Gold and silver price manipulation, “we” have talked and written about it for years. I can still remember speaking two or three times a week with the late Harry Bingham back in 1997 and ’98 regarding this topic. No matter what “event” popped up which logically and in the past should/would have pushed the price of gold higher, we would see waterfall action instead. Then along came Bill Murphy and Chris Powell of GATA. They put forth all sorts of anecdotal evidence, work by Frank Veneroso, James Turk and others which made the “manipulation picture” clearer. Each piece along the way was added to the previous pieces and made it clearer “we were right.”
Of course, along the way there have been slurs and smears of GATA’s work and those of us who put the pieces together shedding light on the fact that gold and silver prices were manipulated. I must say, it was quite a frustrating experience when often times there was obvious evidence to the 3rd grade mentalities out there yet supposedly “smart” people would just turn their noses up saying “that proves nothing.” Even the latest operation last Wednesday at 12:30 AM where one week’s worth of global gold production (40 tons) was sold in the tight window of and Indian holiday and Chinese/Japanese lunch break was “apologized away” as being “routine selling.” Yes, I will agree, it has “become routine” but in no way is it “right.” Selling that which does not exist is illegal, morally wrong and in this case aimed squarely at suppressing the price. This is either “price fixing,” or “collusion,” both supposedly illegal.
UBS has agreed to pay a fine without of course admitting any guilt. It is said there are several other banks negotiating their own deals in London on this same issue. So yes, the prices of gold and silver have in fact been manipulated unless you want to say UBS and the other banks are agreeing to pay their fines out of “nuisance” and just want it to go away. I find the timing of this very interesting. Is this action coming out of London in an effort to show the Chinese (G-20 and the rest of the world) they are cleaning up their act? What about here in the U.S.? Will the CFTC stand alone and look the other way finding “nothing actionable”? As for the 40 tons “sold” last week, do you think the Germans might be thinking “hey, we want some of that, where’s our gold? We asked for less than that for year one and only got 5 tons, was some (or all) of that 40 tons our gold?”
In my opinion, London’s action of bringing this to light now is very significant. Not just because of the BRICS and G-20 meeting but because it comes at a time when GOFO rates spiked negatively suggesting a very tight gold supply in London. Are the British regulators trying to get out ahead of this? Is it possible that the vaults are close to empty? Based on what we know of Chinese and Indian imports the last few years, Western vaults have certainly been dented badly, maybe this move by the regulators is a “tell?” We will soon know one way or the other!
The UBS fine in my opinion is merely the tip of the iceberg and before this saga is over we will find out that gold and silver prices have been “locked” down in many other various ways. We know about the “gold fix” being “fixed.” Now we know about UBS and LBMA dealings not being proper, the last straw will be COMEX in the “land of free and fair markets” but I wouldn’t hold my breath waiting for U.S. regulators.
This “rigging” revelation has many more and far reaching repercussions than first meets your eye. This is not about gold, nor silver. This is not even just about the dollar, interest rates or the Treasury markets. This is about EVERYTHING! First, it’s about the “honesty” of Western markets which for 100 years has been held up as the reason “why” to invest in the West. Next, it is about the standard of living in the West, particularly the U.S. If gold and silver were allowed to rally, back in 1997 and ’98, maybe the dot com bubble would never have occurred or at least to the extent that it did. The housing crisis would not have happened because interest rates could not have been lowered the way they were. The U.S. could not have gone $18 trillion into debt because we could not have afforded 6% interest rates on the balance. The past economic “growth” and standard of living would have been far lower. Elections (if not stolen) would have come out differently, people would have lived their lives differently and decisions on the allocation of capital would have been far different. Yes, EVERYTHING “would have” been different!
So here we are and now we know. The “lunatics” who sounded logical but were “always wrong” were right all along and for the right reasons! What will this mean? If as I believe, the Chinese and the rest of the world are now demanding free, fair and honest markets out of the West as a requirement to doing business and “sitting at the table,” then “things” will change in a very big way! Call it a reset, dollar devaluation, financial crisis or whatever you’d like, “it” is coming. The standard of living in the West is about to change. We will be required to work, and actually produce things. No longer will we be allowed to import real goods and export as payment …fake money. The fake money will be devalued and with it all savings being held by institutions solvent or not.
I want to go back to the very basics as to what “underpriced gold means.” It means that your dollars are valued too high. It means that the interest rates you pay on everything are too low. This means that your house is worth less than you think because new buyer’s incomes can’t stretch to current pricing. It means the stocks you own are far too high and their PE ratios should be much lower. It means that everyday goods you buy from Walmart should cost more. Europe is living with $10 per gallon gasoline while we are under $3, how will that sit when it hits our shores? None of these “situations” should have or could have ever happened if gold was priced higher, maybe multiples higher than it is and has been.
Now, the cat has come gingerly crawling out of the bag and everything I and my “tinfoil hat” colleagues have told you for so long turns out to have been so. Will the “re set” or adjustment we have been telling you of be slow and orderly or overnight and disorderly? This I do not know. What I do know is that it will occur and if you have not prepared for it you will never have the chance again to “catch up.” This is all about your savings and whether they will have value when you need them. This is all about “equality” around the world. Jim Sinclair calls it “the great leveling” which can be seen from two separate points of view. First, if you have it … in paper form …it will be “leveled.” Secondly if you are a producer of goods and are not being properly compensated …your efforts will become “leveled out” and you will be compensated. It is really this simple folks, we have lived a lie put forth by our monetary authorities, and we wanted to believe it because it was a “good lie.” We benefitted from it and enjoyed the fruits of the lies for many years. If you can see this and admit it to yourself now, not tomorrow (or especially next week), get cracking and protect yourself because the truth is going to hurt a whole bunch!
It’s another ugly morning with the list of “horrible headlines” not only broadening, but intensifying. Just a day ago, TPTB attempted to assuage “Ukrainian fears” with a new round of “de-escalation” propaganda and market intervention. However, just as Obama openly admits America’s re-entry into Iraq will be a “long-term project,” the Ukrainian crisis isn’t going away anytime soon – and perhaps, will plague the world for generations. In fact, it’s probably at its worst point since fighting broke out in March, just as the global economy is unquestionably at its lowest point since 2008.
Zero Hedge is typically the world’s best alternative media website, but in ascertaining “bonds don’t believe it’s over” due to “geopolitical fears” is; in our view missing the key point. Which, as we wrote in May’s “Most Damning Proof Yet of QE Failure,” is the fact that collapsing economic activity is causing investors to bet – rightfully so – on global “QE to Infinity.” Moreover, per last week’s “is It Really Ukraine?” the historic financial asset bubbles created by the Fed and other Central banks must be supported at all costs; in this case, with hyperinflationary monetary policy. Eventually – when hyperinflation inevitably arrives – yields will rocket into the stratosphere. However, until then global investors will continue to assume the Bank of Japan’s path to zero interest rate sovereign bonds will be taken by the Fed, ECB and other major Central banks.
Speaking of propaganda, how can anyone still listen to the ramblings of Reserve Bank of India governors? We have long characterized the Indian government as perhaps the worst run in the developing world; and thus, to see investors “relieved” that inflation is just 7.4% is nothing short of incredible – particularly as the all-important food inflation rate is considerably higher. Or how about America’s long-time partner in crime, the UK, of which we’ve been incessantly told how “strong” its economy is? Don’t make us laugh, as like the U.S., the only reason it is even perceived as stronger is because like the Fed, the Bank of England has an unfettered printing press that has enabled it to funnel free money into the hands of the “1%,” who in turn have inflated an historic real estate bubble in “1% markets” like London. UK housing is already rolling over amidst the highest cost of living environment in Europe; and reading today’s estimates that UK GDP will rise by just 0.7% for the next two quarters, we’re baffled as to what all the hype was about in the first place.
As for the rest of Europe, whose money printing escapades are limited by the fact the ECB must obtain consensus from 24 member nations; it is on the verge of collapse. Ultimately, the ECB follows the same path as other Central banks; and mark our words, the $1 trillion QE scheme the ECB is “preparing” will be launched later this year – to fail as miserably as Japan’s Abenomics and America’s QE 1-3. In the meantime, the European economy can best be described as in freefall with today’s articles ranging from the collapse of France, to the need for a broad Italian bailout, to the ominous fact that Greece’s largest trade partner is Russia – thus, making it extremely vulnerable if Europe continues to press for economic sanctions. And for the record, per the below chart, France is Russia’s largest trade partner overall. Not to mention, French banks are more exposed to Greece than any other nation.
And don’t forget today’s abysmal news from Europe’s undisputed leader, which no doubt will lead the charge to break up the Euro when the continent’s economy inevitably implodes. Yes, Germany’s all-important ZEW investor sentiment index plunged to 8.6 in August, down from 27.1 in July and representing a seventh straight monthly decline. In other words, don’t be surprised to see the aforementioned QE announcement at the ECB’s next meeting on September 1st.
Which brings me to the main event, catalyzed by this morning’s excellent article by Bill Holter. The topic is the New York COMEX trading pits, which have long dominated gold and silver’s “price discovery” process. We have written exhaustively of COMEX fraud for years, but never has it been more critical than today – as “any day now,” it will be forever discredited; and with it, the global dollar-anchored fiat Ponzi scheme. The key phrase is “dollar-anchored,” as no one has “taken it out” yet due to fears of the collapsing the value of their own heavily dollar-weighted reserves. But rest assured, like a musical chairs game in its final seconds, the urge to protect oneself will become so great, someone will inevitably “break ranks” and set the snowball rolling downhill.
Frankly, how anyone can not realize the COMEX is a pure fraud is beyond us. In “freely-traded markets,” sixth-sigma events do not occur on a daily basis. Moreover, when the vast majority of product is purchased in the East, it is not rational for prices to be “set” in the West – much less by a fraudulent process ironically called a “fix.” And finally, how on Earth can an exchange purporting to hold $1.3 billion of deliverable gold inventory and $1.2 billion of deliverable silver inventory be viewed as the precious metals “authority?”
To wit, there are an acknowledged 1,600 billionaires capable of taking out at least one of these two stashes; plus perhaps 16,000 institutions and dozens of Central banks – led by the PBOC, which holds $4 trillion of depreciating currency reserves. Heck, China imported gold worth $51 billion in 2013, and we’re to believe they didn’t consider the measly $1.3 billion on the COMEX?
Each day, new revelations of COMEX chicanery are revealed – atop 15 years of blatantly suppressive price activity. I mean, how can any traders still buy gold and silver call options when every month the Cartel raids prices days before expiration? And how can anyone believe the unaudited inventory data supplied by collusive “too big to fail” firms with essentially no CFTC oversight? The CME itself started publishing a disclaimer last June that it cannot guarantee its own data is correct; and now that JP Morgan has been fined for repeatedly falsifying such information, it becomes even more obvious that the aforementioned miniscule amount of metal is the base of an enormous soon-to-be-collapsed Ponzi scheme.
For years, we have referred to precious metals as the “Achilles Heel” of the global financial system; as once these time-honored inflation barometers break from the Cartel’s grasp global financial fear will spread like the Ebola virus. This has occurred time and again throughout history, and today’s global epidemic will be the most terrifying episode yet.
However, silver is by far the “Achilles Heel’s Achilles Heel,” as no more than two billion ounces exist in investable form worldwide; of which the vast majority – like mine – will never see the light of day. Last week, we highlighted how the world’s largest PHYSICAL exchange in Shanghai, has seen 90% of its physical silver inventory depleted since last April’s vicious COMEX paper attacks, whilst COMEX inventories have barely changed amidst a fresh $6 billion of naked shorting, principally by the same “commercial” traders that have been suppressing prices for the past 15 years.
