Martin Armstrong on metals manipulation

By Bron Suchecki, on February 10th, 2012
Below are some relevant extracts from Martin Armstrong’s The Analytical Shill. The article is generally about how research and analysts are conflicted and how analysts and investors and gurus can be blinded by their biases. The paragraphs below are straight from the article and will jump around a bit because I’ve just pasted them in order they appeared without all the extraneous stuff.

Martin Armstrong:

The metals were one favorite sector where they were constantly bullish – never bearish for 19 years. But hey, the market manipulators always needed cheer-leaders to get people to buy every high so they could sell.

On the Buffett Silver Manipulation, it was PhiBro who had a shill call the Wall Street Journal and tell them I was trying to manipulate silver down because I was short. When the WSJ & I argued and they refused to print the name Buffett they demanded I give them, that forced the CFTC to act calling me to ask where was it taking place. I told them London and they called the Bank of England. When they in turn ordered all silver brokers to show up the next morning, Buffett was forced to come out and admit he bought $1 billion worth of silver but denied he was manipulating the price.

You can ask the guys at GATA. They were well aware of the first 1993 Manipulation by PhiBro (Philips Brothers). They got in bed with Buffett when he stepped in to run Salomon Brothers after they got caught MANIPULATING the US Government bond auctions. They began buying silver and the CFTC stepped in demanding to know who their client was. Now if it had been anyone else, PhiBro’s reply was they refused to tell the name of the client. Forget the law. That does not apply to New York firms. The CFTC responded saying if they could not know who their client was, then PhilBro had to exist the trade. They did and of course made a fortune for the hawkers had all the little guys buy silver just in time for PhilBro to sell it to them.

This is WHY the manipulations began to move to London. Not only did PhiBro try to get me on board, their broker walked across the floor and SHOWED my broker Buffett’s orders at the low!

To create the fundamental, they moved inventory from New York to London. They were manipulating silver as always. Playing games with the inventories. They were moving silver from New York to London where the Buffett orders were being executed. This made the US warehouse inventories drop sharply. Go look at the analysts who talked silver up on that very fundamental. If they said there was a shortage of silver and you better buy it is going to $100, then you may be dealing with a shill or a biased analyst.

Many of the metals analysts with an agenda back then hated my guts. How dare I say there was a manipulation when it was at last silver was going up instead of down. Now I was part of some covert conspiracy hell bent on suppressing the metals because I dared to say “they are back” (manipulators) and the target was $7 by January 1998. To this crowd, a manipulation is always to the downside and never up.

Go check the recommendations of analysts back then. See where they stood. The best one I heard was silver was in demand in London because it was .9999 there instead of .999 in New York.

GATA began to see the same nonsense that I did during the early 1990s. It was just that I saw the manipulations as being UNBIASED. In other words, they did not care what they manipulated as long as there was a guaranteed profit. They manipulated even base metals such as rhodium. They manipulated platinum in league with Russian politicians who strangely recalled all platinum to take an inventory. Hell, Ford Motor Company filed suit over that manipulation.

How do you distinguish a REAL bull market from a bullshit manipulation?

Most manipulations can be seen easily when you look at a market in terms of a Basket of Currencies. Why? Because a REAL bull market must take place ONLY when it rises in terms of ALL currencies. Unless that takes place, investors in some countries will be sellers while others are buyers. Here is a classic example as to why we were bearish on gold for 19 years despite the hate mail and the best attacks of the shills. The manipulators ALWAYS need to get the metals guys worked up into a fever to sell to them to make their profits and big bonuses.

So when analysts only espouse one side, be very careful. For no matter what the market, there is always a time to rally and a time to pause. Nothing is ever straight up or straight down. Anyone who portrays that is either ignorant of the market behavior, or a shill – paid cheer-leader. Putting out bogus research has been the name of the game. Unfortunately, there are just some people who are hardcore.

Markets are the same mix as politics. There are people who simply believe in a given position and no matter what you say or what evidence you present to the contrary, they will never believe it. Thus, I have NEVER been interested in preaching to the choir. I have always preferred the independent thinker – the investor who wants to really learn about market behavior and not read someone who simply supports their never changing view of the world. Nor am I interested in exchange words with those who may not be shills, but are just part of a particular hardcore group. I am cheered only when I agree, and if I disagree, I am despised. But that is expected in the retail world – NEVER in the professional institutional world.

There cannot be a perpetual bull market in anything anymore than you can stand there with your arm straight up in the air. Oh shore, you can do it briefly. But then your arm will feel so heavy you can no longer keep it up. Everything takes a pause for the same reason you sleep at night. Nothing can maintain the same energy output all the time. People come up with all sorts of excuses why they are right yet the market declines. Usually it is some conspiracy of a mythical group so powerful that they just win.

