As I was watching the pompom news channel (CNBC), they went into full damage control over Thursday's massacre, and I thought to myself, "What markets or media bullet points do 'the boys' need to control today in order to avoid a weekly sell signal and ensuing panic?"
In order of urgency, here is the list:
Those were the "Big Five," and just as sure as the sun rising in the east, everything on the checklist was executed with absolute perfection, such that this Federal Open Market Committee (FOMC) week ended without the need for weekend press conferences or COVID-19 briefings. You see, if the S&P closes higher on the Friday before the weekend, the COVID death stats are deemed "unimportant," and the Great Recovery continues.
I get into some great exchanges with people that I really enjoy, and there is no one better with whom to have a debate than David Chapman (@DaveCha12). He is a card-carrying member of the Society of Technical Analysts (or something like that), but his business card should read "Chairman Emeritus Society of Market Historians," because while I am pretty good, "Chappie" is unbeatable.
He is such an unmovable object on the topic of market manipulation and central bank intervention that we end up flaming each other over absolute nonsense in areas of meaningless trivia. It's like we are kids playing Monopoly in a tent in Algonquin Park on a stormy day, and he is the banker (who cheats), and I have run out of money and properties. However, he helps me whenever I reach out, and what we both agree upon is that gold and silver are in corrective phases of massive bull markets, with new all-time highs on the immediate horizon—and that the current stock market advance is nothing more (or less) than a "bear market rally."
There are two worlds out there that we are forced to deal with. The first is the world of gold and silver and their roles as custodians of wealth, proven over thousands of years by every civilization on the planet. That world takes its denizens back to a time of rational thinking and prudent wealth management, to a period long before Harvard Business School or central banking. The alternative universe is one dominated by the illusion of paper assets as the dutiful custodians of wealth, where faith in the stewardship of politicians and former stocks salesmen (like Jerome Powell) has caused massive dislocations of valuation and a massive inequality gap between societal chasms.
Social unrest in the U.S. has forced the city of Minneapolis to consider disbanding the police department over the treatment of a citizen, albeit black and albeit a felon and albeit a police hater and albeit "not a very nice man," who has become the poster child for "all that is wrong with America."
As you all know, I lived in the downtown core of St. Louis, Missouri, for four years, and you might also know that in 1972, the intersection of Grand Avenue and Lindell Boulevard was the "Demarcation Line" where we "honkies" were not allowed to venture. As I was a young kid from Canada with zero fear of black Americans, I used to wander up Grand Avenue well beyond Lindell to shoot pool with some really fine pool players (all black) because there was zero "action" at the university. I was trained on an old English snooker table with rounded pockets; for those of you that understand the true meaning of the word "suckered," those that are trained on the square pockets of an American "pool" table will flounder in mediocrity on an English "snooker" table. So, I would walk into the pool room, literally the only Caucasian within seven blocks. Old Sandy was the man who confronted me the very first time I walked in the door, and he would always greet me with, "and here come Mister Canuck to take some bruthah's money." I would always reply, "Only if I don't lose," but always in a really heavy Canuck accent.
I used to play these ghetto players time after time, and win, and there was not one time that they refused to pay. They had their cousins and uncles and sisters all hovering around the table waiting for "dat white boy" to cave in out of fear. It was only until they brought in local St. Louis former heavyweight champ Michael Spinks to play me that I finally got total respect from the locals, after I beat him in a nine-ball game where he did not get a shot. We shook hands after the game, and then had a bunch of drinks, and told our athletic war stories about female conquests and athletic disappointments, but not once did the topic of race come up. People devoid of racial bias never bring up the topic of "race."
I only bring this up because the current "social unrest" meter has now been configured to create a race war that should not be even contemplated. They are tearing down statues of the Founders in the U.S. (my heroes) and threatening to destroy the statue of the greatest statesmen/politician/soldier of the past 500 years—Sir Winston Churchill—while totally ignoring the ignominious gaggle that are stealing inventory from shopkeepers in neighborhood locales.
What does this have to do with the current market? The answer is "plenty."
In a perfect world, the massively reflationary actions by J. Powell and his global central bank thieves would levitate stocks and consumer spirits to the point where the average citizen who had any savings left might want to buy some stocks and or "goods and services." However, the problem that remains is this: There is no gas left in the reflationary tank. The tricks of the past are now the treats of the future; the can that used to be kicked down the road has been now rendered immobile and lifeless, with nothing but air and vacuous matter remaining.
And here is the saddest of all lamentable facts: The only harbingers upon which they have left to assuage are the precious metals markets. As tiny as they are, they are the last lighthouses on the shoreline of economic freedom that can be pummeled with unfettered virulence as a method of influencing investor and consumer sentiment. The precious metals assaults have been as ruthless and concentrated since the COVID Crash as I have ever witnessed in my 43-year career. "Brutal" is understatement and "vicious" is appropriate.
I would ask you to consider the policy actions of the year 2020. If I were to tell you back in 2009 that the actions of the global central banks would double their phony, counterfeit balance sheets within ten years, you would put gold at least at US$2,000 per ounce. If I then were to tell you that the central banks would move from $14 trillion to $26 trillion in total debt due to a virus that has yet to be accurately diagnosed, you would put gold prices at around $4,000 per ounce.
However, gold is now $1,738 per ounce only because it is quoted in U.S. dollars as such by U.S. exchanges and U.S. administrators, and is considered "strategic" to the national security interests of the USA.
