LeMetropole Caf�
Yesterday's closing comment...
"As mentioned earlier, it appears as if The Gold Cartel is about ready to go on the attack with a bazooka. Hopefully not, but either way, if both precious metals can perform well by the end of this week, that will be a real plus."
And attack with a bazooka THEY did. After the Shanghai opening, gold was bombed down to $1194 in short order. Then, in just as short an order, the price rallied back up to $1210, which meant it went positive on the day. Talk about a tug of war! That set the early tone for the trading pattern through today, with quick dips followed by quick rallies. There was nothing subtle about the goings-on.
Dave from Denver's take...
What Happened To Gold And Silver Last Night?
The western Central Banks - especially the Fed - manipulate ALL markets ALL the time. - Off the record conversation I had recently with a very high profile market professional
At the open of the CME Globex computerized paper gold/silver system (6 p.m. EST) last night gold and silver looked like they were on an elevator at the top of the Empire State Building that had the cable cut. No news. Now event triggers. Of course, and this no exaggeration, silver gets hit at the open of Globex 99% of the time.
Silver was smashed for 40 cents and gold for over $13 in less than hour on incredibly high volume for that time of the trading day. Then they abruptly reversed course and shot straight up, again on no news/events. Australia's CB was expected to cut rates but did not.
Of course, we'll never know for sure unless we were given access to the Fed's private emails - something for which the Fed is spending millions lobbying Congress to prevent. Hillary Clinton could only be so lucky.
The best explanation comes from John Brimelow in his Gold Jottings report:
This evening just after the 8PM Shanghai open massive selling hit GLOBEX gold, slashing $12 off gold in less than an hour and producing a low in April of $1,194.60 (down $13.60) about 9-10PM. Then, just as abruptly, the loss was erased with April making a session high of $1,210.50 (up $1.30) about 11PM. Some 30,000 lots were involved
Perhaps the early Asian selling effort was intended to run stops. Instead it apparently uncovered serious demand.
The truth is, we'll never know exactly what happened but I would bet my life that the Central Banks were responsible. The Fed and the Bank of England have kept a tight lid on the metals for over a year now. Interestingly, the metals are now higher than they were before the mob hit occurred.
In my humble opinion, the Central Banks have reached their limit on their ability to hammer the metals any lower. The physical demand from Asia/Russia/U.S. silver eagle buyers is just too immense in relation to the supply of above-ground gold/silver that is still available to support the paper gold/silver fraud. And the economic and geopolitical news gets worse by the hour. I stand by my call that silver will be the best performing asset in 2015.
Put me in Dave's camp for his call on silver for 2015. That said, today is not going to be one of those inflection points which is going to get us there. It is also one of those days in which general commentary about the precious metals for the day had to be put on hold, based on what we have seen since last night.
Not long after Dave put up his missive, The Gold Cartel, with their sloppy banker's pulling the trigger, went right back to work. It is disgusting to watch, and to report, but that's the way it is. And it was just about the time Israeli Prime Minister Benjamin Netanyahu was giving his presentation to the U.S. Congress ... yet another coincidence.
There is no better way to put it, anyone who follows the gold/silver markets and doesn't understand just how manipulated/rigged they are is either mentally challenged, suffers from cognitive dissonance, or is an establishment shill.
How many times have we seen silver acting peculiarly weak vis-�-vis gold and acting as a signal from The Gold Cartel about what they have in mind for the gold price? No sooner had Dave printed out his chart with silver at $16.46 than the bums went to work and began to lean on the price. A caveman could have picked up what was going on here. Press, press, press.
Gold, which had reached $1215 on its run higher, gave us a $1212.75 PM Fix as a result of firm physical market demand. That is when silver began to trade lower and lower. So, The Gold Cartel went to their patented PLAN B attack once the physical market pricing concluded for the day. It wasn't too long before gold had fallen to $1201. Meanwhile, silver disappeared to $16.10. Then both precious metals drifted back up a bit.
The opposition to The Gold Cartel was silenced today, just as the opposition to Putin was silenced.
