David Schectman

For those of you who no longer believe in the "old-timers," remember Richard Russell said, "It's inflate or die." Jim Sinclair said, "The Fed can't stop QE without collapsing the stock market and the economy."

Here is a quote from Jim Sinclair:

Bad economic news is now bad equity news.

Here is an article from Zero Hedge:

Retail Sales Bloodbath: Control Group Has First Decline Since "Polar Vortex" - www.zerohedge.com

Submitted by Tyler Durden on 10/15/2014 08:47 -0400

It may come as a shocker to some, but hopefully not to anyone here, that September retail sales were arguably the worst of the year excluding the "abortion" that was the Polar Vortex. The simple reason: after the US consumer loaded up on debt in the spring and the summer, the payback hangover has finally hit with the payment due in the mail resulting in a collapse in revolving credit as reported previously, and as the September retail sales just confirmed:

• Headline retail sales: -0.3% missing expectations of a -0.1% decline, and down from the 0.6% in August
• Retail sales ex-Autos -0.2%, missing expectations of a +0.2% increase, and down from +0.3%.
• Retail sales ex-Autos and gas: -0.1%, missing expectations of a solid 0.4% rebound and down from 0.5%

And not just that: clothing stores dropped -1.2%, sporting goods dropped -0.1%, furniture was down -0.8%, miscellaneous retailers -0.2%, and, sorry Jeff Bezos, online "non-store retailers" such as Amazon declined -1.1%.

Zero Hedge

Because nothing screams recovery like the US consumer slamming the spending breaks just as the holiday season begins to unwind.

Continue reading on Zero Hedge.com.

Quotes of the Day

On the dollar, Williams says, "The big factor here is the U.S. dollar and all sorts of things that impact that.  The economy is probably the biggest.  You also have the Fed policy.  Right now, there is the presumption that the easing is over and they are going to raise interest rates.  Guess what?  If the stock market continues going as it is and the economy starts turning down, I think the Fed is going back to easing (money printing) again.  They will use the economy as cover for its actions in trying to prop up the stock market and trying to prop up the banking system.  The Fed's primary function in life is to prop up the banking system.  A weak economy is not good for the banking system.  The economy is a sideline for it, and there is very little it can do, but it can use the weak economy as political cover for flooding the system with liquidity and keep the banking system afloat."  Williams goes on to say, "Any pull-back from the 'taper,' any shift in expectation, the Fed is going to have a QE 4, will tend to hit the dollar very hard.  Along with that, a spike in gold prices and we're off and running. . . . You are getting a confluence of extraordinary factors that are coming together that will cause the dollar to break.  You'll have a panic flight from the dollar along with dumping of U.S. Treasury bonds by foreign owners.  We are coming in on the end game here."

- John Williams, October 15, 2014

Nowhere To Hide? Not True!

I guess I should qualify the following, because if you are an American this may not be as valid, but it may become more urgent as time moves forward. Today the U.S. equity markets are getting slaughtered, as U.S. economic growth is beginning to wane. The 10-year bond travelled under 2%, as investors were terrified and looking for a safe haven. Europe is on the verge of another economic Armageddon and geo-political risks continue to accelerate in the Middle East.  Where to hide?  Well gold popped some $20, but as an American investor so what, what's the big deal. I agree:  from the beginning of the year gold is up a paltry 3% in US$ terms.  But what if you're a Canadian or a European? Canada has seen its stock market evaporate to the tune of 12%, in the last few weeks, as commodity complexes disintegrate, against the backdrop of global deflation. Gold in Canadian terms started 2014 at +/- $1,280 and is now at +/- $ $1,405.  For a German, gold in Euro terms has increased 10.3% since the beginning of the year. The fundamental drop in value for the C$/US$ is 6% since the beginning of the year and for the Euro the drop has been 6.5%.  So for the Canucks and the Europeans, gold has provided what it is intended to provide, protection. Our American friends may be next.

- Peter Hug, Kitco.com, October 15, 2014

The gold/silver manipulation issue is beyond silly. JP Morgan has paid, and is paying, huge fines for manipulating the interest rate market (Libor), energy market, and foreign exchange market ... and those fines extended to their foul play in the mortgage backed securities market. SO, the only market they are clean in, or have not manipulated, is the precious metals market (gold and silver). No more comment needed.

- LeMetropole Cafe, October 14, 2014

It's idiotic to rely on charts and moving-averages in a centrally planned world, in which commodities are nothing but political weapons.

