It’s early Thursday morning, here at my article-writing home-away-from-home, Denver International Airport (featuring the “horsie with crazy eyes,” according to Sylvie) and I’d like to start by once and for all, ending the “debate” over whether Precious Metal prices are manipulated. I mean, just how much of a pariah can you be, when as the world’s largest derivatives holder, the “powers that be” still allow you to be caught “fixing” (i.e, suppressing) silver prices?
“Deutsche Bank AG has agreed to settle U.S. litigation over allegations it illegally conspired with the Bank of Nova Scotia and HSBC Holdings Plc to fix silver prices at the expense of investors, a court filing on Wednesday showed.”
Then again, when the below “trading” occurs on a day burgeoning with “PM bullish, and everything-else-bearish” news; let alone, in early Asian trading, when the only news was a “2008 crisis-like monetary easing by the Bank of Singapore”; the PBOC’s largest one-day Yuan devaluation since the August “devaluation crisis”; and yet another FOMC “emergency meeting” – this time, to discuss “financial markets, institutions, and infrastructure,” it’s difficult to even pretend paper gold declines are legitimate. Or, for that matter stock price gains, when the “dead ringer” algorithm blatantly supports the “Dow Jones Propaganda Average” on three-quarters of all trading days.
This, with the global economy at its quantitatively weakest since the Great Depression, whilst physical Precious Metal demand is at an all-time high, with a rapidly accelerating growth trajectory.
In a nutshell, TPTB are “shooting historic blanks” in their manipulative attempts to influence perception – as their comical attempts to alter historically ugly economic data are falling on deaf ears, particularly when such propaganda is promulgated by the most despised people on Earth…
However, nowhere is their desperation, and futility against the raging forces of “Economic Mother Nature,” more obvious than in the fabricated hype surrounding this coming Sunday’s “OPEC/non-OPEC summit” in Doha, Qatar – in which the dead cat bouncing oil market (albeit, down 60% from its highs) supposedly anticipates a “production freeze” agreement between Saudi Arabia, Russia, and other major exporters. How crude oil prices trade in its aftermath – in an environment of global economic contraction, in which most other commodity prices have barely bounced off their lows – will tell us just how much “power” the “powers that be” still have.
In recent weeks, this concocted non-story has taken on a life of its own – care of the relentless “oil PPT” propping of crude prices. This, despite numerous announcements of record production – from Saudi Arabia and Russia, amongst others; surging global inventories; hundreds of cargo-bound tankers seeking ports; vehement statements from OPEC’s third largest exporter, Iran, that it will NOT participate; and falling global demand – which OPEC itself predicted as recently as yesterday.
In fact, the mere concept of a “production freeze” as a major bullish catalyst – as opposed to the significant cut that is actually required – demonstrates just how futile this escapade is. Not to mention, the history of OPEC compliance with quotas, which can best be described as non-existent. And this, as the Russian oil minister – yesterday – said that regardless of what is discussed, “few detailed agreements” will be made, even under the best-case scenario. In other words, “Doha Agreement” or not, inventories will continue to build, as financially-strapped nations and corporations, desperate to maximize cash flow and maintain “market share,” will stop at nothing to protect their own interests.
Of course, the most humorous part of the discussion is that said “oil PPT” – i.e., government-led efforts to support paper crude prices, irrespective of actual physical fundamentals (sound familiar?), is focusing so much of its effort hyping “data points” like weekly API (American Petroleum Association) and DOE (Department of Energy) inventory data, as if negligible changes in what amounts to an infinitesimal segment of global production have any real impact on global crude oil fundamentals. Let alone, when such data is as vulnerable to manipulation as anything else the government (like the BLS’ NFP employment report) or trade associations (the National Association of Realtors’ “homebuilder sentiment” survey, for example) publishes. Of course, the pink elephant in the room is the big picture of what the agglomeration of such data actually depicts; i.e., record inventories, weakening demand, and extremely modest net production changes.
Conversely, I don’t see anyone reporting how gold and silver (and platinum, for that matter), are experiencing record demand, vanishing inventories, and plunging production. I mean, the top three global gold producers – Barrick, Newmont, and Anglogold – are cumulatively anticipating 10%-plus production declines over the next 3-4 years! And as for silver, given that two-thirds of mine production emanates from copper, lead, and zinc mines – which, like oil wells, are massively oversupplied, and certain to experience closures in the coming years – the production outlook has never been weaker. In other words, Precious Metal miners are not concerned about preventing production from rising; but to the contrary, plunging! To that end, when was the last time gold and silver prices surged on legitimate reports of dramatic production declines; as opposed to “oil PPT” supported crude, which seemingly surges 5% any time said API and DOE readings are even slightly “better than expected.”
Based on everything I know about commodities – particularly crude oil, given that I was a Wall Street oilfield services, equipment, and drilling analyst from 1996-2005 – tells me that Sunday’s Doha OPEC/non-OPEC meeting is “the most over-hyped non-event in economic history.” And unless the “powers that be” have some David Copperfield-like rabbits to pull out of their hat, the odds of maintaining the “recovery” of the world’s largest revenue-producing business are somewhere between slim, very slim, and none. And trust me, if oil trends back down toward $30/bbl, it will be GAMEOVER for the world’s political, economic, social – and monetary – structure; and GAME ON for Precious Metal prices!