Extreme And Blatant Gold Futures Manipulation: Bad Jobs Report Ahead?

These guys are seriously overplaying their hand so something must be up.  – John Embry email to me in reference to the blatant intervention in the stock and gold futures markets

The Cliff’s Notes explanation to John’s comment:  The Fed knows the economy is technically in a recession and will be forced to take Fed Funds negative sometime in early 2016.  Yellen floated that trial balloon earlier today.   That’s an event that should launch gold.

First, in reference to the extreme degree of anti-gold propaganda currently being vomited by the western media – see this article from Mark Hulbert LINK and this article from the new Jon Nadler LINK – here is what is going on in the physical gold market:

Reuters has reported that the China Gold Association has announced that Jan/Sept gold production was up 1.48% to 356.9 tonnes and consumption was up 7.83% to 813.89 tonnes. This is the biggest gap between production and consumption growth that JBGJ can remember. The huge Chinese output growth has been going on for well over 10 years and with the early mines getting old sustaining the trend must be getting increasingly difficult. A leveling off or even more a decline in Chinese gold output could increase import demand dramatically.  – John Brimelow from his Gold Jottings report

Typically when there’s bad news coming, the Fed/banks engage in an extreme degree of market intervention to keep the stock market aloft and a heavy lid on the price gold.  After all, they can’t have a rising price of gold alert the world to the degree to which the U.S. system is one big fraud.

The stock market has become historically overvalued.  David Stockman discusses this in his latest article – This Time Is The Same – And Worse.  In his analysis, he reports that the trailing 12-month P/E ratio on the S&P 500 is 22.49x, or higher than it was at the peak of the stock market in 2007.

However, there’s one big flaw in Stockman’s analysis.  He’s using current GAAP accounting numbers.  In order to compare current S&P earnings with earnings and P/E ratios, we have to adjust the earnings by employing “apples to apples” GAAP standards.   Generically, the latest significant GAAP changes in 2010 enabled the big banks to include a significant amount of non-cash “adjustments” as part of their reported net income.  In some quarters, more than 90% of the GAAP net income reported by major banks and financial firms is based on non-cash, discretionary “adjustments.”

In truth, and admittedly this is somewhat imprecise but not wholly inaccurate because the same dynamic applies to the tech sector S&P 500 companies as well (note: IBM is currently being investigated by the SEC for revenue recognition issues – this fact supports my assertion), it is highly probable that the $93.80 per share EPS cited by David Stockman is substantially less than $93.80 using 2007 or 2000 or 1987 GAAP standards.   I would hazard a highly educated guess that if we did the exercise of adjusting today’s S&P 500 earnning using the GAAP rules in place in 2000 that the $93.80 EPS would be cut in half.

In fact, I know of someone who did that exercise back in 1998, using 1987 GAAP standards, and this person determined that the reported earnings in 1998 were less than half of what was reported that year if 1987 GAAP standards were employed.

In other words, the true P/E ratio on this current stock market is, in all probability, the highest in history.

I want to show the gold market intervention that occurred blatantly today and then I’ll suggest a good possibility for the current extreme degree of market intervention (click on each to enlarge):


The ratio of paper gold to deliverable physical gold reported to be in Comex vaults almost hit 300 earlier this week.  After yesterday’s long-side liquidation/bullion bank short-covering operation the ratio “mellowed” out a mere 278x.

As you can see, gold moved higher after a series of gold-friendly comments from the ECB’s Mario Draghi. It was promptly slapped back down about 10 minutes before he Comex floor trading in gold commenced. This occurs about 90% of the time. No news or events occurred that would have prompted the sell-off in gold. After starting to recover from the obligatory Comex floor trading smack, Janet Yellen issued tourettes syndom outbursts loaded with incoherent nonsense about how great the economy was doing, the labor market was tight and the FOMC was going hike rates in December.

Yellen’s comments, other than being the drool of a babbling idiot, had no basis in provable fact. Nearly every private-sector compiled economic data series is reflecting a precipitous decline in economic activity that is back down the activity levels of 2008/2009.  As for a “tight” labor market?  Yes, I suppose if you just ignore the 93 million who have left the labor force – i.e. 28% of the total U.S. population – then I suppose it’s a bit easier to manipulate the data to reflect a low rate of unemployment.  Make no mistake, the unemployment rate number being reported is an unmitigated fraud, which makes Janet Yellen an unmitigated fraud.

