Given today’s theme, we thought it a good time to salute one of the true trailblazers in the quest for truth – GATA’s known co-leader, Chris Powell. GATA is where I “cut my teeth” in the blogosphere having first written free missives there – along with Bill Holter – nearly a decade ago. In my view, GATA’s impact financial market perception has been both global and permanent; and while it may not appear so today, its efforts will certainly impact tomorrow’s decisions by individuals, institutions and governments.
From day one, GATA contended the Cartel’s downfall would be catalyzed by shortages in the physical markets; and given the explosion in demand and stagnation of supply, since it commenced operations in 1998, that time is starting to appear as imminent as it is inevitable. Just look at the below chart of Shanghai silver inventories worth a measly $45 million and dropping like a stone, and ask yourself how much longer the charade can continue – let alone, with the Shanghai Futures Exchanges’ “International Board” having just opened. As Chris eloquently put it several years back, “there are no longer markets, just manipulations” – which fortunately for sound money advocates cannot be utilized to manufacture physical gold and silver. And yesterday, in this fine interview, he discusses, correctly in our view, how gold is the “deadly enemy of central banking and government irresponsibility,” and that “suppressing the gold price is the foremost objective of U.S. government monetary policy.”
Yes, on this COMEX options expiration day, paper gold prices are still well above the June 2013 lows – amidst surging physical demand, particularly in India; but paper silver, incredibly, has been driven below $17.50/oz. – to perhaps its most “oversold” level on record – despite surging U.S. Mint Silver Eagle sales, the aforementioned drain of Shanghai’s supply and a tailwind of economic and geopolitical factors unparalleled since precious metals bottomed at the turn of the century. In our view, “something’s gotta give” likely sooner rather than later.
Conversely, most equity markets are at or near all-time highs – unadjusted for inflation, of course. In yesterday’s “grotesque face of destroyed capital markets,” we wrote of how the MSM and much of the world’s “financial community,” has been so dumbed-down, brainwashed, and otherwise indifferent it can’t see the largest “pink elephant” in financial market history; i.e., the 100% correlation between money printing and stock and bond returns – let alone, when Central banks are manipulating them, overtly and covertly. And not just in the United States of Printing Presses, but everywhere…
As for overt manipulation, what part of “QE” do people not get? That is the official policy of buying bonds with printed money. Let alone, monetary policy itself, which sets interest rates at artificial levels; and oh yeah, machinations like the “London Gold Pool,” which overtly suppressed gold prices until physical demand swamped it in 1968. As for covert manipulations, the “President’s Working Group on Financial Markets” is specifically mandated with supporting the stock market, whilst the “Exchange Stabilization Fund” is mandated to “deal in gold and foreign exchange to stabilize the exchange value of the dollar.” Heck, the President’s Working Group issued a press release on October 6, 2008, indicating it was “taking multiple actions available to it in order to attempt to stabilize the financial system.” Better yet, former Clinton Administration advisor George Stephanopoulos even referred to it by its “pet name” on Good Morning America on Sept 17, 2000, in stating…
What I wanted to talk about for a few minutes is the various efforts that are going on in public and behind the scenes by the Fed and other government officials to guard against a free-fall in the markets …perhaps most importantly, the Fed in 1989 created what is called the Plunge Protection Team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges. They have been meeting informally so far, and have a kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem.
They have in the past acted more formally. I don’t know if you remember but in 1998, there was a crisis called the Long term Capital Crisis. It was a major currency trader and there was a global currency crisis. With the guidance of the Fed, all of the banks got together when it started to collapse and propped up the currency markets. And, they have plans in place to consider (what to do) if the markets start to fall.
And let’s not forget the most critical market manipulation statement of all time – regarding – what a shock – gold…
In front of 3 witnesses, Bank of England Governor Eddie George spoke to Nicholas J. Morrell (CEO of Lonmin Plc) after the Washington Agreement gold price explosion in Sept/Oct 1999. Mr. George said, “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.
–Jesse’s Café Americain, March 24, 2010
Thus, when people ask me “why did the market rise?” or “why did gold fall?,” I want to tear my hair out. I mean, yesterday’s equity “dead ringer” algorithm was EXACTLY what I wrote of in “Dow Jones Propaganda Average” two-and-a-half years ago, whilst gold’s “2:15 AM EST” raid this morning – at the open of London paper trading – has occurred on 305 of the 343 trading days since last April’s “closed door meeting” between Obama and the top “TBTF” bank CEOs.” Chris Powell was dead on in his summation of “financial markets”; and like GATA, the Miles Franklin Blog seeks to spread the truth as rapidly and comprehensively as possible.
Which brings me to today’s “denouement,” regarding the “headline that says it all.” Recall June’s article which, while not validated, claims Central banks have covertly purchased $29 trillion of equities representing half the world’s market capitalization. We’d bet on “the under,” as that amount sounds high. However, we’ve never had a shadow of a doubt that governments purchase equities as aggressively as the Fed purchases bonds and the Cartel naked shorts gold and silver. And of course, when dealing with the “poster child” of monetary foolishness, even the Fed doesn’t hold a candle to the Bank of Japan – which yesterday, admitted to buying $1.2 billion of stocks in August, bringing its (admitted) holdings to $4.4 billion or nearly 2% of the entire Nikkei.
This is why people need to realize that not only is the stock market no longer an “indicator” of anything other than Central bank monetization, but future movements may have ZERO semblance to those of previous crisis. I am stating that the odds of a government-aided “melt-up” in nominal equity values are equal to that of a 2008 or 1929-like “deflationary crash. And the sooner you realize that stock performance has ZERO impact on your life if you don’t own them (which is the case for the vast majority), the sooner you can consider to protect your assets from the guaranteed catastrophic real losses paper assets are destined to garner, whilst real money not only maintains its purchasing power, but recoups 15 years of unprecedented suppression.
As always, thanks for your critical anaysis! It appears we are approaching the “Crack Up Boom” phase within the next couple years. I would certainly say one thing, TPTB got this cycle correct “this will be the greatest transfer of wealth away from the working Joe to them”. They will be very lucky if the violence they unleash doesn’t come back on them. This thought also goes along with the “Taper Theme”. Why the need to broadcast tapering other than to manage perceptions? Or may be the second reason is to make most of the people think the USD is a safe place to be just before there is a massive revaluation! What better way to pull in those $$ before the biggest wealth transfer in history. Just my thoughts.
Again, thanks for what you and Bill do.