Tag Archives: Eric Hunsader

Gold Manipulation And Conflict Gold

The king of high frequency trading, Nanex’s Eric Hunsader, has been on a crusade lately to expose the problematic and illegal manipulative side of HFT/algo-driven trading.  No where on earth is the manipulation of any market more blatant and in-your-face illegal than in the paper gold market.   Yesterday morning Hunsader tweeted out this, after the gold was taken down hard in the paper gold market:

Untitled

Gold was smashed at exactly 8:20 a.m. EST when the gold pit at the Comex opened. The initial hit involved the dumping of 2,748 contracts – or 274,800 ozs of paper gold – in the first minute of floor trading. The Comex is only reporting 162,221 ozs of “registered,” deliverable gold. Hmmm…From 8:00 a.m. – 9:00 a.m, 29,136 contracts traded, representing 2.9 million ozs of gold traded, most of it in the first 40 minutes after the floor trade.

Without a doubt, the blatant nature of the manipulation reflects the degree of desperation felt by the Fed and the bullion banks to keep a lid on the price of gold given that the Fed is unable to raise interest rates without crashing the system.

The blatant manipulation of gold further reflects a bigger problem facing the western Central Banks and bullion banks:  the growing scarcity of gold available to deliver into entitled buyers like India and China.   The Shanghai Gold Exchange withdrawals continued at record levels in September and even Bloomberg is reporting this now:   LINK.

And the big festival seasons are about to begin in India and the Middle East:   LINK

One last point that I believe is perhaps the strongest indicator that the wholesale gold bullion market is as tight as it’s ever been.  “Conflict gold” is now thought to be part of the gold which is flowing into big buyers like India.  “Conflict gold” is gold bars in dore form that are produced in places like Ghana by mines using child-labor or by mines controlled by contra-Government rebel groups in the Congo.

Allegations have surfaced that this conflict gold showing up at refiners in India.  Although the only western gold market writer I’m aware of who is tracking the dore bar market  in India is John Brimelow (John Brimelow’s “Gold Jottings”), India has been shifting a measurable portion of its imports to dore bars.  Dore bars are 80-85% purity bars that are processed by mines and sent to refiners for further processing.

The reason the Indian demand-mix has shifted more toward dore bars, I believe, is two-fold:  1) the dore bars are subjected to a significantly lower import duty than LBMA-quality bars and  2) it reflects the inability of the global market to produce enough deliverable LMBA-quality bars to meet Indian demand.

The shift in demand toward dore bars is one of the primary reasons that the mainstream media like Reuters, the UBS metals group and Dennis Gartman are reporting that gold demand in India is weak right now.  They only track the ex-duty premiums of the LBMA-quality bar imports into India and completely ignore – or, more likely, are unaware of – the booming dore bar imports.  Currently the ex-duty import premiums are negative, reflecting weak demand for those bars. However,  the premiums paid for dore bars reflect booming demand for those bars.

untitledI guess it’s only a matter of time before we get another avalanche of anti-gold media propaganda and thoroughly misleading and factually unsubstantiated garbage analysis from bullion bank apologists like the Perth Mint and Jeffrey Christian.

Yellen Folds Her Cards – Admits It Was A Bluff

“In the summer of 2011 is when things went insane.”  – Remember this quote

In the process, Yellen is making herself out to be a complete fool or a liar:

“I do not want to overplay the implications of these recent developments, which have not fundamentally altered our outlook,” she said. “The economy has been performing well, and we expect it to continue to do so.”  Bloomberg News

The economy has been “performing well?”  Seriously?   Let’s have a look.  Here’s year over year percentage change in retail sales:

Graph1 As you can see, there’s been a steady decline in the year over year growth in real retail sales since August 2010. Is this 70% of the economy the part to which Yellen is referencing as “performing well?”

But here’s the kicker:

graph2 THIS graph shows the actual dollar change in retail sales LESS auto sales since August 2010. We know that auto sales have been pumped up by the largest expansion in automobile subprime (junk) debt issuance in history. If you strip away that artificially pumped up area of the economy – pumped up by Yellen and Bernanke – look at the stunning decline in retail sales.

