Things That Make You Go Hmmm - Such As The Transition From Conspiracy Theory To Conspiracy Fact

Tyler Durden's picture

From Grant Williams, author of Things That Make You Go Hmmm,

Attempts to manipulate free markets invariably end badly - after all, they are, supposedly, by their very nature, free.


Over the past few weeks, the exposure of the Libor-rigging scandal has monopolized the headlines of the financial press and inveigled its way onto the front pages of every major news publication in the world through the sheer size and scale of the story.

Something as big as this just CAN’T be hidden from the public.

Only... it can.

It has been. It no doubt still is to a certain extent. I’m not going to go through all of the events of the past few weeks as you are no doubt familiar with them, but [simply understanding how LIBOR works makes for a simple conclusion].

I’m afraid it’s rather obvious. Given that almost half the reported inputs that help establish the Libor rate are discarded immediately, Barclays simply CANNOT have manipulated the Libor rate alone. Period.

What’s more, to effectively ensure the rate is set at the price required, you’d need to not only establish the highest and lowest 25% of prices, but then ensure the remaining 50% average out to the required rate and, based on the fact that there are 16 banks that submit rates, that would mean about 13 of the 16 involved would need to be complicit.

As a very good friend of mine put it earlier this week; at best this is a cartel, at worst it’s outright fraud on a scale that is completely unprecedented.

So for five years there have been attempts to fix the Libor rate and, take it from me, during that time, many inside the financial industry were familiar with the rumors of such manipulation but it was another huge scandal with such highpowered connected interests that it would no doubt be brushed squarely under the carpet. Forget ‘too big to fail’. This was ‘too deep to prove’.

Libor is so important to so many people in the financial industry that the question of why it was manipulated really ought to be framed differently:

Assuming you COULD manipulate something as important and potentially beneficial as the Libor rate with such ease for years, why wouldn’t you?

The answer to this question would ordinarily be:

"Because it’s illegal and government regulators would throw the book at us"


So, working from the ground up; we have a set of traders looking to produce the best profits they can for personal gain, the major bank they work for and who should be supervising them with a need to disguise the level of its own funding costs and above them all, a government seeking to keep borrowing costs down in the middle of a gigantic financial storm. From such alignments of interest are the greatest of conspiracies born.

In my humble opinion, the Libor scandal (which has a LONG way to go before it has played out and which will claim a LOT more scalps) will mark a fundamental change in the treatment of financial conspiracy theories in the media. The sheer amount of coverage it will undoubtedly receive will signal a shift in attitude towards the exposing of such scandals rather than the blind-eyes that have been regularly turned in recent years.


But perhaps, most-of-all, watching how quickly those in high places begin to throw each other under the bus, it will hasten the end of many other possible government conspiracies as exposing such events becomes an exercise in self-preservation. Prime amongst conspiracy theories that may soon be finally proven to be either valid or the figments of overactive imaginations, are those alleged in the gold and silver markets.

The allegations concerning precious metal price manipulation predate those surrounding Libor by decades but until now day they have remained similarly acknowledged within financial circles and ignored without. That may well be about to change.

Unencumbered by liability, the rising price of gold has always been a barometer of governmental failure to protect the purchasing power of fiat currency and the best indication of the damage that inflation does.


Forget inexorably rising gold prices. Forget the corrections that shake loose hands from the wheel at every turn. In the broader context they carry far less relevance than the intrinsic values that gold provides a consistent yardstick to.


A look at the value of assets measured in ounces of gold remains the most consistent way to get a sense of their real value and the charts below demonstrate all too clearly the true performance of the Dow Jones Industrial Average and average US house prices over the long term when measured in gold ounces.