- David Schectman, Miles Franklin

One thing I've been meaning to report on is the movement in other silver ETFs, such as SIVR and the Swiss ZKB. Over the past month, more than 11 million oz of silver have been withdrawn from these two ETFs alone, despite an overall growth in total silver holdings in all visible sources. To me, this is further proof of increased physical turnover in silver pointing to wholesale tightness. Total visible world silver holdings are near the record 900 million oz level, which is mirrored in the holdings of SLV which are up 10% for the year and within 5% of the record highs of early 2011.

In stark contrast, world ETF and exchange holdings of gold are down more than 30% since the beginning of 2013 and holdings in the big gold ETF, GLD, are still down more than 40% from the start of 2013---and at five year lows. Since the world has added, thru mining, more than 400 million oz of gold over the past five years, it's certainly not the case that we have less gold in the world than we had five years ago; it's just that investment holdings in gold ETFs are lower.

- Silver analyst Ted Butler, Butler Research, October 11, 2014

____________________ 

Today's Featured Articles

Greg Hunter (Must-see interview with John Williams)

Zero Hedge(Jim Rogers Warns: Albert Edwards Is Right "Sell Everything & Run For Your Lives")(Putin Warns Of "Nuclear Power Consequences" If Attempts To Blackmail Russia Don't Stop) (Data Dependent Fed Ignores 'Data' - Bullard Joins Williams In Call For QE4)

LeMetropole Caf� (Swiss gold initiative)

Mountain Vision (The Upcoming Swiss Gold Referendum)

Gary Christenson (Gold Prices Since 9-11)

Coming Apart At the Seams

October 16, 2014

Watching America's "manipulation organizations" desperately attempt to repeal the rapidly approaching "reality tsunami," all we can think of - with tremendous fear and consternation - is what the "other side" will look like. With global economic activity and financial conditions far worse than the 2008 bottom - even before "the big one" commenced - we can only pray the "worst-case scenario" doesn't occur, which even the status quo embracing MSM realizes is possible.

Of course, this time around, the global geopolitical situation is far more unstable, with America a pariah whilst the rising "Eastern bloc" recruits allies faster than ISIS. Thus, the odds of WAR increase with each passing day, as exemplified by Russian Prime Minister Medvedev yesterday claiming a restoration of U.S.-Russian relations is "impossible," and President Putin today making an even stronger more ominous statement in "we hope our partners realize the futility of attempts to blackmail Russia, and remember what consequences discord between major nuclear powers could bring for strategic stability." Throw in the expanding panic, justified or otherwise, of a potential Ebola epidemic and its clear TPTB's best laid plans are undeniably "coming apart at the seams."

Yes, the "best laid plans" - as exemplified by Draghi's infamous "whatever it takes" speech" of July 2012, which simply bought the collapsing European monetary union two years, whilst exponentially worsening its economic and financial condition for the benefit of the "1%," at the expense of all else. Frankly, we can't scream any louder that the Euro will be abandoned, either via secession or expulsion - and watching this morning's carnage, our expectations have never been more validated.

Yes, the PIIGS contagion is back with a vengeance. With nearly all Western yields plunging toward zero, PIIGS sovereign yields are exploding higher - on average, by more than 10% in the past two days. Yes, 10% in two days! To wit, Greece alone has seen its benchmark 10-year yield surge from 6.7% to 8.9% - and watching the utter implosion of European equities, it doesn't take rocket science to guess what investors are anticipating.

As for commodities, the all-out crash we warned of last month is accelerating, 2008-style with WTI oil about to breach $80/bbl., and base metals in utter freefall, such as "Dr. Copper," which this morning sliced through $3.00 like a knife through hot butter. Regarding the former, don't be fooled by pathetic propaganda such as CNBC's outright lies this morning in stating that Saudi Arabia could afford to cut prices because its cost of production is so low. As we wrote in yesterday's "Crashing Oil Prices Portend Unspeakable Horrors," the heavily socialist OPEC nations have massive spending budgets - in Saudi Arabia's case, breaking even at nearly $100/bbl.; and for Iran, nearly $140/bbl. And yes, CNBC, the "average breakeven cost" of U.S. energy producers may be roughly $75/bbl., but the marginal cost of production is dramatically higher - as nearly all incremental production emanates from rapidly depleting, heavily leveraged shale oil projects. Then you have Brazil with nearly all incremental production from ultra-expensive, ultra-deep-water projects (which I know a thing or two about, having been an oil service and drilling analyst for ten years). Brazil was in recession before this month's oil price collapse; so if you want to know how they're being impacted, take a gander at the collapsing Brazilian Real.

