The New Regular: Open Dishonesty
I not too long ago authored a report showcasing a string cite of empirically open lies which now go for actuality on the whole lot from the CPI inflation scale to the Cleveland Fed’s +1 actual rate of interest fantasy, or from official unemployment information to the now comical (revised) definition of a recession.
However a newer lie from on excessive comes instantly from the best of all, U.S. President Joe Biden.
Earlier this month, Biden waddled to his podium and prompt-read to the world that the US simply noticed 0% inflation for the month of July.
Oh expensive…
It’s unhappy when our nationwide management lacks primary financial, math and even moral abilities, however then once more, and in all equity to a President in open (and actually unhappy) cognitive decline, Biden is on no account the primary President, purple or blue, to only plain fib for a residing.
A Historical past of Fibbing
All of us keep in mind Clinton’s promise that permitting China into the WTO can be good for working class Individuals, regardless of hundreds of thousands of them seeing their jobs off-shored to Asia seconds thereafter.
And allow us to not neglect that little warfare in Iraq and people invisible weapons of mass destruction.
Nor ought to we ignore each Bush and Obama’s (in addition to Geithner’s, Bernanke’s and Paulson’s) assurance {that a} multi-billion-dollar bailout (quasi-nationalization) of the TBTF banks and years of printing inflationary cash (Wall St. socialism) out of skinny air was, “a sacrifice of free market rules” wanted to “save the free market economic system.”
In actuality, nonetheless, we haven’t seen a single minute of free market value discovery since QE1.
Thus, Biden’s announcement that there was NO inflation for July is simply one other clear and optically (i.e., politically) intelligent lie amongst an extended historical past of lies.
That’s, he did not make clear that though there could have been LESS inflation in July, this hardly means “no” inflation, as any American who has a invoice to pay already is aware of.
Setting the Stage (Narrative) for a Fed Pivot
What the July CPI decline does obtain, nonetheless, is yet one more headline fantasy to justify an inevitable Fed pivot to less difficult cash by year-end (i.e., mid-term elections) or early 2023.
As we see under, the fiction writers, data-gatherers and fork-tongued coverage makers in DC have already been gathering extra official “information” to justify a Fed pivot towards extra dovish cash printing and therefore extra foreign money debasement forward.
Along with a decelerating CPI report for July, DC has additionally been checking the next, pre-pivot bins to permit the Fed to get again to doing what it was really designed to do, which is print debased cash out of skinny air to avoid wasting the US Treasury market somewhat than working class residents.
Particularly, DC is pushing laborious on the next “information factors” and narrative:
- Decelerating inflation expectations
- Declining on-line pricing
- Declining PPI (Producer costs)
- Declining oil costs (from their highs)
So, has inflation peaked? Are the above declines proof that inflation creates deflation by crushing shopper power and therefore value demand? Is the Fed’s work almost carried out in defeating inflation?
My quick reply isn’t any, and my longer reply is that with regards to market, foreign money and financial circumstances, there’s…
…Extra Ache Forward
One clear signal that there’s extra ache forward, and therefore extra causes for the Fed to pivot from short-term hawk to everlasting dove, is the credit score tightening now happening within the US.
As I’ve stated too many occasions to recall, the credit score—and bond—market is crucial market and financial indicator of all.
Earlier this month, the Fed’s quarterly Mortgage Officer Survey got here out with some scary and telling information, particularly that the credit score markets are tightening.
It’s vital to know that within the final 30 years, a tightening of credit score has at all times preceded a recession, even when DC desires to fake that we’re not in a recession.
The hawks could argue, after all, that through the inflationary 1970’s, tightening financial institution credit score did NOT cease Volcker’s Fed from a hawkish charge hike coverage.
However let me remind once more that 2022 USA (with a 125% debt to GDP ratio) isn’t the Volcker period, which had a 30% ratio.
So, I’ll say it as soon as extra: The US can’t afford a sustained (Volcker-like) hawkish (rate-rising) coverage–except you consider the Fed is beneath direct orders from Davos to destroy America, which, I suppose is a good perception, however one I’m not able to embrace (but)…
Regardless of Powell’s worry of changing into one other Arthur F. Burns who let inflation run too sizzling, and regardless of his failed makes an attempt all through 2018, and once more now, to be the tough-guy on the Fed, I nonetheless really feel the Fed, for all of the narrative factors/causes set forth above (together with falling US tax receipts in July), is ready for extra weak financial information to justify a dovish pivot towards extra QE somewhat than much less inflation.
