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Friday August 22nd 2014



Andy Hoffman on Butler on Business Show – August 21, 2014

Andy Hoffman joins Alan Butler from the Butler on Business show (1:36:00) to discuss the Jackson Hole meeting, market manipulation regime, the bond market, unemployment rate, retail sales, gold and silver.  To listen to the audio, please click below.

Andy Hoffman – Butler on Business – August 21, 2014

Palpable Fear

In last month’s “Most Resolute Precious Metals Bulls,” we wrote of how whether a certain technical analyst’s prediction that a major PM attack was forthcoming, we wouldn’t need the slightest bit of “resolve” to maintain our physical gold and silver savings – which insure us against the inevitable fiat crash, and don’t become less “valuable” when attacked by naked shorting.  Regarding his reasoning, we disagree completely; as in our view, markets have been so distorted by government intervention, short-term technical analysis has become utterly useless.  Not to mention, during ultra-thin trading periods like the middle of August, amidst an environment of potentially catastrophic economic and geopolitical events.  Given PM fundamentals have never been stronger and prices well below the industry’s cost of production, we believe their risk/reward profile has never been more positive.  And given the “palpable fear” TPTB are clearly demonstrating in the brazenness of said manipulations, it’s difficult to believe their “day of reckoning” – for years, if not decades – of destructive behavior is rapidly approaching.

Central Bank Gold Holdings

The signs of said fear are so numerous and broad it is difficult to highlight a single dominating factor.  Economically, reading headlines of Caterpillar – the world’s largest industrial equipment manufacturing company generating year-over-year sales declines for 20 straight quarters could not render the incessant “recovery” propaganda more laughable.  Or, for that matter, this morning’s worse than expected Eurozone PMI manufacturing report indicating the entire continent is amidst or nearly amidst, recession.  However, as governments and Central bank funded institutions have purchased at least half the world’s equities – and in many cases, sovereign bonds – with printed money over the past six years, we’re supposed to believe “all’s well.”  Better yet, we’re told Central bankers are “in control” as they converge on Jackson Hole; when their policies, subjectively, could not reflect less “control” if they tried.  And we’re not just speaking of the post-2008 crisis environment, but the entire history of monetary planning failure.  But don’t worry, we’re told as they’ll do “whatever it takes” to make things right.

Geopolitically, one would have to go back to World War II to find a situation where so many nations were experiencing such dire outlooks.  From the four corners of the planet, the inflation exported by the world’s leading money printers is catalyzing historic expanding levels of social unrest – in many cases, accompanied by revolution draconian government action and even war.  Even the U.S., with its “lesser” inflation due to its (dying) reserve currency status is dealing with such instability (see Ferguson, Missouri) as the cost of living continues to rise and real employment to fall, yielding a “dependency nation” where more than half the population relies on entitlements that themselves are borrowed via freshly printed money.  It won’t be long before global “QE to Infinity” is as ubiquitously understood as the inevitable failure of fiat currencies and the equally inevitable explosion of PM prices.  And thus, we have little doubt that the recent, unfathomable market interventions are nearing an historically ugly end.

Regarding precious metals, even we have never seen anything like the blatant manipulations since April 2013’s “alternative currencies destruction”; when, the day after a “closed door” meeting between Obama and the leading TBTF bank CEOs, gold and silver were attacked with the most vicious paper raids we can recall.  Yesterday’s post-“FOMC minutes” attacks are a perfect case in point; and by the way, the reason we put FOMC minutes in quotes is because frankly, we have serious doubts such “minutes” are even real.  Now that FOMC minutes publication day has become a propaganda mechanism – and PM “key attack event” – it’s entirely likely said “minutes” are fabricated to meet TPTB’s daily manipulation needs.  You know, like nudging rates up when the Fed fears they are signaling the “most damning proof yet of QE failure” (i.e., plunging rates amidst a so-called recovery) or pushing them down when equities are falling to quickly for their liking.  And, in either case, slamming PM prices; and afterwards, justifying such attacks with a litany of pre-packaged propaganda.

Nothing could be further from the truth; and reading headlines like “many Fed officials said job gains might bring rate rise sooner,” my head felt like it would explode.  To wit, just three weeks ago, an extremely dovish FOMC policy statement highlighted a “significant underutilization of labor resources.”  Not to mention, the ensuing July NFP report was a giant disappointment.

Yes, bond yields temporarily rose two basis points – likely due to said manipulations – but an hour later, were back down to where they started – and as I write this morning, are lower than where they were before “minutes” publication.  As for the dollar, it barely budged. However, when gold and silver were simultaneously attacked even the great ZH’s perception can be manipulated – which is exactly why the Cartel exists.  A friend last night spoke of the “rising dollar” – a comical thought, given it has been in a tight trading range for the past decade with the only material component of the “dollar index” basket, the Euro.  Yes, with the ECB on the verge of announcing a major QE program, the “dollar index” has risen from 80 to 82, but against real items of value like food and energy – and PMs – both currencies have dramatically declined for decades.

That said, the recent “dollar strength” is ominously yielding the same “emerging markets” currency weakness that has precipitated expanded global inflation and unrest since the post-crisis money printing group commenced in 2008.  The Yen, for example, appears on the verge of finally breaking support and collapsing – just in time for the end of Abenomics, and potentially, a BOJ “re-upping” that ultimately catalyzes hyperinflation.  As for the Russian Ruble, no doubt Putin’s “de-dollarization” efforts will accelerate as a result; as clearly, it is being tossed around like a rag doll due to Federal Reserve led market intervention.

When will such “fear” turn to panic?  We don’t know, but it can’t be far away now.  The signs are everywhere, and as Bill Holter wrote in yesterday’s “Kill Switch?,” it is indeed puzzling to see COMEX silver open interest not only dramatically above current “inventories,” but at nearly an all-time high despite three-plus years of dramatic price declines and options expiration smashes.

Silver Price vs. Open Interest

Even more intriguing is the fact that mining shares are outperforming gold and silver for the first time since my highly-publicized exit from them in mid-2011, per the below chart depicting a well-defined, year-long “reverse head-and-shoulders” bottoming formation.  Such action does not necessarily “mean” anything.  However, given miners are the market’s most suppressed sector, it certainly draws my attention.  Not that I’d ever buy them, but I must say I’m intrigued by this formation.  Perhaps, as Bill H. wrote earlier this week, “George Knows Do You.”

GDXJ Graph

Well, I guess that’s enough “conspiracy theory” for a day; which I say as the Miles Franklin Blog takes great care to avoid what isn’t proven or highly logical.  FACT and LOGIC are what have driven our analysis for the past decade-plus, and we don’t intend on abandoning them now.  Hopefully, you too will perform your due diligence in like fashion; as if you do, we know you will draw the same conclusion.  That is there’s a reason TPTB are demonstrating such “palpable fear” in their words and actions – which mathematically can’t be far from morphing into full blown crisis and an historic precious metals surge.


