I think we all knew yesterday’s Fed announcement was of DIRE IMPORTANCE to TPTB, directly following a record Dow decline and near parabolic gold surge that broke every Cartel capping tool devised (although they made up for it by sitting on silver).
Anyone with half a brain knew what the announcement would be, and it should be crystal clear that NOTHING they say has a chance in hall of EVER helping the economy. Yet, the clueless media hyped the decision as if the fate of America depended on it, as they have done with EVERY Fed meeting for the past three years, EACH of which has produced the IDENTICAL result!
Given the fragile state of the market, the criminals in Washington and on Wall Street knew they MUST create a post-announcement market reaction that would get publicized worldwide as a “success”, one that assured CONFIDENCE in both the Fed and the near-term economic outlook. Not that they hadn’t massively manipulated gold and the Dow following ALL their other announcements, but this one in particular had all the hallmarks of a potential near-term catastrophe.
I commenced this RANT minutes after the announcement was made yesterday, intending to highlight the futility of the announcement, which early on resulted in gold rising nearly $30 and the Dow plummeting 350 points from the pre-announcement levels. However, I got sidetracked, and thus couldn’t finish what I started until this morning.
However, I want to take credit for the first sentences I penned before quitting (with gold up to nearly $1,770 and the Dow down 200 points), which couldn’t have been more prescient:
“I know it’s early in the afternoon, as the Fed/PPT/ESF/Cartel/Working Group will be pumping more money into stock/bond/currency/gold manipulation in the next hour than at any time in HISTORY! The Fed statement MUST be made to look effective, no matter how many TRILLIONS are spent to paint a picture otherwise. However, no matter what they do, the INITIAL market response, BEFORE all the ALGOs were turned on, tells the story of EXACTLY what it thinks about the Fed’s pathetic statement.”
After Monday’s Dow bloodbath, clearly the PPT was on the case yeseterday, starting with the nonsensical +200 call on Dow Futures right off the bat. The Dow lost ALL those gains just MINUTES into the NYSE trading session, but not to be stopped the PPT continued to goose it ALL DAY LONG. Moreover, gold, which had hit an all-time high of $1,780 early in the morning, was under pressure all morning, particularly with the Cartel intent on sitting on silver like an anchor to keep excitement for the sector at a minimum.
However, gold never turned negative, and going into the Fed decision was up $25-$30 for the day, while simultaneously, for perhaps the fourth or fifth time today, the Dow started to sag. Hopes were high for QE3, but could the Fed possibly announce such a bold move with gold making new all-time highs?
So the statement comes out, yet another limp-d**k special, and gold SOARS while the Dow PLUMMETS. As on June 22nd, the date of the last Fed meeting, when the first call for QE3 was considered, the Bernank was foiled by a soaring gold price, thus forced to say something like ‘with the economy weak, we will maintain low interest rates for an extended period, keeping our eyes open for negative feedback that would prompt QE3.” Six weeks later, that “negative feedback” has been DRAMATICALLY worse than he could have dreamt, but again the SOARING gold price made it impossible for him to FORMALLY announce QE3. If he did, gold would be flirting with $2,000/oz this morning, I have ZERO doubt.
So he made the language EVEN MORE DRAMATICALLY SUGGESTIVE, adding that the “extended period” of low rates would last until mid-2013. Holy S**t, did I just hear that? MID-2013? I have to admit it took me several hours to realize he wasn’t speaking of 2012, but 2013! Two more years of ZERO interest rates for a country with spiraling debt burdens, exploding deficits, and a collapsing economy. If that doesn’t spell HYPERINFLATION, nothing does! No matter, grasshopper, have patience. FORMAL QE3 is right around the corner, as I expect the U.S. economy (and Europe) to implode so spectacularly this fall, it is hard to believe such an announcement can be postponed past September, or perhaps August for that matter.
Anyhow, the vaunted Fed statement comes out, and the market’s INSTINCTUAL REACTION was decidedly negative. The Dow plunged 350 on the Fed’s admission that recession was expected for at least two years, while gold soared realizing that accommodative monetary policy would indeed be here forever, per Sinclair’s long-stated “QE to Infinity” or the venerable Richard Russell’s “INFLATE OR DIE.” Not once, but TWICE did the Dow plummet to -200 from the +200 or so level it traded at all morning, while Treasury bonds exploded upward (the ultimate in investors stupidity), and the dollar declined sharply
But don’t worry, as I noted earlier this was going to be a day of Cartel victory no matter what, which is why they engineered the below $40 drop in gold just a half-hour before the markets closed, coupled with an even more ridiculous 650-point Dow rally. I’d call this “CARTEL PHYSICAL CRISIS #xx”, but I no longer require that table as we are no long past “MANIPULATION SATURATION.” In other words, seemingly every day is a new crisis of surging PHYSICAL PM demand, and any and all attempts to stop them have failed miserably.
In fact, gold rocketed back up to $1,750 within an hour of the NYSE close yesterday, and this morning is back above Sinclair’s magic $1,764 price, the level at which confidence in PAPER starts to dramatically decline, setting up an imminent price EXPLOSION to the upside.