SRS Rocco Report
As the global economy collapses into oblivion, and Central banks step up their maniacal money printing exponentially, the pressure on the “world’s Achilles Heel” – i.e., the COMEX trading pit – will increase commensurately. It’s only a matter of time – likely, much sooner than later – when it is destroyed by metal-hungry investors, institutions and Central banks. And when it is the “world as we have known it” will be forever changed. Each day, the window to PROTECT oneself with physical gold and silver closes a bit more; and once its shut it will likely be forever!
We have something very important to say today, but before doing so, want to keep the expanding worldwide economic collapse front and center. In our view, the universal “realization of reality” is the most likely cause of the inevitable systemic financial crash – and conversely, the “reclaiming” of gold and silver’s rightful roles as the world’s only real money. Let’s start with China, where it’s “miraculous” 10% equity surge this month is due to one thing and one thing only; i.e., the initiation of a new QE program, sans the fanfare of MSM-hyped boondoggles like FOMC, ECB and BOJ meetings.
Lost in the relentless – and in most cases, clueless – propaganda is the dire fact that China’s historic real estate and construction bubble is collapsing. Without even noting the epic recklessness of its unregulated “shadow banking” system and fraud of recently uncovered collateral hypothecation schemes; the charts below depict the reality that the “world’s growth engine” is dead in the water and how it came to be.
Meanwhile, the decidedly not “contained” Portuguese banking crisis is, as we anticipated starting to spread; ironically, amidst the world’s worst Ebola epidemic on record. Yield spreads are widening across Europe; particularly in PIIGS like Greece which we still view as high on the list of candidates to catalyze the inevitable “big one.” And last but not least, TPTB are having an increasingly difficult time masking the reality that America is not only not “recovering,” but in many ways leading the global collapse. Sure, they continue to baffle the clueless financial media with an onslaught of meaningless arbitrary “economic data,” but the reality of economic decline is becoming more obvious each day. To wit, the increasingly laughable NFP employment report in which we’re told that in the first seven months of 2014, 532,000 “birth/death” jobs were created by unreported business start-ups. I’d tell you how many birth/death jobs were created in 2013, but since the government is constantly “recalculating” the number – and thus, not publishing historical figures – the best I can do is report the 866,000 new “jobs” supposedly created in the last eight months of the year.
On that topic, my first question is how new business start-ups can go “unreported” especially if the government wants to collect taxes from their owners. Secondly, given that the only age group to have experienced net positive employment growth since the 2008 meltdown is 55+, predominantly via part-time, minimum wage jobs, is it really believable that this group is starting up businesses en masse? Third, if said businesses are not earning money than what positive impact are they having on the economy? And finally, as the below chart demonstrates since the 2008 crisis, more companies are closing than opening. In other words, the “birth/death” model should unquestionably be leaning closer to “death” than “birth”; and thus, instead of reporting a mythical 80,000 new jobs per month, a more appropriate BLS rendering would be 80,000 job losses. Which, by the way, is what the 35-year low in the Labor Participation Rate depicts; as well as record high government entitlements, record low savings and home ownership, record high subprime and student loans, etc.
Frankly, it surprises us there’s still a “debate” on PM suppression as essentially every financial market has been found to have similar issues – not “coincidentally,” since markets were commandeered by Central banks following the 2008 crisis. On a personal basis, few topics are more serious than market manipulation; as given my skill-set as a Wall Street-trained financial analyst, my livelihood was predicated on freely traded markets. Unfortunately, the “President’s Working Group on Capital Markets” ceased its mandated role of “emergency mechanism” morphing into a 24/7 propping scheme around 2001. Likewise, mere weeks into my initial foray into PM miners in 2002, it became patently obvious that gold and silver prices were suppressed. Not to mention, the overt manipulation of interest rates by the Federal Reserve and covert mandate of the “Exchange Stabilization Fund” to manage foreign exchange and gold. Since I learned these troubling ominous truisms, I have been forced to continually “re-invent” myself to avoid career extinction – which frankly, has been the most stressful situation I have ever dealt with.
By my observation, the level of intervention has increased exponentially since the global economy peaked in 2000, in line with the “manipulation motto” I created roughly a decade ago – “each day worse than the last.” I first realized it after the post-9/11 PPT buying spree, but clearly it was after 2008 when manipulation really kicked into gear – of all financial markets. And the beauty of it all, is I have painstakingly chronicled it for posterity as in the two “Dow Jones Propaganda Average” articles penned in 2012. In those articles, I demonstrated how “dead ringer” algorithms are used around 10 AM EST nearly every day to prevent significant declines – and sometimes, to create “rallies” that wouldn’t otherwise occur. “Coincidentally,” 10 AM EST coincides with the Fed’s New York-based “Permanent Open Market Operations” – which, in layman’s terms means “injecting liquidity” into the banking desks of “TBTF” banks, which in turn “inject” them into markets. All one has to do is view yesterday’s and today’s Dow action to know what I’m speaking of as “good news,” “bad news,” or no news, the world’s most widely watched index is no longer “allowed” to materially decline. Perhaps that’s why nearly all conceivable valuation measures are pegged above the 2000 highs amidst the worst global economic environment of our lifetimes.
Notably, such manipulations may be consistent generally; but irrespective, have changing near-term “goals.” In other words, while the Fed is clearly “QEing” to maintain record low rates amidst history’s largest debt edifice it sometimes deems rate support more imperative. To wit, we penned “3.0% – ‘Nuff Said” in January to describe the lengths it was going to prevent yield spikes, such as the creation of “mystery Belgian buyers” when Chinese selling accelerated. Conversely, in May’s “2.6% – ‘Nuff Said,” we demonstrated how the Fed was equally afraid of plunging interest rates debunking their relentless “recovery” propaganda; i.e., the “most damning proof yet of QE failure.”
However, when it comes to PMs there is not the slightest bit of “subjectivity” in TPTB’s goals. Which is, the same as the previous 600 issuers of fiat currencies, all of which saw their worthless scrip collapse against the timeless, intrinsic value of real money. The 1960s “London Gold Pool” is the most recent example of an overt PM suppression scheme, but today’s is a much different animal – in that theoretically, PMs are not only “freely-traded,” but globally so. Consequently, the obstacles the U.S.-led “Cartel” face are gargantuan – and already, it’s become crystal clear that the current effort encompassing 20 years according to the “Speck-tacular” book published by Dmitri Speck is nearing the end of its “shelf life.” In the final analysis, there’s only so much physical gold in existence, and most of it has “emigrated” from West to East where it will permanently stay. Sooner or later, the West’s “gold bankruptcy” will be realized; and when it does, the “end game” of currency collapse will commence.
Regarding “proof,” GATA has presented it for the past 15 years, and I am proud to have been an integral part of its efforts since 2002. Bill Murphy and Chris Powell have spearheaded a global effort to expose the most harmful manipulation in the history of financial markets; and from them, my “life’s calling” emerged, which is why I am honored to educate of precious metals reality at Miles Franklin. I’ve been documenting this criminality for a decade including the 375-page “manipulation primer” that can be found in the “newsletters” section of our blog, via five “special” reports published in 2011. There’s literally volumes I could speak of on the topic – in sum total, unequivocally proving the point. Essentially, it is statistically impossible for such a steady stream of “sixth sigma” events like “dead ringer” algorithms to occur – and nowhere have they occurred more so than in precious metals – day in and day out, at multiple “key attack times.” Dmitri Speck’s 20-year chart is a perfect depiction of how the Cartel focuses on the close of global physical trading – and the open of New York paper trading – to do its dirty work.
…as depicted by these three nearly identical trading days from the past week…
The evidence is irrefutable, and yesterday’s largely unreported news that JP Morgan was charged and fined by the CFTC of “repeatedly submitting inaccurate large trader reports” solidifies the fact that the world’s dominant “price setting” mechanism, the COMEX is hopelessly corrupt. If the disclaimer it started adding to COT data last June wasn’t enough to convince you everything published by the CME is fraudulent…
The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only.
…or the fact that gold “dealer inventory” hasn’t changed in months; or that prices decline before every options expiration; or that “flash crashes” outnumber surges by perhaps 100:1; or that the theoretically impossible condition of “backwardation” is becoming the rule rather than the exception; then go on believing in the COMEX as an honest means of discount future economic trends.
Otherwise, join TRUTH TELLERS such as the Miles Franklin Blog in their quest to grasp and educate of economic and financial market reality. And oh yeah, to protect yourself – and others – from the inevitable financial collapse coming at us like a Category 5 hurricane.
“My prediction for the rest of the year is for gold to go higher, but in a choppy fashion. The last time that we talked, gold, silver, and a large number of resource equities had just experienced a quick run-up. At the time, I suggested that the market probably needed to ‘back-and-fill.’ Sure enough, it did.
“Now, the market’s taken another leg up. It probably needs to ‘back-and-fill’ again. This pattern will likely continue in the next 12 months. We’re going to see the market alternately lurch ahead, and then fall back and consolidate the gains. We’re going to be in a recovery – which will look relatively flat and choppy, punctuated with 10 percent declines. That is pretty much the way these markets work.
“This is good. In fact, I believe the market is in very good shape right now. Nobody has any expectations for resources, which makes it much easier for the market to surprise to the upside. It looks like we put in the bottom last July, meaning that gold and silver, along with precious metals equities markets, should generally be higher, in a sort of ‘staccato’ motif.” – Rick Rule
It was one of the largest three week Commitment of Trader changes in memory for gold, as more than 97,000 commercial contracts were sold on a $70 gold price rally since June 10. Most notable was that the raptors accounted for 80,000 contracts of the commercial selling and the technical funds 88,000 contracts of the buy side. Never have two distinct groups controlled so much of the positioning.
In COMEX silver futures, the 9,100 contract increase put the total commercial net short position at 52,000 contracts. This is highest level of commercial shorts in COMEX silver since December 18, 2012. I hope everyone knows that “highest” here means, in COT terms, most bearish. I must point out that in December 2012 silver was around $34; whereas today the price is near $21 and below the cost of production for many primary silver miners. – Silver analyst Ted Butler
“The system we have now is one in which the Fed decides, through a Politburo of planners sitting in Washington, how much liquidity is necessary, what the interest rate should be, what the unemployment rate should be, and what economic growth should be.
“There is no honest pricing left at all anywhere in the world because central banks everywhere manipulate and rig the price of all financial assets. We can’t even analyze the economy in the traditional sense anymore because so much of it depends not on market forces but on the whims of people at the Fed.” – David Stockman
Despite not looking for a conspiracy (and not wanting to find one), the greater weight and flow of the evidence convinces me one exists in silver. To be clear, my distinction is that it is not just a small group of traders on the COMEX involved in a secret plot to suppress silver prices, but has now grown to include the CME Group and the CFTC. Since my long-term understanding of the CFTC is that it has been, perhaps, the weakest and most ineffective federal agency of all, it is most likely that the CFTC’s inclusion involves more important federal agencies, specifically, the Treasury Department and the Federal Reserve.
First, let me make the point that I see the conspiracy as having started when JPMorgan acquired Bear Stearns in 2008, but really kicked into overdrive a little more than three years ago around the time silver reached $49. Currently the conspiracy to control and manipulate silver prices has never been stronger or easier to prove. In other words, while I can date the ongoing silver manipulation on the COMEX to 1983, it did not become an organized conspiracy involving the U.S. Government until 2008. Moreover, I don’t believe that the regulators’ involvement was well-planned and deliberate from the start; it was more a case of bungling a set of emergency circumstances and a subsequent cover up. – Silver analyst Ted Butler
I have included four excellent articles on inflation in the Featured Articles Section that are all worth reading. Take some time over the weekend and check them out.