This brings me back to my explanation for the extreme and blatant stock/gold market manipulation this week.  A friend and colleague of mine from NYC does great work on how the BLS uses its fraudulent “birth/death” model to manipulate the non-farm payroll report every month.  The employment report for October comes out Friday this week.  Historically the BLS inserts a big bump up in the birth/death jobs additions in October.  My colleague believes that the number reported will be manipulated higher than the 177k estimate in order to support Janet “Tourettes Syndrome” Yellen’s rate-hike in December fairytale:

BD model adds 145,000 jobs. NFP for October comes in at 190,000. Mark Zandi gets quoted in every wire service saying it’s a clear indicator of the underlying strength and improvement in the economy All jump even harder on the consensus December Fed rate hike band wagon Stock market rips lower and Gold gets hammered to under $1100 Stock market rips at 3:30pm into the Friday close as they force massive short covering into green and Gold goes unchanged on the day. A bullish comment from Jim Bullard is optional…

This view is well-crafted and will likely be right.  However, with each passing non-Government economic report which shows jobs being cut, especially in the manufacturing, energy and financial sectors, the big job additions reported by the BLS take the Government numbers deeper into the credibility hole.   The extreme manipulation and intervention in the U.S. stock/gold market reflects the extreme degree of desperation which the Fed/Treasury/banks are exerting in order to prevent the markets from revealing the truth about the degree to which the U.S. political/financial/economic system has been completely engulfed in fraud and corruption.

Expect a big “beat” on Friday from the NFP report, followed by beat-down of gold.  That smack in gold should be bought with both hands.

One more point, Yellen referenced the possibility of taking rates negative. Talk about an obvious trial balloon.  This tells us that she and her band of FOMC stooges understand the truth about the economy.   This is an event that should send gold on a moonshot.  They are working to make sure that the lift-off platform is as low as possible.

22 thoughts on “Extreme And Blatant Gold Futures Manipulation: Bad Jobs Report Ahead?

  1. It would be nice if more republicans except Trump could attack Yellen the way he did yesterday.
    Of course all the FED idiots are supporting Obama and doing everything in their power to prevent a crash under Obamas watch.
    They want the stockmarket scam to go on until it can be blamed on the next president if he or she is republican.
    I hope they put massive pressure on the FED because they are biased in this question.
    Now it´s time to load up on more AMZN shares they will be at 8000 dollars before year end!

  2. I’m afraid we have to wait till the last gold bullions have been shipped to China and India. Then this whole fraud will finally come to an end. It’s actually scary what the aftermath will be. “The Road” and “Mad Max” are surely possibilities.

    I’m prepared to snatch my buy finger on Friday this week or Monday next week. Fight the financial fascists!

    1. “I’m afraid we have to wait till the last gold bullions have been shipped to China and India. Then this whole fraud will finally come to an end.”

      And why would it? Thousand of tonnes of real metal trade outside the US yearly and have absolutely zero effect on “the gold price”. The only thing empowered by governments to set the price is this Comex thing – a casino, in which players BET on the direction of “the gold price” hoping to win more paper dollars. They don’t want metal. They want paper dollar-denominated yield. No one goes there for real metal.

      A Comex default? Even IF some outsider somehow managed to penetrate the club and “win” enough metal, the Comex would settle in cash. And within ten minutes the casino would resume and the betting (and price-setting) would continue…

      1. BIG tonnage of PM is going from the west to the east, way more than mine+scrap supplies. This is not sustainable (at current prices), so it will end “sometimes”. This is mathematically guaranteed. The only question is when, and anyones guess is as good as mine. But when this turns for good, it will likely turn fast, very fast, and will leave the masses with no metals behind, as ALL paper contracts will be cash settled, defaulted upon, or declared null and void. The confiscation is happening NOW.

      2. As long as the Chinese can get gold for cheap they don’t mind the COMEX fraud at all. Once the last bullions from the Western vaults are shipped to China and they sold all their US treasuries to the FED they will reset the monetary system in favor of their own currency and gold. Price finding of gold will be in China not on the COMEX.

        Do you think settling contracts in cash wouldn’t be a sign to the rest of the world? The ratio of paper contracts to deliverable gold going from 300:1 to infinity would allow business as usual? Dream on!

    1. Isn’t a new president behind bars a legal possibility?

      As far as I know there is only an “optional disqualification” but no real restriction in the eligibility of a convicted new president.

      Under Article I, Section 3, Clause 7, upon conviction in impeachment cases, the Senate has the option of disqualifying convicted individuals… but as far as I can see she has not been convicted…

      Wouldn’t it be a glorious grotesque play to legally inaugurate a convicted, but qualified president, who is to be ruling the world from behind the bars?

  3. I’m very sorry to say, but now it doesn’t seem totally out of question that the criminals will take paper-metal ratio to 1000, and hammer paper gold price to below 1000. I had personally ridiculed such calls in the past. But the extent of madness of the monster we’re facing is now there to see in broad daylight.

    Could any sane person have ever predicted they would stretch the ratio to 300??? If they’re so insane, why can’t they stretch it even further? Like a wounded animal, they’re making a public declaration that they’ll defend this insanity with all they got; and that includes nuclear / biological / EMP and other sinister weapons.

    1. 300-to-one. And how would anything change even at 10,000-to-one?

