Why do i get more depressed when i read your reads,
I think reality has that effect on a lot of people, which is why they work so hard to ignore it.
But, reality is what it is... and I judge it better to be inured of it and prepared, rather than surprised when you learn that everything you believe is a lie ?
Yesterday, saw a couple of ZH posts / comments in the quotes that do nothing to reduce the perception but perhaps illuminate it usefully.
One adopted a bit of Panglossian optimism in pointing out that gold is not lagging... but performed very well in anticipation of current events:
Q: Despite all our crowing, the price of metals still seems to be the only commodity that hasn't caught the inflation bug yet. Why is that, do you think?The metals were early to the party and are now taking a breather while all the other commodities catch up.
Gold was up over 50% in a two year window. It is down 15% in the past year. It is crazy and partly due to price suppression by the Central Banks, but they cannot hold it down forever and the next run will take it to new all time highs quickly in my opinion.
A realist, of course, would see the issues in a longer term context, recognizing the bull market from 2011 as the first meaningful, thus quickly aborted, attempt at the implementation of Basel III... which having not worked out as hoped, led to the sustained gold and silver price manipulation we've seen since... the 50% move in the last two years not being a positive as much as less negative...
But, every chart comparison is always sensitive that way, able to be used in misdirection, by a combination of selective vision in the choice of start and end dates, and obfuscation of the drivers pushing the trade one way or the other ? The long term issue, then, is sustaining a longer term vision in opposition to the misdirections intended under manipulation... one that doesn't allow the misdirection to foster that belief that the price manipulation and MOPE based policies are only recent innovations... with a short half life.
Given the obvious error in gold and silver moving against trend since June... "its manipulation" isn't actually a good enough answer... and accepting it contains particular risks for some market participants. We saw the same issues emerge, first in silver, back in March of 2020 with clear excess in suppression, with a redux in the reply in March 2021 as investors intervened to "squeeze" the trade, and since: as the paper price has failed to sustain actual supply, and failures to deliver have shown the effort sucked all the actual physical out of the market, leading to severe physical shortages and growing premiums for the "real" metal versus the paper price... shown as a growing premium incorporated into "real" market pricing.
But, by May of 2021, we were told... Basel III was back on track as years of manipulation had allowed banks to cover their shorts... and soon... with just the U.K. left to go in meeting its compliance goals, etc. But, as metals bottomed and began a rally that broke trend and became a new leg up into a bull market... suppression began again... with the paper diversion not working to obviate an actual shortage in physical which became critical with retail demand in the "silver squeeze" back in February... with the market demand thus bifurcated in bias to require not just "paper" proofs the metal bought existed... but delivery of physical metal to a consumer.
The suppression failed... and in response the banks had to reverse the flow of physical from the market into the banks... to a flow from the banks into the market to suppress prices with an expanded REAL availability... which took from February to May to enable. But, then, suddenly metal was available again ?
Where did it come from ? My view of it... saw banks borrowing from central bank holdings, again, to re-enable access to a sufficient physical supply to meet (after a lag from Feb into April) the surge in market demand... while that reversal in flows was also undoing the progress made in relation to Basel III that had been made previously. But, awareness of that problem... not widespread even in the metals markets... has left me wondering how that gets "fixed" (in any meaning of that word) now... before the January date of the last leg in Basel III implementation... given proof now that you can only resolve the bank shorts... at the cost of imposing physical shortages in the market... that obviates the utility of the paper pricing scam... as those who demand physical won't accept the failure to deliver as legitimate ?
Part of the answer is seen in the "need" to double down on the manipulation effort, from June 7 to now... the real reason gold and silver are still "under-performing" now in spite of the obvious incongruity in precious metals prices versus the market reality seen in the pricing of everything else under accelerating inflation.
