At the corner of Copperfield and Blaine

Mon, Oct 8, 2012 - 11:31am

What a joke all of this is. It's all just an illusion. A manufactured theater of disbelief where the magicians convince you ignore your senses, distrust your eyes and rein in your sensibility. The current performance includes such mind-blowing feats as:

  • The U.S. stock market is fast approaching a return to all-time high levels. Not because of corporate profits or any other, fundamental driver. Nope. In a market where over 80% of all trading volume is simple High Frequency Trading and "regular" investors have fled for the "safety" of cash, the stock market has become nothing but The Greater Fool Theory, writ large. One computer buys an issue in the hope that some other computer will buy it next, at a slightly higher price. What was once the greatest, most fair market in the world has been reduced to this: No price discovery, no efficient allocation of capital. Just bullshit computer gaming.
  • For decades, the U.S treasury market rose and rallied because of a circular pattern of capital. The U.S. consumed nearly everything the world could produce and sent dollars careening around the globe in purchasing those items. Those dollars then returned to the U.S. when the producing nations purchased treasuries and were then used to finance the next subsequent, higher level of debt. It was all well and good until the music stopped. As it became clear that this couldn't go on forever, the "creditor" nations stopped buying treasuries. Faced with the prospect of rising rates and increased interest costs, official U.S. policy has become one of self-monetization. In 2013, The Fed will issue over 1,000,000,000,000 in dollar credits to the Primary Dealer banks. Those banks, in turn, will purchase treasuries at auction, thereby funding about 80% of the projected 2013 federal budget deficit.
  • How about the appearance of currency stability through relative valuation and pegging? Is the dollar getting stronger or is the euro getting weaker? Conversely, if Fed policies lead to dollar weakness, shine the media spotlight on the euro in order to help the USDX find a bid. If your currency rises against your wishes, print a bunch of it like the BOJ or maybe peg it to some other fiat like the SNB.

The key to the game is to win the day and maintain the illusion a little longer. Future consequences be damned. All that matters is today and this week.

And this leads us to gold and silver. The prices of these metals have been manipulated and controlled for decades. Why, you ask? Again, it's all part of the illusion. What would the metals be telling you if gold was priced at $6,000/ounce, up from $3000 two years ago? And what would this signal about inflation and the relative quality of "establishment" money? If gold was shown to be more valuable that U.S. treasuries, would the 10-year bond still be yielding under 2%? If general inflation was accurately being reported at 10%, who in their right mind would lock up funds in a 30-year treasury at 3%?

So, here we are on this beautiful, early autumn Monday. Back on Friday, we were told that The Gold Cartel has shamelessly been allowed to create 2,500,000 ounce of gold from thin air in the time since the announcement of QE∞. Even more grotesque is the acknowledgment that, over the same time period, The Silver Cartel has created 70,000,000 ounces of paper silver. Our regulators, those arbiters of free and fair markets, simply avert their eyes to this crime in progress.

After reviewing Friday's CoT and the latest Bank Participation Report, Ted Butler has concluded that JPMorgan alone now holds short 34,000 contracts of Comex silver. If forced to deliver, this is the equivalent of 170,000,000 ounces or about 20% of the world's production for 2012. Additionally, after excluding the amount of open interest that comes from spreads, JPM now controls (on the short side) over 33% of the entire Comex silver market. If you add in the positions of their three largest partners in crime, the size of their position rises to over 50%! Think about this for a minute...Four banks control, on the short side, over 50% of all open contracts for a globally-important, industrial and monetary metal.

Again, the hopelessly-inept and likely-corrupt CFTC dawdles and does nothing. Can you imagine the outcry if four hedge funds managed to accumulate a 50%+ position in S&P futures? Or how would it play out if four countries had control over 50% or the crude oil market? But the CFTC turns a blind eye and does nothing.

