Category Archives: Financial Markets

SoT Market Update: As The U.S. Tries To Destroy The World, It Will Destroy Itself

Except for its western hemisphere lap-dogs and chattel, the U.S. “defense” strategy has been the implementation of a highly “offensive” (in both senses of the word here) policy of military and economic antagonism. What unfolding of events in Syria and Venezuela are just two examples.

As the U.S. Ponzi scheme continues to unravel, the Government’s attempt to control the markets intensifies. The primary stock indices (Dow, S&P 500, Naz), which are currently more overvalued than at any point in U.S. history, seem impervious to any sort of sell-off, no matter how atrocious the economic news. The stock market has been “miraculously” bullet-proof from the most recent Fed official threats to hike interest rates in two weeks.

Conversely, the price of gold, has been subjected to paper gold price slams nearly every day since the Federal Reserve’s Club of Thespians released their latest sequel to “Game Of Rate Hikes.” It’s like “Chuckie” in the “Child’s Play” series – the storyline just won’t die.

The current manipulated pullback has taken gold down about 7% since the “Game of Rate Hikes” was released about two weeks ago. India has been dormant as a gold buyer since March 1st, activity seems to be stirring based on the latest ex-import duty premiums. Smuggling into India has picked up considerably this week – LINK. Similarly, buying in China per data from the Shanghai Gold Exchange has been stimulated by the lower price of gold.   In fact, deliveries onto the SGE have surged this week and the open interest now sits at 720 tonnes, which is likely a record.

The only result that will end up being accomplished by the U.S. intervention in the gold market will be a further transfer of real wealth from the U.S. populace to the Chinese. Thank you may I have another? Rory Hall and I discuss these issues in our latest “Market Update” series from the The Shadow of Truth:

John Embry: An Explosive Move In Silver Will Dwarf The Move In The Late 1970’s

I  can make the case, Dave, gold and silver may never have been cheaper than they are at the bottom in this cycle compared to the amount of money, and particularly debt, in the world. So, to me, this move we’ve had so far this year is, it’s like a rounding error. – John Embry, Shadow of Truth

It’s becoming more apparent on a daily basis that the Federal Reserve is attempting to exert complete control over the markets.  The Federal Reserve operates from its NY Fed trading base in conjunction with the  U.S. Treasury’s Exchange Stabilization Fund, which operates in the same building as the NY Fed.   So much for the notion that the Fed operates independently of the Government.

But it’s not just the markets. It’s becoming more apparent to more people that same cadre of insider elitists who are rigging the stock market also do their best to rig the political process.  This is exemplified by the fact that the SEC announced yesterday that it is investigating the accounting methods of Alibaba.   This is eyebrow-raising because it’s quite obvious that Alibaba’s chief competitor, Amazon.com, has been engaging in fraudulent accounting practices for over two decades.

Oh, I forgot to mention that Amazon CEO Jeff Bezos owns the Washington Post.  This is the perfect political hand grenade with which to threaten the DC politicians and political appointees if they were to start probing around Bezos and his enormous business Ponzi schemes.

This insider DC establishment did its best to derail Trump’s attempt at assuming the Oval Office throne.  But the fact that Trump set a record for Primary popular votes  made it next to impossible for the elitists to plausibly justify perverting the Republican convention nomination process with one of its lap-dogs like Romney or Rubio.

On the other hand, it looks like Hillary’s three decade crime spree is finally starting catch up to her. Something happened behind “the scenes,” because all of a sudden the State Department’s Inspector General decided that Hillary broke the law.  This is the first time in Hillary’s history that any official entity has held her accountable for a list of crimes that date back to her days as an attorney and the State of Arkansas’ “First Lady” (I use the term “Lady” very loosely).    Even MSNBC was on her case today.   Some group of unidentified insiders who operate at a level above Hillary have decided she’s not the one  to be their Oval Office pawn.

