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It’s Sunday morning, and I’m starting early as there are just too many “horrible topics” to wait until Monday!

The title of today’s RANT is the self-explanatory “REHYPOTHECATION,” but that’s not where I’m starting.  Instead, let’s talk about the “news” that German newswire service MNI “retracted” Thursday’s headline that the Federal Reserve, Bank of England, and Bank of International Settlements sold gold when it spiked above $1,750 following the ECB rate cut Thursday morning.  No official denials, no fanfare, just a “retraction” that apparently no one anywhere saw, only discovered by grilling MNI’s spokespeople.

Market News International retracts report about central bank gold sales

Have no fear, Precious Metal Army!  This is yet another lie, ruse, or both, from the enemy camp, to scare you out of positions with misdirection and smokescreens.  If this were a football game, it would be the equivalent of the “Statue of Liberty” play, which to my knowledge has only succeeded ONCE in perhaps TEN MILLION attempts in professional, college, and high school football, and perhaps ONCE in TEN BILLION times in schoolyard pickup games.

For football-philes out there, here is a link to perhaps the ONLY successful “Statue of Liberty” play ever.

Boise state statue of liberty play to win the 2007 fiesta bowl
Boise state statue of liberty play to win the 2007 fiesta bowl

As I have discussed all year, the most powerful entities in today’s financial markets are GOVERNMENT MANIPULATION PROGRAMS, such as the PPT in the stock market, QE programs in the bond market, the ESF (Exchange Stabilization Fund) in the currency markets, and of course the Cartel in the PM markets.  They now account for MORE THAN HALF OF ALL TRADING ACTIVITY, by my estimates, growing more pervasive each successive trading day.

Not only that, but such strategy is not just conducted “on the field” with purchases of Dow Futures and Treasury Bonds, coupled with naked shorting of PAPER gold and silver securities, but “off the field” via gatherings such as last week’s ECB meeting and “Euro Summit,” and this week’s FOMC meeting.  The “financial leaders” attending these meetings, and consequently making decisions determining the fate of the ENTIRE WORLD, are nothing more than a bunch of petty politicians with absolutely ZERO understanding of economics but a great knack for gaming theory and, ultimately,  maintaining power.  This is why I repeatedly publish the below commentary from Jim Rickards, first revealed in September, regarding discussions with a friend of his, a former Federal Reserve Governor:
I spoke to (Former Federal Reserve Governor) Randy Kroszner, Former Member of the Federal Open Market Committee and he said to me, ‘When the Fed does these meetings, they spend about 10% of the time on policy and 90% on communication.’  Now Randy calls it communication or “messaging,” but I call it propaganda.
How are we going to lead expectations?  How are we going to manipulate people?  How are we going to get people to believe certain things that may not be true about the state of the economy or inflation?  It was supposed to be a one day meeting and they extended it to two days.  Well, why would you do that, it doesn’t take two days to have a vote?  But it could take two days to agree on the words.
Part of the aforementioned “gaming theory” is devising strategies to confuse your opponent, and manipulate the media coverage of your actions, and intentions.  For 9½ years, I have watched the Cartel, PPT, and ESF plant strategic rumors and simultaneously attack the PAPER PM markets, such as leaking rumors of “Fed, BOE, and BIS gold selling” just as gold is breaking out above a KEY ROUND NUMBER and then attacking the price to validate it, while PAPER traders round the globe panic out of long positions, often leveraged ones at that.  Then, just hours later, or in this case a day later, a “retraction” (that no one sees) stating the rumor is false, which amazingly doesn’t result in a rebounding price (gold down $32 Thursday, up $4 Friday).

Conversely, in the stock market we typically see multiple MAJOR, BULLISH RUMORS every day, such as these two from Friday’s “Euro Summit” alone:

Snapshot Of Pure Lunacy

Clutching At Desperation Straws – China To Bail Out Europe… Again

On queue, the PPT rushes in to buy Dow Futures and “validate” the rumors, but when they are refuted, often immediately, as in the case of the former, or repeatedly, over a period of months, as in the case of the latter, the PPT remains on the scene to make sure markets don’t lose their gains (Dow down 199 Thursday, up 186 Friday).  And don’t forget those “HAIL MARY” rallies nearly every day, such as we again saw Friday.