But allow me to wrap this up on an optimistic note. Though all of the conditions exist for a sustained and coordinated price collapse, it hasn't yet happened. Why? I see two reasons:

  1. The two, separate 30%+ price drops in silver last year both occurred when QE was ending or had ended. At this particular moment in time, The Fed has thrown the banks a curveball by the initiation of QE∞. This is about priorities and, trust me, levitating the bond market is an almost infinitely larger and more pressing concern for The Fed than assisting JPM in their ongoing manipulation of the puny, little silver market.
  2. Because of the open-ended and infinite quality to this latest QE program, demand to exchange fiat for metal in London is unwavering. Every selloff in paper has been met with increased demand for physical. As long as this continues, sustained beatdowns in price are extremely difficult to accomplish.

So remain patient and buy the dip. Keep stacking and continue preparing. Though any quality magician can temporarily suspend your belief in reality, in the end it's all just an illusion. The laws of physics eventually trump the magicians skills just as the laws of economics will, one day soon, blunt the accumulated efforts of The Fed, the banks and their willing accomplices in government and the media.


About the Author

turd [at] tfmetalsreport [dot] com ()


Oct 8, 2012 - 1:17pm

Turd, you made a big mistake

Turd, you made a big mistake in your piece today. Treasury yields absolutely CAN stay at zero percent as inflation races ahead. Your statement about yields going up if gold/silver were allowed to soar is erroneous. It would only happen that way if all treasuries traded among private hands in a market system. This is true even during a hyperinflation. The reason is because the fed makes up 90% of the 30 year bond market. Since they are the only buyer and have unlimited funds they can fix the price at any level they like. The fed is now buying 60% of new US debt issuance. That is why yields on even the 10 year treasury are well below the rate of inflation. During debt monetization you end up with only one buyer of the debt. The price is then fully rigged and not reflective of value.

This will mess with your head: what if the fed buys private debt too? Then we all would essentially get paid to borrow and spend as the interest rate on our debt can easily be kept lower than the rate of inflation. You can be certain that is what is happening today in the housing market now that the fed is buying MBS. Home prices may not rise in real terms much but they sure as heck are about to go up in nominal terms!


Oct 8, 2012 - 1:24pm



Oct 8, 2012 - 1:28pm

The World’s Largest

The World’s Largest Money-Laundering Machine: The Federal Reserve
he Fed policy’s first-order effect is to issue hundreds of billions in “free money” to banks; the second-order effect is to destroy the rule of law in the U.S.

by Charles Hugh Smith, Of Two Minds:

Let’s start with a few questions about the proper role of the Central State and Central Bank: why should they bail out private banks? The answer boils down to something like this: “If the private banks absorbed the losses that are rightly theirs in a capitalist system, they would implode. Since the State and Central Bank have enabled these private banks to infiltrate and dominate the nation’s financial system, that system is now hostage to these private ‘too big to fail’ banks.”

In other words, “capitalism” in America now means socializing losses and privatizing profits generated by State and Central Bank intervention. Imagine for a moment the “beauty” of this system for owners of private banks: in a truly socialized banking system, the taxpayers would absorb any losses, but the State would also benefit from any future bank-sector profits. In the U.S. system, the losses are socialized but the people draw no benefit; the profits flow to the top 1/10th of 1% private financiers.

This is the perfection of State-financier crony capitalism.

Read More @

Oct 8, 2012 - 1:29pm

... about Ann Barnhardt

I was a fan until I called her recently. Her phone was on her website, so I thought it would be more interesting to discuss by phone rather than email her about a blog posting of hers, which I thought was excellent.

She answered the phone, I told her I liked her writing, and she launched into a "all American men are ball-less" rant, followed by yelling into the phone about people calling her at 3am. Well, I was calling at 3pm. I asked her if this was a bad time to talk, but she didn't answer me. I thanked her, hung up, and removed her blog bookmark from my list.


Green Lantern
Oct 8, 2012 - 1:30pm

I feel like Bill Murray in

I feel like Bill Murray in Ground Hog Day watching the metals market. Everyday, I wake up the same song on the radio. It's pure and utter tedium. Of course in Ground Hog Day not everyday is exactly the same because Bill Murray can take advantage of the situation by learning went wrong the day before. I guess the traders have the best chance of doing that but for stackers and owners of the mines, it really is dreadful boredom.

