WASHINGTON, July 14, 2014 – Funniest lede of the day, from Bloomberg:
Gold headed for the biggest decline in almost seven months as Portuguese banking concerns eased and equities advanced, diminishing demand for haven assets.
Why funny? Because Japan’s Nomura Securities is reportedly threatening further legal action against Portuguese Banco Espirito Santo today, putting that floundering institution back in the hot seat.
No, the real story here is that “they” had decided that gold bugs and bulls had taken the yellow stuff too far above the international banking system’s edict to hold the line at $130 per ounce, so this morning’s not-terribly-surprising mass smackdown occurred, pancaking anyone in even the least little bit of gold and leaving gold bugs, hedgers and investors bleeding from the eyeballs.
The ongoing carnage in gold, and in precious metals in general, is horrendous, as Bloomberg spells out the details:
Gold futures for August delivery fell 2.2 percent to $1,307.50 an ounce by 10:38 a.m. on the Comex in New York. A close at that price will make the biggest loss for a most-active contract since Dec. 19.
Guess that’ll teach all of us a lesson.
Here’s a chart, showing the initial hit in European markets (which open first), followed by a clearly massive, intentional opening bell hit in New York on epic volume. No retail players here.
But hey, what, us worry? We’re holding onto our small and not-too-badly-damaged position via Swiss gold bullion ETF SGOL. And we’ll pick up a bit more here just for fun.
We use gold mainly as a hedge, not an investment, and are still not convinced that the U.S. economy is out of the woods yet, especially now that it’s increasingly obvious that easily-manipulable U.S. voters re-elected very possibly the dimmest individual in American history as their president. Not one but two times, compounding the spiraling disasters we’re facing both here and abroad.
Obama’s successor, whomever that might be, won’t have much to work with by January, 2017. He’s pretty much destroyed some 75 years of commonly accepted domestic and international policy, putting this country in extreme danger.
And from a monetary standpoint, even with the current mass-manipulation in commodities futures, gold has historically been the haven of last resort. Which is, in essence, why governments and oligarchs alike don’t want us to have any of the yellow stuff? So they beat gold investors and hedgers up every time they get a little feisty as they did last week.
This huge market manipulation by international rich-boy and wealthy government cartel can only go on so long before its underlying massive Ponzi scheme against currencies and the average taxpayer becomes so obvious that even low-information voters will figure it out.
Aside from gold, the market is bullish today for whatever reason. ZeroHedge’s mysterious entourage of writers, known collectively as “Tyler Durden,” think they know, attributing today’s booming averages as another short-squeeze, vs. the fact that the pros continue to bail out of markets while the public bails in. Time will tell.
Modest. We’ll sneak into a bit more of our precious metals ETFs, but otherwise lie low in the weeds.
In our hearts, we want to be bulls. But this current rally, based as it is on false profitability (via corporate stock buybacks) and international government dishonesty will eventually collapse, probably due to the increasingly obvious ineptitude of the entirety of the U.S. Federal government.
(Euro-socialist ineptitude is a given.)
Otherwise, we’re holding our fire and watching bonds for a clue that the game will be over soon. We’ll keep you posted.