It’s still Thursday afternoon, and my wife is teaching so I figured I’d get started on Friday’s RANT.
LOTS of interesting things to tell you, and show you, starting with the fact that for the second straight day, Miles Franklin has been very busy with buyers taking advantage of the 100% PAPER-driven Cartel attack. In fact, thanks to the Cartel’s dramatic gold takedown below its 200 DMA, as well as rising fears of imminent market collapse, Miles Franklin has seen, for the first time in two years, a dramatic increase in the amount of gold sold, relative to silver. Silver is by far the cheaper metal, but I expect many investors to associate what is on the near-term horizon with what happened in late 2008 – wherein silver declined more dramatically than gold – and thus are opting for heightened near-term caution. Either way, BOTH metals are going up, and investing in EITHER will PROTECT you from the upcoming chaos.
Based on what I have read about the MF Global collapse, last week’s emergency Fed “swap facility,” and deterioration of the European Union, I could not be more certain GLOBAL MELTDOWN II commenced in November. I believe the END GAME would have switched to terminal mode two weeks ago if “the system” had not self-injected the WORLD’S LARGEST CRACK DOSE, to avert the MOTHER OF ALL WITHDRAWAL SYMPTOMS.
Irrespective, “MANIPULATION SATURATION” has set in, and NOTHING they do can buy more than a few weeks of calm anymore. Several nations are on the verge of collapse, as are dozens of banks, particularly the “Big Three” French banks, whose stocks continue to plunge into oblivion, and Bank of America, which despite MASSIVE PPT support, is barely holding its head above the same key $5.00 share level that narrowly averted breaking via the aforementioned emergency Fed “swap facility” announcement. But not for long, I’m SURE.
Speaking of the PPT, I don’t think it’s EVER been more blatant how hard they are working to prop the Dow up, including their early morning Futures goosing EVERY TIME the Dow has a down day, and not EVER taking a breath in its 24/7 quest to prevent it from turning red, even for one minute. Notice how on five separate occasions yesterday it attempted to turn red, rescued each time in the exact opposite manner that PMs are prevented from turning green.
Such as was the case with GOLD, which rose ALL NIGHT in the global, PHYSICAL-dominated market, until EXACTLY the 8:20 AM EST COMEX open, when it plummeted for no reason, by a whopping $35. No other market budged, just gold and silver, which remain entrenched in the clutches of “OPERATION PM ANNIHILATION II,” to be discussed further below. Another WATERFALL DECLINE at the PM Fix at EXACTLY 10:00 AM EST, a hard cap when gold tried to surged at the “cap of last resort” time of EXACTLY 12:00 PM EST, and even some Dow / Gold x 2 ALGOs to push it down further in the afternoon.
And wouldn’t you know it; both major attempts to rise today were stopped just below the KEY ROUND NUMBER of $1,600/ounce. No worries, by this time next year, $1,600 will be a distant memory, NEVER to trade there again, or even within earshot.
Before I forget, I want to return to gold lease rates, which as I pointed out yesterday, have moved up towards positive territory after spending several months below zero, not coincidentally commencing EXACTLY the week in late August when gold surged to a new all-time high above $1,900/oz. The concept of “gold lease rates” is so ridiculous, and revolting, I have a hard time even thinking about it without getting nauseous. NOTHING screams PURPOSEFUL SUPPRESSION more than the fact that “lease rates” tend to hover around zero, and below zero when the Cartel is really on the offensive. And I put “lease rates” in quotes, by the way, as in many ways I don’t believe they even exist, other than as a Cartel “signal” to its puppet traders that additional PAPER raids are upcoming.
The concept of “gold lease rates” is that certain parties desire to lease a “dead asset” such as gold, sell it, and reinvest the proceeds in higher yielding assets. In practice, one would pocket the difference between the ultra-low 1% lease rate and higher yielding bonds then return the leased gold back to its owner. A fantastic strategy when gold is in a bear market and bonds in a bull market – but not so good when gold is rising (and thus more expensive to re-acquire and repay the owner) and bonds falling (yielding losses on the bastardized “carry trade”).
When Barrick and JP Morgan were sued by Blanchard & Co. in 2003, it was for this disgusting, suppressive practice, and don’t forget that Barrick, to this day, has been allowed by its partner, the U.S. government, to fudge the accounting of its hedges based on an assumption it has an endless supply of “deep storage gold” in the ground. And yes, the government was their partner in crime, as Barrick tried to have the case thrown out (unsuccessfully) using this argument.