Markets collapse because EVERYONE who ever thought of buying has bought. They are now counting their profits for the next eternity. Something happens and scares the herd. Suddenly, the long try to sell but there is no bid. The market collapses in the blink of an eye. Why, because the majority has already bought and there are no new buyers to keep the momentum going. It is never some mythical short player preventing the upward advance. It is just not time yet.

Philip Tetlock, a professor of organizational behavior at the Haas Business School at the University of California-Berkeley, has been following the so called experts for some 25 years studying primarily the institutional forecasting skill of political experts. He had signed up nearly 300 academics, economists, policymakers and journalists keeping track of more than 82,000 forecasts plotting them against real-world results. He analyzed not just what the experts said but how they reasoned and how quickly they changed their mind in the face of contrary evidence. He also tracked how they reacted when they were wrong, which was of course the majority of the time. Most could not even beat a random forecast generator.

Tetlock’s research did discover that there was one kind of expert turns out consistently more accurate forecasts than others. The most important factor he discovered was not how much education or experience the experts had but how they actually thought. The best forecasters were those who were self-critical, eclectic thinkers who were constantly updating their beliefs when faced with contrary evidence instead of clinging to dogma. He found the best were suspicious of grand schemes and conspiracies and were more practical about their predictive ability. The less successful forecasters clung to the same ideas never wavering pushing the same idea to the breaking point of absurdity. These types of people were more often embraced by the media because they loved to articulate and persuade as to why their idea explained absolutely everything.

Tetlock uncovered widespread forecasting failures. Of course, there is the herd of followers who for some reason want a GURU and unrealistically expect infallibility. This may reinforce the pundits that like to put on a show and claim why they are personally better than everyone else and only their ideas are correct and when wrong, it is the result of some giant conspiracy, not their lack of ability to forecast.

The key to the future lies in the UNBIASED view of whatever it is. You cannot be married to a single position EVER! Tetlock points out that a successful analyst always qualifies their arguments with “however” and “perhaps,” while the dangerous analysts build up momentum with “moreover” and “all the more so” as they try to be more entertaining. The dangerous analyst wants to keep the clients happy and to a large extent preaches to the choir telling them what they want to hear.

The one thing about markets is that the MAJORITY just have to be wrong! Why? They are the fuel that drives the market up and down. Trap the majority either long or short and you create the fuel for the next move in the opposite direction.

So for now, it is far better to let the markets speak. As I stated at just about every conference I have ever given, there is ONLY one analyst that is never wrong – that is the market itself. The key to successful trading & forecasting is to learn how to let the market speak to you and go with the flow. It does so in both TIME as well as PRICE. Turning points are NEVER specific events, but inflection points where highs and lows take place. It would have been nice to have a low first and a more orderly advance afterwards. But markets like to create the worst of all worlds.

So for anyone who thinks he can beat the game as an analyst or trader, must remember one thing. The market is always right. To survive, we have to align ourselves with the market and listen when it speaks. This is not a game for arrogance and prognostications fixed in stone steeped in bias and dogma. History repeats – but also with a slight twist. So how high will gold go? It is a question of CONFIDENCE.

You will ALWAYS be your greatest adversary, for to succeed you must conquer your own biases, fears, and doubts. You cannot do that as Philip Tetlock has keenly demonstrated with fixed ideas. If you are married to a philosophy and will not yield and blame everyone else for conspiring against you and that is the reason something has not yet unfolded, you better see a shrink.



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US manipulating the gold price up

By Bron Suchecki, on October 14th, 2011
Very funny to read this from Reuters where Iran claims that its enemies were deliberately causing the price of gold and foreign exchange to rise in a bid to undermine the Islamic Republic’s economy. “The enemies and ill-wishers want to make a fuss and present wrong information to provoke and deviate the market,” Ahmadinejad told a crowd in a town in the western province of Hamadan, where he was on one of his frequent provincial visits. “In order to disturb the market they buy a lot of gold coins with their huge amount of money …