Meanwhile, the precious metals sector has sprung back to life after a 5-year period of an unabated manipulated price-thrashing of gold and silver.   Despite Goldman Sach’s incessant plea for $800 gold, the yellow dog ran from $1050 in mid-December to just over $1300 by the end of April.  A 24% rise in 4 1/2 months.  In the same period of time, silver ran up nearly 31%.  The mining stocks, per the HUI index, ran up just over 130% since January 19.   If the general stock market or any of the fast-moving sectors made moves like this, the meat with mouths on CNBC etc would be doing naked cartwheels on air every morning.

Rory Hall (The Daily Coin) and I hosted John Embry for a lively discussion of what is happening, why it’s happening and what might happen:

Physical Gold Is Money – Everything Else Is Someone Else’s Liability

When you own gold, it’s money that you own. Everything else circulating around here is currency – you don’t really own it. The cash you have in your pocket is Federal Reserve Notes [meaning you possess a liability of the Federal Reserve and your spending power is exposed to counterparty risk]. The money you have in your checking account is a liability of the bank where that money is deposited. But when you own physical gold, it’s money that you own. Your are not dependent on someone else’s ability to make good on that money when you want to spend it.   – James Turk on The Daily Coin

The U.S. populace has been methodically trained over the last 100 years, since the erection of the Federal Reserve, to believe that Federal Reserve Notes – otherwise known as U.S. dollars – represents a wealth asset.  But it’s just the opposite:  it’s a liability of the Federal Reserve backed by the “promise” of the U.S. Government.  How much value do you place in that “promise?”

Even more insidious is the notion that “money” in a checking account belongs to the person who made the deposit.  In fact, your money sitting in any bank account is no longer in your ownership.  You have ownership of an unsecured liability issued to you by the bank.  The bank takes  your money and “hypothecates” it – or lends it out.   If the bank loses that money and can’t honor its liability to you because enough loan counterparties defaulted and the bank is insolvent, you will never receive the full value of the bank’s debt obligation.  Welcome to the new world of bail-ins.

But gold in your possession does not have that problem.  Rory Hall of The Daily Coin interviewed James Turk about a new type of non-bank banking service called Bitgold.  He discusses the unmitigated advantages of using Bitgold vs. a traditional bank account.

I have moved U.S.Government electronic monopoly money from my checking account into my  Bitgold  account every day this week, including today. I don’t have the funds required to buy a 1oz. bullion coin everyday, but BitGold allows me to accumulate .9995% gold grams. This is bona fide allocated gold.  I look at this manipulated take-down of the gold price as a gift from the Fed because it enables me to purchase more Bitgold gold every day the dollar price of gold declines.  When the dollar price of gold moves back up, my Bitgold account will increase in value.  That does not happen with dollars sitting in a checking account.  They just sit there like a Pet Rock, earning no interest.  If the bank becomes insolvent, the Pet Rock has no value to me.

I want to make it clear that I’m not an affiliate or associated with Bitgold and do not get any ad revenues from Bitgold for the display link at the top (although I’m sure I could if I requested it). I just really believe in the service and I think anyone can benefit from moving their digital bank credits out of the global Central Banking system and in to Bitgold. I receive a 2% “bonus” if someone uses the links on this site to sign-up for Bitgold and everyone who opens a new account that is funded receives a 5% bonus.

I had an in-depth conversation with the CEO several weeks ago and when I find the time I am going to share my analysis of the with the subscribers of my Mining Stock and Short Seller Journals.

If you own gold, you have money – If you don’t own gold, you have a problem

The “Markets” Are A Total Farce: Stocks Pushed Up – Gold Pushed Down By The Fed

I described the other day what a circus the inter-FOMC meeting periods have become.   One by one Fed clowns appear to describe an economy at full employment and threaten us with another one-quarter of one percent Fed Funds rate hike. Since this process has started last Monday, the S&P 500 has been flat but gold has been taken down methodically  about $80, or 6.7%.   The mining stocks as represented by the HUI have been dropped 12% from their high last week.

Yesterday the circus took on a new dimension.  SF Fed John Williams was once again out promoting rate hikes this year and even more rate hikes next year – LINK.  St Louis Fed clown Bullard was out yesterday pontificating that low rates  for too long could be risky – LINK.  You don’t  say, James?  Is he referencing the nominal .25% Fed funds rate since  lat e 2008?  OR is he referencing the negative real interest rates since well before 2008?  To which measure of interest rates are you are you referencing, James?

