Buy All Attempted Takedowns Of Gold, Silver And Junior Mining Stocks

The most absurd part about today’s payroll report is  the fact that supposedly highly educated people get on financial spin networks and discuss and debate the report with serious expressions on their faces as  though the report has any degree of validity.  It’s emblematic of the fraud and fiction that has infected our system to the core.  The economic reports are bogus, the physical gold in Ft Knox has been replaced with hypothecation agreements and Comex fiat paper futures contracts and the politicians and business leaders are all corrupt – every single one of them.

Please see Zerohedge etc for a dissection of today’s fiction published by the Government, in conjunction with the Fed and Wall Street.   Just for point of note, the number of people who have left the labor force hit another all-time record high and half a million full-time jobs were lost, replaced by 800,000 part-time jobs.   There’s your 6.1% unemployment rate:  deadbeats collecting unemployment insurance and Social Security Disability, students taking out debt and enrolling to DeVry on-line University and full-timers converted into part-timers.


The day of reckoning is coming.  I had a “eureka” moment last night when I read the comments by the chief economist of the Bank of England who, presumably unwittingly, warned that the aggregation of derivatives in the derivatives clearing system (primarily a subsidiary of The Depository Trust and Clearing Corporation – aka DTCC) could be “a problem from hell.”

The nexus of the problem is that fact that interest rate derivatives contracts make up the majority of the OTC derivatives.  JP Morgan and Citibank alone have $97 trillion in notional amount of OTC interest rate derivatives exposure.   To put that in perspective, the total size of the U.S. stock market is around $22 trillion.  And $97 trillion doesn’t include the leverage that is embedded in these contracts.

My co-producer and I are going to do a video on this topic.  I think viewers will be stunned. Pimco, Black Rock and Fidelity have by far the largest concentration of exposure to this. That’s why the Vice Chairman of Black Rock is going around promoting the idea of a mechanism to bail-out DTCC when the derivatives bombs start to fly.  Trust me, I was told this morning by someone in a position to know that the regulators are absolutely terrified of this problem and of a total bond market collapse.

As for the precious metals action today, it was almost as funny as the Government jobs report.  With the entire analytic world (except me and few colleagues) expecting a massive take-down today, here’s what happened (click on chart to enlarge):


They are having trouble taking down the precious metals sector.  I can’t recall the metals ever behaving this way when the market is technically and psychologically set up for a big move lower.  Hell, Goldman still has an $1000 target for gold.   Keith Weiner of Monetary Metals still thinks fair value for silver is like $15.

The truth is, the precious metals market as “sniffed out” the complete Ponzi-nature of our entire system.  The scramble  globally to buy and possess physical gold and silver  is starting to take over the ability of the Fed/big banks to manipulate the prices with fiat futures contracts that can readily printed up.  GATA  ( predicted this would eventually happen over 14 years ago.

The bottom line is that you need to dump your bond funds before they put capital controls on them and load up on gold, silver and junior mining stocks on every sell-off.  Since I published my research on Pilot Gold on May 20th, it’s gone up 22%;  Almaden is up 9.2% (5/15);  EMXX is down 3 cents but requires patience; and the Big Upside Idea is up 5.6% since 6/25.    All four ideas still have a multiples of upside potential and you can read my analysis here:   Junior Mining Stock Research Reports.

Whether you want to buy into the precious metals sector is your decision but if you wait much longer to decide whether or not to get your money out of bond funds, you soon won’t have any control over that decision because getting out won’t be an option.

29 thoughts on “Buy All Attempted Takedowns Of Gold, Silver And Junior Mining Stocks

  1. Our companies 401k is managed by Fidelity and it was a little disturbing to see how many of their funds were managed by Black Rock. I’m not in a bond fund per Se do I still stand to suffer if the bond market shits the bed? I’m on the verge of redirecting my contributions to physical silver but my contributions are matched at 75%
    Decisions, decisions

    1. If you can get any part of your money OUT of your 401k, get it out. Pay the penalties. Otherwise you may as well write it off. Even gold/silver held inside an IRA or 401k will be at risk. What is coming will take entire fund complexes down.

    2. Could you please expand on , be more direct about Fidelity exposure to these bond derivatives. Do they invest my MM funds where they wish in these?
      Please facts only , no dropped paranoid sucker bombs .

      How much exposure does Fidelity have ?

      1. We don’t have details because disclosure rules have been “liberalized” to make it easier for all corporations to hide their sins. Assume that all money market and bond funds, especially the big ones, are riddled with derivatives.

  2. Longevity insurance joins the menu of retirement plan options

    New tax rules will make it possible for workers to buy a type of annuity often called longevity insurance inside their retirement plans. The annuity aims to protect people from exhausting their savings in their later years.

    the hammer is falling….they will soft sell you a seat to your own execution.

    Game of thrones for them….

