Tag Archives: market manipulation

Do Bona Fide Financial Markets Still Exist?

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , ,

Paul Craig Roberts, Dave Kranzler, Michael Hudson

For many decades the Federal Reserve has rigged the bond market by its purchases. And for about a century, central banks have set interest rates (mainly to stabilize their currency’s exchange rate) with collateral effects on securities prices. It appears that in May 2010, August 2015, January/February 2016, and currently in February 2018 the Fed is rigging the stock market by purchasing S&P equity index futures in order to arrest stock market declines driven by fundamentals, and to push prices back up in keeping with a decade of money creation.

No one should find this a surprising suggestion. The Bank of Japan has a long tradition of propping up the Japanese equity market with large purchases of equities. The European Central Bank purchases corporate as well as government bonds. In 1989 Fed governor Robert Heller said that as the Fed already rigs the bond market with purchases, the Fed can also rig the stock market to stop price declines. That is the reason the Plunge Protection Team (PPT) was created in 1987.

Looking at the chart of futures activity on the E-mini S&P 500, we see an uptick in activity on February 2 when the market dropped, with higher increases in future activity last Monday and Tuesday placing Tuesday’s futures activity at about four times the daily average of the previous month. Futures activity last Wednesday and Thursday remained above the average daily activity of the previous month, and Friday’s activity was about three times the previous month’s daily average. The result of this futures activity was to send the market up, because the futures activity was purchases, not sales. http://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500_quotes_volume_voi.html

Who would be purchasing S&P equity futures when the market is collapsing from under them? The most likely answer we can come up with is that the Fed is acting for the PPT. The Fed can actually stop a market decline without purchasing a single futures contract. All that has to happen is that a trader recognized as operating for the Fed or PPT enters a futures bid just below the current price. The traders see the bid as the Fed establishing a floor below which it will not let the market fall. Expecting continuing declines to make the bid effective, they front-run the bid, and the hedge funds algorithms pick it up, and up goes the market.

Is there another explanation for the shift in the market from decline to rise? Are retail investors purchasing dips? Not according to this report in Bloomberg — https://www.bloomberg.com/news/articles/2018-02-12/record-23-billion-flees-world-s-largest-etf-as-panic-reigns — that last week a record $23.6 billion was removed from the world’s largest ETF, the SPDR S& 500 index fund. Here we see retail investors abandoning the market.

If central banks can produce zero interest rates simultaneously with a massive increase in indebtedness, why can’t they keep equity prices far above the values supported by fundamentals? As central banks have learned that they can rig financial asset prices to the delight of everyone in the market, in what sense does capitalism, free markets, and price discovery exist? Have we entered a new kind of economic system?

Proposed Global Class Action Gold & Silver Manipulation Lawsuit

Financial Markets, Gold, Market Manipulation, Precious Metals, ,

This news was originally disseminated by GATA on February 5th.  A British law firm, Leon Kaye Soliciters, has proposed the initiation of a class-action lawsuit charging that six “well known” financial services groups conspired to manipulate the London Gold Fixing from 2004 – 2014.   The proposal cites the recent settled Deutsche Bank class action suit for in New York and the ongoing billion dollar class action suit in Ontario, Canada.  The class action suit would be open to investors globally.  If interested contact Leon Kaye at info@leonkaye.co.uk.  Here’s a summary of the proposal:

Based on documents in the public domain to which we refer below, we consider that there are good grounds to believe that members of six well-known financial services groups combined together to manipulate the outcome of the London Gold Fixing between about 2004 and 2014 and that members of four of those groups combined to manipulate the outcome of the London Silver Fixing between about 1999 and 2014. The effect of this was to create false market prices, in particular by artificially depressing prices after the 3pm (London time) Gold Price Fixing and to increase bid-offer spreads in physical gold, physical silver and their respective derivative instruments. The relevant institutions did this to increase their profits from their own activities in these markets at the expense of other market participants who have therefore suffered loss and damage, probably running into hundreds of millions of pounds in aggregate.

If it can be established that these financial institutions participated in price fixing then we consider that there can be little doubt that they have breached section 2 of the Competition Act 1998 and are liable to pay damages to any other market participant that suffered loss and damage as a result.