I'm always looking for historical comparisons to the events of today to see how things unraveled in different times and how long did it take. So I was wondering if in Ancient Rome the same shenanigans happened, manipulation of prices to go along with currency debasement. And voila found this..

Knowledge of the effects of government interference with market prices makes us comprehend the economic causes of a momentous historical event, the decline of ancient civilization.

This is the important part because besides those in the metals community, the average joe has no idea how much of the markets are manipulated.

No Roman was aware of the fact that the process was induced by the government's interference with prices and by currency debasement. It was vain for the emperors to promulgate laws against the city dweller who "relicta civitate rus habitare maluerit

So what about inflation and food scenarios.

The showdown came when in the political troubles of the 3rd and 4th centuries the emperors resorted to currency debasement. With the system of maximum prices, the practice of debasement completely paralyzed both the production and the marketing of the vital foodstuffs and disintegrated society's economic organization. The more eagerness the authorities displayed in enforcing the maximum prices, the more desperate became the conditions of the urban masses dependent on the purchase of food.

The showdown came when in the political troubles of the 3rd and 4th centuries the emperors resorted to currency debasement. With the system of maximum prices, the practice of debasement completely paralyzed both the production and the marketing of the vital foodstuffs and disintegrated society's economic organization. The more eagerness the authorities displayed in enforcing the maximum prices, the more desperate became the conditions of the urban masses dependent on the purchase of food.

Commerce in grain and other necessities vanished altogether.

To avoid starving, people deserted the cities, settled on the countryside, and tried to grow grain, oil, wine, and other necessities for themselves. On the other hand, the owners of the big estates restricted their excess production of cereals and began to produce in their farmhouses — the villae — the products of handicraft which they needed. For their big-scale farming, which was already seriously jeopardized because of the inefficiency of slave labor, lost its rationality completely when the opportunity to sell at remunerative prices disappeared.

For the full article:

And as a nice piece that goes well with the Burning Platform article.

I never heard of this guy. A former Colonel in the military, and now representative to congress in Florida. Since I don't know that much about him I can't comment on him other to say, that he is spot on here with his remarks on the welfare state and governments manipulation of religious ideals. He equates the nationalization of our programs to Communism. He tells people and the media to go home and do some research! I might like this guy. What do you Floridians think of this guy?

Fr. Bill
Oct 8, 2012 - 1:31pm

Turd Ferguson is Turdville's Tooth Fairy

No disrespect intended at all to say such a thing. Quite the opposite! When I was a boy, the Tooth Fairy only left me a quarter (though it was the valuable kind). But the Tooth Fairy of Turdtown (our inestimable mayor) is far better than that Tooth Fairy of old. Let me explain ... After getting an education here in Turdville over the past months, I have learned how TBTP push down prices of gold and silver. In particular how they attempt to generate waterfall drops in price, using thinly traded markets, preferring to slap a bucket of water with their open palm rather than slapping the ocean. So, last night, I'm watching the spot prices on Kitco and Netdania. It's around 8:00 PM and I see that spot silver has just taken a ten cent drop. New Orleans and San Diego are on the tube and I wanna watch Brees to see what he'll do. Look at the game? Or, stare at the monitor, waiting for a good time to use the mad money I've got at BV after cashing out the last run-up in silver? Turdville's Tooth Fairy whispers in my ear ... TF: OK hot shot. At what price would you wanna buy back in? Moi: Hmmmm. $1090/kg? If silver ran up from there to $1125/kg [$35/ozt], I'd have a tidy $35/kg profit. TF: Oh, c'mon now. Why so shy? Have you already forgotten everything I've shown you? Moi: [sheepishly] Well, ... um ... okay. $1085/kg. How's that? TF: $33.75. That's better. You'd be safe with that.Might not go that low; or it might. My expectation from all I've shown you already is that it will. Moi: Good 'nuff, Tooth Fairy. $1085/kg it is. I'll put in the buy order and go watch the game. And, I did. And, then I went to bed. And then I slept in late (I take Mondays off). And, then I made my pot of coffee, set it on the candle warmer beside the 'puter monitor, poured the first cup, and fired up the internet. Went to the email inbox, and Viola! There it was. A dealing advice from BV. The order executed. At 1:30 in the morning, while I was in deep sleep. Thank you till sparrows weigh a ton, Turd! You're better than ten tooth fairies.

