It’s 3:30 AM MST on Thursday morning (“Twas’ the night before Janet”), and I wasn’t planning to write until her Royal Printing Press-ness delivered her latest “most important announcement ever.” However, given how the Precious Metal community has been besieged this week with the same misdirection, cluelessness, and borderline Cartel-produced propaganda that has characterized newsletter writer “analysis” for the past 15 years, I thought it would be a good time to throw my ring into the hat – in light of the, yet again, paralyzing fear today’s FOMC statement has engendered, amidst one of the most vicious Cartel raids to date. Particularly appropriate, I might add, on a day when we learned JP Morgan has been serially manipulating the aluminum market for years. But no, the far tinier, far more “systemically important” Precious Metal markets couldn’t possibly be manipulated, too. Right?
Before I “update” what I first wrote of the COMEX “COTs” four years ago, let’s just put the past 24 hours’ news flow into perspective, heading into yet another sure to be another pathetic – but likely, market moving – FOMC word cloud; so you’ll understand, recent equity and commodity “short squeeze” notwithstanding, how wildly bearish global economic trends continue to be for financial assets, and bullish for real money.
1 In yesterday’s Audioblog, I spoke at length at my incredulity at the Bank of Japan, just six weeks after “unexpectedly” commencing a NIRP policy (after having, just ten day prior, saying it would not do so), in removing the language that it would “take rates further into negative territory if necessary” from its latest policy statement. Well, just one day, and one Nikkei decline later, have a gander at what the BOJ’s clueless Chief, Haruhiko Kuroda, had to say. Seriously, you can’t make this stuff up…
*KURODA: THEORETICALLY QUITE SOME ROOM TO CUT NEG. RATE FURTHER
*KURODA: THEORETICALLY, IS ROOM TO CUT RATE TO MINUS 0.5%
*KURODA: EFFECT OF NEG. RATE TO TAKE QUITE SOME TIME TO APPEAR
2. The Chinese Containerized Freight Index hit a new all-time low yesterday; and as the PBOC commenced yet another Yuan devaluation cycle, the Chinese government initiated yet another capital control on the currency market, instituting a draconian tax on all currency transactions
3. U.S. retail sales not only fell 0.1% in February, but January’s initial lie print of a 0.2% gain was “revised” to a 0.4% decline
4. Said commodity “short squeeze” decidedly ended, with commodities plunging for the second straight day across the board – typified by iron ore, whose one-day, 19% surge last week has now been completely reversed
5. The U.S. business inventory-to-sales ratio “unexpectedly” hit a new seven-year high; i.e., the worst since the height of the 2008-09 financial crisis
6. India’s non-performing loan percentage surged to an astonishing 18%, catalyzing yet another plunge in BRICs currencies
7. Former U.S. “market darling” Valeant Pharmaceuticals officially commenced its road to fraud-induced bankruptcy – taking with it, one of the symbols of today’s vile, “shareholder activist” environment, Bill Ackman
8. Last but not least, subprime auto loan delinquencies surged to a two decade high
In that context, no less than a half dozen Precious Metal “analysts” are out with their tried-and-true fear-mongering. Yet again, predicting PM prices will crash because the COT report shows “commercials” like JP Morgan have built large short positions in paper futures contracts. I’ve seen it dozens of times before, as these broken clocks utilized blatantly rigged data, in blatantly rigged markets, to try and guess what the Cartel wants them to guess will happen next.
“The information in this report is taken from sources believed to be reliable; however, the (COMEX) Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only.”
To that end, here are the supposedly “damning” charts of the “commercials’” short position buildup over the past four months – to levels roughly in the middle of their averages since the Precious Metal bull market commenced at the turn of the century. Not particularly telling, or anomalous – other than the urgency of the Cartel’s recent capping of gold – amidst exploding physical demand – which has occurred as prices have risen by more than $200/oz. I mean, what “logic” tells you that after the short position has been built, prices are in danger of falling? To the contrary, if this was the stock market, analysts would be calling for a short squeeze, given how such massive shorting has already occurred – and at some point, needs to be covered.
But alas, cry the “newsletter writers,” the “Ides of March” are upon Precious Metal bulls; as clearly, deep-pocketed “commercials” are always right – just as the “speculators” are always wrong, as if there are any materially-sized “speculators” left, after having been fleeced by the Cartel – er, “commercials” – for the past 15 years.
I mean, the Fed is speaking, so how could they possibly lose? You know, like in December, when they finally raised rates as Precious Metal investors were conditioned to fear for three years – yielding said $200/oz surge in gold, and $2/oz in silver. Or in Whirlybird Janet’s February “Humphrey Hawkins” testimony – when again, PM prices “unexpectedly” surged – highlighting how, with each passing day, markets are growing more and more mistrustful of Central bank claptrap; including that of the head money printers themselves.
Look, I’m not saying paper gold and silver will plunge, surge, or otherwise in the near-term; let alone, in response to what will likely be a meaningless FOMC statement – at the least, far more “dovish” than what just a few months ago was predicted to be a “guaranteed” March rate hike. However, I must reiterate the conclusion of my “COTs no longer matter” article of February 2012 – yes, four years ago – in which I discussed how even then, said “COT reports” had lost their predictive value. As opposed to, say, 2002-2007, when it was guaranteed that a significant “commercial” short buildup would yield a price smash; and conversely, a significant commercial long buildup would yield a price surge. To that end, my good friend Craig Hemke was the sole “voice of reality” yesterday, in pointing out that whilst such “data” may suggest a price smash is coming – again, amidst exploding physical demand, and exploding reasons for such demand to continue – there is no inherent “guarantee” of such, particularly given the likely fraudulent nature of such data in the first place.
Last but not least, what said “newsletter writers” fail to point out – which is particularly sad, given as many purport to be friends of the PM community – is that the reason we own physical gold, silver, and platinum is NOT to trade it in rigged paper markets; but instead, PROTECT our hard-earned savings from the ravages of Central bank inflation. And given the monstrous forces of money printing being unleashed on the world as we speak – does anyone remember the ECB’s hyper-inflationary money printing announcement just one week ago – this may be the absolutely worst time in history to “second guess” one’s PM ownership. Of course, if you’re wise enough to avoid said paper dens of thievery – in lieu of the real money physical PMs represent – none of this applies to you, so you can continue sleeping the “sleep of the just,” as I do.