Market participants who have suffered loss and damage are entitled to claim damages in proceedings in the Competition Appeal Tribunal (“CAT”) in a class action pursued either on an ‘opt-out’ or an ‘opt-in’ basis.

You can read the entire announcement here:  Proposed Precious Metals Class Action Suit

While I’m skeptical that this will have an impact on the market, even if the suit is ultimately filed, there’s always the chance that court-ordered discovery – assuming these banks have not destroyed and wiped clean any evidence – could reveal the truth.   And the truth will set the gold/silver price free.

Gold Manipulation, Propaganda And Totalitarianism

Financial Markets, Gold, Market Manipulation, U.S. Economy, , ,

“I read Atlas Shrugged, Brave New World (+ Brave New World Revisited) and 1984 every ten years or so. Each time they are closer to reality.”  That comment was emailed in from a listener who offered the suggestion that the websites identified by Jeff Bezos’ “Washington Post” are Russian propaganda conduits should combine resources and sue the WashPo.  Apparently the proprietor of Nakedcapitalism.com, Yves Smith, has threatened the WashPo with a defamation lawsuit and has demanded a public retraction of the accusations put forth by Deep State insider, Jeff Bezos (see this for details on Bezo’s connection to the Deep State:  McCarthy’s Red Scare Redux).

The problem is that lawsuits of that nature do no good anymore.  We’re in the latter stages of “Atlas Shrugged.”  If you’re not part of the insider Government’s elitist circle, there is no Rule of Law.  If Yves takes up a collection to help fund her fight, we will gladly contribute but we don’t think fighting the trend is going to do anything other than pander to our ego. It’s false gratification that is embedded in the illusion that citizens can effect change.  Ask the people who are being honest with themselves if their vote for “change” worked in 2008…

In other words, there’s a movement toward totalitarianism set in motion now that can’t be stopped until it blows itself up.   History is pretty clear on this dynamic.   Look at the Bill being passed by the House that contains a section which opens the door for internet censorship.  If that Bill becomes a law, it will remove any legal standing to file suits like the one threatened by Yves. If she’s serious about filing a suit, she needs to file it before the Senate passes that legislation and before it’s signed by either Obama or Trump.

The movement toward Governmental totalitarian control gained traction when nobody put up any resistance to the increasing use of presidential Executive Orders.  Congress should have been livid but rolled over under a shower of special interest money.   The use of the Executive Order usurps Congressional and Judicial power and transfers it to the Executive Branch of Government and, specifically, to the Oval Office. It’s Rule of Man.

Just like the totalitarian creep, the use of propaganda by the Government is intended to assert control over the public’s perception.  The phony economic reports and the manipulation of the markets – especially the intervention in the stock  gold markets – are various forms of propaganda.  The economic fundamentals continue to deteriorate.  By just about every privately source economic data series the U.S. economy is contracting – i.e. in a recession.

If the Dow and the S&P 500 keep going higher and the price of gold is prevented from moving higher – and even though the economic fundamentals would suggest that stocks should be tanking and gold should be soaring – it sends the “message” that “maybe everything is better than it seems to me.”  Pure. Unadulterated. Propaganda.

In today’s episode of the Shadow of Truth, we discuss the use of propaganda and market manipulation as tools used by the Government to help it advance the movement toward to a totalitarian system as prophesied by visionaries like Orwell, Huxley and Rand:

The System Will Implode When Central Bank Intervention Fails

Financial Markets, Gold, Housing Market, Market Manipulation, Precious Metals, U.S. Economy, , , ,

The economic reports released this morning added to the near-continuous flow of information reflecting a U.S. economy that is likely contracting, for the most part.  Perhaps the only “fundamental” variable not contracting is the hot air coming from the Fed.

In today’s release of its “services” PMI, Markit explains:  “The US economy is going through its worst growth spell for three and a half years…and the worst may be to come as the greatest concern is the near-stalling of new business growth.”

The core durable goods new orders index released today dropped for the 13th month in a row – Zerohedge points out that it is the longest “non-recessionary” stretch of consecutive monthly drops in 70 years.

