Tuesday November 25, 2014

Table of Contents

Andy Hoffman's Daily Thoughts

The ECB (And Many Others) vs. The SNB

November 24, 2014

 

Watching Friday's "trading," I had a "V for Vendetta moment" - as if a long chain of world-changing events was building to its inevitable crescendo. Perhaps I'm being dramatic, as V for Vendetta is one of my all-time favorite movies; which, no doubt, Miles Franklin Blog readers will love. However, in watching the intense domino scene for the umpteenth time, it couldn't be eerier when the film's villain, Chancellor Adam Sutler, warns his inner circle that "every day brings us closer to November." In that case, he was referring to the "Fifth of November, when the people planned to revolt against his vicious, oppressive government on Guy Fawkes Day. However, it rang way too coincidental for my blood that financially the 30th of November could yield an equally dramatic establishment Waterloo.

 

I'm referring, of course to Sunday's "Save our Swiss Gold" referendum; which, in my mind, is at worst, a dead heat. Consequently, modern day "Sutlerites," led by the Swiss National Bank's evil Chairman, Thomas Jordan, are doing everything possible to convince citizens a Swiss gold standard will be "fatal." Meanwhile Egon Von Greyerz's "freedom fighters" courageously spread truth. Depending on which poll one views, both sides have solid chances of winning - particularly as roughly 15% remain "undecided."

 

Frankly, I don't believe any polls predicting a material "no" lead - as just two weeks ago, a "more reliable" poll had the "yes" contingent comfortably ahead; whilst last week, Deutschebank analysts wrote of the yesses' "clear but narrow lead." To that end, when an admittedly "less reliable" poll depicting a sudden increase in "no" support was "coincidentally" leaked at EXACTLY the Cartel's 10:00 AM EST "key attack time" on Wednesday - as the Cartel maniacally defended $1,200/oz. for the third straight day - it couldn't be more obvious what was going on. In other words, TPTB are flat out terrified of a "yes" vote; and thus, even by their unethical, amoral standards are sinking to new lows of criminality. To that end, this is exactly what they did in Catalonia - where just three weeks before 81% of citizens voted to secede, propaganda like this claimed "polls show around half of Catalans favor ending centuries-old ties with Spain." Last I checked, "half" and "81%" were about as far apart as the ten sigma difference between Thursday's "Philly Fed" report and consensus expectations; i.e., the "lie to end all lies."

 

For that matter, how "coincidental" is it that so many "market moving" events occur at or around 10:00 AM EST? You know, when the Fed conducts its daily "open market operations" in the bond market and global physical PM trading concludes. Be it scheduled Fed Chairman testimony, key economic data releases, Russian "tank invasions" into the Ukraine, or even Malaysian plane crashes; for some reason they occur at or around 10:00 AM EST with remarkably high frequency. As was the case, Wednesday when the aforementioned "less reliable" survey claimed the no's had jumped ahead.

 

As you can see below, the market demonstrated its disbelief in the report by immediately reversing the "associated" waterfall decline. Of course, I write "associated" in quotes because the concept that gold prices sitting near four year lows are somehow "anticipating" a yes vote is patently comical. That said, the Cartel was intent to paint such a picture; and thus, "doubled down" their naked shorting efforts with a 2:00 PM EST "crybaby attack," coincident with the tried-and-true "key attack event" of FOMC minutes publication. And by the way, note how the initial post-minutes raid was again reversed within minutes - to EXACTLY the unchanged level (see DLITG or "Don't Let it Turn Green"); when, voila!, a third paper raid "finished the job" of getting the brain-dead MSM to write of how "gold declined on fears of a no vote."

  

  

 

As for Friday, just how PM-bullish could the day's events - and outside market movements - have been? To start, we awoke to news that not only had the PBOC executed completely unanticipated rate cuts, but Mario Draghi gave one of his most forcefully dovish speeches yet - comically, replacing his "whatever it takes" catch phrase with "whatever means necessary." Whilst John Williams of Shadow Stats published his expectation of a dramatic downward revision of 3Q GDP and potentially negative 4Q print, the Fed's daily "New Hail Mary Trade" failed miserably with Treasury yields plunging all day to a multi-week low of 2.31% by day's end.

 

Global equities, crude oil, base metals and even platinum and palladium surged. Meanwhile, it was reported that October Indian silver imports were so strong, they are on pace to shatter last year's record levels despite the Reserve Bank of India's onerous tariffs still being in effect. Meanwhile, gold forward rates declined to a new 15-year low, depicting unprecedented physical market tightness. And thus, naturally, gold and silver prices suddenly plunged at EXACTLY the 12:00 PM EST "cap of last resort" we have written of for years; "coincidentally," pushing gold below the $1,200/oz. "line in the sand" the Cartel has maniacally defended all week, ahead of this week's Swiss referendum and COMEX futures and options expiration.

  

  

Back to the aforementioned "V for Vendetta moment," it appears that whilst the "bad guys" are maniacally attempting to create a "no" victory, equally powerful forces are desperate for a "yes." And I don't mean small-time "goldbugs" like us but powerful, global financial interests - for myriad reasons.