Kill Switch?

I have written several times regarding the size of COMEX futures going into delivery periods.  It is time to do this again with silver.  The September delivery month has 65,000 contracts still open.  This represents 325 million ounces of silver.  The “registered” category at COMEX now has just over 60 million ounces available for deliver.  If you tally up the entire inventory, this is roughly 175 million ounces.

As we have seen plentiful times in the past, the futures normally get rolled into the next active month and we merrily go on down the road.  In fact, over the past year we have seen large amounts of gold and silver contracts initially stand for delivery only to see them either rolled at the END of the delivery period or “settled” with little or no movement in the inventory statistics.  Both of these situations have had speculations by us conspiracy nuts that they are being either “cash settled” or cash settled with a “premium” attached to entice the contract owner.  Is this true?  I obviously do not have any proof that premiums are being paid but it is a logical explanation and the lack of inventory movement is supportive of the theory.

I would ask the question, “Is a COMEX default plausible?” Judging by the current numbers standing for September silver, the inventory available to satisfy delivery is oversubscribed by more than 5 times.  Yes I understand, we have watched over the last year or two this very same scenario play out.  Heavy open interest going into delivery and “poof,” they then just disappear.  I would also ask if the past heavy open interest may have been “dry runs” at busting COMEX open like a watermelon.  Maybe the huge open interest is a form of “collateral”?  Let me explain with a possible twist.

As you may remember, I have put forward the thesis that the Chinese (and thus the Russians) have been and are behind the heavy open interest in silver which has been building and building.  I believe the Chinese have “spread” their holdings around through various proxies in order to be “discreet” with what they are doing.  Logically, who else has deep enough pockets to have withstood the price of silver going from $40 to $20?  The open interest has been stubbornly high throughout the last 2 years and without any great “flushes” of open interest as one would expect with the huge and frequent downdrafts.  Obviously the “sellers” have also had deep enough pockets to beat back the buying pressure created at and below the cost of production.  To me, “Chinese proxies” in silver make as much sense to me as “U.S. Fed/Treasury proxies” do in Belgium, I think it just makes common sense.

I would like to further my thoughts on this theory.  Why, (if I am correct and China “is” the huge open interest in silver) would China sit back and absorb billions of $ in losses?  Does this make any sense at all?  Don’t investors “invest” to make money?  Very crudely, 150,000 contracts (750 million ounces) taking a $20 loss is $15 billion, this is HUGE right?  Wrong, in the scheme of things as I see them, this is merely the cost of doing business and less costly than a ham sandwich (unless you are really hungry).  Remember, China has amassed over $3 trillion of U.S. Treasuries so $15 billion represents one half of one percent.  In perspective this is very cheap “insurance,” I’ll explain in a moment.

OK, so here is the rest of my theory.  I believe the Chinese have been “using” their positions on the COMEX.  This can be looked at from several angles but they all amount to the same thing.  Maybe the Chinese have these positions as a “detonation switch”?  Maybe they are holding COMEX futures so they are able to at any time and for any reason, blow up the game?  Maybe the position is “leverage” or a gun to the head of the U.S. to continue delivering gold …or else?  It is even possible that China is using this position as a “lien” on the silver inventory so it can’t get away from them?  I believe China leased silver out to the U.S. in the 1990′s, maybe this is merely a way to “attach” some or all of it?

Whether my theory is correct or not remains to be seen, the important thing to understand is how small the silver market really is… and how important it is to retaining the “trust” element in the Western financial system.  The 60 million ounces of “deliverable” silver at current prices are only worth $3 billion.  Ask yourself what would happen if (when) they run out and cannot deliver more?  Ask yourself, when COMEX fails to deliver silver then what will your thought process be?  You will probably want “some” if you have none or MORE if you already do, right?  Will your thought process go further?  “Further” as in the gold market?  “Further” as in platinum, zinc, copper, wheat, rice, cotton, orange juice, milk, coal or any other market where “paper” represents “real stuff.”  Basically, if not enough silver existed behind the contracts then what other markets might this same condition apply?

Do you see where this can lead to?  If I am correct and China is in fact the outsized and unusual open interest in silver, they are sitting on a detonation switch to the entire financial system of the West.  Actually, rather than call it a detonation switch, the better term would be “kill switch” because this is exactly what would result.

I am sure there will be many who either don’t believe this theory or even tell me I’m nuts.  If I were China, THIS is exactly what I would do!  Follow this reasoning through if you will, China has already shown “trust” in the U.S. as evidenced by their U.S. Treasury holdings.  They “trusted” us by lending capital to us and in return expecting to receive payment in the future.  “Payment” is not and will never be in question because we can simply create the dollars to pay.  What is in question is what those dollars will be worth on the international markets when they are paid?  You see, for very little money, expense or even effort, China can “force” the U.S. into a “bankruptcy” using this tiny silver position.

To wrap this up, laugh if you will but I don’t think you should.  Think this theory through several times before you fire mud ball comments back to me.  It really is simple and not complicated at all.  In fact, it makes as much common sense as a bank, a pawn broker or even a private lender moving to “secure” their loan(s).  I believe China is merely acting in their own best interests because after 2008 they have watched us willfully bankrupt ourselves and grossly devalue the dollar.  They have imported massive tonnages of gold since then, why not hold an “insurance policy” in silver which can be “claimed” whenever you choose?  What lender wouldn’t act in this manner?

Deflation Fallacies

As the financial world nears the end of its six-year trek across the Sahara Desert of money printing, market manipulation and propaganda, en route to the same result of all such journeys, when undertaken without water – new “false memes” appear to emerge on a daily basis.  From “tapering” to “recovery” to “de-escalation,” new reasons to shun precious metals – and buy financial assets – are fabricated to “kick the can” one last mile.  Few such reasons actually make sense, and fewer still are actually true.  However, as the “eye of the hurricane” created by history’s most advanced financial engineering scheme passes, many have been lulled into believing nothing can go wrong.  At least, not in the commandeered financial markets, as opposed to the reality of cratering global economy activity, surging debt and inflation, and burgeoning social unrest.

At current historically suppressed prices, gold and silver don’t require any specific event to yield dramatic upward revaluations.  However, with algorithms programmed to attack prices precisely when specific news items are released, a “false meme” can be created that PMs “need” something to occur for prices to rise.  The Cartel has been using this tactic for as long as I can remember, and never mind that following 99% of PM-bullish headlines – like last week’s abysmal U.S. retail sales report – said algorithms sit atop PM prices preventing them from rising.  Yesterday was a perfect example, as gold was again capped at $1,300/oz. at the COMEX open, with subsequent weakness blamed on “better than expected” housing starts – and oh yeah, Monday’s “better than expected” NAHB sentiment index.  Never mind that NAHB is a trade organization incentivized to promote optimism, or that the past two years’ increased optimism has not coincided with either rising prices or construction activity.  Comically, single-family housing starts are still 70% below their 2007 peak, whilst the NAHB’s optimism indicator – er, “housing market index” – has returned to its 2007 highs!  Sadly, “optimism” doesn’t pay the bills; and moreover, when one looks at the internals of yesterday’s housing start data it becomes even less evident why one would be optimistic.

