The Stock Market and Precious Metals are Now Heavily Influenced by Politics

December 4, 2019

The Miles Franklin Newsletter

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From The Desk Of David Schectman

Nicholas, one of the “Golden Men of GATA”, has been watching the Comex’s Ag physical delivery numbers being spouted out by the warehouses proving very little physical have left the arena of manipulated paper. He has been watching this part of the equation like I did the numbers on the options board. His statement spells out what we’ve been talking about for years now; “THE COMEX IS NOW EFFECTIVELY DEAD as a mechanism for delivery of physical gold. My sample period started on 12th July 2019, so now encompasses 142 days. NO GOLD IS EVER DELIVERED FROM THE REGISTERED GOLD INVENTORY AT THE COMEX” …

Wait till we see the issues with Silver! #All-Physical-Deliveries-Matters ! – J. Johnson

$2,000 gold price is very likely, this is what it will take

The current bull cycle for gold prices is still in progress, and it’s only a matter of time before price levels for the yellow metal hit $2,000 an ounce, this according to Sean Boyd, CEO of Agnico Eagle.

“We’re still in that bull market that started in 2015. This is just the initial phase. We think in this cycle gold will hit a new high in U.S. dollars. Ultimately, we’ll get to $2,000, may take two or three years.” – Sean Boyd CEO, Agnico Eagle

If history were to repeat itself, the recent escalation of the trade wars could result in a recession.

It was the Smoot–Hawley tariffs that really brought on the last Great Depression, and it could happen again this time. The world is much more involved in trade now than it was in the 1920’s.

The ramifications of an extended trade war could be disastrous, and President Donald Trump’s lack of economic knowledge is to blame.

“[Trump] could trigger the greater depression, which I’ve talked about for years with his idiotic stance on trade. He’s going to destroy the American agriculture industry, among others. The Chinese, and anybody with any sense, would rather buy their foodstuffs from Brazil or Argentina because they’re not politicized, they’re reliable suppliers. – Doug Casey

Today, I am going to jump the gun a bit with a prediction for 2020…

Those of you who do not take advantage of the current dip in precious metals prices right now will be kicking yourselves this time next year for not doing so.

Am I Sure?

There is no question in my mind…

· The break-out for gold and silver is behind us.

· Therefore, the bull market has begun.

· In a bull market, dips are your friends.

· Precious metals bull markets tend to last around a decade.

There will be several plateaus and several pullbacks along the way, but the bull market trend should be around until the mid to late 2020’s.

Impeachment hearings won’t stop it. A resolution to the trade war – as unlikely as that may seem – won’t stop it. Small changes to the interest rate by the Federal Reserve won’t stop it. A rising or falling stock market won’t stop it. Presidential Election results won’t stop it.

Gold is in a bull trend, and the current dip is worth pouncing on… unless you just like paying more for your gold later. – Rick Checkan

David's Commentary (In Blue)

I’ve been writing articles on gold and silver and the economy and the Fed since the late 1980s. Trends used to be easier to identify. But there is a new component to the mix now, one that was either non-existent, or very minimal in the past, that is clouding the waters. Since Donald Trump took a seat in the Oval Office, things changed. The stock market and precious metals are now heavily influenced by politics. That is a first, as far as I can ascertain. Most of the “financial analysts” now spend a fair amount of time writing about politics.

Short-term moves are unpredictable, often whipsawing about on nothing more than a Trump Tweet, or a rumor that tariffs will or will not be imposed on China. It seems that, more than ever, the hedge funds that control the prices on COMEX live and die on the latest rumor. They are fighting each other for profits based on very short-term highly leveraged bets. That’s a difficult way to run a business and in the last year, several large, well-known hedge funds have closed their doors and returned money to the fund’s investors. Trying to figure out major trends is much more difficult, as is the timing. And for me, being a Primary Trend, long-term precious metals investor, patience has become the key word.

