Today is May Day in Europe and Labor Day in China smack in the middle of Japan’s “Golden Week.” In other words, one of the year’s thinnest global trading days – with the U.S. being one of the only major markets open. Three years ago, May Day fell on a Monday; providing optimal conditions for the Cartel to launch a last-ditch effort to prevent a global silver default, via its heinous “Sunday Night Silver Price Massacre.”
At the time – with the U.S. national debt at a “paltry” $14.0 trillion compared to $17.6 trillion today – silver was approaching its all-time high of $50/oz., with physical product sold out nearly everywhere. The world was on the cusp of a sequel to the 2008 financial crisis, and just three months later the U.S. itself had its triple-A rating stripped by Standard & Poor’s. Thus, TPTB determined that amidst such ultra-thin trading conditions, they would naked short paper silver into oblivion. The result – a $6/oz. plunge – i.e., 13% – in less than 30 minutes, the second the Globex computer trading platform opened at 6:00 PM EST Sunday Night.
Of course, the Cartel needed “cover” for such a transparent attack. And thus, it was “conveniently” reported that Osama bin Laden had been killed. No corpse was presented, under the guise it was “buried at sea.” But trust us; the government stated we got him. Yes, and Saddam Hussein has Weapons of Mass Destruction.
That said, whether Bin Laden was alive, dead, head of al Qaeda, or otherwise is immaterial to the price of gold and silver. Ten years later, 9/11’s devastating political, economic, and social impact on the declining American empire was more powerful than ever; and frankly, those were the “good old days” compared to its standing today, just three years later. And by the way, do you know how the Dow – which arguably would be far more impacted by the death of America’s so-called “public enemy #1” – performed, whilst paper gold and silver prices plunged? It was down three points on Monday, May 2nd and unchanged Tuesday, May 3rd!
By the way – lest anyone actually believes propaganda that Bin Laden’s death was somehow a major PM negative event – behold Exhibit B, which the MSM, of course would never report. Yes, by midday on Monday, May 2nd, silver prices had recouped nearly all of the Sunday night’s losses whilst gold actually went up for the day. And thus, a desperate Cartel seeing its “massacre” stratagem miserably failing – creating the perfect technical set-up for a renewed assault on $50/oz. – enacted its most vicious “cap of last resort” attack ever at the usual time of 12:00 PM EST. By day’s end, both metals were back at their lows, but both would be back to challenge the Cartel again in September.
To wit, when Global Meltdown II was in its full glory that Fall, the Cartel was forced to unleash its “Operation PM Annihilation I” raid on September 7th the evening after the ultra-thinly traded U.S. Labor Day holiday; ironically, simultaneous with the massively PM-bullish news that the Swiss National Bank devalued the sacrosanct Franc by 7% representing a “shot heard round the world” in the “final currency war.” That attack had a shelf life of a few months but when PM prices surged anew, the Cartel was forced to initiate “Operation PM Annihilation II” on December 8, 2011 – unleashing the infamous “gold sale headline” to quash surging prices; again, right after a massively PM bullish event – in that case, the ECB unexpectedly lowering interest rates.
Three months later, PM prices were threatening to break out again; and thus, just hours after the massively PM-bullish news that the ECB’s second LTRO, or Long-Term Refinancing Operation, tranche was reported to be much larger than anticipated, the Cartel launched the equally infamous “Leap Day Violation” raid on February 29, 2012 naturally, at exactly the 10:00 AM EST close of the global physical markets. This too, worked for a time; but when Fall rolled around, PM’s surged anew – particularly after Obama’s re-election signaled a popular endorsement of socialism.
And hence, simultaneous with the launch of “QE3” in January 2013 – and another physical silver shortage as the U.S. Mint sold out of Silver Eagles for two weeks – the “Cartel” decided “emergency response” attacks like the aforementioned was no longer the best way to handle a situation in which irrepressible, inexorable physical PM demand was increasingly threatening the dying fiat currency status quo. Thus, they determined that 24/7 suppression was the best way to “kick the can” the farthest.
Clearly, simple math depicts physical demand far in excess of mining supply; and thus, it was obviously determined that not only were Paper PMs to be naked shorted continuously, but whatever physical stores that remained were to be dishoarded as well. Obviously, this strategy was doomed to fail as at some point physical shortages would become chronic particularly at prices below the cost of production – which is where we stand today. This is why the German Bundesbank have thus far only received a measly five of the 300 tonnes it requested to be repatriated from the New York Fed’s custodial account 15 months ago. China alone imported half the world’s non-Chinese produced gold last year; and this year, is on a pace to far exceed that amount.
