RANTING ANDY – Back to another period of LIMBO, when a series of Cartel raids have badly shaken sentiment in the PM sector. As is typical in such violent, counterintuitive attacks, the hot money was destroyed, the budding believers disillusioned, and “goldbugs” shaken to their core. In this latest round of PM violence, there was perhaps smidge of panic physical selling from Central banks desperate for cash, but given the nature and timing of the hits, I’d estimate no more than 5% of the total selling pressure fit that description, with the remaining 95% emanating from typical, ILLEGAL, NAKED SHORTING of PAPER gold and silver futures contracts and ETFs.
How do I know this? Because PREMIUMS on PHYSICAL gold and silver remain sky high, and the way I calculate it, the average price a retail investor will pay for a one ounce gold eagle is roughly 10% above the FRAUDULENT paper price, and for a one ounce silver eagle, closer to a 20% premium.
There is always the possibility of further declines, particularly if the broad market collapses and the Cartel doubles its efforts to make sure PAPER gold and silver do not act as safe havens, but the majority of selling is likely through. As you know, I view short-term charts to be MEANINGLESS in the rigged PM markets, but longer-term charts are extremely important, particularly as short-term Cartel attacks tend to CREATE the massive long-term basing formations that have propelled PMs higher for a decade.
In gold’s case, it is now more oversold than at the November 2008 bottom, yet in this case the price never fell below the 200 DMA. In fact, the only time it even came close was in thin SUNDAY NIGHT trading last week, following the FRIDAY NIGHT CME margin increase after PAPER gold prices fell $200 in two days. Gold prices stopped falling a few dollars above the 200 DMA, and have since rocketed back up.
In silver, where the attack was many multiples more vicious (a 38% decline in two trading days plus thin SUNDAY NIGHT trading), the price is DRAMATICALLY more oversold than in late 2008, only now the price is above $30/oz while in 2008 it was just $8/oz. Moreover, the open interest in COMEX silver is now roughly the SAME as it was then, showing how little speculative selling is left to occur, even in the event of further vicious attacks.
As noted above, we are back in LIMBO, where many PM investors are licking their wounds, and the rest, shell-shocked by the recent attack and besieged by media propaganda about “burst bubbles”, are terrified to get back into gold and silver. The Cartel APPEARS to be back in control of the PAPER market (but not PHYSICAL, as noted above), and as you can see by the chart below are once again attacking every day at 3:00 AM EST, 8:20 AM EST, etc.. All week, I watched the same Cartel pre-market tricks as always while at the gym (today included), while during the New York trading day all the ALGOs have been turned back on, such as the Dow / HUIx2 ALGO (HUI made to fall twice as fast as the Dow) and the DOW/PM directional ALGO (PMs not allowed to rise when the Dow is falling).
Even a pea brain can see that EVERY rise in PMs is CONTESTED and CAPPED, with multiple WATERFALL DECLINES when the Cartel goes into action. The exact opposite, of course, of how the Dow trades, wherein every decline is CONTESTED and SUPPORTED (even last week’s seemingly sharp declines), with multiple UPWARD EXPLOSIONS, never for any particular reason and often in the last half hour of trading, such as we’ve seen the past two days.
This is MARKET MANAGEMENT 101, but it is just NOISE, especially if you have PHYSICAL gold and silver, which NEVER, EVER loses value, and NEVER causes your brokerage account to decline in value.
In the past two days, while the Dow rocketed up 600 points with even the CNBC polyanas asking “why?”, The HOUSE OF CARDS only grew higher. In Monday’s RANT, “TOO MANY TOPICS FOR A COMPREHENSIVE TITLE”, and yesterday’s “MANIPULATON GONE WILD”, I listed no less than a dozen new horrible headlines, and trust me there were many more that didn’t make the cut. In fact, each day I send myself emails with new “horrible headlines” to discuss in my next RANT, and frankly the emails are getting so long I am having trouble managing them. Right now, I have 12 such headlines below this text, and am afraid to look at my screen lest more pop up.
To summarize, as the world made one turn since my last RANT, here are some of the terrible economic, political, and social things that have occurred:
To start, more PPT rumor mongering, as well as potential insider trading at Morgan Stanley, which “leaked” positive quarters in the last half-hour of trading yesterday to push its stock up. AS IF ANYONE COULD CARE LESS WHAT THIS QUARTER’S FAKE ACCOUNTING EARNINGS ARE, AS OPPOSED TO ITS $175 BILLION OF DEBT AND $50 BILLION OF EXPOSURE TO FRENCH BANKS.
