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Today is November 9th, 2011, a year from the date I call “D-Day” in the ongoing “Cartel War.” 

First mentioned in my May 29th RANT, “CARTEL SECRETS REVEALED,” it depicts a day when Cartel battle tactics were PERMANENTLY escalated.  This day, more than even the SUNDAY NIGHT PAPER SILVER MASSACRE of May 1st, 2011, was the single biggest influence in the decision to shift my ENTIRE portfolio to PHYSICAL gold and silver.

http://babybulltwits.wordpress.com/2011/05/31/ranting-andy-cartel-secrets-revealed/

It wasn’t easy disavowing stocks after 20 years of being a professional equity analyst, during which I held essentially 100% of my net worth in the stock market.  I AGONIZED over the prospect of being unexposed to the EXPONENTIAL upside of the greatest bull market in history, and until the end fought my gut feelings tooth and nail.

This summer, when I sold my last mining stock, I traded more than at any time in my career, the equivalent of a recovering addict having “the shakes.”  But in the end, my mind triumphed over my heart, ending the equity lust that has been ingrained into my psyche from the day I opened a finance textbook in 1988.  “Buy and Hold”, “Dollar Cost Averaging”, “Ownership for the Long-Term”, etc.,  have since been disproven, as in recent years, equity markets have been utterly destroyed by a sinister combination of economic collapse, government manipulation, and HFT algorithms.  This is why the current AVERAGE stock holding period has fallen to an ALL-TIME LOW of just ONE MONTH, and why “betting against the house” has taken on a whole new meaning.

Having been fully invested in Precious Metals since May 2002, I have seen EVERYTHING, and truth be told, it’s a wonder I survived the experience.  NO ONE has put worked as hard exposing SPECIFIC Cartel day-to-day actions, such as the 3:00 am EST “pre-market smash” and the 12:00 pm EST “cap of last resort.”  See yesterday’s chart below if you don’t think I’m on to something – yet another ROUND NUMBER attack, yet again at EXACTLY 12:00 PM EST.

Over this 9½ year period, I have watched every manner of illegal operation, from off-hour attacks to margin increases to false rumors to jawboning, and from 2006-2010 did so while working as an investor relations officer or consultant to literally dozens of junior mining companies, who themselves are constantly under attack by Canadian investment banks.

Oh, what the heck, I’ll go off on a tangent and expound.  While American banks are in the business of destroying THE WORLD, Canadian banks are intent on destroying their CLIENTS.  If you can believe it, Canadian equity regulatory agencies are far less effective than their American counterparts; to wit, the Ontario Securities Commission makes the SEC look like veritable freedom fighters.  Forbes Magazine once labeled Vancouver the “scam capital of the world,” but I’m convinced it’s more due to the BANKS than the mining companies themselves.

Creation of NI 43-101 disclosure rules have dramatically reduced fraud risk, but what hasn’t changed one bit is the Canadian business practice of NAKED SHORTING junior mining companies.  Once the stock prices are sufficiently destroyed, they EXTORT managements into dilutive stock offerings, replete with low-priced warrants ENSURING the stock will never rise.  The end result is a bunch of angry shareholders, worthless warrants, and management teams that become slaves to the bank until the day they goes bankrupt or are acquired for pennies on the dollar.  Only a handful of junior miners escape that death spiral, which is perpetuated by the unending negative sentiment engendered by a gold Cartel intent on quashing ANY and ALL sector breakouts.

Sorry to digress, but to help you PROTECT YOURSELF, it helps to project my experiences, in both the financial markets and real world.  Few know the exhilaration I experienced watching my PM stocks soar until 2007 (when the TSX-Venture exchange peaked), nor the agony watching those gains disappear thereafter.  My intimacy with PM trading should have made the experience easier, but the effect was the opposite.  This experience is what morphed me into RANTING ANDY, and viewed in that sphere, I am grateful to the Cartel.

D-Day was the first time I saw Cartel FEAR, a FEAR that has PERMANENTLY altered their manipulative strategy.  Make no mistake, they live in PERPETUAL fear of the PHYSICAL demand locomotive destined to run them over, which could leave the station any given day.  This is why they work six days a week, 24 hours a day, at their evil craft.  Even on Saturdays, I’m sure they formulate plans for the upcoming week, focusing on key news releases, economic data, speeches, and conferences that could serve as PM catalysts, subsequently preparing for each and every contingency.

Despite this PERPETUAL fear, it was not until November 9th, 2010 when it appeared the locomotive might run them over, yielding the aforementioned change in their suppression operations.  And mind you, it was SILVER, not gold, that was leading the charge, just as was the case six months later, when an even more draconian attack, the SUNDAY NIGHT SILVER PRICE MASSACRE, was required.

