The Miles Franklin Newsletter
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From The Desk Of David Schectman
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If this is the best 'da boyz' could do when Jay Powell handed them the opportunity, you have to wonder how successful they're going to be going forward in their attempts to cover their still outlandish short positions. And as Ted mentioned in his weekly review on Saturday, the double cross by JPMorgan of the other commercial traders is still a wide-open option, if they choose to exercise it at some point in time.
– Ed Steer
Whether we are still in for another engineered price decline so the Big 7 can have any hope of covering even a portion of the financial margin call hole that they've dug for themselves, remains to be seen.
The very bearish COMEX structure that currently exists,
MUST
be resolved one way or another...either in a short covering panic, or an engineered price decline of eye-watering and Biblical proportions. That's baked in the cake. As Ted has said on many occasions...there is just no other way.
– Ed Steer
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Stage One Of The Greatest Depression Has Arrived
David's Commentary (In Blue):
Jim Rogers warns that massive debts, and trade wars will spur the “worst crash ever.” He is not alone in sounding a warning.
Gerald Celente (Trends Research) calls it the Greatest Depression ever. What we are facing is not just another garden-variety recession.
Celente has believed in gold since 1975 and what impresses me the most about what he has to say is that he doesn’t have a horse in the race. He looks for “trends” and then draws his conclusions from an un-biased and well-researched position.
The Fed’s latest interest rate reduction is positive - positive for the equity market and positive for the corporations whose huge and growing debt is funding the stock market bubble. But on the negative side it’s building up more debt on the already $250 trillion debt bubble. It’s adding more money to keep the bull market running. It’s not boosting economies around the world. We’re looking at a global slowdown. Even people at the IMF and the World Bank are warning of a recession.
Ray Dalio, head of the largest hedge fund in the world, Bridgewater Associates, came out in June and talked about the gold Bull Run. At the time, gold was $1,332/oz and he came out and said he was bullish on gold. And now he’s worried about a Great Depression. This from the head of the largest hedge fund in the world.
The people see it. The economy is just being artificially boosted by central banks injecting more cheap money into the market place and lowering interest rates - in many cases taking them negative. Now we have the Federal Reserve introducing another new ploy, which they aren’t calling Quantitative Easing. They refuse to call it “Quantitative Easing, but are pumping in $60 billion/month into the economy to buy Treasuries and another $120 billion a day into the Repo market to provide liquidity for the over-indebted large banks. Do you think the Fed would be doing this if they weren’t worried that the stock market and the economy were in trouble? As always, it’s inflate or die.
The Fed is trying to hold back the recession by pumping this cheap money in, but their fix is only temporary. Housing sales and mortgage re-financing are going back up because money is cheap, but the earnings aren’t there. The debt levels for the consumers are getting heavier and heavier. The Fed is just propping it up, with more money and lower interest rates, just like they have done since the panic of 08’. All this Fed created wealth hasn’t filtered back to the society; it’s gone to the One Percent. Three people in the United States, Bezos, Buffett and Gates, have more money than half of America’s population. Globally 26 people have more money than half the world’s population combined. The central banks policies aren’t working, they are only making it worse. The system is broken.
Celente says the next recession will be worse than the Great Depression. Let that sink in for a moment. Think what that will mean to YOU if he is correct. He presents a compelling argument.
So where does he put his money? “Guns, Gold and the Getaway Plan.” Gold, for Celente, is number one. He is currently all in on gold. When things collapse, they don’t collapse all over and at every level. There are 7.5 billion people on the planet, and not everything is going to go down at once. Eventually things will start coming back. There will be opportunities. But for Celente, gold is number one. He also owns silver but his ratio is two-thirds gold and one-third silver.
My ratio is different than Celente’s. I have half in silver and half in gold. There is no one set ratio that works for everyone. My view is simply that silver is very underpriced compared to gold. It will outperform gold, but hey, I could easily live with an all-gold portfolio.
