Ranting Andy: Manipulation Statistics

RANTING ANDY – Take heart, PM investors.  Nothing EXCITING is going on in our sector, but we should be treated to a brief respite from DEATH STAR attacks while this PPT-inspired short-covering Dow rally soothes politicians, “analysts”, and the media, briefly diverting attention from the ONGOING, ACCELERATING collapse of the Western banking system and Main Street economy.  Remember, aside from a few glomming traders at henchman banks like Goldman Sachs and JP Morgan, the Cartel’s goal is NOT profit, but to SUPPRESS the PM markets and thus ensure they are not viewed as SAFE HAVENS during times of crisis.

I have written exhaustively of how the correlations between PMs and the broad market were non-existent or negative until the PM bull commenced in 2000, which not coincidentally was also when the stock and dollar bull markets ended.  Once the Dow and dollar commenced their seemingly terminal declines, it became necessary for the Cartel to maniacally manage the gold and silver bulls, and believe me it’s no coincidence that Robert Rubin’s “strong dollar policy” became a publicized White House goal in that same time frame.

The Cartel could not care less if gold rises to $2,000, or $5,000, or even $10,000, as long as it does so in an orderly manner, with no corresponding panic out of the dollar (or Euro, for that matter), or, of course, the Dow.  As long as it is PERCEIVED to be rising slowly, inflation is the FRIEND of Washington and Wall Street, as it helps them produce PROFITS and LOBBYING FUNDS while enabling its principals to remain in POWER.  It matters not if REAL inflation is dramatically higher than PUBLISHED statistics, as long as the public PERCEIVES things are “improving” and inflation is “tame.”  The Cartel would be happy to trade a $5,000 gold price for a 25,000 point Dow, although at some point the perception of “reflation” turns nastily towards “hyperinflation”, so their preference, for lack of a better plan, is to continue capping gold’s annual rises to 15%-25% while making sure the Dow’s also steadily rises.  They have absolutely no plan for when that nasty perception change rears its ugly head, and it could happen any day.

Thus, as discussed  in Friday’s RANT, “THE STOCK MARKET DOESN’T MATTER”, the Dow is now nothing more than a Washington/Wall Street policy tool, rigged 24/5 to reduce volatility and ensure steady improvement, thus promoting the party line that “all is well” and “the economy is improving”, even if absolutely nothing occurring in the real world suggests that to be true. 

With 75%+ of all trading executed by HFT programs, the majority of which emanate from PPT henchman banks such as Goldman Sachs, rest assured the Dow will be viciously protected whenever it is in danger of plummeting (and thus eroding public CONFIDENCE), and boosted whenever Washington/Wall Street makes an “announcement” they hope to be PERCEIVED as “positive.”  That is why the Dow always surges when Obama or Bernanke speak, and why it is never allowed to tank in the face of bad news, be it economic (monthly NFP payroll reports, for example), political wrangling (for example, the debt ceiling debates), or social unrest (for example, terrorist attacks or riots). 

Conversely, that is why gold is attacked in each of these situations.  As a rule of thumb, any time the Cartel feels the urgent need to support the Dow, you can be sure they have an equal desire to attack gold and silver.

This morning is a perfect example of how the Cartel can temporarily take control of the stock market, and by proxy public PERCEPTION.  Last Tuesday, the Dow was on the verge of breaking through 10,000 amidst collapsing economic data and the imminent demise of the European Community.  In the six days hence, not a single thing has changed, particularly in Europe where Dexia (and two other European banks) are officially being nationalized, and a near record $345 billion has now been deposited with the ECB as a substitute for using interbank lending facilities, which expose depositors to bank failure risks.

http://www.zerohedge.com/news/two-more-european-banks-nationalized-following-dexias-example

http://www.zerohedge.com/news/meantime-belgium-bond-yields-jump-ecb-flight-safety-facility-usage-soars-highest-15-months

The only “positive news” to be found anywhere is that Germany and France continue to spout how they have “agreements” on how to save European banks, even though no details are ever given.  Of course, the only viable plan to “save banks” is to PRINT MONEY and give it to them, an ostensibly suicidal plan that can only lead to hyperinflation.  Funny how FRANCE is viewed as an ECB “leader” when its banks are the most exposed to soured sovereign loans from Greece, Italy, and other deadbeat nations.  Having faith in France’s ability to save banks makes as much sense as having faith in the Marlboro Man’s ability to cure lung cancer!

http://www.zerohedge.com/news/guest-post-uncredible-dog-and-pony-show-merkel-and-sarkozy

This Merkel/Sarkozy “dog and pony show”, as described by ZeroHedge, can only go on for so long before they need to back up the rhetoric with a MAJOR QE announcement.  In other words, they’ll at some point, SOONER rather than later, need to fish or cut bait, given that the European banking system is collapsing right under their noses.  The U.S. PPT-inspired short covering Dow rally is the only thing that has gotten them this far, but how much time will they really have? 

That is the question, and my answer is NOT LONG.

