Tag Archives: Bloomberg News

Gold Continues To Defy Fed’s Attempt To Control The Price

Bloomberg News admitted that it is aware of the Fed’s “hidden” mandate to control the price of gold when it published an article last Sunday titled, “Yellen Can’t Halt Trump Gold Rally That Funds Bet Against” – Bloomberg/Yellen/Gold.

That title, combined with the content of the article, implied that the journalists and editors at Bloomberg are aware that the Fed actively manipulates the price of gold.  It’s hard to know if this admission was put forth intentionally or unwittingly. But the headline outright acknowledges that the Fed’s goal with respect to the price of gold is to prevent it from moving higher. The Fed’s current tool for this purpose is the “good cop/bad cop” routine played out on a daily basis between the Fed Governors who purport the need for more interest rate hikes and the Fed Heads who advocate waiting until the economy improves.

Lost in the smoke of Orwellian propaganda is the absurd notion that the two “rate hikes” were a mere quarter of a percentage point in magnitude.  This can hardly be described as “raising interest rates.”  It certainly is not even remotely close to the concept of “interest rate normalization,” whatever that is supposed to mean.   In mid-2007, about a year before the financial system nearly collapsed, the Fed Funds rate was 5.25%.   A little more than a year later it had been dropped to near zero.

If the financial analyst “Einsteins” define “rate normalization” as the 5.25% level in 2007, it will take about about 20 years using the speed of rate hikes by the Fed over the last two years.   On the other hand, going back to 1954, which is as far back as the Fed’s database takes us for the Fed funds rate, the median level for the Fed Funds rate is somewhere around 7%.   Is THAT level how one would define “normalized rates?”  You can do the math on how long it would take thereby to achieve “normalized interest rates” if 7% is the goal.

Since mid-December 2016, when gold appears to have bottomed out from the manipulated price “correction” that began in August, gold has been trading in defiance of the Fed’s attempts at price control.  Yesterday’s (Wednesday, Feb 22nd) trading action is point in case.  Gold was slammed for about $9 right after the paper trading market on the Comex floored commenced.  This is standard operating procedure.  But about 5 1/2 hours later, when the Fed released the minutes from its last meeting, gold spiked up and reclaimed the full $9 price take-down.    Today gold has soared another $16.

At the Shadow of Truth, we suspect both Yellen and the editorial staff at Bloomberg News are mumbling to themselves.  In today’s episode, we discuss the trading action in gold and the potential more interest rate hikes this year:

The Pre-Earnings Promote On AMZN Begins

It began last night with FB’s earnings release, which triggered a spike in both FB and AMZN stock after-hours:  LINK.  I have been very clear to the subscribers of my Short Seller’s Journal to avoid shorting AMZN ahead of its earnings release after the market today.  I also advised them to take profits on any short positions or put positions last week.   I have been on the record stating that I fully expect AMZN to report a blow-out quarter.  The trick is to understand how and where they are using GAAP/non-GAAP to inflate the net income and “free cash flow” numbers they will report.    AMZN continues to burn cash and will continue to burn cash.  That’s the bottom line.

Point in case is this puff-piece from Bloomberg News this a.m. which describes how AMZN generates revenues – yet it fails to describe how AMZN turns those sales in real net income and real cash flow.   FYI, AMZN states in the fine-print of its 10K/10Q filings that its reported “free cash flow” number is not a metric that conforms to Generally Accepted Accounting Principles – a fact that should not surprise anyone who does real research and analysis on AMZN.