Seriously, this should be read in context of Vietnam’s issues with its citizens buying gold as an inflation hedge/savings, which I’ve blogged about in the past. We are seeing how politicians respond to high inflation. In Vietnam’s case, try to ban/restrict gold or in Iran’s case, blame outsiders. In neither case take responsibility. Don’t expect it to be any different in Western countries.
I also note DGC Magazine’s pick up of expansion of reporting (in USA) of export/import of physical money to prepaid access/stored value card products. Of course all about preventing the “transfer of money obtained through illicit activity”.  I wonder how long before the movement of money between states within a country has to be reported. They may as well get it over and done with and tell us fuck your privacy and just ban all forms of physical money/value and tell us we have to have one government issued credit/debit card we have to use for any transaction.
Finally, I recommend reading Unqualified Reservations blog post on maturity transformation, on which he has written about before. His argument is that borrowing short and lending long is at the heart of our banking problems and cause of the business cycle.
Quote:
The genius of Professor Krugman is that he goes so near the truth that he makes it obvious even to his commenters – who typically are both idiots and fools, but several of whom spontaneously exhibit the same insight themselves: Why can’t we regulate or even ban the maturity mismatch? Savers would have to make the maturity choice themselves and it would be transparent. Currently, the savers don’t understand the huge run risks that the banks have by funding with demand deposits and lending long. It’s hiding the risk.


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Matt Badiali: The Case for Gold Price Manipulation

By The Gold Report, on July 19th, 2011

Matthew Badiali As a geologist by training, it’s no surprise that S&A Resource Report Editor Matt Badiali takes a data-driven approach to investing. In this exclusive Gold Report interview, he shares calculations for trailing stops and strategies to take profits with prospect generators and points to the signs of gold price manipulation.


The Gold Report: Matt, in the June edition of S&A Resource Report, you wrote that resource stocks could see some pullback once quantitative easing (QE) was no longer injecting money into the system. QE2 ended last week. Is your thesis proving correct and what are your strategies to mitigate post-QE2 portfolio risk?

Matt Badiali: A lot of the resources—silver, oil and even gold—pulled back at the end of April. We felt there was enough commodity risk that we wanted to be careful investing in a lot of those companies. However, we jumped back into several silver companies because they just got too cheap not to take action. It looked like they had been oversold.

I still feel oil is inflated. I think gold is still in a bull market, but no bull market goes straight up. With the end of QE2 we could see gold reverse a little bit. My recommendation this month was coal. With European countries jumping out of nuclear power, coal is a fairly bulletproof market; it has less commodity risk than the rest of the group.

TGR: The headline on that article was “Ignore the Noise and Focus on the Big Trend.” What is the big trend?

MB: For one, gold is still a fantastic long-term investment. That won’t change until the U.S. and Europe get their financial houses in order. That’s when I’ll start looking bearish on gold and silver. We’ve seen a spectacular run in the silver price, then a big correction. Eric Sprott, for one, makes the case that silver will appreciate more than gold over the next year or two.

TGR: But for silver to return to its long-held ratio of 16:1, it would have to accelerate at a rate more than double that of gold. That’s a steep climb.

MB: I think inflation is still one of the best arguments; silver remains a good store of value. But silver also has one foot in industry, where demand is rising.

TGR: You’ve also written about the manipulation of the gold price. You made your case by looking at single day jumps in the price of gold and other commodities over the last 10 years. Over that span, gold had gone up more than 5% in 1 day only 3 times, oil went up more than 5% on 53 days and silver on 32 days. More to the point, gold never went up more than 10% in a single day over the previous 10 years. That would suggest the gold market is being controlled. Are you concerned about placing so much faith in a market that is being controlled by non-market-related events?

MB: Well, let me preface this by saying I went into this as a skeptic. I’m a geologist, a scientist. I looked at the gold price at Eric Sprott’s suggestion; he gave me an idea that I could test with data from Datastream. When we did the math, I was shocked. So, now I do believe that the gold price is being manipulated somehow.

As to my concern about investing in a manipulated market, I do my absolute best to hedge commodity risk by finding companies that are undervalued. You can’t argue with the long-term trend: the price of gold has gone up every year for the last decade. Either the manipulators are doing a terrible job or the trend is so inevitable that all they’ve managed to do is dampen it a little bit. The implication is that if the manipulators lose their ability to manipulate, gold prices could soar.

TGR: Let’s move on to your specialties. You recommend using trailing stops to lock in profits on equities. A trailing stop is triggered when an equity goes below a certain percentage of the previous day’s closing price. Given resource stocks’ inherent volatility, how do you determine trailing stops for junior resource equities?

MB: My colleague Steve Sjuggerud helped design a computer model we use to determine the most effective trailing-stop price. Trailing stops work off the high price. So, we base our percentage on the highest price that the equity achieved at the close of the day’s trade. For example, an investment in ExxonMobil would use a 25% trailing stop.

TGR: Because that’s not a volatile stock.

MB: Exactly. For juniors, we use 50%. Really, it’s about protecting yourself against major losses. We believe 50% is as much of a loss as we want to take on any position. To me, the trailing stop is a great way to take profits. If you start with a 50% trailing stop on your volatile stocks, you can tighten it to 25, then to 15 and 10 as you make money.

TGR: How do you determine how much to tighten?