They both made some insane assertions about “full employment” in the economy.  Does that mean that anyone who wants to be a bartender or barista can find gainful employment?  But what about the 38% of the population that is no longer counted as part of the labor force?   A large majority have given up looking for work because it’s easier and pays better to soak off the taxpayer via Social Security Disability, Welfare and Student Loans.

Everyone knows that the true unemployment rate is over 20%.   This is based on applying the way the Government calculated unemployment in 1980.  We still have the issue of data collection and “massaging.”  The economy is far from healthy and the flow of economic reports from private sector sources, including regional Feds, continue to reflect an economy that is deteriorating down the level of economic activity in 2009.

The Fed needs to promote the idea of rate hikes in order to show consistency in policy with its narrative of “full employment, tight labor market conditions and an improving economy.”  Just as important, it reinforces the Fed’s ability to manipulate the price of gold.

The source of frustration for many of us is that higher rates correlate with lower stock prices and higher gold prices.    Days like today in the markets are difficult to watch because it’s driven entirely by false propaganda and direct intervention in the market by the NY Fed/Exchange Stabilization Fund.

While days like today may be painful to watch, the truth is that since the Fed began bashing gold with rate-hike drivel starting last Monday, the S&P 500 has not moved higher despite days like today which make it feel like the stock market is poised to hit an all-time high.

When the Fed pushes down the price of gold with paper during NY Comex floor-trading hours, take advantage of it by buying some physical gold or silver.

I have moved U.S.Government electronic monopoly money from my checking account into my  Bitgold account every day this week.  I don’t have the funds required to buy a 1oz. bullion coin everyday, but  BitGold  allows me to accumulate .9995% gold grams. This is bona fide allocated gold.

I want to make it clear that I’m not an affiliate or associated with Bitgold and do not get any ad revenues from Bitgold for the display link at the top (although I’m sure I could if I requested it).  I just really believe in the service and I think anyone can benefit from moving their digital bank credits out of the global Central Banking system and in to Bitgold.  I receive a 2% “bonus” if someone uses the links on this site to sign-up for Bitgold and everyone who opens a new account that is funded receives a 5% bonus.

I had an in-depth conversation with the CEO several weeks ago and when I find the time I am going to share my analysis of the with the subscribers of my Mining Stock and Short Seller Journals.

SoT Market Update: Anti-Gold Propaganda

It comes as no surprise that a report on counterfeit gold coins hits the media right about the same time that several Fed officials are once again threatening the world with a gargantuan one-quarter of one percent nudge up in the Fed funds rate.   Both are targeted at throwing cold water on investor demand for gold and assisting the Fed with pushing the price of gold lower.   The entire U.S. propaganda apparatus has become Orwell on steroids.

Comex options expiration for June gold – the current “front-month” gold contract – is Wednesday. Typically this is a signal that the metals are going to be boomeranged lower temporarily.   In scanning the put/call open interest ladder, interestingly there’s a sizeable imbalance in which the there’s at least twice as many open puts are there are calls.  I can’t recall seeing that (although I’m sure it’s occurred), as typically it’s the other way around.  It will be interesting to see how this plays out.

Rory Hall (The Daily Coin) and I discussed the alleged “flood of fake gold/silver coins” hitting the market and where the stock market may be headed in our current Shadow of Truth Market Update:

Billions Are Being Transferred From The Taxpayers To Wall Street

I stated in 2003 that the insider elitists would hold up the system with printed money  long enough to wipe every last crumb of middle class wealth off the “table” and into their pockets.  If you don’t have enough cash laying around to buy your own Federal-level “elected” official, you are middle class.

It’s easy for Wall Street to get their share of the crumbs being swept off the table because it’s managed to infiltrate and control every nook and cranny of Capitol Hill.  Hillary Clinton is a Democrat? Really?  Then how come she and Bill greedily take millions from Goldman Sachs alone in “speaking” fees.  Quite frankly, ex-Presidents OR potential Presidential candidates should be barred from accepting paid appearances from any corporate or corporate-sponsored entity, but especially from Wall Street.

