One of the rare mornings I’m not at the gym (I’ll go this evening), although this time I just need a REST. Moreover, there’s just too much too write, as the next episode of “As the Manipulation Turns” commences.
It’s hard to believe gold was at an ALL-TIME HIGH a month ago, in an environment sporting the EXACT SAME ISSUES as today. Each day brings additional political, economic, and social horrors, which have become ubiquitous as the collapse of the fiat currency system accelerates. Hardly an hour passes before ZeroHedge is reporting a major economic setback or instance of blind corruption or political upheaval, and I assure you that pace will only accelerate.
Unfortunately for those trying to PROTECT THEMSELVES from what’s coming (and in many countries, what’s ALREADY HERE), the PURE EVIL running Washington and Wall Street have discovered new and improved weapons of financial destruction, refining their crafts (particularly in the fields of derivatives and HFT trading) to the point that it feels they can WILL markets to where they want them to be, in some cases in the blink of an eye such as the PPT’s multi-standard deviation surge in the Dow yesterday, a 370-point increase in the past 30 minutes of trading based on NOTHING. One minute, Morgan Stanley is below $12/share due to its $40+ billion exposure to French banks, and a half hour later it’s over $14, in hindsight due to nothing more than “rumors” that bailouts are on the way.
As I wrote last weekend, I firmly believe MORE THAN 50% OF ALL U.S. STOCK TRADING IS GOVERNMENT-RELATED, which is why you will probably lose no matter what you attempt in this market, long or short. Close to 80% of all such U.S. stock trading is HFT, of which Goldman Sachs is by far the most dominant player, using equally forcefully efforts to PUNISH “unfavorable sectors” such as PMs and SUPPORT “vital sectors” such as, of course, BANKS. Given the soaring level of fails-to-deliver in essentially ALL markets, from stocks to bonds to commodities, I have little doubt TPTB utilize naked short-selling indiscriminantly in their goal of controlling PERCEPTION via key markets such as the Dow, T-Bonds, currencies, commodities (how about that Brent/WTI spread?), and, of course, the linchpins of the financial system, gold and silver.
Short selling is an EVIL practice, initially created by WALL STREET to generate commissions and manipulate stocks, but like any practice in today’s corrupt banking world has become significantly more malignant over the years, particularly since the global financial crisis commenced in 2008. Dozens of companies have been bankrupted by naked short-selling, including some that deserved it (Bear Stearns) and numerous others that did not, and hundreds have had their reputations and balance sheets permanently ruined. Taking positions in the stock market, long or short, has become akin to playing Russian Roulette, as I believe 95% of ALL stock investors in the past three years have lost money. Going long during a period of historic economic contraction is treacherous enough, but when you throw in the HFT trading (government and otherwise), naked short selling, and targeted price suppression, it becomes virtually impossible. Conversely, short-sellers take their life into their hands when they fight the PPT, which in the blink of an eye, in seemingly effortless fashion, can take a dying stock such as Morgan Stanley up 15% in minutes, or the government in general, which can print $5 billion, give it to Warren Buffett to pretend he invested in Bank of America, and voila BAC stock gaps up 20%. Thousands of traders and investors got destroyed by that government blitzkreig, getting margin calls at $8.50/share only to watch BAC plummet back to $7.00 in a matter of DAYS, and $5.00 in a matter of WEEKS.
To emphasize the point (i.e. PPT + HFT + Corruption), gold and silver margins were DRAMATICALLY INCREASED last week AFTER the prices were annihilated by GOVERNMENT COMPUTER PROGRAMS, to the tune of 15% and 35%, respectively, in the space of TWO TRADING DAYS (plus illiquid Sunday night trading, of course). The CME cited “excessive volatility” for the margin increases, even though GOVERNMENT COMPUTERS created such volatility and thousands of traders were already wiped out. Conversely, the CME LAST NIGHT, following the massive PPT operation orchestrated in the final 30 minutes of trading yesterday, DRAMATICALLY DECREASED margins on FINANCIAL STOCKS (didn’t even know there was a financial stock futures index), in an attempt to further fuel the speculative buying of bankrupt companies like Morgan Stanley and Bank of America. Yes, readers, this is as close to a “policy response” from the U.S. government to a collapsing financial sector as you’ll get…
…unless, of course, you include their practice of SPREADING RUMORS and simultaneously implementing PPT buy programs, a practice which could not have been more visible yesterday, and will only grow more pervasive as the economic collapse accelerates.