Sure, housing starts have risen in recent years.  However, the sum total is still 35% lower than 2007’s highs, with the all-important single-family home segment down nearly 50%.  In other words, just as the entire growth in post-2008 automobile “sales” have actually been in the leasing segment, nearly the entire growth in post-2008 home construction activity has been in multi-family rental units.  In other words, the expansion of an ugly trend, in which U.S. home ownership has fallen to two-decade lows (note today’s new 15-year low in the MBA’s mortgage purchase application index) care of surging consumer debt, chronic underemployment and plunging home affordability care of the Fed’s latest financial bubbles.  Consequently, rental rates have surged, further strapping consumers, whilst the enormous influx of rental units will pressure single-family home prices for years to come.  Per below, not only is U.S. housing affordability at record low levels, but real wage growth has never been weaker amidst a so-called “recovery.”  Worse yet, if inflation were calculated correctly, real wage growth would be significantly negative.

Zero Hedge

Inflation Adjusted Wage Growth

And help us all if what is now being deemed California’s worst drought ever doesn’t reverse course quickly, per this email sent by a concerned Miles Franklin Blog reader.

One thing that nobody is talking about is how long can people live in California before the water stops flowing. To me this is the real black swan. Today, a friend posted an op-Ed from the L.A. Times claiming California has 12-18 months of water storage left.  As for me, I am slowly considering that I may have to evacuate to another state, losing my job and home.  Consider what would happen if 30+ million people needed to do the same. Not only is the real threat of mass migration possible (although everyone is in denial), but California shutting down would destroy the economy and several foreign nations as well.  Without snowfall and rain this winter, we will be seeing this unthinkable scenario come to pass, but first there will be draconian measures of water restrictions.

Worldwide economic activity has not been lower in our lifetimes; other than, perhaps, the “deer in headlights” lows of the post-9/11 and 2008 crises – although frankly, in places like Europe and Japan, it’s debatable that today’s economic environment is any better.  China – i.e., the “world’s growth engine” – symbolizes how dire the global situation has become with power consumption down 10%-20% in the past year alone, while Europe is in the grips of a rapidly expanding depression, and with the Japanese Yen plunging anew, the BOJ’s upcoming “re-up” of Abenomics may well push the “Land of the Setting Sun” to the brink of hyperinflation.

Here in the States, we are bombarded with “deflation” fears daily – particularly by Fed governors – despite overt money printing holding near historic highs, and the cost of living rising 5%-10% each year.  If I hear one more time how the recent plunge in crude oil prices is somehow a positive for the consumer, I’m going to lose it – as gasoline prices remain the year’s highs, and the all-important diesel fuel price has barely budged.  America’s economy is extremely sensitive to diesel fuel prices; as is the global mining industry, whose cost structure has never been higher.

Diesel Prices

Yes, “false memes” are everywhere, promulgated by Washington, Wall Street and the MSM in a desperate attempt to convince the masses all’s well.  By far, the “deflation” meme is one of the most egregiously fallacious, as across-the-board, it is difficult to identify a single “need versus want” item falling in value; let alone, life or death items like healthcare – per below, rising at an 8% annual clip before Obamacare.

Medical Index

As long as Central bank printing presses continue – which they must to maintain the Ponzi scheme they have fostered monetary “deflation” is not possible; and with each printing expansion, the concept of “deflation” becomes more laughable.  Whether or not Central bank propped financial assets rise or fall in price – including speculative real estate, or for that matter – the “99%’s” cost of living will continue to rise.  Sadly, this is a global phenomenon, as without a monetary anchor, the “final currency war” will only intensify yielding universal cost of living escalations ad infinitum.

Which brings me to the final most comical “false meme” of all; i.e., “deflation” is negative for precious metals.  First off, if we truly were amidst “deflation,” we certainly would not be experiencing surging stock prices (remember 2008, or for that matter, the 1930s?).  No asset class would be more at risk, and with half of America’s (underfunded) pension funds invested in equities, the sound of the fiscal implosion from a new equity crash would be heard from outer space.  And by the way, after the initial Cartel attacks in late 2008 – yielding historic physical metal shortages – gold rocketed higher in early 2009, hitting new all-time highs whilst the Dow plunged to new lows, proving “deflation” is as positive for PM demand as its polar opposite, hyperinflation.  And don’t forget, the lower interest rates fall due to QE – and investor anticipation of further QE – the lower real interest rates fall; i.e., the single most bullish factor for precious metals demand.

In other words, Central bank money printing – and Cartel price suppression – has created the rare “perfect storm” of bullish PM fundamentals at a time when plunging supply, burgeoning unrest and expanding government mistrust could yield the inevitable run on gold and silver supply at any time.  And thus, never before has Miles Franklin’s “motto” been more relevant; i.e., “protect yourself, and do it now!”


Miles Franklin Q & A: Silver Is Trading Well Below the Cost Of Production

Q: David, there is a writer Bix Weir who you most likely know of and he is of the opinion there is considerably more gold in the world than people think.  He references 2 locations of big stashes and maintains the total is in excess of a million ton.  For that reason, he is saying silver is far superior to gold in protection.  What is your thought?

David Schectman’s Answer:

Personally, I believe silver is a better investment than gold apart from Bix’ argument.  His opinion does not reflect the majority view, but with or without the “extra” gold, silver looks better to me.  When the price of precious metals start to rapidly rise, gold will be too expensive for most people and it will be easier to spend $100 or $200 an ounce for silver than to spend $3,500 or $5,000 for an ounce of gold.  There is very little spare above-ground silver to purchase (most is either used up by industry or it is held by strong hands that will not let go of it) and there is a lot of gold sitting around.  The only question with gold is at what price will the owners decide to sell some?  With silver, once shortages arise, due to increased investor demand, then industry will jump in an also hoard since they need the silver to keep the doors of their businesses open.

I try and keep my precious metal portfolio around 50% – 50% but it changes as the silver/gold ratio varies so much.  Keep in mind that it is very high now, taking over 66 ounces of silver to “buy” one ounce of gold.  That number alone suggests that silver will outperform gold by two to one or better.  Back in 1980, gold was $850 and silver was $50 so the ratio was 17 to 1.  If a similar relationship occurs during the peak of this bull market then based on today’s prices, silver will outperform gold by three to one.  Don’t worry about Bix’ unorthodox view on the gold hoards.  It is not necessary to build the argument that you will do better with silver than with gold.