There are currently over half a dozen countries around the world where uprisings are occurring. Again, none of them have a leader. They are spontaneous. The people see the discrepancy in wealth. The money has gone to the One Percent. The people have had it and they are rebelling. When people lose everything and have nothing left to lose, they lose it. That is the underlying cause of the uprisings that are taking place from Asia to Europe to Latin America.
Stage One of the Greatest Depression is already happening. Millions of people are taking to the streets, protesting. They don’t have enough money to live while they’re getting higher taxes and higher inflation and they see all the corruption that is going on around them. Again, none of these movements have leaders, whether it’s Hong Kong, Spain, Lebanon, Iraq, Ecuador, Chile or Columbia. One after the other, the people feel it. It’s spontaneous uprisings. It is Part One of Celente’s Greater Depression.
As economies go down, currencies falter and inflation increases; people will look for alternative currencies such as gold and silver - or even Bitcoin for those who don’t believe in precious metals. What good is a digital currency of a State, backed by nothing and printed on nothing with huge amounts of debt load underlying it? Yes, Celente is all in on gold and I am all in on gold and silver.
What exactly is holding down the price of gold and silver?
Paper contracts on Comex, lots of them. Record numbers of them. This is historic. On Thursday it took a massive 2,000 shorts per $1 of gold rise to hold it to an $18 gain. Without that MASSIVE interference gold could have gained $180, instead of $18. The CME is obviously either powerless to stop this insanity, or else fully on board.
Someone is not telling the truth
The Fed once again last week increased the size of both the overnight and "term" repo operations. Starting Thursday (Oct 24th) the overnight repos were increased from $75 billion to "at least" $120 billion and the term repos (2 week term) of "at least" $35 billion were extended to the end of November, with two "at least $45 billion" term repos thrown in for good measure. The Fed is also outright printing helicopter money for the banks at a rate of $60 billion per month (via "T-bill POMOs).
At the height of the last QE/money printing cycle, the Fed was doing $75 billion per month. So whatever the problem is behind the curtain, it’s already as large or larger than the 2008 crisis.
At every level – government, corporate and household – the level of debt has become unsustainable, with significant portions of that debt in non- performing status (seriously delinquent or in default). Thus, the Central Banks have had to resort to money printing to help the banks manage the rising level of distress on their balance sheet and to monetize the escalating rate of Treasury debt issuance. – Isn’t this exactly what Gerald Celente was talking about in his comments on The Greatest Depression, above.
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LeMetropole Café
What we are witnessing now is the most intense battle in the history of the gold/silver markets!
That statement is not hyperbole over speculative long interests and The Gold Cartel. The gold open interest rose 33,667 contracts to 681,205, which puts in new all- time high ground by around 16,000 contracts. This new number includes the activity following the blatant raid following FedSpeak yesterday afternoon … when THEY attacked and were then stuffed by the free market forces. In addition to that stunning number Harvey Organ reported 10,923 exchange for physicals. The silver open interest rose 2,540 contracts to 224,936.
What we having going on is truly historic and of major significant to the financial universe. How to lay it out? James Mc just checked in and answers that question just fine…
The road to (cartel) Perdition, via 1m gold open interest
Bill,
Like me you are no doubt stunned at the +33,667 gain in yesterday’s gold open interest. They threw a whopping 2k of shorts per $1 of gold rise to hold it to an $18 gain. Without that MASSIVE interference gold could have gained $180, instead of $18. Silver too was capped with an additional 2,540 shorts although that is rather tame compared to the assault on gold. Today sure feels like more of the same naked short selling. It wouldn’t surprise me if we were already at 700k+ OI right now. This week has been largely as I suspected, although with a far more bullish undertone.
