It’s still Monday evening, and I have a lot to write for Tuesday’s RANT, as information is besieging me from all angles. Like a young songwriter or novelist, I am in the prime of my creative career, and frankly have too many thoughts to articulate. Funny how it took this long to peak, as I have been writing professionally for nearly 15 years, oftentimes about topics I felt equally forceful about. However, NEVER have I been as inspired as this year, even more so now that I’ve joined Miles Franklin.
As noted this weekend, the HUI mining index was smashed 20 points Friday while gold prices were UP, a CLASSIC Cartel “signal” that gold would be smashed the following day. Such signals are EXACTLY what Andrew McGuire has been telling the CFTC, and EXACTLY what the “GATA Army” has been highlighting for the past decade. I was 100% POSITIVE something nefarious would occur today, although how, how much, when, and under what pretense was not yet certain.
Years back, I’d worry about gold being hit due to “good news” about the U.S. economy, although I KNEW any such news was at best misleading, and at worst deceitful. The fact that such “good news” was only considered as such following Cartel and PPT follow-up work was immaterial; what was important, however, was that the majority of people believed such propaganda, enabling the Cartel to make short work of PAPER PM prices at any time.
However, in today’s world of CATASTROPHIC, GLOBAL ECONOMIC COLLAPSE, “good economic news” no longer exists. The ball has been pushed over the top of the mountain, and can only roll down hill, at a quicker and quicker pace each day. Sure, TPTB can slow it for a day or two by PRINTING MONEY and MANIPULATING MARKETS, but that just makes the ball LARGER, increasing its downhill momentum. Thus, I NEVER worry about real, believable improvements in the global economy, as it long ago passed the point of no return, and thus can NEVER improve until the entire system COLLAPSES – end of story.
My motto in 9½ years of Precious Metals investing has been “each day worse than the last,” but that banal term doesn’t do justice to what we’ve seen since “D-DAY” 13 months ago, when the Cartel first demonstrated FEAR of the imminent PM explosion, and subsequently stepped up its game to spiritual levels of blatancy. That said, what we’ve seen this Fall alone, starting with “OPERATION PM ANNIHILIATION” the day after Labor Day, is unlike anything I’ve seen all year (except the SUNDAY NIGHT PAPER SILVER MASSACRE), as unrelenting as it is intense. Moreover, the Fall Cartel tactics have been coupled with the most maniacal, desperate usage of 24/7 PPT propping I’ve ever seen, which is saying a lot.
While the Dow was rising for the fifth straight day since “GLOBAL QE” was announced, essentially every piece of news was negative, the only difference from a week ago being that financial markets (and CRUDE OIL) were higher due to one of the greatest MONEY-PRINTING announcements of all time, while gold and silver have not been allowed to move.
Before I get to yesterday’s gold Cartel masterpiece, let’s look at the “news” of the day accounting for higher stock prices (until the usual late afternoon, pre-HAIL MARY swoon) and five gold WATERFALL DECLINES, starting with a big miss in the ISM Services Index – quite ominous for an economy that now runs ENTIRELY on services – highlighted by a MASSIVE crash in the EMPLOYMENT segment.
Huh? I thought the unemployment rate didn’t just fall last month, but PLUMMETED from 9.0% to 8.6?
What’s that you say, the “strong” jobs gain (if you call 120,000 jobs in a 300 million person economy strong) was due to temporary hiring for Christmas retail, just like I opined last night?
Or that “strong Black Friday sales” were, as I also predicted, simply a front-end loading of holiday sales?
Perhaps the Dow was juiced yesterday, and gold attacked FIVE TIMES, because the CFTC “voted unanimously” to crack down on financial fiduciaries stealing their clients’ funds. I wonder if “heightened scrutiny” of this already illegal practice will be as debilitating to the financial criminals as the SEC’s 2009 “crackdown” on naked shorting, which not only has never resulted in a single prosecution, but runs rampant to the point that a significant percentage of ALL stock and bond trading relates to the execution of naked shorts.
Maybe gold was repeatedly, violently attacked because the CEO of one of the largest gold miners in the world, Anglogold Ashanti, stated the HUGE gold buyers (I presume the Chinese government and others) are now directly soliciting mining companies, amidst great levels of competition, because so little available supply exists…
Maybe gold was attacked because CRUDE OIL, the most important commodity on earth and the largest component of EVERY commodity index, continues to SOAR day after day after day. I’m not sure how this would be good for the Dow while bad for gold, particularly when American Airlines went BANKRUPT last week due to soaring fuel prices and a cratering economy. But then again, I don’t operate a Plunge Protection Team or Gold Cartel.
