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Gold/Silver Manipulation: The Foul Smell Of Desperation
Nearly 40 million ounces of paper silver were launched at the Comex yesterday in the space of seven minutes, which triggered a 92 cent waterfall in the price of silver; over 118 million ounces of paper silver were dumped on the Comex today (April 22) between 11 a.m. and noon EST. This market intervention typically occurs after the bona fide physical precious metals in the eastern hemisphere have shut down for the day.
The baseline assumption of modern financial theory is that fiat money is sound and markets are efficient. Neither of those suppositions are valid. The markets have been completely stripped of any legitimate price discovery function. You can’t tell me with a straight face that Tesla, which is now burning cash at a rate of half a billion a year is worth $33 billion – or 8x revenues – any more than you can tell me that junior mining stock with $500 million in proved gold/silver resource in the ground is worth only $24 million.
Gold and silver have been “climbing a wall of worry” for several weeks now. The traditional signs of an imminent manipulative attack on the metals (open interest of shorts vs. longs on the Comex, chart formations, etc) have defied the behavioral patterns of the past 15 years. Several “chartists” and Wall Street analysts, notwithstanding their boorish market prediction revisionism, have been been humiliated by the price-action in gold/silver since mid-January.
Several of us who have researched, traded and invested in the precious metals markets since the inception of the precious metals bull market believe that the bullion banks may have a bigger problem with sourcing physical silver for deliveries right now than with gold. The Comex bullion banks have been hitting the price of silver hard with paper contracts the last two days, in a desperate effort to beat down the price 
appreciation of silver during the overnight physical market activities of the eastern hemisphere bullion markets.
(click image to enlarge)
Currently there are are 56,863 open May silver future contracts representing 284.3 million theoretical ounces of physical silver on the Comex. Against this is 31.9 million reported ounces of physical silver in Comex vaults that have been designated as available for delivery against these open contracts. In other words, the bullion banks have thrown nearly nine ounces of theoretical paper silver at the market for every ounce of alleged physical silver that could be delivered into these contracts.
Tuesday is options expiration day for May Comex gold/silver options. Typically options expiry is one of the triggers for a heavy onslaught of bank manipulation on the Comex. With a brief glance as the put/call open interest in May silver options, it looks like the bullion banks – i.e. the entities that are short May silver options – are motivated to push silver below $17 (based on the amount of open calls vs puts at $17) by the close of silver trading on Tuesday.
Similarly, “first delivery notices” for Comex gold/silver contracts go out after the close next Thursday. With the paper open interest in silver as of today 900% greater than the amount of physical silver designated as available for delivery, the Comex bullion banks will make every effort to shock and awe the hedge funds into liquidating their long paper silver positions. We saw this yesterday with the 92 cent silver smash going into the Comex open. Silver open interest dropped over 14k contracts yesterday. This is one of the many manipulation games the bullion banks have been playing with the hedge funds over the last 15 years.
Because the CFTC and the Justice Department look the other way when it comes to enforcing market regulations as they should apply to the Comex – because those same regulations are actively applied to every other CME commodity product – true price discovery in the gold and silver markets has become an impossibility. But we have 5,000 years of historical evidence which suggests that market interventions always fail. And when they ultimately fail, they fail spectacularly.
India’s jewelry industry is re-opening after a strike since March 1st that shut down India’s gold import machinery. A sleeping elephant is waking up starved for metal as India heads into its second largest seasonal buying period of the year. This will make it more difficult for the banks to manipulate gold/silver prices using paper, which means the illegal trading activity of the next few days may be the banks’ last opportunity to cap the metals until India goes back into hibernation in the summer.
I added to high octane junior mining stock positions in the fund I co-manage today and I will be presenting an insanely cheap junior mining stock with 5 million ounces of proved gold, have of which is in the form of gold-equivalent silver ounces in my next issue of the Mining Stock Journal next week. For a limited time, all new subscribers will have access to the back-issues published since the March 4 debut.
Guest Post: Precious Metals Bull Snorts, Resumes Move
The character of the precious metals market has changed. The manipulation efforts using paper derivatives masquerading as gold and silver futures contracts is losing traction. I believe that the supply/demand dynamic in the physical gold and silver market is beginning to drive the price. Control over the price of the metals is likely shifting from NY/London to Moscow and Shanghai. I’ll have more to say about soon.