Silver has been even more maniacally contained this week in a desperation effort to keep gold at bay (hoping the moronic press will again trot out the tired old “silver is an industrial metal” line to explain its underperformance). But man is it setting up for something crazy, as in BIBLICAL, as in gold will be forgotten, as in EVERYTHING will be forgotten once the awesome power of the coming silver explosion occurs, which I believe will ignite when the $50/oz level is again overtaken later this fall.
And one more note on “manipulation saturation” regards the absolutely INSANE currency market interventions we have witnessed in the past week, starting with the failed $58 billion (at least) intervention by the BOJ to suppress the yen (which is SURGING this morning to a new ALL-TIME HIGH), and stretching even to the Swiss Franc, the “king of currencies”, as the CURRENCY WARS move toward igniting a GLOBAL TRADE WAR that will ultimately destroy trade far and wide and likely yield bloodshed, as the annals of history would predict.
Remember, the whole purpose of suppressing one’s currency is to keep the dollar strong so broke Americans can borrow to buy cheap foreign products, enslaving themselves to debt and destroying American businesses further. And oh yeah, it keeps inflation down in the U.S., while causing it to EXPLODE overseas (can you say MENA, China, LONDON, Zurich (try this one: http://www.zerohedge.com/news/price-big-mac-now-1719-zurich).
So what do you think will happen in the U.S. now that decades of BOJ currency intervention is FAILING, and on the verge of IMPLODING in its face? Not to mention the GLOBAL impact of the unwinding YEN CARRY TRADE, in my view the single most destructive derivative ever created (although credit default swaps on sovereign nations are starting to challenge that claim).
Another topic I need to elaborate further on is silver, which has been MANIACALLY suppressed this week, falling from $40.50 on Sunday night down to $37.30 Tuesday afternoon while gold went ballistic, care of a Cartel DIVERSION tactic to strike fear in the hearts of silver investor that it is an “industrial commodity” that will fall during a recession, which I ASSURE you in this case will not happen.
There is NO DOUBT in my mind that silver’s MONETARY aspects are the dominant theme of the majority of incremental buying, and that it’s MONETARY aspects will win out over any Cartel attempts to portray the latter. Irrespective, without doing the math I’d bet gold and silver have had a 99% directional correlation since the dawn of time, and I assure you that the white metal, whose name stands for MONEY in 51 countries (see below), is not going to break that relationship during the WORST CURRENCY CRISIS OF ALL TIME!
“To 250 million persons in 51 countries the word for money is the same as the word for silver and silver literally means money.” Silver Profits in the 80’s, by Jerome F. Smith and Barbara Kelly Smith, copyright © 1982, ERC Publishing Company, page 43.
Remember, for AT LEAST the past six months, some of the largest bullion dealers on earth, such as James Turk’s goldmoney.com and Sprott’s Securities’ sprottmoney.com, have been selling MORE DOLLARS worth of silver than gold! Think about that, gold costs 45x more than silver, but more than cash is being spent on silver than gold. Throw in the historical 16:1 ratio of gold/silver that has been the average for hundreds, if not thousands of years, and that silver’s industrial uses have essentially wiped out ALL the world’s inventories, and you can very easily make the case that that ratio will be undershot significantly once the silver locomotive starts roaring down the tracks.
But don’t just take my word for it, as the “silver bears” made a new video on Monday, projecting a surge to $75/oz by year-end! And by the way, I’m not looking forward to seeing the state of the world when that occurs.
And one final word on this topic, which occurred to me while at the gym this morning. Last week, for the first time, I realized just how much it costs to buy a one-ounce gold coin. I mean geez, when you add in the premiums charged these days by dealers, you are paying close to $1,900/oz for a single coin, compared to roughly $43 for an ounce of silver. $1,900 is a lot of money in a collapsing economy, and wait till you see just how bad the economy gets in next few months (how about this one? http://www.zerohedge.com/news/july-california-tax-revenues-plunge-more-10-below-expectations). And if you thought about buying fractional gold ounces, even a 1/10th oz gold coin costs close to $200, and premiums on fractionals increase exponentially the smaller the size you go to!
Silver has just as long, and distinguished, of a monetary history than gold, is more rare, is much cheaper, and is nearly entirely produced as BY-PRODUCT from other types of mines, making it far more price inelastic than gold. JP Morgan is about to lose control of this market, and the explosion that will occur will put gold, and probably every other asset class in history, to shame.
I see the Dow has opened down nearly 350 points, erasing essentially ALL the PPT’s manipulation from yesterday afternoon in FIVE MINUTES, while gold is up $40+ to $1,775, approaching a new all-time high.
THE END GAME IS NOW, and as noted many times recently, you are RUNNING OUT OF TIME to PROTECT YOURSELF from the ONCOMING HYPERINFLATION!
Andrew C. Hoffman, CFA
San Diego Torrey Hills Capital
B (720) 350-4130
C (917) 324-7602