Why?
As a result of the Fed’s Solely Job is to Hold Uncle Sam’s IOUs from Drowning
The one strategy to hold US Treasuries from tanking (and therefore bond yields and rates of interest from fatally spiking), is for the Fed to print extra money to purchase Uncle Sam’s in any other case unloved debt.
And this may solely be carried out with extra, not much less, QE down the street.
After all, cash created with a mouse-click is inherently inflationary and inherently deadly to the buying energy of the USD, which is why gold is inherently poised to out-perform each fiat foreign money in play as we speak, together with the world reserve foreign money.
However as for gold’s rise, along with the dis-inflationary recessionary forces (which require a weaker greenback and decrease charges to struggle), there’s lots happening outdoors the US which additional factors to gold’s pending rise.
Little Hassle in Huge China?
Traders could have observed that cash is fleeing China in droves. Capital outflows are reaching ranges not seen since 2015, which despatched the Yuan to the basement by 2016.
Does this imply the FX jocks ought to begin shorting the heck out of the Chinese language Yuan (CNY)?
I feel not.
Actually, the CNY is holding its personal regardless of large capital outflows.
However how?
China: Overtly Mocking the U.S. Greenback and the Again-Firing Putin Sanctions
The brazenly back-firing, financially-inept and politically-arrogant Western sanctions in opposition to Putin’s warfare amounted to the largest game-changer within the world foreign money system since Nixon closed the gold window in 71.
Extra to the purpose, and regardless of large capital outflows, the CNY is remaining sturdy as a result of its FX reserves (i.e., its nationwide financial savings account denominated in international belongings) are literally rising not falling.
Huh? Why? The place’s the cash coming from?
Reply: Nearly all over the place apart from the dollar-led West.
That’s, nations like China and Russia, who’ve been chomping on the bit for the final decade to de-dollarize, are actually doing exactly that within the wake of current strikes by the West to weaponize the USD by freezing Russia’s FX reserves.
Myopic sanction chest-puffing by the West has given the East the proper pretext to struggle again financially and monetarily, and they’re preventing to win a heating foreign money warfare.
No {Dollars}, Thank You
Particularly, international locations wishing to buy Chinese language imports (i.e., commodities) now must pre-convert and/or settle these purchases from native currencies into CNY somewhat than the as soon as SWIFT-and-world-dominated USD.
In brief, the USD is now not the hardest man within the room nor prettiest lady on the dance.
That is changing into extra evident as headlines affirm Indian firms swapping USDs for Asian currencies, China and Saudi Arabia concluding vitality offers outdoors the slowly dying (and forewarned) petrodollar, and the Russian Central Financial institution contemplating shopping for the currencies of pleasant nations like Turkey, India and China.
As commodities like oil (priced-up 30% since 2018) depart locations like China and Russia, they will now be bought with native nationwide currencies (Indian, Brazilian, Turkish) that are then transformed into CNY.
This process provides massively to China’s FX reserves (particularly when oil costs have been rising), thereby permitting its foreign money to remain sturdy regardless of large capital outflows.
From Mono-Foreign money to Multi-Foreign money
In brief, and regardless of Western makes an attempt to flex its foreign money muscle through USD-driven sanctions, nations like Russia and China are actually main the cost from a one-currency world to a multi-currency world of import funds.
With its FX reserves frozen by the West, Russia, for instance, can take its vitality income and Rubbles to buy the currencies of pleasant international locations like China, India and Turkey to rebuild its reserves outdoors of the USD.
On this method, and as I’ve repeatedly warned (in articles and interviews) since February of 2022, the West has shot itself and the world reserve foreign money within the foot.
The previous world is slowly however certainly turning irreversibly away from a USD-dominated foreign money system towards a multi-currency and multi-FX pricing mannequin.
And as we head into winter, nations just like the UK, Japan, Austria and Germany, who blindly towed the US line, might be feeling the chilly pinch of backing the mistaken coverage as different nations keep heat/heated with oil and gasoline that may be purchased outdoors of the previous, USD-led system.
