It’s still Wednesday night, but I want to comment on today’s farcical trading action, which in the big picture will BACKFIRE on the gold Cartel, bringing about their demise sooner than their crack algorithm programmers can possibly understand.
To start, here’s a quote from Rick Rule of Global Resource Investments, now part of the Sprott group of companies. This prescient November forecast likely emanates from his belief that GLOBAL MELTDOWN II would commence, yielding a “flash sell-off” across all asset classes, although I won’t speculate how much of this sell-off he attributed to illegal, PAPER attacks from the Cartel, which I deem 100% responsible for this week’s decline.
If you go into a gold trade leveraged long in the futures market with 20% cash down, what you will experience in the next few months is going to be a religious experience and not of the pleasant kind. If however, you are a rational sober speculator who goes into a trade where you can stay the trade, and takes advantage of volatility rather than being taken advantage of by volatility, this will represent what is perhaps a once in a lifetime opportunity.
-Rick Rule, November 2011
Let’s go back to the infamous news headline from Thursday afternoon, minutes after the ECB cut interest rates, yielding a gold surge to $1,756 (its 22nd attempt to break $1,750 in a week) before yet another patented WATERFALL DECLINE, not uncoincidentally at EXACTLY the 8:20 AM EST COMEX opening.
“MARKET SOURCES REPORT BIS, BOE & FEDERAL RESERVE WERE SELLING GOLD AFTER IT POPPED TO SESSION HIGH”
That was just FOUR business days ago, and since then the PPT-supported Dow has fallen just 3% while gold was smashed 10% and silver 12%, amidst the EXACT same headlines that caused both metals to soar in late August. As noted in Monday’s RANT, the headline was retracted – but not denied – and trust me readers, if you have any faith in my knowledge of Cartel activities, take my word its true.
Whether they SOLD gold or just LEASED it (the negative lease rates imply such a goal), you can bet the “Fed, BOE, and BIS,” as well as the ECB, planned this attack, which I have deemed “OPERATION PM ANNIHILIATION II, utilizing such gold and a SIGNIFICANTLY larger “stash” of fake gold, i.e. naked-shorted PAPER futures contracts and GLD shares. As I wrote in my Friday RANT, “THE LAST ACT OF FINANCIAL HUBRIS,” any such PHYSICAL leasing or selling activity will NEVER be reported, but rest assured the reported reserves of Western central banks are DRAMATICALLY less than the real number, whatever that may be.
With the banking system on the verge of collapse DESPITE last week’s Federal Reserve “swap initiative,” TPTB are literally out of ammunition. I have for some time written that their ONLY remaining “policy tool” is PRINTING MONEY and MANIPULATING MARKETS, which is EXACTLY what we have seen this past week, and EXACTLY what they will continue to attempt in the coming weeks (especially with Christmas bonus time approaching).
It’s gotten to the point that PPT support of the Dow has now officially tied Cartel PM suppression in scope and breadth. There is not a SECOND of the day the Dow is not being propped, which I believe I have demonstrated graphically for several weeks now. Today, with European markets CRASHING (Paris down 3.4%, for example), the Dow ran up to the NYSE open, as always, to nearly the unchanged level. When it bottomed at EXACTLY 12:00 PM EST (here we go again), they attempted to push it back up, and yet again a 70-point “HAIL MARY” rally in the last 30 minutes of trading, which despite fizzling out, closed the Dow down a measly 1% while the rest of the world was slaughtered.
As for PMs, what more can be said, as “OPERATION PM ANNIHILATION II” is now four days old. Once again, gold was flat all-night, with the high tick at EXACTLY 3:00 AM EST, UNCHANGED from Tuesday’s close until the SECOND the COMEX opened, when the first of three WATERFALL DECLINES occurred, taking gold down as much as $61 on the day, or 3.7%, while the Dow meandered with a 1% loss. Silver, which had been “acting well” lately, was destroyed in the PAPER market for a 7% loss, while “Dr. Copper,” supposedly the metal most exposed to industrial demand, fell by just 4%.