Here is another question for David:

Q: I have a question for your Q&A day on Wednesday. This one’s for David…regarding David’s recent article, reprinted below:

“It concerns me to the degree that I am asking myself if this is a good time to leave the Miami area and “retreat” back to the relative calm and safety on Mid America in the Minneapolis area.  That is a question I will answer in the next few months.  And knowing how much we love to live where we do, north of Miami Beach, this is not an easy question to answer.  My past tells me that I am usually right but almost always early.  I don’t believe it’s a question of “if,” but only “when.”  The disparity of wealth in South Florida is embarrassing.  Way too many ultra-wealthy and way too many very poor and under-employed.  You can almost “feel” the envy and anger from those who have less than you do.  We feel it at the shopping malls and the grocery stores.  And we do not flaunt anything, but “they” know. If gold and silver are not the best choice investments when the fuse is lit, then I don’t have a clue what could be better.  Great! I have the right investments in the middle of social chaos. I really want to be wrong here, but I am giving the topic serious though – and maybe so should you.

David across my younger years it was always at the back of my mind that one day I would like to travel across North America. Now, I would avoid it like I would avoid West Africa and for the same reasons. So, my question for you David is simple. 

“With a gun every home and massive civil unrest widely expected and prepared for nationally across America ‘very soon’, are you sure you have chosen the right country let alone state???”

Watching from the outside and having extensively read and absorbed ‘mf dailies’ for a year or two, why on earth would you ever want to stay? You have the means and the awareness, what are you waiting for now?  Surely you can see that black swan fuse only needs lighting now? The feeling is America needs war next to make your failing leaders heros anyway and you already know this too. 

Come over here maybe David. We don’t even know what civil unrest is yet; not to suggest we are the best, just take the time to reconsider your options more broadly because the time in front of us shrinks by the year week and day now doesn’t it?  If you like Miami come climb the Sydney harbor bridge on a slow week or two or maybe take in ‘little Miami’ surfers paradise…. just stick all your metal in Canada come here and retrieve it next. 

Of course, the AUD is closely following USD down the gurgler too, but where isn’t this a problem now?  Silver just isn’t going to save any of us from the vacuous already targeted rioting brain dead starving hoards beating on the empty supermarket windows is it?  When national supply routes are threatened, won’t mid-America suffer earlier and more than most states? 

David Schectman’s Answer:

There is little to disagree with in your email.  Recently, two of our close friends in Miami suggested it was time for us to move away.  They have lived there for decades and see the change and do not like the direction things are going.  You are preaching to the choir as far as staying in Miami is concerned.  Like all things, it’s all about timing.  I know I have to be a day early, not a day late so it gets complicated, especially since we do love it down there.  The real issue, as you pointed out, is not whether to remain in Miami.  It is whether to remain in America.  That’s a much harder issue to wrap my emotions around.

If Susan and I were to leave our country, Australia or New Zealand would be at the top of the list of where we relocate to, but at our age (I am 72 and Susan will be 69 in two months), with our family here, my business here, my friends here, it isn’t as easy as you make it sound.  It may be logical, but that doesn’t make it easy.  Bill Holter keeps telling me to buy rural property away from the big cities as a starter.  But we are city people, not rural people.  Yes, Minneapolis is a safer choice than Miami and the middle of Idaho is better than Minneapolis and Australia is probably better than Idaho, but that is all predicated on one’s willingness to relocate and start over.  I’m not sure it’s us!  Maybe Canada – that’s closer to the life style we are accustomed to.  But will Canada be any different from America?  The suggestions you make are more appropriate for my children, but I can’t see either of them picking up and moving their families offshore either.

Most likely, we will do what is necessary to make it through tough times and pray that the tough times don’t turn into marshal law, massive social unrest and economic collapse.  I can live with “bad,” but worse than “bad” is a very frightening thought.  Most people can’t conceive of total collapse – and even if they can, they won’t do anything about it.  I can only think of two of our clients who actually will leave when things heat up.  It takes a lot of money and a certain mindset to do it.  Both of them are 20 years younger than Susan and I are and it makes it an easier choice, at that age.

“Normalcy Bias” explains why it is so hard for people to react to an event that they have never experienced before.  America has been the place to be for the last 150 years.  It is hard to imagine a situation where that is no longer the case, though we are surly moving in that direction.  Yes, it is a question of “when.”  Timing will be everything.

Thanks for your email.  It is relevant.

Best of everything.

Q:  Can you address my wife’s concerns sufficiently to help us convert some of our “surplus” cash to gold or silver? She is a public school teacher (state employee) planning to retire in two years. Our state has the teacher’s pensions constitutionally protected (for now). Our house and car are paid for. We pay all our bills in full each month. We have no debt. Our kids went to private colleges, which we paid for in real time, so we are behind on buildup of assets for retirement. If the pension holds, we hope to do fairly well for a while (3% annual inflation adjustment built in). With the mortgage paid off, we are accumulating cash every month. I want to convert some of the cash to silver or gold but she’s afraid of it losing value. She seems more comfortable losing the fiat dollar purchasing value every year rather than risking a precipitous drop in the value of silver or gold. Also, one of her concerns is that advertising for gold/silver is only heard on conservative radio shows and the hosts are pitching it. She feels this appears as a conflict of interest and wonders why we don’t see or hear gold/silver advertising in the mainstream media.

Bill Holter’s Answer:

This is a very common question and situation where spouses have differing opinions regarding “what to do.”  First, I congratulate you for living within your means and getting “life done” without going into debt.  I ask you a couple of questions, what does “Constitutionally protected” mean?  I assume it means that the funds are sequestered in some manner and the trust fund cannot be broken into and raided for other uses.  But, what do they consist of and what is the medium they are “guaranteed” to be paid with?  The answer is “dollars” and this is the problem, what will the dollars purchase when you need to spend them?  You say there is a 3% inflation adjustment built in, how will this protect you against 10% inflation and a 25-50% overnight devaluation?

As for silver, the “precipitous drop” has already happened or should I say “manufactured.”  So much so that silver is now trading well below the cost of production.  Currently the cost of production is close to $25 per ounce, this number will only increase with inflation as mining costs increase.  I think the best way to describe the situation is “you are risking dimes for dollars (many of them)” by not owning silver from these levels.  How will mines produce silver if each ounce they produce, produces a loss?  The price must go higher sooner or later or there will be no supply.

The end of your question is “touchy” to say the least, the Conservative vs. Liberal argument.  I would first say that Conservatives more closely want to follow the Constitution “strictly” and metal is clearly appointed as “money.”  I say “strictly” because in my opinion, Liberals are more apt to “interpret” the Constitution. “Main stream” media is no source whatsoever to get your news from.  From Fox to CNN to MSNBC, spectrum to spectrum of conservative to liberal views, they all miss the mark.  It is as if the “right and left” are the right and left hands of a magician which are used to fool you and obscure the reality.

