The Doc & Eric Dubin break down the big volatility in gold & silver this week, discussing:
- Sign of COMPLETE DESPERATION: CME seeks to introduce 1% daily price fluctuation caps in gold & silver futures
- Gold & Silver’s big rally Friday to close the week at $1300 & $19.50
- NFP MOPE Dissected: Did the US economy really skyrocket in April?
- Eric breaks down the escalating geo-political crisis between the US & Russia- Black Swans are Everywhere!
- The Doc provides a behind the scenes look at the state of the wholesale physical gold and silver markets in the US, and reveals the launch of SD’s first limited edition coin series in June!
The SD Weekly Metals & Markets Wrap With The Doc & Eric Dubin is below:
Caption: Uncle Ben and Yellen Ride Taper Titanic (Source: William Banzai7; www.wb7.hk)
We close this week with a rip-roaring non-farms employment report that most US markets appear to think is total bull shit. Why mince words? The headline job creation figure came in at 288,000 new jobs. Whoo-hoo! Break out the champagne. The stock market initially moved higher, but once traders saw 234,000 of these jobs came from the “birth-death” model the tone changed. We also saw the largest increase to the number of people that have dropped out of the labor force for any single monthly survey: 988,00 said “no mas” and have exited the labor pool. The US labor force participation rate is now lower than at any time since 1978.
Once the dust settled from the NFP propaganda release gold and silver caught a bid, with silver leading the turnaround. Sure enough, as precious metals come near the bottom of the trading range we’ve been stuck in for many months, physical buying leaps forward and takes metal to Asia and the Middle East. If the Reuters story about the CME imposing a 1% daily trading cap on silver and gold proves true, one really has to wonder what’s going on behind the scenes. It suggests the cartel knows it will have a hard time managing prices in the future given significantly drained supply of Western-based physical metal readily available for sale. Prices can’t be kept down exclusively by dumping “paper” metal. In a round-about way, the possibility of seeing the CME all the more aggressive with exchange rules at a time when volatility is not a problem strongly suggests the CME and the cartel overall fears a future where paper momentum leaps higher, triggering large short covering and fresh money flowing into the precious metals market. Like it or not, the initial signal that would start a run higher would likely come from the COMEX or the LBMA and keeping trading at a 1% upside cap would allow time for the cartel bucket brigade to splash water on bullish expectations.
The US bond market has certainly been interesting to watch. The 30 year Treasury has now seen the rise in yield that began with early discussions of “tapering” and market freak-out last year give up over half of its gain in yield. Some view this as proof that the forces of deflation (this time, asset values going bad, crushing the shadow banking system) continue to rule the day, regardless of QE liquidity boosting stock market prices. I don’t subscribe to this point of view, but I do believe an increased amount of hedging against a deflationary crash in the future contributes to bond market buying at the margin. Similarly, international safe haven capital flight flowing into the US bond market explains a small part of the move, all the more understandable in our “bail-in” banking world today. But what’s going on is not fully apparent. In fact, it’s fair to question if manipulation from dark pool offshore centers backed by the Fed are buying US government debt. We’ll explore this with SD guests in the future.
On a final note, we received positive feedback about having Dennis Linthicum on last week’s show. Auditing and abolishing the Fed per Ron Paul’s vision can’t happen soon enough. Getting people like Dennis in Congress will help make that happen. Click here if you missed last week’s show.
Have a great weekend — Eric Dubin