Perhaps the “big positive news” accounting for surging stock prices and plunging gold was the EXPLOSION of food stamp usage…
…or the DAILY surge in banks borrowing money to stay solvent, and yanking what they still have out of the failing financial system.
Or maybe gold is terrified of the prospect of more QE, which the Fed is not only carrying out OVERTLY, as we saw last Tuesday, but telegraphing it will INCREASE in the near-term. I wish they’d just bite the bullet and announce “QE to INFINITY,” but I guess we’ll just have to wait a tad longer for that game-ending statement.
And last, but not least, everyone’s favorite topic – the marvelous, magical, disappearing Euro (a reference to one of my favorite childhood TV shows, Marlo and the Magic Movie Machine – I can’t believe this is on You Tube!
|Marlo and the Magic Movie Machine|
Yes, Europe has been bailed out by UNLIMITED MONEY PRINTING by the Fed. All is well, and a few TRILLION of additional dollars printed out of thin air couldn’t possibly cause further increases in inflation, destruction of the middle class, and, subsequently, social unrest, could it?
And it’s certain to bring jobs back from China, reduce unemployment, increase depressed real estate assets, and save TBTF banks, right?
You see I’m being facetious, of course.
Actually, things have gotten so chaotic in Euroland, I frankly have no idea what these clowns are “agreeing to” anymore, or even “discussing” for that matter! Regardless of the PPT-dominated market activity, when I see “stocks up on Merkel-Sarkozy agreement,” but then I read the article, I simply do not understand what happened.
One week, we have the German citizenry in open revolt about bailing out Europe, and the next, proposals of a “One World” government in which France, perhaps the most profligate spender in Europe, will get equal financial treatment? This makes absolutely no sense at all, would NEVER happen, and even if it did would be just as BANKRUPT an entity as the individual parts.
Furthermore, even if such a government were ratified by ALL 27 EU COUNTRIES (yeah, right!), it would still have the not-so-minor issue of FINANCING. And since whatever “agreement” they are agreeing to DOES NOT INCLUDE THE ISSUANCE OF so-called “ONE WORLD” BONDS, why would anyone even give this “announcement” a second glance?…
…ESPECIALLY when its own members IMMEDIATELY call it a dead issue, just as the Chinese government did when “the market” last month hoped it would fund the DOA “EFSF Fund.”
Readers, I am posting this sequence of articles so you understand, without reservation, that ABSOLUTELY NOTHING positive has occurred in the past week regarding the outlook for EITHER Europe or the U.S., just plain old money printing and market manipulation – end of story.
- HUI mauled Friday with gold up, a GUARANTEED “signal” of a Monday gold and silver attack
- Gold CAPPED HARD all morning, yet again at the KEY ROUND NUMBER of $1,750/oz
- A record FIVE WATERFALL DECLINES, including minutes before the COMEX opening at 8:20 AM EST and another at EXACTLY 12:00 PM EST, the usual “cap of last resort.” In between, we see hits at the odd hours of EXACTLY 6:00 AM EST and EXACTLY 2:00 PM EST, with the high trade of the day at, yep you guessed it, EXACTLY 10:00 AM EST, as always. I told you the big HUI sell-off Friday presaged a concerted Monday attack pattern, and this was as concerted as it gets.
- NO KEY REVERSALS ALLOWED – when gold approached $1,750 at EXACTLY 10:00 AM EST, about to go positive on the day after being mauled all morning, it was IMMEDIATELY smashed back down. Gold, silver, and/or the mining shares have not been allowed key intraday reversals in more than five years, trust me!
- DLITG, or “Don’t Let it Turn Green,” a tactic the Cartel plays with the most important gold security in the world, the GLD ETF. For the millionth time, it was down hard in the morning, then got back to within a few pennies of turning green, and IMMEDIATELY was smashed down again. This is the ultimate in demoralizing Cartel tactics, which has been going on since GLD was launched in 2004.
- Dow/Gold x 2 ALGOS – this GOVERNMENT COMPUTER ALGORITHM, which has been around for many years but particularly since “D-DAY” a year ago, is programmed to only allow the PM sector to rise when the Dow rises (can’t have safe haven buying, can we?), and to rub salt in our wounds, onlyallows the PMs (metals and mining stocks) to rise at HALF the rate of the Dow, but conversely to fall at TWICE the rate when the Dow declines. Oftentimes, after these 2x declines occur for the PMs, they miraculously lose their directional ALGO with the Dow when it inevitably moves back up.
