Corporate Media: Journalism In the Service of the Powerful Few

"But the biggest clue that Sorkin's take on Greenwald was no accident came in the rest of that same Squawk Box appearance:

"I feel like, A, we've screwed this up, even letting him get to Russia. B, clearly the Chinese hate us to even let him out of the country.

I would arrest him . . . and now I would almost arrest Glenn Greenwald, who's the journalist who seems to want to help him get to Ecuador."

"...As a journalist, when you start speaking about political power in the first person plural, it's pretty much glue-factory time."

Matt Taibbi, All Journalism Is Advocacy Journalism


"And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that."

John Dalberg Lord Acton

While I obviously can not agree with everything in this long documentary, Orwell Rolls In His Grave, I found the discussion and examples to be interesting.

I have included a short video clip concerning the standard visual media set piece afterwards just for fun.

The problem is not that there is advocacy in journalism. There is always advocacy in journalism, even despite a striving for objectivity. Taibbi goes to some lengths to show this in the piece I quoted from above.

The problem is the concentration of ownership in a few powerful hands, and the accompanying diminishment of the exposure of all the facts and perspectives. Even deciding what is not covered becomes a form of censorship.

Like the deregulation of the financial industry, the concentration of the media in a relatively few corporate hands was a ongoing trend that took a great leap forward under the presidency of Bill Clinton, and was then continued and reinforced under George Bush and Barack Obama. It was the conscious undoing of reforms from past lessons learned.

It is the concentration of ownership of the corporate media that is at the heart of the problem of the decline of independent journalistic standards. That, and the culture of unprincipled expediency in the service of power and shameless greed.

We are not responsible, but are culpable to the extent we accept this decline in decency and justice, even by doing nothing as simple as passing on a leaflet, conveniently electronic these days. As Sophie Scholl once said, many years ago in Munich, a people deserve the government which they are willing to tolerate.

Gold Daily and Silver Weekly Charts - Oh Say Can You See

The propaganda coming out of the mainstream media is reaching a crescendo.   And the carnies on the financial networks are getting so obvious and clumsy it is almost funny, like watching a bad magic show.

Next week will be lightly traded in the States because of the Thursday national holiday.

If the specs start piling on in the metals they will likely get another 'gut check' or two in the off hours because that is often how these things go in dysfunctional markets as are common in New York and London these days.

The physical markets opening in Asia and Russia are going to turn NY and London into the carnival sideshows that they deserve to be.

I would like to see gold take out its 50 Day Moving Average. That is a technical signal that could spark a rather robust reversal.

Someone may be getting set up to take a beating a little later this year. But let's not get ahead of ourselves. The lack of transparency in the markets makes good forecasting difficult. The use of offshore entities, trading gimmicks, and shell companies by some of the big financials is a serious problem.

SP 500 and NDX Futures Daily Charts - Paint Spills Off Tape a Bit Into End of Quarter

And the second quarter is finally over.

Stocks extended their rally in a choppy trade for much of the day but then slumped into the close as traders took profits and squared up ahead of a holiday shortened week.

As a reminder there will be no trading in the US on Thursday, 4 July, and the volume on Wednesday and Friday is likely to be rather light. So I think we will see a lot of 'technical trading' unless something happens.

I do think these markets have been so corrupted by gimmicks that they have become virtually dysfunctional to the real economy.

Have a pleasant weekend.

NAV Premiums of Certain Precious Metal Trusts and Funds - Silver Snaps Back

Premiums are still quite weak, but the snapback in silver is a classic.

The Gold/Silver ratio is still high but nowhere near the 66 it was hitting.

This has been a market operation brought to you by your financial sector.

And there will be repercussions and consequences in the real world for what they have done.

There is no free lunch, even in control frauds.

Are you truly a den of vipers and thieves? Give the gold you have taken back to the German people to whom it rightfully belongs.

Tonnes of Gold Removed From the Major ETFs and the COMEX Since January 1

Considering the theory that the purpose of this market operation was designed to take the price of gold lower since the first of the year, and to free up bullion to relieve certain stresses in delivery, I was wondering if we could quantify the results of it in any way.

With the help of Nick at Sharelynx.com, the keeper of records and master of charts,  I was able to calculate the approximate number of tonnes of inventory that were released into the market, or some private storage area perhaps, from the top funds and exchanges in the western world. The time period is from the beginning of this year through 26 June.