Retail sales represents 70% of the economy.  How can the economy possibly be doing well when the only segment of retail sales showing signs of life is the automobile segment, which has been pumped up by what will be the eventual catastrophic availability of junk loans.   Contacts of mine in the local auto business are in outright shock at the number of 2013-2014 cars hitting the repo market.  I have seen with my own eyes leased land lots along busy commercial boulevards which are overflowing with repo’d vehicles.

Perhaps Yellen was referencing the “low” unemployment rate.  The magical 5.1% rate of unemployment that is conjured up with Government fabrication.  Ya that number may be the unemployment rate if you use the Census Bureau guesstimate of employment based on flimsy population samples and if you ignore the fact that nearly 100 million people in the working age population are not part of or have left the labor force – or if you just make up the numbers (birth-death model):

graph3 We’ve all seen this graph several times but it’s worth seeing again in the context of Janet Yellen making the statement that “the economy is performing well.”

In the famous phrase from Macbeth, the employment situation in the United States is “a tale told by an idiot, full of sound and fury, signifying nothing.”

Now here’s another kicker.  Many of you have already seen the outstanding Fed video written and produced by my good friend and colleague, John Titus:   Best Evidence –  Fed Audit Shocker:  They Come From Planet Klepto.    I get previews of his work along the way and he shares a lot of information with me about everything he discovers reading the Fed transcripts, which are released 5 years ex post facto.

The particular transcript John was pouring over for the above video was from the Fed meeting right before QE was introduced.  The information is there for anyone to look at but John actually does the work.

Recall from yesterday that Janet Yellen referenced the unemployment rate as evidence that QE had worked.  I received a text from John last night that said:  “Janet Yellen is such a fucking liar.”   To which I replied: “based on what, this time?”  To which he cited:  “Did you see that shit about the Fed not boosting inequality?  She says QE put people back to work.  Based on what?  Because in the June 2009 Fed transcript she said the unemployment rate b.s.”  As you can see, John is extremely pissed off at Yellen’s blatant dishonesty.

So there you have it.  Yellen is on record stating to her Fed cohorts that the unemployment rates is nonsense.  This was when she was Bernanke’s co-pilot of the FOMC.  From this we can conclude that Yellen is a serial liar.  But we can also conclude that she is an idiot because she has a left a definitive trail of evidence proving that she’s a liar.

This brings me to the “in the summer of 2011 is when things went insane” comment. The very same John Titus attended a conference yesterday put on by Eric Hunsader, of HFT’s Nanex fame.  Titus asked Hunsader when he first noticed that there was no longer Rule of Law in the markets.   Hunsader replied that “I guess it’s always been there but it got worse” [he pondered searching for a reflective answer and compared it the frog in boiling water adage].

But then John said one of Hunsader’s underlings spoke out – the first and only time during the show – and said “the summer of 2011 is when things went insane.”

I would like to tie this back to the two graphs above which show that retail sales began a definitive decline in growth rate in early 2011 AND an outright decline ex-autos in “the summer of 2011.”

By that time the U.S. system had been bombarded with QE for two years and interest rates had been at zero for a bit longer than two years.  Additionally, the Fed and the Government began an undeniably aggressive attempt to reflate all asset markets and pump up housing and auto sales.

graph4 A lot of bad occurrences developed in the summer of 2011. As you can see from this graph to the left, the stock market went on the longest uninterrupted rise in its history without any real correction. 2011 is when it became obvious to most observers willing to admit it that the Fed was controlling the asset markets with QE.  AND, I might add, figured out how to take advantage of HFT trading and the shadow banking system to help serve its objectives.

If we learned one thing yesterday, it’s that the Fed can not and will not raise interest rates. It’s backed into a corner from which it will be impossible to emerge without a full-scale systemic reset or crash. The problem is that, when this cesspool of lies, fraud and corruption starts to really implode, we will all wish we were watching the show from another planet.

Untitled

 

It’s also why have stated in the past, and have increasing confidence in my conviction, that this is leading to world war three and, ultimately, “The Road.” Interestingly, I’ve received emails from some well-known personas in finance that have expressed a similar belief…