    Game of bones for us……….

  3. Thanks for the article. Great info!

    One little advice, though. Don’t mention Keith Weiner. He is a frigging asswipe.

  4. Hello David,

    The entity that is responsible for derivatives is the ‘Warehouse Trust Company.’

    It was announced on Wednesday February 10 2010, that the Federal Reserve Board had approved the DTCC application, to form a subsidiary of the Federal Reserve System responsible for the Trade Information Warehouse, for OTC credit derivatives, under the umbrella of the newly Fed approved “Warehouse Trust Company.”

    So when the SHTF guess who will ultimately be on the bailout hook? The above was flown in under the radar and sits as a ticking financial time bomb, as part of the Fed system, who the taxpayer will be squeezed to bailout.

    1. Yes. I knew about WTC. I think there will also be a massive amount of money printed. The Fed has not hyperinflated the money supply on the scale that we’ve seen it done historically before an ultimate currency/system collapse. We’re not even close the scale that Weimar Germany was printing toward the end – yet anyway.

  5. looks like the gargantuan bond mess is just now breaking even into just the alternative internet media.
    forget about any hope of it being covered b4 the fact in the MSM, tho.

    rob kirby has been documenting for years how buyers of these endless rivers of debt have been basically sold ‘fire insurance’ on it in the form of interest rate derivatives so the price doesn’t collapse LOL..

    i see the FED bankstah song-&-dance frontman/pimp is out with his latest hysterical howl blaming the IMF now for everything.

    never ever a discouraging word about the FED–beyond sickening.

    anyway, he does mention that Lagarde out with this amazing statement “blueprint”
    released purposely when a few billion are entranced by the world cup, for stealing alllll the pensions to buy the sovereign bond debt!

  6. unemployment insurance is for the unemplyed which means they worked until they lost the job so how are people who are laid off deadbeats. the program may not be to your liking but to paint people who lose a job as deadbeats when jobs are scarce is revealing to your point of view which mainly is limited by the fact that you out of the sphincter

    1. Actually, unemployment insurance creates a HUGE moral hazard in our system. Any insurance does, but Govt subsidized insurance is particularly insidious in creating and enabling moral hazard.

      There are plenty job openings – that’s why we have an illegal immigrant problem. Unemployment insurance by the way is only available to those who had jobs where there company carried unemployment insurance. The taxpayers still subsidize the program. I know plenty of people who opt to take unemployment insurance and see it as a 1 year paid vacation. I admire your idealism and naivete.

  7. Dave, could you also give us the transcript when you release the new video so that we can print it out and re-read it?

    1. We pretty much ad-lib the videos. I’m sure there’s a website you can find using google that will translate voice into text. There might be a closes caption option on youtube as well

  8. And still more from Zerohedge….

    Expropriation Is Back – Is Christine Lagarde The Most Dangerous Woman In The World?

    key quotes, enough to make your blood run cold…

    The new IMF paper is described in great detail exactly how to now allow the private sector, which has invested in government bonds, to be expropriated to pay for the national debts of the socialist governments.

    …The IMF has advocated for a general “debt tax” in the amount of 10 percent for each household in the Eurozone, which also has only modest savings.

    …Now the June 2014 report has a new, far-reaching proposal…..There is no actual default if they extend the maturity. You could buy 30-day paper in the middle of a crisis and suddenly find under the IMF that 30 day note is converted to 30 year bond at the same rate.

    …If they cannot sustain the debt, default and FORCE the so many unsuspecting pensioners to surrender their future to allow politicians to live comfortably.

    One more tidbit, FATCA is here, GATCA is waiting in the wings once FATCA is accepted worldwide. They can follow the money but they can’t follow the flow of gold and silver, which is why the banksters and governments hate precious metals so much.

  9. It took me a while to come up to conclusion that pension is a trap. It is bad for savers because pension uses ‘tax break’ to lure savers to give up their CONTROL of money until they are 60. Once you have put your money into pension, the government have all the time in the world to tap that pension funds. Also once we have the big market correction, people won’t be able to avoid losing money with their pension funds. It takes weeks if not months to change their pension policy. It’s not like selling your investment online or calling your stock broker.

    I have got a pension which I have stopped now but I have moved 60%-70% into gold allocated account and the rest in mining stocks. Since there is no way I can withdraw the money, that is the only thing I can hope to avoid losing money.

  10. Hi David, great article as always. I have a general question for you around this topic. I am invested in junior miners as wells as physical silver, but the inevitable derivatives calamity makes me wonder how share dealers will be affected by the shockwave sent across the financial system – I expect that many of them will be leveraged themselves or simply unable to function due to the inevitable result of stock markets crashing. In any case, in this electronic world with no paper stock certificates how will we be able to capitalise on our mining stocks if our share trading companies are wiped out due to counter party risk? Makes me wonder if I should put a greater portion of my investment into physical…

    1. I agree overall but I think we’ll see another bailout in the form of massive QE. It will be justified on the basis that “otherwise our system collapses.” If I’m wrong about that and we just implode, then the only thing that will matter is how much physical metal you have and that you have it in your own possession

  11. … politicians and business leaders are all corrupt – every single one of them.