Oct 8, 2012 - 1:34pm

I think you misunderstood or

I think you misunderstood or perhaps I didn't state my point clearly enough.

Of course, going forward, QE and Fed manipulation of the bond market trumps market forces. What I was trying to state again was the rationale for metals manipulation, in the first place. An illusion needed to be maintained that inflation was non-existent and faith in fiat was endless.

Now with QE∞, who cares what the metals do? Rates will be kept low, regardless, buy the unending "demand " of The Fed.

You raise an interesting point, though....Maybe the manipulation is no longer needed?? Maybe, one day soon, the fundamentals will change and the banks will be forced to exit and cover??

btw...Welcome. Ranks for joining the board.

Oct 8, 2012 - 1:35pm

This is how were gonna back the World debt...

...with bacteria!

24-Carat Gold Made From 'Worthless' Bacteria

A team of professors, scientists, and students at Michigan State University has done the impossible. The group has created 24-carat gold – nearly 99.9 percent pure gold – from bacteria.

Yes, you read that correctly. Bacteria produced pure gold.

Kazem Kashefi, assistant professor of microbiology and molecular genetics, along with Adam Brown, associate professor of electronic art and intermedia have stumbled upon a game-changing discovery in the realm of science and investing.

Using the extremophile bacteria (one that thrives in extreme conditions) Cupriavidus metallidurans, these gentlemen were able to manipulate the bacteria intro producing 24-carat gold! This particular microbe thrives especially well in metallic environments, a key characteristic in making the alchemy process possible at all using the microbe.

Professor Kashefi himself ecstatically said they were able to literally create gold “from something that has no value into a solid, precious metal that's valuable.”

According to The Blaze, researchers are calling the process “microbial alchemy.” Here's how they achieved the unimaginable:

The men gave the bacteria “unprecedented amounts” of gold chloride, which is a toxic chemical compound, and found not only do the microbes thrive on it, but they can produce gold in a relatively quick manner.

In fact, the team created an art installation — The Great Work of the Metal Lover — that includes a portable laboratory (made of course from gold-plated hardware) that can make the gold in front of audiences.

This is neo-alchemy. Every part, every detail of the project is a cross between modern microbiology and alchemy,” Brown said in a statement. “Science tries to explain the phenomenological world. As an artist, I’m trying to create a phenomenon. Art has the ability to push scientific inquiry.”

This is just another testimony to the limitless possibilities that surround us everyday if we're willing to look for them. Stories like this – turning something worthless into what is considered the world's best investment today – give us hope that we can turn our “worthless investments” into “precious investments” with a little effort in lieu of the widespread economic uncertainty.

As always, gold remains the true safe-haven...

So although this breakthrough discovery is unlikely to solve today's global economic crisis and one can only speculate on how it will affect the gold industry, it's an incredible accomplishment and a refreshing story with a positive message for gold lovers and anyone seeking to turn 'nothing' into something "precious."

onealphaGreen Lantern
Oct 8, 2012 - 1:39pm

Allen West is my Congressman

Allen West is my Congressman and he is an Authentic American we are very proud to have as our Congressman. He is the real deal.

Oh yes, the Dems have spent a small fortune in first getting his district rezoned and then attempting to destroy his image in the media. It is quite sickening. You won't find a more honest and honorable politician in Florida or possibly the whole USA. Even though they are using dirty Chicago style politics on him he does not shy away from honest debate. A lot of us Floridians wanted him to run for President, but I think they felt it was too soon for him. The man just makes you proud when you see how he carries himself.

Oct 8, 2012 - 1:50pm

That 24-karat gold made from

That 24-karat gold made from "nothing" requires more than just "nothing" and bacteria. You first must create gold sulfide (which is worthless). But guess what is required to make gold sulfide... ok, time is up. GOLD. :)

The entire process from beginning to end requires more gold at the input than you receive at the output.

Gold Rush

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