The News Doctor’s Eric Dubin posted commentary and analysis of the blatant paper attack on the price of gold and silver that took place about 40 minutes into the floor trading session on the Comex on Thursday morning (April 21). The initial price attack occurred in the space of about seven minutes in which $2 billion of paper gold and 1,218 tonnes of paper silver were dumped on the Comex. Over the last five years, an attack like this was usually the start of bigger systematic price-takedown of the precious metals over a period of several days. However, in the last couple of months, the market seems to shrug off these paper attacks and head higher.
“We’re setting up for an epic battle, and if silver keeps motoring forward, we may very well have an $18 handle on silver smack in the middle of the expiring contracts window. Buckle-up! There’s going to be fireworks, one way or another” – Eric Dubin, The News Doctors You can read the rest of Eric’s commentary here: The Precious Metals Bull
The Kinder Morgan Myth Shrivels With Each Quarter
The KMI fantasy continues to shrivel, along with its “vaunted” DCF and its CAPEX. The CAPEX narrative is part of what fueled the myth surrounding KMI. Richard Kinder is self-serving Ponzi master who learned his trade under Ken Lay at Enron. He was sucking money out of KMI at a rate of close to half a billion dollars annually by the time the banks forced him to slash and burn the dividend.
Per yesterday’s earnings report for its Q1 2016, Kinders revenues and earnings continue to decline. What happened to the famed “stabilility in earnings and cash flow” – the narrative promoted by Wall Street, the media and the Company itself? The legend had it that Kinder’s contracts insulated the Company’s cash flow from volatility in the energy market. Operating income continues to plunge, falling 24% from Q1 2015 to Q1 2016.
But IRD did some bona fide research and buried in the Company’s 10-K – a place that no self-serving Wall St. analyst would ever tread – is a disclosure revealing that more than 25% of Kinder’s revenues is sourced from buying and selling natural gas and CO2 in the State of Texas. Furthermore, Kinder discloses that its revenues and cash flow are highly correlated with the directional movements in the price of oil, natural gas, NGL (natural gas liquids).
The other part of the myth that is imploding is the CAPEX story. The stock price was fueled by the narrative that Kinder would spend money to make money. But now not only has the Company already lowered its cash flow guidance for 2016 – guidance that was promoted vigorously when it announced Q4/yr-end 2015 results – but Kinder has chopped down its CAPEX spending guidance as well. Why? Projects were cancelled because there were no customers for them. KMI was borrowing money every quarter to fund CAPEX and the dividend. Yes, borrowing money to pay money out to shareholders, namely the Chairman.
Kinder’s debt load net of cash actually increased in Q1 from the end of 2015. It’s tangible book value (stripping out goodwill) is $5.31 per share.
My Company report on Kinder Morgan backs up every assertion I make above and lays out a view of the Company that will surprise most investors, especially the ones who are still “stuck” in the stock. I explain why Kinder Morgan had become a Ponzi scheme dressed in drag in an analytic presentation that you not find like this anywhere: You can access my report here: KINDER MORGAN.
Early Look At The Proposed New “Face” Of The $100
The history of U.S. dollar bills is that past Presidents have been featured on them. With just a few exceptions, most of them have featured men who were original Founding Fathers as well as Presidents. For some reason Obama has decided to change this and ordered Harriet Tubman to replace Andrew Jackson on the $20 bill. I guess in the face of betrayed campaign promises and a largely failed Presidency (Obamacare is starting collapse), changing up the face of the fiat currency will be Obama’s legacy of “change.”
Below is the rumored change coming to the $100 bill, otherwise known as “c-notes, Bennies or honey-bees:”
SoT Market Update: Gold, Silver And The End Of The Biggest Ponzi Scheme In History
The boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation – which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion, and thus bring about the crisis. The depression follows in both instances – Ludwig Von Mises
I re-watched the movie “The Big Short” this past weekend. It’s worth watching twice if you are interested in learning about how corrupt the entire U.S. financial system is. Now, my guess is that a lot of viewers left the theatre after watching the movie thoroughly horrified by what was presented in understandable form to the typical “main street” American.
However, most are likely unaware that the original sources of corruption and fraud were never addressed. In fact, if anything, legislative “reforms” like Dodd-Frank did nothing more than enable the big banks to continue using derivatives and Ponzi-scheme financial structures as mechanisms to continue sucking wealth out of the system. Perhaps what’s most humiliating about this is that Obama Government and Congress blindly let former Goldman Sachs CEO, Henry Paulson, in his capacity as Secretary of Treasury give these banks an $800 billion blank check from the Taxpayers to continue on with their criminality.
The credit and derivatives problems are, in reality, are worse now than they were in the period leading up to the financial market collapse. The legislative “reforms” served two purposes: 1) allow the banks to continue their ways under the illusion that the problems were fixed; 2) provide the banks with accounting tools which enable them to better hide the fraud.