However, it was deemed the only remaining option for a Cartel on the ropes; and thus, following an April 12th, 2013 closed-door meeting between Obama and the CEO’s of the 15 largest “TBTF” banks, the “Alternative Currencies Destruction” raids were launched taking $250/oz. and $4/oz., respectively, out of gold and silver prices over a two-day period. Since then, we have seen a lifetime’s worth of raids, causing constant “stop logic” shutdowns of the COMEX and “sixth sigma” waterfall decline events – such as “Sunday Night Sentiment” raids on 38 of the past 39 Sunday’s and “2:15 AM” EST raids on 214 of the past 241 trading days, or 90% of the time. Not to mention, the “irrefutable manipulation statistic” that silver has had at least a 2% decline on more than half of all trading days in the past 16 months. And this, while global physical demand was shattering previous records, whilst production flattened and mining losses exploded!
The lead-in and aftermath of yesterday’s faux “tapering” announcement was a perfect example; as not only is the Fed not tapering to start with – as evidenced by the comical assertion that Belgium is buying hundreds of billions of U.S. Treasury bonds – but the announcement itself was widely anticipated and by the way not the slightest bit “PM negative.” The fact that the Fed’s balance sheet continues to explode with no hope of shrinking and no plans to end ZIRP policy in the foreseeable future could not be more PM bullish. However, as always under the new “manipulation regime,” Paper PMs are attacked whenever the Fed speaks with the new propaganda claiming PMs will fall as long as tapering continues. Comically, in the wake of paper gold and silver being raided following the so-called “hawkish” announcement (no one was selling any PHYSICAL metal to Miles Franklin), Treasury yields actually fell – to 2.62% as I write Thursday morning from 2.66% at the time of the announcement on the benchmark 10-year bond. And, of course, the “Dow Jones Propaganda Average” was held at its highs.
To wit, here are the news stories this morning that have gold and silver reeling again (facetious), whilst interest rates fall further and stocks remain near their highs again, in ultra-thin May Day trading conditions…
1. Worse than expected Chinese PMI report and an utter collapse in Australian PMI. Subsequently, the Yuan declined to a new multi-year low.
2. Sony slashed its profit outlook by 70% blaming, among other things, Abenomics – per this damning quote from its CEO:
We are actually at a disadvantage [with a weaker JPY]. The preconception that a weaker JPY is good for all is, unfortunately for us, not true against the USD.
–Zero Hedge, May 1, 2014
3. Another record month of General Motors channel stuffing.
4. A second straight surge in weekly jobless claims to 344,000 from last week’s 330,000 and the consensus 319,000.
5. A surge in the Challenger lay-off report, from 34,439 mass layoffs in March to 40,298 in April; not to mention, a flat manufacturing PMI report in which it was reported that job creation momentum declined substantially. But don’t worry, April is a big “phantom job month” with tomorrow’s NFP report having tailwinds from last April’s 236,000 job “seasonal adjustment” – and, of course, the fact that the benchmark 10-year Treasury yield has fallen sufficiently far from the Fed’s “line in the sand” at 3.0%.
6. An utter collapse in the Bloomberg Consumer Comfort Index which has been negative for more than a decade from -25.4 to -37.9.
7. Surging farm prices up 3.6% in April following a 4.7% increase in March.
8. March durable goods orders were revised from +0.1% to -0.2%, and April orders came in at +0.2%, versus expectations of +0.6%.
9. A near record plunge in the U.S. savings rate, to 2008 crisis lows. And the reasons cited for such “strong” consumer spending (facetious, as it was financed by debt) – increased healthcare and utility spending. And no, “the weather” was not a major factor in March utility prices.
10. And oh yeah, it was yesterday morning when 1Q GDP was reported to be +0.1% (actually, +0.005%); according to John Williams of Shadow Stats, NOT due to “the weather.”
11. Last but not least, U.S. mortgage refinancing activity fell last week to levels not seen since the bottom of the 2008 financial crisis. But don’t worry, the housing market is “recovering.”
Hopefully, this description of the “true state of Precious Metals” convinces you that not only are they as undervalued as at any time in our lifetimes; but perhaps, thanks to a desperate Cartel in the final stages of its ill-fated “New York Gold Pool” strategy, any time in history. When will the next physical shortage emerge – particularly amidst unprecedented gold backwardation? And when it does, will it serve the final death blow to a dying monetary system, under attack from all corners of the Earth? Most importantly, will you be protected from the resulting inflation, when said inevitability arrives?