And then there's the United States of "Recovery," where Obama's approval rating tumbled yesterday to an all-time low. Back in June, when MSM and Wall Street optimism was at its highest, and the "Dow Jones Propaganda Average" at its all-time high (excluding inflation and survivor bias, of course), we wrote that "Need Or Want, Demand Is Dying" - at the time, focusing on collapsing demand of both "need" retailers like Wal-Mart and McDonalds and "want" purveyors like Amazon.com. Well, just this morning, Wal-Mart was at it again, dramatically reducing its long-term growth expectations due to the "strong dollar" - whose adverse effects we have practically screamed of all month; mandated food stamp spending cuts (amazing how this is the only program the government is cutting); and generally weak retail demand.

Conversely, on the "want" side of the ledger, eBay dramatically reduced its expectations, as fewer people are spending less money on internet auctions; whilst former "market darling" Netflix - the epitome of "want" purveyance - is down 25% this morning after dramatically reducing its own sales expectations. But have no fear, the government's "island of lies" economic reporting has no shame - in this morning, reporting that "weekly jobless claims" plunged to April 2000 levels. Yes, my friends, this rigged meaningless metric claims jobless claims equate to that of the peak of the post-war global economy, simultaneous with a Labor Participation rate at 36-year lows, as well as essentially all other metrics of economic activity. Remember, mid-term elections are just two weeks away, so the BLS and BEA data-cookers are working overtime to "paint the tape" - just as the PPT uses every illegal trick in its arsenal to preventing 2008's horrors from exposing themselves in all their glory.

However, PPT or not, no manipulations are powerful enough to overcome the "most damning proof yet of QE failure" - i.e., the utter freefall of Treasury yields toward all-time lows as the entire world anticipates "QE to Infinity." To that end, yesterday's yield plunge was unquestionably the most rapid in Treasury market history - with even 2008 unlikely to have witnessed a similar move. Thanks to HFT algorithms' utter destruction of market dynamics, the world's largest financial market - U.S. Treasuries - moved like illiquid OTC stocks on not only their largest volume ever, but nearly ten times the average of the past decade! Seriously, this chart has to be seen to be believed depicting a permanently broken market, enroute to a horrific, unprecedented conclusion. The benchmark 10-year Treasury yield shockingly plunged from 2.20% to 1.91% in a matter of minutes before being run back to 2.16% at the close - followed by this morning's plunge to 1.99% and 2.11% as I write at 10:35 AM EST, following an utterly hideous plunge in the NAHB's housing market index from 59 in August to 54 in September versus "expectations" of 59.

European stocks are falling my BIG percentages with major indices like Germany's DAX down 15% this month, but the U.S. PPT simply will not allow the daily 3% plunges common in Europe. Yesterday's low for the Dow was 450 points or 2.7%; but only for moments, before the PPT "Hail Mary'd" it to just a 173 point loss in the day's final hour. Just as this morning, with major European indices down more than 2%, the PPT wouldn't allow Dow Futures to fall more than 1.5% with the market "miraculously" erasing most of its losses in the opening minutes of NYSE trading - just as it did yesterday, with the follow up second wave of selling also met by relentless PPT forces. In other words, U.S. manipulators are using every tool in their arsenal to prevent the world from realizing the U.S. is coming apart at the seams - like the Cartel's unrelenting "Cartel Herald" algorithms every time paper precious metal prices attempt to surge (in line with surging physical demand); as they did yesterday at the "key attack times" of 10:00 AM and 12:00 PM EST and this morning when gold attempted to surge toward yesterday's "line in the sand" highs. Not to mention, the Fed's "new hail mary trade" goosing of Treasury yields from their lows at nearly the same minute in the early hours of New York pre-market trading, both yesterday and today.

Before I go, please remember to look on the blog tomorrow when we upload this afternoon's widely anticipated "Miles Franklin Silver All-Star Panel Webinar." Not to mention, an upcoming article and podcast describing significant, positive developments at Miles Franklin's industry-leading storage program with Brink's Montreal. And given the stress and strain of working so hard against such powerful (but failing) forces, I wanted to share the joys of doing what I and the Miles Franklin Blog and Newsletter in general, do - as exemplified by a message received yesterday, from reader "Shelley"...

Hi Andy. Great article as usual. Your words are like inhaling freedom!