Looking forward to 2020 I have to wonder to what ends the current administration and the Federal Reserve will keep pumping up the stock market? The economy will determine who ends up in the White House in a year and will also dictate the timing on where gold and silver are headed.

I have often written that the two key elements that will determine when the precious metals markets rocket into the upcoming bull market are the US Dollar and the stock market. A major drop in either will light the fuse. Both are due for a big-time correction, but the question is – will the powers that be allow it to happen prior to the election?

Wall Street loves Donald Trump. He has been kind to the wealth and, in fact, to anyone who owns stocks. He also makes it a habit to step on toes and insult some very powerful people who are not used to being treated that way. Do they want Trump in office for another two years or have they had enough of him? That is the $64,000 Question. (That’s a strange number, so I did some checking and it turns out it was taken from the title of the 1950s television game show Take It Or Leave It . It means the most crucial or most important aspect of an issue. Based on inflation). It should now be called The $684,000 Question, and that’s using BLS inflation numbers, which greatly understate the problem.

It’s unfortunate, but these days the hedge funds and money center banks that control the markets do not seem to care about debt, money creation, leverage, or any of the elephants in the room that are staring us down going forward. They base their buy/sell decisions on today’s rumors and tweets. Investing has turned into gambling and long-term hold has been replaced by a short-term philosophy.

Assuming you understand the purpose of owning physical gold and silver, this is not particularly important since gold and to a lesser extent silver are not investments. They are insurance meant to protect your finances when the inevitable stock market and dollar crashes arrive. They are not short-term investments. In a world of sound bites and tweets where everything is short-term, gold and silver are outliers that you buy, hold and forget about – until their time has arrived.

Will it be in 2020? Under normal conditions, say like a non-election year, I would say yes, probably. But with the election right around the corner it is impossible to know and anyone’s guess is as good as mine. It’s just a guess.

Add to all of that, the politically-motivated Impeachment proceedings. This is about to become an embarrassment and a spectacle. A comedy broadcast on TV and witnessed throughout the world. How will the stock market and precious metals react to that? A good question. We will find out soon enough. I can’t see anything positive coming out of the hearings. There is no way I see the Republican Senate ousting Donald Trump. The result will be even more angst and divisiveness between conservatives and liberals. It will play out at the voting polls 11 months from now.

I don’t see how anyone can be hurt buying metals on dips, and we are in such a market now. Personally, I would rather take my chances on $1,475 gold and $17.00 silver than on a 27,000-28,000 DOW.

There is always one central theme in the articles published by Ted Butler. Lack of managed money selling must be resolved before the gold and silver markets can react in a rational manner.

"The one glaring feature that came through in this week's report is the same glaring feature of the past couple of months, namely, the continued lack of managed money selling since the September price highs. And, obviously, if the managed money traders haven't sold as much as they have on past price declines, their commercial counterparts haven't been able to buy as much either. Thus, the unresolved stalemate continues -- and it is this lack of a resolution that overrides future gold and silver prices."

He would be right about that -- and the commercial traders…sans JPMorgan are all worse off after yesterday’s price action. – Ted Butler

Is the trade war with China on or is it off? Whatever we believe, it will probably be the opposite next week. But if this is a real trade war complete with tariffs, then there is a good chance we will soon re-visit the 1930s and will have learned nothing from the past.

LAWRIE WILLIAMS: Gold and silver pop on China trade talk downplay

As the likelihood of any imminent trade settlement between the U.S. and China seems to be receding, both gold and silver prices popped upwards quite vigorously. They had previously come back quite sharply on more optimistic news being bandied about on an imminent Phase 1 deal, although we, ourselves, remained skeptical!