Our good friend Mexico Mike checked back in...
Where have I seen this before?
Hi Bill!
Since BNN started going with live coverage at the PDAC, every year at the show I can always count on at least one major slam down for the metals. Tens of thousands of investors and staff from all of the major mining companies are on hand and the enthusiasm is usually running high. And then everyone sees the BNN monitor next to the escalator on the way out of the show, with gold and silver getting hammered. Just like the way gold and silver are taken down hard nearly every day before North American trading starts, the metals are also guaranteed to be slammed good and hard during any major mining conference, and for the same reason.
Why not? If you know the regulators will look the other way and ignore manipulation no matter how obvious and pervasive that may be, and if your objective is to demoralize an entire market sector and drive people into other investment classes - while making a ton of money to do so - then its game on and of course a major platform of the mainstream propaganda effort.
The last two days showed great promise early on, and then strong reversals with steady selling pressure. This has the fingerprints of the Cartel all over it, and silver was punch drunk today from the get-go. I think there is some truth to the concept that heavy rigging in gold is in fact related to the overhang of silver shorts. Someone clearly does not want to see any optimism in this sector so close to the delivery window for a large chunk of silver contracts. So its bombs away! Again.
Cheers!
MexicoMike
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Back in 2012 Brodsky and Quaintance suspected worldwide gold redistribution
Submitted by cpowell
Recent assertions by fund manager and geopolitical analyst James G. Rickards that the United States and China are cooperating in suppressing the gold price so that China more easily may obtain enough metal to hedge its grotesque foreign exchange surplus in dollars are not necessarily the first ones along those lines.
As Rickards has held U.S. Defense Department security clearance and was the lawyer for Long-Term Capital Management during the rescue arranged by the Federal Reserve in 1998, he is always worth the closest attention and surely knows more than he can tell without breaching some confidence or even risking assassination.
But the first suggestion that central banks were working surreptitiously to redistribute the world's gold among governments as the transition to some sort of worldwide currency revaluation may have been made by our friends the economists and fund managers Paul Brodsky and Lee Quaintance, then of QB Asset Management, now of Kopernik Global Investors, whose dissertation on the issue was published in May 2012 and publicized by GATA.
Brodsky and Quaintance speculated that central banks actually want the gold price up -- way up -- at least in the long term. They wrote:
"The key to a successful transition is a credible monetary reset. Gold is the default collateral for money because it has a long and established precedent in this role. All that would be needed would be a fairly equitable distribution of gold among global monetary authorities (taking place now?), and an agreed-upon exchange rate vis-a-vis baseless paper. It would have to be an exchange rate at which central banks could successfully monetize assets by tendering for physical gold with newly manufactured paper money, an exchange rate high enough to attract enough gold to cover unreserved credit held in the banking system. It's a high figure.
"The relative cost of holding physical gold today is minimal (above-ground bullion or in-ground bullion through mining shares) against the negative real returns offered by the preponderance of financial assets in float. We suggest that one keep identities straight; invest with central banks, not against them; and consider the hollow rhetoric of the establishment that may temporarily suppress its paper price a 'gift.' They are working for physical gold holders, not against them."
Brodsky and Quaintance did not speculate as to the lifespans of the physical gold holders for whom central banks are working. (Five years? Ten? Fifty? A hundred?) Nor did they make a judgment about the vast deception and cheating such policy by central banks would entail, nor wonder why the planet should be governed so comprehensively by such secretive and undemocratic institutions, the bigger issues behind the gold price suppression scheme. But the Brodsky and Quaintance study remains compelling and can be found here:
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Ed Steer
Jim Rickards: Why the U.S. is Letting China Accumulate Gold
A lot of people think about gold as a percentage of a country's total reserves. They are surprised to learn that the United States has 70 percent of its reserves in gold. Meanwhile, China only has about 1 percent of its reserves in gold. People look at that and think that's an imbalance. But those are not very meaningful figures in my view.