My suggestion is to strike a deal with your wife where you move “part” of your liquidity into silver and gold to start.  This would only be “fair” as currently you are 100% her way entirely in dollars.  I would also suggest that you pick a single subject that is “conspiratorial” so to speak and the two of you research it thoroughly together.  There are now many which the official explanation cannot scientifically be true, the “truth” based in fact and logic may just open your wife’s eyes and make her more amenable to the math and logic that say gold and silver are money to “save” in where dollars are better used if spent.  I suggest you try to use logic but I know, sometimes logic doesn’t work either as I have family members who think I’m a wing nut!

Q:  It seems to me that every newsletter and advisor is missing what looks like “the elephant in the room”.  Isn’t our government (and others around the world) buying up huge quantities of stocks every day in order to prop up the markets?  We know about the “Plunge Protection Team”, but does anyone know just how much of the stock market is now owned by our government? 

Andy Hoffman’s Answer:

Two weeks ago, my audio blog was titled “The Biggest Pink Elephant Ever,” in reference to the massive stock market bubble created by unprecedented, and expanding Central bank monetary easing.  Of course, the even bigger pink elephant, as you suggest, is the fact that not only are ZIRP, QE and other money printing schemes – overt and covert – propping up markets, but so is the government itself.

In most cases, “PPT organizations” like the U.S.’ President’s Working Group on Financial Markets act secretly, but in some cases – as with the Bank of Japan – they actually tell the market what they’re doing.  To that end, just last week we learned that the BOJ is buying massive amounts of stock as we speak – explaining why the Nikkei has been on a tear whilst the Japanese economy implodes.

Better yet, we learned in June that Central banks, cumulatively, have acquired as much as $29 trillion of equities or roughly half the entire global market capitalization.  And thus, when people ask, “How is the market doing?” I have to laugh, as there is no longer such a thing as an equity (or fixed income) market.  That said, once every stock is bought, there’s nowhere to go but down – especially if Central bank interest rate suppression slows down one iota, or if PPT’s stop using printed money to take stocks ever higher.  Moreover, the more stock governments own, the more communist the world gets.

In other words, betting on stocks at historically nosebleed valuations – in the U.S., most metrics are pegged above the 2000 peak – appears to be a sucker’s bet.  Either by hyperinflation or crash, eventually the piper will have to be paid – with massive real losses.



George Knows! Do You?

This past week we saw the hedge fund industry release their 13F filings which showed their holdings as of June 30th.  The most famous and arguably the most successful hedge fund manager is George Soros.  If you know about George Soros, you may or may not like his politics or his beliefs, I personally don’t.  No matter what you think of the man, he does know how to make money on large outsized moves which have a tendency to happen in very compressed timeframes.

Going back to 1992, Mr. Soros made a very outsized bet against the British pound.  He levered into a $10 billion short position and “won.”  It has been said that “he broke the Bank of England” when they were forced to devalue.  Soros made $1 billion on this adventure.

The latest 13F holdings report showed that Soros nearly doubled his short position betting heavily against U.S. equities.  He also holds a large position in the ETF GLD and has outsized option positions betting on junior miners so it’s apparent he believes in the merit of gold.  Is he right?  Does he “know” something that we don’t know?  He is positioned for a crash and will profit when one occurs.  To answer the question, I believe yes, he probably does “know” for a fact what is coming to pass.  He has the ability to speak with presidents, prime ministers and central bankers at will.  Has he been told that the banking or financial system is already upside down or that a war is going to take place?  My guess is probably yes, he knows and has been advised.  Even if this is not the case, the man is smart and can see for himself…just as we can.

So is there a point to me writing about George Soros’ positioning himself for a crash?  Well yes, because he has a very long term track record of being correct and correct in very big ways.  If you are already positioned in this manner or some form of it, you now have something to strengthen your convictions.  If you haven’t completely bought the math and logic pointing to a coming crash, this news might move you off the fence?

I also want to use Mr. Soros positioning with a hypothetical.  Where would we be right now if Ukraine really did wipe out a Russian convoy?  What if Russia does just start the engines and roll into Ukraine?  That all “supposedly” happened this past Friday, today is Tuesday so we would have had 2 full trading days behind us.  Again, hypothetically, what if the Dow Jones was down 700 points on Friday and another 1400 points on Monday, what would you do today?  Would you buy the dip?  Would you sell?  Would you do nothing and just wait for the smoke to clear?

What about gold and silver?  What if gold was up $90 on Friday and $230 on Monday?  Would you be a buyer here at the new price of $1,600+ or would you wait and hope to be able to buy some on a pullback?  Or would you hit the sell button and wipe your brow in relief that you could sell your gold at a breakeven from metal purchased in 2012?  How would you react to $27 silver?  Remember, this is what George Soros is positioned for, what do you think he would be doing?

I cannot answer any of the above questions because only you personally may have an idea as to what your thought process might be.  I caution you however, in the heat of battle, what you believe now may be very very different from the reality when you are faced with it.  My personal thought process is this, once the collapse starts it will be bigger and farther reaching than anything we have ever seen before.  In fact, I believe what is coming will be 1929, 1987, 2000 and 2008 all wrapped up into one big toilet flush!  We have more debt than ever before.  True unemployment if calculated the way we used to is probably pushing levels seen at the depths of the depression.  The same can be said about true inflation, we are probably running at levels or close to what we saw in 1980.  Our Treasury has never before been this indebted and our vaults not this empty in over 100 years.

How is that for a mix?  Yet the majority go on as if it’s business as usual and fool themselves into believing “I’ll do what I need to do when the time comes”.  My point is this, if the stock market is down 10% or more in a couple of days or gold and silver up 10-20%, what will you do?  Will you hesitate to sell stocks or buy metal (real money)?  Human nature says that you in fact will hesitate.

I can foresee a meltdown/melt up in stocks and precious metals coming.  I believe it is possible we could see in a one week to one month timeframe where stocks lose nearly 50% and metals double …AND THEN the markets close.  I have said all along I believe we will see a bank/market holiday where everything closes and then will reopen at “new” levels.  Human nature says you will not do anything in the tumultuous phase, this is called the “deer in the headlights” syndrome.  Then, if I am correct, you won’t be able to do anything while the markets are closed …which leaves you with what alternative?

The “alternative” is to use your own common sense and logic to where we are now, where we are headed and what you need to do about it.  The time is now, right NOW!  Did you know last Thursday that WW III could have started the next day?  Do you know when or what the spark will actually be?  No, you don’t, I don’t and only a handful of insiders do.  All I can say is that the U.S./NATO/West is hell bent on starting a war somewhere and soon to cover up the bankruptcy they’ve caused.  Markets will do things that previously had been unthinkable.  Trades will “clear,” or not.  Metals will be available for delivery, or not.  Markets will be open to transact business, or not.  Please don’t wait for the “or not” phase, in my opinion it has an almost 100% probability of arriving.

