It’s very early Friday morning – OK, where to start?
From my perspective, yesterday was an important INFLECTION POINT in the political and financial WAR to “save the status quo.” TPTB are faced with an untenable situation – a COLLAPSING financial system with no hope of improvement, and consequently INFIGHTING within their ranks. I have discussed this political chaos for several weeks now, but never has it been so apparent as yesterday, amidst the so-called “last ditch” EU summit.
Make no mistake, the European union is beyond the desperation phase, its “leaders” grasping for straws and gasping for air as they realize all options are exhausted. The GLOBAL PPT is working 24/7 to prop markets while the final, fatal decisions are made, and who knows how much time they can buy?
The fact remains that entering this meeting, as well as yesterday’s simultaneous ECB meeting, the only thing holding the system together was the MASSIVE Federal Reserve MONEY PRINTING operation announced last week, in concert with behind-the-scenes, force fed loans to numerous, INSOLVENT banks such as Credit Agricole, and of course, aggressive action by the PPT, hell bent on assuaging the few remaining “investors” that “all’s well.”
Yesterday’s Dow tape had manipulation written all over it, and I haven’t even gotten to GOLD yet, which I assure you I will in great detail later on. As discussed yesterday, the ECB made the expected 25 basis point interest rate cut, from essentially nothing to “less than essentially nothing,” which had the markets fired up until “Goldman Mario” Draghi compared European liquidity to that of Lehman Brothers prior to its collapse, yet refused to OVERTLY agree to across-the-board “bazooka” purchases of ECB sovereign bonds.
While European stock markets collapsed 2%-3%, the PPT worked overtime to keep the Dow down less than 1% all morning, challenging each and every attempt to fall in line with the rest of the world, as always. Throughout the day, myriad, dissociated snippets emerged from Europe, highlighting the aforementioned chaos among the summit’s participants, as well as an alarming lack of direction.
First, we got the results of the comical “nth round” of European bank stress tests, which have all the credibility of a Bernie Madoff operated hedge fund. Per the table below of the last round of stress tests, the best performing European bank was none other than DEXIA, which weeks later went bankrupt!
Immediately after release of the farcical results, which frankly I haven’t paid a second of attention to, none other than the German Bundesbank stated that “Europe has lost credibility.” Very encouraging, considering a “resolution” of Europe’s problems was so desperately hoped for in the ensuing hours.
Much of the meeting was dedicated to creating a MEANINGLESS “treaty” uniting European austerity requirements, as if agreeing to tighter fiscal discipline will suddenly make it happen. When nations are drowning in debt, with soaring unemployment and rising inflation, the LAST thing they need are austerity measures, which only slow the economy further and foment social unrest. Not good for elections, or physical survival for that matter. We’ve already seen the impact of such draconian measures on Greece, the “red-headed stepchild,” which is on the verge of anarchy as its residents protest government ineptitude, beg for further socialistic benefits, and pull their money out of the banking system. I’m sure you can take a guess what will happen elsewhere.
In fact, Europe has already blown to bits the “austerity requirements” of the 1992 Maastricht Treaty, which established the initial financial criterion of Euro Zone member nations. If this treaty were adhered to per provisions of the Maastricht “convergence criteria,” MORE THAN HALF of the 17 member nations would be kicked out of the Euro, including all the PIFIGS!
But then again, it’s just a treaty, and promises are meant to be broken. Just take the U.S. CONSTITUTION, for instance, of which the fourth amendment protects Americans against “unreasonable search and seizure,” a freedom we are about to lose with nary a fight.
As the ECB meeting and EU summit raged on, global stocks were roiled by a series of idiotic rumors, obviously planted by TPTB to keep markets at bay, as we have seen continuously for the past week or so (you don’t see any negative rumors, do you?). Massive ECB debt purchases, IMF loans, a renewed EFSF/ESM, “one world” government – you name it, and a rumor was created to temporarily prop up markets.
