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1.11.2017 - Financial Intelligence Report Bookmark

Everything's Rigged, All of It
 
You all know that the major bankers have been hit with over 30 BILLION dollars worth of fines for rigging markets. They've rigged LIBOR, Gold, Silver, Forex, etc. This isn't speculation, this isn't a theory, this is simply the truth. You can look up the cases.

So the question is, if the banking institutions will collude with each other and rig the price of say LIBOR rates, or the daily quote on Silver, do you think it stops there? I argue "no way!".   From where I sit, I see manipulation and rigging every where I look.

Earlier today we got the oil inventory numbers. Now think back to your economics 101 class. What happens if supply is tight on something? The natural reaction is for prices to rise. Likewise, if supply is abundant, then it holds to reason that prices would fall. So, what did we see in the oil numbers? Let's take a look....

DOE Crude +4.097MMBbl, Est. +1.5MMBbl
GASOLINE STOCKS +5.02M TO 240.5M DISTILLATE STOCKS +8.36M TO 170.0M
U.S. CRUDE WEEKLY CRUDE IMPORTS RISE TO HIGHEST SINCE 2012: 
EIA U.S. DISTILLATE STOCKS REACH HIGHEST WEEKLY LEVELS SINCE OCTOBER 2010: EIA
 
If you're not familiar with those reads, it's really simple. Crude oil was estimated to have risen by 1.5 million barrels. But NO...it rose by 4 million barrels. Gasoline stocks rose by 5 million barrels. Distillate inventory rose by 8 million. All in all, we're swimming in oil, gasoline, and distillates. So a normal thinking person would say "Ghee, with all that oil floating around, the price of oil and oil stocks should be crashing!".  But guess what?  Oil didn't crash, in fact it soared higher, matching yesterday's high.
 
Explain that. Go ahead, come up with all the goofy theories, I'll wait. We have "in your face" facts that oil supply is huge and growing "huger" despite all the noise about production cuts. Yet oil doesn't fall. How can that be if the fundamentals of markets were really working? It couldn't.  So let me tell you why oil can go up in price despite a glut of the black goo all over the globe.
 
Oil, and especially the fracking/exploration industry went crazy a few years ago. All the talk about the Bakken and the other shale fields holding billions of barrels of oil, got hundreds of thousands of people to go to the bankers and take out incredible loans to tap all that supply. Well, when they started all that, oil had recently been over 100 dollars per barrel.  They were all making huge money and the banks were putting out loans like it was the housing bubble all over again. Want 80 million to put up a new field? No problem, take 90!
 
Then "it" happened. Oil crashed. From over 100 it was trading in the high 20's. Overnight, all those hundreds of millions in loans went bad. Wells were shut down. Rigs taken down. Thousands laid off. But because of the umpteen billions in bad loans sitting on the banks balance sheets, they were TOLD not to foreclose. They were instructed to absorb the losses. Why? Because it would have been a bail out every bit as big as the housing bubble crash bail out.
 
Once the banks were propped up and told not to discharge all that debt, the next job was to get oil back up. Thus you started hearing about production cuts two years ago. Then you started to see them shifting oil around the globe. Really folks, as normal storage areas were becoming full, they'd siphon off oil, and put it on ships and send them out to anchor. They were literally "Creating" fake demand and fake inventory numbers.
 
And so it is to this day folks. Oil cannot be allowed to trade down to where supply would dictate because if it falls under 30 bucks none of these frackers can take in enough money to pay their loans.  Thus we'd have another huge round of bank failures across the mid and southwest.  So...they keep prices up artificially.  Central banks print money out of thin air, and literally buy futures contracts.  But wait, it gets better... they actually have an INCENTIVE program from the CME where they get discounted fee's for actually investing in their products!
 
I kid you not folks.  You can see it yourself here:http://www.cmegroup.com/company/membership/files/CBIPFAQ.pdf  
 
It is things like this, that make us believers in the metals go crazy. Take Silver for instance. Does it make any sense to you at all, that a Digital currency like Bitcoin can go to 1K dollars as people flee from Fiat currencies, but something that's been money for 5K years, can't get past 20 bucks an ounce? Is that even remotely possible?  ONLY by manipulation folks.
 
Think about that carefully. Bit coin is popular because 1) it's an alternative to dollars, Yuan, Lira, Rubles, etc. 2) it's pretty anonymous to buy and 3) it's a way around the currency system.  Yet for all those attributes, bitcoin has been hacked and exchanges closed, and in a worst case scenario, if they manage to shut down the internet...you're squat out of luck.
 
Silver has been true money for 5K years. It's been made into coins since the Romans ruled the world. It made up 90% of the content of our quarters and dimes for decades. It really truly is "money".  You can still buy it fairly anonymously, it's an alternative to paper worthless garbage money, and no one can "shut it off."  It's easily hidden, popular around the world and easily recognized.  So doesn't it make sense that it should be at least as high as bitcoin?  Yet it isn't. Why not?
 