In Wednesday’s RANT, “GLOBAL COORDINATED NOTHING,” I noted that the latest, vicious Cartel attack, which I’m officially deeming “OPERATION PM ANNIHILATION II,” has actually pushed the PAPER gold price below its 200 DMA for the first time since GLOBAL MELTDOWN I in late 2008, from which gold sharply surged higher within weeks, achieving a new ALL-TIME HIGH in February 2009, coincident with the Dow hitting its multi-year low.
In fact, readers that remember that time will recall that gold’s SINGLE BEST DAY OF THE DECADE-LONG PM BULL MARKET occurred when gold was pushed too far below its 200 DMA, on November 21st, 2008, when it rose 7.5% in COMEX trading. Five days later, after a capping job reminiscent of gold $1,750 last week, they smacked it down 5.6% to make sure a “runaway surge” didn’t occur. However, the die was already cast, as ONE WEEK LATER gold was back above its 200 DMA, not to return below it until YESTERDAY. Yesterday, amidst a fundamental situation making November 2008 look like an economic boom!
I just pored through my database and put together a graph depicting gold’s historical premium/discount to its 200 DMA, but before I could insert it, I saw the same graph produced in a Zero Hedge article, graphically more convincing than mine. So I am presenting it below, along with the article.
As noted in yesterday’s RANT, since the gold bull market commenced in 1999, gold has rarely traded below its 200 DMA. In fact, just 17% of the time in the past 12 years, or just 5% when you exclude the year 2000, when gold languished all year at its bottom between $265 and $285/ounce. Moreover, it has only traded more than 5% below its 200 DMA for 2 PERCENT OF ALL TRADING DAYS over the ENTIRE 12-year period – ALL at the bottom of GLOBAL MELTDOWN I, amidst a vicious, PAPER Cartel hit reminiscent of what we’ve seen this Fall.
Not to waste my work, I’m also publishing the graph I created with this information, as it goes back to 1983 and thus gives some historic perspective. Please note that, even during the MASSIVE 20-year bear market, gold STILL traded above its 200 DMA more than 50% of the time, and as you can see the ABSOLUTE LOW was a discount of roughly 11%, in 1985, 1990 (when Miles Franklin commenced operations), and 1998.
Adding to the bullish PM factors, LEVERAGE in the PAPER gold and silver markets has dropped to the low end of its historical range, suggesting speculation is at extremely low levels.
Part of this decline, of course, is due to the outright fleeing of corrupt paper exchanges resulting from heightened manipulation and now capital and liquidity risks due to the COLLAPSE of MF Global, as demonstrated in the price/open interest graphs I posted last week, reproduced below.
However, part of the low leverage is due to extreme bearishness brought about by the latest smash, of which Wall Street and the puppet media are jumping on in droves, with their typical “Is the gold bull market over?” propaganda.
Actually, below is some QUALITY commentary regarding the drop in PAPER gold and silver leverage, from my good friend James McShirley of GATA. James is one of the few “manipulation experts” having replicated the depth of research I have, and a fantastic guy to boot. James is a multi-decade lumber trader, and started researching PAPER gold manipulation after watching it trade dramatically differently, over a period of years, from the freely-traded lumber market.
As always the corrupt CME never lowers margins whenever gold and silver prices are collapsing. At today’s $28.53 low for silver the futures leverage is now a paltry 5.83-1. The gold leverage has shrunk to 13.66-1. The high margin/ low leverage not only serves the interest of cabal shorts unable to deliver physical, but probably exacerbates selling by former MF Global clients already in crisis. The silver leverage is as low now as low as any time that I can find in available data. The wicked and corrupt nature of derivative markets has reached Machiavellian proportions. Judging by their terror of gold rising there must be something BIG right around the corner.
It is no coincidence that whenever ANY major financial institution or brokerage collapses the result is ALWAYS a subsequent collapse in precious metals, along with commodities in general. Gold has plummeted 10% since the MF crisis began the weekend of October 28th, much of it the past 3 days. When failed trading firms are taken over by cabal players paper derivatives are always sold to create an illusion of PM weakness. EVERY single collapse, including the Asian crisis, LTCM, Enron, Refco, Lehman, AIG, EU nations, and MF Global has resulted in gold and silver getting hammered. The message is always the same: gold is a terrible idea whenever paper assets are in crisis.