I want to call your attention to an investigative article by Wall Street On Parade titled “The U.S. Government [really, The Taxpayer] Is Quietly Paying Billions To Wall St. Banks.”   In the past for years, 2011 – 2015, Freddie Mac alone paid out nearly $12 billion in derivatives counter-party payouts.   These payouts resulted from losses interest rate swaps, 90% of which are owned by Wall Street banks. That money from Freddie Mac is actually Taxpayer money because the Government still owns FRE and FNM.  LINK

But it’s even more profound than the WSOP lays out.

Interest rates are held artificially low by the Fed/Treasury, which enable FNM/FRE to underwrite mortgages for people who otherwise would not be able to afford the mortgage. The Too Big To Fail banks make money off of this is several ways.  They source the mortgages and take a fee, they flip the mortgage to FNM/FRE and take a fee, they securitize the FNM/FRE mortgages and sell the mortgage pools to institutional investors and take a  fee and they sell interest rate swaps to FNM/FRE and take a fee.  When interest rates don’t go up because the Fed is holding them down, FNM/FRE lose money on the swaps and…Wall Street gets the money from the loss.

A close friend of mine was curious about how the housing market might play out, because – after I described what’s happening and why the mid-price homes in Denver are hot right now (while the over $800k housing inventory piles up like trash at the local dump) – I explained that the same mortgage bubble that fueled the big housing bubble has been reinflated.  The only difference is that FNM/FRE are now the underwriters of sub-prime mortgages that are disguised to look like conventional mortgages.  But they’re far from “conventional.”  If someone puts down 3% – or, more likely borrows the 3% – they are underwater on the value of their home after all closing costs are factored in.  These de facto LTV mortgages well in excess of 100%.   That’s what Countrywide and Wash Mutual were underwriting, only this time it’s well-disguised and backed by YOU, the Taxpayer.

The same dynamic has already occurred with auto loans and student debt.  Auto loans are starting to blow up, as are student loans.  These 3% (FHA) and 3.5% (FNM/FRE) and 0% (USDA and VHA) down payment mortgages are next.   We’re already seeing this occur in energy-heavy areas like Houston.   What’s going to happen to the Central States Teamster pension beneficiaries who need their pension payout to make a mortgage payment after their payout is cut 60%?  That’s close to half a million people, many of whom use that payout to fund monthly mortgage payments.

There’s another gigantic bail-out coming.  And Wall Street will get to keep all the $10’s of billions in Taxpayer money that was funneled to it while it was underwriting the current housing, auto sales and student loan bubble.

My friend then asked me what I thought be would be the event that collapses the U.S. house of cards.   The fact is, no one knows but it will likely be derivatives-related just like in 2008.   No one saw the de facto AIG/Goldman collapse.  Note:  the Martins reference AIG blowing up but Goldman Sachs blew up too.  The only difference between AIG and Goldman was that Henry Paulson, ex-Goldman CEO who was Treasury Secretary, was in a position to direct Taxpayer money toward a bail-out Goldman, while AIG and Lehman were left for dead.  Note also:  AIG was taken over by the Government because it enabled the Government to “dis-arm” – with the help of the Fed – all of the derivative bombs that would have completely incinerated Goldman Sachs.

The only way to protect yourself from what’s coming is to get your money out of the banking system.  The Fed’s inexorable suppression of the price of gold/silver is openly giving everyone a chance to convert as much paper monopoly money as possible into physical gold and silver at artificially low prices.

A Mining Stock Journal subscriber told me over the weekend that he was contemplating a 100% cash-out refi on on his house, which has a lot of equity in it, and buying gold and silver.  He asked me if I thought it was a good idea.  I said that as long as he was okay sending the keys to the bank and walking away when this thing blows – because I know of a lot of people who are going to do just that – that he would be an idiot if he didn’t do it.