With 700k gold OI possibly already achieved the cartel is well on the road to 1 million OI, as I have joked about for years. It is also a road to their Perdition. Something is VERY different this time around. There appears to also be a CTRL-P whale, i.e. Sovereign-backed- entity on the long side At this rate however we will never get to a $2k gold at 1m OI. Hell, we could be at 7 figure OI by $1600 POG. The CME is obviously either powerless to stop this insanity, or else fully on board. Odd indeed that the volatility for both metals is still relatively low, in spite of the humongous gains in OI. No commodity ever acts this placid while it OI is growing by leaps and bounds.
Next week should be one of the more informative weeks for the metals in a long time. Up, up and away is where they should go but as we saw adding 33k of fresh shorts in a single day can alter that path. At some point however today’s coma may turn into tomorrow’s GATA rockets.
James Mc…
Forgot to mention Dec. gold OI alone gained another 23,744 and now stands at an astounding 501,194. With less than 4 weeks to go now before first notice day this is amazing, and bears watching.
Clearly The Gold Cartel is petrified of something to be going bonkers like this. Whatever it is, the odds continue to mount that they are reaching that elusive tipping point in which they just cannot keep the gold and silver prices this low. The odds are also continuing to mount that when the precious metals break free from the cabal’s leash their prices are going to explode.
As far as the day goes, gold and silver survived a US jobs report day, but were still subjected to the cartel’s price capping activity. Gold was stopped at $1515 and silver at $18.09. But they also found support following another early raid. Gold was punished down to $1502 and silver to $17.83. Their ability to constantly come back after these raids is a joy to see. Hardly ever would happen in days of yore.
The US stock market is at all-time highs. The fear trade for the precious metals is nowhere to be found. The dollar is pretty much where it was a year ago when the gold and silver prices were much lower. Should either of those two go into serious bear market mode, even more bids should pour into gold and silver.
For those who don’t have their head in the sand, clinging desperately to the "hope" offered by the misdirecting Orwellian propaganda, it’s difficult to ignore the message signaled by the legendary levels of insider selling.
Someone is not telling the truth – The Fed once again last week increased the size of both the overnight and "term" repo operations. Starting Thursday (Oct 24th) the overnight repos were increased from $75 billion to "at least" $120 billion and the term repos (2 week term) of "at least" $35 billion were extended to the end of November, with two "at least $45 billion" term repos thrown in for good measure. The Fed is also outright printing helicopter money for the banks at a rate of $60 billion per month (via "T-bill POMOs).
At the height of the last QE/money printing cycle, the Fed was doing $75 billion per month. So whatever the problem is behind the curtain, it’s already as large or larger than the 2008 crisis.
That escalated quickly – When the repo operations started in September, the Fed attributed the need to "relieve funding pressures." At the time the public was fed the fairytale that corporations were pulling funds from money market funds to pay quarter-end taxes. Well, we’re over five weeks past that event and the repo operations have escalated in size and duration three times. Someone is not telling the truth…
The rapid increase in Fed money printing in just five weeks reflects serious problems developing in the global financial system. Actually, the problem is easy to identify: At every level – government, corporate and household – the level of debt has become unsustainable, with not insignificant portions of that debt in non- performing status (seriously delinquent or in default). Thus, the Central Banks have had to resort to money printing to help the banks manage the rising level of distress on their balance sheet and to monetize the escalating rate of Treasury debt issuance.
The quote at the beginning is from the former head of the Bank of England, Mervyn King. King is warning that the global financial system is headed toward a crisis and that money printing ultimately won’t save it. While it’s pretty obvious that a disaster waits on the horizon, when the former head of a big Central Bank delivers a message like that instead of Orwellian gobbledygook, the world should pay heed. I would suggest that the Fed’s money printing signals that the risk of a crisis intensifies weekly. Got Gold?
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James Howard Kunstler is in total agreement with the unsustainable debt problem that the Fed and the central banks have foisted on the public. He says,
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What seems to be resolving is some movement to some sort of a crack up of the banking system. What we are really stuck in is a situation where we’ve got too many obligations we cannot meet and too many debts that will never be repaid.