Nearly 12 years into the gold bull market, with the global financial system on the brink of collapse and Central Banks net buyers of gold, the concept that this ridiculous gold leasing practice is legitimately ongoing is an insult to the collective intelligence of the market. Then again, “the market” isn’t as smart as it used to be, and, as always, when it comes to PM manipulation the ongoing mantra is “see no evil, hear no evil.”
Negative interest rates imply that one is being PAID to lease the gold and sell it, or better put, BEGGED to do so. Why not just sell it yourself if you’re so eager to get rid of it, and save the 1% of interest? I mean, can you imagine paying your bank to hold your money? Scratch that, we had negative interest rates on T-bills earlier this year, as the U.S. banking system has become so poisoned that many investors trust the U.S. government more than their local banks!
Anyhow, I don’t believe the Central Banks have much, if any, actual gold to sell, though rumors abound that Greek or Libyan gold has been commandeered to flood the market and buy a bit more time. I mean, seriously, if the Bank of England were involved in the selling operations reported last Thursday, and they barely have ANY gold of their own, then where the heck did they procure it?
Suffice to say, the Cartel was DESPERATE to get ANYONE to sell whatever stash of gold they had available, and by setting lease rates below zero could kill two birds with one stone, by signaling” puppet PAPER traders that a big smash was coming, encouraging them to aggressively sell and add shorts, backed or naked not material of course.
As you know, in doing so they knocked the PAPER gold price 3% below its 200 DMA, an extremely rare occurrence as pointed out in my past two RANTS. Not only does such an event occur as regularly as a total eclipse, but during a period of maximum positive fundamentals is truly a gift to buyers, hence the surge in PHYSICAL gold buying at Miles Franklin and other bullion dealers this week.
Moreover, in doing my internet rounds this afternoon, I came across the following chart from an old comrade of the gold industry, Eric Hommelberg. Fellow Coloradan “Dave from Denver” posted the below commentary on the GATA website this weekend, putting the long-term technical oversold condition of gold in another light. Per Hommelberg’s “RGold” calculation, gold is currently OFF THE BOTTOM OF THE CHART right now, perhaps one of the best buying opportunities in YEARS!
Eric Hommelberg does not freely publish his work anymore, but he follows a metric known as “Rgold”, or “Relative Gold.” This is the spot price of gold divided by the 200 DMA. The chart below just shows 2004-2008, but please note that whenever the Rgold metric rises above 1.20 it is a definitive “sell” signal, and conversely when it falls below 1.00 it is a definitive “buy.” Right now, that measurement is 0.93, which equals a BUY with both hands. Here’s the chart:
Not only that, my good friend Mike Krieger, also a former Wall Street analyst who moved to Colorado for a better life and escape from pervasive New York corruption, alerted me that the Dow/Gold ratio has reached an EXTREME, long-term overbought condition, BEGGING to be sold here – manipulation or not. This ratio started rising precisely when “OPERATION PM ANNIHILATION I” commenced in late August, and now its Relative Strength Index, at the top of the chart, has reached its MOST OVERBOUGHT CONDITION IN AT LEAST YEARS, possibly of the ENTIRE DECADE. In other words, the odds are strongly that gold is about to make a significant move higher relative to the Dow.
Finally, a word to assuage frustrated and/or scared PM investors worried that the biased media and Wall Street finally have it right, that in their fiftieth or so attempt they have finally called the “end of the gold bull market.” Don’t make me laugh, that group of socialist, government-backed jackals won’t EVER be right, about anything, much less the MOST POWERFUL BULL MARKET OF ALL-TIME, one they have been wrong about since day one!
What we just experienced is yet another PAPER Cartel attack, perhaps the fiftieth in my 9½ years of fighting them, not even close to their best efforts, and with larger, more identifiable footprints than ANY I’ve witnessed. All they did was create one last opportunity to buy gold well under $2,000/ounce, although be warned, the larger the size you intend to buy, the harder it will be to secure PHYSICAL metal at these bargain prices (ESPECIALLY if you are an Eastern Central bank – read, CHINA – looking to buy in real SIZE).