MB: This is when the strategy has to go beyond the company. So, say we bought a junior miner operating in the Yukon. We made a big gain during the field season and in September we’re sitting on 60% or 70%. This is a great time to ratchet down your trailing stop because news flow is the life blood of junior miners. You can take a profit and plan to get back in the next summer.

TGR: Let’s talk names. Stansberry & Associates Investment Research developed a list of the Top 10 Prospect Generators. What are some prospect generators you’re following that might be considered undervalued at this point?

MB: Mirasol Resources Ltd. (TSX.V:MRZ) has been one of my favorites for years. It’s a silver explorer working in the Deseado Massif in Argentina. Marisol has smart, experienced folks who explore using cutting-edge technology. For example, Marisol has used satellite imagery and high-altitude aerial photography to explore. This allowed them to make two discoveries.

They just put out a resource on the first property, Joaquin, which is a joint venture with Coeur d’Alene Mines Corp. (NYSE:CDE; TSX:CDM). I suspect that Joaquin is going to become a mine.

I should add that one of the ways that I value prospect generators is the quality of their partners. Some companies will look for discoveries just to sell the project to someone else. Coeur d’Alene, on the other hand, has a vested interest in building a mine at Joaquin. They are serious, committed partners.

The other discovery is called Virginia, 100% owned by Marisol right now. That’s progressing very well; it has high grades. This year, the share price has been as high US$8; now it’s below US$5. If this discovery begins to grow in size, I could see Coeur d’Alene buying the entire company.

TGR: Given that Marisol was at US$8, would you consider it undervalued at US$5?

MB: Yes, and it’s because they’re in between field seasons.

TGR: What are some other prospect generators?

MB: One that’s been a rock star for me is ATAC Resources Ltd. (TSX.V:ATC). ATAC is a junior miner exploring gold projects in the Yukon. In 2008, the company made a big discovery in the Rau Gold Project, Rau is part of the Rackla region. In early July, ATAC put out game-changing results: 82 meters at 4 g/t gold within an interval of 115 meters at 3.1 g/t. That really proves continuity on this project.

TGR: So, that’s a 100m step-out hole from the original discovery hole that was found at Rackla in November 2010. Are there plans for infill drilling in the meantime?

MB: I’m heading up to Vancouver the end of this month to get the entire story. They have a lot of rigs on site, but I just don’t know what their plans are. It’s important for them to get a feel for the size of it.

Right now, I believe it’s time to sit back and see which mining company or companies decide they need to own this project. I think ATAC will be the story that we go back to over the next 5 or 10 years and say, “Wow, what an amazing discovery all the way through its buy up.”

TGR: With a market cap of over US$800M, it will have to be a pretty major player to buy out ATAC. Any idea who some suitors might be?

MB: I’m not sure who the suitor will be. I don’t think you’ll see somebody like Kinross Gold Corp. (TSX:K; NYSE:KGC) sneak in and buy ATAC for its current market value. I think you’re going to see competition. And I’m hoping that it is north of US$2B. That would be pretty nice.

TGR: Do you have one more prospect generator before we move on?

MB: There’s a new company called Renaissance Gold Inc. (TSX.V:REN). This is another company where the people are the most important thing. The CEO is Richard Bedell and AuEx’s former CEO, Ron Parratt, is on the management team as well.

Renaissance has an exciting copper-gold project in Spain called Baza. It’s a partnership with Concordia Resource Corp (TSX.V:CCN) (previously Western Uranium Corp. TSX.V:WUC). The company is drilling there now. It also has several grassroots projects in Nevada that are comparable to Long Canyon. Lastly, it has an exploration agreement with Agnico-Eagle Mines Ltd. (TSX:AEM; NYSE:AEM) on four projects in Patagonia, Argentina.

TGR: Are there some juniors that may be underperforming right now, but could see a bump by the end of the year based on drill results?

MB: I’m expecting great things from Kaminak Gold Corporation (TSX.V:KAM). The company has a real discovery in Coffee; it’s a company-maker. Kaminak made a series of discoveries in the Yukon and named each one after a different kind of coffee drink. Kaminak really needs to find out if the discoveries are connected. I was up there last year and was very impressed with the size. I think that this is going to be their field season.

The CEO is Rob Carpenter. He’s a Ph.D. geologist, a very, very, very smart guy. Up in the camp, where everyone lives in tents, the company used a satellite dish with an XRF fluoroscope to do rough assays on site. It was really exciting to see him applying this new technology in the field on an active discovery.

Another junior that I like and own is Miranda Gold Corp. (TSX.V:MAD). It has a project called Pavo Real in Colombia and it is drilling in Nevada right now. I think that a little success will go a long way in improving their share price.