In fact, if not for immediate refutation of this strategically planted rumor in the last hour of trading, the PPT’s daily “HAIL MARY” rally might have succeeded in turning the Dow UP for the session, despite the ENTIRE WORLD falling sharply! Despite their best efforts, the Dow closed at 11,998, just below the KEY ROUND NUMBER of 12,000 that they so vehemently have been defending.
But don’t worry, as always Dow futures are up this morning, as the PPT cannot allow PERCEPTION that something is wrong, despite all evidence stating otherwise. Not to mention, gold being walked down into the COMEX open, as always. Look hard at this chart of the Dow, how the PPT defended the KEY ROUND NUMBER 12,000 all summer long, then 11,000 during the Fall when the debt ceiling debacle/U.S. credit rating reduction knocked the market down, and now 12,000 again following last week’s Federal Reserve-led GLOBAL QE announcement.
Behind the scenes, a growing number of European nations are preparing for the inevitable collapse of the Euro, and with it accelerating, and in some cases hyperinflation. Several nations are already looking into acquiring new printing presses, so they can create their very own hyperinflations. And you wonder why Europeans are withdrawing capital from the banking system at a record pace, while European banks themselves are moving their funds to the relative safety of the ECB itself.
And the final verdict on the “life or death” EU summit is…a NEW TREATY amongst 23 of Europe’s 27 nations, including several not even in the Euro currency (huh?). The treaty promotes the aforementioned “austerity,” a WORTHLESS gesture among nations that have not only flouted all other treaties regarding fiscal constraint, but are amidst massive recessions, bordering on depressions, and thus without the means to carry out such draconian measures even if they had the political will!
“One world” truly appears to be the order of the day, as this “elite” group of scum in Brussels attempts to commandeer the sovereignty of all of Europe. As in the United States, the European political and economic leaders (i.e. the bankers) created a fiat currency system leading its members to over leverage themselves, and now they aim to steal those nations’ assets, and cultures, as punishment. Ironically, the most indebted nation on earth (497% cumulative debt/GDP), England, wouldn’t agree to the new treaty, but don’t worry it, too, will fall in line when its debt smothers it into oblivion.
And what’s this? In late breaking news, yet another PATHETIC rumor that China will bail out Europe, not un-coincidentally emerging just after STOCK FUTURES started to decline. This is getting comical already; my god, what has happened to this previously civilized world?
In other world news, China continues to experience an alarming decline in its structurally deficient economy. They may have all the world’s manufacturing capacity, but while the rest of the world is mired in deep recession, demand for even cheap Chinese products is falling sharply. With nearly two billion mouths to feed, the Chinese government has been reinvesting its surplus cash into construction projects for the past decade, and consequently has MASSIVELY OVERBUILT, creating a commercial real estate bubble that threatens to dramatically weaken the Chinese banking system.
I assure you, Confucius would have warned the Chinese government that pegging the yuan to the dollar via UNLIMITED MONEY PRINTING would be a bad idea, per his famous saw, “he who will not economize, will have to agonize.”
Speaking of government profligacy, how about this beauty of an article about the U.S. municipal bond market being $800 BILLION, or 28%, larger than ‘initially estimated’ just five months ago! Oh well, I guess all those states, counties, villages, towns, and hamlets will just have to RAISE TAXES and CUT SPENDING, unless, of course, the Fed just PRINTS MORE MONEY and gives it to them!
Ah, the Fed, the inflation gift that keeps on giving. First we had the $700 billion TARP “loans,” which actually turned out to be $16 trillion after Congress finally penetrated its sheath of opaqueness to uncover the cash showered on banks and corporations around the globe, including the Bank of Libya, General Electric, and Toyota (and don’t forget $8 TRILLION to the ECB). But now, like Moore’s Law in the microchip industry, which states that microchip processing capacity doubles every two years, we have an estimate that the total money PRINTED and DISTRIBUTED by the Fed since GLOBAL ECONOMIC CRISIS I commenced is $29.6 TRILLION!
