Propaganda and Rigged Markets
Written by Jeff Nielson Thursday, 20 January 2011 12:28
Articles & Blogs - Gold Commentary
To any who analyze our daily “news” (rather than simply absorbing it like a sponge), it has been obvious for quite some time that the information with which we are bombarded each morning is not “news to inform us”, but rather disinformation to deceive us, and conceal the farcical rigging of global markets. Few days provide as stark an illustration of that disinformation campaign as today.
Upon awaking and discovering that gold and silver had dropped a couple of percent overnight, I do what I always do. I immediately went to Kitco.com – for all of the anti-precious metals propaganda which would be put out to “explain” this move in markets. I was particularly well-rewarded today, as the gold bears at Kitco had furnished no less than four anti-gold headlines, telling all the sheep why gold and silver should be moving lower today.
With two of those items focusing on the economic data out of China, I will take that as my cue that the China news is the principal “explanation”of the propagandists for the moves today in bullion markets. The “news” was that China’s economic growth accelerated faster than expected by the “experts”.
What this directly implies is that China’s demand for commodities (which includes gold and silver) will increase, the Chinese people will have more money in their wallets to buy these commodities, and this will increase inflationary pressures – making gold and silver much more attractive investments as hedges against that inflation. This is why virtually every time economic news of this nature comes out, gold and silver have been strongly higher on the day.
What did the propagandists have to say to justify their “reasoning”? Because of increased inflationary pressures, they expect China’s government to raise interest rates, which is (supposedly) “bearish” for commodities because demand will go down rather than up. Let’s look at this analysis more closely.
Unlike the interpretation I supplied (the usual interpretation of this data) where the “drivers” for higher commodity prices are direct, the interpretation supplied by the propagandists is not only indirect, but also built atop several assumptions. In other words, it’s extremely speculative.
First, what the propagandists are saying is that higher economic growth in China will cause increased demand for commodities and higher inflation (both very gold-bullish), but that China will react to this bullish development with a bearish response. Not only is that indirect reasoning, but it assumes that (automatically) China will respond by raising interest rates, when there are many arguments that they would not (see below). However, that immediately illustrates the second assumption here: that any response by China’s government would negate the upward pressure on commodities (and gold and silver).
In fact, we have two full years of empirical evidence which shows us commodity prices steadily rising despite weak demand from anemic Western economies – because the insane money-printing of Western bankers has meant that the speed with which they are destroying our currencies has overwhelmed all other economic fundamentals.
Have these Western bankers shown the slightest inclination to curtail their reckless money-printing? Not at all. Ben Bernanke has repeated again and again that he planned on finishing his latest batch of Bernanke-bills (totaling $600 billion) irrespective of whether he sees stronger U.S. economic data. Meanwhile, “across the pond” in Europe, we see the Euro printing press being ratcheted-up to an almost Fed-like level.
The propaganda is seen to not only defy conventional analysis, but to defy the empirical evidence of the past 24 months, and to defy the primary driver of commodity markets: Western money-printing. Another way to illustrate that this is shallow and meaningless drivel is to observe what the propagandists would have said had the “news” out of China been literally the exact opposite.
If China’s economic growth had slowed below the level expected by the “experts”, we would be told that this was the “reason” for the decline in gold and silver prices. The explanation we would be given is that the previous moves by China’s government (raising interest rates and bank-reserve levels) were showing that China’s economy was slowing, and that demand for commodities (and inflationary pressures) would lessen.
Note that unlike today’s propaganda, that this is direct reasoning: China’s economy slowed, which directly impacts demand for commodities and inflationary pressures. In other words, unlike today’s propaganda, this would have been a much more plausible reason for a decline in gold and silver prices. Indeed, when such direct news reaches the market, the typical reaction has been for gold and silver prices to sell-off.
We see a general principle emerge: markets typically respond to direct drivers for asset prices rather than speculative, indirect drivers. This can be expressed as basic “risk/reward” analysis, or simply common sense – making today’s propaganda “nonsense”.