The reason is that a country's reserves are a mixture of gold and hard currencies, and the currencies can be in bonds or other assets. The United States doesn't need other currencies. We print dollars, so why would we hold euros and yen?
The U.S. doesn't need them, so it makes sense that the country would have a very large percentage of its reserves in gold. China, on the other hand, has greater need for other currencies.
A better metric, in my opinion, is to look at a country's gold holdings as a percentage of GDP. GDP is a representation of how big a country's economy is. It's the gross value of all the goods and services.
This must read commentary by Jim put in an appearance on the dailyreckoning.com Internet site on Monday sometime---and I thank Dan Lazicki for the final story in today's column.
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What Top Hedge Fund Managers Really Think About Gold: Jeff Clark -- Casey Research
In the January issue of BIG GOLD, I interviewed a plethora of experts on their views about gold for this year. The issue was so popular that we decided to republish a portion of the edition here.
Given their level of success, these fund managers are worth listening to: James Rickards, Chris Martenson, Steve Henningsen, Grant Williams, and Brent Johnson. Some questions are the same, while others were tailored to their particular expertise.
I hope you find their comments as insightful and useful as I did...
This selection of interviews appeared in yesterday's edition of the Casey Daily Dispatch---and it's worth reading.
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U.S. government is authorized to rig all markets in secret, GATA secretary tells KWN
Western governments are legally authorized to rig all markets in secret and as a result investigations of market rigging by the investment houses central banks use as intermediaries are not likely to produce anything, GATA secretary/treasurer Chris Powell tells King World News in an interview last Thursday.
Elaborating, Chris recalls the single hearing given to GATA consultant Reginald Howe's gold market-rigging lawsuit in U.S. District Court in Boston in November 2001, at which an assistant U.S. attorney asserted that the U.S. government has the power under the Gold Reserve Act of 1934 to rig the gold market through intervention by the U.S. Treasury Department's Exchange Stabilization Fund.
This brief commentary by Chris, along with the 9:48 minute KWN audio interview, are definitely worth your while. I thank Harold Jacobsen for pointing it out.
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Jim Sinclair
Chris Powell: Broadcast Interview - Available Now
Chris Powell: Mr. Powell has been focused on uncovering sensitive government and market information for over 15 years - Chris has been quoted in both national and international publications. He has also appeared in many major financial media outlets including Bloomberg, CNBC, King World News and more.
Chris Powell: Director, Treasurer & Secretary - Powell has been managing editor of the Journal Inquirer, a daily newspaper in Manchester, Connecticut, since 1974. He began working at the paper when he left high school in 1967. He writes a column about Connecticut issues that is published in a dozen other newspapers in the state and Rhode Island and often appears on radio and television public-affairs programs in Connecticut.
From 2004 through 2009 he was legislative chairman of the Connecticut Council on Freedom of Information. In 2006 he was inducted into the Academy of New England Journalists by the New England chapter of the Society of Professional Journalists and the New England Society of Newspaper Editors.
In addition to the Connecticut Council on Freedom of Information, he is a member of the Connecticut, Manchester, and Vernon historical societies and the Churchill Centre.
********Jim Sinclair's Commentary
Do you really think central banks are confident that they know what they are doing and where they are going?
The Draghi Derangement: $2 Trillion Euro Government Bonds Trading At Negative Yield
by David Stockman
That investors anywhere in this age of fiscal profligacy would pay to own the notes and bonds of sovereign states is a testament to the financial deformations of modern central banking. But the fact that nearly $2 trillion of debt issued by European governments is currently trading at negative yields--now that's a flat-out derangement. After all, the aging, sclerotic economies of the EU have been making a beeline toward fiscal insolvency for most of the last decade.
So it goes without saying that this giant agglomeration of pay-to-own government debt is not reflective of an outbreak of fiscal rectitude or any other rational economic development. It's purely an artificial trading result stemming from central bank destruction of every semblance of honest price discovery. In this case, the impending ECB purchase of $70 billion of government debt and other securities per month for the next two years has transformed the financial casinos of Europe and elsewhere into a front-runner's paradise.