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Greg Hunter
Renowned author and journalist James Howard Kunstler thinks what has been happening for the last few years with the mainstream media’s coverage of President Trump borders on criminal activity. Kunstler explains, “What I am waiting for is if and when indictments come down from Mr. Barr and Mr. Durham, I am wondering whether the editors and publishers of the Washington Post and New York Times and the producers at CNN and MSNBC are going to be named as unindicted co-conspirators in this effort to gaslight the country and really stage a coup to remove the President and to nullify the 2016 election. I say this as someone who is not necessarily a Trump supporter. I didn’t vote for the guy. I am not a cheerleader for the guy, but basically I think the behavior of his antagonists has been much worse and much more dangerous for the nation and the American project as a long-term matter. I really need to see some action to hold people responsible for the acts they have committed. . . .
I am not an attorney, and I have never worked for the Department of Justice, but it seems to me that by naming the publishers and editors of these companies as unindicted co-conspirators that allows you to avoid the appearance of trying to shut down the press because you are not going to put them in jail, but you are going to put them in disrupt. That may prompt their boards of directors to fire a few people and maybe change the way they do business at these places.”
Kunstler says things look unlike anything we have seen in the past because we are approaching a day of reckoning in our debt based monetary system. Kunstler says, “Yeah, I think you can see it happening now. What seems to be resolving is some movement to some sort of a crack up of the banking system. What we are really stuck in is a situation where we’ve got too many obligations we cannot meet and too many debts that will never be repaid. We have been trying to run the country for the past 15 or 20 years on debt because we can no longer provide the kind of industrial growth that we have been used to . . . and have this massive consumer spending industry. So, we have been borrowing from the future to pay our bills today, and we are running out of our ability to borrow more. . . . I think we are going to lose the ability to support a lot of activities that we have been doing.
It starts with energy and its relationship to banking and our ability to generate the kind of growth you need to keep rolling over debt. The reason debt will never be paid and obligations will never be met is we are not generating that sort of growth. Were just generating frauds and swindles. Frauds and swindles are fun while you are doing them and they seem to produce a lot of paper profits, but after a while, they prove to be false.
Then you have to do something else. A great deal about our economy and our way of life is false and is going to fail. Then we are going to have to make other arrangements for daily life. . . .It will probably mean we will be organizing our stuff at much more of a local scale.”
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Celente says you are either part of the one percent or you aren’t. This hasn’t gone unnoticed by Chris Martinson. He says,
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“
Today we live in a bifurcated economy: it is boom times for some and bust times for others. Your personal situation depends largely on how close you fall on the socioeconomic spectrum to the protected elite class, towards which the central banks are directing their money-printing fire hoses. Why should we care about this bifurcation?
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Today we live in a bifurcated economy: it is boom times for some and bust times for others. Your personal situation depends largely on how close you fall on the socioeconomic spectrum to the protected elite class, towards which the central banks are directing their money-printing fire hoses. Why should we care about this bifurcation? History.
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One more crack in the wall for the Fed to paper over: Ed Steer writes,
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“
The sudden resurrection of the repo market by the Fed a month or so ago is another straw in the wind that there's big trouble in River City. There is just no liquidity in the U.S. financial system -- and since the Fed won't divulge the entities that are receiving funds through its overnight and term repos, the jury is still out on who is on the receiving end of the Fed's largess.
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The very bearish COMEX structure that currently exists,
MUST
be resolved one way or another...either in a short covering panic, or an engineered price decline of eye-watering and Biblical proportions. That's baked in the cake. As Ted has said on many occasions...there is just no other way.
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Ed Steer
Despite the happy jobs report -- and the positive closes in the stock markets yesterday, the Potemkin village that the Fed and the deep state have built over the years was done solely to deceive the sheeple out there into thinking that the situation is better than it really is.
It is not. It is rotten to the core...as the real U.S. economy continues to slip-slide away at an ever-increasing rate.
