The End Is Near?

Sprott Money's picture

 


The End Is Near?

Written by Craig Hemke, Sprott Money News & TF Metals Report

 

The End Is Near? - Craig Hemke

 

For gold investors, the major thorn in our side continues to be the USDJPY so we need to discuss it again.

 

Over the past weekend at TFMR, we had a discussion about how so many well-intentioned people could have been so wrong about "the metals" over the past five years. It included this sentence: "What we failed to predict was the successful, collective manipulation of nearly all "markets" by the CBs, their primary dealers and their willing/sycophant media through HFT."

 

That one sentence could be the subject of a full post or podcast but, for now, let's just focus upon the market manipulation through HFT. As you know by now, the USDJPY is just about the single most important general input for HFT buy/sell decisions. Whether it's S&P futures, bond futures or Comex Gold, the direction of the USDJPY generally impacts all of these "markets" more than anything else. The chart below plots the inverse of USDJPY (JPYUSD) with gold futures. Note clear correlation that began in 2008.

 

 

 

 

 

 

In observing the central bank market manipulation...when we see the same pattern again and again...and this pattern is followed by the desired equity or bond market reaction...then you know something is up. How many times have we captured screenshots of the BoJ, Fed, SNB or whomever buying the USDJPY in size at just the right moment to create and paint a double bottom on the chart? From there, how many times have we watched a near perfect and uninterrupted, 45-degree angle recovery ensue?

 

Here are just a couple of egregious examples that I just chose at random from my desktop folder that holds about 40 charts. (I've only been keeping them since late summer.)

 

 

 

 

 

 

 

 

Well, since we just used the term "egregious", let's apply it again to the charts below. Recall that things were sailing along surprisingly well last Monday. Over the previous week, the USDJPY had failed to hold support near 113 and again near 112 and it had fallen to near and just below the very-important 111 level. Then, as we chronicled that day, a sudden spike occurred on NO NEWS and not even any rumors. Just a spike from out of the blue that drove the pair immediately back above 111.

 

 

 

 

And what followed over the next five days? Well, outside of the sudden plunge on the now disproven stories from Brian Ross at ABC News, the USDJPY has followed the same glide path all the way back to 113. Also, IT'S VERY IMPORTANT TO NOTE where USDJPY reopened Sunday afternoon...RIGHT ON the glidepath. Remove the reaction to Friday's unexpected headlines and it's a near-perfect, 45-degree angle for nearly FIVE FULL DAYS.

 

 

 

 

 

 

(And in case you're wondering which tail wags which dog, note the turn in USDJPY last Monday clearly preceded the turn in the S&P.)

 

How is this even possible? It's not...well, at least not in the traditional and "free market" sense...the pre-2008 and pre-2012 sense. All of these things used to move somewhat independently as human, carbon-based traders made rational investment decisions based upon a number of inputs. However, in 2017, where 90% of all trading is now done through HFT....well, the results are pretty clear. The Central Banks and their Primary Dealer trading desks manipulate the key inputs and HFT does the rest. This is why yours truly and so many other "experts and mavens" have been confounded for the past five years. It's not nefarious intent and it's not because gold bugs are cruel, heartless charlatans who are intent upon stealing as many dollars as possible from the easily-duped. Instead, it is a failure to anticipate the levels to which The Central Banks would successfully go to keep their system alive.

 

Understanding this is why you consistently hear me cite the refrain of PHYSICAL DEMAND. It is only through a renewed crisis of confidence that this system can be broken...at least as it pertains to the precious metals. Physical demand will bust The Bullion Banks by breaking their just-in-time and unallocated delivery system. Physical demand will force price to be discovered through the exchange of physical metal, not the alchemized digital garbage that permeates the system today.

 

We'll leave you today with stories from each end of The Bank monster. The first, and one that we've been following closely since last March, is the continued run-up to renewed war on The Korean Peninsula. WHILE NO ONE IN THEIR RIGHT MIND IS CHEERING THIS ON, it is important to be prepared for all of the unknown unknowns that would come with such a catastrophe, one of them being financial calamity that could again shatter confidence in the current system.

 


http://theweek.com/articles/740264/why-north-korea...

 

And the other story deals with gold alchemy and the continued shunting of physical demand into sham/scam paper investments. It seems the World Gold Council is hungry to increase their fees. They are apparently planning to offer a whole new "gold" ETF, perhaps designed to compete with the IAU. Ask yourself, from where will this fund get the 200-300 metric tonnes of gold needed to fund its "inventory"? Once again, The Banks will simply perform the alchemy of leveraging current unallocated stockpiles into more and more digital "gold".

 

http://www.etf.com/sections/daily-etf-watch/new-ph...

 

Again, true physical demand is the only antidote to the poison created by the Central Bankers and the Bullion Banks. Sadly, 2018 promises another surge in war, debt, negative interest rates and de-dollarization. Will these events finally prompt enough physical demand to break The Banks? Only time will tell.

 

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

The End Is Near?

Written by Craig Hemke, Sprott Money News & TF Metals Report

 

 

Check out these other articles by our contributors:


Craig Hemke -   Another Tradable Low Coming

John Rubino - Finally, An Honest Inflation Index – Guess What It Shows

Jeff Thomas - Tilt! Game Over

Ask The Expert: Jim Willie

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ThrowAwayYourTV's picture

I was thinking the same thing this morning while having coffee. "The End is Near." Well not the end of the world but the end of the party.

So, what if? What if all of the sudden I had no money at all? What are the basics to survive? Gold? Silver? BitCon? No, not for me. To me those things only mean one thing. Trouble.

I figure all "I" will need are 3 things. Heat. Food. And water. Don't need electric, I'll go to bed when it gets dark. Don't need a new car, boat, motorcycle, new furniture, new lawn mower, new welcome mat, new shoes, new computer, new nothing. Don't even need to get out of bed to pay for those. All I need personally is, Heat. Food. And water.

I'll stand there with a coffee made on my cook top woodstove watching a couple eggs bubble next to a slice of ham while looking out the window at everyone walking around wondering how to pay for all the useless shit they've acumulated because of commercials and ad's and keeping up with the joneses.

I'll be ready to heat some water and take a nice hot shower by standing in a tub and pouring warm soupy water over my head. Maybe spend the day bringing in some more wood and sitting down to a good book.

You can keep your gold, silver, bitcon and slavery. I'll take my old farm house cooktop woodstove over any of it.

MonetaryApostate's picture

The end of the charades yes, by now everyone should be waking up, the Fed has hyper printed the hell out of the US Dollar, they borrowed 90 to 1 against the quadrillions they printed, & it's no small wonder that the gov owns & controls everything. (Senators & reps got hush money, hookers, & blow to keep silent.)

Fake money, fake debt, fake value, fake news, fake investments, fake markets, fake history, fake everything! 

https://plus.google.com/collection/QorNbB

MaxThrust's picture

This was a nothing post by sprott money

anarchitect's picture

This was a nothing post by MaxThrust

crusty curmudgeon's picture

This is a nothing post by crusty curmudgeon.