No matter that this was a smaller HAIL MARY than usual, the important thing is the PPT is ALWAYS there “validating” bullish rumors with buying support, just as the Cartel is ALWAYS attacking gold for the converse reason.  Note the REPEATED capping efforts in COMEX gold on Friday alone, of which I count no less than FIFTEEN separate instances, including, as always, at EXACTLY the 8:20 AM EST open, EXACTLY at the PM Fix at 10:00 AM EST, and EXACTLY at the 12:00 PM EST “cap of last resort.”  Sometimes this capping is more subtle than other days, but it’s always there, and RANTING ANDY is always watching.

Remember, the “Fed, BOE, BIS selling” headline was not refuted, as the Cartel likely ordered MNI to simply retract the headline, but issued no official denials.  In other words, few people other than investigators such as GATA even knew of the retraction, so the Cartel gets to “have its cake and eat it, too.”  The initial rumor scared gold traders the world round, likely dampening their enthusiasm for attacking the KEY ROUND NUMBER of $1,750/oz, yet most traders have no idea the rumor was retracted.  Conversely, the Cartel can “officially” deny the rumor was true, claiming the gold market is free after all.

The problem, of course, is even the “best laid schemes of mice and men go oft awry,” as this Cartel strategy has more holes than a chunk of Swiss Cheese.  Again, whether they actually sold gold or not (per Friday’s RANT) is IMMATERIAL.  Market manipulation does not require actual selling, but simply misleading others into selling, as is the case with jawboning.  Moreover, by naked shorting PAPER futures contracts and ETF shares, one is not really selling gold or silver at all, but unbacked promises fated to be reneged upon.

For one, let’s go back to Thursday’s DEATH STAR attack, right at the time of the alleged gold price intervention, which just happened to occur at, whattya know, EXACTLY the 8:20 AM open of the New York PAPER COMEX market.  If the Cartel really intended to sell PHYSICAL gold, why would they wait until the PAPER market opened, nearly to the minute?  In fact, the “attack pattern” was the EXACT same tactic observed DOZENS of times before, particularly following FOMC meeting decisions and monthly NFP employment reports.

This tactic, which is EXACTLY what Andrew McGuire reported to the CFTC as one of the key “signals” given by the Cartel to its cadre of leeches – I mean traders – is executed as follows.  The news comes out, nearly always gold-bullish, and the Cartel allows gold to immediately spike $5-$10 to draw in as many “suckers” as possible, followed by a major WATERFALL DECLINE to create a vortex of panic, and eventually margin call fearing, selling.

As evidence, below are charts of PAPER gold trading activity after the last three FOMC decisions, all of which concluded with announcements at 2:15 PM EST.

On June 22nd, after the following statement:
The Committee continues to anticipate that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate for an extended period.
…gold immediately rose $3, then plunged $7 (this was a milder attack than usual).  Of course, note that once again a KEY ROUND NUMBER, this time $1,550, was defended…

…not to mention what they did to PAPER gold the very next day, at EXACTLY the 8:20 AM COMEX open…

Next, the September 21st FOMC announcement, again at 2:15 PM EST.

After the following, UNEXPECTED, wildly gold-bullish statement:
The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.
…gold was permitted to surge $15, bursting through the KEY ROUND NUMBER of $1,800 for the SIXTH TIME THAT DAY ALONE, before their massive $35/oz DEATH STAR attack within minutes….

…followed by the most vicious gold attack ALL YEAR, taking it from $1,815 minutes after the gold-bullish FOMX release on June 21st at 2:15 PM EST to $1,490 on Monday, June 27th, in the wee hours of the night.

Finally, the November 2nd FOMC meeting, of which the following statement was published at 2:15 PM EST:
The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.
The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools to promote a stronger economic recovery in a context of price stability.
Once again, gold immediately surged $6, but within minutes experienced a $10 waterfall decline, par for the course and EXACTLY why JP Morgan is able to report such large “trading profits” despite its ongoing, massively losing PAPER silver short position.

But then again, according to Jamie Dimon and his “sponsor” CNBC, the market is free and America has the most transparent financial markets in the world.  Do not listen to this on a full stomach.