    Ron Paul is corrupt?

  12. I’ve come to realize an important date 1964. The 1964 The Civil Rights Act is the same year they stopped minting quarters, dimes and nickels. What are the chances this was all just a setup to prevent everyone getting rich down the road, especially black people. Because every government and religion has no intention of population control

  13. I have invested two thirds (about 67%) of my net worth into physical precious metals.

    I have some more cash I’d like to invest but I just can’t seem to make up my mind: More physical? Or should I start investing in the mining shares?

    Like the one comment above by Rich Browne, I am concerned with derivatives and how it could affect brokers and the mining shares I invest in.

    Sometimes I just think it is better/safer/easier to just invest in more physical bullion?

    On the other hand diversifying into mining shares does sound like a good idea but the choice of miners to completely overwhelming!!

    Look forward to your reply!

    1. The truest, hardest core “goldbugs” have always advocated moving as much as you can into physical and keep it in your own possession. When I first saw that view back in 2001, I didn’t fully appreciate it. Within about 2-3 years, after reading and synthesizing everything I could on what is going on in our system/world, I understand exactly why owning only physical and keeping only enough money in the financial system on monthly basis to cover expenses.

      However, the system won’t die tomorrow and if you think you can time it correctly, there’s a fortune to be made owning juniors. The trick is to not get greedy and pull your money and go into physical before the rapture. I think I’ll be able to do it. The risk is getting part of your wealth caught – it will be incinerated. But that’s why you should have at least 50% in physical now. Like I said, don’t get to greedy.

      I have 4 solid mining stock ideas in my research link at the top. I’ll be posting some more this month.

      1. Thanks for the great reply. The choice between more physical PMs and the mining shares has been bouncing around for weeks in my head…I’m still undecided. I’m going to look into your reports to get me started.

        What are your thoughts on Anglo Far East and Brinks for metal storage (for a non-US citizen/resident)?

        Do you think there will be another drop in the PM prices this year that will give latecomers (like me) to investing in mining shares a chance to get in? Even though the mining shares have dropped quite a bit, they have had a nice pop up during the last 6 months. I guess its all about timing.

        1. Mining stocks are going to go a lot higher this year and next. It’s just getting started. I don’t know if there will be another drop in PM prices. It’s far too manipulated to forecast what kind of line the prices will trace. Just keep adding.

          I don’t know Anglo Far East at all. Brinks I’m sure is fine.

  14. Total’s de Margerie Sees No Need for Dollars in Oil Purchases

    Total SA (FP) Chief Executive Christophe de Margerie said he sees no reason for oil purchases to be made in dollars, adding that it makes sense to expand the use of other currencies in transactions outside the U.S.

    “Nothing prevents anyone from paying for oil in euros,” de Margerie told journalists at the Cercle des Economistes conference in Aix-en-Provence, France. “The price of a barrel of oil is quoted in dollars. A refinery can take that price and using the euro-dollar exchange rate on any given day, agree to make the payment in euros.”

    The remarks from the head of France’s largest oil company are the latest in a debate sparked by an $8.97 billion fine slapped by the U.S. on French bank BNP Paribas SA (BNP) for transactions carried out in dollars in countries facing American sanctions.

    “Shouldn’t the euro be more important in the global economy?” Sapin asked journalists in Paris July 3.
    “We have to consider the weight of the dollar and the consequences of pricing things in dollars when it means that American law applies outside the U.S.”


    Yes Dave, optimism will grow in the mining share market as easily as easily as these “radicals” took on the Bank of Scotland’s North Bridge Branch one sunny day: “Awesome Talent With Bagpipes”
    Real pipes, not a pipe dream, tuning out the bankers’ song and dance routine, makes tuning in everything else a breeze.

    We hear banks might back away from their traditional cloak and dagger, stealth shakeups, consolidations and mergers, but where climate change flooded executive bonuses, then investigations led to “disappearances”, and a groundswell of lawsuits and scandals still menace, the outlook on the clearing horizon is not business as usual:
    Guest Columnist: Shortly There Will Only Be Two Types of Banks
    By Tim McCausland
    Published: 2:00 AM – 07/07/14
    Just as there are two kinds of people — people who separate the world into two kinds of people and those who don’t — there will be, in relatively short order, only two kinds of banks.

    Bank consolidation, technology advances, demographic changes and customer preferences and behavior are creating this dynamic. At one end of the spectrum, there will be a very small population of giant banks that offer a vast array of commoditized products and services for prices that will be virtually impossible to compete against…”

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