As we continue to witness orchestrated take-downs in the paper price of silver, the real market rigging is taking place in another industry. After the price of silver fell 5% in a twenty-four hour period of time, precious metals investors are once again concerned about the future outlook of the shiny metal.
If psychology is the key to market trading, the Fed and its member banks have done an excellent job destroying market sentiment in silver currently. I say currently, because “ALL” fiat currencies and Ponzi schemes collapse. There are no exceptions.
Controlling precious metal sentiment, controls the price rise of these two monetary metals. Low gold and silver prices keep the public’s faith placed firmly in the regime of irredeemable currency — the U.S. Dollar.
If we take a look at the intraday silver chart, we can see a huge $1.00 swing from the high ($19.95) yesterday, to a low ($18.93) today:
Several of the well-known precious metal day traders such as Dan Norcini, don’t believe that gold and silver markets are rigged. Norcini made this comment in his blog on the subject of precious metal manipulation by a top German regulator:
When the German authorities prove that Deutsche Bank was also DOWNWARDLY manipulating the price of all those commodities which make up the various commodity indices out there, then you will have a convert here. Until then, this has nothing to do with the price of gold unless of course you are willing to boldly proclaim that DB is the culprit behind the fall in the price of corn and wheat and sugar and coffee and gasoline, and on and on and on. Take a look at the GSCI, an index which I regularly post here to try to teach folks how to READ SENTIMENT in regards to the broader key markets – it has been steadily falling for some time now. Why would gold be moving higher if the general price of commodities has been moving lower over that same period , especially over the last year? Gold was moving lower because WEstern investors did not want to own it and tie up precious investment capital in a NON PERFORMING asset, not while there was so much money to made in Equities!
While I respect Dan Norcini as he was once associated with Jim Sinclair’s site for many years (no longer), I totally disagree with him on the theory of “Precious Investment Capital.” Dan believes gold is a non-performing asset because there is “so much money to be made in equities.”
Dan may trade gold, but does he understand what the term “money” really means? He states that investors can make a lot of money in equities. I gather he meant to say, “fiat currency.” Because there is a big difference between money and fiat currency.
If you don’t know the difference between money (gold-silver) and fiat currency (U.S. dollars and all the increasingly worthless paper currencies in the world), I suggest you watch the series, Hidden Secrets of Money at GoldSilver.com. If you only have time for one of the five videos, then watch the first one for sure.
The problem with Dan Norcini’s paper market trading analysis is that it becomes meaningless the day the United States Government finally announces a banking holiday with a planned dollar devaluation. At that point in time, all the successfully acquired digits in one’s trading account are subject to huge losses when the dollar is devalued say… 30-50% overnight.
Trading digits and making fiat currency gains are not a long-term viable market strategy.
Getting back to subject at hand… while silver enjoyed volatile 5% trading range, copper managed to move a boring 1.2%:
This chart is only showing the price movement for copper today (Jan 30, 2014). As we can see copper only fell $0.02 (0.6%) compared to silver’s decline of $0.53 (2.7%) for the trading day. Copper fell a little more than $0.04 (1.2%) from its peak yesterday, while silver investors were lucky enough to enjoy a huge $1.00 swing (5%).
I gather the market felt that silver would suffer much worse than copper after the Fed announced an additional $10 billion taper. I am being sarcastic here. There is no way to figure out these markets today when they are totally rigged.
Where The Real Market Rigging Is Taking Place
While I believe there is manipulation occurring on the gold and silver paper exchanges, the real rigging is taking place in the Interest Rate Swap and Forex Markets.
If we look at the chart below, we can see that Interest Rate Contracts consist of 81% of the total notional amount held by U.S. Banks:
According the OCC – Office of the Comptroller of Currency Q3 2013 Report, 93% of the total notional value held by these top U.S. banks were in Interest Rate and Foreign Exchange Contracts. The third largest piece of the pie were Credit Derivatives at 5.4%, followed by Equity Contracts at 0.9% and then commodities, which came in last at a measly 0.6%.
This next table provides detail on how these five asset classes are broken down (I say asset classes… but in all reality, the majority are liabilities):
The top U.S. Banks currently hold $195 trillion in Interest Rate Contracts and $28 trillion in Forex Contracts for a total of $223 trillion. Contrast this to commodities, including gold and silver, which only amount to $1.2 trillion.
Not too long ago, gold was used as the major asset class in banks for balance of trade settlement. However, today these banks spend all day long trading one worthless financial paper contract for another. As the system becomes weaker, the notional value of these financial products inflate to insane levels.
Basically, Interest Rate Contracts control the overall market interest rate. To get a better idea on how the Interest Rate Swap market works, please read my article, THE BIG QUESTION: Where is the Price of Silver Headed in 2014.
You will also notice that the Interest Rate Contracts and Swaps represent the majority of trading activity by the banks in Q3 2013. The banks total notional value of their Interest Rate Contracts increased $7.1 trillion while the commodities/other category increased $13 billion.
Here we can see that the banks are controlling the market because their Interest Rate & Forex Contracts outweigh their commodity asset holdings (including gold and silver), by a factor of 163 to 1 ($195 trillion vs. $1.2 trillion). This is where the real market rigging is taking place.
Precious metals investors need to understand that in order for this Grand Derivatives Ponzi Scheme to continue, the price of gold and silver have to be controlled to keep the masses from waking up. To keep the public purchasing worthless 401k’s, IRA’s, bonds, most equities, pension plans, CD’s and etc, the OUT OF SIGHT, OUT OF MIND TACTIC is used by the Fed, U.S. Treasury and member banks.
When the price of gold and silver move up too high, this puts a kink in the fiat monetary authorities game plan. The Fed and banks have no use for a public that is WELL INFORMED AND AWAKE. As long as Americans continue to behave and purchase the crap the U.S. Treasury and banks dish out… everything is fine.
I would like to conclude this article by reminding the reader that investors lost $18 billion (estimated by court appointed trustee) in the Bernie Madoff Ponzi Scheme. According to Wikipedia:
Madoff said he began the Ponzi scheme in the early 1990s. However, federal investigators believe the fraud began as early as the mid-1980s and may have begun as far back as the 1970s.
Putting it into perspective…. Ponzi schemes can last a long time. Investors who are acquiring paper wealth by trading digits in a fiat monetary system, time is not on your side.
I plan on releasing the U.S. & GLOBAL COLLAPSE REPORT in February. The report will provide detailed information and data on what will be the biggest economic collapse in history. In the past, mankind always had the ability to recover and rebuild after suffering from a World War or economic calamity.
Unfortunately, this time will be different…..
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