Here are some “hindsight” explanations for the big Dow short squeeze yesterday afternoon, and trust me that’s all they were, the same old, same old “market action makes commentary” propaganda tool. The Dow didn’t rocket up because of the potential for a “bad bank” solution for Dexia (i.e. taxpayer-funded bailout), as everyone knows Central Banks and their flunky organizations will bailout EACH AND EVERY TBTF bank until their currencies collapse. For central bankers and politicians, they have NO CHOICE but QE TO INFINITY If they want to maintain power and avoid a literally IMMEDIATE market implosion, so the concept that “markets” were “surprised” by such news, if it was even news at all, is ridiculous.
If the solution to banking system insolvency was simply to create “bad banks”, the Dow would be 50,000 today, gold would be worthless, and the global economy would be rocketing ahead. Likewise, if all that was required was for European governments to “unite” in bailing out insolvent banks, all would be well. But alas, that was already attempted in 2008-2010, doing nothing but kicking the can into 2011, from where we are now facing insolvencies significantly larger, and a banking crisis infinitely more dangerous.
Speaking of rumors, remember this one from September 12th regarding how China was about to invest in Italian government bonds and “save the Euro?” Stocks loved it, “pundits” loved it, and politicians and the media went gaga over this “news”, which in the big picture would do nothing but kick the can down the road again and significantly weaken China’s finances.
Only problem, it was nothing more than a rumor spread by TPTB to boost sagging bank stocks (the Dow surged 600 points in four days on this “news”). As soon as it was disproved, down stocks went again, culminating in a Standard & Poor’s downgrade of Italy a week later, from A+ to A…
Stock investing can be ADDICTIVE, and believe me I know. Stock ownership is so exhausting, it can dominate your existence. For years, I couldn’t use a slot machine in Las Vegas because I was so drained from “gambling” during the week, although in earlier days I felt the stock market was “winnable.” Now I believe, in nearly all cases, one is better off at a craps table than in the stock market, as at least the house rules do not CHANGE. In other words, the odds are always stacked against you, but do not get WORSE as they have in the stock market. Sure, there are opportunities to make money in stocks, and my firm is certainly attempting to flesh out such opportunities, but you must be extremely careful in such investments, as in a cratering economy SAVINGS are of paramount importance.
Just as I predicted above you will not see a sovereign bond rating increase, OF ANY KIND, this decade, I do not expect to see genuine “economic improvement” in the Western world for years to come. The U.S. is doomed, Europe is doomed, and Japan (the puppet Western nation) is doomed, with all requiring far more downside before even a glint of improvement is possible. So don’t be fooled by the propaganda, which will only INTENSIFY in the coming years, telling you otherwise.
Actually, I think such propaganda is starting to wear thin, which is why the Fed is not only being ignored but in danger of being protested out of existence, particularly given that its 99-year lease expires at the end of 2012. Readers know there is not an ounce of optimism in me, but Ron Paul did win 97% of the votes in this week’s “First in the South Presidential Preference Poll”, and wants nothing more than to abolish the Fed. Stay tuned.
And before I leave the topic of propaganda, the article below is a MUST READ if you want to see how DESPICABLE mainstream corporations such as Starbucks can be in their attempts to boost stock prices. Pay little attention to the corruption of the WALL STREET BANKS in this article, as it just represents “par for the course.” But to see Main Street join these criminals, now THAT is disgusting.
As for gold and silver, words cannot describe how intense the Cartel attack has been this month, planned throughout August and commenced the SECOND Asian markets opened after Labor Day. First came the DEATH STAR ATTACKS, then the insane two-day attack starting MINUTES after the Federal Reserve announcement September 21st, and finally the all-out DESTRUCTION of mining shares, which have fallen so sharply that even the banks are blushing.
As I vehemently forecast throughout the summer, the Fall would bring a MASSIVE financial crisis, which it certainly has (and Fall JUST STARTED). We all know TPTB will do everything in their power to keep safe-haven investment flows away from Precious Metals, but even I was taken aback by the force of illegal manipulation that has gone into this effort. I know it’s been stated many times before (and each time truer than the last), but the level of DESPERATION among the fragmenting politicians and Central Banks has reached spiritual levels, and unfortunately for them will only grow worse as the banking system, and the fiat currency system by proxy, weakens exponentially in the coming months , no matter how many HYPERINFLATIONARY bailouts they announce.
