Precious Metals

There is compelling evidence that 2015 will see a global slump in economic activity. This being the case, financial and systemic risks will increase as evidence of the slump accumulates. It can be expected to undermine global equities, property and finally bond markets, which are currently all priced for economic stability. Even though these markets are increasingly controlled by central bank intervention, it is dangerous to assume this will continue to be the case as financial and systemic risks accumulate. Precious metals are ultimately free from price management by the state. Furthermore, they are the only asset class notably under-priced today, given the enormous increase in the quantity of fiat money since the Lehman crisis. In short, 2015 is shaping up to be very bad for fiat currencies and very good for gold and silver.

People are becoming more critical of our current monetary system. In the past six years, central banks have promised us growth within six months’ time. They and the whole monetary and financial system have lost credibility. The banks’ profit to GDP is the highest in history in an economic environment where we have the highest amount of unemployment since WWII. There is something very wrong with the way the system works and this is all due to the overemphasis on trying to minimize the business cycle. The real conclusion of QE can only become visible if we experience the full business cycle. In Jakobsen's view, we have never been allowed to have a down cycle since 2008. But now, there is finally going to be a down cycle because central planners can’t print more money. As Jakobsen puts it: “Now is the time for the real economy to take over”.

• Global Debt Crisis II – Total Global Debt to GDP Ratio Over 300% - Risk of Bail-Ins in 2015 and Beyond - Currency and Gold Wars - $1 Quadrillion “Weapons of Mass Destruction” Derivatives - Cold War II and New World Order as China and Russia Flex Geopolitical Muscles - Enter The Dragon – Paradigm Shift of China Gold Demand - Forecast 2015: None. Forecast 2020: Gold $2,500/oz and Silver $150/oz

If we review the events of 2014, it seems the situation has intensified: governments are still overwhelmed with debt, our fiat money system is unsupported, our central banks insist on accumulating debt and making money valueless. Will someone realize we have to pull the plug? And when we do, because it will happen whether we want it or not, how can we hedge against the damage that we will all be exposed to? Owning physical precious metals stored outside the banking system is a proven and essential form of monetary insurance against the uncertainties and negative surprises we see in our world today.

After subdued trading in the overnight session until a little after 8pm Eastern, algos went into overdrive just around the time the Fed's 2015 voting member and uberdove Charlie Evans told reporters that "raising rates would be a catastrophe", hinting that the first rate hike would likely be - as usual - pushed back from market expectations of a mid-2015 liftoff cycle into 2016 or beyond (but don't blame the US, it is the "international situation's" fault), in the process punking the latest generation of Eurodollar traders yet again. Whatever the thinking, S&P futures soared on the comments and were higher by just under 20 points at last check even as Crude has failed to pick up and the 10Y is barely changed at 2.00%.

Earlier today, a small Denver-based precious metals dealer AmagiMetals announced something curious: it would paid its staff in Bitcoin. As it reported in its press release, "its entire staff will voluntarily accept a portion of individual employee paychecks in Bitcoin in 2015 through a new service called Bitwage. CEO of Amagi Metals Stephen Macaskill said the company is taking this action to advance its ability to function fully in Bitcoin going forward. Macaskill will accept $40,000 of his annual salary in bitcoin to demonstrate his support of Bitcoin." Whether it is a marketing gimmick, or the PM dealer is one of the few companies to put its (electronic) money where its ideological mouth is, and press for a world without dollar intermediation remains to be seen, however, for the sake of its employees we hope they did not put any part of their bonuses in the Bitstamp exchange which as we learned overnight, was the next big Bitcoin exchange to suffer a major hack following the now defunct Mt. Gox, and where a little over $5 million in bitcoins were stolen.

Same slide, different day, as the crude crash continues, with both WTI and Brent tumbling to multi-year highs, below $49 and $52 respectively. This happened despite the news overnight that China is accelerating 300 infrastructure projects valued at 7 trillion yuan ($1.1 trillion) this year, suggesting that China will focus more on fiscal policy than monetary easing, which in turn led to much confusion in the SHCOMP, which fluctuated up and down for the day several times before finally closing unchanged. There was no confusion about the stops slamming USDJPY, and its Nikkei225 derivative which tumbled 3%, sending Japanese Treasury yields to fresh record lows. Record low yields were also seen in Germany, Austria, Belgium, Netherlands, Finland, France (and many other places), which in turn forced the US 10 Year to finally dip back under 2.00%. In fact, taken together, the average 10Y bond yield of the U.S., Japan and Germany has dropped below 1% for the first time ever, according to Citi.

The new year is not even a week old and already the volatility fireworks are off, as well as the continued commodity derisking. But while for now US stocks continue to be an island oasis in a turbulent global sea where GDP forecasts decline every single day, the same can not be said about either the Euro, which after crashing overnight to a 9 year low, and rebounding briefly, has continued to decline and is now once again flirting with a key support level, this time 1.19, last reached during the May 2010 first Greek bailout. The catalyst, as usual, Greece which may or may not be leaving the Eurozone shortly, as well as ongoing bets on ECB QE following this morning's regional German inflation data which declined once more and now hints at outright deflation in Europe's strongest nation.

2014 may go down as the year when gold and silver conspiracy “theories” became conspiracy “facts” as banks globally were found to have conspired to rig the prices of gold, silver, currency and many other markets.

Dr Marc Faber, respected economic historian and author of the respected monthly newsletter, the ‘Gloom, Boom and Doom Report’, has warned that 2015 is set to be very volatile, urged international diversification and owning “physical precious metals stored outside the U.S.”

Here is the second part of my retrospective from Slope of Hope in 2014.

As a result of Deutsche Bank's gold-rigging problems, the German bank's practically brand spanking new Singapore gold vault, just over a year old, is about to go on sale. But while one can debate when the brand new storage facility will see a "for sale" sign attached to the main vault door, one thing is clear: Deutsche Bank's massive, and even newer, gold vault in London is already looking for offers. According to Reuters, Deutsche Bank is "open to offers for its London-based gold vault following the closure of its physical precious metals business."

The events of the past few months seem astounding when taken in all at once. The plan to destroy the U.S. dollar and the American middle class is moving at an ever increasing speed. There are three lessons that many people will learn in the coming months. If you do not have it already you may not be able to get it. If you do not have it physically in your hands you do not own it. If you cannot protect it you will not have it for long.

Since the early days of civilization, the ancients connected the brilliance of silver to the moon. Artemis, the Greek goddess of the moon, wore silver sandals and shot from a silver bow and arrow. This lunar comparison might be fitting because like the moon, silver also has many phases. The properties of silver make it the most dynamic of precious metals.

Despite stocks ignoring the momentum ignition efforts, USDJPy just briefly broke 120 once again. That appears to have been the flash signal for 'someone' to dump vast quantities of precious metals in the futures markets... "unrigged"