by Andy Hoffman, Miles Franklin: As it’s still 1:30 AM MST, I’ll reserve judgement on the title, and principal theme, of today’s article until after the June NFP jobs report five hours from now. Given yesterday’s miserable June ADP employment report – featuring a big “miss” versus expectations, ZERO manufacturing job growth, and a significant downward revision of May’s numbers; coupled with the nearly across-the-board declines in June economic “hard data” to date, there’s a good chance the June NFP report will be disappointing, too. Even if, generally speaking, the correlation between these two, putting it mildly, “statistically flawed” reports tends to be low.
If it is indeed weak – according to their rigged statistics, that is; it’s going to be very difficult for the Fed, which markets already give just an 18% chance of raising rates in September, to continue purporting “economic strength” and “inflation fears” – particularly now that their own big mouths have catalyzed what could be the start of a significant market correction. To that end, Jim Rickards boldly predicted, yesterday, that by then, Whirlybird Janet will have already experienced the “ding dong, the Fed is dead” moment that must inevitably arrive; when she is forced – not by declining economic data, which she’s been ignoring all year – but plunging financial markets, against the best efforts of the Fed’s “open market operations; to admit the economy is declining, and concede its “tightening” cycle is over after 21 months – of only raising rates to 1%, and reducing its $4.5 trillion balance sheet by nary a penny.
“The Fed’s latest failure will cause policy to shift to ease before September in the form of forward guidance of no further rate hikes this year. Just one more failure in a long list. It’s time to load up on gold and cash. The Fed may be the last to learn about deflation, but when they do, the policy response could be instantaneous and markets could suffer whiplash.”
Typically, per the below chart by the great Dmitri Speck, gold’s historic seasonal strength starts now. However, since the infamous “alternative currencies destruction” Cartel raid of April 2013 – one day after Obama’s “closed door meeting” with the top too big to fail bank CEOs – this pattern has been reversed. In other words, instead of bottoming mid-year and topping at year-end, Precious Metals have bottomed at year-end, and topped mid-year. I wrote of this in December’s “gold bottoming in late December for the second straight year” – in which, I espoused that the principal reason was the Cartel’s recent, sinister tactic of demoralizing money managers holding large “paper PM investment” positions, in the hope they will “give up” on the sector the following year.
Unfortunately for them, prices have surged in early January every year since – followed by the Cartel viciously attacking at mid-year, as they have again this year. Ironically, commencing with the Fed’s “hawkish” FOMC statement three weeks ago; when, despite massively negative economic data – including a horrific retail sales report the very day of the statement – they continued to pretend “all’s well”; as if, being “more hawkish than expected” is bad for Precious Metals in the first place; particularly when the Fed’s “worst case scenario” involves a single quarter-point rate hike in December – and potentially the very, very tentative beginning of unwinding its balance sheet. Not to mention, its “most likely case”; i.e., to continue waffling, under the weight of inexorably weakening economic data, that will certainly not be helped by the rising interest rates – and falling stock and commodity prices – that their reckless “hawkish” chatter catalyzed.