In fact, a good argument can be made that if a bona fide rate of inflation was applied to the Government’s GDP calculations, the U.S. economy has not produced real, inflation-adjusted economic growth since 2006.  Review the work of John Williams’ Shadowstats.com for evidence of this fact.

The Swiss National Bank admitted that it has spent $470 billion on currency manipulation since 2010.  Given the Fed’s refusal to disclose any information about its currency swap programs – including denying all FOIA requests on this matter – there can be no doubt that the Fed has been actively funding the SNB’s endeavors. The same goes for the SNB’s huge U.S. stock portfolio, which includes insanely overvalued gems like AAPL and AMZN.

We are witnessing the western Central Banks’ last gasp at preventing total systemic collapse.  The Fed et al were able to defer this event in 2008 with many trillions of direct money printing – deceptively marketed as “Quantitative Easing” – and many more trillions of direct Government income and spending subsidization.  After all, a Government willing to underwrite and guarantee 3% down payment, subprime credit mortgages is creating nothing more than a form of “helicopter money” dressed in drag.

A reader who is a self-professed real estate expert took issue with my blog post the other day in which I stated that the housing market is tipping over now.   He said: “Until proven otherwise, the U.S. housing market is still alive and well right now – and Denver is still doing very well too!”

Quite an assertion given that his opinion is based almost solely on the corrupted data produced by the National Association of Realtors (I refer you to one of several blog posts in the  past in which I demonstrate in detail why the NAR data is highly flawed, if not intentionally fraudulent to some degree).   To which I responded:

We’ll have to agree to disagree. Despite the propaganda, prices have been falling in Denver since last summer. Inventory is going through the roof. The “bubble” neighborhoods everywhere in metro-Denver are starting to look like they did in 2008, littered with for sale and for rent signs. I’m not sure where your “Denver” data is coming from but I conduct actual “boots on the ground” due diligence. I am getting emails from readers in Florida, DC/Virginia, NY and other regions describing the same thing I’m seeing in Denver.

The NAR data is highly manipulated. Yr over yr SAAR is useless as is the NAR data collection methodology. The “seasonal adjustment” regression program is the same program the Government uses in its data manipulation scheme.

At the lower end of the spectrum, we are seeing the last fumes of a regenerated subprime mortgage bubble sponsored by FNM/FRE/FHA/VHA/USDA. Yes, the USDA, which sponsors 0% down pmt mortgages in “rural” areas where “rural” turns out be the outermost suburban band of most MSA’s. Were you even aware of that?  There’s also been a “last gasp” surge in investor/flipper volume. They will be stuck holding the bag on homes they can’t sell or rent, just like in 2008.

My point in all of this is that the only “trick” left in the Fed’s bag right now is direct intervention in the stock market.   It’s a last gasp effort in an attempt to generate a “confidence” and “wealth effect” dynamic.  Hey, if the stock market isn’t going down things can’t be that bad, right?

The problem is that, for the most part, the world can no longer absorb any more credit expansion. We’re seeing this in the U.S. with the rapidly rising delinquency rates for auto and student loans, soon to be followed by another round of mortgage delinquency/defaults.

The Fed knows this and that’s why it continues to defer raising rates despite the constant barrage of threats to do just that at “the next meeting.”  Even the boy who cried “wolf” is blushing on behalf of the Fed.  I believe that the Fed’s inability to inflict a meaningful price take-down of gold and silver – especially silver – may be an indication that the Fed’s manipulative powers are beginning to atrophy.

It’s likely that this latest bear market bounce in stocks – the one for which Jim Cramer has ceremoniously proclaimed “a new bull market” – is going to start tipping over.  It won’t happen all at once but it will likely lead to yet another “waterfall” drop in the S&P 500.  Incredibly, the last two times around witnessed an incredible amount of screaming from the “peanut gallery” for the Fed to do something in response to just a 10-15% drop in stocks.  Bear markets typically don’t end until stocks have dropped 60-90%.

