“Crime, once exposed, has no refuge but in audacity.”
Tacitus, Annals
Gold and silver were hit early on today, and knocked lower on high volume in relatively quiet trade, while the stock market was being pumped higher.
The Fed would like to set the stage for their FOMC meeting next week, and rather badly so. They are afraid to do it with these unstable equity and bond markets, because if they raise and then the market breaks, then they will be blamed for it. You can see that the IMF and the World Bank have already covered their posteriors by warning.
It is not a 25 basis point increase that will break these markets. They are already broken, an accident waiting to happen.
The Comex continues to bleed out, with additional gold and silver leaving their warehouses yesterday.
Registered (deliverable) gold has fallen to 185,314 troy ounces, a low we have not seen I believe in since before the year 2000. On a quick calculation pending the final numbers early tomorrow, I would think that the ratio of paper claim to actual deliverable gold at price is now at an unprecedented about 225:1. This is not 'normal.'
Unless something changes, you can stick a fork in the NY version of 'price discovery', it is done.
Who is going to keep honoring a price set by a bunch of jokers playing liar's poker with a stack of paper claims?
The largest gold bullion exchange in the world outside of Asia, the LBMA in London, is scraping the bottom of the barrel trying to find enough bullion to keep satisfying delivery requests for Asia at these prices. That is worth watching closely, although it has always been light on disclosure.
The real game now is in London, and the indications are that the costs to borrow physical for immediate delivery, which means refining into kilobars and shipment to Asia never to return, are soaring.
There are increasing signs of desperation. Once again they look to India to cut imports and start 'utilizing' the gold held privately in that country. That means to hypothecate it as collateral for other peoples' obligations into the bullion float, never to return.
From what I have been reading, it seems as though JPM introduced quite the scheme to do that with unallocated gold, ETFs, and a number of private sources around 2011 in London.
The gold pool shows every indication of a late stage Ponzi scheme. If it was not operating under the 'cover' of some unwitting, bureaucratic boobs, it would probably have toppled over already.
Wall Street and the City have skated through so many lawsuits and criminal cases that they have fallen into a recidivistic spiral of white collar crime. They think that they are
teflon dons.
Listen to what Peter Hambro had to say in the first half of this recent interview,
here.
What I don't quite get, and I admit it, is why the gold pool keeps pressing prices lower against what is clearly an unsustainable and highly corrosive gambit? Where do they think they are going with this, or have they extinguished all their impulse to caution?
Ok, Jesse, but the price just went lower, and I'm confused, angry, and depressed
(head hits table, clunk).
When the going gets tough, these jokers keep doubling down. They are breaking the cardinal rule of never adding new money, even when you are
winning, to a proposition that is quickly becoming mathematically unsustainable. That is how almost every secular financial failure, from LTCM to MFGlobal to the London Whale, went wrong.
This pool, long lived as it might seem, is no different from any of the others, such as the infamous London Gold Pool. And the countdown to its end is underway.
Money, except during the relatively short life of a totalitarian state, is a function of market acceptance and global valuation.
Private individuals and governments have always intervened in the valuation of most markets including money.
I watched the ruble burn in the 1990's. I watched the currencies of the former Soviet bloc pass from an Orwellian fixed value system to free exchange. No currency has ever been held its value against the market forces outside their own borders, and inside, never for longer than the power of the State to control everything.
Given time, the markets have always won. Always.
I am concerned that if these folks do not wise up soon, we will not see an orderly rise in the price of the underlying commodity, but a series of dislocations and breaks sharply high as Jim Rickards appears to now think. That will not be constructive. They forget that it is never the act, but always the extended coverup, that brings even the most powerful down.
Storm warnings are out. Time to get our houses in order.
Have a pleasant evening.