To further illustrate the absurdity here, what the propaganda implies is that if China’s economic news had been terrible that gold and silver would have risen strongly today, because (using the same indirect reasoning) China would have reacted by lowering interest rates, which would have boosted commodity-demand and inflationary pressures.
In fact, alert readers will recognize this last example as a very common propaganda-tool used to pump U.S. equity markets higher. How many times have U.S. markets rallied on “bad economic news” in the past, because this (supposedly) meant the Fed would react by lowering interest rates or cranking up the printing press?
If readers merely take a moment to evaluate whether a particular piece of analysis is based upon direct or indirect reasoning, this will often provide a quick tip-off as to whether a news item is legitimate analysis or deceptive disinformation.
As I mentioned earlier, the bears at Kitco.com cited two other “reasons” for the drop in gold and silver prices today. It’s worth taking the time to examine these other explanations as well. Speaking of the U.S. economy, bullish U.S. economic data was given as another reason for today’s bullion sell-off.
However, unlike the the reason given for bullish Chinese economic data “causing” this sell-off, even market sheep would have laughed at any suggestion that the Federal reserve might raise interest rates or bank reserve levels. So the propagandists had to invent new “logic” for this explanation. According to Bloomberg, stronger U.S. economic data has reduced the need for gold as a “safe haven”.
But hold on here. While gold is off less than 2% today, silver was down well over 3% last time I checked. Knowledgeable readers will know that these same propagandists tell us again and again that silver is an “industrial” metal. So what we have in today’s news is that the world’s largest and second largest economies “surprised experts” with very bullish economic data (implying greater economic activity, greater industrial activity, and greater commodities demand), and according to the propagandists this is the “reason” why silver is down more than 3% today.
This brings us to the last “reason” for the drop in gold and silver prices: Brazil’s government choosing to increase interest rates. At first glance, this actually seems like a legitimate reason for commodity prices to fall. A large economy raises interest rates, which directly implies lower economic activity and commodity prices. As the old saying goes, however, “looks can be deceiving”.
Why is Brazil increasing interest rates? Because the reckless money-printing of Western bankers is causing horrible inflationary pressures on its economy (sound familiar?). Two observations must be made here.
First of all, the Brazilian government hated the idea of raising interest rates. Doing so causes its currency to rise versus the other fiat paper – reducing the competitiveness of its economy, while simultaneously drawing in dangerous amounts of capital into its debt and asset markets. It only engaged in this move as a desperation-measure, indicative of how extremely strong are such inflationary pressures (hardly “bearish” for commodities or bullion). This means that not only is Brazil unlikely to repeat today’s move, but if there is any significant softening of inflationary pressures (i.e. lower commodity prices) it would seek to reverse this policy at the first opportunity.
The overall trend is clear: the reckless money-printing of Western bankers, which has rapidly pumped $trillions of their worthless paper into asset and debt markets is drowning-out all other economic factors (by a large margin). The propaganda with which we were bombarded today is nothing but a cynical attempt to (briefly) hide the monetary destruction caused by these bankers, parroted by mindless drones who lack the slightest understanding of the markets on which they report.
The lesson here for readers is look at the data, ignore the (so-called) analysis, and simply laugh at the absurd headlines. In the case of U.S. economic data, of course, we can’t even trust any of that. This forces those looking for accurate information on the U.S. economy to go to Shadowstats.com (I wonder if John Williams is gracious enough to thank the U.S. government for their “contribution” to his enterprise?).
The other lesson is the “contrarian” lesson. If we are being bombarded on a daily basis with propaganda designed to frighten us away from the gold and silver markets, and discourage us from acquiring the world’s only “good money”, then what should we do?
I’ll let readers answer that one for themselves.