Every other nation on the planet has seen their currency fall to all-time lows versus gold except the U.S., and the reason is that the American banking sector recognizes the importance of the "strong dollar policy" as it would pertain to gold. The Americans want the concept of "stock ownership" to represent "the joys of free market capitalism" so as long as the sons and daughters of corporate America continue to invest their inheritances in companies with zero cash flow and rotting balance sheets that continue to be supported and bailed out by the Fed. The mantra of the past remains well supported and sacrosanct within the status quo.
It is rot; nothing more and nothing less, and society will pay a pitiable price for the inactions of the "emperor class."
My cautiousness on the precious metals markets is founded in my undying faith in the criminality of the U.S. banking establishment. With nary a margin call ever to be met, they can sell fifteen times global gold production through the Crimex with the simple and unfettered goal of capping the U.S. dollar price of gold. Because it is an even smaller market, the banks can cap silver prices even more easily, and far more so than if they were to step into the bid-offer market of Tesla or Apple or Amazon. Should the manipulators ever try to cap stock prices—as in any non-gold stock price—there would be hell to pay, jobs lost and indictments issued.
This week, I offered subscribers the third "watershed call" of 2020. The first two are now well documented in the March 16 "Generational Buying Opportunity" in the gold miners, the April 22 "Generational Buying Opportunity" in oil. Last Wednesday's outright "Sell the S&P!" call was within literally minutes of the top of the March 12–June 8 bear market rally.
The first two calls made us a ton of money, as the world was "black bearish" on gold and oil. But the one that is shaping up as potentially a "kingmaker" is last Wednesday's call at the intraday top of the three-month rally. I further shorted more of the S&P into Friday's feeble attempt to levitate stocks after a totally contrived 65-point S&P opening disappeared, and wound up at 36 points after going negative in the mid-session session.
Getting back to the metals, what former stock salesman Jerome Powell told the world on Wednesday was not what the bulls nor the White House wanted to hear: Things are going to be rough for at least the next eighteen months and rates are going to stay zero-bound for a great many more weeks. As friendly as that was to negative real interest rates and the breeding ground for gold price advances, gold ended the week flat and silver was weaker.
There is an old axiom that old floor traders would echo constantly, and it goes like this: "Stocks that go down against good news are stocks that should be sold." The news purveyed by Powell & Company was outrageously bullish for gold and silver, and yet gold closed out the week at US$1,737.30 and silver at US$17.58, which is anything but celebratory news for gold bulls like us.
My cautious stance for gold is well noted, and now a few of my newsletter brethren have joined the "cautious" camp. Brien Lundin, who was kind enough to give me (and us) Great Bear Resources Ltd. (GBR:TSX.V; GTBDF:OTCQX) last year after the Dixie discovery at Red Lake (bought at CA$2.33/share in January 2019) has recently told the world that he too is in the near-term cautious camp, which not only looks good on Brien but actually gives me a little comfort in knowing that I am not the only near-term bear in our camp. I spoke with Brien earlier in the week, and not only is he extremely competent in his field, he is a gentleman and a genuinely nice man.
I am on the record here in saying that there has never been a period in my 43-year career as fundamentally positive for gold and silver prices, but I further advance the notion that there has also never been a period so diametrically crucial to U.S. dollar hegemony than where we are right now. If the dollar tanks and import prices start to escalate, it will matter not what stocks are doing, because social unrest will go vertical. For the short term, I maintain that we are in the crosshairs of a deflationary tempest that will force producer prices downward and consumer prices soon to follow. In the absence of pricing power, manufacturers and retailers (and their bondholders) are going to strive for cost recovery over margins, and that is neither a stagflation nor inflation scenario; it is a deflationary scenario. To the bankers loaded to the gunnels with deflating collateral, it is the nightmare from hell.
The irony of the current condition is that if the banco-politico cartel could ever allow gold and silver to assume their generational roles as barometric harbingers of economic trends, free markets could return and the natural ebb and flow of human greed and fear could be deciphered and gauged appropriately. As it stands today, I am caught in a miasma of central bank deception and deceit, and for all of the reasons mentioned above, I remain a jaundiced non-believer in the sanctity and trustworthiness of markets—and I mean all markets. The pit boss that runs the U.S. dollar gold/silver casino has your credit card info, your bank account info, your latest credit score, and your latest medical tests. He knowseverything about you and me, and that is why we keep waking up with a declining balance.
If the term "forewarned is forearmed" is a legitimate precursor to protective action, then please understand that as gold and silver investors, you are eventually going to be lifted into a position of sanguine stability (our collective goal), but if you are in the Get-Rich-Quick trader's camp, you are deemed subordinate to the agenda of the politically driven price managers and are, by default, at risk.
Speaking of risk, the only game of "straight pool" I ever played where I thought I was "at risk" was in the winter of 1975 at Sandy's on Grand Avenue, when I was on the verge of a three-rack run when, with over $300 on the table, my opponent decided that he had better grab my winnings and run. Sandy (an older black gentleman) leveled a sawed-off shotgun at the cash on the table and urged my opponent to "go for it."
Imagine that: One man ensuring that another man got his money. The only color that mattered was "green."
Originally published June 12, 2020.
Follow Michael Ballanger on Twitter @MiningJunkie.
Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger's adherence to the concept of "Hard Assets" allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.
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