Our House of Cards
By Paul Craig Roberts and
Dave Kranzler
February 12, 2015 "ICH"
- As John Williams (shadowstats.com) has
observed, the payroll jobs reports no longer
make any logical or statistical sense. Ask
yourself, do you believe that retailers
responded to the very disappointing
Christmas season by rushing out in January
to hire 46,000 more retail clerks?
Perhaps those 46,000
retail jobs is the BLS telling us that they
have to come up with new jobs to report
whether or not there are any.
As we have reported on a
number of occasions, whenever the price of
gold in the futures market starts to rise,
massive uncovered shorts are suddenly dumped
on the market. As the shorts dramatically
increase the supply of future contracts all
at once, the supply overwhelms demand, and
the price of gold is driven down despite the
fact that the demand for gold in the
physical market is strong. (Remember, the
price of gold is determined in the futures
market in which contracts are largely
settled in cash and seldom in gold. The
physical market is where gold bullion is
purchased, not paper claims on gold for
speculation.)
Last Friday the attack on
gold was coordinated with the announcement
of the suspicious jobs report. The price of
gold was hit hard with an avalanche of
uncovered gold futures contracts dumped at
the same time that the U.S. Government’s
Bureau of Labor Statistics (BLS) released
what can only be described as an incorrect
employment report. The avalanche of paper
contracts that were dumped onto the Comex
(both the trading floor and electronic
trading computer system) took the price of
gold down $39 in three hours, with most of
the price hit occurring in the first 40
minutes after the jobs report was released.
The volume of contracts
that traded after 8:00 a.m. on the Comex was
unusually high for a Friday, running about
60% above Thursday’s volume for the same
time period. Such departures without cause
from normal trading patterns are indicative
of market manipulation, and Friday’s price
smash capped a week in which the price of
gold was taken lower every day at 8:30 a.m.
after the release of economic reports, most
of which reflected a deteriorating condition
of the U.S. economy.
Gold is a refuge in times
of uncertainty. With yen, dollars, and euros
all being created at a faster rate than
goods and services are being produced, with
both stock and bond prices at bubble levels,
gold is definitely an attractive refuge.
Confidence in gold would pull money out of
the rigged markets for financial instruments
and make it more difficult to maintain the
appearance that all is well. To attack gold
simultaneously with issuing a happy jobs
report doubles the encouragement to remain
invested in financial paper and to continue
to hold the over-printed currencies.
The expectation is that
more money will be printed. The prices of
troubled sovereign debt have been bid
unrealistically high because of expectations
that quantitative easing by the European
Central Bank will result in central bank
purchases of the troubled sovereign debt. In
the US the 100 percent and more than 100
percent auto loans have been securitized and
sold as investments. Borrowers whose
trade-in value is less than their remaining
loan can borrow more than the purchase price
of the new car in order to pay off the old
car loan.
The lenders made their
money on loan fees, but as defaults rise the
securitized loans and associated derivatives
will likely require a bailout like the
securitized mortgages.
Anyone looking at these
prospects is tempted by gold, but a rising
gold price could bring down the fiat
currencies and, thus, must be prevented.
In other words, those who
have rigged the system know that it is a
house of cards.
Dr. Paul Craig Roberts was
Assistant Secretary of the Treasury for
Economic Policy and associate editor of the
Wall Street Journal. He was columnist for
Business Week, Scripps Howard News Service,
and Creators Syndicate. He has had many
university appointments. His internet
columns have attracted a worldwide
following. Roberts' latest books are
The Failure of Laissez Faire Capitalism and
Economic Dissolution of the West and
How America Was Lost.