It was reported today that the Central States Pension Fund, which handles the retirement benefit programs for Teamster truck driver unions across several large States, has formally filed an application to cut benefits up to 60%. It stated that the fund would be empty by 2025 if the application is denied.
This reflects how catastrophically underfunded this pension fund was in the first place. And make no mistake, if you are covered by a large institutionalized pension fund, public or private, your fund is equally as underfunded – it just has not yet been affected but it will be sooner or later.
This begs the question: with the stock market at near-record levels and Treasury bond prices at all-time highs, how is it at all possible that these pension funds are still underfunded to this extent?
The truth lies in the fact that the entire U.S. financial system is one gigantic Ponzi scheme. The Shadow Truth podcast show presents another Market Update in which we discuss the fact that the U.S. financial system is a giant mirage that has been fabricated by the Federal Reserve and the U.S. Government. It’s not a question of IF the next financial market collapse will occur – it’s a question of WHEN:
Silver Is Off To The Races Again
What we don’t know about the gold/silver price admissions is what it has stirred up behind the scenes … meaning how it might be, or will, affect the manipulation of the precious metals in the United States, where the real big issue resides. There is no telling what could be percolating at Gold Cartel headquarters … or what just might be TOLD to them. – Bill “Midas” Murphy from tonight’s Midas report (LeMetropolecafe.com)
There’s a lot of factors going on right now that could be pushing gold/silver higher over
and above the inexorable headwind of Central/bullion bank market price manipulation.(click on graph to enlarge).
Today’s move up could be attributable commencement of the yuan/gold price fix rolled out by the Shanghai Gold Exchange. But this was a known event well ahead of time and the market theoretically should have priced this in. Same deal with the Deutsche Bank lawsuit settlement. But that event hit the tape last Wednesday and gold/silver yawned.
Something a lot more profound seems to have developed behind the thick fog of Orwellian smoke billowing from the western Central Banks and Governments. I believe the financial system is collapsing. This explains the Fed’s frenetic attempt to keep the stock market propped up. This effort has become about the only part of the Fed’s activities that is transparent.
Phillip Kennedy – Kennedy Financial – hosted me on his Youtube program to discuss some of the factors that are contributing to the surprisingly strong move higher in the precious metals sector. Phil blends sharp insight with humor to produce an informative and entertaining show:
I recommended a silver stock in early January that has gone up over 600% since its January 10th close. Shortly after that recommendation to subscribers of the Short Seller’s Journal, the Mining Stock Journal was introduced. I’ve featured three other junior stocks which easily have the same upside potential as the silver stock. “I got the email with the past reports. Thank you very much. This is an incredible value” – new subscriber comment.
Right now I’m offering all of the back-issues to subscribers (debut issue was March 4th). I’m already working on the next issue and the stock I’ll be featuring is not well known (for now anyway) and is irrationally undervalued. You can access these reports here: Mining Stock Journal.
The Deutsche Bank Gold/Silver Manipulation Settlement: All Show, Little Tell
Until I’m proven wrong, it is likely that the Deutsche Bank gold/silver manipulation settlement with investors will not change the ongoing Central Bank/bullion bank manipulation of the gold and silver markets.
To begin with, the charges and settlement relate to DB’s participation the LBMA gold/silver daily price fix, from which DB removed itself in early 2014. Deutsche Bank is de facto insolvent. It would have collapsed under the weight of bad assets and fraudulent OTC derivatives had western Central Banks not cooperated to keep the corpse alive. Letting DB hang for the sins of the other players was an easy decision.
It’s the Comex that is more relevant than the LBMA with regard to the highly methodical Central Bank intervention in precious metals trading. The DB settlement isn’t going to change anything – just the names of the players that step in to replace any banks removed from the LBMA. Why did they wait several months after the LBMA was “reformed” to announce this deal? Because now they can say “we’ve taken measures to make sure banks like DB can’t manipulate the fix anymore.” Truth is, all they did is make the process even more opaque and even more susceptible to rigging schemes. Look at what happened to silver with the 84 cent price plunge at the a.m. silver fix on January 28th. This was after the so-called reforms were put in place.