Jackson Black Hole

My weekly appearance on Kerry Lutz’s radio show is called “Manipulation Monday” – and yesterday’s segment takes the cake, surpassing even the “day of manipulative infamy (and failure)” that was Friday’s “convoy attack” interventions.  Fortunately, the cumulative impact of our work is starting to work; as with just 13% of Americans trusting the government, the “alternative media” that the Miles Franklin Blog operates in is become a powerful enlightening force.

The reason we so emphatically speak of PM suppression is because it is the single most important factor in global capital markets – utilized by TPTB to “mask” inflation, and enable Central banks to continue printing money.  However, Miles Franklin doesn’t spend such large amounts on this endeavor for “fun,” as our principal goal is to get you to act.  And if you do, we hope you’ll give us a chance to earn your business.  There’s a reason we’ve been in business for 25 years; and we promise, if you do call us, you’ll get the industry’s most experienced, lowest pressure service at competitive prices.  Moreover, we believe our Brink’s Montreal vault represents the Western Hemisphere’s best PM storage solution – so much so, that David Schectman, Andy Schectman and myself utilize it ourselves.

Back to the topic at hand, yesterday represented the Cartel’s 60th straight “Sunday Night Sentiment” attack, while today’s “2:15 AM” raid was the 281st in the past 317 trading days.  In both cases, the odds are not even in the realm of “sixth sigma,” with the latter expected to occur naturally once every quintillion trading days.  And if we calculated the odds of gold falling every day at the 6:00 PM EST open of the ultra-thinly traded “Globex” paper platform, for at least the past year, they would be significantly higher.  As for today, check out the comparison to yesterday morning’s “trading” – “Cartel Herald” algorithms and all – and tell me if you believe something’s fishy.

3 Gold Charts

As we surmised, Friday’s “convoy attack” was but another ruse; and like last month’s MH-17 crash, the world has not a clue what actually happened.  Equities rocketed higher, but with entities like the BOJ overtly buying stocks and other “PPT organizations” doing so covertly, it’s hardly surprising.  Nor is said, maniacal PM suppression given that economic data has never been weaker, Central bank money printing broader, or geopolitical tension this intense in generations. Actually, we’d say the below Dilbert cartoon – from 1996 – is apropos, but it’s really not.  Back then, retail equity speculation was rampant; while today, retail participation is stone cold dead.  To wit, if the average investor didn’t lose his shirt in the 2000 “tech wreck” or the 2008 financial collapse, his savings have surely been destroyed by a 14-year recession, 35-year low in labor participation, and 40-year low in real earnings.  And per above, few people trust markets anymore, given the ongoing parade of scandals amidst too big to fail, too big to jail banks.  No, this time around the “market” is being driven up solely by Central bank money printing and government intervention, with only the “1%” materially benefitting.  This is why blue chips and stuff alike are being valued at record levels – on record margin – amidst the worst economic environment of our lifetimes; and consequently, why massive real losses are inevitable, whether markets ultimately crash or hyper-inflate.


This week, the propaganda du jour revolves around the Kansas City Fed’s annual Jackson Hole boondoggle, in which high-level Central bankers pollute the world’s cleanest air with economic drivel.  David Stockman opines that yesterday’s “mindless” equity rally” is due to expectation of dovish comments from Whirlybird Janet and Goldman Mario, who both speak on Friday.  I agree whole-heartedly with this characterization, in that computers now control 90%+ of all trading.  However, per what we noted above, the Central bank money printing – and PPT market support – won’t dissipate under any scenario.  And thus, what makes this week any different?

More importantly, the entire world is awash in exponentially increasing debt.  And thus, it will never be feasible to raise rates; let alone, exit the Ponzi scheme that is the Fed’s own balance sheet.  In other words, bonds must be eternally supported with zero (or lower) interest rates – and stocks, despite historically high valuations.  Regarding the latter, U.S. financial custodians empowered by the “Bernanke (and now Yellen) puts,” have completely ignored the lessons of 2000 and 2008, by still having the world’s highest equity allocations!

Pension Fund Equity Allocation

As for the conference itself, the MSM will yet again misinform, noting the possibility of policy change “hints” in the aforementioned Friday speeches.  In reality, the Fed has never used non-FOMC events to do such, be they international symposiums or Congressional testimony.  However, because Helicopter Ben stated the obvious in August 2012 – i.e., QE3 was upcoming – the babel leading up to Friday will be deafening.  In Whirlybird Janet’s case, her last two public comments spoke of “considerable uncertainty” in the Fed’s economic forecasts (July 17th) and “significant underutilization of labor resources” (July 30th).  Since then, the preponderance of data – particularly real data, not published on the “island of lies” – has been awful.  And thus, the odds of dovish comments are not much different than those of 60 straight Sunday night paper gold raids.

As for Goldman Mario, he is even less likely to make a major policy statement, given he is the ECB’s sole representative at a U.S.-sponsored event.  Granted, his afternoon slot is after European markets are closed for the weekend; thus, enabling him to avoid moving markets.  And granted, the world already anticipates the $1 trillion QE program the ECB is “preparing” to be launched in the not too distant future, with Europe’s economy literally plunging into the abyss.  However, it would be extremely poor form to announce – or even hint at – such during a Federal Reserve conference; which frankly, would be taken as a sign of rank desperation.  And thus, unless a new “Archduke Ferdinand Moment” or other significant equity event occurs between now and Friday, we’d expect Friday’s “Jackson Black Hole” – like all others – to dissipate in the wind.

Of course, the more important question is what Central banks will do after Jackson Hole, when the global economy continues to implode in unprecedented, simultaneous fashion.  Here’s a giant hint; they’ll do exactly what they’ve always done when attempting to prolong dying fiat Ponzi schemes.  Print, print, and print some more – until inevitably, today’s 180+ currencies join the dustbin of history like the 599 before them.  And no, it won’t take “years” to occur, even if some hold on longer than others, as many currencies are already experiencing dramatic purchasing power declines.  The terminal phase of all fiat regimes are defined by exponential money printing and debt growth, which is exactly what’s occurring as we write.  And after this Fall’s “decision time” for serial money printers like the Fed, ECB and BOJ, the slope of debt growth will likely become significantly steeper.

And thus, we hope you “see the forest through the trees” by soundly ignoring Jackson Hole; and instead, focusing on the exponential money supply growth that will inevitably yield dramatically higher gold and silver prices, and dramatically lower real returns in traditional asset classes.  Be warned, such changes will not be without equally dramatic increases in the level of social unrest and draconian government action – and potentially, military engagement.  However, all we can do is hope for the best and prepare for the worst; and in the case of history’s most suppressed assets, the risk/reward profile for physical PMs has never been stronger.


Can You Believe Anything Anymore?