Savvy investors worldwide are now scooping up the incredible physical PM bargains being afforded by a corrupt derivatives scheme. The majority of U.S. citizens will remain clueless to the end. That’s the power of the MSM inflation expectation message. If the viciousness of this attack is any indication 2012 should be a really big year for physical PM owners. Sub-$1,600 gold will one day look as ridiculous as the 1999 “Brown’s Bottom” at $250. Maybe this one will be known as Corzine’s Bottom. It fits, Corzine is a proven ass.
And finally, the very same negative lease rates the Cartel utilized to entice borrowing and selling of Central Bank gold (which will still be counted as such, due to fraudulent gold accounting rules set by the IMF), appear to be subsiding, likely indicating the brunt of the assault is over. Even the Cartel realizes that below the 200 DMA, which healthily resides at $1,615/oz, even their financial sorcery will likely have little impact.
AND NOW, THE BEST NEWS I CAN GIVE YOU, PROVING WHAT I HAVE THEORIZED THROUGHOUT THE FALL – THE REVENGE OF THE PHYSICAL
As readers are well-aware, the PHYSICAL PM industry has experienced two separate periods of supply shortage this year, both led by silver. First, in late April when PAPER silver approached $50/oz, and next in late September when “OPERATION PM ANNIHILATION I” caused PAPER silver to briefly drop below $30/oz. Both periods resulted in long wait times and expanding premiums, the result of a PHYSICAL market far stronger than the Cartel-suppressed PAPER markets. Several Miles Franklin brokers have noted April was one of their best months EVER, and I believe five of the firm’s ten best days EVER (21 years of business) occurred after “OPERATION PM ANNIHILATION I” in late September.
Throughout the past few weeks, I predicted that further attempts to push PAPER silver below $30/oz would trigger a similar SILVER response, and I hadn’t even dreamt of such a vicious, pre-meditated attack on GOLD, as the one we’ve seen this week. From my “home office” here in Denver I worked away today, not wanting to disturb our Minneapolis brokers on what I assumed to be an extremely busy day. I saw anecdotal industry around midday, when it was reported on a blog that one of our competitors reported an overload of its online servers, and thus I waited patiently for day’s end to receive Miles Franklin’s tally.
And finally it came – HUGE bullion demand, easily one of our TOP TEN best days EVER, with strong sales of gold, silver, and even platinum.
REVENGE OF THE PHYSICAL, for the whole world to see!
OK, it’s now Thursday morning, and as I expected Dow Futures are UP, as they ALWAYS are following a major down day, if you call a PPT-supported 1% decline when the rest of the world falls 2%-3% a “major down day.” Apparently, Spain sold some debt this morning without hitch (and probably with COVERT ECB support), so the stock market is agog with hope. Yes, in today’s upside-down, rapidly deteriorating financial world, it is considered “good news” when a debt-ridden nation with massive deficits, unemployment, and a bursting housing bubble goes further into debt.
In other words, all of yesterday’s European “horrible headlines” should be ignored, as clearly Spain going further into debt will prevent sovereign nations such as Greece from going bankrupt…
…as well as the banks dumb enough to be heavily invested in those sovereigns, such as Credit Agricole, one of France’s “Big Three” banks…
…and Commerzbank, the second largest bank in Germany.
Additionally, we should all ignore the political infighting throughout Europe, as the “every man for himself” policy takes hold and the rats start to jump ship…
…with no help from even the “money printer of last resort,” the FRC, or Federal Reserve of Criminals…
And don’t forget the apparently unimportant news that the National Defense Authorization Act, which strips all Americans of their two century-old protection from “unreasonable search and seizure” passed through Congress by a wide margin…
…or that, despite the fraudulent decline in jobless claims, likely due entirely to temporary holiday retail jobs, millions of Americans are living below the poverty line, with no hope in sight…
…or that Wall Street is again picking the next American President. The below article, which I highlighted in red to make it stand out, shows how Mitt Romney has the OVERWHELMING support of Wall Street, as did Obama in 2008 and Bush in 2004. In other words, you can crown Mitt Romney, yet another rich, crony capitalist, as our next President.