If this is correct, and the hypothesis is correct, then it is 'mission accomplished.'

There should be no excuses for not delivering Germany's gold.  And plenty of other bullion has been made available to solve those other pesky failures to deliver that seemed to be cropping up.

So one may presume that the bullion is in the mail to its rightful owners, in care of the Herr Weidmann at the Deutsche Bundesbank. The NY Fed sends its special regards.  Ich liebe dich.

Unless of course it has been rehypothecated to those barbarian buyers in Asia and the Mideast, yet again.

C'est la guerre des monnaies. Quelle dommage!

I have also included Nick's personal wave count for gold and silver, although I am not an adherent to the waves theory per se. And his long term confidence range for the gold bull market.

The stars seem to be aligning, with perhaps a few more antics and end of quarter shenanigans.  But boys will be boys, and they can't keep their hands off their toys.  So who can say what will happen next.  How about another round of bailouts?

Dubai: Not Enough Space On Flights To Carry Gold From West To East

Dubai is a hub for gold flowing from West to East.

But no gold for Germany can be found.

Could it be an unofficial bail-in? 

Curiouser and curiouser.

The National UAE
Gold rush 2013 style has Dubai scrambling
By James Doran
Jun 28, 2013

There is not enough space on airlines flying in to Dubai to meet the rapidly rising demand for physical gold in the emirate since the price plunged to record lows this week.

The price drop led to a rush of buyers for Dubai gold from the Middle East, South East Asia, the Balkans, Turkey and parts of Europe according to Tarek El Mdaka, the managing director of Kaloti Gold in Dubai.

"I cannot find a place for transporting gold on Emirates, on BA on Swiss Airlines this weekend," Mr El Mdaka said. "I am shipping in one-and-a-half to two tonnes of gold every day and it is going straight out...."

Read the rest of the story here.

Gold Daily And Silver Weekly Charts - End of Quarter, Stealth Confiscation

There is intraday commentary here.  I think it is important.

One remarkable thing about today's market action was the rebound in the miners even as gold underwent another waterfall bear raid of selling down to the 1200 level. 

While one can assign any motives they wish to the speculation about if and why there is a stealth confiscation happening, I do believe that the trigger for this was the request from Germany to have their sovereign gold returned, and the refusal of the custodian in New York to do so until 2020.

That is huge.  It is almost incomprehensible.

Any fails to deliver or difficulty in obtaining supply at the LBMA or the Comex is most likely a secondary effect to this request.

The scramble is on to find bullion, because a failure to deliver on a legitimate request from a sovereign nation to have their gold bullion returned at the insistence of their citizens, who actually own it, is stunning. I am surprised that more has not been made out of this, and that the German people took this so blithely.

A default on an exchange can be covered up with forced cash settlements. A rehypothecation of customer assets by an MF Global can be sectioned off and minimized with the right PR campaign, localized to the investors whose property has been misappropriated and will not be replaced, except in discounted cash.

But for a central bank to release another country's bullion to their cronies in the market and then be unable to replace it without roiling he markets and sending a shock into the financial system is almost unbelievable.

This is what has happened in my opinion, and why the 'dogs of the market' were released by the financiers on their own people to try and hide what must be an embarrassment of the first order.

And if you believe I am mistaken, or engaging in some obtuse conjecture, I have only one response.

Prove me wrong. Make the markets more transparent. And return Germany's gold.

"Truth never damaged a cause that is just."

Mohandas K. Gandhi

This has become a badly done shell game of rehypothecated assets that cannot be unwound except with much higher prices which are viewed as an embarrassment and an impairment to a few of the TBTF Banks.   Well, they have had plenty of opportunity to cover their massive short positions, and free up bullion from the big ETF.

The initial misdeed may have been minor, but as it always seems to happen, the coverup is growing like some gothic structure.  This is MF Global on steroids.

I think these fellows are playing for time, perhaps hoping for some 'big event' that will allow them to reset the markets and the rules of the game, for themselves and their cronies, once again.

Maybe there will be a rationale,  a fairy tale, that this was a way to pressure Iran, who was rumoured to be resorting to gold payments when their currency was blocked in the international payments system. The American people might believe this. I doubt the rest of the world will.

Show us the truth while they is still an honorable way out. Make the markets honest and transparent again. Stop stonewalling on the investigation of the silver market.  Fulfill your oaths.