TGR: Could you comment on Kiska Metals Corp. (TSX.V:KSK)?

MB: I’ve known the management group at Kiska since 2006 when they were Rimfire. I have a lot of respect for them. They got away from the prospect generator model when they merged with Globex in 2008. Their Whistler project in Alaska is a series of gold sniffs. It’s copper-gold porphyry, which tends to be large and low-grade.

Comparable projects might be Northern Dynasty Minerals Ltd.’s (TSX:NDM; NYSE.A:NAK) Pebble project and Seabridge Gold Inc.’s (TSX:SEA;NYSE.A:SA) Kerr-Sulphurets-Mitchell deposit. These are all low-grade, but really, really big projects.

The Whistler project is relatively underexplored, so it has a lot of potential. If they get a couple of good drill holes, the share price could rise quickly. The company has a resource on it now.

TGR: Whistler has about 5.5 Moz., indicated and inferred combined.

MB: I think it has the potential to double. This could be one of those long, slow explorations. The average grade there is half a gram, so they need to string a lot of holes together. That’s what we saw with Seabridge. It took several field seasons, but they wound up with more than 30 Moz. just from drilling and delineating the deposit. That’s what Kiska will have to do.

Kiska does have a new technique for drilling that they think might speed things up, and a new target area. The company is going to do more than 30,000m of drilling this year. Kiska is worth speculation at this point. Their high was US$1.74 last fall and their 52-week low was US$0.65. Now, it’s around US$0.77. Unless they have some sort of calamitous accident, this is pretty close to a likely bottom. It looks like this is a company that you can speculate on.

TGR: What would the trailing stop be?

MB: I would use a 50% trailing stop.

TGR: Let’s close by going back to a more strategic topic: management groups. What’s your approach to evaluating a management group?

MB: Doing your homework really pays off in this industry and not doing your homework will ruin you. There’s an old saw that says the best way to make a million investing in junior miners is to start with two million. That’s true.

I do the homework—and the legwork—for Stansberry. I make the phone calls. I go to Vancouver and attend the conferences. Meeting management is crucial; I go to their offices. I go out to the projects and kick the rocks. I keep a contact list of industry experts from geologists to brokers to successful speculators to retired geologists that aren’t in the field anymore. I vet projects and companies as thoroughly as I can before we ever invest in them.

TGR: Matt, thanks for helping our readers get a start on their homework.

Matt Badiali is the editor of the S&A Resource Report, a monthly investment advisory that focuses on natural resources—from small exploration outfits, to equipment companies, to the biggest commodity companies in the world. As a geologist, Matt focuses on all natural resources including silver, uranium, copper, natural gas, oil, water and gold. He’s also a regular contributor to Growth Stock Wire, a free pre-market briefing on the day’s most profitable trading opportunities. Matt has real-world experience as a hydrologist, geologist, and a consultant to the oil industry and he holds a master’s in geology from Florida Atlantic University.



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We are flies in a bullion bank web

By Bron Suchecki, on May 26th, 2011
I left this comment on the FOFOA blog:

Your point about bullion banks having the best intel is important. Bullion banks are like spiders in the center of a web. They can feel the twitching of the flies in the web and determine the mood of the market better than anyone else and often in advance of others.

For example, if Mints are starting to see an increase in demand and begin running down stocks, they will start to take delivery ex-bullion banks, who as a result now have intel that retail demand is picking up before anyone else sees it in reported coin sales.

London Banker has expressed this idea much better than me in this post:

Over the past 25 years the financial markets of the world have become highly concentrated in the intermediation of a handful of firms, and regulation has been harmonised in the interests of these few firms. …

Sadly, these few global firms have been for some time in “a conspiracy against the public”, and have subverted the organs of public governance and the infrastructure of the financial markets to their purposes. …

Four global banks are intermediaries in 85 percent of OTC derivatives transactions. The same banks dominate prime brokerage. The same banks own large equity interests in the now demutualised exchanges, clearinghouses and even warehouses of the global markets. Naturally, the same banks dominated underwriting of securitised assets. The implications have scarcely been grasped of what this portends in terms of the information asymmetries and the opportunity to manipulate markets without risk.

Each of these roles gives these few banks a view into the positions of market investors. They know who owns what, using what leverage, under what terms, and trading in which markets. Knowing that, the manipulation of prices to impoverish investors and enrich the ruling banks is child’s play with a bit of ill-transparent HFT through proprietary dealing desks and connected hedge funds aligned with the firms. …

The only resilient solution is local, transparent markets with disintermediation of the controlling banks. Eliminating the information asymetries which allow them to see everyone’s positions, leverage and trading activity – and trade and ration liquidity accordingly – would go a long way to preventing further concentration.



