50 Million in a Day
Legal Front Running
The hypocrisy of our so called legal system never ceases to amaze and amuse me. If I buy up a ton of stocks and then go out to the media and push that stock, I get the SEC up my butt for frontrunning the stock. That's how it is supposed to work. It is wrong, it's manipulation. But when a big time hedge fund guy does it, or JP Morgan does it do you know what we get from the SEC?? Queue up the crickets. We get no response. A look the other way. "Move along, nothing to see here".
Carl Icahn is a billionaire investor. TV is touting him as the most successful investor of the past five years. When Icahn speaks people listen because he's so "big". Okay, we get that. But because he's so big, he's supposed to be regulated as to what he can say about things he's buying or holding. Well, maybe the rules have to be changed. When the regulations were put in place so many years ago, there was no face book, there was no twitter. To quote the talking heads ...."is twitter even real media?"
Last week Icahn posted a "tweet" that said he had a very large position in AAPL. In fact, here's the exact tweet...
"We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come,"
Well those little words sent the shares of AAPL soaring on the day. All the followers of the big hedge fund guru went out and bought AAPL with both hands. When it was all over, AAPL stock gained 22 billion dollars in market cap, and Icahn pocketed a sweet 50 million on the day. So how do you explain all that? Hasn't Wall Street and their idiot pundits told you that the market is "free" and a "random walk" and "totally efficient", and not manipulated? It has. Hasn't the SEC passed rules about front running via the media? It has. So, isn't it illegal for him to come out on Twitter and hype his stock and say that? So far, no one's saying.
But there's a bigger game being played in the gold and silver market and the main culprit is JP Morgan. Over the past 5 years I've gone out of my way to show you how JPM was oft times short more silver than a full third of all the worlds production. That's illegal, yet no one at the CME or CFTC saw a thing. I've showed you how they've used off hours trading to move the price of Silver around to suit their short positions. Nothing was said. Metals traders the world over have contacted the authorities concerning their illegal positions and blatant manipulation. The regulators say "they can't see any manipulation"
Well, consider this. During the big gold smack down JPM was net short a "ton" of gold. When the paper attack on gold and silver hit back in April, it didn't' happen until JPM was notoriously short the metal. Then after watching it plunge from almost 1900 the ounce to under 1200, something changed. By following the printed data from the exchanges, we saw them shift from being insanely short, to being very very long. Yet they didn't do it over night and gold didn't really move. It sat there, bouncing and wiggling up and down.
But sure as the sun comes up each day, when JPM is net/net long something you can bet that eventually it is going to go where they want it. Back on June 27 th I told my Insiders Members that the miners were beginning to look very attractive. We bought five of them for our long term account. Gold was only trading at a low of about 1180 the ounce, horribly down from the 2011 highs. From then on however, gold started moving back up. The miners have gained smartly, but gold itself has really taken off. From 1180, gold hit 1340.
But here's where it gets interesting. On Friday morning, CNBC was doing its pre market cheer leading and they mentioned gold. That's when I heard it... "and find out why JPM says you should buy this gold bounce". Now let's get this straight. An investment house that gives investment advice to traders and investors was short gold and profited greatly by the massive manipulated illegal take down. Then they accumulated longs and as if by magic, gold starts rising. Then as they got "really long" they come out and tell people to continue to buy the metal despite the massive bounce it's had.
When you're JPM you can manipulate the metals market and no one says anything. When you're Carl Icahn, you can make yourself 50 million in a day by going on twitter and hyping your own book. When you're a lowly newsletter writer you have to defend yourself against charges of "misleading investors". Sort of ironic, no? Yes.
I'm a gold and silver bull. No one that has ever read one of our letters since 2001 could deny that. When gold pushed up over 15-1600 I told my readers I was no longer adding to my position, as I felt it was getting too much froth from late comers trying to catch the train. Then when it fell back under 1300 I've been adding on dips. Why? Simple, gold and silver are the only real money out there. Of course that's not the only reason, but it is the most basic. Most people collect "currency". I don't want currency for anything more than paying bills. I want money. "Money" doesn't go to zero. Currencies do.