We found out last Friday who “A” (not “the”) culprit was that has been selling concentrated blocks of gold futures to depress the price. The Financial Times wrote that a mid-level trader from Barclays was nabbed and censured by FCA (British equivalent of the SEC), Zero Hedge wrote about this last Friday here. Barclays was fined 26 million pounds for not supervising properly and injuring clients. I don’t even know which humorous direction to go from here because there are so many.
First off, this “lone perpetrator” only worked for Barclays for the last 8 years while FCA says that the scheme was ongoing for 10 years. Did someone “teach” him how to sell big and very naked blocks and then just retire and pass the baton on to him? Also, are we to believe that this “rogue” trader got away with selling $10’s of billions worth of gold (and in a bull market) while the compliance department at Barclays never saw or said anything? No, not possible. Remember, this particular instance has a 10 year track record behind it, FCA never saw anything at all until just recently? Or…the CFTC? How could they have not seen this? What about before 2004, does anyone still remember the old “$6 rule?” (Yes I know that was the “2% rule” at the time just as it is now).
We are also supposed to be led to believe that all of the waterfall and concentrated smashes were done by just one trader again, not possible. If it was just this one guy, how is last April’s 36 hour waterfall period explained? 50% of total global gold production was sold in concentrated bursts in less than 2 trading days. Are we to believe that this $50 billion or so that was sold came from just one company and by just one trader within this company? $50 billion?
I usually don’t like to rant but I really can’t help myself on this one. For more than 15 years I have said that the gold and silver markets were manipulated or rigged to keep the price down, I have said on umpteen occasions that all that is needed is to pull a “time and sales” to see how much was sold and who sold it. Period. End of story. Time and sales is not a big undertaking like a “DNA” test; it’s even easier than “fingerprints.” Time and sales is a PAPER TRAIL that tells you who bought, who sold, how much and exactly at what time. It is not rocket science, it is not in any fashion a judgment call and doesn’t even need any reasoning whatsoever. Time and sales are black and white hard data that tell you who did what and when.
We have been led to believe by the numerous CFTC investigations that all is copacetic. Please remember the “wording” that they’ve used to cover their sorry bottoms, they “found nothing actionable.” They did not say they found “nothing illegal” although they probably could have because a lower gold price (which I will explain shortly) is in the “interest of national security.” So, anyone acting in this interest would not be doing anything illegal OR where the CFTC could take action.
No matter what we “conspiracy nuts” at least have a smidgeon of vindication because we now have hard evidence that effort has been made to lower the price of gold… by at least one trader. Technically, it cannot be called a “conspiracy” yet because there is only one perpetrator but… we also know that there is no way that this one single trader could have possibly sold $50 billion (40 million ounces) in just two trading days. If this were the case and the market was “honest,” any single trader that went that short would have been sniffed (squeezed) out in an epic “come to Jesus” moment by market participants. Any single trader that sold or shorted 1/2 of global gold production would have the task of eventually covering that position while a bunch of sharks circled to make this impossibility without losing an equal amount of flesh. It also stands to reason that if these bursts of selling were not “officially” sanctioned, they would have been uncovered by the week’s end. Can you imagine if this were done in the Treasury or S+P pits? No, this would never fly; the perp would end up in solitary confinement between water boardings!
OK, I mentioned above that a lower gold price is “desired” and in the interest of national security. Why is this and how can I say it? Think about it, what would a $5,000 or $10,000 price of gold mean? Did you notice the little “dollar sign” in front of the numbers? It would mean that “dollars” would be worth far far less than they are currently at $1,300. It would mean that their purchasing power is far less. It would mean that the “power” to print these pieces of paper (or electronic digital chits) is less “powerful.” The power would be less because logically they would have to print many more just to equate to current purchasing power.
From another angle, a higher gold price means a lesser level of “confidence” that would require more dollars for the same ounce of gold. Please understand that “confidence” is the only thing left that is holding up your standard of living. Confidence is the only thing left that lends “value” to your dollar bills. It is the only thing left that lends value to Treasury bonds which by the way are what your bank uses as “reserves” to claim that they are solvent in any fashion. Confidence is the only thing that is keeping the global (U.S. sponsored) Ponzi scheme from collapsing. What I have just described is “motive,” motive for a lower gold price.
In reality, I cannot believe that a British (Western) regulator would dare expose even one trader for price manipulation of gold. This is a “thread” that is now exposed and can be pulled on. Do these regulators really believe that one sacrificial lamb will be enough? Do they really believe that the public will be satisfied… or gullible enough to accept just one mid-level head to roll? This is a very dangerous precedent or gambit if you will. In my opinion, they should have just kept lying 100% because this is the way that lies come unraveled. This is like the little kid explaining to his mother that all the cookies are gone because he saw his brother eating one when he got home from school. He’s not admitting his own guilt but he is pointing a finger. “Someone” did it, he is admitting that the cookies are gone …and the lie unravels from there because he still has cookie crumbs on his face (how to explain the continuing 8AM massacres etc. after this bad bad lone trader has been shut down?).
None of this really matters because it is becoming more obvious that “all is not right” in the gold market. Austria now wants to audit their gold in London. First it was Germany who asked for an audit (and were denied) at the New York Fed and then asked to repatriate gold, now it is Austria. Will London give them the same excuses that “logistically” it will take 7 or 8 years? Remember, Germany only received 5 tons total of gold last year out of 300 (out of 1,500 “held”) that was promised. The FCA truly boo booed on this one because they are admitting that one trader sold nonexistent gold, do they expect people to believe that this guy was the smartest (and only) person in the world to have figured out how to sell gold…that isn’t really gold? And without his firm knowing about it? Really?
I do want to make mention of a piece written on the Barclays topic by Trader Dan Norcini recently. Dan is a really good guy and I have learned much from him over the years. We had a back and forth a couple of weeks ago regarding my piece on negative GOFO rates and what they mean. We finally agreed to disagree. We apparently also disagree on a few points regarding Barclays and I am apparently part of the “GIAMATT” (gold is always manipulated all of the time). Yes, I do believe this. I do not believe that there are any days where gold truly trades freely. Do I believe that ALL price drops are cartel driven? No, markets should and do go both up and down. Can the exact percentage numbers of 1% or 2% where gold is constantly capped to the upside be explained by anything other than pre planned programs? Can there be a $250-$500 million seller of gold every single morning at 8AM (like 5 O’clock Charlie)? In my opinion no there cannot.
Dan says that the dollar index no longer dropping is why gold stopped going up and that gold will not go higher until the index resumes its downtrend. He may be correct but the dollar index is “versus” other fiat currencies, primarily the euro. If all currencies debase at the same rate, there will be little movement in the index yet all of the currencies have debased. If the price of gold can be “managed” to lower levels then the façade of paper currency purchasing power can be maintained. There has been enough anecdotal and hard evidence dug up over the years that points to manipulation to depress the price of gold. There is certainly motive and without a doubt the “ability” through futures markets where huge leverage can be employed. There is also the “cover” of agencies like the CFTC’s monkeys who see, hear and speak no evil. I am of the opinion that TPTB cannot afford to let gold trade freely for even a single day for fear that it could ignite the derivatives time bomb but that’s just my opinion.
Dan also mentions that the central banks actually “want” higher gold prices because they are afraid of deflation; this is one part that I particularly disagree with. With the way “money” is thrown around today, a pittance $20 billion order for delivered gold in my opinion would be enough to tip the scales toward an upside panic if the Fed desired it. I cannot believe that higher gold prices could not be easily orchestrated overnight as mined supply does not meet the current demand and market prices are below the costs of mining, in other words the supply just isn’t there. The danger to the central banks as I see it is not prices going down because all they’d have to do is print up some fiat and buy gold, no, it is losing control of upside pricing. A loss of control to the upside would crack the confidence in and the credibility of the central banks themselves. Were (when, in my opinion) this to happen, they will lose their currencies and thus their ability to push and pull the levers of finance. I guess the flaw in logic that I see here is that the Fed can ALWAYS buy gold if they want to and pay for it with newly minted money. Can the Fed “always” sell gold to keep the price down? Well, yes they can as long as they have it to sell …but they can only sell what they have because gold cannot be printed. Actually upon thinking about this for just a short moment longer, what would stop the Fed from making the statement “we will buy any and all gold for $2,500 per ounce?” Would gold not immediately shoot up to $2,500? Sorry, I don’t buy the argument that the Fed wants higher gold prices and are afraid of lower prices.
I do want to say that I respect Trader Dan’s opinions but I do not agree with all of them. I know him as a top notch guy and he is obviously a top notch trader as evidenced by the fact that he is “still here” and trading. Trading is a hazardous occupation and one where just one big mistake could be enough to knock you out of the game if you are not disciplined. I would never dismiss what Dan has to say out of hand but after reading his piece, I do disagree with much of it so I guess we’ll just have to agree to disagree.
That said, I have written many times that trying to time gold is a mugs game in my opinion. If you understand the end game then you also understand that you have to be there “when” it happens. If you purchase physical metal without margin and sit tight until the end game arrives, you will “win” so to speak. Buying dips is a great idea but if you own no metal at all currently, “you shouldn’t wait to buy gold…you should buy gold and wait.”
As I have said in my opinion for several years now, this entire scheme will come down on the day that China is told, “Sorry, we cannot deliver any more gold.” This will happen on its own or the Chinese can force it with an outsized order. It doesn’t matter which occurs first because the outcome will be the same. We will live with a much much higher price of gold and a financial system that implodes because confidence evaporated.
It’s early Tuesday morning, and I’m sitting in one of the most peaceful places imaginable the Denver airport at 5:00 AM, where I’m the only sole in sight. This evening, Miles Franklin is hosting a “Protect Your Wealth” dinner in Minneapolis, Minnesota where Andy Schectman and I will be speaking and I’m looking forward to saying hi to our team and speaking to a large group of truth-seeking investors.
Fortunately it’s a quiet morning newswise. However, the Japanese and European stock markets appear to be following the U.S.’s lead – falling significantly as the potential for a new, global financial contagion takes hold. Ironically, Zero Hedge is off in stating that unlike 2008, global Central banks are not in “easing mode”; as trust me, if the current stock declines cannot be stopped – by the usual money printing, market manipulation and propaganda – we’ll be back in “2008 mode” in a heartbeat. Frankly, it’s flat out comical to characterize the current environment as anything but accomodative; as as I write, the Fed is QE’ing $55 billion a month – and likely, much more, with the promise of maintaining ZIRP for at least another 12-18 months. The ECB just reduced rates to 0.25% and last week unveiled the blueprint of a $1.4 trillion QE program, the BOE has given no time frame for ending its five-year QE and ZIRP programs, the BOJ is halfway into the two-year “Abenomics” scheme, targeting a doubling of the Japanese money supply and the PBOC not only just executed a de facto Yuan devaulation, but printed nearly three times as much money in January as the Fed and BOJ combined! In other words, if this is a period of Central bank “tightness,” I’m terrified to see what “loose” policy will look like which sadly, is exactly what we will see in the coming months.
Amidst today’s litany of global “horrible headlines,” the theme – or meme, in current parlance – that stuck out most prominently was LIES; i.e., propaganda, permeating every aspect of the political and media landscape. The commandeering of entire governments by Wall Street has created a perpetual economic “lie machine,” charged with doing “whatever it takes” to preserve the status quo; and seemingly, no matter what topic is discussed, mainstream publications spin it as positive. War, famine, recession, inflation – you name it, and somehow it is portrayed as “good” for the economy, “good” for the future and, of course, “bad” for Precious Metals.
