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March
30
2017

Frothy and Anti-Frothy
Andrew Hoffman

I just got home, just as the markets were closing with LOL, gold at exactly its 200 week moving average of $1,252/oz; and silver, at $18.20/oz a mere $0.10/oz from its own.  Trust me, the Cartel is not happy; as after yesterday’s farce of a “12:00 cap of last resort” attack; followed by an “8:00 PM algo” raid, and the roughly 800^th “2:15 AM” EST capping of the last 900 trading days; let alone, as yesterday was a COMEX options expiration day; I’m sure they believed a significant PM plunge was “in the bag,” given how many “traders” are likely betting that the 200 WMA will prove to be impenetrable resistance, in light of the massive anti-gold propaganda campaign going on 24/7.

Heck, even the double LOL, “dollar surged,” even if was only because the dominant component of the dollar index, the dying Euro, plunged because ECB leaders made it crystal clear they will NOT be removing any of their historically hyperinflationary policy measures any time soon.  To that end, as I’ve made it equally crystal clear in my four-part “if a nuclear bomb destroyed Europe” series, weakness in competing fiat toilet paper is decidedly not the same as “dollar strength” – and if anything, is wildly PM-bullish.

Why is the Cartel failing, you ask?  Simple, because all manner of political, economic, and monetary PiMBEEB headlines are besieging them; which is probably why Treasury bond yields continue to plunge, as I vehemently predicted in early January, whilst Wall Street was busy taking record T-bond short positions; and why before today’s ECB hyperinflation-fest, the dollar was trading at its lowest level since just after the election; again, as Wall Street was taking near record long positions.

Subsequently, the powers that be attempted yet another “hail mary” attack; just as they did a month ago – when, mere minutes after a trading day when gold and silver also closed at exactly their 200 week moving averages, three Fed governors were unleashed to speak of imminent policy tightening, followed up by a $2.7 billion paper silver “sale” as the COMEX opened the following day.  The subsequent Precious Metal price smash impact was minimal in both time and price; and one Fed rate hike, and just four weeks later, both are already back to said 200 week moving averages.

Thus, when two Fed governors – neither of them, FOMC voting members- spoke today of “frothy” markets; and thus, the need to raise rates further – as they have been forecasting all year; it probably surprised them when gold and silver prices didn’t budge downward.  Let alone, as the “frothy” equity markets they speak of are entirely due to their own daily rigging – centered around the Fed’s own 10:00 AM EST “open market operations”; as opposed to actual economic activity, which couldn’t be more “anti-frothy.”  Moreover, if they think investors will sell gold and silver after they rose following all three Fed rate hikes of the past 15 months – particularly anything potentially upcoming, given that the economy is free-falling, and actual market-based interest rates with them – they are going to be sorely mistaken.  Not to mention, as Precious Metal markets have not been this “anti-frothy” – i.e., undervalued – in decades; with countless, potentially major upside catalysts looming in the very near-term – like the debt ceiling, French elections, etc.

The last time I looked, the best time to invest is when markets are at their “anti-frothiest”; and in the 15 years I have watched Precious Metals, that time is NOW!

P.S.  Given that at least two people think my opinion that Donald Trump cannot “make America great again” simply by exerting his will is defamatory, I figured I’d once again address the reality of the situation.  To the contrary, I was probably more responsible for his election than 99.9% of the population; and to this day, vehemently hope he can make things better.  However, there is nothing political about my statements – and thus far, I have been 100% correct in what I espoused in my first post-election Audioblog, ‘turning on Trump;” such as, that Obamacare would never be repealed.  To that end, I last month clarified, in painful detail, my hopeful, but realistic stance on Donald Trump; which is, that I believe he has good intentions – although his choice of a Goldman Sachs/crony capitalist-centric cabinet leaves a lot to be desired; but not a chance of reversing the mathematical certainty of U.S. economic (and monetary) collapse.  I could not care less about politics; and both personally and professionally, my goal – and the Miles Franklin Blog in general – is to educate you of the economic and monetary ramifications of all things political, to help you do the best due diligence you can, to make informed financial decisions.

Andrew (“Andy”) Hoffman, CFA joined Miles Franklin as Marketing Director in October 2011. For more than a decade, he was a U.S.-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 investment focus has been entirely on Precious Metals – and since 2006, has written free, public 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. An archive of Andy’s articles can be found on the Miles Franklin Blog.

www.milesfranklin.com