This is exactly what Wall Street is doing with the Government’s blessing.   If you can’t beat ’em, join ’em…

The Daily Coin Guest Appearance: Junior Mining Stocks

Rory Hall, my co-host and producer of the Shadow of Truth series invited me onto his Daily Coin interview show last week:

I sat down with Dave Kranzler, Investment Research Dynamics, to discuss the miners and investing in mining stocks. Over the past couple of months I have interviewed CEO’s and other executives with some of the best junior mining companies on the market. Before you turn away answer this one question – how much free gold and silver would you like to add to your stack? That’s right, free physical gold and/or silver…The Daily Coin – Mining the Miners

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SoT Market Update: Federal Reserve Intervention In Full Force

The Fed is in full market intervention mode right now.  It is desperate to keep the S&P 500 above 2,000 and gold below $1300.  Despite the intensified threats to hike interest rates at the June FOMC meeting, the stock market continues to spike up and gold is being pushed down.  It’s blatant manipulation.  Interestingly, research shows  – LINK – that Fed interest rate hike cycles are bullish for gold.

Futhermore, the non-seasonally adjusted, non-manipulated economic data continues to Untitledshow the economy has slipped into an “unofficial recession.”  Certainly a rate hike accelerate the problem reflected in this graph (click to enlarge) to the right, which shows the year over year rate of change in the number of delinquencies for commercial and industrial banks.

In other words, we can expect the rate business bankruptcies and liquidations to accelerate going forward.  I guess if Yellen wants to get tagged with that legacy then the Fed should go ahead an push up rates another 25 basis points in June.

Fed Funds Rate Hike: Another Empty Threat?

What are these Fed officials doing?  They’re putting into question the credibility of the institution because they sound like idiots.  – a good friend/colleague of Investment Research Dynamics

It’s becoming a farce of epic proportions, especially when there’s an entire month between FOMC meetings.  Starting this past Tuesday the typical Fed officials began their monthly cyclical cant of rate hike threats.  For some reason the stock and paper derivative unnamedprecious metals markets always take a beating when the “threat” of a rate hike at the next meeting is floated.

On Tuesday one official stated that June was a meeting at which action could be taken but that it was too early based on Q2 data “to draw a conclusion.”  Another official, SF Fed Prez, John Williams, threatened that “June was a live meeting.”  Both officials gave themselves an “out” by saying that a rate hike depends on the data.

Today Bill Dudley, the ex-Goldman Sachs criminal who’s in charge of the NY Fed, also used the phrase, “June is a live meeting.”  Can anyone tell me what this means?  Does this mean that all the other FOMC meetings prior to June’s were fake?  Is the term “live” going to become “Fed-speak” for “a rate hike will be discussed at the next meeting but we may or may not raise rates?….I’m telling you, people, this next meeting is going to be a live one so you better watch out…”

Here’s an interesting question that no one has thought of to ask:   The Fed has Untitled1implemented interest rate changes between meetings.  It’s rare but it’s happened.  If these Fed officials are serious about raising rates, why not do it now?   Why torture the market with series of empty threats?   If unemployment is really only 5% and inflation is at the Fed’s target rate – see this speech Stanley Fisher today:  LINK – then raise rates now.   At 25 basis points per hike,  it would take 13 rate hikes to raise the Fed Funds up to China’s overnight bank lending rate.

If the Fed raises rates even just 25 basis points, it risks derailing the smoldering level of economic activity that remains from the QE/money printing program.   Currently there’s still a pool of renters out there who can buy a low-priced home or apartment with a monthly mortgage nut including real estate taxes that is about the same as their rent payments.

What’s not being fully disclosed by the banks/Fannie Mae/Freddie Mac etc is that many of the mortgages these people receive are being underwritten with no cash-out-pocket down payment.  True debt to income ratios are exploding and the ratio of the monthly mortgage payment to monthly after-tax income is well over 50%.   These are extreme sub-prime mortgages with a heavy application of cosmetics on the facade.  Even a 25 basis point increase in the Fed funds rate would translate into an increase in mortgage rates that would disrupt this portion of the current housing bubble.

