First, I’m going to explain something I’ve learned from watching Precious
Metal markets, tick for tick, for the past 14½ years – back to times when the
dissolution of the Euro, hyperinflation, or a collapse of the global banking
system weren’t even considered, much less a strong
possibility. Back then, financial markets were, by my estimation,
roughly 60% “freely traded” – but significantly less so for Precious Metals;
compared to, perhaps, 25% today, on all fronts. To that end, I have not
only compiled reams of empirical data about market movements, but practical
experience of what drove them. Which is why I respectfully
disagree with one of our industry’s best analysts, regarding his view of
drives markets today – i.e., Central banks algorithms, causing the HFT
computers that comprise more than 80% of trading to move them like puppets on
a string.
Generally speaking, I agree with his premises. However, to say
Central banks are not the primary mover of markets – as opposed to
mere facilitators – doesn’t makes sense, as the vast majority of HFT
volume emanates from entities like Goldman Sachs and JP Morgan. Which,
at the least, are government “affiliates”; and more likely, full-fledged
“partners.” How else could their “trading desks” be profitable
essentially every day – compared to the historical trading average of roughly
half the time – if they weren’t fully aware of what algorithms were coming;
as opposed to simply reacting to market movements? Not to mention, the
fact that the “dead ringer” algorithm supporting the “Dow Jones Propaganda
Average” – which I first wrote of four
years ago – occurs at exactly the 10:00 AM EST time stamp of the Fed’s
“open market operations.” And oh yeah, the fact that countless Central
banks – including the Banks of Japan, China, and Switzerland – are now overtly
monetizing stocks. Moreover, saying something as black and white
as markets are moved entirely by the dollar/yen, VIX, or other “algo du
jour,” ignores the subtleties of market rigging I have carefully watched,
every second of every day, since 2002.
Frankly, I could care less about the stock market – as ultimately, I know
it will be devalued by either a crash or hyperinflation; resulting in
dramatic declines in real terms, relative to physical Precious Metals.
However, I still watch its each and every move, to gauge its relationship to
other markets; most importantly, Precious Metals. And if there’s one
thing I’ve learned over the years, it’s that such manipulative algorithms
never work “two ways.” In other words, it’s completely fallacious to
say gold and the Dow trade opposite to them, certainly in terms of
scope. To wit, I have watched dozens of instances of the Dow rocketing
higher on the most minute decline in the yen/dollar exchange rate; but barely
any instances of PMs surging when the yen/dollar rises. And
conversely, Dow declines attributed to yen/dollar rises never
seem to be as large as PM declines attributed to yen/dollar declines.
And then there’s the equally large amount of times when such “rules” are
completely ignored, with the Dow surging despite no material movement – or at
times, a decline – in the yen/dollar exchange rate. Whilst
conversely, gold, often doesn’t rise at all when the yen/dollar rises; but
oftentimes, declines despite the yen/dollar rising.
In other words, such algos are used more to promulgate propaganda
regarding what moves markets than anything else, particularly paper Precious
Metals. In a nutshell, the government has created numerous algorithms
to generate strong – and importantly, uncapped – stock buying; and
equally strong declines in Precious Metals, with all related strength
capped. Basically, the term I “coined” years ago to describe how such
algorithms function is “gold is whatever is down, whilst stocks are whatever
is up.” Which essentially means, that on any given day, gold “trading”
is tied to whatever the powers that be want the propaganda to pick up on – be
it rising (or falling) oil prices; Deutschebank stock; the VIX; dollar/yen;
or anything else they deem in their best manipulative interest. The point
being, that you shouldn’t worry so much about what the yen/dollar’s near-term
future might be; or the VIX; oil prices; or otherwise. As trust me, the
frustration, angst, and rage you are feeling about what the Cartel has done
over these past two weeks will soon pass – to be replaced by excitement;
hope; and eventually, the financial gains that must come your way,
for having chosen wisely in the final currency war. Simply focus on the
fundamentals; and buy physical, not paper, gold and silver;
and you’ll be fine – as unquestionably, the bull market has
returned. And by the way, given that, according to reports last night,
Japan’s upcoming “helicopter money” announcement may not be $100 billion, but
$200 billion, pray tell why Precious Metals should “fear” a falling
yen/dollar, should it subsequently result?
Speaking of insane, my head is on the verge of exploding, watching the
dramatic explosion of terrifying political, economic, and social events
encircling the planet – in this, the terminal stage of history’s largest;
most destructive; and for the first time, global; fiat Ponzi
scheme. From the unquestionably staged Turkish coup attempt – which in
its wake, is enabling Erdogan to carry out a Stalin-like purge of all
perceived threats; to Japanese helicopter money; borderline criminal
“non-GAAP” accounting of U.S. corporate earnings; Obamacare’s unfathomably
destructive power; the utter lunacy – care of the aforementioned, maniacal
interventions – of financial market valuations; and the explosion of debt,
of all kinds, as the insidious ramifications of zero and negative interest
rate policy work their destructive power, on a world already on the verge of
financial collapse.
To that end, this morning’s ECB meeting is exposing everything I warned of
in April’s “myth
of QE to infinity”; of how Central banks’ fallibility is being exposed,
front and center, regarding the fact that even open-ended
monetization schemes have their limits. And not just due to the
economic implosion, hyperinflation, social revolutions, and geopolitical
conflicts they engender. But simply speaking, when you’ve bought all
there is to buy, there’s nothing left to monetize. And when that
happens – which shortly, both the ECB and Bank of Japan are about to realize
– the “Wile E. Coyote” moment, when the world realizes the jig is up, will
rapidly descend on financial markets and political regimes alike.
In a nutshell, the ECB’s insane, open-ended €80 billion/month QE program –
just like the Fed’s QE3, which it was modeled after; is running out of bonds
to buy – just like QE3, in which more than half of U.S. mortgage-backed bonds
were monetized, and a third of U.S. Treasuries. However, in the ECB’s
case, the situation is far direr – as not only is the EU on the verge of
collapse as we speak, but rates are so negative, the ECB has extremely
limited options to keep the bond Ponzi going. Which is probably why the
Euro is so close to a major technical breakdown; enroute first, to its
all-time low, well below dollar parity; and eventually, its complete
dissolution.
At the start of his press conference, Draghi vehemently expressed his
“readiness, willingness, and ability” to “use all available tools” to LOL,
“save” the Euro. However, four years after he initially said he’d do
“whatever it takes…and believe me, it will be enough,” the Euro is further
from being “saved” as any time in its pathetic, 17-year history. And
considering Draghi’s options for continuing history’s largest monetization
Ponzi – from lowering rates below the current -0.4%; to proclaiming all
bonds – government, corporate, and junk alike – to be eligible; to
ignoring limits on specific countries’ holdings; it couldn’t be clearer just
how close we are to the entire world realizing the jig is up. And when
it does, Central banks’ vast holdings of historically overvalued bonds will
crash like Wile E. Coyote with an Acme Anvil tied to his tail. As will
the currencies they are denominated in – against real items of value,
like physical gold, silver, and platinum.
P.S. Just as I was about to hit “send,” Draghi’s press conference
ended, with what may well be not just a prophetic statement of the hyperinflation
to come, but the catalyst to end the recent, egregious Cartel paper
raids. To wit, when asked about the ECB’s plans for collapsing European
banks, he espoused, counter to current ECB rules prohibiting bailouts, that “public
backstop is a measure that would be very useful, and should be agreed with
the Commission according to the existing rules.”
Yay! More money printing and bailouts. That’ll work!
