Sometimes there is simply nothing incremental going on, as is the case early this morning. The same marginally higher stock markets, the same “will they, won’t they” rumors about Greek bailouts (they won’t), and the same early morning Cartel suppression of gold at the KEY ROUND NUMBER of $1,750/oz, the line in the sand that will likely yield a rapid surge to the all-time high of $1,920/once broken. The PROPAGANDA HEADLINES state “stocks higher on hopes of Greek bailout,” which I guess is negative for gold, the market poised to benefit the MOST from another pure MONEY PRINTING operation (facetious).
The battle for $1,750/oz rages on, and as you can see below it was broken twice overnight, in both cases for a mere minute before Cartel naked shorting pushed it back down, the second time at – what a shock – EXACTLY 3:00 AM EST. Any other market would have rocketed through $1,750 like a knife through hot butter after the performance it put in yesterday – particularly with oil and base metals up 2% this morning! – but not gold and silver, the Achilles Heel of the fraudulent global financial system, which MUST BE SUPPRESSED!
Irrespective, I am confident the $1,750/oz line in the sand will be broken shortly, particularly as gold’s 200 DMA inexorably rises higher each day – now at $1,666/ounce and rising at the rate of roughly a dollar a day.
Speaking of lines in the sand, silver is currently $34.30/oz, barely a buck under its 200 DMA of $35.43/oz, supported by rising gold prices and “ADMIRAL SPROTT’s” full frontal Cartel assault via last month’s $304 million PSLV offering, which as of yet has not taken delivery of the ten million ounces of PHYSICAL silver it purchased. I believe $34.00/ounce has been capped in the same manner as $1,750/oz gold because the Cartel doesn’t want silver to regain its bullish trend, which could also catalyze a rapid launch toward the all-time high of $50/oz, and subsequently the LARGEST TRIPLE TOP BREAKOUT OF ALL TIME.
“OPERATION PM ANNIHILATION I,” which commenced hours after the Labor Day holiday, and minutes before the Swiss National Bank devalued the franc by nearly 10%, was by far the most aggressive Cartel operative to date. Thus, they are loathe to allow its impact on the PAPER silver market evaporate so quickly. A break of silver’s 200 DMA would put it at its highest price since that day – September 6th, 2011 – putting it in line to do just that, in short order.
As for the news this morning, as always, it’s all bad. Last night, it was reported the Greek economy literally collapsed last month, dropping the odds of a syndicated bailout from slim to none…
…and this morning, essentially the same horrible news emerged from Italy.
Even if, by the grace of God and stupidity of politicians, the ECB bails out Greece with newly PRINTED MONEY, the combination of still enormous debt, a collapsing economy, onerous austerity demands, and the charts below ensure FAILURE, and thus new bailout demands by year-end…
And here we go again with the German Parliament planning a vote next week as to whether they will consider bailing out Greece, which is likely more posturing than anything else, just like the failed German Supreme Court attempt to deem a European bailout unconstitutional. But then again, we all know the people of Germany oppose a bailout, and the Parliament is, after all, an elected proxy of the people.
Finally, news out this morning discussing the ongoing aftermath of the collapsing Chinese real estate/construction bubble, which you can bet will be combated with unfettered MONEY PRINTING. Not only has the PBOC been printing with reckless abandon to compensate for the construction bubble it created, but is mandated to do so to keep up its dollar peg. Thus, for every dollar printed by the Fed, the PBOC must print an equal amount of yuan.
China – Reuters reports that Chinese steel makers have racked up USD400bn of debt which some may struggle to support, adding to the list of potential problem loans the banking industry may have to face. The steel industry is already suffering from soaring debt-to-equity ratios and a shortage of liquid assets in relation to their short term debts, but now face declining margins, rising raw material costs, overcapacity and slower growth. They have turned to the bond markets to refinance bank loans coming due, but yields on these are soaring. Given that the leading steel makers are ultimately state owned, the country’s banks are likely to end up carrying the losses. UOB-Kay Hian said “What steel mills are doing is essentially rolling over their debt and then borrowing more….If profit margins continue to languish at current low levels of around 2.8% compared with 8% in 2001 – 05, there’s a risk some of them will not be able to repay these bonds when they mature”. According to the China Iron and Steel Association (CISA) total liabilities rose 2% in the first 10 months of last year to CNY2.52trn (USD399.23bn). Acid test ratios, measuring the current assets less inventories against liabilities due within a year, average just 0.48 which means that the industry will continue to dig itself deeper into debt. Combine this with the collapse in shipping industry globally, China’s slowdown in property, and the fact that the unprecedented investment rate of 49% GDP is creating a huge number of white elephants, and clearly the industry has huge excess capacity
Time to go for now, to see if today is the day gold inevitably breaks through the $1,750/oz. line in the sand.