Stand and deliver.

SP 500 and NDX Futures Daily Charts - Back Up to the Trend Channel Top

The market has been rallying ever since it made that very precise hit on the Fibonacci retracement level that I pointed out just before it happened.

This is the end of the quarter, and so I would not be surprised to see the paint applied to the tape in liberal doses 'unless something happens.'

What else do they do in a kleptocracy.

Stand and Deliver: How Germany Disrupted the World's Gold Market

Someone asked, 'why would there be a desire to do a stealth confiscation of gold from the public holdings in ETFs and private stores through price manipulation?' Who could have been assigned the task of prying bullion out of the hands of the people, and for what conceivable reason? It appears to be happening, but why?

There are any number of possible reasons. Concerns that an innovative new round of QE and money creation might create a run on the gold price is one possibility. There should be little doubt in those who look into the evidence that central bankers are quite sensitive to gold and silver as alternative currencies and reflections of their own policy initiatives.

And that is quite possible. As I have pointed out, there is some precedent for it. In 1933 Franklin Roosevelt pulled back much of the publicly held gold in the US. And after this was done, the government revalued the gold from $20 to $35 overnight, and then used the gains to recapitalize the banking system.

Although this could happen again, it does not seem likely because it flies in the face of everything the central bank has achieved by putting the US on a purely fiat money regime, the last gold ties being severed by Nixon in the 1970s. They prefer to denigrate gold, even though they still hold it, and certainly speak about it quite a bit often through their intermediaries.

There is definitely a movement to revisit the Bretton Woods Agreement that established the dollar as the world's reserve currency. The BRICs, whose economic power is ascendant, are seeking to establish a new currency for global trade that is owned by no single central bank or entangled in the domestic policies of no single country. And they wish to add gold and possibly silver to that mix. And they are in the process of acquiring substantial reserves to accomplish it.

The Anglo-American banking cartel is resisting this movement with all their diplomatic and political might. One of the sensitivities of the recent spying scandal leaks is the concern that they may be trying to obtain intelligence that could be used in these negotiations which are ongoing, very quietly behind the scenes.

But one has to ask, 'what set off the firestorm of price manipulation against gold that started at the beginning of this year?' Unless one is a shill, or naïve about markets, the market operation to knock the price of gold, and also silver, down is fairly obvious and heavy handed. They are not even trying to hide it. Traders do not dump hundreds or even thousands of contracts at market in quiet periods with any other objective than to take the price down. It really is that simple.

My initial take on this was that this was part of the 'price-setting' negotiation for gold and silver in the basket of currencies that the BRICs are developing. But that seemed a bit thin, unless it was seen as a 'last stand' against including gold and silver by making the argument that they were too volatile.

So I looked back on the chart for what I saw was the pivotal moment, and then checked the news and tried to find some event that may have served as the impetus for it. And the truth of it was staring me right in the face.

How remarkable is it that Germany, at the urging of their citizens and despite the objections of their central banks, has requested the return of its sovereign gold from its custodial storage in New York? And that the Feds said, no. You can't have it, but we will be in position to return your own property in seven years time.

What was up with that? Venezuela had recently requested its gold to be returned, and that helped to push the price of gold up to its all time high, because the request had obviously been floated before it became public knowledge.

So why couldn't Germany have the return of its own property for seven years?

Think about this. And perhaps what is happening now will become more clear. It is all a part of the credibility trap, wherein past actions of officials must be hidden in order to protect careers and ensure the orderly functioning of the status quo, even to its own eventual detriment.

Oh this is wrong? This is some weird theory? Well I admit that part of the problem is that we are left to guess what the central banks and the markets are doing with our money and property far in excess of what might be expected in democratic societies. This is the failure of regulation and oversight, and the corrupting power of big money in politics.

But, ok. If this is just some distraction, then give Germany back its gold, in full, this year.

If you wish to prove your word is good and facts are straight, give Germany back its gold.

And if you wish to restore some level of confidence in the markets, make them more transparent and open so people can conduct their business efficiently and safely without fear of being cheated and defrauded at every turn.

If you wish the trust and respect of the world, redeem what you have pledged to hold in trust.   If you have taken some actions in the past that were made in good faith and for good reasons, but may have gone too far or turned out badly in retrospect, make good on them now.   The way to stem a scandal is to bring the truth to light.  It is never the initial act that brings down government, but the subsequent attempt at coverup that obtains a life of its own.