One positive note with DB’s settlement agreement: It’s further vindicated GATA’s efforts to expose the truth about the manipulation that is endemic in the daily trading of gold and silver futures, forwards and OTC derivatives. Eric Dubin’s (News Doctors) and Jason Burack’s (Wall St For Main St) Welcome to Dystopia show hosted GATA’s Bill”Midas” Murphy to discuss the DB settlement and factors that are driving gold, silver and mining stock higher right now:
I hope I’m wrong on my assessment of the significance of the DB precious metals manipulation settlement. But everything that has occurred in the financial system over the past couple of decades has happened for a reason. At the end of the day, the outcome of what appears to be an event that is beneficial to society ultimately turns into yet another device by the big banks to screw the public.
Gold Looks Ready To Spike Higher – JPM Gets It Wrong Again
These are the most gold-friendly readings in almost 2 months. India is getting ready to participate in the world gold market again. India’s gold imports drop 80.48% to $972.9 million in March documents what a heavy blow the Indian gold retailers strike struck to global gold. JBGJ guesstimates March imports at around 24 tonnes meaning some 120 tonnes of demand was lost in March. – From John Brimelow’s Gold Jottings.
The quote above from Brimelow’s Gold Jottings report is in reference to the fact that gold import price premiums in excess of the import duty India’s gold market began to appear again.
Since the big move higher through early March, gold has been surprisingly “resilient” up to this point from repeated attempts to manipulate the price lower. The most common occurrence has been attempted “flash crashes” during early Asian trading. Interestingly, gold has tended to rally after the London a.m. fix and into the NY Comex floor trading hours. Perhaps most surprising is that the bullish activity has occurred in the absence of demand from India. India’s jewelers have been on strike since March 1, which has effectively closed down India’s massive gold import machine (excerpt from the latest issue of the Mining Stock Journal).
The graph above (click to enlarge) shows the big “cup/handle” formation that has formed in gold since its extraordinary move since mid-December. “Extraordinary” because the gold market has had to endure strong headwinds in the form of a literal avalanche of anti-gold propaganda from the financial media, financial cable networks, Wall Street banks and even some of gold’s supporter.
As you can see from that graph, gold has been “oscillating” sideways, digesting the 21% bottom to top move it made in a short period of time. Perhaps most impressive about the move is its durability despite a continuous flood of paper gold thrown at the market by the Comex bullion banks, per the CFTC’s Commitment of Traders report. In fact, the latest report released last Friday showed a big spike higher in the bullion bank net short position in both paper gold and paper silver. Typically this signals an imminent, manipulate price-plunge, enabling the Comex operators to cover their shorts at a handsome profit.
Too be sure, the technical formation in the graph above could break either way. From a technical standpoint, it would not be atypical to see the price of gold to pullback to the “rim” of the cup (112 area on GLD) or even down to the 200 dma (red line, 109.40).
But the market manipulators will not be getting help from India, who’s elephantine appetite for gold at this time of year appears to be picking back up or from the public, which has been converting paper fiat dollars into gold at a record rate per this report on gold eagles sales by SRSRocco.com.
JP Morgan’s mining stock analyst issued a report on Agnico Eagle (AEM) in which he made the assertion that, “the company’s exploration efforts have yielded good results, resulting in an increase in the share price, even against declining gold prices.” Hmmm. I wonder what kind of smokable material JPM’s analyst has been putting into his pipe (click to enlarge:
SoT – Jeff Brown In Beijing: Why Does The West Fear China?
There are some serious heavy-weight challenges to the Bretton-Woods economic stranglehold on the world that are happening right now. A lot of events are percolating up right now…that should lead to a more equitable use of the world’s resources now. – Jeff Brown in Beijing on the Shadow of Truth
China has been aggressively accumulating physical gold for a long time. Anyone with any modicum of knowledge about the global precious metals market dismisses China’s publicly released 1,778 tonnes gold holdings report as readily as they dismiss the United States’ published gold ownership holdings.
Perhaps the most credible estimate of China’s gold holdings is based on research by Alasdair Macleod. His research shows that China has been stockpiling gold at its Central Bank for a far greater period of time than is commonly assumed. Further, he suggests that China holds at least 25,000 tonnes – LINK.
On Tuesday China will begin to price gold on its Shanghai Gold Exchange in yuan. While no one knows if this will have an immediate affect on the ability of western banks to continue their inexorable manipulation of the gold market, it is likely another methodical move by China toward re-introducing gold back into the global monetary system.
The West, especially the United States’ neocon-controlled Deep State, is facing a global reset that is being engineered by China and Russia that is going to nullify the west’s Bretton Woods-based control of the global financial system.
Several other important building blocks for this reset have been or are about to be put in place. The establishment of the BRICS’ New Development Bank, which will open for business this month, is seen as an alternative to the IMF. The Asia Infrastructure Investment Bank, which recently issued a $750 billion yuan-denominated bond, is funding alternative to the World Bank.