The latest change in sentiment arose from a tweet from President Trump indicating that a trade deal was unlikely until after the 2020 Presidential election. this may have been a Trump negotiating tactic but this could effectively suggest no deal until 2021 at the earliest – and the way trade negotiations have been going with neither side seemingly prepared to give way on some key issues - even a resolution then would seem unlikely! However this is a fluid issue and no doubt there will be both positive and negative public relations statements in the meantime, if only to pay lip service to relevant audiences with little, or nothing, concrete emerging in terms of a deal being actually imminent. Gold and silver prices will, no doubt, rise and fall depending on the general perception as to the likelihood of any such statements bearing fruit.

Equities markets all declined sharply and the U.S. dollar moved down too which will have helped precious metals prices advance. But gold and silver are still sharply down over the past month and unless gold can move back above resistance at $1,500 and silver at $18 they will remain in a technical downturn. The next stage may well now be the imposition of additional U.S. tariffs this month unless President Trump mitigates these in the interests of defusing an immediate Chinese counter move. If these tariffs are imposed and the trade dispute thus escalates further, we suspect gold and silver may breach the aforementioned resistance levels and equities markets will continue to suffer.

China is undergoing a fairly serious short term growth downturn, but it may consider this a price worth paying provided the lid can be kept on any resultant domestic unrest. While the U.S. is a key market for Chinese- manufactured goods, the impact of the U.S. trade tariffs may be reduced by allowing the yuan to fall against the dollar, while China looks towards building other export markets as well as making the transition towards a replacement of exports through increasing domestic demand – its probable ultimate aim.

The pattern of the gold price rise was interesting too. It went up in $10 tranches. There was a bit of a hiatus at $1,460 which saw a little resistance and then again saw a bit of a hiatus at $1,470 before it broke out again and hit $1,480 where further resistance was apparent and the price moved sideways just below the $1,480 level until the close. This may be an indication of computerized high frequency trading with selling coming in at $10 intervals. If that is the case and the gold sale price pattern remains positive we could see further resistance at $1,490 and again at $1,500 – the latter being the key and if that level is broken one suspects that the price could then move rapidly to a new interim high above $1,550. However the timescale on this kind of move remains distinctly uncertain and will probably be dependent on the vagaries of perceptions of the strength or otherwise of U.S. data announcements.

This morning, after a brief foray above the $1,480 level, the gold price was brought back down again to the low to mid-$1,470s where it seems to be consolidating again and we would not be too surprised to see it attack the $1,480 level once more. Asian equity markets fell overnight following yesterday’s sharp Wall Street falls, but European markets this morning are making something of a recovery. It will be interesting to see how U.S. equities perform today. Maybe yesterday’s falls were overdone? We shall see.

Here is a quote from Ed Steer that is echoed in an article published on the LeMetropole Café

As I mentioned in my commentary on the dollar index at the top of today's column...if JPMorgan et al. hadn't shown up at the afternoon gold fix in London...gold, silver and platinum closing prices would have been the talk of the town by close of COMEX trading on Tuesday.

I hate to repeat myself, but there are no free markets anymore, just interventions. This one was a beaut!

LeMetropole Café

After last night's gigantic gain in open interest was the no follow through rule ever in serious doubt? All it took was a weaker dollar, and ONE lousy ADP number to send the cartel selling algos into hyperdrive. The lying, deceiving, MSM but of course struggled to come up with ANY explanation other than suppression. In fact, they viewed the smash as "support." – Bill Murphy

Like a broken record of old, but first James Mc last night…

Unreal OI

Preliminary gold OI for Tuesday +29,351- now back up to 701,533. I’ve got to stop joking about this stuff. That’s a whopping 2k of gold shorts per $1 of gold gain. The cartel went all out stopping what should have been yet ANOTHER $70-100 gain, or MORE. Silver OI up 2,727, which is tame by the gold "standard."

As Arthur C. Clarke said, the truth will always be stranger than fiction. So far the cartel is offering unlimited paper gold shorts to a very determined, but strangely resolute Beijing, er, Washington Generals.

The increase in the gold open interest revealed the extent to which The Gold Cartel went to in order to control the gold price. Their 1% capping, huge volume they threw at the market, and price lockdown following the early surge were classic cabal maneuvers.