Thanks to a combination of MANIPULATION and GLOBALIZATION, world stock markets are now highly correlated, with the Dow the LINCHPING of ALL global efforts to improve public sentiment.  ALL global stock market declines mysteriously end in New York trading hours, and ALL global stock market rallies are led by the Dow, no matter how nonsensical.  That is your PPT in action, a group capable of creating 1,000 point Dow rallies in a week when absolutely ZERO positive developments emerge.

As for the market rigging mechanics themselves, the most valuable TOOL the Cartel/PPT has is its ability to create excessive VOLATILITY in key markets, thus making them SCARY to trade and DANGEROUS to take major positions in.  The current PPT-led Dow rally was not only performed to “restore confidence” in the U.S. economy and European banking system, but to ATTACK the shorts (particularly in dying stocks like MS) and render them TERRIFIED to take another stab at shorting.  Conversely, this year’s vicious Cartel ATTACKS on gold, silver, and PM shares in January, March, May, and September are not only planned to quell EXCITEMENT in Precious Metals, but to DESTROY speculative longs and engender FEAR of investing in the sector.

And that is EXACTLY what they have done for the past decade, where I estimate 95% of all PM investors have lost money thanks to the non-stop, counterintuitive WATERFALL DECLINES and steady, unrelenting naked shorting of GLD, SLV, and large-cap mining shares.  These attacks have been particularly virulent in recent years, which should come as no surprise given that the Cartel clearly must step up its suppressive efforts just to DELAY the inevitable gold and silver MANIAS that so terrifies them.  These stepped up efforts have been the primary focus of my RANTS this past year, starting with “D-DAY” on November 9, 2010, and accelerating throughout 2011 via the usual daily tortures plus new, intensified “attack formations” such as the SUNDAY NIGHT PAPER SILVER MASSACRE in May and last month’s OPERATION PM ANNIHILATION (exemplified by constant DEATH STAR attacks), just as gold and silver appeared on the verge of finally breaking the Cartel’s chains.

To prove this point, I did a statistical analysis this morning to compare the downside volatility of the Dow with GLD, SLV, and the HUI index.  Essentially, I compared data from the past three years to determine how often the PM sector “plunged” compared to the Dow.  Before I show the volatility data, I figured I’d first show how the four markets have performed over this period.  As you can see, the Dow has underperformed silver, gold, AND the HUI over the past three years, AS IT SHOULD given that the U.S. economy has rapidly deteriorated while the fundamentals for gold and silver have exponentially improved.

 

Silver

Gold

HUI

DJIA

2009

42%

23%

24%

26%

2010

72%

23%

35%

18%

2011

1%

15%

-8%

-4%

Average

38%

20%

17%

13%

A normal investment analyst would expect a higher degree of volatility in the most vulnerable sectors, particularly in today’s world where economic stability is deteriorating and “black swan potential” omnipresent.  Of course, nothing is “normal” in today’s 100% rigged markets, and I’m sure my readers will not be surprised at the below results.  Still, for those on the fence about manipulation, I think it will be painfully clear how forceful the PPT/Cartel efforts are to make the Dow a “desirable” place to invest, and conversely, PMs “undesirable.”

First, I calculated the number of days GLD, SLV, the HUI, and the Dow declined by more than 1% from their previous day’s close in intraday trading, and then 2%, 3%, 4%, and 5%.  There are many ways to measure the aforementioned “plunges”, but I figured this method best characterizes the downside volatility I am referring to.  Obviously, on a NET basis, gold, silver, and the HUI have recovered from these attacks, but it is the terrifying intraday WATERFALL declines that scare people away from the sector, so that is what I focused my analysis on.

The upper tables depict the NUMBER OF DAYS these securities fell by AT LEAST these percentages, and the lower tables the PERCENTAGE OF TRADING DAYS.  There is some double-counting involved, as if an index falls by 5%, it shows up in that day’s statistics for declines of 1%, 2%, 3%, 4%, and 5%.  However, as this methodology is applied to all four categories uniformly, it is statistically consistent.

As you can see, despite outperforming the Dow over the past three years, the NUMBER of vicious plunges in silver and the HUI is DRAMATICALLY higher than the Dow, to the point of being comical.  Sure the Dow is allowed to fall by 1% within the normal bell curve distribution of market activity, but 1% is the absolute PPT cutoff point for Dow losses on NEARLY ALL days. 

The only mildly surprising statistic is that GOLD appears to have LESS volatility than the Dow, a powerful statement given how much effort is made to negate its 6,000-year old SAFE HAVEN STATUS.  Of course, that is why SILVER and the HUI are so viciously attacked, to make sure that the NET INVESTMENT EXPERIENCE of PM investors is negative.

The beginning of  2009 coincided with the tail end of GLOBAL FINANCIAL MELTDOWN I, when fear of a total system collapse was thick in the air.  Gold actually showed HALF the downside volatility of the Dow, as described above, yet amazingly silver and the HUI were DRAMATICALLY weaker.  I mean – GEEZ – while gold was the strongest asset in the market, silver had twice as many 3% plunges as the Dow, and the HUI four times as many!

