Saturday, 8 May 2010

A House Of Cards Swaying In The Breeze

The Financial Times: "The day after $1,000bn was briefly wiped off the market value of US equities, traders were still trying to work out what caused share prices to plunge and then rebound so dramatically in a matter of minutes."

$1,000 billion was wiped off the markets in 6 minutes - that is a rate of $2.8 billion per second.
Per second!?

Contagion has been the word of the week in both the markets and in Greece and at the Peripheries of the Euro.

There are two public stories on this financial tsunami - the 'incorrectly typed sell order' pretence or the gobsmacked and bewildered "What The Fuck Was That?" brigade.

In the FT again, "We still don’t know what was the initiating signal for the trading activity we saw on Thursday," said Jeff Wecker, chief executive officer at Lime Brokerage. "The verdict is still out."

Well, we'll tell you what it was - the impact of Dark Pool overflow on the public markets ie private markets erupting and spewing their detritus into the financial atmosphere.

We have blogged previously and repeatedly about how Dark Pools, these entirely non-regulated private trading environments, will be utilised by insiders to escape the hit when the next phase of the W-shaped Depression kicks in properly (the increased volatility and the 8.2% fall in the value of the HyperImperium over the last four trading days of last week suggest we're back on the Big One).

Unless you are one of the privileged who are invited to trade on these underground platforms - identical in format to the underground Asian markets that dominate global football, since you ask - you are in the position of monitoring for the breakout.
Seismological Forensic Science.
As the huge blocks of institutional trading continue away from any prying or taxing eyes, the money and information flows occasionally send signals through to the main public exchanges - the lava of liquidity oozes to the surface, the magma of mammon murkily manipulates.
[Oh come on! The lava of liquidity and the magma of mammon :)]

There is a Psychology of Fear in the market.
All rational traders understood that the surge was a dead cat bouncing.
When signs flash, the slick close out their psychological trend profits.

Computer generated trading compounded this Psychology of Fear as the same individuals who were closing out their positions had orchestrated the programming of the software underpinning the algorithmic cybernetic stuff.
Sell orders cascaded as the noise reached a crescendo.

Just as the linkage of computers exacerbated the cataclysmic fall in the market, contagion reached through to the currency and bond markets with the yen gaining massively at the expense of the euro and the dollar and the demand for government debt soaring.

In a further analogous throwback to the Last Depression Era, NYSE Euronext decided to "slow down" trading to prevent market collapse - yet another form of Tickertape for the Teenie Years.

Secret Underground Markets And Manipulation Of Their Public Equivalents...
...Shouldn't Somebody Somewhere Be Doing Something About This?

As the Financial Times is the only newspaper worth reading, we'll leave the last word on the integrity of their free market system to them: "One government official said the activity reinforced worries that “the market has outpaced the ability of the infrastructure to handle it. We have detached finance from the real economy and created a monster.”"

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Saturday, 1 May 2010

Au Dear! All That Glistens Is Fool's Gold

The Telegraph Finance pages are a mine of market disinformation.

The newspaper, in the words of Danny Lyons (who kindly put us onto this story) recently produced a "a hagiography about how brilliant gold was doing (reads like a plant from the gold bullion association, or equivalent)."

Mainstream media misinformation.
So what?

Well, difficult as it is to admit that there is cognitive resonance to the east of the backbone of England, a response to this article in the Telegraph is thoroughly enlightening about a particular form of market abuse.

All praise to aleedsfella for regurgitating the below content which initially appeared at http://theeconomiccollapseblog.com.

Now, what was all that about gold being a safe haven in a Depressive Storm?

"If you buy gold or silver, make sure you take delivery of it. As companies have been applying the fractional reserve system to gold and silver, that they hold for investors.