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The Mysterious Mr Maguire’s Message of Metal Manipulation

By Bron Suchecki, on April 6th, 2010
“Since criminal prosecution is only a remote threat, and since the fines and damages are generally paid by the companies, not by the individuals, the question is: what’s to keep a Sumitomo from happening again, perhaps in precious metals?” – Modern Market Manipulation by Mike Riess, International Precious Metals Institute 27th Annual Conference, 16 June 2003.

The recent statements by Mr Maguire may well prove Mr Riess right. It is well worth reading Mr Riess’ presentation. It is not long and neatly identifies the factors that contributed to the copper manipulation, factors that also apply to the metals markets.

For the young’uns, “a Sumitomo” refers to the case where, as the CFTC itself found: “the principal copper trader for Sumitomo engaged in a scheme, in conjunction with an entity operating in the United States, with the intent of manipulating the price of copper. In particular, during 1995 and 1996, Sumitomo, acting through its agent or agents, established and maintained large and dominating futures positions in copper metal on the London Metals Exchange (”LME”). In the fall of 1995, Sumitomo stood for delivery on a significant percentage of its maturing futures contracts. It thereby acquired a dominant and controlling cash and futures market position, which directly and predictably caused copper prices, including prices on the United States cash and futures markets, to reach artificially high levels. … Sumitomo intentionally exploited these artificially high prices in order to profit on the liquidation of its large portfolio of futures contracts and holdings of LME warrants.”

It is because of the Sumitomo case that I am not surprised by the revelations of Mr Maguire. However, the question for me is what sort of manipulation are we talking about? It is being spun as proof of GATA’s claim that the gold market is manipulated by the US Government via bullion banks in an attempt to support the dollar. While I don’t begrudge GATA some PR mileage, at this time all that Mr Maguire has is potentially another “rouge trader” case, only affecting the silver markets. He is not providing any evidence about gold market manipulations or Governmental involvement.

This may come in due time if the CFTC investigate further but that does beg the question of why rely on the Government. If they are ultimately party to the manipulation, will they not make the issue go away in a backroom deal? Alternatively, if the CFTC presses on and does find something initially in the silver markets, will it just be explained away as a rouge trader who will take the fall?

In this case it may be best to fight fire with fire. GATA would achieve more, and quicker, by doing a roadshow with Mr Maguire to hedge funds, sovereign wealth funds, etc and making its case that the market has been manipulated via the surreptitious leasing and selling of central bank gold that is now all used up and hence there is a large short position that can be squeezed. The standard of proof would be much lower, just enough to convince an investor that the odds are in their favour.

Would it not be better to use brawn rather than bureaucracy? Only if you’re sure the bet your pitching won’t turn bad, because then your buddies will be blue (to put it mildly).



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Gunning For Goldman Sachs Gangbangers

By Trace Mayer, on December 7th, 2009

Goldman Sachs (GS) gangbangers are engaged in public service, or more appropriately pillaging, as fast as possible even while the victims are getting increasingly shrill in their protests.  No means no and the gangbangers are not being respectful.  Bankers, financiers, hedge fund managers and others are being exterminated under suspicious circumstances.  Even senior gangbangers have issued guidelines for Goldman Sachs (GS) employees congregations in public.

You cannot make this stuff up.  So, in the culture of Goldman Sachs (GS), if their employees start getting exterminated then how will it affect the stock and how can the situation be played for profit?

TENSENESS IN THE OFFICE

The Goldman Sachs (GS) gangbanger’s public pillaging is being increasingly revealed and the hundreds of millions, even billions, of people they have stolen from and wronged are getting rightfully upset.  This is bound to create some tenseness and nervousness around the gangbanger’s hideout.  Bloomberg’s Alice Schroeder, author of The Snowball:  Warren Buffett and the Business of Life, reports:

The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank. … Has it really come to this? Imagine what emotions must be billowing through the halls of Goldman Sachs …

The bailout was meant to keep the curtain drawn on the way the rich make money, not from the free market, but from the lack of one. Goldman Sachs blew its cover when the firm’s revenue from trading reached a record $27 billion in the first nine months of this year, and a public that was writhing in financial agony caught on that the profits earned on taxpayer capital were going to pay employee bonuses.

My the tangled web that Goldman Sachs (GS) gangbangers weave.

WARNINGS

Lloyd Blankfein, Chief Gangbanger for Goldman Sachs (GS) and whose wife does not like to wait in line at charity events, proclaimed that Goldman Sachs (GS) was ‘doing God’s work’.  Interestingly, CNBC reported, Lloyd Blankfein “added that he understood, however, that people were angry with bankers’ actions: “I know I could slit my wrists and people would cheer.”