The sudden resurrection of the repo market by the Fed a month or so ago is another straw in the wind that there's big trouble in River City. There is just no liquidity in the U.S. financial system -- and since the Fed won't divulge the entities that are receiving funds through its overnight and term repos, the jury is still out on who is on the receiving end of the Fed's largess. Most think it's the Wall Street banks and investment houses -- and that may be partially true. But there could be some insurance companies, pension and hedge funds, along with some large public corporations that are on the receiving end of this money as well. The right people in Congress have to ask these questions -- and so far they aren't.
And with this repo thingy now extended until the end of Q2/20...can
POMO
[Permanent Open Market Operations] be that far behind? As Bill King of King Report fame now states in every daily column since the Fed put repos back on the table..."The Fed is in some stage of panic over something that is not entirely clear."
Although the record high student loan and car loan debt is certain to become problematic at some point, it's the corporate debt issue that overhangs everything...especially the triple B debt. Doug Noland and others...including Raoul Pal in his video commentary in the Critical Reads section above...have pointed out the fact that the credit agencies have become loath to mark down all the triple B debt that is already junk status, for fear of imploding the junk bond market, which would take the rest of the corporate bond market with it. They don't want to be held responsible for sending the U.S. [and world] economies into recession, or worse.
It's going to end up as the worst-case scenario anyway -- and all they're doing is delaying the inevitable. This will ensure that the final denouement will degenerate into the worst-case scenario in almost the blink of an eye the moment that some out-of-left-field event sets it all in motion.
This will seize up the markets...all markets...in rather short order.
At that point in time, if not sooner, the value of the U.S. dollar will become the first casualty -- and the first beneficiary will be the precious metals. The stealth run on them that began in January of 2016 will be on in earnest...topping every safe haven run that has come before.
As this scenario rapidly unfolds, it will become crystal clear to all that not only will the U.S. financial system crumble in this situation, it will take the rest of the world with it.
There's no 'if' to this scenario...none whatsoever. It's only the 'when' that's not known. But as I stated last week...this event is coming as sure as night follows day.
And for that reason alone, as I keep saying every week in this space, I'm still quite content to be "all in" -- and fervently hope that it will be enough.
With both gold and silver trading in sync -- and in a very tight trading range on Friday, I'm not going to try reading into the price action what may or may not be there. However, I will note that the sell-off on the jobs news was almost a non-event...something that would have never happened in years gone by
A
ssuming that there was an increase in the commercial net short positions in both silver and gold as Ted Butler suggested would be the case, it goes without saying that both are in more negative territory than they were last week at this time. Of course we've had further price increases since the Tuesday cut-off -- and that just piles it on a bit more.
Whether we are still in for another engineered price decline so the Big 7 can have any hope of covering even a portion of the financial margin call hole that they've dug for themselves, remains to be seen.
I also get the impression that JPMorgan is not an active participant in whatever engineered price declines that we are seeing. However, they are certainly feeding on whatever long contracts they can buy -- and whatever short positions they can cover, while that decline is going on.
The very bearish COMEX structure that currently exists,
MUST
be resolved one way or another...either in a short covering panic, or an engineered price decline of eye-watering and Biblical proportions. That's baked in the cake. As Ted has said on many occasions...there is just no other way.
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Private Safe Deposit Boxes
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About Miles Franklin
Miles Franklin was founded in January, 1990 by David MILES Schectman. David's son, Andy Schectman, our CEO, joined Miles Franklin in 1991. Miles Franklin's primary focus from 1990 through 1998 was the Swiss Annuity and we were one of the two top firms in the industry. In November, 2000, we decided to de-emphasize our focus on off-shore investing and moved primarily into gold and silver, which we felt were about to enter into a long-term bull market cycle. Our timing and our new direction proved to be the right thing to do.
We are rated A+ by the BBB with zero complaints on our record. We are recommended by many prominent newsletter writers including Doug Casey, Jim Sinclair, David Morgan, Future Money Trends and the SGT Report.
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