I wasn’t going to focus on manipulation this morning but given the publication of a book by one of the gods of our arena, Dmitri Speck, I changed my mind. Not just to pay homage to one of the world’s great analytical minds – who I had the great honor of meeting at GATA’s London Conference in 2011 – but emphasize our belief that government suppression is dramatically accelerating the end game of fiat currency collapse.
Last week, I wrote three straight articles on the newest, most pitiful manipulation scheme yet in the Treasury market, where the Fed appears to actually be “tapering” for the first time since lying about such an intention a year ago. Only this time, the reason it is doing so is ironically to “prove” its policies are in fact catalyzing the “recovery” its relentless propaganda machine has been purporting. Consequently, the Fed appears just as desperate to support the benchmark 10-year yield at its new, “downside line in the sand” at 2.6% – as cap its long-standing “upside line in the sand” at 3.0%. To wit, rates again fell below 2.6% Friday morning but as you can see, they were again “Hail Mary’d” higher late in the afternoon – for the fourth straight day!
Speaking of “Hail Mary,” how about the perfect “dead ringer” algorithms executed by the PPT on both Wednesday and Friday? I first wrote of this blatantly obvious phenomenon two years ago in “Dow Jones Propaganda Average” and lo and behold, it has since become as ubiquitous as “the 2:15 AM” gold raids witnessed on 90% of the past year’s trading days. By now, it should be crystal clear that not a single aspect of the Dow reflects reality – as discussed in this fantastic article, which takes my ongoing criticism of “survivor bias” to another level.
Meanwhile, gold was stopped cold by equally blatant DLITG, or “Don’t Let it Turn Green” algorithms on both Thursday and Friday – with silver joining the fun Friday. I first recognized this phenomenon circa 2005, to give you an idea of just how long it’s been ongoing. James McShirley of GATA tends to focus on price changes between COMEX closes at 1:30 PM EST; but as for the DLITG algorithms, they are quite obviously focused on the GLD and SLV ETFs; i.e., the proxies utilized by most market participants to gauge PM action.
As for this morning, we started with the 41st “Sunday Night Sentiment” attack in the past 42 weeks, and it was a doozy. Just hours after the East Ukraine referendum unanimously voted for secession and Russian annexation – prompting an aggressive response from the Ukrainian government and collapsing Ukrainian financial markets – this is what the Cartel did. Yes, amidst such bullish, non-“de-escalation” news with no other market budging and the majority of the world still asleep, “someone” entered a market order to sell a whopping $231 million of paper gold pushing the price down nearly $10/oz. in one minute. Over the past 15 years, such comically blatant manipulation has been commonplace – always to the downside, despite gold being in a bull market the entire time.
And why do they fight reality so hard, you ask? For the simplest of reasons, per Occam’s Razor. That is, to maintain a status quo in which “the 1%” monopolize the world’s wealth at the expense of an increasingly desperate “99%.” Fortunately, the “diminishing returns” of such unnatural, manipulative actions are becoming too obvious to hide; such as, for instance, 0.1% GDP growth, record food prices and a 35-year low in the U.S. Labor Participation rate – which doesn’t even tell half the story, of multi-decade lows in real wages, full-time employment, homeownership and savings. Not to mention, all-time highs in government entitlement programs which feed, clothe, house or otherwise sustain more than half the population, with a far greater proportion expected to join the ranks as America’s upcoming demographic nightmare unfolds. In the meantime, said “1%” is benefitting from the historic bubbles being created by the Fed, per the incredible charts here not to mention, the unprecedented propaganda regarding a non-existent “recovery,” as depicted by these damning charts – of the complete dislocation of reported U.S. “employment” with underlying empirical data.
In China, none other than President Xi Jinping this morning told the world to expect a low growth environment; while in Japan, the nation’s largest ever current account deficit was reported putting an explanation point on the Abenomics’ historic failure. And don’t forget – again, this morning – the comments from ECB governor Ewald Nowotny, that “interest rate cuts alone would likely be too little to combat low inflation”; let alone, UK Prime Minister Cameron’s statement that “if we don’t collect taxes properly and make sure people pay their taxes properly, we look at the problem of having to raise tax rates.” Not to mention, that by week’s end, the long, drawn out Indian election process will be over, most likely installing pro-gold candidate Narendra Modi; and thus, setting the stage for the repeal of last year’s ridiculous PM import tariffs and restrictions.
And thus, given this backdrop of extraordinarily PM bullish news – amidst a veritable ocean of related “horrible headlines,” I’d like to draw your attention to a new book by the great Dmitri Speck titled, “The Gold Cartel: Government Intervention on Gold, the Mega Bubble in Paper, and What This Means for Your Future” which this morning, I purchased here. Zero Hedge published an excellent review here and after reading it, I look forward to 328 pages of “Speck-tacular” Analysis.
That said the specific analysis that put Speck on the map is one long-time readers should be very familiar with; i.e., his daily trading charts for the past 15 years. Below is the one he’s maintained for gold and I assure you, the silver chart looks the same. In it, he demonstrates how over a 20-year period, gold prices peak on average, at the 4:00 AM EST open of the London PAPER market and again, at the 10:00 AM EST close of the global PHYSICAL markets – or, as I call it, “key attack time #1.” Consequently – and amazingly – gold was net down in New York trading hours for the entirety of the 1999-2012 bull market with ALL gains attributed to Asian trading hours. In my view, there is not a single piece of evidence more damning of how the Cartel operates or, of how blatant their operations.
In “the Gold Cartel…,” Speck not only gives indisputable quantitative evidence of the surreptitious draining of Western government gold reserves, but the how, when, and why. Not to mention, a detailed chronological history of the world’s break from the Bretton Woods monetary system in 1971 including the London Gold Pool, the “strong dollar policy” and everything in between. In our view, this is must read material for anyone interested in how markets really work and particularly how TPTB’s money printing, market manipulation, and propaganda efforts are utilized to prevent widespread interest in real money from its inevitable return.
To that end, I’d like to finish today’s article with a description of today’s “market action” thus far. Yesterday evening’s Sunday Night Sentiment attack could not have been more blatant, followed by the 220th 2:15 AM raid of the past 248 trading days. However, prices have since surged as for whatever reason you choose, the Cartel appears to have little leverage to push prices significantly lower. Both metals are trading above massive technical floor levels; both are well below their respective costs of production and both are being aggressively accumulated by Chinese interests – per none other than Andrew Maguire.
It’s a good start to the week; but as usual, gold’s gains were capped by a prototypical “Cartel Herald” algorithm at exactly the 8:20 AM EST COMEX open when the price had risen by – drum roll please – exactly 1.0%; stopping gold at, what a shock, exactly the Cartel’s ten month “line in the sand” at the key round number of $1,300/oz. As for silver, it too surged higher but as usual, was stopped cold just as it approached the Cartel’s six-year “line in the sand” at the very, very key round number of $20/oz.
I hope you will consider reading his fabulous new book which not only will unravel much of the “mystery” involved in the opaque manipulated PM markets, but help you understand why it must ultimately fail – and thus, why you must consider protecting your portfolio with real money.