      In the extremely unlikely event of some miscreant actually winning unavailable metal, he’d be paid out via ‘force majeure’ with a nice sum of the very cash that the Comex bettors are all after anyway.

      And ten minutes later the casino would re-open for more government-protected betting. It’s called “systemic manipulation”.

  4. Folks,
    Gold and Silver are going to get hammered again. Why? Because the U$ Dollar is about to begin another leg up. Sound preposterous? It’s not. Emerging markets are getting destroyed. You’ve got your warning. The next big move in the Dollar is UP, not DOWN. We are entering a deflationary depression. The Fed is out of ammo.
    I am not marketing anything except a dire warning.

    You want to make some money? Go long the greenback. You heard it from Chris first.

    Good luck.

  5. The market seasonality is historically strong in the 4/Q with December being the strongest month. And yet only 2 sectors staples & tech are higher than early August.

    Liquidity has become scarce and is most evident in retail when viewing the S & P Retail Ex. AMZN, NFLX, EXPE, since its only these 3 that are holding up the sector!

    As per the Russell 2000 relative to the S& P 500 small companies reflect poor liquidity.

    When comparing equal-weight discretionary relative to market-weight discretionary, again the smaller companies are doing very poorly.

    Manufacturing accounts for only 12% of the US economy employing just 9% of the workforce, which is otherwise driven by consumer spending and services. However most consumers are struggling, attempting to “get by” on low wage service sector jobs!

    Yet the market is up? And gold is down? Bad is good? And good is bad? WTF???

  6. Drowning in adjusted EBITDA!
    November 3, 2015

    We’re at the tail end of earnings season — the next Q deadline is on Monday, Nov. 9. What that means is that Team Footnoted has been reading an awful lot of filings. As we tweeted on Friday, 139 8-Ks and 95 10-Qs were filed after 4 pm last Friday. Any guess on how we spent our weekend?

    Yesterday, another 160 10-Qs came crashing on our electronic shore. While we don’t read all of those filings — after all, we’re not total masochists — one thing comes across loud and clear: the number of companies using the term “adjusted EBITDA” appeared to be swelling. We tweeted this too, last week, and got some interesting responses.

    So we decided to run the numbers and here’s what we found: the bloat in adjusted EBITDA is real, even at the largest of large-cap companies. We searched for the term “Adjusted EBITDA” in 8Ks, 10-Qs and 10-Ks going back to the very first year that EDGAR was available, 1994. And we decided to limit it to large caps, which we defined as companies over $25 billion in market cap. What we found surprised even us: there were zero mentions between 1994 and 1997. But, then, all of a sudden…

    Charlie Munger has famously described EBITDA as “bullshit earnings”. And Seth Klarman rang the EBITDA alarm bells all the way back in 1991 in “Margin of Safety”. So what does that make adjusted EBITDA? And all of us, for continuing to swallow and digest?

  7. It seems like if the jobs reset is going to be great then they wouldn’t be so aggressively taking gold down. It appears they are aggressively covering their shorts before Friday.

    It does appear the level of manipulation matches extreme desperation by the Western central planning communists to hold the f”ree” markets together.

  8. Jobs? Who needs ’em.. I personally laid off two US 6-fig. engineers last Friday… Nothing good happening from where I sit Dave. 1Kg Lunar Dragon.

  9. Think like a goon. Take gold and silver down to support. Issue a strong employment report on Friday. Rally dollar. Watch all the metal ong specs get chased out, drop gold/silver through support and destroy the charts. Another hoped for trend change in the metals is kaput.

  10. One has only to look at historical gold prices to see that the price of gold bears no relationship whatsoever to the US $. E.g., in 1934 it was > $600, only half what it is today. Whereas today’s $ is probably worth < 1/40th of the gold-backed 1934 $ (e.g., oil was <$2 a barrel). So, in effect, gold is trading at < 1/20th what it was in the 30s. I see that gold is now trading at exactly what it was in the late 70s, when oil was < $20 a barrel (and a new Honda Civic was about $3K).

  11. I believe the gold and silver will be the least of anyone’s
    real concerns. If you are watching current developments
    in the Middle East, the fuse has been lit and the real shit
    is now in motion. It reminds me of the Road when the dude
    finds a coffee can full of gold Krugerrand’s and places the
    can back on the shelf. It will be about clean water, food
    and personal survival.

  12. Why would I want to buy gold when it’s obvious that this manipulation will continue indefinitely? There is no reason to believe that these criminals will be prosecuted, as they would have been, say 30 years ago. And it doesn’t matter if the vaults in the West run out of physical gold, because they don’t need physical gold to manipulate the price. All this talk about a spike in gold is nothing but wishful thinking.

    If anyone disagrees, please explain to me why you believe the manipulation will stop.

  13. Au to 1093USD, more likely 1079 to hit those sell stops.

    Bad jobs report, agreed. Bonds near support stocks near resistance. Good time to retrace.

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