As the Huffington Post reported:

L’Osservatore Romano is reporting that Goldman Sachs is indeed Doing God’s work, and His Former Holiness Joseph Ratzinger has confirmed the unsolicited hostile takeover. Writing under his pen name Benedict XVI, Ratzinger verified that total control of the popular religion has been transferred to Goldman Sachs and His New Holiness Lloyd Blankfein.

But seriously, the Bible has many examples from Elijah with the chariots of fire to Daniel in the lion’s den of those who did God’s work being protected.  And what type of work did Jesus do?  Mark records:

And they come to Jerusalem: and Jesus went into the temple, and began to cast out them that sold and bought in the temple, and overthrew the tables of the moneychangers

But instead of relying on God’s protection the Business Insider has reported, “all Goldman Sachs employees received earlier this month. They were told not to organize small [12 maximum] parties even if no firm money goes to pay for them.”

So during the holidays remember to keep that Christmas spirit.

WAGING OF WAR

During the Panic of 1873 many investment houses went bankrupt.  Tensions got so heated the United States Army was deployed to New York City to protect the bankers.

When the rich wage war its the poor who die in Afghanistan but when the cake eating poor wage war its the rich who died in France.  This time around the Goldman Sachs (GS) gangbangers are going to want security provided by highly trained troops, or former troops, whose parent’s pensions have been stolen and whose best friends have died in their arms in foreign lands.

A few days ago I was talking with a friend who had just returned from an overseas war deployment with the United States Navy.  I jokingly recounted how the armed forces protected the bankers in 1873 and asked him ‘What would you do if ordered to protect the bankers?’  He jokingly replied to the effect, ‘I would go, stand between the angry crowd and the banker and when the time was right I would grab the bankers and throw them to the crowd.’

EXTERMINATED VAMPIRE SQUIDS

I can understand why the leading gangbangers at Goldman Sachs (GS) are getting nervous as the number of parasitic vampire squids that have been exterminated keeps growing.  Andrei Kozlov, Russian central banker, was riddled with bullets.  Dead hedge fund managers include Seth Tobias, Oleg Zhukovsky, Rene-Thierry Magon de la Villehuchet, Michael Klein, Peter Wuffli and Kirk Wright.

The list goes on.  It includes David Kellerman, Freddie Mac CFO and even James MacDonald the CEO of the Rockefeller family offices.  I suppose we should wish their famlies the best; except for New York tax attorney William Parente.  Whoever he angered worked corruption of blood and his wife and two children were also murdered.  There are many more examples.

SERVICE BUSINESS

Goldman Sachs (GS) is primarily a service business and dependent upon the individuals who receive an average bonus of about $700,000 from a total pot of $16.7B.  When a company’s workforce is so universally hated and have wronged so many millions, even billions, of people there is a possibility that retribution will be taken.  If retribution is taken then how could that affect earnings and how could the company benefit from the unfortunate circumstances?

Wall Street is full of sociopaths and you cannot grow a conscience if you do not have one.  Unfortunately, for this exercise we will have to analyze like the Goldman Sachs (GS) gangbangers; with the lack of a moral compass.

Key-man insurance can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the individual specified on the policy. The policy’s term usually does not extend beyond the period of the key person’s usefulness to the business. The aim is to compensate the business for losses and facilitate business continuity.

Not only is there a very real threat to Goldman Sachs (GS) gangbangers from the outside, evidenced by the weapons permits and limitations on sizes of gatherings, but there is a potential conflict of interest from the inside.  Sure, if Goldman Sachs (GS) gangbangers were to start targeting their own employees to benefit from key-man insurance it would be illegal and they should be prevented from receiving proceeds because of killer and slayer statutes.

But perhaps the gangbangers will get their vassal politicians to create ex-post facto legislation to provide immunity.  As CNET reported:

A federal judge in San Francisco has tossed out a slew of lawsuits filed against AT&T and other telecommunications companies alleged to have illegally opened their networks to the National Security Agency.

U.S. District Judge Vaughn Walker on Wednesday ruled that, thanks to a 2008 federal law retroactively immunizing those companies, approximately 46 lawsuits brought by civil liberties groups and class action lawyers will be dismissed.

Which employees should the upper brass target?  If you have spent the last 5-15 years putting in 80-100 hour weeks then how much would you sell your health for?  An even better question may be how much would your boss sell your health for?  Why should they share profits with you?

CONCLUSION

The Goldman Sachs gangbangers are among the largest hordes of parasitic vampire squids on the planet.  The absence of their aggressive theft would increase the standard of living for millions even billions of humans.  As a peacemaker who believes that force should never be used aggressively against innocent people or their legitimately acquired property I would prefer to starve the vampire squids I am opposed to and not be an instrument of extermination.  It is unfortunate that the parasitic Goldman Sachs Gang has been and is so aggressive that their host victims may feel they have no other choice than to act in self defense by gunning for Goldman Sachs gangbangers.