If the long-stated claims about government-sanctioned, bank-led manipulation of precious metals markets put forward so eloquently by the likes of Ted Butler, Bill Murphy & Chris Powell at GATA as well as Messrs. Sprott, Sinclair, Davies et al are eventually proven to have any validity whatsoever, the fallout from the Libor scandal will prove to be (to use the words of Jamie Dimon) just another “tempest in a tea pot” as the precious metals are the very underpinnings of the entire global financial system. Conspiracy or no, it would be a blessed relief to get closure no matter what the truth turns out to be.


As for the full note by Grant Williams, which has much more in it, it can be found below (pdf):

Hmmm Jul 08 2012

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veyron's picture

Bankers messed with nearly every other rate and economic indicator.  Why not LIBOR?


The outrage was expected; The surprise is genuinely surprising.

zaphod's picture

That Dow/Gold chart clearly says now is the time to buy stocks and sell Gold. Of course that trendline is wrong because it was manipulated during the past 100 years by the Fed. If the FED is able to put humpty dumpty together again (for awhile), then maybe it is time to buy stocks, my head hurts.

Troll Magnet's picture

Forget gold & silver. I'd like to know what really happened on 9-11!

Killtruck's picture

Deep down, you already do.

Clashfan's picture

TM, it's still the most important question one can ask.

Answer: inside job.

Nage42's picture

The only question you ever need to ask is:  "Who benefited most from it?"

For only [sorry, but in the scheme of things... this is a small number] 3000 deaths, it represents the bigest group-think change for power-grab and personal freedoms give-up for the beginning of the 21st century across the globe.  It's right up there with "the shot that rang out across the world," which was a case of political assassination setup... hmm, coinkidence!

The Navigator's picture

Cui Bono?

Big (sometimes a False Flag) event, resulting in war(s), money lent, money spent on war items, and interest collected by lenders.

Pearl Harbor, WWII, MIC, central bank (the Fed)

Kennedy (Gulf of Tonkin), Vietnam, MIC, central bank (the Fed)

911, Iraq/Afghanistan, Haliburton et al & Chertoffs body scanners at airports, central bank (the Fed)

Seems to be a 'beneficiary' pattern in these. And also a pattern of created & scary boogyman too (Japs, Communist Viet Cong, & Fanatical Muslim Terrorists).

War is very profitable for a few.

Pool Shark's picture



Actually, the Housing Price/Gold and Housing Price/Silver charts are screaming that it's time to trade your precious metals for a house...



Clashfan's picture

The RE market is not near the bottom yet.

Tapeworm's picture

Whether that is a sound idea at the moment, it certainly seems so. Housing in PM is at a fantasy low right now. If one bought gold in 2001 and used it to buy a pretty good house now, you are looking at some deals.

 33 oz of gold will buy an all brick ranch style 2 bedroom with a nice yard and 2.5 car garage. (I did it) At $300/oz that gets a house for $4750. Of course one needs to consider the lost opportunity costs along the way, but you know all of that.

 Houses and many other goods are extremely cheap in terms of gold and silver. That is why I refuse to recommend buying Au/Ag for those that ask me what I think. Most of the askers would be better off if they bought long term storage foods from Costco as the foods have been extremely cheap in gold or silver.

 Get your basic needs purchased long before buying Au/Ag. These are ridiculously cheap in terms of gold bullion right now and in the past two years.


reader2010's picture

its the classical example of Value Trap! soon-to-be escalating property tax alone will not compute. 

d2themfi's picture

uhh no, the dow gold chart implies the ratio is going to around 0.8 by about 2025 imo (check the exact ratios from peak to peak and valley to valley). I would probably buy the broad stock market when an ounce of gold equals a share of the dow. The fed has indeed been manipulative, but the bigger lesson from that graph is the increased volatility brought on from larger and larger bubbles which occur under an "elastic" money supply. I just cant decide if this current dow/gold cycle will mark the end of the dollar or if it will be the next one which will coincide with the social security/medicare/etc obligations. I tend to think the latter. Pricing assets in gold is pretty interesting though. home prices priced in real money seem to be well below long term average and actually at basically an all time low. If real estate investors and foreign buyers are providing a de facto price floor, even with a weak economy/weak lending environment real estate in select parts of the country (vegas, arizona, florida?) seems to be a nice alternative hard asset to diversify out of gold and silver a bit. Anyone agree/disagree?