As today's Bloomberg piece tracking Europe's $2 trillion of exuberant irrationality makes clear, sovereign bond prices are soaring because traders are accumulating, not selling, in anticipation of the ECB's big fat bid hitting the market in the weeks ahead:
"It is something that many would not have pictured a year ago," said Jan von Gerich, chief strategist at Nordea Bank AB in Helsinki. "It sounds very awkward in a sense, but if you look at it more, the central bank has a deposit rate in negative territory, and there's a huge bond-buying program coming. People are holding on to these bonds and so you don't have many willing sellers."
Needless to say, this is the opposite of at-risk price discovery; it amounts to shooting fish in a barrel. Never before have speculators been gifted with such stupendous, easily harvested windfalls. And these adjectives are not excessive. The hedge fund buyers who came to the game early after Draghi's "anything it takes "ukase have enjoyed massive price appreciation, but have needed to post only tiny slivers of their own capital, financing the balance at essentially zero cost in the repo and other wholesale funding venues.
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Jim Sinclair's Commentary
Chair Yellen: Are you paying attention, as your economic recovery looks poor?
ISM Manufacturing Tumbles To 13-Month Lows, Employment Slumps, Construction Spending Plunges
Submitted by Tyler Durden
Despite a collapse in US macro data in February, Markit somehow managed to conjure a better than expected 55.1 print for US Manufacturing PMI. Under the covers employment creation was the slowest since July and inflationary pressures loom as selling prices rose notably. ISM Manufacturing printed 52.9 - a small miss vs 53.0 expectations - down for the 4th month in a row to 13-month lows, with employment at its weakest since June 2013. Construction spending's modest rebound in (seemingly un-weather-affected) December (after dropping in November) has been destroyed with a 1.1% drop in January (against expectations of 0.3% rise) for the biggest drop in 8 months.
Spot The Odd One Out - one of these is a soft survey... the other summarizes US macro hard data into one variable...
Doesn't exactly look like a 'recovery' in manufacturing based on the jobs created...
********Zero Hedge
How Our Crazy Money System Works
Submitted by Tyler Durden
Squirrelly and Subtle
Yes, we were in London, taking care of business. Now, we're back in Buenos Aires. We've tried medication. We've tried prayer. We've tried heavy drinking - all in an effort to understand how our crazy money system works. And where it leads.
You'd think it would be easy. It's just Central Banking 101, no?
Well, no. It is squirrelly... and diabolically subtle. We doubt anyone understands it - especially those who are supposed to control it.
The basic unit for the system is a kind of money the world has never had before: the post-1971 fiat dollar. It's paper money - worth as much as people think it is worth ... and managed by people who think it should be worth less as time goes by.
What a Business,
Who are these people? Who do they work for? You might say they are "public servants." But that implies they are working on the public's behalf. Nooooo sireee...
They are employees of a banking cartel that is owned by private banks. These banks have a license to lend money into existence, earning interest on their loans.
It is no surprise that their share of US corporate profits has risen fourfold since President Nixon ended the quasi-gold standard Bretton Woods system. What a business! Their cost of goods sold is next to nothing. A few strokes on a keyboard and millions... billions... heck, trillions... of dollars are created.
As our friend and economist Richard Duncan points out in his book The New Depression, the amount of liquid reserves banks have to hold against their loans is now so small they provide "next to no constraint" on the amount of credit the system can create.
Banks just have to maintain a certain "capital adequacy ratio." This restricts their lending to a multiple of their equity capital (money provided by their shareholders). Of course, money is valuable only as long as there is not too much of it. The market can absorb a little counterfeited money. But there's a limit. And that limit has been greatly increased, thanks to:
1) A worldwide overcapacity of output, financed by previous lending
2) A huge glut of cheap labor, also largely brought forth by the credit expansion of the last 30 years
Without these unique circumstances, central banks' irresponsible policies - ZIRP and QE - would probably have caused inflation to rise to the double-digit range already... maybe higher.
