Is Stockman Right? Is This The Big One?

September 26, 2016

It’s early Monday morning, on what could not only be a historically bad week for global financial markets, but the “beginning of the end” of the manipulated worldwide perception that “everything’s OK.”  Most of the world’s 7.4 billion denizens know this already, having watched their savings, currencies, standards of living, and political and/or social stability decline substantially since the 2008 financial crisis.  Which also goes for the majority of Westerners, I might add.  However, Western “intervention operatives” – like the PPT, ESF, Fed, and gold Cartel – have been more successful at manipulating markets to defer such perception.  Moreover, having the world’s reserve currency enables the inflationary hell the vast majority are experiencing; and in some cases, like Venezuela, hyperinflation; to be temporarily averted, in lieu of a more gradual, “frog-in-a-pot” type syndrome.  This is why gold, in the “average currency,” is trading at, near, or in many cases well above previous all-time highs.  Which of course the “evil Troika” of Washington, Wall Street, and the MSM won’t dare discussing, in their cumulative desperation to have you believe the PPT-supported, “record-high” Dow Jones Propaganda Average is indicative of a stability that simply does not exist.

Long-time readers know I rarely, if ever predict anything related to near-term financial market movements – although I am far from bashful in boldly predicting macro-economic events.  Frankly, I’ll put my track record against anyone in the financial media, going all the way back to the turn of the century; particularly in recent years, as the collapse of global economic, monetary, and political stability has unfolded, in my view, quite predictably given the world’s historical unwaveringly horrible experience with fiat Ponzi schemes.  Thus, the fact that since February, I have loudly called for a “catastrophic financial event by year end” is so relevant – as frankly, I have NEVER felt so strongly about my views, as discussed in Friday’s must read article, be careful what you wish for, as we’re about to get it.  This, before the weekend’s news that one, Angela Merkel ruled out the possibility of a government bailout of Deutsche Bank; and two, Moody’s’ downgraded Turkey’s credit rating to junk status.  Consequently, financial markets are “turmoiling,” just in time for what will unquestionably be the most widely watched debate in global history.  And likely, in both my view and David Stockman’s, a major turning point in global perception, from bad to MUCH worse.

Regarding the latter, Turkey was already a major “x-factor” politically, after July’s horrifying, blatantly government-orchestrated “coup attempt” enabled Erdogan to “purge” his opposition, taking one of the most geographically and politically unstable nations further away from the West, and toward its “enemies” in Russia and the Middle East.  And trust me, this “financial act of war,” by a major Western rating agency, will have dire ramifications on the entire world.  As for the former, the reason I did my Emergency Podcast with Bix Weir last week was because, after the incredible news that the U.S. Justice Department was literally “going for Deutsche Bank’s jugular,” was because at this point, no “conspiracy theory” can any longer be discounted.  For if the U.S. itself is trying to take down the “world’s most systemically dangerous institution” – as deemed by the U.S.-led IMF – clearly, someone is attempting to catalyze political, economic, and monetary carnage NOW.  The day of that podcast a week ago Friday, I might add, DB stock closed at $13.38, compared to this morning’s all-time low pre-market futures price of $11.99 – at which point, the company’s Ebola-like “CoCo bonds” are rapidly coming into focus, preparing to plunge Deutsche Bank stock into hyper-dilutionary implosion.  And now, with Angela Merkel herself overtly claiming the German government itself will not stand by the nation’s largest bank, how could one NOT speculate that the end game is nigh?

Not only that, we also learned this weekend that second quarter U.S. state tax revenues actually declined year-over-year – amidst a trend that is deteriorating so rapidly, it couldn’t be more obvious that an official recession will be reported imminently.  Which, when it does – or beforehand, if TPTB lose control of financial markets – will catalyze the Fed to irreversible “re-join” the overt QE and NIRP parties, to infinity.  Not to mention, Obama’s veto Friday night of the anti-Saudi JASTA, or Justice for Sponsors of Terrorism, bill – which will unquestionably be over-ridden by two-thirds-plus votes in the House and Senate, cementing the exploding hatred of the Democratic Party that will be on display, worldwide, tonight.  Throw in this weekend’s pathetic Saudi attempt to perpetuate the myth that oil – and Saudi Arabia’s dying political regime – can be “saved” by tomorrow’s “all-important” Algiers producers meeting; and exploding U.S./Russian diplomatic hostility regarding the expanding Syrian crisis that may well catalyze World War III; and you can see just how close we are to the biggest financial abyss in decades, if not centuries.