Through the use of key-man insurance and ex post facto legislation to provide immunity for illegal behavior the Goldman Sachs Gang can tremendously increase the gang’s profitability and the bonus share for the senior partners.  If the gang’s leaders do happen to find themselves in an uncomfortable situation then they will likely be bailed out, if possible.  Nevertheless, I would not tamper with such a filthy instrument either way.

DISCLOSURES:  Long physical gold but neither long nor short with GS and neither long nor short (except for being a US citizen) on any GS employees.



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The death of gold

By Bron Suchecki, on June 22nd, 2009

While I have only been blogging for a short while, I have been following goldbug chatter since 1998 when I took up a position in the Depository division of the Mint. At that time it was all doom and gloom with the price in a downward trend, helped along by Gordon Brown with his auction.

This unheard of method of selling central bank gold (usually it was done on the quiet and announced later) was not endorsed by anyone and really only left two conclusions: either he was stupid or it was a conspiracy. For an example of the latter, see this 25 May 1999 posting by GATA: “A political decision was made by the British to make sure the price of gold did not rise above the key $290 gold carry trade borrowing point of the bullion dealers and to make sure that the price would tank when the first pre-gold sale announcement in more than 20 years was made.”

Since that time the the gold price has risen from $250 to $1000, which implies a very unsuccessful manipulation. In some sense this is true. Consider that around 2001/02 the total amount of gold leased out was estimated between 10,000 and 16,000 ounces (see this Golden Sextant commentary) compared to approximately 30,000 oz of central bank holdings. One could conclude the increase in gold from 2002 to 2009 is proof the manipulators ran out of firepower (ie gold to lease to support short selling) over that time.

If indeed central banks have leased all they can, then one would assume that the market is finally poised at the crucial tipping point that the commentators from those early days have been waiting for, where further physical buying that is already in excess of mine and scrap supply will overwhelm supply from short sold leased gold, resulting in a parabolic rise in the gold price as the shorts are broken, scrambling to cover their positions being unable to post sufficient collateral to cover the huge rise in gold.

This is the 1980 spike revisited, but at a much higher inflation adjusted price. How high? There are as many guesses as their are commentators – $2200, $5000 or more? This is the end game that many goldbugs have been waiting for, when they can shout “we won”!

But will they have won? I would argue not. I would argue that such a scenario would actually be the death of gold.

Those who welcome a 1980s spike have lost sight of the real war. There are others who are driven by base greed. They have fallen into the trap of seeing gold as an investment. It is no such thing. It has no power to create wealth – it is an inert thing. It is only the entrepreneur and inventor who create wealth. Hawking gold as an investment is bubble behaviour, no different to the debt fueled bubbles in stocks and real estate. Such people are no friends of gold.

Gold is money. Often stated, but what does it mean? Gold is for storing wealth, not making it. I can only suggest reading Whither Gold? by Antal Fekete if you want to get what I am talking about. Those who understand this understand that the real war is gold as money versus fiat as money. The winner is the one that can demonstrate an ability to store wealth.

One may argue, how can fiat win when it has lost 95% of its value since the Federal Reserve came into power in 1913? This is too broad a sweep of time for the average person. They look only year to year, and single digit inflation looks stable to them. There is some vague understanding that money loses value, but it is not dramatic and anyway, the way to deal with this is to “invest”.

To beat gold in this war, all you have to do it make it look unstable. This is why a parabolic rise in the gold price is counterproductive. It makes the average person see gold as a speculative investment, worst still, one that does not pay a dividend. Parallels to 1980 will be drawn, focusing on the bust after that bubble. This does nothing for gold’s image as a stable store of wealth.

From this point of view, the theory of suppression of the gold price misses the point. To kill gold you don’t manipulate its price, you manipulate its volatility. If gold looks unstable, it is unlikely that a gold standard will ever be accepted.

Therefore, at the one moment in time when people may lose faith in debt based investing as a way to beat inflation and preserve wealth, when they are looking for something else more stable, gold will fail to win them over.

I mentioned earlier about a tipping point. I would like to conclude with one last idea: one other advantage of manipulating volatility rather than price is that your firepower lasts longer. All you need to do is start a trend, or help a trend along. Herd behaviour and chartist momentum will do the rest. Bullish or bearish, it doesn’t matter. As long as the price moves wildly, your ends are served. For those that believe in manipulation this thesis means we are not at a tipping point and the manipulation has many more years to run.



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