What got me started on this tangent were two articles last night by the great Paul Craig Roberts, a former Assistant Treasury Secretary who has taken Washington “whistleblowing” to a new extreme. In first writing of the outright fraud of Friday’s (still miserable) NFP report, and next the Obama Administrations obvious attempts to demonize – and incite – Russia over the Ukrainian crisis, he penned the following, overarching comment that must be kept in mind when reading anything emanating from the “evil troika” of Washington, Wall Street, and the MSM.
As I write, I cannot think of one thing in the entire areas of foreign and domestic policy that the US government has told the truth about in the 21st century. Just as Saddam Hussein had no weapons of mass destruction, Iran has no nukes, Assad did not use chemical weapons, and Putin did not invade and annex Crimea, the jobs numbers are fraudulent, the unemployment rate is deceptive, inflation measures are understated, and the GDP growth rate is overstated. Americans live in a matrix of total lies.
–PaulCraigRoberts.org, April 5, 2014
To wit, the so-called recovery discussed above – as “validated” by supposedly “strong” jobs growth – can be refuted with just a modicum of due diligence; in this case, demonstrating how the true U.S. labor situation is the worst since the Great Depression. And not only that, but sadly, such figures grossly understate true unemployment.
Or how about the equally hyped “housing recovery” which amidst the tiniest increase in interest rates, has clearly started to roll over. Essentially, the entire 2012-13 “boom” was the product of Wall Street speculation with free Fed money; and now that vulture buyers, like private equity “buy to rent” speculators, have stopped buying – amidst the most unaffordable housing market of our lifetimes – there’s only one direction for real values to go, and possibly nominal prices as well. The fact that mortgage originations have fallen to an all-time low amidst record stock and bond prices should tell you all you need to know; and moreover, scream loud and clear what the Fed will need to do when it becomes apparent that only exponential increases in money printing can prevent a near-term real estate implosion.
Globally speaking, government lies have become as epidemic as the worst Ebola outbreaks as the worse economies get – and consequently, the more difficult for incumbents to be re-elected, the more egregious the propaganda, mistruths, and inuendo. Recently, the trend toward “re-calculating” historic GDP data has become in vogue for governments trying to mask their debt; frankly, in a manner not much differently than Goldman Sachs telling Greece that if it restructures its debt “off balance sheet,” the resulting decline in published “debt/GDP” would reduce its borrowing costs. The U.S. and China have implemented similar accounting schemes in the past year but none so blatant as what Nigeria did yesterday – in essentially “doubling the size of its economy with the stroke of a pen,” per Simon Black of the Sovereign Man. Truly Orwellian stuff, depicting a global shift toward the justification of draconian government policies with flat out lies; sadly, an unmistakable element of human history, that always repeats itself when times become most desperate.
When it comes to wealth protection, hands down, one’s greatest fear should be inflation. The fact that said governments are steadily increasing the “deflation” drumbeat – amidst quite obviously, the highest cost of living environment in generations – should tell you all you need to know of what’s coming. As we’ve noted ad nauseum, fiat currency regimes, by nature, are Ponzi schemes that must grow larger to survive; and thus, with the entire world enmeshed in the largest such scheme ever, future Central bank actions are already set in stone.
However, no “official” actions in the realm of deception are more blatant than the past decade’s attempts to suppress the prices of history’s most reliable “inflation barometers,” silver and gold, but particularly the past two-plus years. Outside GATA, no one has discussed this topic more than the Miles Franklin Blog and since HFT trading is in the news, we thought it was worthwhile to bring this amazing article to your attention, from the great J.S. Kim. In it, he gives a fantastic account of how HFT trading is utilized to attack PAPER gold and silver prices; which despite its foolproof logic, the CFTC – of course – ignores, given that they, as a government entity, are charged with furthering such fraud. As we wrote in last week’s “Is the Market Rigged?” the real issue is not the “skimming” HFT algorithms steal from the public with, but the fact that they have become powerful policy tools to rig essentially all paper markets – from stocks, to bonds, commodities, and currencies.
Sorry if I seem a bit disjointed, but it’s very early and I’m very tired. Honestly, I cannot recall a day in the past year that I didn’t write something, as I am as committed to protecting readers at this critical juncture in political and economic history as anything I have ever done. Hopefully one day, my writing will be remembered as having “made a mark” on the world and if even one half of one percent of “financial stragglers” take it to heart, I will have considered my life’s work a job well done.
As for the “markets,” its quite the coincidence that the Dow’s declines were limited to exactly the “ultimate PPT limit down” level of 1.0% the past two days, whilst the NASDAQ was savagely bludgeoned. Meanwhile, the Cartel’s obsession with capping Paper PMs at the current “lines in the sand” at the very key round numbers of $1,300/oz. and $20/oz., respectively, could not be more blatant.
However, following last week’s “golden cross” in the gold market – i.e., its 50 DMA crossing above its 200 DMA for the first time in a year, with silver’s own “golden cross” coming shortly – the Cartel’s ability, in an environment of soaring physical demand, to hold these lines is getting exceedingly difficult – as you can see by this morning’s action.
And when we say soaring physical demand, our claims are backed up by data from the four corners of the globe. Per the below quote from James Turk, gold backwardization – which frankly, can only happen when physical demand surges due to artificially low paper prices – has reached levels only seen just before the PM bull market commenced at the turn of the century, and the very bottom in 2008, when government attempts to “prove” PMs weren’t safe havens caused the most severe physical shortages of our lifetimes.
So here are the key numbers that we need to look at Eric: The low price in gold was reached at the end of June. Since the backwardtion began on July 8th, there have been 192 trading days, and gold has been backwardated a remarkable 55% of the time. This compares to the low in the gold price in 1999 and 2008, when gold was backwardated only 2 and 3 days respectively. This comparison shows how unbelievably distorted the gold price has become. Silver has also been backwardated along with gold.
–King World News, April 7, 2014
Hopefully, this article helped you to understand just how deceitful the world has become; and thus, the necessity of doing your own due diligence when deciding how to protect your assets. In our view, the Miles Franklin Blog should be a “go to” source of real, truthful information and if you agree, we hope you will “give us a chance” to earn your business by calling 800-822-8080!
I wanted to title this piece “what if” but I think I’ve already done that 2 or 3 times so instead…I have to ask, what exactly would happen if there were a class action lawsuit against the exchanges that trade silver and gold? What if there were also class action suits against the World Gold Council and GFMS for understating global demand while overstating supply? What if the “crazies” went so far as to sue JP Morgan for concentrating positions and cornering markets? Or maybe the CFTC for letting it happen even while being spoon fed evidence from GATA and other sources. What if it went so far that boards of directors of mining companies were sued for breaching their fiduciary responsibility by not making a “peep” all these years and for selling “assets” below true market value?
Yes I know the above sounds absurd and maybe it is but Kevin Maher of New York filed a class action suit yesterday against the 5 firms that participate (d) in the London fix from 2004 to present. Is this crazy or nuts? Yes it probably is and the odds in my opinion are stacked against him from so many different directions but…if it does not get thrown out immediately he then may have a “trump card.” This trump card is quite similar to the one that Blanchard played back in the early 00s when they took the baton from Reg Howe’s foray. Back then, Reg sued the Fed in Boston court and had a sympathetic judge that agreed with his argument but was found to have “no, or limited standing” so Blanchard stepped up and sued Barrick (with JP Morgan attached) because they did have standing. We will never know exactly what happened here because the case was settled and Blanchard was muzzled by the settlement. The thing is, “discovery” was just TOO SCARY of a thing because it meant pulling the curtain back to see just exactly what was “being done” to retard the prices of silver and gold. I think it was Jim Sinclair who said that no case of this sort would ever truly go to trial because “the discovery process is like sunlight to vampires,” he’s been right so far.
I have no idea how far this suit might go but can you imagine if a groundswell of “plaintiffs” joined in the ranks? Plaintiffs like all the jewelers in the country? How about all of the coin dealers in the country? Or anyone who bought silver, gold or metals ETF’s? How about the miners? Can you imagine these spineless wonders joining in? Of course anyone who bought mining shares during this timeframe would qualify also. Yes I know, each group would have their own gripe and it’s possible that jewelers might even complain that the price was not “driven” low enough but the bottom line complaint would be that prices paid or received were not correct and they were interfered with.
Can you imagine how fast a settlement would be offered if JP Morgan were included and directed by a judge to open their books to discovery? Can you imagine how big the settlement might have to be if a judge were to include ALL of the players over the years…on BOTH sides? Could JP Morgan or Deutsche Bank or any of the others say that they were “working for” or the “agent of” the Federal Reserve or some other central bank?
Yeah I know, it’s just “dreaming.” It’s dreaming because no judge who wants to live would allow anything of the sort. I say this because it goes way too deep and way too high. In fact, it could even be claimed that much of this was done at the behest of the “President’s working group on financial markets” …which would be a free get out of jail card. Another problem is “time.” It will take too long for any suit to work its way through the courts, in my opinion a delivery failure will occur before this thing is even seen. Once we have a delivery failure, then one must ask “what can I win” if I bring this suit? I’m pretty sure that any settlement and surely any award would be in “dollars” rather than ounces… And of course, if I had to bet, I would on some if not many or even all defendants not having two nickels to rub together once the derivatives chain breaks.
I spoke about this very subject with a close friend and old client of mine, he started laughing almost uncontrollably and said, “I want to join this lawsuit, I just want my money back, never mind what I should have made.” Don’t get this wrong, he did very very well, so well that he was able to retire in his late 40’s. He was in the shares early and took metal out as profit but yes, he did however take a few very big “lickings” on the COMEX. He was referring to some of the margin hikes after the close on Friday followed by straight down moves on a Sunday night when there was no volume…followed by another margin hike which caused margin calls …which was like flushing a toilet! He is correct though, it sure would be nice to have some of that COMEX “vapor” money back …but I suspect that by the time any case or settlement were to come around we will be more interested in other things like trading beans for toilet paper or silver for gasoline.
Before I finish I’d like to recount one other thing my buddy said which had me rolling on the floor laughing and yes I absolutely remember this like it was yesterday. My buddy said to me, “Doug Gillespie (who was partners with John Williams of Shadow Stats and has since passed away) was right, he always told us that our markets are so perverse and rigged that an ICBM could be launched and the Dow will close at a new high because somehow that will be spun as bullish.” Well, sure enough, this is exactly what happened yesterday, Russia “test fired” an ICBM missile in truly classic “middle finger fashion”…and yes the Dow reached an all-time high. This is the very last and only thing left for Washington to point at as “proof” of how good things are!
I know that I rambled on with this piece but please understand that this will all end badly. Actually, I believe the coming financial train wreck to be of Biblical proportions. Will owning gold and silver “save you?” Are you going to be “rich?” No, but you will at least have a fighting chance and far better odds of surviving than without them.
P.S. We just got through another (rare until this year) 3 nights below freezing here in South Texas. My “1,200 groundhog” Principe’ started losing gobs of hair last Thursday and no longer looks like a baby chick, Spring must be right around the corner!
I first heard on Sunday night from Chris Powell that the Financial Times had done an article on “the manipulation of the gold market.” I had not seen the article but I was told it was pretty good (as good as anything else that’s been printed in MSM) and that even Gold Money’s Alisdair Mcleod was quoted. I got up Monday morning to read the article only to find that it had been “pulled” off of the internet but in fact the print edition did go out.