Below is a chart of gold’s jagged rise over the past four years, starting just before GLOBAL MELTDOWN I commenced in mid-2008. As you can see, gold experienced numerous “interim tops,” in nearly all cases due to Cartel attack operations per its overarching goal of slowing the PM bull, NEVER allowing it to surge parabolically (as it so yearns to do) and thus draw speculative fervor (i.e. GREED) and, more importantly, panic buying (i.e. FEAR). GREED will be what draws gold’s attention, but FEAR will ultimately break the Cartel’s back, and these yin and yang emotions go hand-in-hand in the unique, precious world of PHYSICAL gold and
I have written often of “THE WAITING,” i.e. the seemingly interminable periods between interim tops, how tortuous it seems and how LONG. Due to the aforementioned, unrelenting Cartel pressure, Gold has ALWAYS displayed the unique, frustrating property of gnashing for months before finally surmounting Cartel-induced “walls of worry” to reach new ALL-TIME HIGHS, only to IMMEDIATELY crash (TO A HIGHER LOW) and start the process of climbing anew. Kind of like Sisyphus pushing the boulder up the hill, only to have it roll back down; although in this case, the gold bull pushes the boulder higher each time, and is able to stop the boulder’s descent at a higher point each time.
Below is a chart breaking down the periods between interim peaks over the past four years, depicting how much time gold investors must “WAIT” with the amount of time gold rises to new highs. It wasn’t easy creating a table visualizing this concept, so please read carefully.
I started with the first interim peak of 2008-2011, at, what a shock…the very KEY ROUND NUMBER of $1,000/ounce. As expected, the Cartel attacked viciously at that level, and per the second row of the table, it took 339 days to return to the $1,000 level, which just happened to be at the height of GLOBAL MELTDOWN I, in February 2009 (yes, it IS a safe haven!). The second to last column, “Time between Return-to-Peak and Ultimate Peak” depicts the period from when that $1,000 price finally returned and when gold reached its next interim peak.
Unfortunately, In February 2009 the Cartel was VIOLENTLY against gold surging through $1,000 during a time of maximum crisis, and thus wouldn’t let it rise further, hence the “0 days” entry in that column, followed by another 214 days of “WAITING” until $1,000 was again reached by Sisyphus – er, gold. Gold then rose 20% in the ensuing 70 days, before yet another Cartel attack yielded yet another interim peak at $1,195/oz, and yet another long period of “WAITING,” this time 229 days, before $1,195 was again reached.
Per the bottom row of the table, the TOTAL amount of time in which gold was rising past an interim peak to a new ALL-TIME HIGH was just 342 days, compared to 1,256 days of “WAITING” to return to a previous peak. In other words, for the past four years, gold has been below an interim peak an astounding 79% of all trading days, creating the ILLUSION it is “always falling” even though, in actually, the short bursts of those 342 days more than made up for the tortuous, frustrating PLUMMET and CHOP of the other 1,256.
This ILLUSION works wonders in demoralizing investors, particularly those “doubling their pleasure” by simultaneously investing in mining shares, which I will never again do for reasons discussed ad nauseum in recent RANTS. For example, take a look at the action of the HUI mining index over the past three years, a jagged saw-like chart depicting no less than 19 significant declines in 36 months. If gold is only rising to new highs 21% of all trading days, I’m guessing the same calculation for the HUI would show it to be advancing to new highs on no more than 5%, the ULTIMATE in investor torture (thank you, ALGOs!). Moreover, in recent years the HUI has DRAMATICALLY underperformed GOLD and SILVER themselves, although who knows what that relationship will look like in 2012.
Next, look at the Dow’s three year chart, the polar opposite of the HUI in that it nearly always rises smoothly, with essentially no volatility no matter how bad the news. Inevitably it does have declines, as PPT or not, there are still SOME legitimate market participants left, and during periods of maximum FEAR even the PPT must concede declines – at the least, for appearances sake.
But just as EACH and EVERY HUI spike is met by an immediate WATERFALL DECLINE, each and every Dow decline is met by immediate, maniacal support. When “periods of maximum FEAR” inevitably occur, they just step up such support, particularly at KEY ROUND NUMBERS, such as the VERY KEY 10,000 level defended so vigorously for six months in mid-2010, and the 11,000 level that has been equally vigorously defended for the past four months.
In other words, readers, “WAITING” periods are simply “gifts from the gods” (those same gods that cursed Sisyphus), to be utilized accumulating PHYSICAL gold and silver in advance of the brief sprints to NEW ALL-TIME HIGHS, when one of these days the Cartel will LOSE CONTROL, yielding the aforementioned PANIC buying that will ultimately break them, yielding supply shortages that will make it all but impossible for late entrants to PROTECT THEMSELVES.
