Do you want to know why the Cartel was so hell bent on capping gold at $1,340/oz on Monday, in perhaps the most PM-bullish news environment imaginable? You know, when Deutsche Bank was plummeting 9%; the Algiers oil meeting was on the verge of failing; and the stock market was plunging – albeit, by exactly the PPT’s “ultimate limit down” of 1%; ahead of the potentially status quo changing debate that evening? Let alone yesterday, when DB plunged anew, and the Algiers meeting did in fact fail?
Simple, because yesterday was COMEX options expiration day, and $1,338 represented gold’s 50-day moving average. Which is probably why “someone,” for the third time in the past week, dumped three massive “market sell” orders around the COMEX opening – the first, for 7,000 contracts,” in the thinly-traded “pre-market” at 6:45 am EST; the second, for 6,000 contracts, ten minutes before the COMEX open, at 8:10 AM EST; and the third, for 5,000 contracts, at 8:45 AM. All in all, 18,000 contracts, representing 1.8 million ounces of “paper gold,” worth $2.4 billion. In other words, par from the course, amidst a “summer of hell” for PM investors – during which, as the political, economic, and monetary world crumbled around it, the Cartel has maniacally held Precious Metals around their initial post-Brexit highs. Quite obviously, guarding the key technical levels of $1,375 oz (gold’s five-year downtrend line) and $20.40/oz (silver’s 50-month moving average) – knowing full-well that “buy stops” above those levels will likely catalyze the next, massive surge in real money buying we all know is coming. And given how these “terrifying trends” are worsening, I have never felt stronger that this Fall will be the “season of hell” for the powers that be, at the expense of those who have done the right thing by preparing for it.
Already, said “powers that be” are in massive “damage control” mode; first, in crude oil – i.e., the world’s most important financial market, given how many corporations and sovereign nations depend on high prices to maintain solvency – when for the third week in a row, inventories were “magically” lower than expected, mere hours after yet another OPEC failure caused prices to plunge. This time, below the ad hoc “oil PPT’s” blatantly obvious “line in the sand” at $45/bbl, which it has fiercely defended all year. Frankly, the American Petroleum Institute, or API, data, is starting to look every bit as fraudulent as the ADP jobs data. That is, the so-called “privately compiled” oil inventory data released every Tuesday evening, before the publicly compiled Department of Energy data each Wednesday morning. Just like the ADP, or Automated Data Processing, jobs data, which is reported two days before the BLS, or Bureau of Labor Statistics’ payroll data, on the first Friday of each month.
To that end, with each passing day, the line of demarcation between “private” and “public” data is blurring further, as all related parties are clearly incented to report “better than expected” data, no matter what reality depicts. I mean, that’s what “seasonal adjustments, “double seasonal adjustments,” and “birth/death models” are for, right? Heck, the BLS’ birth-death model alone has been responsible for more than 50% of all “jobs” created since the financial crisis, despite the rate of small business formation, which is the entire premise behind its existence, being net negative over this period. Unquestionably, the culmination of this ongoing “merger” between public and private compilation is best personified by the 2014 IPO of “Markit,” a company that not only produces the widely-followed, but statistically insignificant, PMI diffusion indices for the U.S., but many other nations as well. Which, in my view, is as “quasi-public” in the economic data generation arena as Fannie Mae and Freddie Mac were in housing. And we all know how that turned out, huh?
Finishing my thought on the oil market, which as I write is trading slightly below the oil PPT’s “line of demarcation” at $45, three hours before today’s DOE report, it’s quite amazing how many supply data points can be “better than expected” in a market so hopelessly oversupplied, the world’s largest oil producers are having emergency meetings to discuss it. In other words, like the Fed – which seemingly has “de facto policy statements” on a weekly basis now, in its relentless, accelerating efforts to jawbone increasingly “uncooperative” markets; the “oil PPT” is creating as many “propaganda opportunities” as possible, to try and talk up prices, when the underlying fundamentals are so painfully failing. In this case – like the Fed, which spent four weeks hyping the September rate hike that never happened; the oil PPT spent four weeks suggesting a major production cut – or LOL, “freeze” – would occur at Algiers, which of course, didn’t occur. Or frankly, come even close to doing so.