Do the right thing even if it is not convenient, because it is the right thing to do. 

Prove your full faith and credit to be worthy.  Fulfill your oaths.  Tear down the wall of secrecy that divides the people from their government. End this before it can go any further.

Stand and deliver.

"Oh what a tangled web we weave when first we practice to device."

Sir Walter Scott

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it."

Sir Eddie George, Bank of England, in private conversation, September 1999

Gold Daily and Silver Weekly Chart - Staggering Into the End of Quarter

I think we are nearing the end of this exercise in bullion inventory adjustment and price driving selling patterns that started in October.

While this most likely had its impetus in the official, in practical implementation it smells like Wall Street asset stripping to me.

That is another term for a stealth confiscation through price manipulation.

But why speculate. Let's see what happens.

Gold is still flowing from West to East.   There is no doubt about that.  

I just wonder how many of the Banks and their friends have used this policy opportunity to wet their beaks, and feather their own nests for the future.

Am I being too cynical?  Are you serious?  What market haven't they rigged lately?

SP 500 and NDX Futures Daily Charts

Stocks put in a rally today despite a sharply lower adjustment to 1Q GDP to 1.8% from 2.4%.

That is twenty five percent lower!

The Fed will not be ending QE anytime soon.

They may call it something else. They may change what they are buying and how they are buying it.

But the Fed is going to remain 'accommodative' for the time being.

The problem they face is that their money creation is going right into the banking system where it is being channeled into financial assets. They may seek to change that. Without serious cooperation from the dysfunctional Congress and the crony captured White House, it is hard to see how they can.

The Tax Free Tour

"All animals are equal, but some animals are more equal than others."

George Orwell



h/t Stacy Herbert

Gold Has Had a 34% Correction

Here is a chart from Tom Fitzpatrick at King World News that I thought put this into some perspective. 

It is certainly worth reading his commentary, and I produce only his first chart with the rest to be seen at the source. With last night's selloff that correction is probably more like 35% or so but that does not alter the chart pattern.  He also shows his long term chart on silver.

I took the liberty of circling the secondary cup and handle that was the consolidation before that last big leg to the upside top. This is what I was referencing last night. I had not realized at that time it was a 34% top to bottom correction. I was setting down to do the longer term chart today when I came across this, and it is well done.

That secondary cup and handle consolidation marked a big resistance level that thereafter became big support after having been exceeded.

I am waiting to see what happens here.  This is a very 'purposeful' correction with selling that is blatantly timed to move prices lower in quiet markets.  But the overall timing matches with the new lows in deliverable bullion at the COMEX and the TOCOM.

Big corrections like this are not unusual in bull markets.  That huge correction in 2007-2008 cleared out the market and set up the move to the high.  

I do think that such corrections represent 'asset stripping' by powerful and lightly regulated insiders and traders who have a free hand to obtain assets on the cheap after manipulating prices lower, and then allowing them to rise again.  But who can say, except for someone like a regulator with access to the relevant information.

I do think that a turn, if it occurs, will coincide with the end of quarter mark to market.  Perhaps that is too cynical.  It is hard to imagine that one can be cynical enough after the serial frauds in market rigging we have seen in the past fifteen years.

These sorts of action disrupt normal market operations and allocation of capital that may inhibit future supply. But it is too much to think that these jokers would care as long as they are making money.  Traders and private equity managers are often short term predators, and the environment in markets has become almost pathological. 

One serious caveat is that since we are in a 'currency war,' at least to some peoples' thinking, one can only rely on market-oriented things like charts so much.  As I said, the selling is obviously purposeful.  And there are contentious issues being discussed by the world powers behind the scenes.

Source: King World News

NAV Premiums of Certain Precious Metal Trusts and Funds

The selling action overnight was purposeful and determined.

To what purpose?  'Asset stripping' is one possibility, and not only from ETFs.

Let's see what happens to the global mining sector.

As I noted in a post last night, gold has now corrected back to the 'cup and handle' which was the point at which it broke out. I suspect we will find a footing here, but it is hard to tell since the trade is so disconnected from the physical market. I hear that in Vietnam overnight gold prices were running $230 over 'spot.'

Secrecy

We may wish to recall these words at this time.

