SD Midweek Update: Looking to history as a guide, it’s not the current repo market operations that matter. It’s what comes next…
The interventionist Fed is a 24/7 market manipulator that’s unelected, private, never audited, “independent”, and it has a “.gov” internet URL.
The Fed is actually much worse than that, although I’d rather not analyze pure evil today, so for the purposes of a point, a minimum set of descriptors will do.
According to what they do decide to tell the public, the Fed is engaging in daily interventions in the repo market.
The banks are not trusting something with the current financial system.
You see, in the repo market, there is zero risk.
Here’s how it works:
- Bank “A” needs money.
- Bank “A” goes into the repo market to enter into a repurchase agreement.
- The agreement could be Bank “A” selling a US Government T-bill to Bank “B”, which Bank “A” will buy back from Bank “B”, at the same price, plus a smidgen of interest, the very next day.
- Bank “A” gets that fast cash to keep the party rockin’ all night long, and Bank “B” gets to earn some sweet interest, absolutely for free, as Bank “A” is required to buy back the T-bill.
Here’s the problem: For more than a month now, Bank “B” has been unwilling to participate.
Here’s my first point, and I’ll ask it as a question: When is a financial institution, in this case a bank, not interested in free money?
And it’s not like this is “dirty money”, or anything criminal in nature, but rather, it is simply the latest active policy undertaken by the Fed.
Why is this such a serious issue for the markets and the economy?
Because the banks are not acting normal, in much of the same way that a rabid skunk does not act normal.
It is serious because we are not privy to the details of the scope or severity of the problem.
Think of it this way: If there was a rabies outbreak in town, wouldn’t you like to know what animals were involved, how many rabid animals they’ve found, how many dead rabid animals have been collected, how many rabid animals are estimated to be wandering around, have any humans been infected, and other similar, important details?
But we are not given those details.
And we have right to know – the Fed is, after all, directly affecting the value of our dollar in adverse ways.
Think about it this way: If a group of armed thugs keep firing bullets into your house, wouldn’t you like to know where the gunfire was coming from, how many thugs there were, what kind of rounds to they appeared to be firing, and stuff like that, you know, so instead of accepting that fate, you could actually do something about it?
Instead, here is what we’re told from the Fed: We (as in the Fed) are intervening daily in the Repo Market to hold interest rates within our target range.
Oh yeah, we’re also told there are some economic slowdowns in a few frothy locations around the world, but they’re not affecting the booming, super-duper US economy!
My overall point is this: We are on the cusp of something very, very serious.
And when I say very, very serious, I’m talking about a paradigm shift.
How do I know?
Well, I’ll use history as a guide.
Everybody knows what happened in 1933:
That was only the beginning, however.
Only months later, in January of 1934, Roosevelt signed the “Gold Reserve Act” which, among many things, gold was revalued from $20.67 to $35 per ounce (it was actually $34.45).
That is a massive dollar devaluation.
Just imagine if one day everything that costs $20 all of the sudden costs $35, with all other things being the same such as wages, savings in the bank, etc?
If we can think of what started in 1933 with what is happening now in the Repo Market, then it also stands to reason that something is in the works right now, to the detriment of Americans in general, and we can be dang sure that some of the corrupt leaders in Washington are working on this along with the corrupt Fed right now to benefit from the coming destruction.
In other words, what comes next?
I don’t know.
I’m not smart enough to know.
They know, however, what is coming next, they’re just not telling us.
Just like Americans were told to turn in their gold in 1933, some evil, corrupt bastards in Washington and in the Fed did not turn in their gold as did the gullible, and not only did they not turn in their gold, they knew they were about to be rewarded with a massive transfer of wealth as gold was set to be revalued higher (the dollar was devalued against gold) only months later.
This repo market intervention has gone on for over one month now, and when it gets dicey enough, the Fed/Government will execute whatever they’ve been planning, all the while keeping the armchair quarterbacks critiquing not only the trivial, but also refusing to see the Fed’s indirect, literal destruction of the American people for what it is.
The gold-to-silver ratio sure looks to be rolling over:
As soon as the next rally starts, we’ll be out of the 80’s very fast.
Gold’s technicals are actually looking pretty neutral right now:
After the initial break-out above $1500 more than 2 months ago, we’ve been straddling either side of $1500 ever since, and the technicals are still supportive of a quick little run to put in that all-important higher-high.
Silver has literally flat-lined at $17.50:
I think we’re ripe for an explosive move, and I doubt it will be to the downside because that puts the cartel at risk, not necessarily of the Western retail coin buyer, who is still dormant, but the industrial buyer, which right now is a massive pool of money looking for its entry-point.
Palladium has also eerily flat-lined:
We can consolidate over time here, but I’d really like to see a pullback to somewhere around the $1,650 range, or at least a dip below $1700 before the next leg higher.
Like silver, it looks like platinum is also ripe for an explosive move:
I think we are about to see a wave of institutional demand coming for platinum as well, but not for industrial purposes, but rather, for monetary purposes.
The Dow is losing its grip on 27,000 with each passing day:
Just keep in mind that we’re still a little bit early for bringing maximum pain to the United States in the form of economic misery and financial ruin.
That is to say, there are still way too many Dems running in 2020, and I think the field of candidates needs to get whittled down to make the coming crash extra-dramatic.
If you’re into WWE, I suppose it will be fun to watch.
My working theory is that it will be a title bout between Trump & Warren, with Warren being the victor.
But if we’re in the midst of a stock market crash and economic collapse, will Wall Street even care at that point?
Right now, it appears Wall Street has not a care in the world:
And that’s exactly how you want things to appear if you’re about to wreak havoc in the markets.
The yield on the 10-Year Note is barely suggesting a 25 basis point rate cut next week:
I would be surprised if yield on the 10-Year rises much before next week’s FOMC.
The dollar index has bounced off of its 200-day moving average:
I think it is a “dead cat bounce”, and if that’s the correct call, we’ll begin falling again very soon.
What’s the bottom line as we find ourselves here this beautiful Wednesday in late October.
Everybody is focused on what the Repo Market interventions mean, or don’t mean.
Like people in 1933 would have asked “why do we have to turn in our gold?”.
It is not what is going on now in the Repo Market that is the problem.
The problem’s what are the Fed & government going to do next?
Unless you are a corrupt, evil insider with that information?
There is no way to know exactly how this will play out.
Certainly, however, it won’t benefit the people.
It will be something fundamentally bad.
With only one way to protect from it.
One way that’s always the way.
That way’s with gold & silver.
Time is of the essence.
Things happen fast.
Ending in what?
– Half Dollar
About the Author
U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.