What I find particularly worrisome is that Goldman Sachs is so strongly behind him, contributing $352,000 to Romney versus just $49,000 for Obama. During the 2008 campaign, Goldman was Obama’s #2 campaign contributor (behind only the University of California), sending him a whopping $1 million, and as a result were rewarded with numerous government posts, starting with chief of staff Rahm Emmanuel, who since resigned to become mayor of Chicago, replaced by JP Morgan partner William Daley. JP Morgan, by the way, contributed $800,000 to Obama’s 2008 campaign, and has also contributed more to Romney 2012 than Obama 2012, as have Morgan Stanley, Citigroup, and essentially all major Wall Street criminals – er, banks.
And here we go again, as Goldman et al continue with “OPERATION PM ANNIHILATION II” by first hitting the HUI mining index by 5 points, and then gold with its third WATERFALL DECLINE of the young COMEX trading session (after rising ALL NIGHT in the PHYSICAL markets), at EXACTLY the PM FIX at 10:00 AM EST.
No better time in the past three years to buy gold than today, as HISTORY tells us it won’t stay long below its 200 DMA!
And one more topic before I conclude today’s RANT that of silver as a BY-PRODUCT mine output.
Few realize how fragile the silver market is, and why the U.S. Geologic Service (USGS) recently declared silver will be the first EXTINCT ELEMENT on the periodic table – except, of course, for bullion coins in investor vaults.
Roughly two-thirds of all silver production, which amounts to roughly 700 million ounces annually, is derived as by-product from other mines, particularly primary zinc/lead and copper mines. In other words, not only are silver prices INELASTIC due to its rare monetary value, but because higher silver prices do not directly cause increased production. Instead, silver production’s fate is determined primarily by copper and zinc/lead prices, which in an environment of global economic weakness could fall dramatically, as occurred in late 2008.
In fact, I remember Silver Wheaton falling to $2/share in late 2008 , on fears many of the primary lead/zinc mines it had silver stream deals with would shut down due to uneconomic lead/zinc prices, such as Lundin’s Aljustrel mine in Portugal, which did just that.
I’m not saying that will happen today, as Silver Wheaton is far stronger financially, and more diversified into primary copper and gold mines, but keep in mind there are COUNTLESS risks to holding mining stocks, which are NOT necessarily “proxies” for gold and silver. Sometimes these risks are obvious, such as yesterday’s rock slide at Hecla’s Lucky Friday mine in Idaho (the second such incident this year), and some you might not consider at all, such as I noted above, while some, such as windfall tax or nationalization risks, which haven’t yet come about.
But keep in mind, both lead and zinc inventories are DRAMATICALLY higher than they were in late 2008, and construction activity is expected to decline equally DRAMATICALLY across not only the Western world, but CHINA and the Eastern world as well.
And if there’s one indictment of the outlook for mining stocks that cannot be ignored, it’s the fact that, as of this week, Yahoo Canada has officially omitted the TSX-Venture (aka Vancouver) Exchange from the front page of its Finance section. The TSX-V, the world’s best proxy for small mining stocks, is down a whopping 39% this year and 58% from its high point in April 2007, nearly FIVE YEARS AGO.
Keep your eyes and ears open, readers, as 2012 will likely represent a turning point in human history, the end of the most destructive, all-encompassing Frankenstein experiment EVER – the fiat dollar-based GLOBAL monetary system.
When the financial tsunami washes ashore, there will be no time to run, or breathe for that matter, let alone PROTECT YOURSELF by exchanging worthless dollars, pounds, Euros, and yen for ITEMS OF REAL VALUE, i.e. PHYSICAL GOLD and SILVER, FOOD, ENERGY, and OTHER LIFE NECESSITIES.
Use any and all opportunities to PROTECT YOURSELF before this happens, such as this week’s PAPER gold “drive-by shooting,” which has driven it below its 200 DMA amidst the strongest fundamentals in perhaps 5,000 years of human HISTORY!