Gold: Back to the Top of the Cup - Overnight Paper Bear Raids Free Up Bullion from the ETFs

Remember this chart?

This is the cup and handle formation that led to the big breakout and rally in gold, the point from which gold 'slipped the leash.'

And here we are testing that handle again.

Each time they smack down the paper prices of gold and silver, they free up bullion from GLD and SLV.  I wonder who decides where and how that bullion is sold into the market. 

With TOCOM and COMEX scraping the bottom of their deliverable inventory, and big drawdowns on the customer inventory held at JPM,  the release of tonnage from the ETFs matters.

Who is the custodian for GLD again?  Oh yeah. 

If and when gold finds a footing, it will be interesting to see who is holding bullion, and who has had it stripped away by this price operation that started in October of last year. 

I suspect its purpose was 'to save the system' which is another word for the Banks who were caught short on that big run higher.

But this is all for conjecture for now.  Let's see what happens when it happens.

Registered Gold at the Comex Long Term Chart

Someone asked me about this, and while I do not keep a history of it, I found a decent historical chart of the registered gold inventory at the COMEX on the web site Conscience Sociale.

For your reference the number of registered ounces in the COMEX warehouses yesterday was approximately 1,360,000.

Gold Daily and Silver Weekly Charts - Quiet on Option Expiration

The vampire squid (aka Goldman Sachs) came out yesterday and announced that gold is 'overvalued.'

It did not result in a big sell off as perhaps was intended, although the metals were under pressure for their Comex option expiration.

Registered gold held for delivery was down to a new recent low at 1.36 million ounces. Perhaps the Street wants to provoke another paper sell off to justify the release of more bullion from the GLD ETF.

With physical gold in short supply anything that triggers buying could ignite quite the short covering rally. I think the long stocks - short gold cross trade is getting a bit tired.

Let's see what happens.

 

SP 500 and NDX Futures Daily Charts - 'Better Than Expected' For 'Rally Tuesday'

The Consumer Confidence number from the Conference Board came in 'better than expected' as well as the volatile durable goods and new housing prices.

Interesting that good news was not interpreted negatively as it has been of late. Maybe that was because it is 'rally Tuesday' today.

NAV Premiums of Certain Precious Metal Trusts and Funds - Comex Option Expiry - Bazinga

Just another Comex option expiration.

There are two things that are fascinating at the moment.

The first is watching the declining inventory of registered gold at the Comex. Although keep in mind that there is a much larger store of eligible bullion there that could be switched to registered and available for sale at the right price.

And the second is the worldwide manhunt for Edward Snowden. It is fascinating, especially if you can watch it from some objective distance and see the propaganda campaign that goes with it.   Why is the great reformer possessed by an almost Nixonian desperation for secrecy?

Curiouser and curiouser.

The Search for Edward Snowden

The Daily Show Does the US Ratings Agencies

The Daily Show does the ratings agencies, CNBC, and the opera buffo of the financial markets.

The credibility trap doesn't explain everything, but it does cover quite a bit.

"It is difficult to get a man to understand something when his salary depends upon his not understanding it."

Upton Sinclair

h/t Matt Taibbi

COMEX Registered Gold Inventory Drops to New Lows

Bullion offered as deliverable inventories at the COMEX has dropped to new lows.

As a reminder, tomorrow is option expiration for gold and silver.

This evening Harvey Organ notes that:

"Tonight, the Comex registered or dealer gold lowers in inventory to 1.359 million oz or 42.27 tonnes. This is still dangerously low. The total of all gold at the Comex rose sightly to 7.681 million oz or 238.9 tonnes of gold.

JPMorgan's customer inventory remains constant tonight at 141,197.86 oz or 4.39 tonnes. Its dealer inventory also remains constant at 408,709.033 oz but it still must settle upon contracts issued in the June delivery month which far exceeds its inventory.

The total of the three major gold bullion dealers (Scotia , HSBC and JPMorgan) in their  gold Comex dealer account registers only 27.76 tonnes of gold."

The Wall

"The best weapon of a dictatorship is secrecy, but the best weapon of a democracy should be the weapon of openness."

Niels Bohr


"Every thing secret degenerates, even the administration of justice; nothing is safe that does not show how it can bear discussion and publicity."

