-- Published: Thursday, 30 July 2015 | Print | Disqus
At the risk of offending nearly everyone I am going to wade into a hot topic; namely, Armstrong’s war against gold promoters. Armstrong and a few others nailed the top in the price of gold. That is not up for debate. What is open for debate is why people promote gold and why some are “complacent” enough to take the price at face value.
The issue is really one of perception as to how markets function currently. Gold promoters believe governments have no business in the markets. Amazingly, Armstrong’s model accounted for their massive participation. How the model got it right is irrelevant. What I believe most gold people have a problem with is Armstrong’s vituperation toward government incompetence largely or completely ignores their machinations in all markets. It comes off as hypocritical.
I think it is highly naďve to believe that governments aren’t the market. Armstrong’s model may not make that distinction but gold promoters sure do and the evidence is overwhelmingly on their side is it not?
1) HFT firms are breaking existing law? Some go years without a trading loss! That is impossible in a free market yet the government turns a blind eye.
2) The overwhelming bulk of US equity gains occur when all of the US is asleep. Nanex has shown that between midnight and 4AM someone has consistently ramped US futures. They are illiquid, so it is easy to send them higher without expending a lot of capital. Is that the ESF at work? ZH is adamant the NY FED runs the market through trading behemoth Citadel. ZH has not been wrong very often on conspiracies surrounding markets.
3) Steve ST. Angelo, as good an analyst as there is in markets has clearly demonstrated that transportation energy usage since 2007 has declined 11% in this country. That means there is no economic recovery and the government is lying. However, a rising equity market sure does make everyone think there is a recovery. How did the markets rise? Go ask Ben Bernanke.
Of course we could go on but let’s look at what is at stake here. The equity market is all that is left. It is for all intents and purposes the US economy. What little of the wealth does trickle down into the hands of worker bees is what keeps this economy moving. Do we really believe the US government is going to go quietly in the night and let buyers and sellers have at it? Not on your life. The direct beneficiary of CB led QE is the government! It lowers their borrowing costs and increase their revenues via higher capital gains from a never ending controlled rise in equities. They have proven they will fight a fall in equities.
Certainly, those that touted gold and the miners look very bad here. Those that have followed them have lost a lot of money. But remember, at no point did these miners ever trade on fundamentals in the first place. All of the excuses for their performance are nonsense. The second largest miner made .26 cents last quarter. It is $17.50. Amazon made .19 cents and it is $530 and has never had any basis in reality. It is simply promoted endlessly by Wall St and the world of finance along with dozens of other stocks trading at values that aren’t rational.
The never ending promotion of stock darlings has created so much mal-investment that when things do turn and the economy does not produce you end up like Greece. Their stock market is going on week four without trading (proving stocks will not be a safe have after all in a debt meltdown). Gold promoters see that coming and were clearly blindsided by QE. Armstrong sees a meltdown as well but he got QE right.
There is a clear monetary winner here but in the end when a meltdown does occur I am not so sure any of it will matter.
It’s a Mystery
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-- Published: Thursday, 30 July 2015 | E-Mail | Print | Source: GoldSeek.com