At some point the Fed will be completely helpless to prevent the market from going lower. That’s the point at which the system will collapse.  In my upcoming issue of the Short Seller’s Journal, I outline why I believe both oil and stocks are getting ready to head down the roller coaster tracks once again.  I have an idea that will capitalize on another move lower in oil plus accelerating defaults in the energy sector.  Subscribers also received an update email last night that presented a stock that I think is getting ready to experience an “elevator shaft” drop.  This company’s accounting is more misleading than Amazon’s, if that’s possible.

The Fed has been working overtime to hold up a stock market that is the most overvalued in U.S. history based on using traditional GAAP earnings.  My Short Seller’s Journal will help you find stocks that will ultimately fall at least twice as much as the overall market, either because of misleading accounting that gets exposed or rapidly deteriorating fundamentals, or both.  (click below to subscribe)

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SoT Ep 17 – Bix Weir: Silver, Gold And The End Game

Financial Markets, Gold, Market Manipulation, U.S. Economy, , ,

When the bond market collapses it will make the stock market crash look like a day at the beach.  – Bix Weir, Shadow of Truth

How much gold does China’s Central Bank/Government currently own?  How much will they admit to owning when they update their holdings in June?  Estimates of China’s gold holdings range anywhere from 4,000 tonnes to 40,000 tonnes.   No one knows how much gold they will report, but it is highly probable that the number they do report is a number that they want the mainstream world to believe and there’s probably a lot of thought that has gone into masterminding this disclosure.

Bix connects the genesis of the rigging of the stock market to computer programs written originally by Alan Greenspan using BASIC programs.  Greenspan was high school classmates with the co-inventor of BASIC – John Kemeny.   This was some fascinating history with which I was not aware, but I have been able to corroborate the information.

So what will the end-game look like as it unfolds?  Bix offers an optimistic vision in which the “good guys” are able to push out and eliminate the “bad guys” and the system “reset” we all know is coming will provide the foundation for new beginning and better world.

We think you’ll find this an engaging and interesting conversation we have with Bix.  He’s clearly done a lot of research and offers some extremely interesting insights and viewpoints:

Several Factors Suggest A Big Move Is Coming For Gold

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Thank God for the manipulation. Could be collateral stress? We get to buy at lower prices.  I just wish they manipulated the price of food, clothing and shelter lower as well. – Comment from a reader

There’s no question about it – the Fed and the Government’s taxpayer-funded Exchange Stabilization Fund have all of the markets under “lock-down” control right now.  The real economic data plus the geopolitical risk becomes worse by the day.  And yet, just when it looks like the stock market is going to drop off a cliff, out of nowhere the S&P 500 futures take off straight up as if launched from an anti-aircraft missile launcher.   Similarly, every time the precious metals start to make a serious move higher, HFT-driven mini-flash crashes start to occur repetitively during the least active periods of overnight trading and always after the Shanghai Gold Exchange closes.  The engineered flash crashes serve the purpose of triggering an avalanche of selling from large hedge fund “black box” computer programs.

But the oppressive and illegal manipulation of the gold market is starting to show unintended consequences again.  At the beginning of April the LBMA (London) gold forward rate (GOFO) turned negative again.  It’s been getting more negative every day this month.  The GOFO is the interest paid on dollar/gold swap transaction.  Ordinarily, it involves a party who pays interest to borrow dollars, using gold as collateral.  But when there’s a shortage of physical bullion, it means that one party needs to borrow gold and will pay interest plus put up dollars for collateral. It means that, at the current moment in time, it is perceived to be riskier to hold dollars than to hold gold.   

Because there is a shortage of physical gold, the lender of the gold is being  given the market value of the gold in dollars as collateral plus a rate of interest to compensate him for the risk that he might not get his gold back.  Think about that for a moment.

I just published an article on Seeking Alpha which discusses the GOFO and two other significant factors which suggest the possibility of big move coming for gold something this spring/summer.  You can read it it here:  GOFO, India and China.

With respect to the frequency of a negative GOFO:   From January 1, 1989 – July 7, 2013, there were only seven days in which a negative GOFO was observed.   But since 7/7/2103, GOFO has been negative more than 55% of the time.  In other words, the market for physical gold that can be delivered into the custody of the buyer has never been tighter.