Do I hear $50 TRILLION?
“Higher than previously estimated ” past money printing is just one of a host of anticipated horrors from Washington, as it rapidly approaches the December 23rd deadline for raising the debt ceiling by another $1.2 TRILLION. Not to mention the DEADLOCK we can expect as Democrats and Republicans play political reindeer games in the run up to November’s presidential elections. I couldn’t think of a better time for massive political infighting, can you?
And speaking of how pervasive corruption has become in the American political system, check out this beauty of an article, almost too surreal to be believable (I think I’ll have to call Ripley’s about getting this one onto their show). Amidst yesterday’s travesty of a Congressional hearing on MF Global, Representative Frank Lucas “made it clear how disgusted he would be if it was found that Jon Corzine is guilty of stealing client funds.”
Defending one of the most vile white collar criminals in U.S. history during a nationally televised hearing – that sounds insane, right? Not to mention when said Representative Lucas is also HEAD of the House Agricultural Committee, charged with creating legislation to protect FARMERS, who happen to be the group MOST negatively impacted by the MF Global grand theft.
Ah, but what’s this? Per the incredible table below, said Representative Lucas, an elected steward of the American people, and leader of the Agricultural business sector to boot, is bought and paid for by THE AMERICAN BANKING ASSOCIATION!
Yes, the “bankstaz” own ALL of Washington, not just the Presidents…
…an if you make ANY assumptions otherwise, you will be in for a big surprise in 2012.
And now for today’s RANT topic, one close to my heart – GOLD. Yesterday may have been a major INFLECTION point in the European banking crisis, but it was far more than that in the gold market – an HISTORICAL DAY!
A day of victory for GATA, for RANTING ANDY, and for all of us that have vehemently argued that Western central banks, led by the Federal Reserve, manipulate the gold market to prevent it from being seen as the safe haven asset it has always been, and will always be.
A day, amidst sheer DESPERATION, when the Cartel committed its FINAL ACT OF FINANCIAL HUBRIS by showing its hand by admitting it manipulates the gold market!
We may never know EXACTLY how they executed yesterday’s DEATH STAR attack at EXACTLY the 8:20 AM COMEX opening yesterday, but given the remarkable similarity to dozens of other PAPER gold attacks, particularly since “OPERATION PM ANNIHILATION” commenced minutes after the Labor Day weekend, you can bet what they announced today is simply an acknowledgement of what they have been doing all along.
Just yesterday, I posted charts of the past week’s trading, in which “someone” was violently protecting the KEY ROUND NUMBER $1,750, and yesterday was a perfect example of this tactic. Gold was solid all night, and took off when the ECB cut interest rates, comparing the current European situation to the final days of Lehman Brothers. However, just MINUTES after breaching $1,750, yet again gold violently sold off in its typical, counterintuitive manner relative to the news at hand.
The news report states explicitly the “BIS, BOE & FEDERAL RESERVE WERE SELLING GOLD AFTER IT POPPED TO SESSION HIGHS,” i.e. when gold dared to breach $1,750. Thus, CLEARLY I was right about the defense of this key round number, just as I’m positive “they” were defending $1,800 last month and $1,900 in late August. For the record, the BIS is the Bank of International Settlements, the so-called “Central Bank’s central bank,” and the BOE is the Bank of England. More on that in a bit, don’t you worry.
I have supported GATA, the Gold Anti-Trust Action Committee, since 2003. Bill Murphy and Chris Powell are close friends, two of the most steadfast believers in their cause of anyone I know. The “GATA Army” has been the inspiration of my life’s work, and over time I have become one of its generals. Casting my lot with GATA was the smartest move of my career, as I met some of the brightest stars in the investment world and, more importantly, have been empowered with the WILL to keep battling through attack after attack after attack, due to my KNOWLEDGE that such attacks are nothing more than illegal, PAPER ruses seeking to discourage me from investing in TPTB’s “Achilles Heel,” PHYSICAL GOLD and SILVER.
