Oil’s Collapse Is Accompanied by Consumer Goods Decline

David Jensen passed along the following charts to me and to our group on June 15. This chart of Light Crude shows a coincident decline in oil during the same timeframe as the Manufacturer’s New Orders declined in late 2014:

WTIC

manufacturersThe gold markets are constantly being manipulated to the downside by the money center banks who don’t want honest money to get in the way of their counterfeit money. But as David noted, there are no paper tools that can fix market action shown in these two charts or in regard to the shipment of exports from China. The laws of economics will eventually prevail. You can’t create wealth by printing money. If you are a counterfeiter, like J.P. Morgan Chase or Goldman Sachs, you can reallocate wealth from those who create it to yourself as a thief. But you can’t create wealth by printing money. Indeed that is the simple but adequate information as to why the middle class is being destroyed while Washington and Wall Street party on. But now, I believe the laws of economics are indeed starting to prevail against the secular humanist gods of Harvard, Princeton, and Yale. And the “ugly head” from the perspective of the Washington and Wall St. thieves that is starting to appear may well be a rebellious bond market.

As my friend David Jensen observed last week, not all bond holders are asleep, and the accelerating decline of bonds (increasing yields) IMO speaks of the herd beginning to break out of the corral as they can see the failure of printing money to create real wealth (surprise). The question is how long rising rates will continue before we start to see major derivative holders detonating in the markets.

The 10-Yr. Treasury rates have risen from 1.65% in February of this year to 2.476% earlier today. Those are still very low rates, but, as I expect John Rubino to discuss on my radio show next week, the fear of rising rates is pushing real estate agencies to push their buyers and sellers to close on their homes sooner rather than later and to lock in fixed rates now, before they rise dramatically higher. Already we are looking at more than a 40% rise in Treasury rates and that will flow directly to the housing market. It seems clear to me that the long hibernating bond vigilantes of the 1970s are coming back to life so that the Fed will be forced by the markets to raise rates. As one Wall St. professional told Tom Keene, what is needed to get the economy moving is higher rates so banks start to lend. Yet because of the Fed’s manipulation of markets, getting from the communist/fascist policies that have denied capital markets price discovery to one that returns to lending and real economic progress will result in huge economic pain.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.