BOMBSHELL – Whistle Blower Comes Forward With Solid Proof The Price Of Gold And Silver Is Being Manipulated By Major Financial Institutions

For a long time many of us have had very serious suspicions that the prices of gold and silver were being highly manipulated. But now, thanks to the mind blowing testimony of one very brave whistle blower, the blatant manipulation of the world gold and silver markets is being blown wide open. What you are about to read below is absolutely staggering. Once the American people learn how incredibly corrupt the world financial system is, it is going to change everything. The government that we are all trusting to guard the integrity of the financial system is failing to do that job. It turns out that the Commodities Futures Trading Commission has been sitting on solid evidence that the elite banking powers have been openly and blatantly manipulating the price of gold and silver. Even though they were basically handed a “smoking gun”, they have done absolutely nothing with it. But now the information has gone public and the CFTC is red-faced.

Back in November 2009, Andrew Maguire, a former Goldman Sachs silver trader in Goldman’s London office, contacted the CFTC’s Enforcement Division and reported the illegal manipulation of the silver market by traders at JPMorgan Chase.

Maguire told the CFTC how silver traders at JPMorgan Chase openly bragged about their exploits – including how they sent a signal to the market in advance so that other traders could make a profit during price suppression episodes.

Traders would recognize these signals and would make money shorting precious metals alongside JPMorgan Chase. Maguire explained to the CFTC how there would routinely be market manipulations at the time of option expiries, during non-farm payroll data releases, during commodities exchange contract rollovers, as well as at other times if it was deemed necessary.

On February 3rd, Maguire gave the CFTC a two day warning of a market manipulation event by email to Eliud Ramirez, who is a senior investigator for the CFTC’s Enforcement Division.

Maguire warned Ramirez that the price of precious metals would be suppressed upon the release of non-farm payroll data on February 5th. As the manipulation of the precious metals markets was unfolding on February 5th, Maguire sent additional emails to Ramirez explaining exactly what was going on.

And it wasn’t just that Maguire predicted that the price would be forced down. It was the level of precision that he was able to communicate to the CFTC that was the most stunning. He warned the CFTC that the price of silver was to be taken down regardless of what happened to the employment numbers and that the price of silver would end up below $15 per ounce. Over the next couple of days, the price of silver was indeed taken down from $16.17 per ounce down to a low of $14.62 per ounce.

Because of Maguire’s warning, the CFTC was able to watch a crime unfold, right in front of their eyes, in real time.

So what did the CFTC do about it?

Nothing.

Absolutely nothing.

Which is extremely alarming, because the size of this fraud absolutely dwarfs the Madoff or Enron scandals. In fact, this fraud is so gigantic that it is not even worth comparing to any of the other major financial scandals of recent times.

But Maguire did not give up. He sent several more emails to the CFTC detailing the open manipulation of the gold and silver markets.

The CFTC did not reply.

Finally he sent them a final email: “I have honored my commitment to assist you and keep any information we discuss private, however if you are going to ignore my information I will deem that commitment to have expired.”

The reply by the CFTC?

“I have received and reviewed your email communications. Thank you so very much for your observations.”

No action.

No acknowledgement that anything was wrong.

No recognition that a massive crime had been committed.

Fortunately, that was not the end of it.

On March 25th, the CFTC held a hearing on alleged manipulation in the gold market by the major banking powers.

Maguire wanted to testify during that hearing but he was not invited.

But William Murphy, chairman of Gold Anti-Trust Action (GATA), was invited to testify. GATA has been compiling data on the manipulation of the gold and silver markets for quite a long time now.

Murphy was only given five minutes to deliver his testimony. He raced through his presentation so that he could get as much information on the record as possible.

Very curiously, the live television broadcast of the CFTC hearing suffered a technical failure the minute before Murphy began his testimony. The technical failure was corrected the minute after Murphy was finished.

Coincidence?

Well, it turns out that there were are lot of coincidences surrounding this hearing.

But we’ll get to that in a minute.

When Murphy finished his statement, the panel asked him for some hard proof of market manipulation. Murphy shocked the panel by revealing the name of Maguire and explaining how Maguire had informed the CFTC Enforcement Division of the market manipulation that was taking place by JPMorgan Chase. The CFTC panel seemed stunned by the revelation and seemed reluctant to learn any further and asked nothing else about it.

In another “coincidence”, Maguire and his wife were subsequently injured and hospitalized when their car was struck by a hit-and-run driver in the London suburbs.