In the week leading up to November 9th, silver EXPLODED from $23.50 to $29.50, threatening to blow through the key ROUND NUMBER $30 for the first time in 30 years like a knife through hot butter.  The PM mining stocks, which had been largely dormant since the aforementioned TSX-V peak in April 2007, EXPLODED in the prior two weeks, with the HUI rocketing from 490 to 588, while, more importantly, JUNIOR PM mining stocks rocketed to new multi-year highs on record volume.  I had waited eight-plus years for “internet mania” to reach the mining stocks, and it looked like it was finally here.

Just as the $30 silver price was about to be breached, something amazing happened.  For the first time in silver market history, the CME sharply raised margin requirements INTRADAY, and it’s no surprise it occurred just after 12:00 PM EST, “the cap of last resort.”  Silver fell nearly $3.00/oz. in the ensuing hour, gold $40, and the HUI a whopping 44 points, or 7.5%.

Go to www.kitco.com, “Charts & Data”, “Historical Silver Charts”, November 9, 2010

Go to www.kitco.com, “Charts & Data”, “Historical Gold Charts”, November 9, 2010

As monthly smashes go, November 2010 was very shallow, with gold and silver falling by just 4% and 14%, respectively, before achieving new highs just four weeks later.  To understand what I mean by “shallow”, compare November 2010 to May 2011, when silver was trashed by 32% in one week, and September 2011, by 41% in three weeks.  Moreover, on a DAILY basis, these smashes don’t even register on the manipulation meter, in contrast to the two most egregious attacks, BOTH in the wee hours of a Sunday night, BOTH fueled by CME margin increases.

On Sunday night, May 1st, i.e. the SUNDAY NIGHT PAPER SILVER MASSACRE, silver was attacked for $6.00/oz., or 12%, in ELEVEN MINUTES while Chinese markets were closed for a holiday.  And no, it wasn’t “pent up selling pressure” over the weekend, as NOTHING happened that weekend.  If you look at the chart, silver opened marginally UP that Sunday night, and traded flat for a half-hour before the Cartel Kraken was unleashed.

And don’t forget SUNDAY NIGHT, September 25th, when silver plummeted from $31.50 to $26.00, or 17.5%, in the middle of the night for NO REASON.  That smash represented the culmination of a vicious month of DEATH STAR attacks, yet another new Cartel battle tactic created out of desperation following the prior month, when all Cartel and PPT rules were violated by a combination of plunging stock prices and soaring precious metals.

Go to www.kitco.com, “Charts & Data”, “Historical Silver Charts”, May 1, 2011

Go to www.kitco.com, “Charts & Data”, “Historical Gold Charts”, September 26, 2011

So no, it’s not that the SCOPE of the “D-Day” smash that was memorable, but the change of attack strategy, of which the INTRADAY silver margin increase was just the tip of the iceberg.  To the contrary, it was the AFTERMATH that revealed the true nature of the Cartel’s game plan change, and ultimately the reason for altering my portfolio allocation, likely PERMANENTLY, to 100% PHYSICAL gold and silver.

What I saw post- “D-Day” was an explosion of Cartel COMPUTER ALGORITHMS in the large-cap mining shares; robotic, likely NAKED, short-selling programs designed to neutralize any and all excitement in the PM miners.  Not that they haven’t been sitting on the sector forever, but never in such a blatant manner, and never with this level of firepower.  Following “D-DAY”, I spent many an hour watching stocks like Silver Wheaton and Silvercorp get bombarded by computer sell orders, irrespective of what gold and silver, or any other market for that manner, were doing.

Over the past year, gold and silver prices rose sharply, while large cap PM miners have treaded water and juniors (using the TSX-V as a proxy) have been pummeled.  Even the premiums of closed-end funds like the Central Fund of Canada have declined below historical averages, and each time these premiums attempt to rise, the ALGORITHMS appear to keep them down, preventing new stock offerings that take PHYSICAL product off the market.

 

11/9/2010

11/9/2011

% Change

Gold

1,424

1,802

27%

Silver

29.30

35.20

20%

HUI

588

609

4%

     

 

Dow

11,453

12,040

5%

TSX-V

2,060

1,665

-19%

     

 

CEF premium

6%

3%

-50%

This is why GTU, a sister bullion fund of CEF, did an equity offering two weeks ago, rapidly priced an offering when its premium dared to breach the 8%-9% level for two days.  I own GTU, and despite the dilution, am thrilled every time a new offering is priced, as I know how much damage they do to the Cartel.  Actually, let’s see what gold has done since GTU purchased $180 million of PHYSICAL gold in the open market on October 28th.