- NO SIMULTANEOUS STRENGTH – Gold, silver AND the PM shares are NEVER allowed to all act strongly together. Usually only one can act strong at a given time, and sometimes two, but NEVER all three. Yesterday we saw silver showing uncanny relative strength all morning, even when gold was repeatedly smashed. However, later in the afternoon, silver suddenly COLLAPSED, at the end of the day massively underperforming gold to demoralize silver investors.
- ALL-OUT ATTACK – i.e., no matter that ALL the market news was gold neutral at worst, bullish at best; there was simply no way the Cartel would be denied yesterday. Flat to higher stock markets, weak economic data, soaring oil prices, etc., were to be overridden by suppressive computer programs at all costs!
And finally, late in the day we saw the following rumor that S&P, despite last week’s GLOBAL QE announcement by the Superman Fed, was considering downgrades for ALL OF EUROPE, including a two-notch downgrade for France and one-notch for Germany. All this did was push the Dow down to +20 (remember, since GLOBAL QE the Dow has not been allowed to turn red) while gold was, for the fifth time of the day, SMASHED. Subsequently, the daily Dow HAIL MARY rally to ensure the PERCEPTION that “all’s well,” with gold closing at its low of the day and oil, yet again, at its high (see rule #6 above).
Then, after the close, the S&P statement is released (I love how it somehow got “leaked” 30 minutes before the close), just as bad as advertised…
…while the Bank of England dealt with its own credit crunch with fresh MONEY PRINTING…
…and the TBTF banks dutifully lead their clients to yet another trap via a reckless “trading call” and endless hype about the NEXT GREAT BIG THING, Thursday’s NEWEST, MOST IMPORTANT European financial summit yet…
OK, time for bed, let’s see what happens Tuesday morning, as well as what “Literati” means.
Tuesday morning, and before I get to today’s action, and RANT topic, I want to speak of a few topics that came to mind at the gym this morning. A workout, I might add, which featured the same Cartel shenanigans as always, including the high trade of the day at EXACTLY 3:00 AM EST, the WATERFALL DECLINE at EXACTLY the 8:20 AM EST COMEX open and now, as I write, another sharp decline at EXACTLY the PM fix at 10:00 AM EST.
OK, so what’s on my mind?
For one, the stock market, which in my view is no longer a market at all, but a playpen for government and HFT manipulation. First I recalled an article from this morning showing how, unlike Western stock markets (which are constantly rescued by the PPT), the Chinese stock market has not responded at all to last week’s monetary easing.
To quote the article, “unlike in the developed world, where central banks are entirely in control of capital markets, in China capitalism still has a foothold, however weak, and as a result the Shanghai Composite is indicating the direction of where the global economy is truly headed.”
If there are any Chinese investors reading this, have no fear. Sooner or later, the Chinese government will create their own PPT, at the expense of further economic dislocations, malinvestment, and surging consumer inflation.
While on the stair climber, I read the latest piece from my good friend Dan at Future Money Trends. A passage in it was particularly compelling, as it sums up EXACTLY why I sold ALL my mining stocks earlier this year, likely FOREVER. And here it is:
If a stock is large enough to be on the radar for high-frequency trading, then we want nothing to do with it.
Following “D-Day” last November, I literally watched HFT programs impregnate the large-cap mining stocks, particularly my largest, long-time holding Silver Wheaton. Those GOVERNMENT COMPUTER ALGORITHMS have given terminal cancer to these stocks, in my view, to the point that multiples have contracted to end-of-cycle valuations. Stocks like SLW are so badly capped on up days, and violated on down days, it’s a wonder anyone still holds on. But they do, forever viewing the dangling carrot as manna from heaven. For the sake of PM mining investors, I hope their dreams come true, but for my money, I’ll take the exponential, GUARANTEED gains of PHYSICAL metal with NONE of the risks of mining stocks. For the record, the last time I owned a NON-Precious Metals stock was April 2000, and my guess is the Silver Wheaton I sold this summer will likely be the last stock I own, EVER.
While on the topic of corrupted stock markets, I see this morning the Green Bay Packers are planning to sell stock this morning. Only in America can people be dumb enough to buy something so obviously at a top in valuation, particularly something as illiquid as this. But like sheep in a herd, investors will fall upon themselves to buy stock of a team that has won 18 games in a row, only to sulk two years later when the Packers’ performance reverts to the mean.