My first thought was (and still is) “shock” that an article of this sort would have ever gotten past any FT editor and the title, “Gold Price Rigging Fears Has Investors On Alert” was just too inflammatory. I guess my questions at this point are “why” and “how.” How did this article EVER get past the editors? And since it did…why did they pull it off of the internet?
Zerohedge wrote a piece on this on Tuesday which was a good read and asked a few questions of their own. As for the “pulled” article itself, I thought that it had very little “shock” value and not much “meat” to it. Yes it was nice to read a headline in one of if not THE largest financial publications which had the two words in the same sentence “gold” and “manipulation” but that’s about it.
Seriously, the author says that gold might be manipulated 50% of the time? Really? Is this 50% of waking hours? Trading hours? Or her source could only identify it 50% of the time? Those of you who know me and have read my writings over the years know that I believe the gold price has been manipulated 100% of the time, 24/7 and in all time zones! This article was a disappointment to me. The author, Madison Marriage gave it a try and only scratched the surface of the surface. She mainly talked about the “London gold fix” and the 5 “fix” members front running or colluding for profit and totally misses the point. If she really wanted to do a “blood and guts” story, all she needed to do was contact GATA, they have the REAL story spelled out going back many years. They would have gladly given their information on a “real silver” platter. GATA has for 15 years contacted regulatory agencies and media with smoking gun information only to come up “crickets” with nary a response!
She really and truly missed the point AND the “motive” behind the manipulation of gold and silver prices. Not only that, she completely missed the point by “laying blame” on 5 overweight cigar smokers cooped up in a London room. Anyone with common sense understands that gold is a “political” metal that central banks have fought since the printing press was invented…and even before. Central banks have EVERY motive to manipulate gold and NO motives whatsoever to allow it to trade freely, this is just a simple fact. With the advent of derivatives they also have new “ways” to carry out their attacks…and “profit” their minions for “helping out.”
Ms. Marriage does finish her piece by mentioning investigations by Bafin and the CFTC but has she really looked into “what” they (the CFTC) have done? “Done” as in have rock solid information about silver only to announce that they found “nothing actionable?” I do want you to study the phrase “nothing actionable” for a moment, this is not the same as saying there is no manipulation…only nothing that they can take action on…and I presume because of where or “who” the evidence leads to! As I have written many times before, I was just some Joe Schmoe in the brokerage industry but I saw several instances where the SEC used a “time and sales” report coupled with phone records and e-mail to track down their target, why can’t the CFTC perform a simple time and sales report to see who dumped 50% of global silver production within 36 hours? Because it would lead them to entities that are “too big to trail,” that’s why!
Back to my title, why would they do this? Why or how could the title even be printed? Once it’s “out” then why pull it back? This is like a bullet, once out of the chamber there’s no going back. Not that the content was so damning or anything but the title alone is like sunlight to these vampires. Did someone in the press actually have an inkling of conscience? Is Ms. Marriage a kid just out of college and read what a journalist is supposed to do …and tried to do it? Was this some sort of “signal” to cabal cronies? Or so they can say at a future date “we tried to tell you, we reported on it?”
I really don’t know on this one and usually this is not the case. Not that I “always know,” but 99% of the time I have an opinion or a guess yet this one has me thoroughly stumped. I would love to hear from anyone who has a theory on this one. What was the upside of printing it in the first place? And why pull it down? Normally there is an upside (or at least a “perceived” upside) to anything that someone does, where is the upside here? Maybe the most obvious question is this, “Who is going to be fired for such blasphemy?”
P.S. In his usual Sherlock Holmes fashion, Chris Powell from GATA has been following the Financial Times with the question, “Why was the story pulled? “So far the only response from the Financial Times is that the article was a “mistake.”
It’s hard to believe the deadly Indian Ocean tsunami that killed 230,000 people was nearly a decade ago; as after all, it was the worst natural disaster of our lifetime. Until then, I knew little – if anything – of the mechanics of tsunamis; but as you can imagine, they received plenty of media attention thereafter. One thing I learned, as immortalized by numerous amateur YouTube videos, was that ominously, the tide recedes as the tsunami approaches the shore – in some case, for several miles due to the enormous suction created by the rapidly circulating waves.
As I watch the PPT take the Dow higher this morning, amidst seemingly endless “horrible headlines” – such as the Chicago Fed National Activity Index falling from +0.16 to -0.39; the PMI Services Index plunging from 56.6 to 52.7; and the Dallas Fed Manufacturing Survey plummeting from 3.8 to 0.3; visions of receding economic waves are filling my mind. The same goes for the rest of the world, of course; albeit, Chinese stocks haven’t been so lucky – amidst their worst three-day decline in four months, following the publication of terrifying data, suggesting its historic housing bubble is rolling over. In fact, the rate of change of global economic activity is plunging as rapidly as at each of the worst periods of the past decade; and sadly, Central banks have no more “ammo” left to fire at it.
Have no fear, they’ll certainly try to “stimulate” with freshly printing money. But sadly, they’ll only make things worse; as when banks simply won’t lend – because they can take the ECB’s unlimited 0.25% funds, via a “back door bailout” with no end in sight – they’ll simply buy the sovereign bonds “guaranteed” by Draghi’s promise to support such bonds with the soon-to-be-fired OMT bazooka.
Like the U.S. government, Europe’s “leaders” continue to publish data suggesting “deflation” is the continent’s greatest fear. However, aside from the fact that such data is blatantly “cooked,” it doesn’t account for the most important factor of all – i.e., price deflation only affects items we “want versus need.” Today, for example, it was reported that the Eurozone experienced negative 1.1% inflation in January; but looking at the below chart of UK fuel prices, it’s hard to see how British consumers are that excited. After all, they’re still paying the equivalent of nearly $10/gallon for gasoline (“benchmark average UK petrol prices remain stubbornly above 130 pence a liter,” according to the Automotive Association of Britain”); and throughout the entirety of Europe, average petrol prices are just 5% lower.
Of course, they’re simply setting the stage for Draghi to not only unleash the OMT – now that the German Constitutional Court essentially gave it the A-OK; and potentially, instituting a hyperinflationary “NIRP,” or negative interest rate policy. Here’s what “Goldman Mario” said two weeks ago; and frankly, I wouldn’t be surprised if “all available instruments” are not unleashed simultaneously with the Fed pausing and/or reversing “tapering,” and the Bank of Japan expanding Abenomics.
We continue to expect the key ECB interest rates to remain at present or lower levels for an extended period of time. Given broad-based economic weakness and subdued monetary dynamics. We remain firmly determined to maintain a high degree of monetary accommodation and to take further decisive action if required.
–ECB.europa.eu, January 9, 2014
As for Precious Metals, which just as inevitably, will break their Cartel shackles and demonstrate what “inflation protection” means – and then some; it appears that what we wrote last Wednesday is already coming to pass.
The new ‘lines in the sand’ appear to be $1,330/oz for gold and $22/oz for silver; and despite my distaste for short-term predictions, I get the impression such hurdles won’t be as formidable as those witnessed for three months at $1,250/oz, and eight months at $20/oz.
–Miles Franklin, February 18, 2014
Sure, the Cartel executed their 26th “Sunday Night Sentiment” attack of the past 28 weeks (does last week’s omission count, given Monday was a holiday?); but once Asia opened, it was all uphill from there. Yes, as I write at 10:30 AM EST, gold is up – what do you know, by exactly its 1.0% “upside cap” level. However, it is well above $1,330/oz., while silver has yet again pushed above $22/oz.
Just as we wrote last week – of the emerging, global, “realization of reality” – the mainstreaming of gold manipulation is gaining a life of its own. Call it the expanding dislocation of paper and physical demand; the German repatriation fiasco; Deutsche Bank resigning from the London Fix under allegations of fraud; or simply, 15 years of unnatural price behavior. Irrespective, the manipulation story is spreading virally; and in a world of seven billion people, with just a tiny amount of available supply, who knows what may happen in the coming months and years?
Just this weekend, no less than the UK’s Financial Times wrote a scathing article on the topic – citing a Fideres study that found “global gold prices may have been manipulated on 50% of occasions between January 2010 and December 2013.” Comically, the article has already been removed from the internet (remember when Bill Murphy’s March 2010 CFTC testimony was “accidentally” cut off, just as he started speaking?). However, not before GATA – and numerous other alternative media outlets – posted it, such as here.
We cannot emphasize more strongly that, all along, the Cartel’s “Achilles Heel” was the inevitable realization that price action has not been catalyzed by real physical supply and demand factors, but fake paper ones instead. Now that this weakness is being exposed, it’s just a matter of time before the scheme implodes upon itself – just as the “London Gold Pool” in 1968, and every other attempt to mask Central bank currency inflation throughout history.
Consequently, are you going to grab a chair before the music stops – and the tide returns? Or will you fight over one with thousands of others – when it’s already too late?
As you might know I attended the Jim Sinclair Q and A session in Austin on Saturday with Bill Murphy of GATA. The seminar lasted over 4 hours and we met many smart people and I call them “truth seekers.” One of these was a well-dressed German fellow who looked to be in his early 40’s. He came up to Bill Murphy during the first break and asked why GATA had not gotten all of their information out to the regulators and the media? He said, “The manipulation is so obvious, why don’t you go whistleblower?” Bill explained that GATA has tirelessly given uncovered information out for years, 16 years now and no one wants to hear it. Murphy went right down the line, he told of his CNBC appearance that was cut short and him never being allowed to appear since then … He explained that he and Chris Powell have given the CFTC piles of information, they’ve given multiple “smoking guns” to the press…yet nothing but silence.
Bill even explained that over the years, some reporters have even told him that the word “GATA” (Gold Antitrust Action Committee) could never be printed. In fact, about the only press over the years has been foreign press. He told of the 2001 Durban, South Africa trip and the press coverage, the fact that even Russia has carried news of and spoken of GATA…but only silence and suppression of the truth here in the U.S. and Britain.
The German guy wouldn’t give up though (because he’s a stubborn German, I should know as I am the same), he approached Bill 2 more times and couldn’t understand why GATA hasn’t been able to do what their primary mission is, namely exposing the truth about the suppression of gold’s price as part of keeping the markets “tame” (rigged). GATA’s mission has been merely about “free markets” or I should say the LACK of free markets. All they want is a free gold price and for that to reflect the “temperature” of markets much like a thermometer.
As I said, the German was stubborn and approached Murphy one last time after the conference…and only then did things start to roll. It turns out that this guy was quite successful, he retired 6 years ago (presumably in his 30’s) after selling his “headhunting” business. This is significant because he has ties and acquaintances in the German media…it was GAME ON! You could see Murphy’s face light up like a Christmas tree! Could this be possible? A German who truly understands what has been happening AND a connection to the German media…at a time when Germany has been defaulted on and it appears that their gold is gone?
The 3 of us spent a couple of hours brainstorming as to how to approach this and of course nothing was set in stone but much as an artist sketches an outline…it was drawn up last night. Bill is going to pull the “entire file” with every piece to the puzzle and every smoking gun that GATA has uncovered over the years. This “file” will be shown to several journalists in Germany AND also to Bafin. Bafin if you will recall is the financial regulatory agency that is cracking down on LIBOR, bank fraud and also “gold manipulation.” Bafin’s President Elke Koenig made the comments last month that “if there is gold manipulation it would be far worse than LIBOR.”
