JP Morgan, Jr Senate Hearing 1933

A Flash Crash in silver is no different than a flash crash in stocks, bonds, or anything else. It is the same root cause of all panics – the lack of bids. Every  stock market crash ever since 1907 has been followed by an investigation with the theory that some huge player forced or manipulated the market down. During the 1930s, they summoned everyone and publicly asked if they were short. They found nobody but ruined the lives so so many people with outrageous claims. Fox of 20th century Fox lost the company because so many lawsuits were filed against him based upon groundless allegations on capital hill. Herbert Hoover apologized for what took place saying that sometimes when a government becomes outraged it burns down the barn to get the rat.

All Crash events take place because of the LACK of BIDS. It does not matter what time of day, they just do. If there was a solid underlying book of bids, a crash could not take place. The silver crash was no different. This is simply how all markets perform. The flash crash in silver took place on the weekly target for a turning point. This was indicative of the sale and the lack of buyers simultaneously.

Today is 23 days up for the US share market and the retest of the low in gold and may provide the turning point for the week. The fact that silver crashed first is nothing strange. Gold and silver both have different cycles individually. If this were not true then the silver/gold ratio would be a flat-line. There are different markets whereas silver tended to be driven more as an industrial commodity and gold as a luxury consumer commodity. These two distinct driving forces account for the wild swings in price differentials historically as illustrated by the chart above covering the ratio from 1560-1991.

So is there anything to be drawn from the lack of bids? Nothing other than the fact that we are in a trend right now where governments have waged war against capital and are going everything in their power to (1) confiscate assets under any excuse, and (2) France is pushing to eliminate all purchases of gold and silver for cash in Europe period. All the trade shows for antiquities and coins that once proudly took place in Paris have been cancelled because the dealers were told they had to report everyone who bought and sold anything at the show.

We are in the middle of a financial war against all assets. There is no risk of HYPERINFLATION because governments seem to believe they can solve the problems if everyone paid their taxes. In Europe, the bad loan may reach double that of the $700 billion bailout in the USA. But instead of printing, they cannot agree on that and as such the agreement is that whatever bank is in trouble, they will just take depositor’s money – that is DEFLATIONARY.

They will NOT print their way to honor commitments. They will default and blame the people never themselves. The rally for the metals must wait for capital to first shift out of Europe, concentrate inside the USA, then then move toward assets and that may have to wait until the end of this current wave in 2015.75. However, the bulk of any decline in the metals should be accomplished here in 2013.

The Latest from Nigel Farage

http://www.youtube.com/watch?v=BQryLd2MYaE

If anyone wants to know why the dollar will soar to new highs, just stop and look at Europe. The gold promoters will claim the bank crisis will make gold soar. But the dollar will soar. France is out to shut down gold sales and has outlawed buying or selling gold for cash. They are tracking every ounce. The smart Europeans will move their cash to the USA before they can’t get out or go to Asia maybe better. But the bottom line – it is the dollar that is becoming the ONLY game in town.

The banking crisis in Europe is worse that the US ever was. The US was a trading loss, this is a systemic failure that is more than $1 trillion in bad loans when the USA was $700 billion. France wants total seizure of assets to secure socialism. This is like cutting off your head because you have a headache. The denials of the Cyprus solution would ever be applied to the EU have faded into the night. The politicians cannot see for an instant what they are doing to the world economy. When I said we have a Crisis in Democracy – this was not hype. The EU will seize bank deposits to bailout the banks. The governments are unwilling to put in that money because they cannot sell it to the people. Germans are not interested in bailing out the banks in Italy or Spain.

A slowdown in British inflation sent sterling to a 7-week low on the view it could give the Bank of England more leeway to support the UK economy, and the yen lost ground after a Japanese minister rowed back on remarks suggesting the currency had weakened enough.

The Dollar is the Prettiest of the Four Ugly Sisters – Europe, UK, Japan & USA

Long Live the Dollar

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The Flash Crash took place because of the lack of bids. Despite the gold/silver promoters, there is no expansion of buyers for the precious metals. It has been the same choir over and over again. Silver broke the April low and this is a leading indicator warning of lower prices yet to come. Nonetheless, this is a week for a target turning point and last week may be the lowest weekly closing in silver for right now. There is still the possibility of lower lows in June.