Proof of Richard Duncan's contention: prior to the crisis, a negligible amount of bank reserves "supported" trillions of dollars in outstanding bank credit. QED, reserves actually don't matter anymore in the "fractionally reserved" system. However, it is still necessary to understand the money multiplier theory in order to fully grasp how the system works - click to enlarge.
Free Money for Governments
The authorities must feel like a college student who has found his professor's exam questions. He knows he's going to get away with something...
And since there are about 1 billion people who live on $1 or less per day, central bankers expect to get away with a lot more. Not only that, but also they're lauded as heroes for it.
And now there's no further need to worry about how much governments borrow. Central banks buy governments' bonds... hold them on their balance sheets... return the interest payments... and the whole thing will be forgotten. And when those bonds expire, central banks can use the repaid principal to buy more government debt!
In effect, today's raft of central bankers is doing something previous central bankers could only dream of doing: printing money without causing inflation. Politicians, too, are enjoying this once-in-a-lifetime opportunity for recklessness. They will be able to do what none could do before: borrow money without paying it back. We have not seen it in the press yet, but it should be coming soon. Commentators and kibitzers are bound to urge Germany to lighten up:
"Why should Greece have to repay those loans, anyway? Where did the money come from? It didn't come from German taxpayers. It came from nowhere, like all the rest of the world's money. And so what if it isn't repaid? What difference will it make? None."
Unfortunately, it will make a difference:
Even though most of the money was created ex nihilo, Greece's liabilities are offset by assets someone owns. That "someone", quite involuntarily, are the taxpayers in other euro nations. The above cartoon illustrates quite nicely how "helpful" money printing is to the economy.
Nirvana for Public Finance
Duncan, whose analysis of liquidity levels at Macro Watch helps us understand the effects of QE, believes central banks should - and will - buy 100% of government bond issuance... and then simply set fire to them. Too much government debt? Problem solved...
Hallelujah! Hallelujah! Nirvana for public finance has arrived. Heaven has come for politicians. Who says there is no such thing as a free lunch? We doubt that either the public or Congress has fully come to terms with this. We've just realized it ourselves. But eventually they'll start lining up.
Budget restraint will be yesterday's worry. Government debt will be written off and forgotten. The feds will be eating breakfast, lunch and dinner on money that never existed... and never will be paid back. But wait? Is that too good to be true?
Yes, it is too good to be true. If central banks really were to set fire to all government debt, this would happen. The illusion that money is "backed" by something with value, however ephemeral, would be irrevocably shattered.
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David Stockman Warns, "It's One Of The Scariest Moments In History"
Submitted by Tyler Durden
"The Fed is out of control," exclaims David Stockman - perhaps best known for architecting Reagan's economic turnaround known as 'Morning in America' - adding that "people don't want to hear the reality and the truth that we're facing." Policymakers are "taking our economy in a direction that is dangerous, that is not sustainable, and is likely to fully undermine everything that's been built up and created by the American people over decades and decades." The Fed, Stockman concludes, "is a rogue institution," and their actions have led us to "one of the scariest moments in our history...it's a festering time-bomb and we're not sure when it will explode."
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Bill Gross: "Central Banks Have Gone Too Far In Their Misguided Efforts To Support Economic Growth"
Submitted by Tyler Durden
"None dare call it a "currency war" because that would be counter to G-10/G-20 policy statements that stress cooperation as opposed to "every country for itself", but an undeclared currency war is what the world is experiencing. Close to the same thing happened in the 1930's, a period remarkably similar to what many countries' policies resemble today.... Negative/zero bound interest rates may exacerbate; instead of stimulate low growth rates in all of these instances, by raising savings and deferring consumption... Asset prices for stocks, high yield bonds and other supposed 5-10% returning investments, become stretched and bubble sensitive; Debt accumulates instead of being paid off because rates are too low to pass up - corporate bond sales leading to stock buybacks being the best example. The financial system has become increasingly vulnerable only six years after its last collapse in 2009....
Central banks have gone and continue to go too far in their misguided efforts to support future economic growth"