And one more article before I retire for the night, to yet another soccer game. The article below by Casey Research depicts some of the supply factors to be considered when investing in gold. Note that production peaked nearly a decade ago, and due to rising production costs and political risks it will take some time to surpass that peak, while simultaneously investment demand EXPLODES exponentially, such as the 4,000% increase in Chinese gold exports from a year ago.
The most important charts below are the last three, depicting rising investment demand compared to jewelry and other uses, the end of Central bank and investor selling, and the even distribution of investment demand by geographic region.
Hopefully, this section has convinced you how strong a buying opportunity exists NOW for gold, which WILL likely end its “WAITING” period in early 2012, and prepare for its INEVITABLE surge past $2,000 per ounce!
OK, it’s Friday morning, and I’m fired up anew over yet another instance of unbelievably BLATANT Cartel/PPT activity. All you need to see is today’s gold chart to observe that, for the second straight day, gold rose ALL NIGHT until the SECOND the COMEX opened at EXACTLY 8:20 AM EST, when gold suddenly plummeted $15, losing HALF its overnight gains in the first 30 minutes of COMEX trading. Look at the green and red charts of the last two days, up until the COMEX opening – IDENTICAL!
Not only did PAPER gold get attacked at its usual time, but was stopped at +$31, or EXACTLY the 2% daily cap limit imposed on 99% of ALL TRADING DAYS over the 11+ year bull market, at EXACTLY the KEY ROUND NUMBER of $1,600/ounce! Meanwhile, as always Dow futures were higher all morning, surging 50 points in the first five minutes of NYSE trading to “set the tone” for the day and make sure the week concludes on a positive note, again above 12,000 if the PPT gets what it desires.
And ditto for PAPER silver, which rose ALL NIGHT until EXACTLY the 8:20 AM COMEX opening, when it was stopped pennies from the KEY ROUND NUMBER of $30/ounce before it’s usual, daily WATERFALL DECLINE.
So what occurred overnight that’s so BULLISH for the Dow, bullish enough to push it above 12,000 (and the KEY 200 DMA of 11,940) for the umpteenth time this fall, while GLOBAL MELTDOWN II simultaneously progresses?
Could it be news that China’s economy is significantly slowing…
…or that it imposed huge tariffs on American auto imports?
I find it hilarious that the press talks about how “horrible” this act is, when in fact China is simply retaliating to similar actions undertaken by the U.S., per the title of the article…
And speaking of China, not only has it taken over the world’s manufacturing crown from the U.S., but banking leadership as well (for what that’s worth)…
Compared to China, the U.S. is becoming an also-ran in nearly all categories. However, it still throws its weight around, in an increasingly arrogant, aggressive fashion, because the dollar remains the “world’s reserve currency.” In other words, “it may be our dollar, but it’s your problem.” Ah, young grasshopper, but for how long?
Today’s westward journey of “horrible headlines” takes a pit stop down under, where lo and behold even Australia is locked in the vise-like, GLOBAL grip of the European crisis. Sorry mates, your banks, too, are ensconced in the daisy chain of bad debts and derivatives centered in EUROPE but created by AMERICA. Throw in the fact that the Aussie dollar, too, is a fiat currency – as is EVERY CURRENCY ON EARTH – and you can see how NO NATION IS IMMUNE to the economic conflagration set to consume the GLOBAL financial system. Some nations will fare better than others – and I’d guess Australia is one of the former – but ALL will see massive debt defaults, rising inflation, and declining standards of living when the dollar-based GLOBAL fiat currency system collapses, prior to creation of a new GOLD STANDARD.
Next stop, Russia. No matter where one looks these days, the pre-World War III drums are beating, with IRAN squarely in the cross-hairs as its focal point. I don’t know WHEN, or by WHOM, but SOMEONE will manufacture a conflict with Iran in the coming months, or years, and when they do, will find a large, aggressive, well-armed, West-hating, nuclear-equipped army waiting for them with rage in its eyes. I shudder at the thought, as mankind never learns its lesson.
On to Europe, where as you can imagine the list of horrible headlines is as long as ever. But don’t worry, the stocks are higher! All’s well!