As vitality costs proceed to cripple the West, particularly right here within the EU, will such nations just like the UK, Austria or Germany bend or keep agency?
Both approach, the USD is the open loser over time, and can by no means be trusted as impartial foreign money once more.
However agree or disagree, you should still be asking: What does any of this must do with gold?
It Has All the things to do with Gold
As extra nations flip away from the West (and the USD) and nearer to the East (i.e., Russia) to fulfill their vitality wants, how will they discover the Rubles or Yuan to purchase their oil, gasoline and different commodities?
In spite of everything, within the new, post-sanction, multi-FX importing mannequin described above, Turkey can’t simply purchase Russian oil in Lira; it must first settle the commerce in Rubles.
So, once more, what foreign money will Turkey use?
From Petro-Greenback to Petro-Gold
John Brimelow, a constantly good gold analyst, has given us a reasonably apparent trace/reply: YTD Turkish gold imports are up 44% to almost 70 tonnes, and may simply attain prior ranges of 300 tonnes every year.
In different phrases, Turkey might be dumping US {dollars} to purchase gold at what everyone knows is a intentionally rigged (i.e., low) COMEX/LBMA value.
Turkey can then promote that gold to Russia’s central financial institution in alternate for Rubles “at a negotiated value” in any other case wanted to buy Putin’s oil.
On condition that the bodily oil market is sort of 15X the bodily gold market, one can solely think about what additional oil-for-gold transactions as per above will do for the rising value of a scarce asset like gold.
See the Sea of Change?
See how the USD is slowly dropping its shine?
See why gold is slowly gaining in shine?
See how the US-led sanctions have been the largest political and monetary coverage gaffe since Kamala Harris tried to find the Ukraine on a map?
See why the BIS/COMEX/OTC value fixing of gold earlier this 12 months was the proper (and synthetic, legalized fraud) timing wanted to maintain gold low cost for different nations to purchase?
Rhetorical Questions
Maybe all this curiosity in gold somewhat than the USD explains Saudi Arabia’s current push to refine gold inside its personal borders?
Maybe this additionally explains why less-favored nations to the US (i.e., Nigeria and India) are launching a bullion alternate and opening gold buying and selling?
Maybe gold’s new roles are why the BIS, the largest participant (legalized scammer) within the paper value fixing of gold, has unwound almost 90% of its gold swaps over the course of a 12 months (from 502 to 56 tonnes)?
And maybe gold’s cussed significance additional explains why the 2 greatest US gold value manipulators within the futures pits, JP Morgan and Citi, have been grotesquely increasing their gold by-product ebook (they personal 90% of all US by-product financial institution gold) on the identical time the BIS was unwinding their swaps?
Why?
Easy: To maintain a boot to the neck of the pure gold value only a bit longer as they accumulate extra of the identical earlier than the very foreign money system they helped break lastly implodes?
Sincere not Sensational: Gold’s Bull Market Has But to Even Start
Given the dishonest occasions by which we reside, and given all of the mechanizations sited above, it might not be sensational to remind typical traders what most gold traders already know: Gold is most trustworthy and dependable when dishonest and disloyal markets implode.
Hedge fund managers and different candid analysts are collectively and already foreseeing large market ache forward, as Egon and I’ve been warning for years.
The massive boys are actually net-short US Fairness futures:
Whether or not re-valued by oil, or just re-valued by fiat currencies which have more and more no worth, gold can simply attain ranges which present traders can’t think about.
After Nixon’s debacle in 1971, gold surged 400% in only one 12 months between 1973-74.
Watch the Foxes, not the Hen Home
The TBTF banks haven’t any morality in my thoughts. I’ve written of their open fraud for years.
Ever since of us like Larry Summers repealed Glass Steagall and turned banks into casinos and bankers into speculators (with depositor cash), nothing the large banks do is both honest or fiduciary.
Mockingly, nonetheless, it’s honest to say that even these banks might be hoarding extra bodily gold (at presently repressed/rigged costs) because the world they created implodes beneath its personal systemic sins.
And if JP Morgan or Citi is getting ready, shouldn’t you?
In spite of everything, higher a fox than a hen, no?