And yet, just like the Fed – which unfailingly, commences the next “imminent rate hike” propaganda within days of failing to raise rates – the Saudi Minister concluded the Algiers boondoggle by claiming a production freeze deal was “possible” at the upcoming, bi-annual OPEC meeting in November. As if a “freeze” would matter a whit in an historically oversupplied market, from record production levels, with at least three OPEC members claiming the right to be “exempt.” Which irrespective, would have the same real world impact on crude oil prices as a ¼ point Fed rate hike. Which in both cases, are moot concepts either way – as neither will occur!
As for Deutsche Bank, in the aftermath of Angela Merkel’s comment this weekend that the German state would not participate in a bailout – as if the public will for such an action even exists – “DB damage control” has been launched in full force, starting with yesterday’s PPT “hail mary” rally at the NYSE open, just as the German-traded shares were about to go under the key psychological level of $10/share. Which secondarily, would have ignited speculation regarding the imminent ignition of the company’s hyper-dilutive “CoCo,” or contingent convertible, bonds.
Next, in true “oil PPT” and Fed-like manner, a series of unsubstantiated “rumors” of ongoing “bail-out” discussions. And last but not least, CEO Jon Cryan’s “Dick Fuld moment” last night, in claiming Deutsche Bank is “comfortably equipped with free liquidity,” with “no need for a capital raise.” Just as Dick Fuld, the CEO of Lehman Brothers, claimed in April 2008 that the “worst of the crisis is behind us,” and “we have billions of highly liquid assets.” Geez. If it weren’t so sad – and catastrophically perilous to the entire world – one might even consider such idiocy humorous.
Last but not least, the Federal Reserve – which, as noted above, have become the undisputed kings of jawboning. Which frankly, they must be, given how they’ve spent essentially all their monetary ammunition, and destroyed essentially all of their credibility – amidst an historic economic crash; an unprecedented debt explosion, in large part, due to the Fed’s own, hyper-inflationary policies; historic U.S. Treasury divestment; and an election Hillary Clinton must win if Janet Yellen wants to keep her job.
Which is exactly what they’ll try to do this morning, when Janet Yellen gives testimony to Congress – albeit, in this case, focused more on “supervision and regulation” than an actual economic outlook. Not to mention, after Whirlybird Janet speaks this morning, five other Federal Reserve governors and Presidents have speeches planned, for anyone that still doesn’t realize how desperate the Fed is to get its latest “message” across.
So, how do these kings of manipulation play this one, given that it’s nearly impossible to successfully implement damage control on a horse with a broken leg – let alone, two? I mean, it was just one week ago when the Fed failed to raise rates, after spending an entire month emphatically suggesting it would do so. And during that week, the economic data has measurably worsened – including this morning’s ugly durable goods orders report; whilst oil prices have plunged, in the wake of the failed Algiers meeting; and oh yeah, the stock of Europe’s largest bank has gone into freefall mode, amidst fears of an imminent bankruptcy. Throw in the aforementioned election, which at this point can be best described as a dead heat; and lingering market fears of rising rates; and you can see how careful JY must be. But hey, that’s what her team of wordsmiths does, particularly when “accompanied” by history’s most maniacal market manipulation.
That is, until such frauds and fabrications inevitably “run their course,” and plunge into history’s massive dustbin of failed efforts to corral “Economic Mother Nature.” Let alone, history’s largest, most destructive fiat Ponzi scheme; which even the Fed’s diehard, brainwashed Keynesians are starting to acknowledge – such as former Philadelphia Fed President Charles Plosser, who this very morning espoused that the Fed is “concerned about credibility,” and “pretty good at conjuring up reasons not to act.”
To that end, I’m not sure how much more emphatically I can plead for you to look at what’s going on around you; decide what the most likely outcomes are – particularly those with, for all intents and purposes, mathematical certainty; and act to protect yourself, before it’s too late. And moreover, to give Miles Franklin the chance to earn your business, if such actions include the purchase and/or storage of physical Precious Metals.