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written by paxjds, January 21, 2011
The only thing to do is ignore all the press releases by the neo Pravda outlets and buy more physical gold and silver. Definitely do not sell, but use it as a buying signal. If one(or group of Banksters) makes a lot of small sales each time lower and lower driving the market down say $30 an OZ, half the banksters day is now over. Then around the world they buy larger quantities as the price slowly rises. Banksters can lose: they make a killing on the transactions and they help keep the fiat currencies looking better than their real collapsing selves.
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written by Jeff Nielson, January 21, 2011
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written by rdisrael, January 20, 2011
forgot to add one more thing,you are right on with the China news .you can't have it both ways .Last year the GDP was below expectations, all commodities went down because it was said china is slowing down.Now today they come in above expectations and commodities are sold off because growth is bad.You couldn't make this stuff up .When has surging growth been bearish because it has to be throttled back .this ridiculous notion gave the desperate commercials the opportunity to sell commodities ,especially gold and silver .You see it all the time when ever the U.S. releases a jobs report , PPI, CPI report or for that matter any economic report ,doesn't matter if the report is good or bad gold/silver are always sold off
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written by rdisrael, January 20, 2011
great article ,couldn't agree with you more.One piece of news that was the real reason for today's sell-off was that the comex is raising margin rates again on gold and silver .Its outrageous.Clearly from today's action the cartel were well aware of this news, so they went in with total abandon and sold down the metals.this is the fourth time in the last 10 weeks that margins have been raised for silver and the second time for gold.
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written by bobbbny, January 20, 2011
It said "US Mint reports sales of gold coins DECLINED 14% in 2010; 74% in December".
What it didn't say is that the US MInt STOPPED PRODUCTION of these coins, and silver Eagles as well because of "A SHORTAGE OF THE PLANCHETS FOR THEIR PRODUCTION".
It's obvious that if you don't make them, sales will fall.
It's no wonder that the pent up demand for physical has led to a buying surge.
Which propaganda is right?
I'm going with real demand and higher prices.
Buy physical. Scorch the short.
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written by Jeff Nielson, January 20, 2011
This argument is a form of "technical analysis", which is dubious (in analytical terms) at the best of times. Worse still, it is highly subjective technical analysis in that they pluck out a single number as an anecdote, and then make a "technical" conclusion on the silver market on the basis of this one anecdote.
If there was any "quality control" in the world of journalism, such garbage would never get published, as it simply lacks any theoretical or factual substance.
Suggesting that an entire sector is "crowded" (i.e. "over-bought") on the basis of U.S. coin sales doesn't come close to passing the "smell test" as legitimate analysis.
In global markets, where $10's of TRILLIONS are sloshing around we're told that the silver sector has over-heated because less than 0.001% of those dollars are going into one of the ONLY two forms of "good money" in existence.
Presumably if 1% of all of these financial assets ever went into "good money" we would be told that these markets represented the "Mother of All Bubbles".
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written by jonanderson, January 20, 2011
http://www.bloomberg.com/news/2011-01-20/silver-may-decline-20-as-coin-sales-signal-crowd-technical-analysis.html
Now, I'm not a technical expert when it comes to the PM market, just an humble fan of silver, but I dont understand the argument put forward that increased coin sales are the reason why the price of silver will decrease. The article even cites that "it's too popular". Surely the more that's sold, the less there is on the open market to buy, thus restricting supply.
Am I the only one who tends to link increased demand and reduced supply with a corresponding increase in value?
Thoughts?
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written by Posthumous, January 20, 2011
Gold ...This "Barbarous Relic" is now being bought, for the fist time in decades, by the "Banks" "Oligachs", whatever...
It has now dawned on these "Numptys", what a grave momentous error, dumping this bedrock of credit worthiness has been!
Are in a bull market for Gold?
These people are desperate to not alert anyone to the the garbage paper they are offering to get back the gold.
Are we in a Gold bull market?! YOU BETTER BELIVE IT
http://www.gata.org/node/9523
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Nice to see you back, Paxjds!