Then we had the PPT prop up our stock market indexes in the last hour, another maneuver seen time and time again over the past many years.

The expectation today was for the cartel to keep at it, and that is just what we have in the early going. Gold was on the move in Asia, taking out yesterday’s early spike high with a pop to $1484. But then it was bombs away at that old PLAN A attack time in London. The gold price was driven down to $1472, at which point it began to recover.

Silver took out a near term triple top at the $17.20 area, rising to $17.27, at which point JPM and allies began licking their chops, ready to fleece those traders who entered buy stops above $17.20. Silver was driven back below $17 and then it too recovered, briefly.

As we get going today, both precious metals are little changed (no follow-through allowed of course) and our DOW is called 100+ higher, of course.

Not even a surprisingly negative ADP private jobs growth report this morning (see below) could change the pre-ordained markets script. The DOW went even higher on the news and the precious metals eased lower.

The final OI numbers showed gold up 28,834 contracts to 701,106 and silver up 2,498 contracts to 205,807.

All it took for The Gold Cartel to get really charged up and enhance their pre-ordained script was for another couple of negative US economic numbers to surface (also see below). The dollar edged lower, the DOW went higher, and gold/silver were bombed. All of this was set in motion (also part of the script) by an anonymous report on Bloomberg that the trade talks are going well after all.

What a rigged horror show! Gold was dumped to $1470 and silver disappeared again to $16.67 at its low. Using the overnight markets, silver is putting in a negative outside day reversals to the downside … again, perfectly scripted by JPM and the bad guys...

The fundamental reasons for gold and silver to explode remain a ten. But for the moment the fanatical efforts by the cabal forces to smother the precious metals is an eleven. Thus, the gold/silver prices continue to be not allowed to get going on the upside.

This is as frustrating and infuriating as can be. But it is what it is. It is only a matter of time before the gold/silver time bombs go off, but when is the question. The one positive in all of this is we know what is really going on and what it is going to lead to. So we hang in there for the mega big score.

The gold/silver ratio rose to 87.73.

If Michael Snyder is right, then we won’t have to wait for the election for the shit to hit the fan. I don’t think I am being politically incorrect by using that “S” word. But if I am, so be it. It gets the point across. Anyway, Snyder says, “ You don’t have to wait for the next recession because it’s already started. Eventually, this whole thing is going to come crashing down. This thing is not sustainable. The important part of this sentence is “ the next recession has already started.” This is real, honest commentary, not based on a Tweet or rumor, but based on solid economic history. Trees do not grow to the sky and there is a limit to how much debt a society can accommodate before imploding.

Greg Hunter

Debt Bubble to End All Bubbles – Michael Snyder

By Greg Hunter On December 4, 2019

Journalist and book author Michael Snyder says corporate debt is at record highs standing at $10 trillion. Snyder points out debt is setting records in every aspect of the economy and contends, “If you include all other forms of corporate debt not listed on the stock exchanges, that brings the total to $15.5 trillion, which is equivalent to 74% of GDP. We’ve never seen anything like this before in all of U.S. history. That is just one form of debt and how our society has grown the debt. People need to realize the only reason why we have any prosperity in this country today is because it is fueled by debt. We have been building up this bubble, and it is the bubble to end all bubbles. Look at consumers. U.S. consumers are now $14 trillion in debt, which is an all-time record. State and local governments are at all-time debt record levels. The U.S. government . . . we just hit $23 trillion in debt, more than double since the last financial meltdown. . . . We are stealing from future generations more than $100 million every single hour of every single day. This is a crime beyond comprehension, and it’s been going on more than a decade. . . .All the debt has bought for us is more time to expand the bubble for relative stability. Meanwhile, we are literally committing national suicide and literally destroying the future of this country and the future of this republic. We are destroying everything the founders built by insatiable greed in this generation.”