This is a dream come true! Germany is hungry for any information about gold right now…because they have figured out that theirs is, well, “it’s gone!” And compiling information about gold and the fraud that has surrounded it for at least 42 years is the only thing that GATA has done for 16 years…except no one wanted to hear it in the U.S., NO ONE. Chris Powell had already sent this information last month to Bafin with no response from them at all. The plan is to get this information to Bafin “publicly” so that the German populace knows full well that the regulator has all of the smoking guns and 1 media outlet in an exclusive scoop. This information will be followed by a “presentation” to the German public who are only now beginning to ask questions since the U.S. has dragged its feet on shipping German gold back to its rightful owners.
This will not be a presentation by a bunch of knucklehead conspiracy theorists. Please understand that GATA has now and has had for quite some time enough information that put together properly paints an absolute masterpiece of who did what and how. Murphy wants to put together an All Star team to make this presentation; he intends to request that the likes of Jim Sinclair, Eric Sprott, James Turk, John Embry, (a special surprise guest) and others participate. Please understand that this presentation will not be some sort of “he said she said” or “I think” blah blah blah, no, there is a paper trail evidence of much that has transpired over the years. There is a “paper trail” in reality for EVERYTHING that has transpired over the years though much of it is hidden and out of sight. This evidence is NOT out of Bafin’s sight however.
The thought process is this, inform the German people exactly what has happened, why it has happened and where we (they) are now. This will obviously put some pressure on politicians to get behind this which will pressure the regulators to dig…deep. We were told last night by our “German friend” that the population is just now beginning to ask questions about their gold, that the media sources that he knows very well may have an interest in this, that there are some politicians (more than just Ron Paul here in the U.S.) already asking these questions and of course Elke Koenig who has already claimed gold manipulation.
It looks to me like “GATA” is all they need. GATA finally after all these years (of digging for the truth and finding piece after piece after piece and thinking with each one “no one could ignore this”) may have their mission statement accomplished. Germany is expressing a desire for answers and GATA has them all in one file. The funny thing is that Bill Murphy and Chris Powell have always said over the years that “once the system collapses, Congress will investigate and we’ll have everything that they need to find out why.” I’ve even kidded Murphy many times that I can picture him testifying to Congressmen who don’t even have a clue what he’s talking about. Little did I know that he may end up testifying to a German translator in a foreign land? I might add that the Germans are also a little ticked off over Angel Merkel being spied on and our wonderful diplomat who said, “Screw the EU… (And we have the nerve to be upset that she was spied on?).
If this does work and I believe it will because Germany is hungry for the truth, the world will change drastically and quickly. It will surely feel like it’s for the worse in the short run but in the long run, fraud deceit, theft and rigged markets to keep the status quo can never be permanent. GATA has the “power of truth” behind them, hopefully I am not being naïve and this mission gets accomplished.
Of all the possible ridiculous possibilities in our financial world, Blythe Masters joining the CFTC was probably farthest from my mind. Blythe Masters as you know is the head of global commodities trading at JP Morgan. You know? “JP Morgan” the financial behemoth that has paid out $25 billion over the last year in 12 “wrist slapping’s” (with 2 more to come) for conduct unbecoming human beings? How is it possible that the CFTC could offer her a job? How is it possible that she would accept it? Is this a joke? …On us?
I don’t suppose the CFTC nor do Ms. Masters see any conflict of interest here. Don’t get me wrong, in a real world with real laws and real consequences this could not only ever happen but never even be contemplated. In my opinion there are no “conflicts of interest” at all. No, I’m not crazy and I didn’t take a “stupid pill.” There is no conflict of interest as far as I’m concerned because the CFTC has the exact same “interests” as does JP Morgan. They both want low rates, low gold and silver prices and high paper asset valuations…so where are the conflict?
Whoever it was that dreamed up putting the head fox of foxes on the planet inside the juiciest henhouse must be “brilliant” …in their own mind. I say, “In their own mind” because only someone with a perverse sense of humor could have come up with this one. Think about it, “comedians” are truly brilliant people and that’s why they are comedians. They have a perverse sense of humor and don’t think like normal people who are what gives them the ability to look at something mundane and find something “funny” about it.
To put the CFTC’s current hire into perspective, this is akin to Al Capone taking J. Edgar Hoover’s job at the FBI or making Bernie Madoff the head of an exchange like the Nasdaq…oh wait, never mind, or giving Eric Holder …Eric Holder’s job as attorney general…oh fuggedaboutit you get the idea! Speaking of Eric Holder, JP Morgan is obviously “too big to jail,” were any single one of the 12 settled or 2 yet to come cases actually prosecuted, can you imagine what would come up in any discovery process? This is why in any civil cases…they are always settled ahead of time…BEFORE the opening of any “books” in the discovery process. Can you imagine the paper trail that would be exposed if just one single tiny “string” was tugged on …to fruition? Or where that string might ultimately be attached? The Fed? The Treasury? Both?
Getting back to Blythe, apparently JP Morgan is selling their commodities unit to Mercuria, a Swiss firm formed by 2 ex Goldmanites (doing God’s work?) and she will not make the transition. Instead, she will be taking a 99%+++ pay cut to “do good.” Oh I get it, the CFTC figures she knows where all of the skeletons are hidden and will start pointing the bloodhounds in the right direction…NOT! Actually, I cannot imagine any firm after doing any due diligence whatsoever wanting to take on any legacy positions held. Will Morgan’s “60% corner” in the gold derivatives market go along with the sale? Will this be a Countrywide Mortgage purchase and “all that comes with the package”… on steroids?
Maybe just maybe Blythe is taking the job so that she can point the bloodhounds in the wrong direction? I just don’t get it; she cannot need the money so it can’t be the paycheck. The CFTC is not some “famous” (yes it is infamous) agency where she’ll get “exposure” (I’m sure that this is EXACTLY what she doesn’t want). Thinking perversely as I often do, I can only surmise that this is simply an “in your face” to those of us who know and a joke “on” those who don’t. Think about it, the funniest thing in the world is when you’re sitting around a table having a few beers with friends and start making fun of someone…who doesn’t understand that they are the butt of the joke but they start laughing anyway. Everyone is laughing right? But, everyone is laughing for a different reason…because the butt of the joke doesn’t get it. I might add that this is simply a description of someone “who doesn’t know that they don’t know.” I can only believe that this is what Blythe Masters (and cohorts) is doing. It is “in your face, what are you going to do about it?” for anyone who gets it and “you’re so foolish that you don’t even know that you don’t know” for the rest of the population.
OK, maybe I’m just being too cynical? Maybe Blythe Masters has had a “come to God” moment and wants to “make right” everything that was “made wrong?” Maybe she’s going to “clean up” the system and help return the markets to one of true price discovery? Maybe she’s going to rat out everyone and we’ll finally see some perp walks and jail time? Maybe my horse will grow a single horn on his head and Unicorns do exist? Or better yet, maybe mi amigo will grow some wings and I can fly Pegasus Airlines to the city of Atlantis?
P.S. Just as I was about to send this, word is that Blythe Masters has withdrawn her name from consideration because “she’ll be too busy overseeing the sale of the commodities unit.” Zero Hedge alleges “furious Twitter backlash.” This is encouraging, maybe there are enough out there who get it? Darn the bad luck though; I was really looking forward to my afternoon “smooth” ride above the treetops!
This is another one of those “where do I start?” mornings; as frankly, my poor little brain is being stretched in multiple directions by the forces of lunacy.
It would be easy to commence with last night’s news that none other than Blythe Masters – head of JP Morgan’s commodities division, and chief nemesis of truth-seeking, free market advocates the world round – has been asked to join the CFTC in an advisory role. Talk about asking the fox to guard the henhouse! But then again, in today’s world of lies and deceit – as a fraudulent, multi-decade economic paradigm comes to an end – what else would one expect? And no, don’t “worry” about it; as the bullish forces of gold and silver will not be usurped by a handful of clueless, overconfident brats in Washington and New York. The entire world is starting to understand the extent of fiat monetary peril and real money sovereignty; and inevitably, the “financial world as we have known it” will collapse under its own weight; perhaps, much sooner than you can imagine!
UPDATE: Just before publication of this article, Blythe Masters withdrew her candidacy for the CFTC role, following literally thousands of angry “tweets.” LOL, I guess Twitter has some use after all!
Of course, such zeitgeist changes take time; in this case, nearly 15 years and counting. Ever since the tech bubble burst in 2000, the “evil troika” of Washington, Wall Street and the MSM has attempted to recapture the 1990s glory days – of surging stock prices, plentiful jobs and careless spending. However, per the Bloomberg Consumer Comfort Index we published yesterday – and oh yeah, CNBC’s ratings, those days are long over. Care of a 14-year sequence of political, economic and social calamity, public “confidence” has been inexorably weakened. Even an historic, Fed-induced housing bubble in the mid-1990s failed to restore the public’s pre-2000 purchasing power and economic comfort; and now, any hope of a return to the “American dream” has been shattered.
It’s no coincidence that the 1999 repeal of the Glass-Steagall Act – ushering in a catastrophic era of financial engineering, also occurred at this time. Not to mention, the commencement of mass job outsourcing due to the 1994 NAFTA treaty (which Ross Perot warned of, via his prophetic “giant sucking sound”), supplemented by the suicidal 2001 granting of “most favored nation” status to China. The cumulative effect of these events caused America’s economy – and dollar – to permanently peak; and here we are today, with a dying labor force, plunging real wages and no hope of resurgence. Consequently, the dollar-led world has been plunged into crisis after crisis; each time, “rescued” by additional money printing – which care of the laws of “diminishing returns,” no longer produce anything but debt, inflation and social unrest.
Today, the exported inflation created by Fed money printing is causing “Arab springs” to crop up the world round, from the “MENA” region –i.e., Middle East/North Africa; to the Ukraine, Turkey, South America, Thailand, Southern Europe and even the “world’s growth engine” – China – which this morning saw repo rates surge anew, following publication of the lowest ever PMI services figure. As we wrote last week, the “financial cancer is no longer dormant”; as the past five years of intensive, destructive “financial chemotherapy” has all but killed the patient; at best, keeping him alive just a few miserable years longer.
Within that context, let’s discuss this morning’s catastrophic NFP jobs report. To start, keep in mind that essentially every Wall Street “pundit,” “guru” and “sage” predicted it would rebound from last month’s horrific 74,000 figure due to “better weather”; as opposed to the Miles Franklin Blog, which scientifically demonstrated essentially ZERO correlation between job creation and the weather. Not to mention, the below chart – depicting how this year’s weather-related employment disruptions didn’t hold a candle to those of the past five years’…
Not that the BLS can’t fabricate whatever jobs number it chooses, in its unending quest to influence markets, elections and monetary policy. However, we were quite confident that an “anti-weather” bounce was not in the cards; and voila, not only were December’s figures unrevised, but January’s 113,000 job gain well below the 181,000 consensus. In fact, the only confusing matter to us was that the unemployment rate only fell to 6.6%, from 6.7% last month – given that 1.3 million people’s long-term unemployment benefits were officially terminated.
Clearly, the BLS is desperate to prevent the so-called “unemployment rate” from being seen as the utter mockery it has become; as clearly, it is using every accounting gimmick imaginable to avoid subtracting said 1.3 million people from the Labor Force, which would have plunged the unemployment rate closer to 6.0%. Frankly, I believe it specifically “goal-seeked” 6.6%, given that 6.5% was the Fed’s previous “end of ZIRP threshold”; which as you know, was permanently abandoned in December, coincident with the Fed’s initial “tapering” decision.
