“If you want to talk about how utterly insane our markets have become and how schizophrenic the trading action has mutated into, look no further than the last two days of trading this very week.
“On Thursday (6/28/12), silver was mauled by hedge fund selling tied to both long liquidation and brand new fresh short selling. The result? Silver hit a 52 week low! One day later - it rockets to close 5% higher in a single day. This is the type of madness that has been unleashed by Central Bank interference into the market place which is the SOLE CAUSE of this volatility.”
“Hedge Funds Continue to Pummel Silver – Until Today”
Dan Norcini, http://traderdannorcini.blogspot.com, 6/29/12
And it is not just in the Silver markets that Central Bank (and their Mega-Bank Factota The Cartel [see Note 2] as we characterize it) Interference is the Main Mover. Years ago we, and a few others before us, said that Mega-Bank Intervention was a Main Mover in many Markets, including, periodically, the Precious Metals Markets. And so it remains today.
Even the New York Times has just, decades late, concluded,
“If these (LIBOR –Ed.) rates are rigged, markets are rigged – against bank customers, like everyday borrowers, and against parties on the other side of a bank’s derivatives deals like pension funds.”
“Rigged Rates, Rigged Markets,” New York Times, 7/3/12
To facilitate this Market Rigging and to help its Mega-Bank clients, the Central banks are implementing a Policy of QE. Jim Sinclair (correctly) forecast that “Q.E. to Infinity” would be the Rule Going Forward, all to help the Mega-Banks, their Central banks controllers and/or Owners. Important to note is what the Euro-leaders just did as June 2012 closed:
- They promised the ECB would print money and give it directly to the Eurozone Banks (e.g. via buying their Toxic Debt). And not, note well, to Eurozone citizens for investment or tax relief, or anything else.
- In a further move to protect The Banks, it was agreed the new loans (from the ESM) would not be given seniority further protecting the Banks’ private creditors. Intrepid Finland has objected.
- The ECB will soon take over the Supervision (read Control) of Banks in formerly Sovereign Nations.
In sum, Sovereign Nations continue to cede sovereignty to the Globalist Mega-Bankers while the continuing QE to Infinity. Those QE Injections continue to rob their Citizens of the Purchasing Power of their Fiat Currencies while the Major Beneficiaries are The Banks.
Attorney Ellen Brown sums it up well,
“The ESM is now a permanent bailout fund for private banks, a sort of permanent "welfare for the rich". There is no ceiling set on the obligations to be underwritten by the taxpayers, no room to negotiate, and no recourse in court. Its daunting provisions were summarized in a December 2011 youtube video originally posted in German, titled ‘The shocking truth of the pending EU collapse!’:
‘The treaty establishes a new intergovernmental organization to which we are required to transfer unlimited assets within seven days if it so requests, an organization that can sue us but is immune from all forms of prosecution and whose managers enjoy the same immunity. There are no independent reviewers and no existing laws apply. Governments cannot take action against it. Europe's national budgets [are] in the hands of one single unelected intergovernmental organization.’
“There is reason to suspect that ‘Super Mario’ Monti may be representing interests other than those of his country. He rose to power in Italy last November in what critics called a ‘coup d'etat engineered by bankers and the European Union’. He was not elected but stepped in after Prime Minister Silvio Berlusconi resigned under duress.
“Monti is not only an ‘international advisor’ to Goldman Sachs, one of the world's most powerful financial firms but a leader in the Bilderberg Group and the Trilateral Commission (see below). In an article in The New American, Alex Newman calls these clandestine groups ‘two of the most influential cabals in existence today’. Monti is listed as a member of the steering committee on the official Bilderberg website and as the European Group chairman on the Trilateral Commission website.”
“Government by the Banks, for the Banks: The ESM Coup D’Etat in Europe”
Ellen Brown, WebofDebt.com, 7/1/2012
Of course, all this Money Printing/Digitizing continues to erode the Purchasing Power (and thus the value of Savings) of the citizenry. For example, in the 100 years of the private for-profit U.S. Fed’s existence, the Purchasing Power of the $US has diminished by over 95%!
So what has acted as a Wealth Preserver and Profit Reservoir over, say, the past decade? Well, NOT the value of Equities-in-general which, if Real Inflation (Note 1 regarding Shadowstats) is factored in have actually lost Purchasing Power over the last decade. Well, Gold. Just consider where Gold has ended the year, each year, since 2000.
2000 -- $273.60
2001 -- $279.00
2002 -- $348.20
2003 -- $416.10
2004 -- $438.40
2005 -- $518.90
2006 -- $638.00
2007 -- $838.00
2008 -- $889.00
2009 -- $1,096.50
2010 -- $1,421.40
2011 -- $1,566.80
2012 -- ?
Holding Gold in the face of increasing Money Printing/Digitizing is certainly one way to Gain going forward.
A related consideration is that QE-enabled Money Printing and Increasing Debt is threatening not only the Eurozone, consider:
“The explicit US national debt has risen by $4.39 trillion since Obama took office. And the total unofficial plus official debt (the accrual deficit of the United States) has skyrocketed by approximately $5 trillion annually.
“Put simply, plunging [return on investment from energy inputs] spells bankruptcy for the US government, but politicians are busily making the situation worse by contracting unpayable debt. In effect, Obama is doing to the United States what a generation of profligate politicians in Athens did for Greece.” (emphasis added)
James Davidson, 6/2012
In the short run, periodic injections of QE are the Main Mover of most Markets as the Massive Equities Markets Rally (generated by word of more Eurozone QE) of Friday, June 29th proved. But these QE engendered Rallies are increasingly less enduring, for several reasons. The main one is that ever-more-QE is Fundamentally Destructive over the mid and long-term – piling more debt on unpayable debt.