What happened, in 2010/2011, when it became clear Basel III implementation would be more difficult than expected ? First, the banks ended the suppression and reversed the trade... to run the price up too far too fast on purpose... to ensure the trade would fail... and they could profit from the paper trade in running up, first... and again by shorting the paper price back down from the peak... while extending the Basel III deadlines and the price manipulation effort still seeking to use the paper trade to help cover the physical shorts by skimming real metal from the paper trade. But, as the price rocketed higher in 2011, the rising prices challenged a couple of banks that were holding gold for customers in their vaults... and as the customers became nervous and demanded their gold back... the banks proved unable to produce it. When a couple of banks had failed... and the subsequent audits showed they had sustained far greater obligations than they held metal in the vaults... the custodial "holdings" of customers gold was all gone... some customers just lost their gold when the banks failed. We've seen similar issues in the form of inter-bank problems... before and since... as nations began demanding repatriation from foreign bank deposits and encountering "delays" in getting gold back... which, when finally delivered, proved to be not the same gold as was "held" for them in segregated storage ? In 2008 we learned, as the bank themselves learned... that you can't trust banks... and that hasn't changed since 2008... its only been proven more true of things other than fraudulently created AAA mortgage backed securities ? Like... gold... and silver ?
But, if I'm right that the move the metals made from May to June... undid the flow of metals from the market into the banks... with the sudden flush in market supply of physical we saw appearing post February all coming from renewed borrowing from central bank holdings... since it couldn't come from mining... while Covid sustained its impact and imposed suppression of mine output ? How does that get resolved now... when ongoing market disruptions, some seen as price inflation driving costs higher, some as supply chain problems imposing delays... as it combines with the gold and silver price suppression being renewed... which only prevents the mines restoring lost production on a price equivalent basis ? "Can't get there from here" is the correct answer... price suppression now forces further reduction in mine output... and only makes the problem of banks being short physical metal that much worse, now, as the "solution" of price suppression only shrinks the supply that would otherwise be made available to cover the position, but only in a market that worked... without the banks imposition of pricing frauds making that impossible.
All of that as a very long introduction to ask and answer the question... how do they get out of this without kicking the Basel III can down the road again... without making the failed effort in suppression even more ridiculous.. as it should be ridiculed... and without the "solution" forcing the banks to fail ?
Start with... it is a physical market... the same thing in market disruptions occurring now in copper... with the Comex being denuded of physical metal... proving that ridicule is well earned... as paper substitutes prove they simply will not make functional wires... ?
Include that... the failure of the fraud in the paper trade has costs and consequences... that have to be realized... with someone winning the trade and someone losing the trade...
And, they won't allow it to be the banks that recognize the fact of their failure and bear the costs of it...
What I caught a whiff of recently... is that the plan for meeting all the above criteria has already been tested in the Comex "resolution" of their own FTDs... as those holding contracts for delivery have simply been "cashed out"... provided dollars instead of delivery of the metal the contract says they own...
But, a world of difference between doing that in a Comex (or LBMA) contract for delivery... and doing that to the depositors of gold being held in trust for them by the depositories ?
And, if that's right... from there... perhaps doesn't take a lot of imagination to calculate what happens next... when the former holders of large gold positions held in trust... that have been "disappeared" by the banks into the black hole of banks derivatives trading losses... are instead presented with a pile of cash in "compensation" for that theft of their holdings by the banks, to which they've been subjected ?
That's the likely and perhaps fully natural consequence for those private holders who were foolish enough to trust banks to "hold" that store of value for them... even in spite of seeing how it played out in 2011... ?
Of course, that's likely to include a lot of metal "on loan" to provide the ETFs with the illusion of ownership ?
But, will that supply in pre-coordinated arrangement of "storage in the market"... and takings from private holdings held in trust by the banks directly... be sufficient to meet the banks repayment obligations of loans taken from the central banks ? I don't know... and I don't know that anyone really knows... as 2011 also showed that the banks were lying to each other about the status of their own holdings vis a vis the market.
The price impact shouldn't be a mystery... when the failure of the suppression trade... combines with the exposure of the parallel frauds in "holdings" in trust being subjected to backstopping the banks derivatives trading losses.
And, perhaps that intersects, again, with the calendar... somewhere between the supposed January 1st date of Basel III implementation... and the headline attached to the link I posted above... claiming:
Hyperinflation Is 3-4 Years Away
But, the other quote I noted as containing more truth than most prefer... rightly or wrongly attributed to Benjamin Franklin...
"War is when your Government tells you who the enemy is, Revolution is when you figure it out for yourself." |
