Everything “They” Do Now Is About Market Manipulation
For some time I have made it known that the title of my article on the day the Fed announces QE4 and/or negative interest policy, will be “Ding Dong, the Fed is Dead.” However, in reality that day passed long ago – as exemplified by the Fed’s inaction on June 15th, after having bluffed throughout May of a “potential rate hike.” To that end, my audioblog the following day was titled “Central banks are dead”; and if I had to guess, “Cliff High’s” web bots are likely uncovering the keywords “central banks”; “dead”; “lack of credibility”; “ineffective”; and “impotent” at exponentially growing rates. Which is probably why he thinks silver will reach $38/oz by July 28th – a forecast I’m watching with great intrigue, as his credibility, too, is on the line. Then again, I last weekend “called” the Cartel’s imminent demise – for the most part, due to its tenuous, record-setting silver short position. Not to “make a name for myself,” but because 14 years of research tell me the end game of Precious Metal suppression is nigh – and with it, the “window” to protect yourself. I guess we’ll just have to wait and see; however, what I’ve seen thus far, in just the first day-plus of post-“call” action, tells me I could be on to something.
Back to the Fed, it occurred to me yesterday that I need to stop thinking “in the box” of what might occur in financial markets, given the historic manipulation that no longer simply describes, but defines them. It all started with the 1987 creation of the “President’s Working Group on Financial Markets” – i.e., the Plunge Protection Team, or PPT. However, as the collapse of history’s largest, most destructive fiat Ponzi scheme commenced at the turn of the century, and accelerated post-2008, market manipulation has clearly morphed from a “defensive” tool – as was the original intention of the President’s Group – to an offensive one, in which political, economic, and monetary policies, the world round, are now made with an eye as to how they will effect financial markets. And by that line of thinking, how to manipulate them simultaneously, to influence the perception of such policies. Which is exactly why Fed meetings and “minutes” releases have become Cartel “key attack events”; as well as Presidential and Fed Chairman speeches, economic data releases, and negative geopolitical events. And not just Precious Metals, but all markets; as sadly, the only way to “extend and pretend” the “life” of a zombie is with more tainted blood. As trust me, if stocks, bonds, Precious Metals, or countless other markets were allowed to trade freely for even a day, the whole, historic House of Cards would come tumbling down like the Tower of Babel.
To that end, I’m starting to revise my thinking as to whether the “Ding Dong, the Fed is Dead” day will ever come. Not because they won’t launch QE4 or institute NIRP – as trust me, to continue “extending and pretending,” they will be required to print more money in the coming year or two than the previous 15 combined. However, they may not need to do so officially, as so much of their monetization activities are now covert; and in the case of negative interest rates, financial markets will do it for them, by taking U.S. Treasury yields negative in anticipation of QE4 and NIRP – as yield-starved institutions see Treasuries’ positive yields (albeit, negative in real terms) as the best financial market arbitrage around. Let alone, because the US dollar, as the world’s most liquid currency, will continue to garner safe haven flows as the global economic collapse continues. “Safe,” that is, until the fiat cancer inevitably climbs to the top of the fiat totem pole, and kills the dollar itself.
Starting with the revelation that the Fed not only bailed out European banks with limitless, off balance sheet “swaps” during 2008, but provided $16 trillion of “secret loans” to any government, Central bank, or corporation with a pulse, the reality of Central banks new modus operandi started to become clear. In other words, why beg Congress for $700 billion TARP bailouts, when you can effect them covertly, by simply printing money and sending it where it’s “needed?” Such as, for instance, to Deutschebank in February, to staunch its initial equity death spiral by pretending it was buying back $5 billion of bonds – thus, “assuring” its solvency. Which, when the stock plunged through said lows last month, was clearly proven to NOT be the case. I mean, it’s no longer even speculation that Central banks are monetizing stocks, now that the Bank of Japan admits to being a top 10 holder of 90% of the Nikkei Index’s 225 stocks; the Swiss National Bank admits to being one of the world’s largest international equity investors; or, as learned yesterday, the People’s Bank of China will now be mobilizing pension funds to support the dying Shanghai stock market.
Here in the States, institutions have withdrawn capital from equity funds for 17 weeks running. And yet, amidst horrific political, economic, and geopolitical developments the world round; let alone, plunging corporate earnings; U.S. stock markets closed at an all-time high yesterday. In nominal terms, I might add, decidedly NOT real terms. Which was explained 100% by the article that inspired this article – published yesterday by Zero Hedge – titled “the mystery of who has been pushing stocks to all-time highs has been solved.” And the winner was…you guessed it…CENTRAL BANKS! In other words, my long-standing waffling as to whether stock markets will die in real terms only – or in nominal terms as well – is now resolved. As in my new, updated view, there is NO WAY the printing presses will ever allow a nominal crash, a la 1929, 1987, 2000, or 2008. No, as I espoused in Monday’s Audioblog, it is now a fait accompli that an unprecedented, global “hyperinflation supernova” is headed our way.
That said, it follows that the inevitable – and my updated view, imminent – break of the Precious Metals Cartel may well be the catalyst for the entire world to recognize this truism. And given that traders are clearly starting to smell “commercial” blood in the water – particularly in silver, given the essentially non-existent COMEX registered inventory – I believe a breakout of epic proportions is nigh. To wit, ever since Steve St. Angelo alerted us that silver is about to break above its 50-month moving average of $20.50/oz, I have pounded the table as to how important such a MASSIVE long-term technical breakout this would be – including yesterday, on my “$20.50 or bust” podcast with Kerry Lutz. And consequently, how MASSIVELY intense the Cartel’s efforts to “defend” this level have been, since July 3rd’s terrifying “Independence Eve” surge to $21/oz.
Fortunately for them, they were able to buy a tiny bit more time by “Cartel Heralding” it back down. And subsequently, building a trench-like “line in the sand,” which it has spent the past week staunchly defending.
Including today, when not once, but twice it raided the “gates” at $20.50…
Frankly, the manipulation – of Precious Metals, and all financial markets – has become so pervasive, it has essentially been “accepted” by the political, corporate, investment, and regulatory communities. Particularly, as so many are incentivized to avoid the inevitable, cataclysmic crash – and thus, are ill-positioned to handle it. Fortunately, we are NOT incentivized by fraud, and ARE positioned to handle what will unquestionably be the most spectacular financial collapse in global history. “They” may think manipulating markets will enable them to sustain the unsustainable; but I assure you, “Economic Mother Nature” will remain undefeated. In my view, with a knockout blow that will be as imminent, particularly in Precious Metals, led by silver – as it is inevitable.
P.S. WOW! WOW! WOW! Literally, as I was about to hit send, the following quote came over the wires, from a speech given as we speak by Cleveland Fed President Loretta Mester, following her mentor Ben Bernanke’s weekend trip to Japan, in which he “helped” the Bank of Japan to commence its first “helicopter money” policy…
“So it’s my view that [helicopter money] would be sort of the next step if we ever found ourselves in a situation where we wanted to be more accommodative.”
Game, set, match!
Andrew ("Andy") Hoffman, CFA joined Miles Franklin, one of America's oldest, largest bullion dealers, as Media Director in October 2011. For a decade, he was a US-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005. Since 2002, his focus has been entirely on precious metals, and since 2006 has written free missives regarding gold, silver and macroeconomics. Prior to joining the company he spent five years working as an investor relations officer or consultant to numerous junior mining companies.