Ideas pop up in the media. When other commentators & investment advisors, looking for material to justify their salaries, pick those ideas up and repeat them, you’ve got a recipe for a market rise. More and more people pick up & pass on the idea, and the price rises as more and more people listen and crowd in. They believe because everybody else believes. They buy because the price is rising.
Only one problem: when everybody expects the same thing, they’ve already placed their bets and for lack of buyers the market collapses. Government and central bank actions — “surprise parties” — exaggerate these reactions. Right now the dollar and stocks are priced for perfection. Markets rarely grant perfection.
Right now, everybody who wears pointy Eye-talyun shooes on Wall Street is certain that Mother Yellum will begin raising interest rates AND SOON. Problem is, they haven’t quite thought that through. Sure, Mother Janet, with two eyes on the labor market, is going to raise rates and risk slowing the economy while unemployment still rages? Is she going to raise rates in the face of Japan & Europe suppressing rates & QE-ing themselves to death, thus pricing US products out of world markets?
More, you just let Mother Yellum get a whiff of something scorching in her Wall Street kitchen, that is, you let stocks burn a day or two, & she’ll come out of that kitchen a spittin- & a-printin’ money like a threshing mo-sheen.
Mother Yellum, as all socialists and fascists, has a problem: the more you control an economy, the more you have to control. Totalitarians must become totaller. Their excuse is always, “It would have worked, if we’d done more of it! We need MORE control!”
And get out of your head the hogwash notion that QE and ZIRP have saved the world or the economy: they haven’t. They saved the banks, which is all they were meant to do. They’ve starved any recovery.
Problem for socialists — ALL socialists, American, German, Russian, or Chinese — is that socialism doesn’t work. Therefore they always need MORE control. Now so many central banks have entered markets — and I’m not talking merely about central banks KNOWN interest rate and currency exchange rate manipulations, I mean in all stock and commodity markets, and central banks around the world — that there ain’t much free anything left. After all, a central bank with bottomless pockets can run a market for a long time, as the present stock rally proves.
So the question becomes, when will the wastage of socialism finally catch up with the socialists? The Soviet Union lasted 70 years, and US socialism ain’t far behind, & piling on control by the second.
In Greek tragedy they had a cheap trick to get the actors out of an impasse in the script: the deus ex machina. When the characters are painted into a corner, a crane backstage (“machina”) would lower down a character (“deus”, a god) who with a wave of his hand would overcome all difficulties. So deus ex machina or god from the machine is not great writing, just a contrived device to overcome a poorly planned plot.
In the same way, I could every day explain market movements by pointing to the Nice Government Men. More, a matter of notorious fact and law & government policy the US Treasury intervenes in markets through the President’s Working Group on Financial Markets (Plunge Protection Team, primarily for stock markets) and in the silver & gold markets (Exchange Stabilization Fund, Gold Reserve Act of 1934, etc.). Thus it is not conjecture but hard fact that your yankee government intervenes in markets.
But not every day. More, because markets are so huge, they can only manipulate at the margin, and never successfully long term against a primary trend, witness their “suppression” from $4.01 silver & $252 told to $20 & $1,290 today. If that “success” ain’t the hallmark of a government job, I don’t know what is.
Yet although they don’t manipulate every market every day, sometimes they do, especially when they want to skew public perception. To convict of a crime, you must show that the criminal had Motive, Means, & Opportunity.
Do the NGM have Motive lately to manipulate gold? Well, with a war brewing & the dollar tanking & $3+ trillion of newly printed money waiting to hit consumer prices, I’d say so. Nor do they want folks to see stocks tanking and gold rising. Even as great a nincompoop as Alan Greenspan knew that the public views gold’s price as the barometer of US dollar’s health.
Do they have the means to Manipulate? Go visit www.GATA.org if you need proof, but they’ve been intervening in markets for over 80 years that I know of. And the opportunity arises whenever they take it up.
All this is my sideways explanation of why gold & silver MAY have dropped today: the NGM simply couldn’t stand to leave gold alone while the dollar is tanking & gold offers a safe haven from potential war. (I do not, by the way, put much credence into “safe haven premiums” on gold. They vanish as quickly as they appear.) On the other hand, gold & silver may be signaling some as yet unresolved weakness, some lingering doubt over both metals that requires time and lower prices to resolve.
By the way, the NGM let down a DEA magna et crassa ex machina today when Mother Janet Yellen spoke to congress. This assuaged all those panicky stock investors & pumped up the stock market, & apparently bopped gold on the noggin. Looking deeper, where she said anything in the blizzard of persiflage, she said they would keep interest rates low for a long time. That of course is GOOD for gold, because it lowers the opportunity cost suffered by receiving no interest while you hold gold. Never mind.
From Franklin Sanders Daily Commentary, Wednesday, 7 May a.d. 2014.
“Trillions were created so that a system choking on existing debt could issue more debt. But you can’t lose sight of the creation process, created isn’t ‘out of thin air’, it’s never out of thin air. Created is loaned into existence. We are issuing debt in order to transfer debt in order to ‘free up credit’ which basically means to create more debt. This is how our monetary system works.”
– Post comment by “kridkrid”, at Zero Hedge