For the last 100 years, our currency has lost 98% of its purchasing power. Gold on the other hand has retained 100% of it. Now which one would you rather hoard?? But besides the idea that owning "money" is considerably better than owning debt notes which is what our currency is, I also like to have things that are in demand. Consider this... Gold bar and coin investment grew 78% year-on-year globally in Q2, topping 500t in a quarter for first time. After rising from just 299 dollars the ounce in 2000, all the way to 1900, don't you find it really telling that so many people want physical metal that its demand grew almost 80% in one year?? I certainly do.
All the stars are lining up for gold and silver to make their next move higher. Not because the economy is going to crash ( it is) not because our monetary experiment has failed ( it has) not because Central bankers have lost control and credibility ( they have) but because JPM is long. JPM gets what it wants and if they're net long, you can bet they'll "make" gold rise. It's what they do.
Silver has a very good shot at challenging its all time high within the next ten months. While Silver is the whipping boy of JPM, if gold gets loose, Silver will tag along simply because the folks that want to buy gold but can't afford it, will rotate into silver. Never underestimate the animal spirits of greedy investors. If they see gold really on a tear, even though they don't have enough money to buy one ounce of gold, they'll buy the 10 ounces of silver they can afford. All those wanna- be gold buyers will add to the underlying manufacturing and medical demand for the metal and push it quite nicely. Yes, we're silver buyers too.
While Icahn can manipulate the market via twitter, and JPM can manipulate the metals prices in the futures pits, NO ONE can manipulate the actual metal itself. This makes it pure and in demand, and frankly that demand has risen at a record pace and will only grow. You might want to take the ride, we are. ( Hey wait is that front running and manipulating the media!?)
The Market...
It's been a rough week in market land as we've seen the DOW shed 600 points in ten trading sessions. You all know the basic reasons, the Fed's been talking about "tapering" off the QE gas pedal and then their paid flunkies on CNBC like Steve Liesman follows up by telling you how it's fine that they are tapering, they should taper because the Treasury doesn't need as much money, they've lowered the deficit.
Sometimes the lies are so "in your face" that all you can do is laugh. Consider this for a moment...
(CNSNews.com) - The Treasury Department's Financial Management Service (FMS), which publishes both the federal government's official Daily Treasury Statement and its official Monthly Treasury Statement, is reporting that in July the federal government ran a deficit of $98 billion but that the federal government's debt remained exactly $16,699,396,000,000 for the entire month
Now I'm no rocket scientist, and I didn't stay in a Holiday Inn last night, but something stinks to high heaven about that, no? Yes. See the "debt" has stayed the same for 87 straight days now despite running up the deficit by over 100 billion. How's that work? Well, to keep from going over the debt ceiling, Jack Lew has been employing "the standard set of extraordinary measures" to prevent the Treasury from exceeding the legal limit on the federal debt."
Now CNS News should be congratulated for showing folks that something is wrong here. But they stop short of asking "where's the money coming from??" See they leave that to little conspiracy nuts like me. But what they've actually been doing is raiding Federal pension plans and replacing the money with IOU's. Now, ask Mr. Steve LIESman of CNBC if that suggests strength worthy of tapering QE.
But the fact is that a lot of folks think it's coming and the market has reacted violently to the idea. Just like the grumbles you get at 2 am when the bar announces it's closing, no one wants to stop the party. So they grumbled.
The question of will they or won't they taper is so back and forth I'm tired of discussing it. The bottom line however is that if they do, we'll see more red, if they don't we'll see a really strong snap back rally. But it is still 4 weeks away, a lifetime in market timing. So what about the here and now? 600 points in 10 days is a lot, I'm figuring they'll steady us out here and trade sideways for a bit looking for more hints that the punch bowl will indeed be refilled.
This week brings us the "Jackson hole" Central banker and elites meeting. This is where a group of the worlds movers and shakers get together to party hearty, and discuss monetary policy and other such high falutin ideals. Usually the head of the Federal Reserve is the key speaker, but this year Bernanke isn't going to be there, so it will be interesting to see what kind of blather spews forth from that little cabal. Stay tuned.
We're 81 points over DOW 15K, and I don't think they want to let that get away, so a sudden rush lower followed by a Vee back up, makes sense. I just don't think the bounce takes us far, just far enough to suggest they're willing to "wait and see" instead of wholesale selling. So that's my guess, I think we'll see a quick drop down, and then a reversal back up as they try and rescue the 50 day moving averages from the plunge.
Good luck out there friends, I'll see you all Wednesday evening.
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