While the Fed might be able to prevent the stock market from plummeting, if it follows through on its rate hike threats, it would be unable to prevent the plunge in economic activity that is dependent on near-zero bank funding rates.

“Gold Thrives On Rate-Hike Cycles”

Several of my Mining Stock Journal subscribers have asked what I think will happen if the Fed raises rates.   It may seem counter-intuitive, but there have been several periods in which gold moved higher during rate-hike cycles by the Fed.  Rather than spend time re-inventing the wheel of evidence,  I found a detailed statistical analysis by Adam Hamilton (Zeal Speculation and Investment Newsletter) which proves this point.  Hamilton tends to be quite verbose, so here’s the Cliff Notes to his findings:

On average during the exact spans of all 11 of the Fed’s rate-hike cycles of the modern era, gold rallied 26.9% higher! That’s a serious gain during events that are supposed to slaughter gold. If I was a futures speculator heavily short gold with extreme leverage, this would terrify me.

Digging deeper, the hard historical data proves Fed-rate-hike cycles are even more bullish for gold. The majority 6 of these 11 cycles have seen gold gains averaging a staggering 61.0%! Gold is more likely to rally big during a Fed-rate-hike cycle than fall, contrary to speculators’ self-fueled delusion today.  You can read the entire here:  Gold Thrives On Rate Hike Cycles.

The bottom line for me is, if the Fed wants to raise interest rates, I say “Bring It On.”

Obama’s Presidency: Probably The Worst In U.S. History

I vividly recall stating to friends and colleagues in the summer of 2008 that W was the worst President in history.  At that point I was welcoming the idea of Obama:  a guy who seemed completely detached from Washington’s inside mafia and Wall Street’s never-arraigned felons.   I was ecstatic over his promise to clean up the fraud and corruption that had been engulfing Wall Street and Capitol Hill over the past couple of Presidents.

About a year into his first term, I had Obama figured out.   His campaign slogans were empty billows of mendacious smoke billowing from his mouth.  He has not followed through on one plank in his campaign platform.   The only people who can’t see it are his slavishly blind devotees, many of whom are afraid to say anything negative about a black man out of fear of being labelled a racist.  It was brilliant exercise in psychology by the insiders who selected Obama over Hillary in 2008.   At that point I told friends and colleagues that Obama will possibly go down as the worst President in history.

Part of the catalyst was the high expectations for which we were set up.   He seemed like he really wanted to make a difference.  A close friend argued with me the other day that it’s not Obama’s fault – that Congress has prevented Obama from fulfilling his promises. But that is thoroughly untrue.   Obama has actively employed the act of Executive Order routinely and systematically to override Congress, as a threat to override Congress and as a device to circumvent the Constitution.  This is the very same act of Executive Order he promised to eliminate from the Oval Office tool chest.   Everyone remember him making that promise?  Because I recall it distinctly

The author of Washington’s Blog wrote a must-read commentary which details why Obama’s Presidency has been a complete failure – possibly the greatest failed Presidency in history:   “Bush was a horrible president. At the time, I thought he was the worst president in American history…”

…But Obama has made a lot of firsts himself:

  • Prosecuted fewer financial crimes than President Reagan, Clinton or either of the Bush presidents. (As bad as the Bush administration was, they at least prosecuted the heads of Enron, Worldcom and some other white collar crooks. In contrast, Obama hasn’t prosecuted even one high-level Wall Street executive.)
  • Is the most secretive president ever
  • Is more hostile to the press than any president in history
  • Claims the power to strip Americans’ liberty in a way that no other president has ever tried to claim … and that even King George of England didn’t claim. Indeed, Obama has rolled back some of our liberties to the time of the enactment of the Magna Carta in 1215.

That’s a partial list.  I highly recommend reading the rest of the article:   Washington’s Blog.

Now Obamacare, doomed from the beginning, is collapsing as big insurance companies successively drop out of the Obamacare network and the quality of healthcare in this country continues to deteriorate.  I can’t wait to see what happens to retail sales when the next round of health insurance premiums hits the system shortly before the November election…