Andy Hoffman joins Kerry Lutz of the Financial Survival Network to discuss gold and silver, unemployment, 10 year yield plunging, UK housing prices are dropping at record rates, new silver fix and the upcoming Fed’s Jackson Hole Meeting.  To download the audio, please click below.

Andrew Hoffman – Can You Believe Anything Anymore?

Next Time?

Around mid-morning on Friday we heard news that the Ukraine had “destroyed part of a Russian convoy.”  The stock market immediately dropped nearly 200 points, Treasury bonds were bid 10 basis points lower, oil was higher and gold which had been hammered $20 lower earlier ran back to unchanged.  I do want to mention that “the sale” which knocked gold down was some $2 billion worth of COMEX futures.  $2 billion, this would amount to a little more than 1 week’s production from ALL mines in the ENTIRE world.  Again, “who” would ever sell their product in this fashion where they receive THE worst price of the week?  The real laugher is that this was not even “gold” which was sold, the sale was merely COMEX futures.  This game however will shortly end as the Shanghai exchange comes on line which will be a 100% physical exchange.  China has a history of meeting out harsh and should I say “physical” penalties for financial crimes, selling something that does not exist would fall into this category.  This further display of naked short selling is not what I’d like to write about today.

The “announcement” of the destruction of a Russian convoy had all the makings of being the spark for WWIII.  As soon as I heard the “news” and saw the markets react, my first thought was “this is the beginning.”  Were it true, the situation would have already escalated in every fashion.  The escalation would have certainly been militarily but also financially.  What the heck really happened though?  Anything?  Here it is more than a day(s) later and what do we really know?  Was there a Russian convoy destroyed?  Was there even a Russian convoy on Ukrainian soil?  Was anything at all destroyed?  The Telegraph put this article out Friday evening. The headline clearly states “Ukraine destroys part of Russian military convoy.”

First, two British journalist “saw firsthand” the military convoy cross the border.  Do we have any pictures?  Did they not have cameras with them?  This is possible but not probable, but surely they had cellphones right?  So where are the pictures?  I haven’t even seen any pictures showing destroyed vehicles in the light of day after the alleged attack.  Russia denies having any vehicles on Ukraine soil nor having anything destroyed.  Yet the President of Ukraine himself swears to it?  What really happened if anything?  Zero Hedge even speculated that Ukraine may have even fired on their own units.

I have to ask again just as I did after the Malaysian airliner was brought down last month, where are the satellite images?  Russia says they don’t have any because there are none, the White House tweeted “can’t confirm convoy destroyed.”  Who is going to come forward with proof one way or another as to what happened?  Was this just another false flag to start war which went sour and failed?  I hope you understand just how serious this is.

Sadly, I will give you my opinion on what “is happening.”  Some who read what I am about to write and will say I am “un patriotic” or “un American.”  This couldn’t be further from the truth.  After watching the U.S. “back” tyrants in various countries and support the coups of “puppets gone bad” who would no longer do our bidding, I can only say we are wrongheaded and dangerous.  In my opinion, Washington is doing anything and everything possible to start a war.  This war of course will end up being against the interests of China and Russia.  Is this war “winnable?”  No it is not and the danger is we end up in a nuclear conflict.

But why?  Why does it seem the U.S. is hell bent on war?  There are several reasons all of which turn back to the U.S. dollar itself and the power involved in issuing the reserve currency.  First, it is my opinion that Washington knows the game is about over.  The economy has not and cannot be kick started because there is too much debt weighing it down.  I also believe we are at the end of the road where it comes to keeping a lid on gold and silver, I believe the metal to deliver has just about run out.  I also believe the realization that there is very little good collateral left to be lent or borrowed against has sunk in.  Even outright lies about economic numbers are no longer supporting confidence which is waning.  Remember, “confidence” is what holds up fiat money.  It is the failure of confidence that Washington is trying to hide or misdirect your attention from.

It is my opinion that we have come to the point where a scapegoat is needed and dirty tracks must be covered.  The dollar system is a Ponzi scheme which cannot just fall apart on its own without having something to point at as the “cause.”  The thought process I am sure is if a war is started and “we win,” the dollar can then be “forced” upon the world.  If we lose?  This will be pointed to as the reason the economy is in shambles, the markets collapsed, your bank closed and your dollars cratered in purchasing power.  Never mind the fact we ran wild deficits, printed money and have done everything that history has shown us was imprudent and reckless.  A war will (they hope) act as a distraction from the financial chaos.  I believe the thinking here is the public will be so involved with their own problems that the perpetrators of the grand fraud might get a pass.  Whether this would/will work or not is another question.

It is my opinion the world knows all of the above and is in the process of isolating the U.S.  Our actions to start a war have eaten away at the trust in our currency.  “Trust” was all we had left and we have lived off of it for years.  It seems the more we lost it, the more we “pressed” to keep it using bullying tactics which only served to eat further away at the remaining trust.  As I wrote last week, we are “kicking the table over” because there are no other options.  Starting a war will do this.

The above was written over the weekend.  Here we are Monday morning and “it never happened.”  Nothing happened so please move along and just forget about it!  Actually, Friday’s news has already been completely forgotten.  What you should not forget personally is the fact that you were given “news” on Friday which was completely false.  What will you believe “next time?”  There will be a next time, you can count on it.  There unfortunately will be “next time’s” until one gets the desired end which results in the war called for by the script.

A Day of Manipulative Infamy – And Failure

From 1999-2002, my oilfield service research team at Salomon Smith Barney was ranked by Institutional Investor magazine as one of the best in the industry.  For fundamental analysts, this is the equivalent of an Academy Award; and trust me, we earned it!  Back then, financial markets were for all intents and purposes, freely-traded; with few exceptions like precious metals of course.  Then again, even PMs weren’t controlled that much back then, as TPTB did not yet fear their message.

Anyhow, the reason we were recognized was simply, we were good analysts.  In other words, we did our homework detecting trends others either missed. Sadly, rigged markets became a reality circa 9/11 – becoming so obvious in the ensuing years, that by 2005 I left Wall Street for good.  Unfortunately, my initial instinct was to work for mining companies (in investor relations); but rather quickly, I realized mining shares were more rigged than all other sectors combined.  Finally, I left the equity business entirely in 2011 (as well as mining share investments) to join Miles Franklin; where fortunately, fundamental analysis still has validity.  You see while TPTB can short all the mining shares, ETFs, closed-end funds and other “paper PM investments” they want, they cannot fabricate physical gold and silver.  In other words, “Economic Mother Nature” will not be denied no matter how hard manipulators try.  I had been analyzing PM fundamentals for GATA since 2005 for free; and at Miles Franklin, was blessed to be given the opportunity to do so as well for a salary.

