’s Bill “Murphy” Midas to discuss the trading action, noting that “something is different.” This “V” bounce has been occurring quite frequently since mid-December. Historically, once the Comex price-spanking occurred, the trading day for gold traders may as well have been over. But for some reason the gold cartel banks have been unable to keep their boot pressed on the throat of the gold market.
One other point. Many of you may have noticed that GLD and the Comex have recently been reporting a large increase in gold vault inventory. As I said to Midas: “I’ve noticed in the past that a build-up in reported GLD inventory seems to precede a smash. But it’s been “building up” for a while and no smash. All hits are being bought.
Not sure it means anything, especially if the gold that is being reported in the warehouses at the Comex and GLD exists only as accounting entries, which is very possible if not highly probable.”
I’ll end with a piercing comment from John Embry. I rhetorically asked him how high the price of gold would be if the regulators prevented Comex market makers from issuing gold contracts in an amount that exceeds more than 110% or 120% of the stated inventory of gold on the Comex:
With respect to your gold question, the price would be much higher but they could still get away with considerable chicanery OTC and on the LBMA. However, since the American government is firmly behind this Ponzi scheme, I am not holding out any hope for help from the regulators. However, things are moving inexorably in our direction, and in my mind, the question only concerns time not the ultimate outcome.Thus as frustrating as it has been I would still rather be playing our hand at this point, not their’s. – John Embry
Stunning Development In Comex June Gold Deliveries
If the Comex were allowed to issue paper contracts representing no more that 10 or 20% of the actual amount of gold held by Comex vaults, what would the price of gold be?
1.176 million ounces of gold have been delivered – or should I say “delivered” – for the June contract six days into the June contract delivery period. I don’t follow the delivery patterns as closely as I used to, but this is a massive amount of stated deliveries. Even more interesting is the fact that there’s still 6,683 Juno contracts open representing 668,300 ozs of potential deliveries. This is a relatively high number of contracts still open this far into the delivery period.
One other interesting point of note is that over the last few months, a couple new “players,” beyond the standard Comex bullion banks (JP Morgan, HSBC, Scotia) have been participating in the deliveries: B of A (Merrill), International FCStone Financial, Morgan Stanley and SocGen. All four of these have been taking an increasing amount of deliveries the past couple of months, primarily on behalf of customers (vs. for their own house account).
I have no idea what would be triggering this sudden increase in delivery activity on the Comex – other than the obvious. And who knows to what extent the physical gold is actually being moved from the accounts of the delivering parties to segregated accounts of the parties taking delivery. It would be even more interesting if a lot of this gold was being removed from the Comex, which would reinforce the likelihood that it really exists in unencumbered physical form.
On another note, the stock portfolio portion of the fund I co-manage was up 4.7% today vs. the HUI up .23% and the GDXJ “junior” ETF up 1.7%. We own highly concentrated positions in true junior exploration stocks. My point here is that a lot of money is flowing into the highest risk/return segment of the mining stock sector. In my opinion this is a signal that the “smart” money is expecting a big move in the entire sector.
I publish the Mining Stock Journal, which is a bi-monthly subscription report which features a junior mining stock in every issue. I try to find lessor known ideas because I want to put my money in good ideas before the wider universe of newsletters begin to discover them. The next issue out this Thursday will be featuring a very small silver exploration company that appears to have found what could be very large silver (polymetallic) deposit. You can access the Mining Stock Journal here: MSJ Subscription Link. I am sending all-back issues to new subscribers.
Considering the research and content, both the Mining Stock Journal and Short Seller’s Journal are remarkable bargains. – from subscriber “Jay”
SoT #85 – Protect Your Gold And Silver From Financial System Risk And Fraud
In this Shadow of Truth Market Update, we discuss the best way to invest in silver, why the only way to protect your wealth and savings is to remove your money from any of the various custodians (banks, IRA/retirement fund custodians, ETFs, any financial firm) and the fraudulent nature of the U.S. financial system.
Five years down the road you’re going to pay taxes and early withdrawal fees on zero because that’s what your IRA is going to worth. – Shadow of Truth
Gold/Silver Ready To Run Now That The Fed Can’t Hike Rates
Doc invited me on Silver Doctor’s Weekly Gold and Silver Market update this week. The Fed’s threat to raise rates in June were largely targeted at cooling off the big move in gold and silver, which were about to take off like a runaway freight train. We discuss:
- Is the Correction Over? Bullion Buyers “Shellshocked” As Gold & Silver Prices Jump Higher
- “There Was Never Any Intent to Raise Rates” – It Was All About Targeting Gold!
- Unprecedented Development in Gold – RECORD Amount of Gold Standing for June COMEX Delivery
- Friday Was A Shift in Sentiment: “I Think We’re Going to Go Alot Higher”
- The Most Heavily Shorted Mining Stock in the World Jumps Over 15% – Hedgies & Algos Jump Back On the TrainDoc, Dubin, & PM Fund Manager Dave Kranzler Break Down Gold & Silver‘s Huge Moves Friday:
The junior mining stocks are more undervalued right now in relation to the price of gold and silver than at any time in history. Some of the companies that I present in my Mining Stock Journal will turn into lifestyle-changing investments. Click on the image above or on this link to subscribe: Mining Stock Journal
I’m enjoying and am really pleased with the results so I wanted to say thanks. – Subscriber “Jason”