But don’t worry; because as sure as death and taxes, said 1.3 million will be subtracted from the Labor Force – and simultaneously, added to the food stamp payrolls; enabling the entire world to realize the true state of America’s “recovery,” just as the Miles Franklin Blog predicted at year-end…
In our view, last month’s NFP “whistleblower” allegations simply highlight the obvious; that is, the true state of U.S. unemployment is not only approaching that of the 1930s, but amidst a permanent weakening that will necessitate dramatically increased entitlement spending. According to John Williams of Shadowstats.com, the true unemployment rate – or as we call it, the underemployment rate – is closer to 23% than the officially reported 7%. Particularly in light of the fact that this weekend, 1.3 million more people officially left the labor force – because their unemployment benefits expired – it should be crystal clear why the Fed eliminated its previous, 6.5% threshold for ending its ZIRP policy. Heck, we may well see 6.5% in next week’s December NFP report; at which point, the understanding of just how structurally damaged the U.S. labor situation has become should significantly expand. Consequently, the Fed will feel increased pressure to not taper, but increase QE; likely, by the middle of the year.
–Miles Franklin, December 30, 2013
Ironically, the BLS actually increased the Labor Force by 499,999 in January, per what it calls the “annual adjustment of the population controls”; yet again, literally making up jobs when none exist. Of course, the overall trend is decidedly against them; and thus, just as exploding PHYSICAL gold demand will inevitably overwhelm Cartel efforts to suppress PAPER prices; the reality of economic destitution will rout BLS efforts to propagandize “recovery.”
As for the market’s “reaction,” it was even more contrived – and ridiculous – than the data itself; although, as I write at 10:15 AM EST, the forces of reality are starting to overcome the PPT and Cartel. As you can see below, stock prices initially spiked on the NFP report – only to subsequently plunge when FOMC perma-hawk Richard Fisher said such data would not deter his view of “tapering”; as if anything ever would. Next, stock prices surged when, of all things, the Japanese Yen started plunged anew.
I mean, I get this whole “yen carry trade” thing, but this is getting silly already. I mean, what on Earth about miserable U.S. economic data – and Fisher’s comments – would cause the dollar to plunge against the yen, and subsequently surge? In other words are we to believe that if tapering is “paused,” this is “great” for the Yen/dollar and “terrible” for the Dow; but if not, vice-versa? Not to mention, why is there now an essentially 100% correlation between the Dow and the dollar/yen exchange rate?
The answer, of course, is that financial markets are now completely overrun by government algorithms; which via unprecedented levels of manipulation and propaganda, have attempted to create a “meme” that Federal Reserve easing will cause the Bank of Japan to ease “more”; and thus, foster hyperinflation sooner rather than later. Such convoluted thinking will be heartily laughed at when the history books are written; much less, the concept that stock markets could produce meaningful, real gains under such circumstances. I assure you, those in Weimar Germany, late 2000’s Zimbabwe and modern Venezuela and Argentina will tell you otherwise; and eventually, so will Americans and Japanese investors alike. That is, what remains of them – as retail equity participation in both nations is extremely low; and in the case of the U.S., ironically, last week we saw the largest ever retail equity outflow!
As for PMs, just how much more blatant could the Cartel have been? Both metals initially surged after the NFP report; only to be immediately capped by prototypical “Cartel Herald.” And where were they stopped, you ask? Gee, what a surprise. Gold was up EXACTLY 1.0% – at its new “line in the sand” at $1,270/oz.; and as for silver, double shock – as yet again, the Cartel’s now eight-month “line in the sand” at $20/oz. was defended like Mt. Sinai, the Alamo, and Thermopylae combined. And again, “CIGAs” – or Comrades in Gold Arms; don’t worry; they unequivocally will be defeated – as they always have throughout history.
Anyhow, it’s now 10:30 AM EST, and gold has surged back to $1,265/oz. and silver to – I kid you not – $19.99/oz.; whilst the Dow sits right at the unchanged level; in the latter case, awaiting “POMO” operations to prevent yet another violation of “PPT Rule #1”; i.e., “thou shalt not allow PMs to surge whilst the Dow plunges.”
Who knows what will ultimately happen on Tuesday morning, as “Yellenomics” is unveiled to the House Financial Services committee? The aforementioned Richard Fisher can play all the “bad cop” games he wants, but the fact remains the Fed cannot continue to “taper” (as if it ever really did) if it wants to prevent an immediate market crash, as we have seen the early signs of this past month – particularly if the U.S. economy continues to freefall, as this week’s ISM Manufacturing, Factory Orders, Construction Spending, Consumer Comfort Index and NFP reports depict.
In all circumstances, the upward pressure on PHYSICAL gold and silver demand will increase dramatically; while conversely, the downward pressure on PAPER assets will expand – thus, yielding the necessity of increased, not decreased, Fed money printing and monetization. It’s only a matter of time before “the Big One” hits; and when it does, if you haven’t already protected yourself with real money, you may NEVER get the opportunity.
JPMorgan has amassed between 100 – 200 million ounces or more of physical silver. Most of it is stored in London. My friend Trader David R would agree. He says he has seen the silver there himself. According to Butler, their plan is to force silver’s paper price (Comex) lower and then buy the physical metal as cheaply as possible. They use the same technique on gold.
It only takes around $2 billion annually to absorb the available 100 million oz. of silver not used by industry and jewelry fabrication. But it takes over 50 times as many dollars to absorb the 80 million oz. of newly mined gold that is left over for investment purposes.
According to Butler, even if it isn’t JPMorgan that is the big buyer of physical silver (and he is sure that they are), silver has moved from weak hand to strong hands.
Even though JPMorgan was never able to get its net short position in Comex silver futures below 10 to 12,000 contracts over the past six years because of a limit to technical fund selling and raptor buying competition, it looks to me that the bank has been able to accumulate physical silver because there are different participants in physicals than futures. What this also highlights is the madness and illegality of having the paper price on the Comex setting the price in the physical market. If JPMorgan hadn’t been capable of rigging silver prices lower in 2013, it would never have been able to buy back 100 million ounces of short paper contracts and buy many tens of millions of physical silver as well.
I continue to be amazed at the amount and level of commentary in gold and silver that centers on manipulation. While I don’t agree with everything that is being said, there is no denying that the commentary about price manipulation in gold and silver is intensifying to an extent never witnessed previously. Hardly a day goes by when someone new doesn’t raise the issue, either pro or con. Further, the subject of manipulation appears to be unique to gold and silver, as I am unaware of any similar discussion in any other market. What does this mean? Since this is a highly unusual circumstance, there is no sure way of blueprinting how it turns out. But something tells me that the more widespread the subject of gold and silver manipulation becomes, the greater the likelihood it will end.
–Butler Research, January 22, 2014
JPMorgan’s short position in Comex is around 80 million oz. If they actually do own 200 million oz., as Butler states, then the CFTC would not have reason to take action on their manipulation.
JPMorgan acquires a majority of the (physical) silver that becomes available from mining, recycling and sales from existing holders, including SLV.
On the Comex, it’s the commercials (especially JPMorgan) vs. the speculators (the hedge funds). Butler believes that JPMorgan is responsible for the large High Frequency Trading smashes of silver.
Butler’s views are clear – he says, “There is no escaping that silver is manipulated in price by JPMorgan and will be until it isn’t any longer.”
Unlike many in our industry, Butler does not buy into the conspiracy involving the U.S. Government. He says they do it to make profit. The fact that they are very long physical gold and silver is bullish. The commercials are almost always on the right side of the trade with the speculators.
It’s hard not to conclude that JPMorgan’s ownership of physical silver and gold (futures and physical) will be bullish for the price; in fact, it looks to be the single most bullish factor of all. That’s because the most logical end game is for JPMorgan to cash out at much higher prices.
It should be clear by now that I have a great deal of respect for Ted Butler and highly recommend his excellent newsletter. But I have always been willing to examine different views and I have a great deal of respect for Trader David R, whose credentials and background are beyond excellent. He has worked for the bullion banks, represented Barkleys Bank setting the gold price in London and is actively trading the precious metals for his own account now. When I bring up JPMorgan as the entity that is causing all of the HFT rapid drops in gold and silver he disagrees. He says it’s the hedge funds and their computers working out of Chicago. He told me:
You now have all these algo’s in Chicago who are trading gold against other commodities or indexes. It’s all relative value trades. These guys do not know the color of gold just the historical data and based off of any news they will buy and sell gold vs. other stuff. You will see most movement ahead of US Equity open, when ETF opens, or economic data comes out. But these Algo guys are managing $1 – $4 Billion of dollars, so they can have massive impact on buying and selling of futures. They don’t care about the market they just need to buy and sell and the metals market is too small for this amount of money, so you will see greater movements.
Now that the banks are all leaving the metals business, the liquidity is going to dry up, so these Algo guys will be responsible for much bigger swings when they need to sell and/or buy millions of ounces. Volatility is going to be so far greater going forward and liquidity is going to be hard to come by. These quants sitting in the rooms in Chicago do not care about you or gold, they just care about making a few dollars each day…… it’s become a casino…. you can thank your government for regulating the heck out of the banks and leaving this market now in the hands of the algo’s.
I think we see new highs in gold sometime later this year or early next year….. I cannot see the FED continuing the QE withdrawal with all the economic data out, but gold should be supported on the downside and I want to buy dips now. Inflation in other countries is growing and I think there is a HUGE risk that one of these central banks are going to mess something up soon because they usually do !!
Whether you agree with Butler or Trader David R, the bottom line is both are very bullish on gold and silver.
By the end of the month, the Fed will decide whether or not to cut back on QE. If they do, it will be only $10 billion and they will try and tell you that inflation is under control, unemployment is not an issue and the economy is turning around. Hogwash! Read Shadowstats.com and see how the facts are twisted. 2014 will not end well (other than precious metals).
You now have all these algo’s in Chicago who are trading gold against other commodities or indexes. It’s all relative value trades. (For example, long gold short the stock market or vice versa).
Yesterday, I spoke of how football playoff tickets are selling for incredibly low prices; here in Denver, at lower prices than opening day. Unlike mainstream retail chains like Best Buy, Sears and Macy’s, the people that typically buy expensive playoff tickets have above average incomes and savings; and thus, if they are not spending, clearly the rest aren’t either.
Amidst non-stop commentary of the widening disparity between “the 1%” and “the 99%,” one might get the impression everyone is either filthy rich or flat broke. Of course, this is not true; as despite the rapid decline of the middle class, it does still exist. Per below, 6% of the labor force earns over $100,000 per year – although just 1% earns more than $200,000; and thus, if a so-called “recovery” were actually occurring, one would expect strong spending trends in the high-end category. Unfortunately, this is decidedly not occurring; as validated by this morning’s punk results from Coach, Inc. – by far, the most famous handbags maker in the world; which, by the way, blamed weak North American demand for its earnings shortfall.
Worse yet, it appears the U.S. economy is “relatively stronger” than everywhere else; as the world round, nation after nation appear headed down the same rat hole as the late 2000s. Just look at Turkey, Thailand and the Ukraine – which are literally collapsing; or Venezuela, where food shortages are becoming pandemic; or Italy, where bad loans just surged to an all-time high – up an astonishing 23% year-over-year. And how about economic collapse poster child Greece – where deflation has become so bad, it’s just a matter of time before the Golden Dawn Nazi party takes power. Yes, deflation; which is exactly what occurs amidst a depression when the government can’t print its own money; which is exactly what Greece’s new government will do, after the dying nation is either secedes, or is expelled from the European Union.