CuriousPasserby's picture

I'm in FLorida and seeing a lot of cash buyers getting houses from banks at 1/2 to 1/3 of mortgage balances. I'm trying to get the vacant lot next to my home to grow food!

tmosley's picture

Next time, please tell everyone how "obvious" all this was BEFORE it is revealed.

inca's picture

[emphasis mine]

A Powerful British Faction has Aligned with LaRouche

by Jeffrey Steinberg July 06,2012

It is almost impossible to overstate the strategic significance of the fact that an important group within the top echelons of the British Establishment have come to the conclusion that Glass-Steagall is the only survival option open to them. The July 3 Financial Times editorial endorsement of Glass-Steagall has been followed, over the past 48 hours, by a series of further endorsements by leading figures, from Peter Hambro, of the old British merchant banking family; to Lord Myners, former Financial Services Secretary in the Gordon Brown government and a Rothschild-sponsored banker; to Terry Smith, a leading City banker who had called for a return to Glass-Steagall at the time of the September 2008 Lehman Brothers and AIG blowout. In Italy, the newspaper of record, Corriere della Sera, came out Friday with a big push for Glass-Steagall by leading financial correspondent Massimo Mucchetti, who is known to have, in the past, been close to Romano Prodi and the De Benedetti interests.

These actions have been taken with the full knowledge that the fight for Glass-Steagall has been led—in the United States and in Europe—by Lyndon LaRouche. As he noted in the brief statement that appeared earlier, LaRouche is the only person qualified to engineer the return to Glass-Steagall and a system of fixed-exchange-rate sovereign currencies in the trans-Atlantic region. In discussions with colleagues today, LaRouche emphasized that, if leading figures in the trans-Atlantic governments do exactly what LaRouche has prescribed, we can go into an immediate economic recovery. "London has delivered a shot across the bow, and we are the world leaders on Glass-Steagall," LaRouche declared on Friday. "A group of responsible people in Britain has decided that the fate of everything that is important to them requires an immediate Glass-Steagall reform."

LaRouche added a crucial point: "This also means that they cannot any longer tolerate Obama in office. By moving as they have for Glass-Steagall, they are also committing to sink the bastard. They can no longer tolerate Obama's continuation in office in the United States." That is the crucial factor in our moving to remove Obama from the Presidency and the nomination before the Democratic nominating convention begins on Sept. 3.

It is crucial to understand that a grouping in London has concluded that the system has already blown, and they must act preemptively to save their interests. This opens the door for Obama's removal in time. The crimes of Obama are evident, from Fast and Furious—which was nothing else than a coverup of the flood of drug money that went to Obama's illegal election in 2008, courtesy of George Soros and that gang—to the most damaging leaks of national security secrets in the nation's history.

Dugald's picture

Yes, but chucking each other under the bus....not until prison sentences loom large and certain.....till then huff n puff n large round eyes with a few ooohs and ahhsssss,

Perhaps even a Coo'errr fancy that!

All Risk No Reward's picture

LIBOR-gate is nothing.  Try Monetary System-gate.

Debt Money Tyranny is a fraud ENGINEERED TO BANKRUPT SOCIETY to the very inner party aligned with those who set this con game up...  Big Finance Capital.

Debt Money Tyranny

If you don't udnerstand the money flows of that chart, keep looking at it until you do.  Note society NEVER has enough money to pay back its debts, hence the need to constantly inflate to the breaking point.  If they didn't, the system would collapse due to the impossibility to pay back the debt.

Oligarch wealth is our debt - and their wealth is being concentrated, as is our debt.

Asymmetrical financial warfare is the method of the "scientific dictators."