When a bystander who saw the “accident” tried to block the other driver from getting away, the other driver accelerated directly towards the witness, forcing him to leap out of the way to avoid being hit. The hit-and-run driver’s car then hit two additional cars as he left the area.

But Maguire and his wife were fortunate.

In the past, other would-be whistle blowers that had evidence regarding the manipulation in the gold and silver markets died in “unusual accidents” before they were able to bring their evidence to light.

But there were even more “coincidences” surrounding this hearing.

A week before the hearing, the CFTC announced that they had had a fire in the room where its gold and silver records are held.

Isn’t that convenient?

In addition, after the hearing was over, Murphy was contacted by a number of major media outlets for interviews.

Within 24 hours, every single interview was cancelled.

Every single one.

Is that a coincidence too?

It appears that some very powerful people do not want this information to get out.

It also shows how corrupt the mainstream media has become.

This is a story that is so much bigger than the Madoff scandal or the Enron scandal that it is not even funny.

And yet the mainstream media is avoiding it like the plague.

But there were additional bombshells that came out during the hearing as well.

During the hearing it was revealed that the gold manipulators have accumulated a huge short position in gold and that these huge short positions are “naked”, which means that these positions are not hedged.

These massive short positions have put some of the largest financial institutions in the world in an extremely vulnerable position.

In addition, it has now come out that most “gold” that is traded is not backed by the actual metal itself. For years, most people have assumed that the London Bullion Market Association (LBMA), the world’s largest gold market, had actual gold to back up the massive “gold deposits” at the major LBMA banks.

But that is not the case.

People are now realizing that there is very little actual gold in the LBMA system.

When people think they are buying “gold”, they are actually just buying pieces of paper that say they own gold.

In fact, during the CFTC hearings, Jeffrey Christian of CPM Group confirmed that the LBMA banks actually have approximately a hundred times more gold deposits than actual gold bullion.

Uh oh.

So what happens if everyone decides that they want actual physical delivery of their gold?

It would be such a mess that it is painful even to think about it.

The truth is that right now most of the trading activities on the London exchange are just paper for paper.

But people get into gold because they want to be in a real commodity.

In fact, there are thousands of clients around the globe who think they own huge deposits of gold bullion, and are being charged large storage fees on that imaginary bullion, but what they really own are a bunch of pieces of paper.

If there comes a time when everyone starts asking for their gold it is going to create a squeeze of unimaginable proportions.

Maguire explains this situation this way: “for 100 customers who show up there is only one guy who is going to get his gold or silver and there’s 99 who will be disappointed, so without any new money coming into the market, just asking for that gold and silver will create a default.”

The truth is that it is absolutely impossible for the LBMA to ever deliver all the gold and silver owed to the owners of contracts.

Yes, it is a gigantic mess.

But this type of thing is not entirely unprecedented. For example, Morgan Stanley paid out several million dollars back in 2007 to settle claims that it had charged 22,000 clients storage fees on silver bullion that did not exist.

But the scale of the fraud going on now is absolutely mind blowing.

So what is the bottom line?

The bottom line is that the precious metals markets are cesspools of fraud and manipulation.

The markets have been suppressed by the major financial institutions for years, and this has created the potential for a “squeeze” in the precious metals markets that could send the prices of gold and silver into the stratosphere.

You see, the reality is that there would be no gold left in the entire world if all the Gold ETFs (Exchange Traded Funds) asked for physical delivery.

Are you starting to get the picture?

In fact, Maguire claims that the naked short selling scam by the major financial institutions is well into the trillions of dollars, making it by far the biggest financial fraud in history.

Maguire calls what has been going on “financial terrorism”, and he accuses the financial institutions involved in this fraud of “treason” for putting national security at risk.

And national security is at risk.

Because if the true extent of this fraud comes out, it could collapse the entire financial system."

Excellent!
An Inverse Gold Standard - A Cash Standard.
So, Gold That Does Not Exist Is Linked To Cash Of Illusionary Value.

How Alchemic Do You Wish For Your Wormhole To Be?

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