Athletics have become as tainted by greed, corruption, and plain old cheating as corporate America, a microcosm of the deregulated, laissez faire attitude that has led the nation to its imminent demise. Striking football and basketball players, thieving owners (such as the Bernie Madoff cronies owning my beloved Mets), and universities focused more on profits than education represent the current American way, as best depicted by the story below.
Nearly every city in America has a new baseball stadium, in nearly all cases forced upon the populace without a vote, yielding increased debts and taxes on the unsuspecting citizenry. In many cases, such as is being alleged here, owners are accused of bribing public officials to obtain such funds.
Examples of such deals, which forcefeed higher taxes on residents while destroying municipal finances are everywhere. A great example is the Texas Sports Agency, which in the past decade built three sports stadiums in Houston, to be financed with car rental and hotel taxes that increase Houstonians cost of living AND negatively impact tourism. It looks like the $1 billion of stadium bonds are about to default, but don’t worry the politicians that signed the deals and the owners of the Astros, Texans, and Rockets are doing just fine.
Even in NY, stadium deals have been bad deals for everyone but the investments banks and team owners. And of course, the ratings agencies, which for their exorbitant fees gave the usual “investment grade ratings” to the Yankees’ and Mets’ respective bond deals…
What a shock! The Mets later got downgraded to “junk” status (LONG before its owners were sued for being accomplices of Bernie Madoff), and per the article below, their experience is no different than dozens of other ill-begotten “stadium deals” across America.
Next, let’s talk about some history, particularly that of PHYSICAL GOLD and SILVER as MONEY. Back in 2005, when I contemplated becoming a sell-side analyst covering the Precious Metals sector (no one was interested), I wrote an initiation of coverage report including some moving passages from one of my favorite authors, James Michener, which are self-explanatory regarding the aforementioned topic.
As a representation of the Eastern philosophy regarding the value of Precious Metals, I cite below a paragraph from James Michener’s fictitious novel “Caribbean”, in which a young Indian emigrant recounts his grandfather’s description of love:
“Jewels as a proof of love – Grandfather said that if an Indian really loved his wife, he gave her jewels to prove it. I found a diary of a French traveler who wrote in 1871 of my great-great-grandfather’s wife: ‘In Port of Spain (Trinidad) at the well-known Portugee Shop I met Madame Banarjee, a woman of great charm who wore on each arm some twelve or fourteen big bracelets of solid gold or silver. Around her neck she wore chains of the same metal on which hung large disks of silver embellished with precious stones from Brazil, while in her nose she wore an immense diamond. Her worth as she walked to greet me must have been tremendous’.”
Similarly, here is his grandfather’s description of the Indian belief that Precious Metals have timeless, and even spiritual value. Remember, India is already the world’s largest gold market despite centuries of abject poverty.
“How to treat grave robbers – When the wife of my great-grandfather died, he buried her wearing all her gold and silver, and an English official protested: ‘ But you’re throwing away a fortune’, but he replied: ‘She brought me a fortune, and I would not like to see her in another world poorer than when she came to me.’ Three days later, when the police came to the Portugee Shop to inform him that grave robbers had dug into her coffin and taken all the precious metals and the jewels, he said: ‘They were hers. She spent them as she though best.’ But when some of the jewels surfaced in the Trinidad bazaars sometime later, he made careful note of who had them and of how they had obtained them, and shortly after that several men were found dead…one by one.”
Those passages never fail to inspire my belief in the historic value of gold and silver, which for millennia have succeeded as the ONLY universally accepted forms of MONEY. I bring them up now because this morning, while reading Gai-Jin, by another of my favorite authors, James Clavell, I was treated to another such historic reference.
The novel, which takes place in the 1860s, speaks of the opening of Western trade to the previously closed Japanese market:
“After years of negotiating, Harris arranged Treaties later ratified by major Powers that granted access to certain ports. The Treaties also fixed a very favorable rate of exchange between Silver Mex, Mexican silver dollars, the universal coin of exchange and trade in Asia – and Japanese gold oban…”
The point, of course, is no matter what continent, or time period, you will find references to PHYSICAL GOLD and SILVER being the primary MONEY of the land. Moreover, in the latter passage, we are also treated to yet another reference to Western bankers and politicians taking advantage of those in the East.
And speaking of “sound money,” what better segue way into Ron Paul’s brief but incisive take on the latest round of “GLOBAL QE?”
