As I discussed this weekend, and many times before, Central bankers are no more than heavily-armed Keystone Kops – who each day, attempt to “kick the can” another 24 hours. To that end, they are rapidly losing control of global economies, financial markets, and political regimes; and thus, in their last ditch desperation to acquire those last, painstaking inches, they have supplemented 24/7 market manipulation and unprecedented money printing – like an iceberg, far more covertly than overtly – with what amounts to weekly, if not daily, “de facto FOMC meetings.” In other words, the walls are closing so rapidly, they are now “jawboning” as intensely as they are manipulating markets and economic data. Seemingly, focused principally on “last to go” markets like the “Dow Jones Propaganda Average” and paper Precious Metals, given their vital influence on the global perception of economic activity, and Central bank “control” itself.
To wit, on August 26th, Janet Yellen’s Jackson Hole speech; whilst wildly dovish on balance, failed to push gold down with its purposefully media and algorithm–targeted bullet point, “the case for a rate hike has strengthened.” As quite obviously, the investment community called her bluff. To the contrary, gold soared from $1,325 to $1,342; so Vice Chairman Stanley Fischer, in an obviously orchestrated “plan B” contingency – appeared on CNBC an hour later, at exactly the Cartel’s “key attack time #1” of 10:00 AM EST (when the global physical markets close), to ambiguously state that Yellen’s comments were “consistent with the possibility of a September rate hike.” The propaganda disaster was thus averted, as gold ended the day at just $1,322.
A week later, on September 2nd, the August NFP jobs report was an unmitigated, unexpected disaster – causing September rate hike odds to plummet to 20%, and gold to surge from $1,310 to $1,330. By the way, notice how in both cases, gold’s “initial reaction” was to plunge – before surging sharply, into the “Cartel Herald” (pennant-like) algorithm that has capped every Precious Metal rally for the 14½ years I’ve been watching. However, at – what do you know – exactly 10:00 AM EST – Goldman Sachs’ Chief Economist, Jan Hatzius, raised his September “rate hike odds” from 40% to 55%; incredibly, claiming the widely-panned jobs data was “better than expected.” And Voila!, gold’s gain was limited by the Cartel’s time-tested 1% rule.
I immediately called him out in my September 3rd article, “Hapless Hatzius, the poor man’s Stanley Fischer” – claiming his “call” was nothing but a Cartel-abetting attempt to quell PM sentiment. Which, like his earlier calls for four rate hikes in 2016; then three; then two; would be inevitably reversed. And wouldn’t you know it? Not only did he reverse his call one trading day later, following the horrific ISM Non-Manufacturing and Fed Labor Market Conditions reports of Tuesday, September 6th – taking his “odds” back down to 40%, but he lowered them to 25% yesterday, in the aftermath of this week’s stock and bond market rout.
To that end, the September 6th economic data was so bad, Precious Metals rocketed higher, actually closing the day slightly above the Cartel’s summer-long, post-Brexit “lines in the sand” of $1,350/oz, and $20/oz, respectively. Which, as I have noted for weeks, are just a hair’s breadth below the real lines in the sand they are desperately guarding – of gold’s three-year, Cartel-orchestrated downtrend line at $1,375/oz, and silver’s 50-month moving average of $20.45/oz.
Thus, the Fed went into “emergency propaganda mode” yet again, aided by the Cartel seizing upon the Bank of Japan’s non-sensical “Reverse Operation Twist” rumors – which, if actually enacted, would unquestionably destroy financial markets. To wit, they scripted Atlanta Fed President Dennis Lockhart’s, and Boston Fed President Eric Rosengren’s scheduled speeches on Wednesday and Friday to, as always, ambiguously suggest a September rate hike was possible – as if rate hikes, in and of themselves, are negative for Precious Metals.