 

Most prominently is the ECB itself - whose actions this past week appear to be begging Swiss citizens to vote yes. To start, I remain speechless by ECB governor Yves March statement Monday that the ECB is considering gold purchase. In other words, screaming that gold is a valuable monetary asset, and doing so in the SNB's time of greatest propaganda need. Next, we have Draghi's over-the-top bearish comments Friday; no less, on the very day the ECB's official "QE" program commenced operation. Subsequently, the Euro plunged to a new 2� year low; i.e., to the spike lows of summer 2012, which prompted the ECB to bail out Spanish banks and Draghi to utter the aforementioned, infamous statement that he would do "whatever it takes" to save the Euro - and "believe me, it will be enough." Given that the Franc is pegged to the Euro, the Franc closed Friday at its lowest level since the peg was initiated in September 2011 - just one week before the referendum.

 

Thus, care of Goldman Mario, Swiss citizens this weekend are pondering why they should support the SNB, when its actions have taken the Franc down 16% whilst swelling its balance sheet by nearly three times; as Swiss GDP has averaged a meager 0.4%/quarter growth; and inflation has risen so strongly, the "Decent Salary Referendum" was voted on earlier this year as to whether the Swiss minimum wage should be raised to an astounding $25/hour. Heck, even the least financially illiterate Swiss - which frankly, equates to some of America's most literate - are smart enough to be terrified of the hyper-inflationary connotations of Draghi's comments, that "We (the ECB) will continue to meet our responsibility, by doing what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires."

 

Subsequently, and frankly, even more shocking in its content and "coincidental" timing, was Friday's announcement that the Dutch Central bank recently repatriated 122 tonnes of gold from the Federal Reserve. How they were able to do accomplish this whilst the far more powerful German Bundesbank only received 37 of the 300 tonnes it requested two years ago is another story entirely. However, the fact that the Dutch Central bank chose now - just one week before the Swiss referendum - to make this announcement, could not be telling. In other words, just as Yves Marche was flat out screaming to the Swiss that gold is a valuable asset, the Dutch were making them well aware that repatriation is both prudent and timely.

 

And why, you ask, would the ECB and its member nations make such "yes-friendly" statements, mere days before the referendum? Simple because the "final currency war" has gone nuclear; in this case, with Draghi hell-bent on destroying the Euro, utilizing the referendum as a "weapon" to break the Franc/Euro peg. Which, if you haven't noticed, has been bid by speculators to its breaking point anticipating a "yes" vote.

 

Simultaneously, we learn of MASSIVE Chinese and Russian gold purchases; the aforementioned explosion of Indian silver imports; unprecedented negative gold forward rates; and sky-high COMEX silver open interest ahead of this Friday's first notice day; atop the recent months' massive drains of COMEX gold and silver inventory, as well as the GLD ETF. Without "speculating," or trying to name "conspirators," it appears an awful lot of "coincidental" things are occurring in the world of real money; and this is amidst an environment of "unprecedented skepticism" amidst the PM community. Throw in the "shocking" PM upside reversal of November 14^th - which eerily reminded me of November 21^st, 2008, when gold rocketed higher from its ultimate bottom - and it doesn't take much imagination to believe "something" may be afoot.

 

As you know, we are against "speculating" about what's going on behind closed doors, particularly regarding near-term gold and silver movements. However, it's not a stretch to claim a "yes" vote could forever alter the world's perception of fiat vs. real money; and in the process, potentially destroy a Cartel whose actions have not only maintained a destructive status quo for six ugly years, but did so for the benefit of the "1%," at the expense of all else. As noted above, there are numerous motives by numerous groups to see a "yes" vote; in many ways, like Murder on the Orient Express, when all the suspects wanted to see Monsieur Ratchett die. Yes, the Fed and SNB are powerful financial terrorists. However, so are the ECB, the PBOC and the Russian government. In other words, a titanic battle is ongoing for the fate of this vote - so don't for a second be lulled into believing TPTB are in control. By this time next week, the world as we have known it - for generations - may have changed; and if you didn't protect yourself beforehand (at prices well below the cost of production, no less), you may not get another chance - certainly nowhere near today's Cartel-subsidized prices.

 

 

 

Interviews and Appearances

Gold Confiscation & Windfall Profit Taxes?

November 25, 2014

 

Andy Hoffman joins Elijah Johnson of Finance and Liberty and Chris Duane of Silver Shield Xchange to discuss the gold to silver ratio, housing and will there be a windfall profit tax on precious metals.  To listen to the interview, please click below.  

 

 

Gold Confiscation & Windfall Profit Taxes? | Duane & Hoffman (Part 3)

 

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Swiss Time Bomb Ticking Away  

November 25, 2014

 

Andy Hoffman joins Kerry Lutz of the Financial Survival Network to discuss the Swiss referendum, the stock and bond market, the Dutch repatriation announcement, most negative GOFO rates since 1999 and Chinese gold imports likely will exceed 2013.  To listen to the interview, please click below.

  

Market Recap

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