First to Eastern Europe, where the contagion is just as powerful. It looks like Hungary is about to collapse, with its huge banking ties to the AAA-rated (LOL) nation of Austria…
And then to Western Europe, where the IMF is begging the rest of the world for help…
And how about this knee-slapper? That the DOA EFSF fund is still making headlines is pathetic enough, but given that Italy and Spain are two of the top candidates for near-term bailouts, isn’t it ironic that these two financial zombies are responsible for funding one-third of the fund? Only in today’s bizarre world!
Speaking of bailouts, I see Fitch downgraded EIGHT global banks last night, including major European banks such as BNP, SocGen, UBS, and Deutschbank, and the two American banks most likely to lead the upcoming daisy chain of bankruptcies – French-noosed Morgan Stanley, and PPT-supported above $5.00/share Bank of America!
And speaking of “French-noosed,” I wonder how many people realize that GERMANY, considered a pillar of financial conservatism, owns 90% of all French government debt!
Sticking with the ugly topic of French finances, in light of yesterday’s accusation by a Bank of France official that the UK, not France, should be downgraded (more of the political infighting I have spoken of), it should be pretty clear BOTH nations are in trouble, and likely the UK more so given that these figures only discuss government debt. To wit, as horrific the condition of France’s “Big Three” banks, they pale compared to the recklessness of UK banks, which have borrowed nearly as much as French and Italian banks COMBINED!
While on the topic of sovereign borrowing, here is a table listing debt/GDP of major Western nations, not including “off-balance” sheet items, of course, which in the case of America includes the expanding losses, and thus debts, of Freddie Mac and Fannie Mae as the epic U.S. housing bubble endlessly bursts. And how about that, the U.S. trumps BOTH the UK (E) and France (F ()!
In other words, if not for its “world reserve currency” status of the dollar, the U.S. would be wallowing amidst the PIFIGS pen!
Of course, when considering the $114 TRILLION of American unfunded government liabilities, the PIFIGS pen looks more like the Ritz-Carlton! To give some perspective how much money the U.S. government owes (a number to be shortly compounding at an exponential rate), below is figure depicting how large a structure would have to be built to hold $114 TRILLION of fiat dollars.
This figure, shown on the right, is ENTIRELY COMPRISED OF $100 BILLS, totaling $114 trillion. In other words, a structure holding $114 trillion of one dollar bills would be 100 TIMES HIGHER, or 33 MILES HIGH – above the stratosphere, and into the mesosphere!
To finish this section anticlimactically, I feel the need to include this article about the province of Ontario, home of some of the most unscrupulous banking characters I have come across, although not close to the criminals residing in New York and London. Per the article below about the province of Ontario under scrutiny for potential downgrade, and the above article about Australia preparing for a European bank collapse, NO NATION ON EARTH is immune from the economic tsunami about to wash across the world’s shores, DIRECTLY resulting from the TOWER OF DEBT pictured above!
And on to today’s RANT topic, my idol and precious metals “father figure,” Jim Sinclair.
I first met Sinclair in January 2004, when I traveled to his winter home in Jupiter, Florida for an intimate presentation to gold investors. Then, as now, the sole purpose of his writings, and such meetings, was to empower people to PROTECT THEMSELVES from the oncoming economic storm. That mantra has permeated my personal and professional lives, and here I am eight years later espousing the same sentiments to a readership of tens of thousands.
Sinclair is known as “Mr. Gold” due to his unsurpassed knowledge of the inner workings of the gold market, although he has an equal, unparalleled understanding of the banking system and macroeconomics. He was talking about DERIVATIVES light years before anyone else, and as the former operator of a clearing firm, knows EXACTLY the ramifications of “fatal errors” such as the MF Global collapse.
He has been 100% in his macro forecasts over the past decade, particularly regarding GOLD, and he is currently shouting from the rooftops that gold his headed to $2,000/oz, then $4,500/oz and significantly beyond, per comments in this exclusive interview Wednesday afternoon, following that day’s incredible $60/oz COMEX PAPER attack.
Sinclair believes the headline of Cartel sales last Thursday, as well as essentially everything out of TPTB’s mealy mouths since gold passed $1,900/oz in August, has been JAWBONING, a last-ditch act of Central Bank cowardice before all hell breaks loose.
Ignore Jim Sinclair’s warnings at your own peril, or listen to them, PROTECT YOURSELF, and SURVIVE and THRIVE in the upcoming GLOBAL economic collapse.
Have a great weekend!