Neo’s Revenge – And We Are Neo!

When I started at Miles Franklin 4½ years ago – just after dollar-priced gold’s temporary peak of $1,920/oz – my articles, then called “rants,” featured numerous cultural references.  Particularly, favorite movie clips – providing analogues to the current economic environment.

Some of the more memorable ones were the V for Vendetta domino scene – depicting how rapidly Ponzi schemes can unravel; the Jurassic Park scene in which stampeding dinosaurs rapidly change direction – depicting how quickly public perception can shift; the Storm of the Century scene of human lemmings walking off a cliff (no explanation required); the final battle in Return of the Jedi – when the heavily undermanned rebels destroy the “invulnerable” Death Star; the opening scene of Vertical Limit – highlighting the impossibility of the “powers that be” retaining control (not for the faint of heart); and of course, the cataclysmic train wreck at the end of Back to the Future III – depicting what is occurring NOW, as we speak, to the global economic and financial system.  Only in this case, they won’t be naming a ravine after the Central banks that caused it, but an era of monetary malfeasance unparalleled in history.  And, for that matter, a special place in hell for the monsters that promulgated it.

As I awoke today, following yesterday’s “President’s Day Desperation” Cartel raid – in which, starting the second markets opened Sunday night, paper gold was taken down $50/oz amidst some of the most violently PM-bullish news flow imaginable (collapsing Chinese imports and exports, imploding Japanese GDP, Greek riots, and escalating Middle East tensions), the movie clip that kept popping into my head was “Neo’s the One” from the Matrix, in which Keanu Reeves’ character, after having been endlessly intimidated and terrorized by Mr. Smith, realizes he has the power; and thus, cannot be defeated.  After which, he merely toys with Mr. Smith, until Mr. Smith inadvertently destroys himself.  Which is exactly what today’s “powers that be” – including the PPT, gold Cartel, and manipulators of fiat currency, economic data, and financial markets are dealing with – as reality sets in.

As I write early Monday morning, gold is back up to $1,214/oz – having recouped half of said losses; whilst silver, after having twice bounced off its 200 DMA of $15.11/oz, is back up to $15.35/oz.  Meanwhile, WTI crude has again been repelled by what is rapidly becoming rock solid resistance at the key round number of $30.00/bbl – after yet another comically desperate “oil PPT” rally failed, when the long-awaited meeting between Saudi Arabia and Russia’s oil ministers, in which “production cuts” were rumored to be possible, miserably disappointed.  As, I might add, I have screamed from the top of my lungs will NEVER occur, as there is zero incentive for either party to do so.  In fact, what they actually “agreed” had the impactful equivalent of the Bank of Japan lowering interest rates by 0.1%.  That is, not a shred of positivity for oil price fundamentals.  And, to the contrary, a dramatic reduction in Cartel credibility.  To wit, in agreeing to “freeze” production at January’s all-time high levels – which in and of itself, is wildly bearish for crude oil prices; contingent on other major producers doing the same (which #2 OPEC producer Iran has already said it won’t do, whilst U.S. shale producers certainly won’t agree to), they simply made it more obvious that no relief is in sight for the foreseeable future.  To the contrary, the possibility of sub $25/bbl – or even $20/bbl – remains a distinct possibility.  Remember, it was just last week that BP’s CEO made terrifyingly predicted…“In the second half of the year, every tank and swimming pool in the world is going to fill with oil, and fundamentals are going to kick in.”

And the PM-bullish, everything else-bearish hits keep coming – like Hong Kong property auctions 70% lower than a year ago; China creating as much debt in January ($520 billion) as the Fed during the first six months of QE3; U.S. debt default rates on the cusp of exploding; further escalation of the Syrian conflict; a renewed decline in Deutchebank stock; Mario Draghi espousing “increased concern over the global economy,” but that the ECB will “not hesitate to act if needed”; horrific Empire State Manufacturing and NAHB Housing Index readings; and oh yeah, the mysterious death of a swing vote U.S. Supreme Court justice, creating a partisan deadlock that could morph into an historic political war.  Throw in the apropos news that the DeBeers diamond Cartel – like OPEC, and shortly the gold Cartel – is on the verge of collapse, and you can see why gold investors, and equity shorters, are starting to feel like Neo, against the “powers that be” represented by Mr. Smith.

Most ominously of all – validating EXACTLY what I predicted in yesterday’s article, ”NIRP vs. Gold, Part VI – the horrific end game of a cashless society” – the ECB voted yesterday to eliminate the €500 Euro from circulation.  Which may not sound like a big deal, until you realize it represents, in terms of gross value, 30% of the entire circulation of physical Euro notes.  In other words, the deadly combination of negative interest rates and cashless society is approaching the Western world like the aforementioned runaway train, to steal your money and destroy your freedom.  Which if you’re smart, will prompt you to get your capital the heck out of the government-partnered banks preparing to do so, and into the only financial assets immune to this savings-destroying cancer.

And my god, I kid you not!  As I’m editing – and just about to send this article to my editors – take a gander at what headline just popped up on Zero Hedge…”Larry Summers launches the War on Paper Money – It’s time to kill the $100 Bill.”  To that end, take a guess what percent of the gross value of U.S. physical currency issuance is represented by $100 bills.  Drum roll please….79%!

Yes, my friends.  We are Neo, and we hold the cards in a deck that, contrary to what years of abuse, intimidation, and manipulation have conditioned us to believe, is stacked in our favor.  But only if we take actions to protect ourselves from the negative interest rate, capital control, cashless currency-imposing “house” – while we still can!

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