As if that wasn't enough, the Trojan Horse that inflicts the criminal Debt Money Tyranny asymmetricl financial warfare model, criminally blew the world's largest credit bubble that is the ROOT CAUSE FO RTHE ONGOING BUST - that will get much, much, much worse in due time.

Weapons of Mass Debt

NOBODY in the establishment will tell you this.

Karl Denninger covers a few times a year.  I help out when I can...  Maybe 2 or 3 people have responded with specific references to these charts showing the ARCHITECTS AND CONTROLLERS OF THIS SYSTEM ARE THE ENEMY OF THE PEOPLE.

They aren't morons, THEY ARE YOUR ENEMY!

Please don't wait until your community is destitute to consider this truth.  It will be too late by then.

THE ENEMY will gladly play the fool...  b/c you will let them off the hook if they can convince you that they are merely fools.

Ignatius's picture

Bang, bang, bang...whistle, whistle...bang, whistle... is this thing on?

emersonreturn's picture

too deep to prove...


may they get theirs!  TDTP indeed!

OmNamah's picture

Gold/Dow ratio breaking below normal SD zone doesn't mean gold would correct and dow would rise....but can also mean that both will rise but gold will rise faster and the ratio will drop further....

Btw I have tracked this that whenever there is a post on ZeroHedge (>75% probability) on gold you get a more than a 1% correction in gold & silver....zerohedge has made decent money for me this year shorting PM's. Whoever says that zerohedge has zeroedge in trading:) ....We will see how today goes....


Keep up the good work...if you are interested in Indian markets and its shit stories visit

Rogue Trooper's picture

"Your (There) time will come".... BITCHEZ

Another tune to brighten a ZH readers day in such dark times.

Great solo BTW @ 2:12 on... genius :)

CuriousPasserby's picture

Doesn't everyone also know that US gvt has a committee to control the dollar's value by contolling the gold price? I thought this was diclosed years ago.

death_to_fed_tyranny's picture




Central Banks are Nearing the 'Inflate or Die' Stage So hold tightly to your gold
All Risk No Reward's picture

For another view, the Money Power is reaching a point where they have to determine who gets their limbs cut off.

1. Hyperinflation will cut off the limbs of the debt holders and the cash holders

2. Debt deflation will cut off the limbs of debtors and nation states.

TBTF mega banks can't fail, by definition, so they don't really care which way it goes.

The problem the "straight to hyperinflation" folks have is that it requires:

1. The private banking cartel that makes the call to determine they will cut off their own limbs in order to bail out debtors.

2. That same banking cartel has to be dumber than a box of rocks for issuing 3.6% 30 year mortgages ahead of this "imminent hyperinflation."

3. You can't just "lose confidence" in the money anymore than you can "lose confidence in your mortgage" or student loan or car loan.  The debt holders won't let you do that, so YOU NEED MONEY OR YOU LOSE YOUR ASSET. 

If you lose the assets, the debt has to be written down - and that's deflation by definition.

Hyperinflation is the end game - of that there is little debate.

The operative question, for those who understand the system enough to even formulate the question, is, "will there be an asset strripping deflation ahead of the hyperinflation?"

I believe there will be.

That doesn't make gold bad - it isn't so long as it is in your possession and you can defend it.

$1,000,000 in the bank could easily turn to $0 in numerous ways.

But you might find that you get much better pricing in order to dollar cost average when such a deflationary "spiked pit" aheads of inflation occurs.

But you also have to consider that it might be h*ll on Earth to get physical gold because a societal asset stripping deflation is gonna be WICKED...  it won't be a gradual decline in prices.  We are talking about 50-90% of bank credit and investment digits being zeroed out - and the insiders have been preparing for this eventuality the last 4 years.

salvadordaly's picture

All Risk, what does this mean for the average Joe who has a mortgage, and $10,000 in additional debt? If it all collapses, which it will, who will be coming to take over that mortgage and debt? Who will evict the resident and tell them they have to leave? Desperate people do desperate things!