So Much For Bloomberg’s New Bull Market In Oil

As I mentioned two days ago when oil popped about 10%, Bloomberg was all giddy in declaring a new bull market in oil.  Within two days oil took back all of Monday’s gains, and more.   With oil now down over 10% from Bloomberg’s “point of new bull market,” is this a “correction” or a sell-off from a paper-manipulated bounce:

OIL

Next up: the “new bull market” in fraudulent Government non-farm payroll reports…

Gold has worked down from Alexander’s time… When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory – Bernard Baruch, famous Wall St financier, philanthropist and Presidential advisor

The Economics Of A Crash – Alasdair Macleod

Bloomberg was out today heralding the “new bull market” in oil.  I herald it as Bloomberg’s new bullmarket in bullshit.  The price of oil is determined in the short run by a lot of factors besides the law of economics.  The spike up today in the price oil was most likely technically driven by hedge funds covering large short positions put on over the past couple of weeks.  The short-cover trigger was likely a big bid put into the market by the Too Big To Fail banks backed by the Fed.

Make no mistake about it, the Federal Reserve in conjunction with the big banks have “blood money” motivation to try and keep the price of oil propped up.  The big banks are exposed both on and off balance sheet to the price of oil.  Many of the big banks are heavily exposed on-balance sheet to the collapsing oil shale/fracking industry in the form of hundreds of millions of asset-based revolvers.  These are shorter term funding facilities, the size of which is determined by the value of the estimated shale reserves of the borrower. However, many of these revolvers were drawn down when the price of oil was much higher.  It is highly probable that the big banks like JP Morgan are sitting on drawn revolver facilities that are worth dimes on the dollar.

Preventing this default has become a growing problem and is the primary task facing central banks. Household, corporate, government and financial sectors are all exposed to debt default, ensuring political and business considerations will allow no alternative outcome.  – Alasdair Macleod (link below)

A former colleague of mine who trades distressed energy debt told me he thought the big banks had these debt facilities marked at par (100 cents on the dollar).  When I asked him if if any of was trading yet in the secondary market he responded:  “no, but all hell will break loose when it does.”

This debt will blow big holes in bank balance sheets.  We only can assess the on-balance-sheet damage.  There is no doubt 10x that amount of exposure in the form of OTC derivatives.  The lower the price of oil goes, the bigger will be the hole that is blown.  This is specifically why the Fed/TBTF banks are working to keep the price of oil aloft and why they are feeding pump and dump outlets like Bloomberg the information that a new bull market in oil has started.

Equity markets are telling us that the debt crisis is now upon us again. The detailed course that events will take from here cannot be predicted, but we can be certain that over the coming months governments will be ready to move heaven and earth to prevent a deepening crisis, by any means at their disposal.  – Alasdair Macleod

The start of an economic crash of unprecedented magnitude began in 2008.  The true severity of this crash was delayed by mark to market accounting, increased debt issuance and money printing.  Many trillions of it.   But ultimately history tells us that the no amount of artificial manipulation and attempted market control can evade the laws of economics. The collapsing price of oil is a rock-solid indication that economies globally, including and especially the U.S. economy, are in a state of collapse.

Alasdair Macleod has written a must-read commentary/analysis of what is now unfolding and why.  You can read his entire article here:   Economics Of A Crash

The Shadow Of Truth will be hosting Alasdair this Thursday.  We will discussing this article as well as his take on what is now unfolding in the precious metals markets and China.

Guest Post – SGT Report: China, Gold And Bloomberg Disinformation

There is a great monetary reset coming. There is a day of reckoning on the horizon for the tsunami of fiat which has flooded the planet. There will be a revaluation of the gold (and silver) price that will revalue the precious metal at a price far higher than the manipulated price we see today.  – SGT Report

An entity called “Bloomberg Intelligence” published an article which asserted that the price of gold would need to be $64,000/oz in order for China to back its currency with gold. Unfortunately, the article lacks any meaningful depth of intelligent analysis.  Additionally, there is a glaring absence of documented assertions and reference-base facts to support the article’s thesis.

The SGT Report has saved me the time of slashing and burning this poor excuse for journalism:

We’re not sure who ‘Bloomberg Intelligence’ is or from where they are gathering this “intelligence”, but it would be helpful if they dealt with some of the commonly known facts about China’s gold hoard which we cover daily here at SGT Report.