 

GLD

SLV

HUI

DJIA

2009 1% drops

85

127

152

136

2009 2% drops

29

75

118

54

2009 3% drops

11

41

75

21

2009 4% drops

2

17

44

8

2009 5% drops

1

9

26

2

 

GLD

SLV

HUI

DJIA

2009 1% drops

34%

50%

60%

54%

2009 2% drops

12%

30%

47%

21%

2009 3% drops

4%

16%

30%

8%

2009 4% drops

1%

7%

17%

3%

2009 5% drops

0%

4%

10%

1%

In 2010, a year of recovery for ALL asset classes thanks to literally TRILLIONS of freshly printed fiat currencies, gold had twice as many 3% intraday declines as the Dow, silver five times as many, and the HUI six times as many.  And again, notice that the PPT has no problem letting the Dow fall by 1% intraday, it is BEYOND 1% that they so violently protect its value.

 

GLD

SLV

HUI

DJIA

2010 1% drops

62

103

138

91

2010 2% drops

13

52

64

23

2010 3% drops

11

26

29

6

2010 4% drops

2

13

15

1

2010 5% drops

1

7

6

1

 

GLD

SLV

HUI

DJIA

2010 1% drops

25%

41%

55%

36%

2010 2% drops

5%

21%

25%

9%

2010 3% drops

4%

10%

12%

2%

2010 4% drops

1%

5%

6%

0%

2010 5% drops

0%

3%

2%

0%

Finally, the data for 2011, a year of continued global QE and collapsing banks and currencies.  Amidst a similar economic crisis as in 2009, gold is again displaying volatility LESS THAN the Dow.  Moreover, proving the point that PMs are CONTROLLED in ALL market environments, be it BEARISH TIMES such as early 2009 or mid-2011, or BULLISH TIMES such as late 2009 through early 2011, silver and the HUI have once again been attacked viciously to make sure the NET investment experience of PM investors is negative.

Just think how crazy it is that silver is UP 1% in 2011 (not including today’s gains), yet has had an intraday plunge of AT LEAST 2% on ONE-THIRD of ALL trading days, and a plunge of AT LEAST 3% on ONE-FIFTH.  Not only that, but with gold UP 17% for the year and the Dow barely down, the HUI has had an intraday plunge of AT LEAST 2% on 30% of all trading days, and AT LEAST 3% on 16%.

But don’t worry, PUBLIC, the Dow has only fallen 2% intraday on 14% of ALL trading days, and 3% intraday on just 3%!

 

GLD

SLV

HUI

DJIA

2011 1% drops

53

99

98

74

2011 2% drops

21

61

58

27

2011 3% drops

11

41

30

6

2011 4% drops

3

31

12

6

2011 5% drops

1

18

7

4

 

GLD

SLV

HUI

DJIA

2011 1% drops

28%

52%

51%

39%

2011 2% drops

11%

32%

30%

14%

2011 3% drops

6%

21%

16%

3%

2011 4% drops

2%

16%

6%

3%

2011 5% drops

1%

9%

4%

2%

 Hopefully, these statistics emphatically “bring it home” for anyone doubting the efforts of TPTB to make the Dow a “safe” place to invest and PMs a “dangerous” place.  The most encouraging conclusion is that gold itself actually shows LESS volatility than the Dow during periods of market FEAR, despite the fact that it is constantly under ATTACK by the Cartel. 

The dislocation between PM sector valuations and investment fundamentals, particularly for SILVER, has in my opinion NEVER been wider, which may be why PHYSICAL PREMIUMS have SOARED to near-record levels.  Do not let the PPT-inspired short-covering Dow rally lull you to sleep, as NOTHING has improved in the American or European banking systems in the past week, and NOTHING will in the coming weeks.  There is simply NO WAY another round of GLOBAL QE can have the same impact as in 2008, when it bought roughly 2½ years of positive PERCEPTION before the walls came crashing down again.

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3 Responses to Ranting Andy: Manipulation Statistics

  1. George Silver says:

    Silver physical “premiums” haven’t soared at BullionVault and GoldMoney.

    It’s only in the coin market.

    You can still buy Silver for just over the spot price at BullionVault.

    • bluecollargoldtieguy says:

      There seems to be a huge discrepancy in the understanding of the word ‘allocated’. Allocated storage implies ownership or no counter party risk. Unless you are, when discussing third party storage, issued a deed showing the refiner, purity, weight and serial number then you are subject to someone else saying it is theirs. Can you say legal SNAFU?! If you want a no counter party claims you must either A) hold it in your hand or B) have a deed on the individual bar which must be held in a trust. There are ways to buy where you don’t have to purchase 9 x 400oz bars to make it viable. There will always be a premium over spot when dealing in physical – unless we wind up with another gold standard where paper bills are as good as gold, literally. The Banksters aren’t done with us yet, so keep stacking, Brother.

  2. Ranting Andy says:

    As I have written, in SIZE premiums have not risen as much. For 99% of buyers, however, they are up HUGE.

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