First, Lockhardt – who ironically, resigned yesterday, for no apparent reason – on Wednesday stated that in light of recent data (exactly what data” he’s referring to, I’d love to know), a serious discussion of a rate hike is warranted. And on Friday, Rosengren, who equally ambiguously, and far less hawkishly, espoused there is a reasonable case for gradual rate increases. Add in a touch of “Cartel magic” – and Voila!, yet another unwarranted Precious Metal plunge.
Of course, there are ramifications of such reckless comments – as in a world drowning in debt, and addicted to historically low interest rates – even the hint of higher rates catalyzes plunging global financial markets, commodities, and currencies. Which is exactly what occurred Friday, September 9th, right after Rosengren’s hawkish last straw- fueling plunging bond, commodity, and currency markets, and even an unheard of 400 point Dow plunge. The Treasury selling carried over to Monday as well, but the Dow magically recovered because the PPT, and its (insider) trading partners on Wall Street knew the Fed had an ace up its sleeve, in that perma-dove FOMC governor Lael Brainard was speaking at 1:15 PM EST.
To that end, her carefully scripted speech was clearly focused on downplaying the prior week’s hawkishness – as not only were stocks, commodities, and until that morning, stocks, plunging, but implied September rate hike odds, like Jan Hatzius’, were back down to 20%. Thus, for a day, the stock market was “saved” – and even Precious Metals; even if gold, despite the fact that September rate hike odds were exactly the same as before Janet Yellen’s Jackson Hole speech, and after the horrific September 6th economic data, was, thanks to the Cartel, down to $1,327, from $1,352 six days earlier.
Unfortunately, Brainard’s speech didn’t have the same manipulatory “Fed effect” as usual – as yesterday, stocks and bonds plunged anew. Was it because the market still anticipates a September rate hike? Of course not, as rate hike odds for next Wednesday’s meeting are now below 20%. Is it because of Hillary’s health? Or global inflation fears? Or even a “December rate hike” – which incredibly, for no fundamental reason, now has money market odds slightly above 50%?
I don’t know, but in all potential scenarios, this would be positive for Precious Metal demand – particularly a December rate hike, given that last year, gold and silver prices bottomed the very day rates were hiked. Of course, my “personal odds” of a rate hike – in December, or ever – are ZERO; as should any sentient beings’ be, given how rapidly global political, economic, and monetary trends are deteriorating. Which is what made yesterday’s blatant Cartel raids – the worst, coming at exactly the time-tested 12:00 PM EST “cap of last resort” – so egregious.
This morning, for the time being, there’s a bit of calm before the storm going on – although ominously, oil prices have lost all their post-API inventory data gains from yesterday evening. Aside from today’s DOE oil inventory data, there is no market moving news anticipated. Plus, Fed governors are now in their blackout period, unable to speak publicly until after next Wednesday’s FOMC meeting. Which, I might add, coincides with what could be an even more dramatic Bank of Japan meeting. That said, tomorrow’s U.S. retail sales and industrial production data – both of which, are likely to be extremely weak, could be violently market moving, given their potential to once and for all, dispel all “rate hike fears.” Regarding Precious Metals; as was the case during late August’s “summer doldrums” raids, they are again trading at comically low levels. Thus, be prepared for anything. Let alone next week, when the proverbial rubber may well hit the road, given just how many potentially ugly political, economic, and monetary events could rear their ugly heads.
To that end, I assure you, the world’s “big money” is as aware of the Fed’s desperation can-kicking games – as well as those of the BOJ, the ECB, and all the world’s imploding, self-immolating Central banks. With each passing day, their manipulative “blueprints” are being called out for what they are – giant, manipulative scams to influence perception, amidst a global economy unquestionably collapsing, and the world’s largest, most destructive fiat Ponzi scheme imploding. Personally, I called them out with my investment allocation years ago, but the vast – and I do mean vast – majority of global investors remain tied at the hip to failed Central bank memes, holding ZERO Precious Metals, and MASSIVE positions in historically overvalued financial assets. The big question is what will you do – and equally importantly, when – as time is rapidly running out to position oneself.