In yesterday’s RANT, I graphically depicted the intense attacks on gold this month, particularly utilizing the 3:00 AM EST CAPPING TOOL to take the sails out of the market following the unrelentless, daily Asian gold buying. If I haven’t mentioned it before (I probably have), over the course of the eleven year PM bull market, gold is actually DOWN in COMEX trading hours on a cumulative basis. Think about it – gold rose from $250 in 2000 to $1,900 in 2011, with the great majority of VOLUME trading on the COMEX, yet gold is DOWN in New York trading hours, and obviously UP dramatically in Asia, where PHYSICAL, not PAPER gold is being transacted. My thanks to the great European analyst Dmitri Speck for bringing this anomaly to my attention in 2004, a trend that has only grown more stark since.
As for the 3:00 AM EST CAPPING TOOL, it has obviously been a mainstay of Cartel activity for the past decade, particularly this month. Yesterday, I showed you how gold peaked at EXACTLY 3:00 AM EST at $1,680 on Monday night, only to be taken down NEARLY $100 in COMEX PAPER TRADING in an environment of the EXACT SAME MARKET FACTORS that propelled it significantly higher (capped at EXACTLY 2%, by the way) the day before!
Last night was no different, as gold rose throughout Asian trading, essentially rejecting yesterday’s COMEX mob hit, until – yep, you guessed it – EXACTLY 3:00 AM EST, when gold was treated to yet another $35 DEATH STAR ATTACK!
Once again, I cannot emphasize how strong PHYSICAL DEMAND for gold and silver is right now, perhaps as strong as I’ve ever seen it. And each day the Cartel keeps prices depressed will only take more PHYSICAL metal off the market, in most cases FOREVER, so buy all you can, and don’t even blink at the premiums. The way I view it, they are not “premiums” at all, but the REAL, TRUE PRICES, significantly higher than the spot prices quoted on your screens.
Remember readers, the fact that mining stocks are down is not because the prices of REAL GOLD AND SILVER are down, but because major mining companies are too stupid to renegotiate offtake agreements to incorporate such REAL prices. Yes, I’m thrilled that Newmont and others are going to pay dividends, but dividends should have as much influence on your decision to buy a stock as the interest rate on your mortgage influences your decision to buy a house. In other words, dividends are a distant SIXTH in my stock investing decision process to the P/E ratio, growth forecast, balance sheet, management, and operational statistics.
Before I end this lengthy (nearly three hour) RANT, I want to reassure readers that the aforementioned “rumors” and propaganda are just that, LIES to make you believe things are “improving”, or on the cusp of doing so. To the contrary, each headline I read depicts further freefall of the Western economy, with not only no CHANCE of improvement, but no HOPE. Have a glance at these headlines, all published AFTER the Dow surged 370 points in 30 minutes at the close of yesterday’s trading, if you don’t believe me (not including the Moody’s Italy downgrade noted above).
10/05 – 9:39 AM EST – MERKEL SAYS GERMAN GOVERNMENT STANDS READY TO CAPITALIZE BANKS IF NECESSARY
10/05 – 9:40 AM EST – UK PM CAMERON SAYS THREAT TO WORLD AND UK ECONOMY IS AS SERIOUS AS 2008
10/05 – 10:01 AM EST – ISM NON-MANUFACTURING EMPLOYMENT INDEX AT LOWEST SINCE APRIL 2010
And please, please, please ignore the TOP CALLERS who are out in force with their doom and gloom predictions for Precious Metals, citing “technical breakdowns” and uncertainty regarding QE3.: Quantitative Easing goes on ALL DAY , EVERY DAY, both OVERTLY and COVERTLY, with ALL global Central Banks participating, and it will NEVER END until the currencies collapse.
Keep your cool, be good to your fellow brothers and sisters, and above all, PROTECT YOURSELF!
As I suggested before; "IT IS NOT A FREE ECONOMIC MARKET!!!
Had I know how corrupt the market is I would not have touched it!
I've committed myself to SVL, believe SVL to be a future 10 bagger, but now have to ride it out.
Let's hope the latest drill results will bring fresh money in and break the back of the BOT Traders (may they be cursed!).
Cheers to all Silver Bugs.
Denys
Ranting Andy
Andrew Hoffman was a buy-side and sell-side analyst in the United States (including six years as an II-ranked oilfield service analyst at Salomon Smith Barney), but since 2002 his focus has been entirely in the metals markets, principally gold and silver. He has worked as a consultant to junior mining companies, head of Corporate Development and VP of Investor Relations for different mining ventures. Also by Ranting Andy Website Contact author
SVL Price at posting:
15.3¢ Sentiment: Buy Disclosure: Held
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