Reality of No Economic Recovery Means Collapse-John Williams - usawatchdog.com

By Greg Hunter On October 15, 2014

By Greg hunter's USAWatchdog.com

Economist John Williams is sticking by his assessment that the economy is in deep trouble.  Williams says, "What we are seeing is a very big fiction by the financial media and the political media that the economy has recovered.  The economy has not recovered. . . . We are seeing all sorts of things that indicate the economy is not recovering and never has recovered, and it is turning down again."

On the recent wild gyrations of the stock market, Williams says, "I can't give you good reason for why the stock market is as high as it is.  The fact you are seeing this volatility means there are a lot of people who are very nervous about what is going on and where things are in the market.  It is probably one of the great bubbles of all time.  It most likely will collapse along the lines of the U.S. dollar in response to the reality of no economic recovery. . . . I can't think of a more vulnerable market than what we are seeing here." 

On the dollar, Williams says, "The big factor here is the U.S. dollar and all sorts of things that impact that.  The economy is probably the biggest.  You also have the Fed policy.  Right now, there is the presumption that the easing is over and they are going to raise interest rates.  Guess what?  If the stock market continues going as it is and the economy starts turning down, I think the Fed is going back to easing (money printing) again.  They will use the economy as cover for its actions in trying to prop up the stock market and trying to prop up the banking system.  The Fed's primary function in life is to prop up the banking system.  A weak economy is not good for the banking system.  The economy is a sideline for it, and there is very little it can do, but it can use the weak economy as political cover for flooding the system with liquidity and keep the banking system afloat."  Williams goes on to say, "Any pull-back from the 'taper,' any shift in expectation, the Fed is going to have a QE 4, will tend to hit the dollar very hard.  Along with that, a spike in gold prices and we're off and running. . . . You are getting a confluence of extraordinary factors that are coming together that will cause the dollar to break.  You'll have a panic flight from the dollar along with dumping of U.S. Treasury bonds by foreign owners.  We are coming in on the end game here."

On rumors swirling about coming QE 4 by the Fed, Williams predicts, "It's a virtual certainty in the event of a stock market crash.  It's a certainty in the deterioration in the quality of the banking system.  That's happening."  Williams contends, "You are not going to have a healthy recovery here until the system has had a chance to shake out all the waste and the fat, and people can sit back and say now we can move forward on a positive basis.  That environment is not there.  We are still living in the shadow of the panic of 2008.  The latter part of that panic is now in the final stages of playing out.  It is not a happy circumstance.  All they did was push it into the future."

On Williams' 2014 hyperinflation forecast, Williams says, "I have been forecasting hyper-inflation in 2014 for some years now.  We are coming to the end of 2014, and it hasn't happened.  A prerequisite is a collapse in the dollar.  A collapse in the dollar can happen at anytime . . . and at this point, I am not looking to change the outlook."

On the fear factor of investors, Williams says, "I have had a lot of calls from clients recently to that effect, yes.  I can tell you what they are seeing in terms of their business, after adjusting for inflation, and that's using the government's inflation number; they are not seeing any sales growth.  How can you have no sales growth in 80% of the economy and have a booming economy?  It's not happening." 

Join Greg Hunter as he goes One-on-One with founder of ShadowStats.com, John Williams.

(There is much more in the video interview.)

John Williams-We're Coming to the End Game

Jim Rogers Warns: Albert Edwards Is Right "Sell Everything & Run For Your Lives" - www.zerohedge.com

Submitted by Tyler Durden on 10/16/2014 21:21 -0400

From Bitcoin to the Swiss gold referendum, and from Chinese trade and North Korean leadership, Jim Rogers covers a lot of ground in this excellent interview with Boom-Bust's Erin Ade. Rogers reflects on the end of the US bull market. Citing a number of factors from breadth to the end of QE, adding that he agrees with Albert Edwards' perspective that now is the time to "sell everything and run for your lives," as the "consequences of [The Fed] are now being felt." Most notably though, Rogers believes the de-dollarization is here to stay as Western sanctions force many nations to find alternatives. Simply put, Rogers concludes, "We are all going to pay a terrible price for all this money-printing and debt."

Continue reading on Zero Hedge.com.

***

Putin Warns Of "Nuclear Power Consequences" If Attempts To Blackmail Russia Don't Stop - www.zerohedge.com

Submitted by Tyler Durden on 10/15/2014 22:53 -0400

"We hope that our partners will realize the futility of attempts to blackmail Russia and remember what consequences discord between major nuclear powers could bring for strategic stability." - Putin

Continue reading on Zero Hedge.com.