After D-Day, it was clear the Cartel was stepping up its game, on all fronts.  The INTRADAY margin increase was an obvious, amplified tactical change, followed up in 2011 with some of the most heinous, blatant, contrived PM attacks in the entire eleven year bull market.  These attacks represent the FINAL, DESPERATE attempt to stave off the oncoming locomotive, which WILL NOT be denied its track, and will eventually run over everything in its path.

For those invested in PM miners, I want to be very, very clear.  I am by no means saying PM miners will never rise, and frankly I’d be shocked if a window of opportunity doesn’t open when the Cartel finally appears to be in serious retreat.  To the contrary, I am simply trying to highlight the increased RISKS of mining stocks compared to the metal itself, risks I have listed in previous RANTS on countless occasions.  Some say the HUI is higher than in the past, which means I’m wrong in my assertion of underperformance.  However, anyone invested in the sector knows I am correct, as only a small handful of miners have risen AT ALL over the past five years, and of those that have, they’ve done so whilst MULTIPLES of their earnings and/or reserves have relentlessly CONTRACTED.

Until this spring, my big picture strategy was to hold my net worth in PM miners, waiting until they have huge breakouts, at which point I’d sell them and move the proceeds into PHYSICAL gold and silver.  However, I changed that strategy this summer when I moved 100% into physical, due to the aforementioned equity risks.  Despite the conventional wisdom that mining stocks dramatically outperform the metals, there is no GUARANTEE this will occur, particularly in a post D-Day environment of heightened PM stock suppression.  It is not possible to increase demand for PHYSICAL gold and silver, but clearly the SEC, CFTC, et al have carte blanche to increase the supply of PAPER PM securities, and will NEVER stop doing so until the system is destroyed.

More importantly, I shifted my mind-set from OFFENSE to DEFENSE, as my goal is no longer to become the RICHEST man, but the most PROTECTED.  PHYSICAL gold and silver prices will rise more than 99% of the stocks in HISTORY, with NONE of the risks of stock ownership, including MANIPULATION, tax, operational, political, financing, and fraud, not to mention SYSTEMIC risks of stock ownership including margin calls, bank holidays, brokerage failures, and other black swans I don’t want to imagine.

Not only do I want to PROTECT myself against such risks in a world gone awry, but I now believe the true END GAME for PM shares will be NATIONALIZATION FEARS, which will destroy ALL mining stocks, and can occur at any time, in any place.  Furthermore, now that I have a better knowledge of the bullion business itself, I believe STRONGLY that PHYSICAL premiums will EXPLODE VIOLENTLY as the paper scam collapses and the END GAME commences, likely yielding PHYSICAL shortages that will make it difficult, if not impossible, to purchase REAL gold and silver.

Think it can’t happen?  Then read my RANT from April 28th, “ALERT, ALERT…NEARLY ALL MINTS OUT OF SILVER”.  I know for a fact that Miles Franklin had one of its best months ever in April, when silver approached $50 an ounce, and that delivery times across the industry exploded due to bullion shortages.  And that was during a time of silver investor GREED, which won’t hold a candle to the upcoming silver investor FEAR!

http://babybulltwits.wordpress.com/2011/04/28/ranting-andy-alert-alert-apmex-and-likely-nearly-all-mints-out-of-silver/

The only way to GUARANTEE you will not lose your capital while being CORRECT about gold and silver is with PHYSICAL bullion.  And, by the way, you just might need it to SURVIVE under the worst-case scenario.  For those that aim to be maximize their wealth, please remember it is not about HOW MUCH you own, but how much RELATIVE TO OTHERS.  While PHYSICAL gold and silver prices are skyrocketing, 99% of the population will see dramatic declines in their net worth, and many will lose it all.

Finally, for those that still possess the “greed gene”, of which I, too, am guilty, please keep in mind my PM price forecasts:

In TODAY’S DOLLARS, I predict gold will rise to $15,000-$20,000/oz., solely by accounting for the fiat currency that has been OVERTLY printed over the past 40 years.  As for silver, I expect the gold/silver ratio to fall to AT LEAST its historical 15:1 average, and more likely closer to 10:1 when one accounts for recent supply/demand factor changes.  Per the below link, Mike Maloney does a fabulous job summarizing the mathematics behind my gold estimate, a must see video for anyone interested in this sector.

To conclude, your PRIMARY goal should be PROTECTION of your assets, so you can SURVIVE and eventually THRIVE once the next financial order is established.  You are ASSURED that with PHYSICAL gold and silver, but in the “post D-Day” world, of little else.