When Larkin and Van Der Walt claim “A traditional gold standard, in which the precious metal backs the currency, is basically impossible at current prices due to the amount of metal needed“, one wonders what in the world they are trying to say. Are they referring to the total amount of Dollars in circulation worldwide? Are they referring to the total fiat money quantity (FMQ) which we have discussed at length with Gold Money’s Alasdair Macleod? Regardless, a $64,000 per ounce gold price itself would be the direct result of re-pricing the oceans of fiat in circulation to the relatively tiny amount of physical gold.

Once again we see obfuscation of the facts from the mainstream mockingbird financial publication Bloomberg.

First, the authors claim that 10,000 tons of gold is NINE TIMES more than China’s “official holdings”. While that may be true, certainly Larkin and Van Der Walt are aware that China now likely holds far more gold than its officially reported total of 1,054 tons. In fact, unless Larkin and Van Der Walt are entirely incompetent imbeciles, they must be aware that even the mainstream mockingbirds at Market Watch are reporting that China is about to come clean about how much gold it really owns.

You can read the rest of SGT’s analysis here:  Bloomberg, China and $64,000 Gold

 

 

Anti-Gold Terrorism From Bloomberg News

In terms of monetary policy, the Federal Reserve and Treasury became concerned about the inflationary potential of excess reserves in the banking system and large gold inflows, and therefore decided to double reserve requirements and sterilize gold inflows.  – Douglass Irwin, Dartmouth College 2011, in reference to the decision in January 1937 byTreasury Secretary Henry Morgenthau to block the use of gold in the monetary system.

As you can see from the quote above, the U.S. Government has been manipulating gold for much longer than anyone understands.  In fact, FDR temporarily disconnected the dollar completely from the gold standard in 1933.

Yesterday Bloomberg News published a report which alleges that hedge funds have assumed their most bearish position in gold in history.   That article is 100% inaccurate. Moreover, historically, whenever the hedge fund net long position (longs minus shorts) becomes as low as it is now, gold has staged big rallies.

While Bloomberg specializes in misleading and fraudulent news reports, thankfully we still have access to data which enables truthseekers to ferret out the truth.  Currently, if you go by the Commitment of Traders report published by the CFTC, which Bloomberg references, the “Managed Money” account category – aka the hedge funds – are net long 29,844 gold futures contracts.  (Note:   Bloomberg uses futures + options combined, but serious analysts do not include options in the analysis.  that said, aggregating the hedge fund options position makes Bloomberg’s point of view even less compelling – i.e. including the options position increases the hedge fund net long, making the hedge fund bear growl softer).

I downloaded the historical disaggregated data (it goes back to 2006) from the CFTC website and looked at the net hedge fund long position in gold.  Not only is the hedge fund net long position not at a record low – i.e. at its most “bearish,” it’s not even close.  Using just the futures positions, the net short as of last Friday was 11,435.

HOWEVER, from November 25, 2013 to January 14, 2014, the hedge fund net long position ranged from 9,941 (12/3/2013) to 28,270 (1/14/14).   There have  thus been at least one recent periods of time when the hedge funds were significantly more “bearish” on gold than they are now.

WHEN THE HEDGE FUND BEAR GROWLS, GOLD RALLIES

EVEN MORE INTERESTING, the three previous times when the hedge funds have assumed an extreme “bearish” Comex paper gold futures position, gold staged a big rally (click to enlarge):

HedgeFundBearGrowling

Of course it remains to be seen whether or not history will repeat a fourth time.   The Treasury Department, in conjunction with the Fed and its agent bullion banks, has never attempted to push the price of gold lower with as force as is being exerted currently.  This is because the degree of gold manipulation is directly correlated with the degree that our system faces collapse.

One thing is clear, however, the financial media is doing its part to promote anti-gold terrorism with highly misleading and fraudulent news reports.