Right now, the Daily Bullish Reversal in silver stands at 2385. This is what we need to exceed on a closing basis to stabilize this market for now,

Hollande of France is seeking to federalize all of Europe forcing a new socialization of Communist agenda. He sees no use for the Free Markets and is trying to sell this idea to Europe. In his mind, if he can prevent people from fleeing his insane ideas, he will win. Italy is starting to now agree with France. The worse these people are economically, the more insane the ideas.

http://translate.google.com/translate?sl=de&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&eotf=1&u=http://deutsche-wirtschafts-nachrichten.de/2013/05/21/eu-will-mit-neuen-instrumenten-demokratie-in-europa-kontrollieren/

Everyone knew that the real agenda from the outset was to federalize Europe. The problem has been how to deny that so they did not require a democratic vote from the people. What is taking place now is the attempt to seize control of the rule of law in all member states. This way no court can say Brussels is going too far or violating the sovereignty of member nations.

The future world these people are creating is the de-democratization of Western Society. The elites have decided they will be in power and just because their design is serious flawed is no reason to stop their agenda. Thank God I am not 20 years old. I hate to see what kind of future they have in store.

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QUESTION: 

Hi Martin,

Re: Is Japan Real Estate a Taboo subject?

Thanks for all your writings – FANTASTIC. Spot on with the DOW & gold. What inspiration and enlightenment. As they say down under – you are a living legend mate! Out of pure interest only, I was wondering if you could do a blog on Japanese real estate 1989 to present day?  I would be interested to know what has happened to their real estate prices since their 23 year depression (possibly heading into 26 years). Seems to be a Taboo subject that no one wants to talk about for whatever reason hence the more reason it would make a ‘good read’.

Cheers

JS

Australia

ANSWER: Japan is starting to turn around. The decline in the currency actually revitalizes the economy. It was a trick that George Warren convinced Roosevelt to do when his Brains Trust said no way and preached austerity as is taking place in Europe now. Even lunch in the center of town for the Japanese businessman fell to 1000 yen. Another question came in about UK property and the collapse of the pound.

I was living in London in 1985 when the pound fell to $1.03. To the domestic player, he saw nothing. The attitude was property was way too expensive and everyone expected a crash. But with the pound at par, to anyone dollar based, London was on sale like at Harrods. The Concorde tickets when it began were 2,000 pounds. At $2.40 that was about $5,000 in 1980 when a first class ticket on TWA was $3,000. At par, I walked into British Air and asked them how many open pre-paid tickets would they sell me? They looked at me like I was nuts or a drug dealer or something. Reluctantly, the manager came back and said 25 would be the maximum. I bought them at $1.03. Because the pound crashed, they raised the ticket price to 5,000 pounds a couple of months later. Then the pound moved back to nearly $2 and it was a $10,000 ticket when first class was $7,000.

I bought a 328 Ferrari in London at the same time. In the States, this was a $50,000 car in 1985. In pounds it had been priced at 25,000 pounds. I bought one, drove it around London for two years, then sold it for $50,000. How? Ferrari could not afford to sell the car for $25,000 when the pound was par. So they raised the price to 50,000 pounds. But the pound rallied to almost $2 and it became a $100,000 car.

This is what currency-inflation is all about. Warren was absolutely correct. What appears to be overpriced in London to the Brit, let the pound crash and burn, and it will be a spring sale at Harrods and hell, I may buy a home there! Welcome to the dynamic world of International Capital Flows.

These experiences have helped to shape my understanding of the global economy. It has helped me restructure corporations changing how they price their product. If they price their product in the local currency of the target sale, then manage the currency risk at home. This creates a stable market for the consumer. If they price their product based upon their cost of production in their local currency as did the Germans, then cars will continually rise in the local currency of the consumer when their currency declines. A 911 Porsche in 1971 was $10,000. By 1980 it was a $50,000 car and now $100,000+. Was that rise really the cost of production rise in labor and materials alone? Or was it first driven by the currency whereas the DMark rose against the dollar creating the image that German cars were better and held their value more than American cars. It was a great sales-pitch in the 1970s and early 1980s and the Ferrari and Porsche became the new “yuppie” cars for show rather than true sports enthusiasts like myself.

Currency is – E V E R Y T H I N G!