Validating EXACTLY what we have spoken of for years, an incredible article was released yesterday by the European Commission, citing how the
The still growing macroeconomic, employment and social divergences threaten the EU’s core objective; namely, to benefit all members. The latest review shows how the seeds of the current divergence were already sown in the early years of the euro; as unbalanced growth in some Member States, based on accumulating debt fueled by low interest rates and strong capital inflows, was often associated with disappointing productivity developments and competitiveness issues.
In the absence of the currency devaluation option, euro area countries attempting to regain cost competitiveness have to rely on internal devaluation (wage and price containment). This policy, however, has its limitations and downsides – not least in terms of increased unemployment and social hardship; and its effectiveness depends on many factors such as the openness of the economy, the strength of external demand, and the presence of policies and investments enhancing non-cost competitiveness.
–Europa.eu, January 21, 2014
Even we were floored by the EC making such an outright admission of its own frailty; and thus, even if Draghi actually attempts “whatever it takes” to save the Euro (i.e., limitless money printing and bond monetization), it will ultimately fail. Moreover, given the aforementioned “factors” required to save the union are moving in the wrong direction, it’s only a matter of time before the impending Euro Zone collapse moves back to center stage.
And by “relative economic strength” in the U.S., we simply mean its possession of the world’s reserve currency has enabled the Fed to borrow more money and prop financial markets more effectively, than most; thus, giving the temporary illusion of improvement, when in fact none exists.
We don’t need to show you the horrific debt, money supply, inventory and unemployment charts that we have presented for years to prove this point again; as by now, it should be glaringly obvious that America’s “leaders” sacrificed any remaining chance at economic salvation in order to “kick the can” that last mile. Now that high-end consumer spending – i.e., from those receiving the bulk of the Fed’s free money – is weakening as well, what’s left to “save the world?” Surely not Europe, per above; and if IBM’s catastrophic earnings don’t illustrate how weak Asia is, NOTHING will. That is, unless you consider the pending Chinese shadow banking collapse, which some believe will commence as early as next week.
Now that those “horrible headlines” are out of the way, let’s get to today’s “main event”; i.e., the utterly shocking statements made last week by Elke Koenig, the President of BaFin, Germany’s top securities regulator. BaFin regulates all German financial markets; and thus, might be considered a roll-up of the U.S. SEC and CFTC. And given Germany is the largest, most powerful nation in Europe, statements such as these are not being taken lightly.
Here in the States, government intervention has destroyed all semblances of free markets. To a large extent, much of the same occurs in Europe; particularly with the aforementioned “whatever it takes” Draghi in charge. However, such intervention is far more difficult to orchestrate, given that the ECB is beholden to the views of two dozen members. Irrespective, Germany has clearly sought to separate itself from the Euro Zone collapse; although at this point, it’s unclear just how possible that is.
Obviously, the recent realization that Germany’s Federal Reserve and Bank of France held gold is likely gone has shaken its leadership (and citizenry) to its core; as not only is it fearful of a PIIGS-led European collapse, but has a very recent, horrific history with the catastrophic potential of fiat currency – and conversely, the saving graces of real money.
Specifically, Koenig said that in addition to currency rates, the manipulation of precious metals “is worse than the Libor-rigging scandal.” And generally, “allegations (of manipulation in) the currency and precious metals markets are particularly serious, as such reference values are typically based – unlike LIBOR – on transactions in liquid markets, not estimates of the banks. Moreover, “the financial sector is dependent on the common trust that (markets) are efficient and at the same time, honest. The central benchmark rates seemed to have been beyond any doubt; but now, there is the allegation they may have been manipulated.”
Again, we ask you to consider the gravity of such statements from one of the world’s top securities regulators; particularly, one that likely believes the U.S. government has stolen its gold! Essentially, we have validation from the most “mainstream” government official possible, in one of the world’s leading economies, accusing the U.S. government – not “bullion banks” like JP Morgan – of gold and silver manipulation. Perhaps, not specifically, per se. However, such statements clearly refer to the actions of the market’s largest participants; and in the case of gold, the “largest participant” is clearly the U.S. government.
Taking Koenig’s statement a step further, let’s explore just how much “worse than LIBOR rigging” Precious Metals manipulation actually is. To start, just who was affected by a bunch of banks (NOT governments) colluding to fix money market interest rates? I guess one could say “everyone”; but in reality, the impact on the average person was infinitesimal. In effect, the LIBOR scandal was no different than “skimming” off the top; i.e., taking a handful of crumbs from each transaction and distributing the cumulative trillions to a handful of bankers. Sort of like the computer-hacking schemes in Superman III and Office Space; wherein, the fractional pennies from each corporate payout were skimmed into a single bank account.
However, everyone has been negatively affected by the past decade-plus of gold and silver suppression; or, more accurately, four-plus decades of substituting them with fiat currency, purporting the former to be “barbarous relics” and the latter money. In other words, the whole point of the LIBOR scandal was to rob institutions of their “spare change”; which, while illegal and unethical, never bankrupted anyone. Conversely, by covertly suppressing gold and silver prices down – and justifying such actions via publications like Larry Summers’ “Gibson’s Paradox” and campaigns like Robert Rubin’s “Strong Dollar” – TPTB sentenced all but “the 0.1%” to generations of inflation, economic stagnation and financial serfdom. In fact, it angers me to consider comparisons of the petty theft that was the LIBOR scandal and grand larceny that has been the Cartel’s PM suppression scheme. Not that Ms. Koenig was making such a comparison; however, the fact that the entire “civilized world” colluded in this scheme for so long – Germany included – is beyond contempt.
By suppressing the historical “inflation barometer” via gold price suppression, banks became too big to fail; governments more corrupt than at any time in our lifetimes; and the global financial situation more desperate than at any time in history. Fiat currencies would never have been able to expand at such rapid rates; assets bubbles would never have been enabled; and global income disparity could never have occurred. Nations, municipalities, corporations and individuals alike – especially in Western nations with the most powerful currencies – could never have become so indebted; America could never have funded its destructive wars; and horrific, nation-killing legislation like Obamacare could never have been passed. Moreover, “QE” would never have been politically viable; and thus, the massive, exported inflation that is destroying the “fragile five” and other worldwide economies would have NEVER occurred.
To conclude, the horrific, government-led collusion to artificially suppress real money – at the altar of fraudulent, hyper-inflating fiat currency – dwarfs the importance and ramifications, of all other financial scandals combined. The fact that a leader of one of the world’s most powerful nations is openly discussing it should serve as a “shot across the bow” of the entire world; as clearly, this illicit, world-destroying scheme is on its last legs. As the global economy weakens; money printing accelerates; and PHYSICAL gold and silver inventories drain, the odds that “tomorrow” is the day the global fiat Ponzi scheme collapses grow with each passing day.
Ignoring such potentially earth-shattering statements could mean the difference between bankruptcy and wealth; and more importantly, financial survival and bankruptcy. It won’t be long before EVERYONE is parroting Elke Koenig’s statements; and, for that matter, the Miles Franklin Blog’s. Which is why you must PROTECT yourself, and do it now!
The title “It’s gotta be close” is a direct quote from John Embry. For those of you who don’t know John, he works side by side with Eric Sprott and is probably the preeminent mind when it comes to mining companies. “It’s gotta be close” was John’s response to Glenn Beck’s video release a week ago. You see, Glenn Beck as I mentioned this past week would sometimes “go there” but never really “get there” as far as gold was concerned. Yes he has promoted gold for a few years but never ever until the last year gotten into the “crazy conspiracy theories” that gold’s price could actually be manipulated. This would have been “too far off of the envelope” for him…but he has now jumped in feet first and no matter what he says or wants you to believe, he is “mainstream.”
But why now? Because, as John said, “We gotta be close.” “Close” as in the entire suppression scheme blowing up sky high so that anyone and everyone can see and know what has been going on for years. The revelations are piling up “bigger and faster” than ever before. In just the first 2 weeks of 2014 we have heard from Germany 4 times regarding their gold. On Jan. 5th they said that they have received 37.5 tons of the 87.5 that they had expected. Now it turns out that only 5 of those tons came from the NY Fed and the bulk from Paris. They claimed that these 5 tons was re-refined in the U.S. Then a week later they changed their mind and said that it was refined inside of German borders. Let me put this 5 tons in perspective for you, the Fed lent out over $17 trillion to banks and financial institutions back in 2008 to “save the world” (over half to foreign institutions) yet we can only muster up less than $250 million (with a measly “m”) worth of gold that was supposedly being safe kept…did we “lose it?” Sell it? Lease it? Something is VERY wrong here. Do you realize that the Fed conjured up this $17 trillion within a month’s time while we can only send $250 million worth of gold over the course of an entire year? Doing the math in my head, the Fed lent out 68 THOUSAND! Times more in cyber credits than the real money they sent back to its owners. The German people should be screaming bloody murder; the American people should wake up and understand this. The stage is set for a buying panic…”it’s gotta be close!”
This past Thursday, Bafin’s President Elke Koenig claimed that “gold price manipulation” is worse than the LIBOR manipulation. Let me also put this in perspective for you, “Bafin” oversees the German banks, brokers and insurance companies, everything financial if you will. An equivalent of “Bafin” in the U.S. would be the supervisory arms of the Fed, the SEC, NASD, CFTC, FDIC and state insurance regulators ALL rolled up into one. The statement by Ms. Koenig was huge and loud if you were, actually listening because she is not some secretary or middle manager. She is the president of Bafin! You can bet the ranch that she did not make this statement off the cuff, lightly or by mistake. Think of the far reaching ramifications of a statement like this? Just on her words alone a buying panic can get started because she has now lent credence to us “conspiracy (fact) whackos” and everything that we’ve been saying. This is the equivalent of Ben Bernanke, Mary Jo White, Frank Zarb, Gary Gensler and Sheila Bair all making a joint statement that “gold’s price is manipulated.” But wait there’s more! Deutsche Bank announced Friday that they will no longer participate in the “London fix” and will market their “seat.”
Another little tidbit yesterday was Koos Jansen’s revelation that China imported 79 tons of gold for the week. Yes, for the WEEK, not month! This would amount to a run rate of 320 tons for the month or close to 4,000 tons for the year compared to global production of 2,200 tons (ex. China and Russia). Then we add in to this mix another big bleed from COMEX registered inventories which still seems to have some December deliveries left…with February less than 2 weeks away. Feb. if you recall delivered some 40 tons last year…COMEX only sits on 11 tons currently and some of this still needs to settle December!
So, I guess you could say that Germany is “stuck!” They now fully realize that their gold is gone and they will never get most or all of it back. Why else would Bafin’s President make her statement? Why else would Deutsche Bank give up their seat at the London fix? I would also like to add in one more “voice” to the mix. Bill O’reilly last week said and I quote, “If the Feds do not stop the wild spending, the dollar will collapse.” That means that all of your savings, investments, your home and everything else will blow up before your eyes.” The video can be seen here.
I and many others have spoken and written about all of this for years on end but we were and are “tiny voices.” Maybe you are a liberal and you scoff at conservatives Glenn Beck and Bill O’reilly waving the danger flag. But, maybe you deep down know that “something” is wrong but don’t know what it is. Maybe you have acted to protect yourself and family, maybe you haven’t yet. I would say to you that “time” is now VERY short! Do what you need to do and do it today, not tomorrow or next week or next month because your ability to do so very well may no longer be available. No matter what Beck and O’reilly say, they truly are “mainstream” and their voices get heard. Elke Koenig is not “mainstream,” she is “official” which means that we have also now gotten “official warning” that this baby is being detonated. And, the Chinese are doing what they do…buying gold, lots and LOTS of it! As I started this piece by quoting John Embry, “It’s gotta be close!”