The King of the Scumbags Speaks

With that commentary emblazoned into your mind, let’s go back to Thursday’s announcement of an ECB rate cut, coupled with comments by “Goldman Mario” Draghi that the European liquidity situation resembles that of the final days of Lehman (i.e. necessitating MASSIVE money-printing).  The announcement, made at 7:45 AM EST, or just before the COMEX open, caused gold to immediately surge $14/oz, breaching the KEY ROUND NUMBER of $1,750/oz that had been maniacally defended a total of 21 TIMES in the prior five trading days.  Subsequently, within minutes of the COMEX open, a vicious $45/oz WATERFALL DECLINE coincident with the following news headline:


To start, note the waterfall decline did not occur until AFTER the COMEX opened, when the Cartel has free reign to naked short PAPER contracts.  The fact that Draghi’s press conference did not start until then is immaterial, in my view, as the rate cut and comments about congruence to the Lehman situation alone should have sent gold to the moon.

Second, given the WATERFALL DECLINE happened so quickly – in roughly 30 minutes – could the “Fed, BOE, and BIS” have so quickly sold that much PHYSICAL gold, a market which typically is negotiated?  And why would the price drop so rapidly unless they were PURPOSELY trying to take the price down, not uncoincidentally after it surged through a KEY ROUND NUMBER that had been defended so vehemently for the past week?

Finally, and most damning of all, the fact that the statement named the BOE and BIS as the gold sellers, along with the Federal Reserve .

Per Friday’s RANT, few people in the world have even heard of the Bank of International Settlements, much less understand its function as a “Central Bank to Central Banks.”  Heck, I don’t even know what that means!  Moreover, even fewer realize the BIS has been integral to Central Bank gold sale programs, both OVERT and COVERT, over the past decade.  Remember the 1999 famous quote from Eddie George, Governor of the BOE and Director of the BIS:

We looked into the abyss if the gold price rose further.  A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake.  Therefore at any price, at any cost, the central banks had to quell the gold price, manage it.  It was very difficult to get the gold price under control but we have now succeeded.  The U.S. Fed was very active in getting the gold price down.  So was the U.K.

Well, guess what?  I just figured a MAJOR PIECE OF THE PUZZLE!  Given that George was a BOE governor, the gold world likely misinterpreted this statement to mean the BOE led the selling operation, in cahoots with the Federal Reserve.  However, notice the wording at the end of the statement – “The U.S. Fed was very active in getting the price down.  So was the U.K.”  Wait a second here, if the Bank of England was the leader of this operation, and George a Governor of the Bank of England, why was he stating the U.K. also helped to bring the price down?

Answer: Because George led this gold-selling effort from his post as Director of the BIS, from which he secured the Fed and BOE gold, of course.

This is probably why Reg Howe named the BIS as the lead defendant when he sued a group of Central Banks for gold price manipulation, in his 2001 lawsuit, “Howe vs. the Bank of International Settlements et al.”

Why do I bring these semantics up?

Because there is simply NO WAY a “rumor” of selling – naming the BIS as one of the sellers, could emerge from someone, who is not from deep inside the Cartel that would have knowledge of such matters.  Not to mention, as the Bank of England sold nearly all its gold at the 1999 “Brown Bottom”:

a) they likely have very little left to sell, even if they wanted to

b) it would be INSANE for them to sell their little remaining gold while on the verge of financial collapse

Guess Which Country Has Debt Of Nearly 1000% Of GDP…

c) that little amount of gold would certainly not scare market participants, and

d) it would be POLITICAL SUICIDE for David Cameron to sell England’s remaining gold now that public anger about the “Brown Bottom” is at “maximum velocity,” not to mention the political upheaval likely to result from his decision to exclude the UK from last week’s Euro austerity treaty.

Max Keiser: Crazy Cameron suicidal with knife in Euro gunfight!

Once again, whether the “Fed, BOE, and BIS” actually sold any gold Thursday is immaterial.  We know they COVERTLY did so via normal naked shorting of PAPER contracts (as described above), but we may never know if they did so OVERTLY with PHYSICAL sales, if they even own PHYSICAL gold anymore.

All that matters was whether or not they manipulated the market, i.e. either sold physical gold or fooled others into doing so by jawboning about doing so.  And given the fact that whomever leaked that rumor was dumb enough to tell Market News International – a clueless news service – that the BIS and BOE were involved with the Federal Reserve, it should be quite obvious the leak emanated from Cartel insiders.

In other words, my conclusion from Friday’s RANT, “THE FINAL ACT OF FINANCIAL HUBRIS“, stands.  The Cartel, in utter DESPERATION, showed the world its “Jack high” hand by OVERTLY attempting to manipulate the market, an act that, in hindsight will be remembered as “the most important day in gold trading history!