Next, to this morning’s action, although thankfully most of it was covered in last night’s commentary. Following S&P’s threat of the imminent downgrade of ALL OF EUROPE, it has also put the comical AAA rating of the European EFSF Fund on downgrade review, one of the first securities to ever be downgraded BEFORE it issues even a penny of debt. Like the New York Mets stadium bonds referenced above, the ratings agencies will give an AAA rating to ANYONE that pays them a fee, no questions asked.
The EFSF has been DOA for the start, so why it would be rated is beyond me, and why anyone would expect this unfunded garbage to trade above junk status is an even bigger conundrum.
Meanwhile, the “Arab Spring” has now spread to Russia, which despite its great government wealth and rising gold reserves, is still an oligarchy run by an irrepressible dictator whose prior position was head of the Russian secret police.
And finally, a beautiful illustration of the dangers of “DEBT SATURATION” and “MANIPULATION SATURATION.” In other words, no matter how much money the Fed prints, it will NEVER be able to kick start the dying U.S. economy. These very same liquidity injections, combined with mortgage finance deregulation and government housing market supervision comparable only to its successes with Fannie Mae and the CFTC, are what enabled the real estate sector to become unsustainably leveraged, ensuring its ongoing COLLAPSE for many, many years to come.
And FINALLY, to my RANT topic of the day, “LITERATI.” I know you are spellbound, the suspense killing you. Heck, some may have even googled the term, coming up with the Wikipedia definition referring to intellectuals specializing in the literary field.
Unfortunately, googlers, you would be wrong about my reference, which in fact is to the Yahoo Game of the same name. Literati is Yahoo Games’ version of online Scrabble, essentially the same with few minor alterations. My wife and I were addicted to Literati circa 2005-06, spending countless hours trying to achieve miniscule gains in our player ratings. In fact, our passion for the game was so intense, we’d often fight for our one and only computer to play. Boy, times have changed, as today the two of us have SIX computers!
Anyhow, back then Literati was the video game equivalent of a “free market,” as for the most part all games were fair, and all players equal but for their level of intellectual skill. I really enjoyed challenging others with my wit, as Scrabble is one of my all-time favorite games, particularly from other nations, at odd hours to boot. But then something happened, as slowly corruption seeped its way into the game, taking out all the joy and fairness described before.
First came the “cursers,” who wrote vile instant messages throughout the game, to the point I couldn’t play anymore because I felt so violated.
Next, the “settings cheats,” who would set game timers to “UNLIMITED” to force you to quit when they took hours for each move.
Next, the “anagramers,” who kept internet anagram programs open so they could plug their letters in and look for the best words. I quickly recognized something was afoot when, all of a sudden, players started to write big words in short periods of time, and thus was forced to use anagram programs myself when I came up against other anagram users.
But anagramming is not foolproof, as different anagram programs find different words, some of which are acceptable to the Literati computer, and some which are not. Moreover, in a timed game, you not only must find the best anagrams, but the optimal spot to place them on the board. So while the “skill” involved in playing was greatly diminished, some semblance of it still existed.
Thus, came the last and final threat, which permanently destroyed the game for all parties involved – “Literati Buddy.”
Yes, it was inevitable that a COMPUTER ALGORITHM would be created to guarantee victory, in this case “Literati Buddy.” Tied in to your game, Literati Buddy would immediately find all acceptable anagrams, but not only that would tell you where to place them and rank your choices by the number of points generated. Once Literati Buddy was invented, it spread through the game (with tens of thousands of players) like a malignant cancer, and just weeks later Diana and I had played our last game.
For those of you not enthralled by this silly story of how I spent my free time in years past, I’m guessing you have an idea where I’m going with this. Clearly, Literati is a dead-on allegory for the U.S. stock market, which a decade ago commenced its venture to the world of PPT manipulation, and today has been completely, irrevocably DESTROYED by GOVERNMENT HFT TRADING ALGORITHMS.
As noted in my October 27th RANT, government interference into financial markets is no different than Bill Macy’s character in “Fargo,” who was sure a simple staged kidnapping would work out well for all parties involved. Unfortunately, at the end of the movie, he was sent to prison while seven others – including his wife and father-in-law – were dead.
The fate of Literati strongly parallels the U.S. government’s path down the dark road of market intervention, or from a wider angle GLOBAL QUANTITATIVE EASING. The U.S. financial situation is terminal, its markets rigged, and its reputation and influence dying. Unfortunately, this experience has been shared by cultures throughout history, and only those free thinkers understanding the ramifications of such actions survived with their lives and fortunes into the world’s subsequent economic incarnations.
PROTECTY YOURSELF, and do it NOW!