Today, we’re going to demonstrate how such analysis is performed, as pertains to the “market reaction” to Friday’s supposed Ukrainian attack on a Russian humanitarian convoy; which I deem supposed because as I write Sunday afternoon there is no proof it even occurred.  Sort of like July 18th’s MH-17 airline disaster; which certainly occurred, but a month later, it has still not been proven who did it or why.  In both cases, the Miles Franklin Blog is not averring opinions as to the perpetrators or their agendas; but simply, discussing how markets traded around these “sixth sigma” events in light of our ongoing research on market manipulation.

To start, let’s go back to the July 17th downing of MH-17 over Eastern Ukraine.  Our ensuing article was titled “Coincidence,” in which we described extremely suspect trading before and after the event.  Below are excerpts from that article describing “market reaction” eerily similar to Friday’s.

As for the timing of the crash, it couldn’t have been more suspect.  I was taping my weekly Butler on Business podcast at roughly 12:00 PM EST – one of my best ever, posted here – when gold suddenly rocketed higher.  At the time, we were discussing the horrific housing starts numbers behind the morning’s powerful rally in U.S. Treasury bonds.  Readers are well aware that we believe plunging yields in the face of the propagandized “recovery” – and Fed “tapering” – are the “most damning proof yet of QE failure”; and thus, it was quite “coincidental” that with the all-important 10-year yield amidst a desperate struggle to hold the key 2.50% level, an extraneous, “black swan” event suddenly emerged to “finish the job.”  As you can see, the yield promptly plunged below 2.45%, and sits at 2.47% as I write – in eminent danger of a dramatic breakdown that could ultimately erase all of the past year’s “post-tapering” gains.

As for gold, consider the “coincidence” that the crash occurred within the narrow three-and-a-half hour window of 8:20 AM to 12:00 PM EST constituting the only period PMs are “allowed” to materially rise.  Sure, it was at the end of that window; but no problem, as long-time readers are well aware that I deemed 12:00 PM EST the “cap of last resort” nearly a decade ago.  And thus, it probably won’t surprise you that gold’s top tick was +$26, or exactly the “2% cap” the Cartel enforces on 99.9% of all trading days.  Not to mention, it occurred at exactly 12:00 PM EST, via the prototypical “Cartel Herald” algorithm utilized to stop every PM surge over the past decade-plus. 

What makes the timing of this event that much more suspect is the fact that historically, the Cartel tends to “pre-empt” expected PM surges – for example, when they know a particularly dovish FOMC statement is coming – with vicious paper raids.  Well, not only have we seen epic COMEX “commercial” shorting all month – to the tune of $20 billion worth – but “mystery sellers” dumped $1.3 billion and $2.3 billion of gold futures contracts, respectively, on Monday and Tuesday mornings to push prices down a whopping $47/oz. from Friday’s Espirito Santo-related $1,339/oz. close.

Even more “mysterious” was crude oil’s plunge over the past three weeks, from above $107/bbl. to $99/bbl. on Tuesday, whilst other industrial commodities like copper surged along with robust stock markets.  This is not the first time crude oil has had suspect plunges, although the nature of such declines is nothing like those of Precious Metals, which invariably occur during the exact same times of day, with the exact same algorithms.  Needless to say, oil surged anew yesterday afternoon.

-Miles Franklin, July 18, 2014

All I can say is WOW – as when I read this, I realized it could just as easily have been written to describe the “market action” surrounding Friday’s yet to be validated Ukrainian convoy attack.  To wit, the chart below of the 10-year Treasury yield; which as you can see broke below the 2.40% level the Fed has been covertly defending the past two weeks, seven hours before the convoy attack.

Blue Graph

In freely-traded markets, plunging rates amidst recessionary fears would have been construed as wildly PM-bullish.  However, typically, gold was “mysteriously” attacked with naked shorting just before the COMEX open, taking it from $1,314 to $1,302.  And don’t forget, today was the first day of the “new silver fix”; so it shouldn’t surprise anyone that said attack commenced when silver was again on the verge of breaching the Cartel’s multi-year “line in the sand” at $20/oz.  Then, when the Empire State Manufacturing Index was reported to have its biggest plunge in two years, the TIC report showed significant foreign outflows from U.S. securities, July industrial production barely budged higher, consumer confidence plunged to nine-month lows, and Minneapolis Fed President Kocherlakota offered uber-dovish comments and PMs were smashed even more – with gold plunging to $1,293/oz. whilst equities sat quietly, and the 10-year yield fell further to 2.38%.

And then, for the “manipulation coup de gras,” the supposed convoy attack occurred around 11 AM EST, an hour after the global physical PM markets has closed for the weekend.  This headline generated all the “market” needed to collapse the 10-year yield further, giving the Fed an excuse for having failed to protect 2.6%, 2.5% and now 2.4%.  In fact, rates fell all the way to 2.3%, before rebounding to 2.34% when another highly suspicious data point emerged; i.e., that just an hour after Ukraine supposedly destroyed, unprovoked Russia’s humanitarian convoy; the Foreign Ministers of both countries had agreed to meet in Berlin on Sunday!

The “Dow Jones Propaganda Average, of course, nearly recovered its losses via prototypical “dead ringer” algorithm; and the NASDAQ actually closed higher!  However, silver was mauled in blatant fashion; and as for gold, check out the damning charts below – first of gold’s trading in the aftermath of MH-17; and next, the Russian convoy attack.  As you can see by the upward spikes, they both occurred at EXACTLY the same time of day; and per the commentary above, both were stopped cold at EXACTLY the 12:00 PM “cap of last resort” with prototypical Cartel Herald algorithms – in Friday’s case, not even allowing prices to turn positive for the day!

24hr Gold Charts

Better yet, recall oil’s mysterious plunge from $107 to $99 before the MH-17 disaster.  Well guess what it’s done in the past two weeks? Yep, it crashed from $104 to $96, or essentially the same percentage!  And most comical of all, was Yahoo! Finance’s top story headline at 3:30 AM EST, just before the 10-year yield breached 2.4% seven hours before a potential “Archduke Ferdinand Moment.”  Need we say more?

Reuters Headline

As for the latter part of today’s title, re: Cartel failure.  Friday’s PM attacks may have “worked” in the short-term, in that both metals closed lower amidst blatantly PM-bullish economic and geopolitical events.  However, the initial gold slam didn’t even reach its 200 DMA of $1,286/oz.; and capping and all, it still closed above the 50 DMA of $1,303.  In silver’s case, sure they knocked it down further – as they always do.  However, in doing so, they have pushed it into extremely oversold territory, well above the $18.50-$19.00 level that has created a massive quadruple bottom formation over the past year-plus.  And why shouldn’t it, given the cost of production is nearly $25/oz. and long-term industry sustainability closer to $30/oz.?

Yet again, we emphasize that this commentary does not constitute a geopolitical conclusion of any sort.  That is not our focus here; but instead, to supply you with the tools to perform your personal due diligence.  Clearly, something is “fishy” here, but only you can determine what.  And hopefully, you reach the correct assertion regarding market manipulation which couldn’t be more obvious – or UNSUSTAINABLE!

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