Since his election campaign, President Trump has been promoting the fact that he wants the U.S. to work as partners with Russia and China, and as mentioned recently, only as competitors rather than as adversaries. And in response to this the Deep State has initiated a commission to attempt to keep Russia vilified using the guise of election tampering, and Congress has even gone as far as forcing Trump to continue with economic sanctions.
However as the President prepares for a summit with Vladimir Putin early next week, expectations are for this to be much more than a PR stunt. And if what took place between the U.S., South Korea, and North Korea are any indication, then agreements have already been put in place regarding Syria, NATO, and economic sanctions where all that remains is the handshakes, photo ops, and signing of said accords.
Likewise we must look deeply at the Trade War Trump has instigated with Canada, Mexico, the EU, and China and see if this too is simply a smoke screen for something much greater.
Since President Trump began his quest to strike down the current global trade system, first by backing out of TPP and then calling for a renegotiation of NAFTA, dominoes have begun falling all over the world, including on the political end in places like Italy, Spain, Germany, and the UK. In fact since snubbing world leaders during the recent G-7 meeting, political power in Britain and Germany has come under crisis, with Chancellor Merkel on the precipice of a vote of No Confidence, and Prime Minister May seeing several cabinet members bail out on her following last weekend's failure to come to a Brexit consensus.
Interestingly as well is the fact that many central banks over the past month or two are suddenly speaking out on the potential of a global recession. And this appears to be completely in tune with them now attempting to scapegoat Trump to hide the fact that it has been their policies over the past eight years that have brought the world to the brink of collapse.
In public (on Twitter) it may appear that the President is little more than a buffoon, even going as far as insulting enemy and ally alike to stir up the pot. But the reality is that Trump is an incredibly shrewd and clever negotiator, and knows that for the U.S. to survive the coming financial collapse he must first work with his 'competitors' to destroy the old system (and by this we mean in trade and banking) to allow a new one based on mutual trust to emerge, and with it a return to sound money and fair trade.
It is starting to appear that the Exchange for Paper (EFP) scheme that is going on between the Comex and LBMA is having interesting consequences for U.S. control over the gold price. And by this we need to look at an interesting dichotomy occurring between gold and two different currencies.
Ever since the middle of June when the gold price fell below $1300 per ounce, the dollar has gained in strength as rhetoric over a trade war with China began to heat up. But rather than move in accordance with history, and by this we mean that gold in the past would normally have prospered under chaotic conditions, it instead began to follow a different track, and emerge almost in lockstep with the Chinese Yuan.
June saw China accelerate their currency devaluation to alleviate the effects that the oncoming trade war was having with their exports. And what is very interesting is that as this devaluation began to take place, the price of gold began to move in that same direction with the Chinese currency.
As you can see, the price movements are nearly identical over the past month. But according to work done by Craig Hemke over at TF Metals and Sprott Money, it may also have been going on for over a year now.
Now consider this. Since the PBOC began to actively devalue the yuan versus the dollar four weeks ago, the price of COMEX gold has tracked the yuan nearly tick-for tick.
And so, here’s where it all gets quite interesting. What are the implications of China assuming control of the global gold price and the existing physical distribution centers in London and New York? Many have long speculated that the Chinese government and the PBOC have stockpiled thousands of metric tonnes of physical gold over the past two decades. It should come as no surprise that the world’s largest holder of physical gold would want some measure of control over its price. As David pointed out in his column, “he who owns the gold sets the rules”. But to what end would China be driving price?
By linking the dollar price of gold directly to the yuan, the PBOC has eliminated for now a level of foreign exchange risk to their gold portfolio. Have they done this to enable themselves to continue acquiring physical gold from the west at a “set price” ahead of further yuan devaluations? Is the PBOC planning for a trade war or a liquidation of their massive U.S. treasury position? Or, instead, are they planning for something much more significant?
– Silver Doctors
Since the Comex can no longer provide assurances for the contracts they sell by the fact they have to transfer them en masse over to London for resolution, and the LBMA itself doesn't have the gold in its vaults to accommodate what has already become more than the world's annual mine output here in just the first six months of 2018, it appears quite probable that China has now taken control over the pricing in the gold markets, and can at any time reverse the current trend for economic or geopolitical reasons.
You know that the flattening yield curve is finally starting to 'get real' when even CNBC is forced to talk about it. But for those of us in the alternative financial media, the threat of a coming yield curve inversion has been on our radar for several months now.
And finally here on July 10, the spread between the 10 and 30 year Treasury bonds hit its lowest level in 11 years by dropping into single digit basis points.
Yet while the spread between the 10 and 30 years yields closed out today at 9.9 bps, the swap curve has already inverted.
Which for the economy leaves just one thing to do...