carpediem
5th April 2010, 11:27 AM
http://www.marketwatch.com/story/radical-gold-bugs-vs-wall-street-2010-04-05
By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) -- Paranoids notoriously have enemies, but sometimes they have friends too. Long-derided financial conspiracy theories are finally being reported in the mainstream media. Could be ominous.
In some ways, this situation is similar to the way in which conspiracy theories about the nefarious role of mega-investment-bank Goldman Sachs /quotes/comstock/13*!gs/quotes/nls/gs (GS 172.77, +2.55, +1.50%) finally went mainstream last year. ( See July 20, 2009, column.)
The difference, as I predicted then, is that the theories have now spread to include possible manipulation of financial and particularly gold markets -- and ultimately raise grave questions about the fundamental probity of key U.S. financial institutions.
One example: another remarkable article by ferocious Goldman critic Matt Taibbi, posted March 31 on Rolling Stone magazine's Web site. (See "Looting Main Street.") It purports to chronicle the way in which J.P. Morgan Chase /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 45.13, -0.05, -0.11%) managed to saddle Jefferson County, Ala. (containing the city of Birmingham) with more than $5 billion debt for a sewage system originally supposed to cost $250 million, bringing it to the brink of bankruptcy.
(Goldman Sachs wasn't involved -- because, Taibbi says, J.P. Morgan paid them $3 million to go away.)
If Taibbi is right about this Alabama atrocity -- and he says that there have already been more than 20 local convictions for corruption, plus an SEC fine for J.P. Morgan -- then anyone dealing with Wall Street is in effect putting themselves in the hands of the Sopranos. It's hard to see how any economy can survive this sort of predatory parasitism.
Another example from the liberal media (where are the conservatives and libertarians?): Nathan Lewis' March 31 article in the Huffington Post: "It's Ponzimonium in the Gold Market."
Lewis reports the recent testimony before the Commodity Futures Trading Commission by Bill Murphy of the LeMetropoleCafé Web site. Murphy is what I call a radical gold bug, who believes not merely that gold is an inflation hedge but that the gold market has been manipulated in the interests of sustaining a financial bubble. ( See Dec. 7, 2009, column.)
Additionally, however, Lewis makes an exceptionally blunt statement of the case that there's widespread deception in the institutional gold world, so that customers who think they own bullion actually own "unsecured gold loans ... at a negative interest rate." He predicts a scramble to take delivery of gold -- which would work like a bank run -- and massive dollar decline.
One radical gold bug subscription Webzine is currently predicting that what radicals call the "Gold Cartel" is about to take both gold and stocks down sharply. The Deepcaster service (posted here) says:
"Ominous Reverse Head-and-Shoulders (Bearish) are forming both for bullion and the [gold] shares. Yet both their Upward Trend Channels are still intact."
"But, of course, the fact is the fundamentals for gold and silver remain extremely bullish. If it were not for Cartel intervention, gold would today be over $3000/oz and silver over $75/oz, in our view."
"But we also repeat that the Cartel is still potent, delivering $50 down days in gold in early December 2009 and early February 2010."
"It IS becoming harder and harder for the Cartel to implement successful takedown attempts, because more and more investors are becoming convinced, rightly, that they should buy physical gold and silver on the dips, and hold it personally."
"But the Cartel's 'bottom line' is that it cannot afford for gold and silver to be seen as 'go-to' assets in the face of a Cartel takedown of the equities (or commodities, for that matter) markets. The Cartel's entire game plan depends on the ability to continue to successfully suppress gold and silver prices."
"Thus the Cartel attacks on gold and silver will likely continue," the Deepcaster concluded.
By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) -- Paranoids notoriously have enemies, but sometimes they have friends too. Long-derided financial conspiracy theories are finally being reported in the mainstream media. Could be ominous.
In some ways, this situation is similar to the way in which conspiracy theories about the nefarious role of mega-investment-bank Goldman Sachs /quotes/comstock/13*!gs/quotes/nls/gs (GS 172.77, +2.55, +1.50%) finally went mainstream last year. ( See July 20, 2009, column.)
The difference, as I predicted then, is that the theories have now spread to include possible manipulation of financial and particularly gold markets -- and ultimately raise grave questions about the fundamental probity of key U.S. financial institutions.
One example: another remarkable article by ferocious Goldman critic Matt Taibbi, posted March 31 on Rolling Stone magazine's Web site. (See "Looting Main Street.") It purports to chronicle the way in which J.P. Morgan Chase /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 45.13, -0.05, -0.11%) managed to saddle Jefferson County, Ala. (containing the city of Birmingham) with more than $5 billion debt for a sewage system originally supposed to cost $250 million, bringing it to the brink of bankruptcy.
(Goldman Sachs wasn't involved -- because, Taibbi says, J.P. Morgan paid them $3 million to go away.)
If Taibbi is right about this Alabama atrocity -- and he says that there have already been more than 20 local convictions for corruption, plus an SEC fine for J.P. Morgan -- then anyone dealing with Wall Street is in effect putting themselves in the hands of the Sopranos. It's hard to see how any economy can survive this sort of predatory parasitism.
Another example from the liberal media (where are the conservatives and libertarians?): Nathan Lewis' March 31 article in the Huffington Post: "It's Ponzimonium in the Gold Market."
Lewis reports the recent testimony before the Commodity Futures Trading Commission by Bill Murphy of the LeMetropoleCafé Web site. Murphy is what I call a radical gold bug, who believes not merely that gold is an inflation hedge but that the gold market has been manipulated in the interests of sustaining a financial bubble. ( See Dec. 7, 2009, column.)
Additionally, however, Lewis makes an exceptionally blunt statement of the case that there's widespread deception in the institutional gold world, so that customers who think they own bullion actually own "unsecured gold loans ... at a negative interest rate." He predicts a scramble to take delivery of gold -- which would work like a bank run -- and massive dollar decline.
One radical gold bug subscription Webzine is currently predicting that what radicals call the "Gold Cartel" is about to take both gold and stocks down sharply. The Deepcaster service (posted here) says:
"Ominous Reverse Head-and-Shoulders (Bearish) are forming both for bullion and the [gold] shares. Yet both their Upward Trend Channels are still intact."
"But, of course, the fact is the fundamentals for gold and silver remain extremely bullish. If it were not for Cartel intervention, gold would today be over $3000/oz and silver over $75/oz, in our view."
"But we also repeat that the Cartel is still potent, delivering $50 down days in gold in early December 2009 and early February 2010."
"It IS becoming harder and harder for the Cartel to implement successful takedown attempts, because more and more investors are becoming convinced, rightly, that they should buy physical gold and silver on the dips, and hold it personally."
"But the Cartel's 'bottom line' is that it cannot afford for gold and silver to be seen as 'go-to' assets in the face of a Cartel takedown of the equities (or commodities, for that matter) markets. The Cartel's entire game plan depends on the ability to continue to successfully suppress gold and silver prices."
"Thus the Cartel attacks on gold and silver will likely continue," the Deepcaster concluded.