John Dalberg Lord Acton

Gold Daily and Silver Weekly Charts - Option Expiration Tomorrow on the Comex

For those of you who are familiar with George Orwell's 1984, the histrionics about the search for arch-villain and espionage agent Edward Snowden reminds one of the search for the mythical enemy of the state in that book, Emmanuel Goldstein.

I will be curious to see what the equity market does, and how gold and silver go forward into the last few days of this delivery period with the existing inventory levels near record lows. 

As you know, when registered gold inventory has gotten to these record lows, it has marked an intermediate trend change within a month or so.

Speaking of contrary indicators, Dennis Gartman came out today and made some grunting noises about those unfortunates who own gold.  Dennis should know unfortunate, given the awesomely awful performance of the Gartman ETF (HAG.TO) which earlier this year went 'tits up' as they used to say in WW II.

For your convenience I have included the Comex calendar for the futures and for options below. 

SP 500 and NDX Futures Daily Charts - A Fibonacci Cha-Chi

Intraday commentary on stocks here.

Richard Fisher made some remarks about 'feral hogs' testing the Fed's will in the market, and stocks rallied from there.

I thought it was a nice touch that he did so when stocks were almost precisely at the first key Fibonacci retracement level. Nice technical precision.

Stocks are appearing to try and find a footing after last weeks quadruple witching option expiration.

SP 500 Futures Intraday - You Can't Follow the Opera Without a Libretto

This is from my post earlier today at 11:17 AM.

"I may adjust my outlook if the September SP 500 futures do not hold at 1518 which is the 50% Fibonacci retracement level. Right now we are at 1553 which is about a 38.2% retracement from the highly controlled, almost straight line rally that began at the beginning of the year."

Here is what the futures market looks like now in the chart below.   This market is trading on the technicals. 

Technicals is sometimes a euphemism for calculated insider manipulation, as in a 'wash and rinse.' You convince the small investor to get in despite their fears at some higher price, and then one pulls the rug out from under them since the entire rally has been manufactured, and buy the same paper back on the cheap, thereby skinning them once again.

Some of this is herd instinct with the smaller traders, but the big dogs at the Banks and funds are setting the tone in this trade with all the passion of a McCormick reaper.

This is the norm for deregulated or under-regulated markets, a far cry from the 'efficient markets theory' which is a canard. This was standard operating procedure in the 1920's before reforms were introduced.

If you do not believe this happens, if you do not believe that traders signal each other of their intentions, if you do not know that the big trading desks watch the structure of the market as in who is holding what and then act on it,  if you do not understand that the financial sector is being recapitalized by looting the real economy,  then you may be either a shill for the house, witting or not, or one of the suckers at the table.

"It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Upton Sinclair

We may have more downside to the 50% retracement, and it could be more IF something real happens.  That means something real, something fundamental, and not a manufactured event off some mild Fed jawboning. 

But in my opinion everything that has occurred since Bernanke's non-statement last week has been the second act in this opera buffo known as the US financial markets. 

NAV Premiums of Certain Precious Metal Trusts and Funds

The disparity in premiums, albeit both still negative, between the Central trusts and the Sprott trusts is remarkable.

I think it can be attributed to the difference in their 'redeemability' for bullion.

The gold/silver ratio is now a bit over 65, showing that the markets are under some obvious and general liquidity stress, and as such, gold tends to offer a bit more 'safety.'

I am tending to view the selling in the equity markets as the effect of the Fed jawboning to let some of the air out of a growing asset bubble that was becoming overleveraged.

The professionals are using this as an opportunity to take the public and the real economy out for an old fashioned 'wash and rinse' in which they frighten people out of positions that up until recently they had been urging them to take.

There is money to be made in shorting, and then one buys the same assets all over again on the cheap. This is the fallacy of efficient market theory and the benefits of financialisation. It becomes, at its extremes of deregulation and moral hazard, little more than a wealth transferal scheme, which is a fancy word for a con game. And it can rise to and corrupt the highest levels of a society.

I may adjust my outlook if the September SP 500 futures do not hold at 1518 which is the 50% Fibonacci retracement level.  Right now we are at 1553 which is about a 38.2% retracement from the highly controlled, almost straight line rally that began at the beginning of the year.

Glenn Greenwald Interviewed by David Gregory on 'Meet the Press' This Morning

Not the finest moment for the national mainstream media.

Please know that Glenn Greenwald is a regular writer for The Guardian newspaper, and has been reporting on certain policy issues for years. 