Just like they're rigging the price of oil higher, they've been rigging the price of silver lower. Silver demand is higher every year as more and more is made for solar installations, space applications and medical applications. The above ground stock of it dwindles each year. At its current price, a lot of mining operations just about break even. Yet there it sits. Manipulated down to keep it from being a contender to the worlds "printed out of thin air" money.  
 
The hypocrisy is enormous. Not too many years ago, there was a big lawsuit in Nevada. A man named Robert Kahre was in a lot of construction business, and was paying his employees with gold coins minted by the US Government and legal as tender. Well the IRS had a big problem with what Mr. Kahre was doing. See, he'd pay a worker with say a gold coin with a 50 dollar stamped value. But the value in dollars for that one ounce coin at the time was like 500 bucks.  The IRS said it was an elaborate scheme to avoid paying income taxes.
 
But wait a minute.  How on earth can we have a two money system? How can we have a one ounce gold coin that says  "In God we Trust" and is "legal" to use as money, but on the other hand have worthless fiat dollars where that 50 dollar "money" is worth 1200 bucks now??  In the trial NOT ONE tax preparer knew how to answer the question about how to tax proceeds like that. Not a one.  The first trial ended with 0 indictments on the 160 counts. So, the IRS came back with a new trial in about 2009. And they made sure they got the right judge that would make up his own rules and find Kahre guilty.

What Kahre really did, was show how the Federal Reserve has destroyed our economy via monetary inflation. Kahre has also exposed the fraudulent means by which the welfare-warfare state has plundered the American people through the fiat money scheme that FDR foisted on the American people during the New Deal. Today, it takes $1,200 in paper money, not $50 in paper money, to purchase one $50 gold coin. That difference reflects the horrific damage that U.S. officials have done to our money over the decades. Think that through folks. In 1925 a 50 dollar gold piece cost you....drum roll....50 bucks.  Today it takes 1200 of them.  If that isn't fraud and manipulation, I don't know what is.
 
If Bitcoin can be 1000, Silver can be 1000 and Gold can be 10,000. We just need to get the IRS, the Central banks and the printing machines out of the business of manipulating the metals. As I titled this piece "Everything is rigged" and as sad as it is to say, you all know it's true. What a mess.
 
The Market....

That elusive DOW 20K hat is still elusive.  After hitting 19,999.63 on Friday, the market faded off for two sessions on Monday and Tuesday.  Then today, we went on something of a roller coaster ride, with the market opening well enough and pressing higher, only to roll over and fall like a rock, going red....and finally seeing them claw their way back up to finish out the day in pretty good fashion. The DOW up 98 and the S&P up 6.
 
So we ended the show at 19,954.  I wish they'd just get it over with. I wish they'd punch us through and run this market. Why? Because since December 13th the market has been bouncing around in a rectangle, with 20K as the top side of the box and about 19,800 as the bottom side. One of these levels is going to break eventually and while it could be the lower side and we just roll over, I still think they want their stupid hats.
 
Not only that, if you read the commentary above, you know that this market is as rigged up as a Christmas goose. Japan's national pension fund owns half their market's stocks. The Swiss National bank owns 80 BILLION in US stocks. The Fed says they are "allowed" to own stocks but don't have any. Baloney. They just buy them up via a third party like Citadel.
 
So while the old line analysts will talk about earnings and price to book and blah blah blah...the power for this market to go up or down rests in the hands of the Central banks. Period. If they hike rates high enough, the stock buy backs will stop and economic activity will contract. If they stop buying stocks outright, the market will contract. And it's my guess they want to send Obama off with a big fat DOW 20K under his belt.
 
But then what? The elites aren't that happy with Trump. The Soros people hate him. I'm sure there are those in Brussels at the IMF that don't have much love for him. Are all these Central banks going to continue to support the market once Trump is finally in the White House? I'm all for all the good this guy could do concerning taxes and regulations and helping keep manufacturing here.  But again the market is bigger than all that. The market is the result of the Central banks and they can kill it if they wish.
 
So my guess was/is that they grant Obama his DOW 20K hat. But shortly after Trump gets in, I think they start pulling the plug on him. Don't' forget folks the same central banks that have perverted our money to the point where it takes 1200 dollars to buy a 50 dollar gold coin, also have perverted our markets into contortions never seen before. Without their trillions and trillions...this market would be sub 10K.
 
It's my guess that you should try and be long the "last hurrah" spike higher ( if indeed they give it to us) and then I feel you might just want to get extra cautious.  2017 has the ability to an incredibly bizarre year. Yes Trump is saying ( and doing) all the right things. But there are powerful forces out there, that might not allow it to go on for too long before they start screwing with him. 
 
Just think about this one thing... The Fed's have raised rates just 2 times in TEN years. What happens if they really do get aggressive on Trump and toss 3 or 4 at him this year? I'm sorry but a full percent in the Fed's Funds rate in a short period of time, would derail darned near anything the man was trying to accomplish. And that's just by hiking rates. God forbid they stop buying stocks on the sly. Worse if they actually have institutions SELL them.  So again... while that all might just be fear mongering, it's something to consider.  Take care and stock up on popcorn, this show gets better every day. 

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