Most important is the imminent introduction by China and Russia of a trade settlement system (CIPS) that will enable participants to by-pass the west’s SWIFT system and to settle their trade transactions without using the dollar.
The Shadow of Truth hosted Jeff Brown, author of the China Rising website. Jeff has been living in Beijing for several years and offers us a view of China that is not distorted by the heavily manipulated United States’ propaganda-infested news apparatus.
Is Silver Getting Ready To Rip Higher?
The big buzz yesterday in the precious metals market was the news that Deutsche Bank has agreed to settle charges for its role in manipulating the London Bullion Marketing Association (LBMA) daily gold/silver price fixings. My view on this, albeit admittedly jaded, is that it is akin to the settlement charges being paid by the big Wall Street banks for their fraudulent behavior in the housing bubble mortgage market. Although Deutsche Bank has agreed to “spill the beans” on other banks, I have yet to hear any mention of JP Morgan, Citibank, Goldman Sachs or any number of other western bullion banks who engage in daily price intervention in the gold and silver futures market on the Comex.
My view on the matter is that until I see otherwise, this is nothing more than a “we took care of the problem, move along there’s nothing else to see here” situation. DB is like a trapped felon who blinked in the game of “Prisoner’s Dilemma” and gave up a couple of names in order to let it continue forward in its endeavor to save itself from collapse. While other indictments may be doled out, I do not see this as an advancement in the effort to reform the trading activity in the gold and silver markets. After all, the banks are manipulating the market on behalf of the western Central Banks and Governments who are highly motivated in their effort prevent a sustained rise in the price of gold from signaling the west’s continued financial and economic deterioration.
While the Deutsche Bank announcement may trigger some celebratory dances in the precious metals community, rest assured that for every bank removed from its gold/silver market manipulation service, they will be replaced by banks “sitting on the bench.” The “reformed” LBMA gold fix process is proof of concept. The prima facie format has been somewhat altered, as have the names involved. But it can be argued that the “reformed” price fix process is perhaps even more permissive of manipulation than the old format.
The more interesting issue in my opinion is whether or not the bullion banks’ ability to keep the price of gold and silver capped with any relative degree of success is fading. History has proved that all forms of market intervention eventually fail. If the intervention in the precious metals market did not ultimately fail, it would be a statistically unique event. I would have the readers recall the fact that the Rothschild family, which founded the London gold fix, withdrew from its involvement and connection to the LMBA, including the twice-daily fix process, in 2004. Something like this happens for a reason…
It’s been my view that silver hit a bottom in mid-December when the Comex silver contract closed at $13.72. The bottom was affirmed the day that silver was instantaneously plunged down to $13.58 for the purposes of the LBMA price fix and the futures immediately thereafter snapped back over $14. That was perhaps the most audaciously blatant act of manipulation that I’ve witnessed in any market in over 30 years of involvement in all aspects of the financial markets. I also believe it was a last-ditch capitulative effort of sorts by the bullion banks. And, of course, the LBMA never did offer an explanation for the egregious price anomaly.
Since mid-January the price of silver has been uncharacteristically “buoyant,” especially in relation to the price-action in gold. In general, silver outperforms gold on days when gold is being successfully manipulated lower and, in general, it outperforms gold on rally days.
I’m not an adamant technician or chart-reader, but the two graphs below are suggestive of a market that is ready to make make a big move higher (please click in the images to enlarge):
The graph on the left is a 2-yr daily of Comex silver. It appears to have carved out a nice bottom and it has broken out above both its 50/200 dma’s after successful “re-tests” of each. The graph on the right is 16-year weekly that goes back to the beginning of the secular bull market in the precious metals. After the big move up from 2008-2011, silver (manipulatively) pulled back a 16-year uptrend line and bounced.
Whether or not this is nothing more than a short-term bounce or the start of the next big move higher remains to be seen. I have told colleagues since the beginning of the year that I won’t break out the first case of champagne until silver trades above $20 and moves higher from there. Certainly the systemic fundamentals which support much higher prices for gold and silver grow stronger everyday.
Having said that, I remain firm in conviction that silver will be the best performing asset class at least through the rest of this decade. I also am growing more confident that both gold and silver are set up to make a big move higher over the next several months.
The latest issue of the Mining Stock Journal was released last night. In addition to providing what I believe is somewhat unique insight on the precious metals market, I present a junior mining stock that has been overlooked by the market. After an extensive conversation with the CEO last week, I don’t think this stock will remain overlooked much longer. You can access this report here: Mining Stock Journal.