I found it repulsive that David Gregory could question Greenwald's right to the title of 'journalist,' preferring to label him a 'polemicist.' Is that because Greenwald was never a stand-in for Don Imus' morning talk show like David Gregory had been?

Where are the journalism schools in this time of official assault on their profession?

Gregory resorts to the bullyboy 'questioning' style in which statements and assumptions are first put forward as if they are true, to provoke a reaction of the person being questioned.  It is often saved for those whom the network views as undesirable, and in a weaker power position.

Television national broadcast media often resembles entertainment and infomercials moreso than straight journalism.    And it is little wonder why so many are turning to alternative sources for real news.

“The further a society drifts from the truth, the more it will hate those that speak it.”

George Orwell

This is like some bad version of The Hunger Games.





Here is a link to the complete show.

Obama's War On Whistleblowers - McClatchy

The Last Time the Feds Devalued the Dollar To Save the Banks

Here is a reprise of an article in which I take a closer look at the Gold Act of 1933 and the devaluation of the dollar against gold to recapitalize the banks.

As you may recall at the time the government withdrew gold from circulation it was the sovereign currency, and essentially 'owned' by the state, even while it was used by individuals as money.

This time gold has no official standing as money, and is considered private property, except perhaps for gold and silver Eagles which is a tenuous claim at best.

Therefore the government might be forced to use extraordinary and deceptive means to keep gold out of the hands of the people, and prepare the way for a revaluation of global currencies against gold is other ways.

Not all countries are on board with this, most notably China and India, although the RBI has been urging its people to substitute paper claims for actual bullion of late.

I do not think the US will go back to a gold standard.  However, I do think that there will be some inclusion of gold in the emerging replacement for the US dollar as the reserve currency for global trade.  I think it will be a basket of currencies and gold, perhaps silver. 

The revaluation of gold to the dollar would boost sovereign reserves significantly.  And I suspect that this move is being delayed while some countries are allowed to 'catch up' in their accumulation.

The Last Time the Feds Devalued the Dollar to Save the Banks
14 January 2009

We dipped once again into the Federal Reserve Bulletin Publication from June, 1934 to take a closer look at the growth of the monetary base, and found an interesting graphic that shows the accounting for the January 1934 devaluation of the dollar and the subsequent result on Bank Reserves in the Federal Reserve System.

As you will recall, the Gold Act, or more properly Executive Order 6102 of April 5, 1933, required Americans to surrender their gold coinage and certificates to the Federal Reserve Banks by May 1, 1933. There were no prosecutions for non-compliance except one benchmark case which was brought voluntarily by a person who wished to challenge the act in court.

After a substantial portion of the gold was turned in by US citizens and taken from their bank based safe deposit boxes, the government officially devalued the dollar from 20.67 to 35.00 per ounce in the Gold Reserve Act of January 31, 1934.

The proceeds from this devaluation were used to provide a significant boost to the Federal Reserve member bank positions as shown in the first chart below.

The inflation visited on the American people because of this action helped to take the CPI as it was then measured up 1200 basis points from about -8% to +4% by the end of 1933. To somewhat offset the monetary inflation the Fed also contracted the Monetary Base which served the nascent recovery in the real economy rather poorly and is viewed widely as one of a series of policy errors.

Considering that the actions did little for the employment situation this was painful medicine indeed to those who were dependent on wages.



Fortunately at the same time FDR was initiating the New Deal programs which, despite continual opposition from a Republican minority in Congress, managed to provide a small measure of relief for the 20+% public that was suffering from unemployment and wage stagnation.

People ask frequently "Will the government seize gold again?"

While there is no certainty involved in anything if a government begins to overturn the law and seize private property, one has to ask for the context and details first to understand what happened and why, to understand the precedent.

Technically, the government did not engage in a pure seize of private property, since at that time the US was on the gold standard, and much of the gold holdings of US citizens were in the form of gold coinage and certificates.

Governments always make the case that the currency is their property and that the user is merely holding it as a medium of exchange. The foundation of the argument was that the government required to recall its gold to strengthen the backing of the US dollar against the net outflows of gold for international trade. The devaluation helped with this as well, since dollars brought less gold for trade balances.

People also ask, "Why didn't the government just revalue the dollar without trying to recall all the gold from the American public?"

The answer would seem to be that this would have been more just, more equitable recompense for the public. The Treasury could have purchased gold from the public to support its foreign trade needs.