The Navigator's picture

If I may?

This afternoon I was at a 2 hour class at Tuners Outdoorsman learning how to reload - shotgun reloading saves a little, brass reloads for pistol and rifle quite a savings.

Next I want to learn how to brew beer.

They won't shoot a beer maker that knows how to reload, will they?

Work on the secured debts (mortgages) at the expense of unsecured debt - if you own your home, or have a definite backup plan B, C, & D that will ensure those payments, you're good.

When Hyperinflation hits, you'll be able to pay off debts pennies on the dollar - problem is, getting there.

When the shit storm hits, few will have incomes, fewer will have assets worth anything - so how to hold on to your home WHEN it hits - savings, other income streams (beer making, etc), renting out spare rooms in your house to make mortgage payments. Think worst case scenario where you install 6 beds in a bedroom and put a sign outside your house saying "nightly bunk rental, $10 -- with shower, $15, with hot water, $20 -- family and group rentals negotiated, inquire within"

I agree with All Risk - the shit storm is coming, prepare as best you can, learn to make something people always need/will pay for, pay off secured debts at the expense of unsecured ones

Get your slickers on and Batten down the fucking hatches.

The Navigator's picture

and ONE more thing

pick the neighbor on either side that voted for Obama, that would never in 1,000 years own a rifle, offer to help plant bushes or trees or install a sprinkler system with them (on their property) -- and then, when they go away for the weekend, get your post hole shovel and some 3' x 6" pipe and caps, bury your $90-$150 rifles and ammo on their property, and then plant a couple nice plants on top.

That way you can keep an eye on your goods when DHS comes to take yours away.

I wouldn't recommend this for your gold or silver holdings.

AND if you're going to plant gold or rifles in a distant location, leave your cell phone at home.

Paranoid???? God Damn Right.

Solon the Destroyer's picture

But you also have to consider that it might be h*ll on Earth to get physical gold because a societal asset stripping deflation is gonna be WICKED... it won't be a gradual decline in prices. We are talking about 50-90% of bank credit and investment digitsbeing zeroed out - and the insiders have been preparing for this eventuality the last 4 years.


If we get to that point, and so far it looks like a lock...

Gold will go into permanent backwardation. It will not be available for any amount of irredeemable greenbacks. It will be hoarded... like it's money.

We won't be able to buy it at any price. When the debt tower implodes, the ability of the USA to pay it's debts will become a very big issue. The Treasury market will be completely Corzined as the herd Pamplonas into gold. It will be unobtainium at that point.

As for ongoing well-known conspiracies in the precious markets...

Why won't Barrick, the largest miner going, respond to why it hedges it's ops after 12 straight years of losses? Its biggest competitors gave up hedging ages ago. So why does Barrick deliberately undermine its shareholders year and year out? Just so there are enough institutional shorts in the market to encourage other shorts and ensure the snakes are always bigger thanb the ladders?

You know it.

So who's been covering Barrick's losses all these years? The Treasury and the Fed?

You know it.

...If you don't have the jack for an oz, buy a quarter or an eighth coin or whatever you can. Gold will become unobtanium. BTMFD Bitchez.

zuuuueri's picture

It is indeed wise to consider what the powerful players will do based on what is to ehri advantage. However, it is foolish to assume that the powerful players are all somehow in league and on the same side. They struggle against one another as well. the inflationary scenario shifts power, as does the delfationary scenario. Consider, though, that the inflationary scenario is mostly a tool of states and the deflaitonary scenario is moslty a tool of banks.
Consider that not all banks, and not all states, are on the same side. Theyre all wrangling for the upper hand, for power, for their own side-scams, and so on.

Consider the basic difference between these two tools. The inflationary tool allows you to print and buy up assets and anything else, from the rest of the economy. The deflationary tool allows you to activate legal mechanisms called contract law to enslave people and confiscate assets.