And if you don’t believe my thesis that MORE THAN 50% OF ALL STOCK TRADING IS GOVERNMENT COMPUTER PROGRAMS, than how does one explain a 600-point, two-day Dow rally based on NO NEWS in the face of these kind of statistics?
Not to mention some of the many “horrible headlines” from yesterday alone, such as the French government preparing a nationalization plan for its “Big Three” insolvent banks, which is only a matter of time…
…or the U.S. national debt rising $162 billion in just THREE DAYS…
…or the inevitable, all-out (and well-deserved) assault on the Obama administration’s Solyndra scandal. A drop in the bucket compared to the overall level of Washington/Wall Street corruption, but the perfect fodder for Republicans to spend the majority of their time pursuing while the nation crumbles. Perhaps they can get an impeachment a few weeks before an election Obama is destined to lose anyway…
…and what about the Arab Spring reaching kingpin Saudi Arabia, possibly a more significant event than a Euro collapse if radical Muslims take over. Did anyone notice that oil was up more than $4.00/barrel yesterday?…
…or how about France now limiting public gold sales of its citizens, as Austria did the week before?…
….not to mention PHYSICAL gold and silver sales WORLDWIDE…
But Alas, that was just YESTERDAY, so you can see what a difficult job I have trying to commentate about so many “horrible headlines”, ALL of which are MASSIVELY BULLISH for PMs and MASSIVELY BEARISH for everything else (except the QE’d T-Bond, until, of course, it eventually COLLAPSES).
Now, on to today, and then tomorrow, as the HOUSE OF CARDS grows and grows (think Tower of Babel).
OK, to start, the Bank of England left interest rates at 0.5% this morning and announced a new 75 billion pound QE program, or roughly $120 BILLION. Given that England’s economy is just one-seventh the size of America’s, their announcement is the equivalent of the Fed announcing an $840 BILLION QE3 program, which I ASSURE YOU is coming very, very soon. The banking system will go into MELT-DOWN phase by year-end, and MASSIVE QE is the ONLY weapon left in the Fed’s arsenal. Of course, that weapon is pointed right at the mirror, but why trifle over vagueries?
Similarly, the ECB left rates unchanged at the piddling level of 1.5%, only doing so because it is compromised in trying to maintain Germany’s support of the PIFIGS banking system. Irrespective, under the radar it, too, announced another 40 Billion Euro, or $55 BILLION QE program to buy ECB sovereign bonds, and per comments all over the tape this past week (including from Germany), is ready, willing, and able to save any and all banks with more PRINTED MONEY BAILOUTS.
Oh yeah, remember Dexia, the 16th largest bank in Europe? Yep, it will now officially be nationalized, wiping out the stock and yielding tens of billions (at least) of PRINTED MONEY bailouts, and more importantly, setting the precedent that new bailouts will be endorsed in essentially all cases. I wonder how that will sit with the “Occupy Wall Street” movement, which has now been ongoing for nearly three weeks and is GROWING in size as we speak.
And what about Greece, where thanks to the PPT Dow explosion the past two days, has suddenly been forgotten as it teeters closer to the edge of oblivion. I do not see how Greece CANNOT be defaulted, or devalued substantially, by the end of this MONTH, much less the end of the YEAR. And we know what happens when that “Daisy Chain to Hell” gets started. It looks like the people there aren’t too happy about the PROSPECTS for “austerity”; I can’t imagine how they’ll handle ACTUAL austerity, with HYPERINFLATION to boot.
And finally, on to TOMORROW, with yet another BLS UNEMPLOYMENT REPORT. Last month, with the FRAUDULENT Birth/Death model at +87,000 PHANTOM jobs, the BLS miraculously avoided a negative number with the suspiciously round ZERO print. This month is one of the only NEGATIVE Birth/Death model months, so let’s see how much government manipulation will be required to avoid a negative print. Of course, if it is negative, the PPT will try to goose the market on “hopes of QE3”, which is coming VERY SOON irrespective (it’s already here COVERTLY, but will eventually be announced OVERTLY).
Don’t let the Cartel scare you out of PROTECTING YOURSELF with GOLD, SILVER, and OTHER ITEMS OF REAL VALUE. The banking system will enter a new MELTDOWN PHASE no matter how hard TPTB fight it with QE and propaganda. The fiat currency system is the “currency” of the banking system, and will be DRAMATICALLY devalued as well, reducing living standards worldwide, but PARTICULARLY in the U.S. which has the furthest to fall.