Toronto
broker and mining entrepreneur Michael Ballanger covers U.S. government
rigging of the stock and gold markets in his latest market letter on what he
thinks will be the "trade of the year" for 2015 -- a variant of
which he also thought would be the "trade of the year" for 2014 but
turned out to be only the trade of the first half of the year.
Ballanger
writes: "The zero-interest-rate-policy of the global central banks has
herded money from the bond market into the stock market both indirectly ('QE'
bond buying) and directly (central bank buying of stocks). The net result is
that historical securities analysis has to be thrown out the window because
even garbage stocks (like IBM) are supported by corporate buybacks fueled by
cheap and easy money.
"And how about interventions? All you need to do is take a glance at the
chart of the S&P 500. Notice how the price was managed higher after the
major correction in late 2011. It was if someone drew the chart going out to
2015 and told the New York Fed's trading desk to 'make it so.' ...
"Despite
the greatest physical offtake of the metal in history, the U.S.
dollar-denominated price of gold declined. The interventions began at the
all-important $1,525 support level in 2013 when unnaturally large amounts of
gold futures ('synthetic gold') were dumped into the Comex with zero regard
for 'best price' and total regard for the $1,525 support level being
shattered. These interventions have occurred at every critical chart point in
the same way that every decline in the SPY was rejected at major price points
(a decline of 10 percent or more)."
But as
their many interventions have failed to revive real economies around the
world and resource price declines are beginning to risk insolvency for bank
loan portfolios, Ballanger thinks that central banks will try reflating this
year by letting gold and silver off the mat.
For
whatever it may be worth, your secretary/treasurer would add that shortages
of real metal, which are likely to manifest themselves eventually under any
price-suppression system, also could induce a change in central bank policy,
just as shortages exploded the London Gold Pool price-suppression system of
the Western central banks in March 1968. But letting the monetary metals
function as mechanisms of currency devaluation always risks getting out of
hand, more so now than in 1968, since, unlike back then, there now is so much
more naked shorting of metal by central banks and their investment bank
agents. Back then gold price suppression was handled directly and openly by
Western central banks. These days, with price suppression conducted by
central banks surreptitiously and often indirectly, through intermediary
banks, rising metal prices in a free market could cause defaults by
institutions that are "too big to fail" and thereby cause contagion
eventually impugning central banking itself.
That
would argue for another option for central banks and the governments they
control: still more "financial repression," only this time
necessarily out in the open, not just the surreptitious kind undertaken now.
If there were such defaults or currency or capital controls imposed to limit
their consequences, even the Financial Times might have to report them, and
then there would be no more pretense of democracy and market economies. Awful
as that might be, at least then the world might know where it stood.
Well,
GATA really isn't in the prediction business. We're mainly in the
fact-finding business --
http://www.gata.org/taxonomy/term/21
-- but
we can enjoy the predictions drawn by others in part from GATA's work, so
with his kind permission, Ballanger's market letter, headlined "2015
Trade of the Year," is posted at GATA's Internet site in Word format
here --
http://www.gata.org/files/Ballanger2015TradeOfTheYear2.doc
-- and
in PDF format here:
http://www.gata.org/files/Ballanger2015TradeOfTheYear.pdf
