Chairman Powell’s testimony this week was closely scrutinized not just for its economic implications but also for its political overtones. Powell cited “trade tensions” as cause for concern about the strength of the global economy. He clearly seemed to be blaming President Trump’s tariffs.
But if the tariffs are what ultimately move the Fed to cut rates, Trump will have finally gotten what he wants out of Powell. In recent weeks, Trump has stepped up his attacks on the central bank, calling it the biggest problem facing the economy, floating the idea of firing Powell, and suggesting his administration would match China’s and Europe’s "currency manipulation game." Full Story
Unfortunately Butler can't seem to acknowledge the probability that these enforcement agencies fail to act against market rigging because the actual perpetrator is the U.S. government itself, operating through intermediary brokers, and because such rigging is legal.
That probability is greater because of the refusal of the U.S. Treasury Department and Federal Reserve to answer the simple question posed to them more than a year ago by U.S. Rep. Alex Mooney, R-West Virginia: Which markets are you secretly trading in, and why? Full Story
Just remember, both Janet Yellen and Ben Bernanke confessed that it is the Fed that murders economic expansions (their words, not mine), and the weapon they said the Fed uses is over-tightening the economy in their effort to suffocate inflation. (Exactly as I’ve said the Fed would do at the end of its recovery.) In that light, consider how the Fed has been talking about not raising interest rates any higher and now about lowering them while that entire time it has continued to rapidly tighten up its balance sheet like a rope around the economy’s neck without a word about that in any of its speeches.
Nice sleight of hand, huh? Turns out the monster creating all the shadows is the Fed, itself. There’s a twist you might not have seen coming. If you don’t believe me, just read the Fed’s own confessions linked to above. Full Story
Since Trump has been in office, the trade deficit has widened by 25% (as has the US budget deficit). The trade deficit is widening because countries are importing fewer US goods and because they are lowering the value of their currency against the dollar, and we measure trade in dollars. As foreign currency devalues, it takes fewer of those dollars to buy the same amount of goods.
That devaluation of foreign currencies good for US consumers, but bad for US exporters because the price of their goods in foreign currencies goes up because they start out being built and priced in dollars, so they sell fewer goods abroad. It’s also bad for US trade statistics. When other nations lower their currency the lower price of goods in US dollars increases the amount of goods on the foreign side of the ledger that the US imports, widening the trade deficit. Full Story
Aside from his inability to respond intelligently to the gold standard question (he should have taken notes from Greenspan), Powell knows that a zero interest policy and money printing is the only way that he and his elitist cronies can keep the system from collapsing until they finish extracting the last remnants of wealth from the public. A gold standard would stand in the way of this effort. Full Story
The two developments in focus include a broad artificial pricing scheme, or manipulation, affecting a wide swath of commodity markets and a more specific price manipulation involving JPMorgan in silver and gold. The illegal pricing schemes did not evolve overnight, but over a multi-decade period of time. That’s one of the main reasons why so many have failed to appreciate what has occurred – it has been a gradual process. So gradual that, like a frog not jumping out of a pot of water being heated slowly, market observers and regulators alike have come to accept as normal the dramatic and illegal change in the price discovery process.
Simply put, commodity prices are now set and determined by excessive speculation in derivatives contracts by a handful of large traders and not by changes in actual commodity supply and demand. Derivatives contracts are entered into by two parties, a buyer and seller, and include futures and options contracts traded on listed exchanges and contracts traded over-the-counter, where futures contracts are called swaps. In essence, derivatives contracts are simply paper bets on price in the future and only rarely involve the physical delivery of the underlying commodity. Full Story
This means that GOLD is telling me that the metals complex is likely setting up for another strong run as we look towards 2020. And, ideally, I would like to see GOLD blow through that 27 region, on its way well over 38 in the coming year or two. (No, that was not a misprint).
So, as this market sets up its next bullish move higher, I think we can sit back, set our stops, and simply let the market run and work for us in the coming months to year ahead. Full Story
Citing a confession to gold market manipulation in the United States, a member of Parliament this week urged the British government to investigate possible manipulation of the gold market in London.
The member, Jeremy Lefroy, Conservative for Stafford, prompted a discussion of manipulation during a speech Monday in the House of Commons. Lefroy questioned the economic secretary to the U.K. Treasury, John Glen, Conservative member for Salisbury, as to whether the government was able to prevent gold market manipulation.
Glen responded that the U.K.'s Financial Conduct Authority has "the right tools" and the jurisdiction to "detect and respond" to attempts at market manipulation. But he did not directly respond to Lefroy's request for an investigation. Full Story
In conclusion, be warned that both CFTC-generated indicators are flashing warning signals for the short term. However, the conditions that led to the most recent price spike will persist—and will only deepen—in the months ahead. So don't let the next pullback frighten or otherwise concern you. This is just the natural ebb and flow of these Bank-dominated "markets". Higher highs are still pending in 2019 as COMEX Digital Gold posts its best annual gain since 2010. Full Story
The summer months historically present a buying opportunity in precious metals as illustrated in the charts shown below. In the past, there has been a clear change of direction in sentiment annually from the 185-195 day mark – midway in the year. So far this summer, though, gold has broken with tradition by turning in a strong June, as shown in the third chart.
“Gold trading usually gives pundits, dealers, and investors a break at some point over the summer,” observes Adrian Ash at BullionVault. “But like 2007, 2008, 2009, 2011 and 2016…this year is proving no time to take your eye off the market. And if 2019 is going to see an old skool summer lull in gold trading, it won’t feel much like a discount up at these prices.” With a range of economic and geopolitical issues preying on investor psychology – particularly at the funds and institutions that have fueled the upside this year – the summer of 2019 might go down as one of those years when we bypass the annual slowdown. Last year, gold hit a low of $1178 in mid-August. By December 31st, it was trading at the $1280 mark. Full Story
Stock market investors, hungry for more pork, are demanding Fed Chair, Jerome Powell, land on their table on a silver platter with an apple in his mouth at this week’s congressional testimony. Will he deliver? Powell has a thin red line to talk, or this overFed market, which he and is cronies have nurtured, dies this week from its own morbid obesity. On the other hand, if he does what they want, it’s a major blow for Fed independence. Powell proves he is the market’s slave, and he bows to President Trump. Full Story
Gold and silver bugs are well aware that JPMorgan Chase dominates precious metals futures trading. Russ and Pam Martens of the financial blog Wall Street on Parade just identified how much control they have.
There are more than 5,300 FDIC insured banks in the U.S. Just two of them, JPMorgan and Citibank, hold 75.7% of all precious metals derivative contracts (primarily futures) in possession of the nation’s banks.
Other major Wall Street banks, including Goldman Sachs and Bank of America, are barely even in the game. Full Story
In the first part of this series, we introduce some concepts from accounting: cash basis and balance sheet. This approach would logically suggest that we look at the national equity account. Any accountant can tell you that assets = liabilities + equity. Or, to restate it, equity = assets – liabilities. So in this approach, we should add up the value of the assets. That is daunting, but it should be possible for a government agency with sufficient resources. And add up all the liabilities, which should be easier.
There’s just one problem. What do we mean by the value of the assets? They are constantly going up, in the regime of falling interest rates since 1981 (the asset price is inverse to the interest rate, a topic we’ve addressed in other articles). We have this problem even if we look at the proper book value, i.e. the price paid by each owner and not mark-to-market. Full Story
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