Yra Harris On Official Swiss Objections To the Gold Referendum

Yra Harris cuts to the heart of the matter in addressing the objections, more like rationales, of the Swiss National Bank to the gold referendum coming before a vote of the Swiss people.

I like it because it more generally addresses some of the objections to gold as a reserve asset.

"In a Bloomberg article from Nov. 5 by Nicholas Larkin and Catherine Bosley, it is noted that the Swiss National Bank is very opposed to the Swiss voters passing the referendum calling on the SNB to retrieve all its gold from foreign depositories and also to be an active buyer to replenish previously sold gold reserves. Larkin and Bosley noted the referendum specifies that at least 20 percent of the SNB‘s total assets be held in gold from a present level of 8 percent.

The problem is magnified by the present policy that is holding the Swiss Franc at a floor of 1.20 to the euro. Since the 1.20 EUR/CHF policy was announced, the SNB‘s assets have expanded by more than one-third as the SNB has intervened in FX markets by selling Swiss francs and buying euros and other foreign currencies. If the SNB wishes to maintain this absurd policy it will have to buy much more gold if the referendum passes.

The SNB is presently selling a hard currency, the Swiss franc, and buying massive amounts of a problem plagued asset, the euro. The Swiss policy of holding the EUR/CHF at 1.20 will be proven a foolish endeavor if the ECB moves to a significant QE program. The Bloomberg article concludes with a concern of the Swiss Government that:

“…. the initiative’s [referendum] ban on gold sales would deprive the SNB of an asset should it find itself in dire straits. Several analysts share that view.” In putting forth more nonsense about the SNB having to purchase gold, Georgette Boele of ABN AMRO in Amsterdam says: “You hold gold in terms of an emergency that you can liquidate if you really need to.”

Let me reiterate the nonsense of this statement: 1. If the SNB had to liquidate in an emergency then gold, in fact, would be the most sought after asset of haven status in the world and its price would be at extremely elevated levels; and 2. You don’t have to sell your gold but rather create an asset-backed security using gold to borrow on a leveraged basis in the very liquid capital markets.

The SNB and Swiss authorities are evidently very nervous about the upcoming referendum because of the effect it will have on the EUR/CHF policy of the SNB. Buying gold would be the best policy for the entire Swiss nation for presently the policy of printing Swiss francs to purchase euros is patently absurd."

Yra Harris, Notes From Underground

It's a Dark Day In Our Nation

"It's a dark day in our nation when high-level authorities will seek to use every method to silence dissent.  But something is happening, and people are not going to be silenced."

Martin Luther King, Ebenezer Baptist Church, 30 April 1967

I wonder what Martin Luther King would have said about America's decision to dedicate itself to perpetual war.

Gold Daily and Silver Weekly Charts - Audacious Oligarchy

"The problem of the last three decades is not the 'vicissitudes of the marketplace,' but rather deliberate actions by the government to redistribute income from the rest of us to the one percent. This pattern of government action shows up in all areas of government policy."

Dean Baker

"Most of them became wealthy by being well connected and crooked.  And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful. That’s what I have a problem with. And I think most people agree with me."

Charles Ferguson, Predator Nation

"No lie can live forever."

Thomas Carlyle

There is a currency war ongoing.  It's objective is the subjugation of whole peoples, including the domestic public.  In a very real sense it is nationless.

There is an 'audacious oligarchy' of self-defined rulers who move freely between private industry and government, whose primary objective is preserving and furthering their own power and self-interest.

Sheldon Wolin called this 'inverted totalitarianism.' Economist Robert Johnson has called it an 'audacious oligarchy.'  And so have many other responsible economists from Simon Johnson to Jeffrey Sachs.

I do not think that warnings or lessons from history will be sufficient to provoke change. Hubris makes people deaf and blind to consequences.  They will not learn, nor be informed by anything outside their own small circles.

This implies that there will be another financial crisis,  a 'hard stop' in the Western markets. How and when that will occur I do not yet know.

Have a pleasant evening.

BILL MOYERS: And you say that these this oligarchy consists of six megabanks. What are the six banks?

JAMES KWAK: They are Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo.

BILL MOYERS: And you write that they control 60 percent of our gross national product?

JAMES KWAK: They have assets equivalent to 60 percent of our gross national product. And to put this in perspective, in the mid-1990s, these six banks or their predecessors, since there have been a lot of mergers, had less than 20 percent. Their assets were less than 20 percent of the gross national product.

BILL MOYERS: And what's the threat from an oligarchy of this size and scale?

SIMON JOHNSON: They can distort the system, Bill. They can change the rules of the game to favor themselves. And unfortunately, the way it works in modern finance is when the rules favor you, you go out and you take a lot of risk. And you blow up from time to time, because it's not your problem. When it blows up, it's the taxpayer and it's the government that has to sort it out.

BILL MOYERS: So, you're not kidding when you say it's an oligarchy?

JAMES KWAK: Exactly. I think that in particular, we can see how the oligarchy has actually become more powerful in the last since the financial crisis. If we look at the way they've behaved in Washington. For example, they've been spending more than $1 million per day lobbying Congress and fighting financial reform. I think that's for some time, the financial sector got its way in Washington through the power of ideology, through the power of persuasion. And in the last year and a half, we've seen the gloves come off. They are fighting as hard as they can to stop reform.

