"Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks. In fact, they tend to be too calm and exhibit minimal variability as silent risks accumulate beneath the surface.
Although the stated intention of political leaders and economic policymakers is to stabilize the system by inhibiting fluctuations, the result tends to be the opposite. These artificially constrained systems become prone to 'Black Swans' — that is, they become extremely vulnerable to large-scale events that lie far from the statistical norm and were largely unpredictable to a given set of observers.
Such environments eventually experience massive blowups, catching everyone off-guard and undoing years of stability or, in some cases, ending up far worse than they were in their initial volatile state. Indeed, the longer it takes for the blowup to occur, the worse the resulting harm in both economic and political systems."
Nassim Taleb, The Black Swan of Cairo, Foreign Affairs, May 2011
"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."
Alan Greenspan, Congressional Testimony on Regulation of OTC Derivatives, 24 July 1998
"We hypothesize that, having learned from the misadventures of the 1960s, the policy elites, well-versed in the practice of financial engineering and market manipulation, would have seen no need to dump stocks of government gold reserves onto the market, 1960s style, to keep the price in check.
Instead, synthetic gold, sourced in pyramids of credit extended to bullion bankers by central banks with little or no claim on physical substance, have provided a more efficient, better-camouflaged form of intervention. COMEX synthetic gold and related over-the-counter derivatives are traded in macro strategies implemented by hedge funds, high-frequency trades, and commodity funds in pair trades with interest-rate, currencies, equity futures, or even more exotic offsets. The volumes traded are huge, and bear little resemblance to actual flows of physical metal."
Tocqueville Gold Newsletter 2Q 2015
"Le temps mûrit toute choses; par le temps toutes choses viennent en évidence; le temps est père de la vérité."
Time ripens all things; with time all things come to be evident; time is the father of the truth.
François Rabelais
The long awaited invasion of Lebanon by the Israeli army shook the markets back into reality.
What a surprise.
The usual safe harbors saw activity as gold, silver, and the Dollar all rallied.
Risk assets like stocks slumped.
This is just an opening round in what appears to be a serious confrontation, stoked by ideological sociopaths and neo-cons.
Free speech comes under renewed assault, as the fog of war descends, and the false narratives of power are repeated shamelessly.
"Secrecy is completely inadequate for democracy, but totally appropriate for tyranny."
Malcolm Fraser, former PM of Australia
Have a pleasant evening.