Over the 9½ years I have been FULLY INVESTED in Precious Metals, I have experienced every manner of anger, frustration, humiliation, anxiety, and misery, as seemingly each day the Cartel has stepped up the intensity of its attacks, ironically as prices continue to inexorably rise. The primary reason for these emotions, and countless financial losses, was the level of manipulation in mining shares, both large and small cap. The bulk of my investments were in junior mining companies, in which I generated the greatest financial gains of my life from 2005-07, and subsequently the greatest losses in 2007-08. Thankfully, I was wise enough to put my eggs in two key baskets at the BOTTOM in late 2008 – PHYSICAL metal and Silver Wheaton.
From 2008-09, I rode the “reflation trade” beautifully, with bullion doubling and SLW rising more than tenfold, but then that brief period of universal appreciation ended. Starting in late 2010, the illusion of success from a combination of government bailouts, nationalizations, accounting changes, and fiscal stimulus started to wear off; i.e., the beginnings of GLOBAL MELTDOWN II. Gold and silver shocked the Cartel by taking off late in the year, necessitating a draconian increase in manipulative tactics, which I believe started on “D-DAY,” November 9, 2010.
At that point, GOVERNMENT ALGORITHMS were injected into the large cap stocks, making equities like SLW pure torture to own. Despite surging metals prices, producing miners have experienced contracting P/E multiples thanks to these algorithms, which in turn yielded a negative trickle-down effect to the higher beta juniors. Junior miners have, for the most part, fallen back to levels last seen at the bottom of GLOBAL MELTDOWN I, and believe me I know, having worked for nearly five years as an Investor Relations officer or consultant to junior mining companies.
As proof, look no further than the TSX-Venture Index, a/k/a the Vancouver Exchange, home of hundreds, if not thousands of junior miners. It is down 33% in 2011 (including 46% at its October low), and 54% from its April 2007 high, with a long-term chart that doesn’t inspire encouragement. I have read numerous articles in recent weeks about how “undervalued” this group is, but then again so are the senior producers, which generate revenues and earnings, with balance sheets capable of withstanding another major decline, if one should be in the cards.
“Undervalued” is a siren song in stock investing, one that has lured me to financial pain as often as bliss, but in recent years far more often the former. It is an ambiguous term utilizing obsolete valuation techniques from the days when stock markets were freely traded, and one that can put investors’ finances in precarious positions amidst the most difficult economic environment of our lifetimes. In other words, not worth the risk. Believe me, I know – I am a 20-year stock market analyst, who majored in finance, earned his CFA 13 years ago, worked three years as a buy-side analyst, seven as a sell-side analyst, and five as an investor relations officer to public companies, as well as a ten-year investor in mining equities!
Sorry to digress, but when I think of the impact the gold Cartel has had on my life, both positive and negative, it is hard not to get emotional…and angry…and PROTECTIVE of readers, for whom I wish to generate the highest possible returns at the lowest possible risk.
Despite reams of evidence to the contrary, some of which I’ll share with you today, central bankers and their minions have ALWAYS denied official intervention in the gold markets, and NEVER been transparent about the nature, or accounting of, their gold transactions. For purposes of this RANT, I will only be speaking of gold, as central banks have ZERO reserves of silver, and thus their ONLY means of manipulation is via naked shorting of PAPER products such as COMEX futures and SLV shares.
Below is one such “admission,” in 2009 by a Federal Reserve lawyer grilled by one of the few recent bright spots in Congress, Alan Grayson of Florida, who of course lost his re-election bid shortly afterwards. He states the Federal Reserve possesses all the gold reported on its balance sheet, just as U.S. lawyers, bankers, and politicians have done for the past decade.