Consider Jim Willie’s analysis of the effect of QE, including the $US Swap Arrangement which the private for-profit U.S. Fed established to help Eurozone Banks.
“From December 2011 to April 2012, the Dollar Swap Facility released $3.2 trillion for European bank aid. It accomplished nothing, since their banks are a field of Greek-like ruins still. The money went into the LTRO funds, the ill-planned knucklehead Draghi plan. The banks bought overpriced government bonds, lifted in value by the Euro Central Bank itself. The same banks are worse off than before the application of LTRO funds. What irony! Draghi has no credibility left. Harken back to 2009 when a similar Dollar Swap Facility released over $1 trillion to the same European banks. It solved nothing either. The tragedy is accentuated by the realization that central bank clowns learn nothing, attempt the same vacant solutions, only to repeat their errors at a later date. The public seems incapable to recall the past failures, holding out hope. Now we hear of a possible $2 trillion plan to recapitalize the European banking system. In Weimar terms, this is pocket change. Counting the US fixes, the London fixes, and the previous DSFacility, the total is closer to $6 trillion already wasted in a massive debasement series of whiffs. So another $2 trillion is pissing in the wind of Weimar flatulence, the stench to be noted by next year.
“When the paper mache artisans start talking about a total of $10 to $12 trillion for Western Europe, the United Kingdom, and the United States combined, then they will be seriously planning a banking system recapitalization. They prefer the futile incremental approach, with the proviso of not liquidating the big banks. The hilarious factor is that even $10 trillion would not work, but it would indeed buy another couple years, maybe three years. So if an alcoholic has the Delirious Tremens, the consensus stupidity calls for feeding him a higher proof Jack Daniels whisky and from a vat for intravenous application, which will revive him, when a mere few liters would not. It is utterly amazing that Bernanke and Draghi are given any respect at all. This is utterly absurd, since the wrong-footed solution is going to be simply higher volume of what does not succeed in reviving the system. WHEN THEY START TALKING ABOUT BIG BANK LIQUIDATION AND A NEW GOLD-BACKED MONETARY SYSTEM, THEN EXPECT SOME TRACTION. But such a plan would involve plowing the system under and removing the bankers from power. Until then, plan for a bigger killing field. The great tragedy is that the killing field is the entire Western monetary system, attached at the hip to the Western Economic system. Witness the gradual collapse.”
“Gold: the Last Asset Standing, & Outline on Collapse End Game”
Jim Willie, goldenjackass.com, 6/29/2012
Clearly, Massive Monetary creation and Multi-Trillion $ Injections into/by/for The Banks is a Main Economic and Markets Mover going forward, not ostensibly (the Fictitious) Improvement in Business or Economic Health. For example, do not believe all the poppycock about the health of Corporations which according to the controlled MSM have “lots of cash.”
“$$$ HALF A $TRILLION VANISHED FROM CORPORATE BALANCE SHEETS. THE HOKUM ABOUT MOUNTAINS OF CORPORATE CASH ON THE SIDELINES TO PUMP PRIME THE USECONOMY WAS FALSE. JUST ANOTHER LINK IN THE CHAIN OF FALSE PUBLIC ADDRESSES MESSAGES OF MERE PABLUM. $$$
“The liquid assets (including cash) held by US non-financial corporations was supposed to lift the USEconomy. It was supposed to be infused as a gigantic healthy boost of capital into the system. It never existed, at least nowhere as claimed in magnitude. Once again, the revision after deception sheds the harsh light of reality. The volume of loose corporate cash fell by half a $trillion compared to end 2011, from $2.23 trillion to $1.74 trillion dollars. My belief is that much of that admitted money is tied up in overpriced bonds of many varieties, including USTreasury Bonds and USAgency Mortgage Bonds, the stuff of commercial paper. Barry Ritholtz wrote, ‘Did this money actually go missing? From the Fed report, it’s not clear whether or not this based on a significant accounting revision from recent quarters, meaning it never was really there in the first place. Alternatively, the money actually was spent, and corporate America added an additional half a trillion dollars in economic activity. I suspect it’s the former.’ See the Ritholtz article.
“With a 90% likelihood in practical interpretation of forward views, suspect the more dire outlook. US corporations are not sitting on as much cash as previously reported, just another nail in the recovery coffin or vacant cupboard. The long string of nonsensical false billboards is an embarrassment to the US political & banking machine (hardly separable). Consider the annual Second Half Recovery already discarded this year, the banking system rescue aid packages that solve nothing, the loudspeaker claim that USTreasury Bonds are a safe haven…”
“Hat Trick Letter Issue #99”
Of course all this Monetary Inflation is already Price Inflationary. Real U.S. Inflation is e.g. 9.3% per shadowstats.com (Note 1) which calculates the statistics as they were calculated in the 1980s before Official Statistics became seriously politicized. But there is one collateral benefit to being aware that Official Numbers are Bogus. Deepcaster’s tracking of Interventionals and Real Numbers has provided an “Edge” thus facilitating Profitable Recommendations such as those in Note 3 below.
In sum, it is more important than ever to track, the ongoing and Prospective Market Interventionals and the Trend of the Real Numbers. Those are essential to Gaining from the Main Markets Mover going forward.
July 6, 2012