Consider that if you have these two mechanisms working against one another, those who are using the deflationary tool to force asset confiscation will be up against those who will print up any amount desired (and, so much more pleasant in a deflationary environment!) and buy everything.

Consider that at the end of the day armed force is the foundation of power, and on this the banks have relied on the state, and in most places the state retains overwhelming force. Corrupt politicians have placed this power at the disposal of various entities, but i would put my money on those closer to the real tool of power - armed force - to have the initiative in the final stages of the great 'collapsing empire' game. In the few rounds right before that, those who have the deflatoinary tool will find themselves being both outbid by those with the inflaitonary tool, and on top of that will find that those with the inflationary tool, who also are the ones who enforce the very laws and confiscations by which the deflationary tool operates, can withold the use of force to carry out the necessary moves of the deflationary tool.

It seems obvious that the deflationary tool is weaker and depends on a functioning state and civil law system, whereas the inflationary scenario is the obvious endgame.

How much will the deflationary tool be used until then? We have already been observing the shift to concentrating the shrinking pool of power in the hands higher up the ladder, to the detriment thus far of th emiddle classes. But expect that this trend will continue upwards. Observe the attempt by california politicians to pull the rug out from beneath the banks
re forclosed or delinquent mortgages. Until you see a bank raise an army to fight back,
you can conclude that the politicians are already feeling enough squeeze that they are abandoning rule of law and just grabbing directly. In such an environment, inflation will prevail.

Jim in MN's picture

Arrogant swine setting interest rates = epic fail.  Period. 

Let's clean house and put these psycho charades behind us.  Let the markets clear, assholes!!!  You think you're smarter than Adam Smith.  Piss off.

Oh regional Indian's picture

Given the smugness of (Barclay) Dimond's testimony though, it was clearly all done with a nod and a wink all around.

Maybe there is a clone factory and some cloen will go to a white-collar jail.

Unless something really big changes. And that might yet happen.


palmereldritch's picture

The swine may, in fact, be already cleaning house themselves in their typical burnt sacrificial way to take up residence in a new hidey hole with a new grift...QIBOR

Or if they were going to establish a fresh gold-backed global ponzi they certainly couldn't have LIBOR standing in the way. 

I wonder how it must feel for all these high finance types (Yo! Bob Diamond!...with more to come) who may think they are Knights to then really discover they are just pawns being rooked and then casually disposed upon the board....

Cathartes Aura's picture

you can tell things are hotting up, as they begin to turn on each other. . .

no honour among thieves, and certainly no loyalty.


palmereldritch's picture

[I don't have to tell you CA! :)]
Just make sure the popcorn is non-GMO organic!!

ManOfBliss's picture

Groucho Marxist is overrated.

Jim in MN's picture

By the way, the Dow:Gold chart in this post is wrong and dangerously misleading.


Start in 1896 and put it in a linear scale.  Then you'll see WTF is going on.  The 'trend line' on this post is BS.


Try the last chart here:

Paladin en passant's picture

Correct.  Otherwise the rising trendline indicates that over long periods of time the Dow outperforms gold, which, if gold is an inflation hedge and intrinsic store of value, shouldn't happen.

d2themfi's picture

Well no if the companies that comprise the dow are productive and create real value past the real rate of inflation (not CPI) then the dow should gain in value over time. The trendline for most of the US history was probably indeed very positive. Whether it has been over the last 40-60 years is up to debate. Regardless, even if it is still positive it is likely flattening as a result of all the things everyone on this site is already aware of

Burnbright's picture

That is why I love this image right here. Explains the chart so well. Three bubbles since the inseption of the federal reserve and each one is worse than the last... lol.

Jack Sheet's picture

Given the whimsical title of the blog, it is probably more an entry for a poetry prize..

Seasmoke's picture

Time to hang Blythe from the lamp post