***

Data Dependent Fed Ignores 'Data' - Bullard Joins Williams In Call For QE4- www.zerohedge.com

Submitted by Tyler Durden on 10/16/2014 10:29 -0400

As yet another fed speaker takes the jawboning lectern today, it is becomingly increasingly clear that The Fed truly has only one mandate - to keep stocks up. While claiming to be "data-dependent", which judging by the general trend of government-supplied data (and President Obama), things are going great; Jim Bullard joins his intervention-prone colleague Williams:

BULLARD SAYS BOND PURCHASES SHOULD BE DATA DEPENDENT

and

SAYS 'U.S. FUNDAMENTALS REMAIN STRONG'

but

BULLARD SAYS FED SHOULD CONSIDER DELAY IN ENDING QE.

So much for data-dependence...

Continue reading on Zero Hedge.com.

10/14 Are Gold And Silver Gearing For A Launch? - www.lemetropolecafe.com

Gold Initiative

They will do this in a referendum on the "Gold Initiative" which has three demands:

1. Returning the gold held abroad (in Canada and the UK) to Switzerland
2. The Swiss National Bank must hold 20% of their assets in physical gold
3. No further gold sales.

So why it this referendum so important? Because Switzerland has for hundreds of years been a bastion of sound monetary policy and low inflation. But this has gradually changed in the last 100 years since the creation of the Fed in the US.

The Swiss Franc, having been a strong currency, is now in the process of being destroyed by the recent policies of the Swiss National Bank (SNB). Since 2008 the SNB's balance sheet has expanded 5 times from CHF 100 million to CHF 500 million. So Switzerland has printed around CHF 400 million in the last 6 years in order to hold its currency down against the Euro. CHF 400 million is around 2/3 pf GDP and more money than any major country in the world has printed in recent times.

LeMetropole Cafe

Why go from a strong to weak currency?

To read the full article, please subscribe to Le Metropole Cafe.com.

THE UPCOMING SWISS GOLD REFERENDUM - www.mountainvision.com

October 15, 2014

Dear friend of precious metals,

We have received a number of emails from our subscribers, asking for additional information in regard to the upcoming "Gold Initiative", a referendum which will be held November 30th 2014 in Switzerland with the following claims:

- The Swiss National Bank is not allowed to sell any Gold in the future

- The Gold has to be stored in Switzerland

- Gold should at least represent 20% of the Swiss National Bank assets

Jeff Deist and Claudio Grass discuss the uniquely Swiss mindset behind the upcoming Swiss gold referendum, and how decentralization of political power is part of Swiss DNA; the tremendous geopolitical aftershocks that would occur if the referendum passes - including the physical repatriation of gold to Switzerland; and how the Swiss people may be waking up to the sellout of their country by the Swiss National Bank and the IMF.

Claudio Grass: The Upcoming Swiss Gold Referendum

Gold Prices Since 9-11 - deviantinvestor.com

Posted on October 16, 2014 by Gary Christenson

 

The world as we knew it changed after the dot-com crash of 2000 and especially after 9-11.

• National debt zoomed much higher
• Stock markets crashed
• The Fed introduced more "stimulus" and helped create a housing bubble
• Government became larger and more intrusive
• Gold, silver, crude, and other commodities rallied

 

What do the charts show?

Since 9-11 national debt (official) has increased from $5.773 Trillion to $17.858 Trillion, an increase of $12.08 Trillion.  Note the increasing ratio of gold prices to national debt after adjusting for increased population.

  

 

DeviantInvestor.com

 

Gold to National Debt - population adjusted

We can reasonably assume that National Debt will continue increasing a $Trillion or so per year.  I think gold will rise even faster, with notable corrections along the way, for the next several years, as it has since 9-11.

Note the graph of the ratio of gold to the S&P 500 Index.  Both are rising together and gold is now inexpensive (again) compared to the S&P 500 Index, like it was on 9-11.

 

Gold to S&P 500 Ratio

Since 9-11 crude oil prices have gone much higher and crashed lower but on average they have increased with gold prices.

  

Gold to Crude Oil Ratio

 

 

Gold and silver increased dramatically since 9-11, but they corrected after mid-2011.  They are now inexpensive, per the graphs, compared to the national debt, the S&P, and crude oil.  Note the ratio of gold to silver where peaks in the ratio have been a good indicator of bottoms in the prices for gold and silver.

  

DeviantInvestor.com

 

Continue reading on DeviantInvestor.com.

 

 

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