However, today’s “main event” – assuming Deutsche Bank stock doesn’t enter its final, Lehman-like death spiral before the trading day ends – regards the first Trump/Clinton presidential debate.  Which, as of this yesterday, was anticipated to be viewed by 100 million people, compared to the previous record of 80 million viewing the one and only 1980 debate between Ronald Reagan and Jimmy Carter.  Since then, no other Presidential debate has been watched by more than 66 million people (Bush/Clinton/Perot in 1992); and in my view, that estimate woefully underestimates just how many Asians and Europeans will be watching on tape delay, via DVR, YouTube, and other internet outlets.  The reason being, is that so many billions – not millions, billions – despise what the U.S. has become; led by Chief Status Quo Representative Hillary Clinton.  And consequently, their Schadenfreude, or desire to revel in America’s misfortune, is at historic, reserve-currency-endangering levels.  Throw in this weekend’s heavy duty dose of incremental “Hillary-Gate” news; as well as the morbid fascination with her obviously declining health, and you can see why, as in Ancient Roman days, the masses are rooting for the tiger, Donald Trump, to maul his increasingly defenseless prey.

Incredibly, the so-called “betting line” still has Hillary Clinton as a 1:2 favorite to win the Presidency, compared to actual polls suggesting she is at best in a dead heat, but in most cases, rapidly falling behind.  I discussed this very same phenomenon before the BrExit vote – when said “betting lines” predicted a strong “BrEmain” victory to the bitter end, given how easily they can be manipulated by a few large, Central-bank-funded “bets.”  However, even such blatant rigging won’t be able to withstand the onslaught of anti-Hillary sentiment I anticipate after tonight – which in my view, will be as big of a Trump landslide as his upcoming, inevitable election victory.  To that end, keep in mind that David Stockman, last month, predicted that the most likely catalyst to an at least 40% crash in the historically overvalued U.S. stock market – accompanied by a major gold surge – would be today’s debate; when anyone still clinging to the ridiculous belief that Hillary Clinton can win will be forever silenced.  I’m sure he wasn’t considering the possibility that Deutsche Bank might collapse simultaneously.  But then again, as noted above, at this point it’s difficult for me to consider anything a “coincidence,” particularly in the weeks leading up to the most important election in global history.

Regarding Precious Metals, I was speaking to Miles Franklin’s President and Co-Founder, Andy Schectman, yesterday, of how strange it is that immediately following the Brexit – when the Cartel clearly went berserk trying to defend silver’s 50-month moving average of $20.40/oz – physical silver demand has weakened considerably relative to gold; the latter of which, has been selling quite briskly all summer.  My view is that, for the first time since 2008, investors actually believe the “Big One” is imminent.  And thus, are conservatively overweighting gold, given their perception that, as in 2008, it will outperform silver in the early stages of a major financial collapse.

First, let me say that I agree 100% that this is a factor, even if silver’s paper decline in late 2008 was more than outweighed by the explosive surge in physical demand that caused premiums to surge as high as 100%; and delivery delays to stretch to three months, at the paper price lows.  Moreover, my view that if the Cartel is in fact successful in catalyzing a near-term paper silver decline – which for the record, I do not anticipate – it will this time around be far more shallow, given that physical demand is much higher than in 2008; physical inventories much lower; and global production actually declining; whilst generally speaking, worldwide understanding of said manipulation, is much, much higher.

In other words, all the factors that caused said physical demand explosion in 2008 – let alone, in 2011, 2013, and 2015 – will be far more powerful; as, in my view, they will not be able to be reversed this time around by Central bank intervention.  In other words, the upcoming, historic silver shortage I predicted three months ago looms more imminent than ever.  And given how much “advance notice” has been given; and how terrifying the aforementioned shortages of 2008, 2011, 2013, and 2015 were; it would be a crying shame for anyone believing what we do of the upcoming, historic political, economic, and financial market chaos to have missed out on the opportunity to purchase the world’s oldest monetary asset at such ridiculously “bargain basement” prices, whilst supply is still available and premiums so reasonable.

Before I go, to see if the “powers that be” can avert carnage on the eve of the most important, potentially status-quo destroying debate in political history, I figured I’d add another comment to my growing list of potentially Custer-like “famous last words.”  In this case, from a “Deutsche Bank spokesperson” this morning, who claimed “there is currently no question of a capital increase.  We are meeting all regulatory requirements.”

Andrew ("Andy") Hoffman, CFA joined Miles Franklin, one of America's oldest, largest bullion dealers, as Media Director in October 2011. For a decade, he was a US-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005. Since 2002, his focus has been entirely on precious metals, and since 2006 has written free missives regarding gold, silver and macroeconomics. Prior to joining the company he spent five years working as an investor relations officer or consultant to numerous junior mining companies.

Peru became the world’s largest producer of silver in 2012.