Central Banker Swap Lines Are Working; Saturday’s Analysis and Friday’s Podcast Thus Far On Target – Eric Dubin

TND Market Brief:  Eric Dubin

On Saturday, I published Swap Lines To Prevent Market Crash Next Week, But Major Pain Ahead.  Thus far, markets are unfolding within the bounds of what I was expecting given massive central bank intervention.  Mainstream media will continue to describe this week as painful, but that markets are eventually going to calm down.  Market action will be attributed to people settling down, not the primary catalyst being central bank liquidity swaps.  If there were no swaps and other market rescue actions, we’d be a heck of a lot lower today (and last Friday, when I started to see all the footprints of intervention).

The tamping down of volatility was nothing short of astounding last Friday.  It was a 10 alarm fire, and 50 stations responded!  Central bankers are not screwing around this time.  Lehman was allowed to die.  It was a calculated decision.  Since that religious experience, central bankers have taken the lesson that they must do “whatever it takes,” to quote Goldman Sachs boy, Mario Draghi, head of the ECB.

Central banks are doing whatever it takes, right now, and the majority of money under management is being managed by people that continue to believe the system will hold.  We are still in the “slow burn” phase, to use Catherine Austin Fitts’ wonderfully appropriate term.  That will change, but we are not at that phase shift just yet, and the unfolding bear market will continue to be a process event for many months to come, not a Oct-Nov, 2008 style event.  A 2008 phase shift is in our future, however.  That’s a huge topic for another day.

The cartel has been able to keep a lid on gold today.  But this is temporary and they are not getting any meaningful traction to the downside.  Last Friday’s orgy of new contract issuance on the COMEX to absorb the explosion in long interest was truly astounding.  Gold would have probably been up over $200 if new longs were not finding it so easy to buy newly issued contracts versus bidding up existing contracts.  But don’t tell that to the most dogmatic among people that deny the existence of gold manipulation, what with their pretzel-logic distortions the fact that for every long, there’s a short on the other side of the trade.  But when new contracts are issued, that absorbs demand, courtesy of the gold cartel and the bullion banks.