The Financial Oligarcy in the US - Bill Moyer's Journal

SP 500 and NDX Futures Daily Price - Audit or End the Fed

"Politics is the loom that weaves and spins the fabric of our democratic social cohesion. The politics of democracy is the social blanket that we all willingly come together under, huddled awkwardly, for our national identity. The interwoven threads of multi-media, technology, financial, and shared social myths bind this political blanket into our national identity as a democratic republic.

When the democratic political process has been stealthy co-opted over many years by financialization, which seamlessly connects the financial industry and the government, we become members of a fascist form of state (inverted totalitarianism), without collectively knowing it yet."

Joe, the Angry Hawaiian

The financial system in its existing form is excessively arbitrary and non-transparent.

An external standard provides a flywheel, which prevents the expansion of the money supply at the discretion of a central authority that also has the power to monetize debt and set interest rates, within some longer term limitations.

In its worst form, short of an overt tyranny, the central banking power has the ability to create money at will, and distribute as they see fit, to their cronies, for whom they are also a powerful friend and regulator governed by a self-defined class that moves freely between government and the financial industry.

This is the precise reason why President Andrew Jackson vetoed the Second Bank of the United States.  The Banks speculated in the goods of the nation, keeping the profits, but using the power of their Central Bank to shift the losses to the public.

And this is the story of the serial bubbles we have been seeing since the 1990s.

Would it be 'better' to merely shift the power to create money at will from the Fed to the Treasury, and eliminate the issuance of debt?  Hardly.  There are other ways to accomplish this that do not count upon men being as selfless and wise as angels, which may exist as a theory, but has proven to be a terrible folly in all real world situations in which it has been tried.

Have a pleasant evening.

 

Gold Daily and Silver Weekly Charts - Short Squeeze

"Oh what a tangled web we weave,

When first we practise to deceive!"

Walter Scott, Marmion, Canto vi, Stanza 17

Watching the trade in gold and silver last night was interesting.

Around midnight gold was smacked down seven dollars to about $1132 in the matter of a few seconds. That is customary since traders have to reset their stops after midnight, and there was a bit of the usual inexplicable 'gamesmanship' one sees in bucket shops, rigged card games, and for some reason the Comex.

But about an hour later the price rebounded back up sharply to the 1144 area and seemed to stick there for most of the trade, with a slight upward bias, until the US announced its Non-Farm Payrolls Report for October, which sucked out loud.

There is no recovery. And as that fantasy wavered, so did the dollar and both gold and silver traded higher throughout the day, as the spec who came for the usual NFP Day smackdown ate their shorts.

So what next. Gold and silver are still in bear markets. This is counterintuitive of course since in the case of gold especially there is a yawning mismatch between actually supply and real demand.

I took a look at the Sprott Physical Gold Trust and there it was, another redemption. I have not yet looked but I suspect we will see more sizable redemptions from the ETFs.

I have offerend some intraday commentary that may shed some light on this phenomenon. I encourage you to read it here.

That there is manipulation in the gold market is, in my mind and in accordance with the evidence at hand, strictly a rhetorical question now, argued by the bully boys and shills of the Banks, and those pit crawlers of the financial demimonde.

That is not to say that 'it is over.'   These things never end when you think they will end, but when the end comes, it tends to come with a vengeance.  So I don't think we will even have to ask the question when the answer is there. 

A good start would be for gold and silver to break these awful, grinding short sales and bear raids lower, and that means breaking the pattern of lower highs and lower lows.  That means taking out $1270 gold and sticking it to the bears, hard.

For now this is a big bounce off a grossly oversold condition.  So it is too soon to break out the balloons.  Even if you are a legend of the legendary legends.  Mere mortals must wait for a more solid confirmation of a sustained change in trend.  The powers that be never give up any shred of power easily, and that is what we are seeing: a shifting landscape of historic proportions. 

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Non-Farm Payroll Flop - FrankenFed

There was intraday commentary on the Non-Farm Payrolls report.

It was fine, if you want less jobs than expected at lower wages that can sustain anything like a recovery.

Things are not going smoothly for those required to live in the real world.

At some point, the pampered princes will have to notice that all is not well, and that the natives are growing restless. 

 

I think what we saw in the midterm elections is some disenchantment with the happy talk, and blowback on the party in power. 

 

The bloom is going to wear off the elephantine rose fairly quickly if the houses of Congress cannot do something a little more imaginative than trickle down, trickle down.

Do you think the powers that be are completely unaware?  Perhaps not.

 

It was common for people in old Russia to say, 'if only Comrade Stalin knew what was going on.'

George Carlin had a rather salty and somewhat pessimistic explanation for the lack of reform and recovery.   Caution language.

Perhaps the one percent and their burgermeisters will have a change of heart-- before the sight of villagers with pitchforks and torches comes cresting over the hill.   It might end up looking like the fall of Saigon.  Oh the bureaucracy!

Have a pleasant evening.

NAV Premiums of Certain Precious Metal Trusts and Funds - More Sprott Gold Goes Walkabout

It appears that some more gold has been redeemed from the Sprott Physical Gold Trust in this last paper push lower in price.

There were a total of 27,911 ounces of gold redeemed from the Trust with a corresponding number of units turned in for them.  

Given the pressure on physical supply in this last paper bear raid, it is not all that surprising.

No wonder the powers that be are so nervous about the 30 November Swiss referendum.

I will have to do another look at the big ETFs to see if they have been bleeding bullion.

Here is a chart showing the previous level of gold in the Sprott Physical Gold Trust