But it would have left much less liquidity for the banks.

One can make a better case that the recall of the gold, with the subsequent revaluation to benefit a small segment of the population in the Banks, was a form of seizure of wealth without due compensation. Hence the lack of active prosecutions.

So, will the government take back gold again to save the banks by devaluing the dollar?

Highly unlikely, because they not only do not need to this, since the dollar is no longer backed by gold, and is a form of secular property except perhaps for gold eagles, but they do not have to, because they are devaluing the dollar already to save the banks.

This time the confiscation of wealth to save the banks is called TARP. (and subsequently QE - Jesse)

If one thinks about it, US Dollars are being created and provided directly to the banks to boost their free reserves significantly, at a scale comparable and beyond to 1933-34.

The confiscation of wealth is being spread among all holders of US dollars and dollar assets, foreign and domestic, in the more subtle form of monetary inflation.

Granted, the government must be more opaque to mask their actions in order to sustain confidence in the dollar while the devaluation occurs, but this is exactly what is happening, and all that is required to happen in a fiat regime.

There is no need to seize widely held exogenous commodities like gold and oil, but merely dampen any bellwether signals that a significant devaluation of the dollar is once gain being perpetrated on the American people in order to save the banks.

Its fascinating to look carefully at this next chart below.



First, notice the big drop in gold in circulation of 9.8 million ounces, or roughly 36% of the measured inventory at the end of 1932. Think someone was front-running the dollar devaluation? We suspect that the order went out to start pulling in the gold stock to the banks.

The reduction in gold in circulation AFTER the announcement of the Gold Act in April would be about 3.9 million ounces, or roughly 22% of the gold remaining in circulation in March 1933.

Considering that all gold coinage held by banks in the vaults was automatically seized, the voluntary compliance rate is not all that impressive. We are not sure how much of this was being held in overseas hands by non-US entities.

But beyond a doubt, there was a unjust, if not illegal, seizure of wealth by requiring citizen to turn in their gold to the banks, which was then revalued at the beginning of 1934 by 69% from 20.67 to 35 dollars.

It would have been much more equitable to devalue the dollar and to change the basis for dollar/gold first, before requiring private citizens to surrender their holdings. But of course, this would have lessened the liquidity available for direct infusion into the Federal Reserve banks.

What Kind of Fools Are Buying Gold?

On the whole, the world's central banks are now net buyers of gold, and have been for some time, after being net sellers for over twenty years.

Russia is one example.

Why do you think they are buying it?   They don't understand money?

They don't know what they, and some of their associated central banks, are planning to do to recapitalize the deteriorating global financial system and dollar reserve trade regime?

Did they forget to watch CNBC to find out what they really ought to be doing?

I hear that J P Morgan has stealthily gone net long gold now after beating down the price.   Would having the biggest banks go long gold and then letting it be revalued higher be one way to recapitalize them?  It seems as though recapitalizing them through insider information is the mode du jour.

Silly idea huh?  Well that is what the did in 1933.  They took the gold out of official circulation, and out of the hands of the people, and then revalued it significantly higher, and used it to recapitalize the remaining banks after purging the insolvent banks during a bank holiday.

The only ones who seem to be saying that gold is not a good investment are the Anglo-American banking cartel and their enablers and supporters. They wish to maintain the confidence, and the buying of their paper which they are selling.   But who knows what they are doing for themselves in private. 

Such strange times. Such deception and disappointment.  One can only wonder.

Obama Discussed During Leader's Questions in Dublin - Never Cross An Irish Woman

As a general rule of thumb, never cross an Irish woman.

And if her eyes narrow and start flashing, head for the pub.

Gold Daily and Silver Weekly Charts

Unless markets collapse over all in a rush to liquidity I think gold and silver are both oversold short term and will likely find a footing here.

Next week is an option expiration for gold and silver on the COMEX.

I am waiting to see how the physical selling numbers come in. That is the most important thing to me as we work through a delivery period with short supplies.

In my mind this sell off was a just another paper based phenomenon enabled by slack regulation by the CFTC.

I would feel more confident if the metals can break up through their 50 day moving averages.

Today on Bloomberg Mr. Laszlo Birinyi said that 'gold is our biggest short.'  

I hear the commercial hedgers are near record lows on shorts.  

Let's see what happens.