Wheee – here we go!
The Nikkei ran up to 10,986 this morning and the US futures are flying. Why? Who cares – it’s a RALLY and we all love rallies because, if the stock market is rallying then everything must be great. Things are, in fact SO GREAT that the market doesn’t even care that 35 people were blown to bits on the Moscow subways this morning. Just in case you are keeping score: If people are killed in London – Big crash. If people are killed on a Spanish train – Big crash. If there is even a scare in New York – Big crash. 2 separate attacks killing 35 people and injuring 65 more in Russia – Big rally. That’s the New World Order, I guess…
Perhaps we are just getting used to terror attacks but why then, do oil and gold spike and why is there a $30 per barrel “terror premium” in the price of oil if our reaction to an actual terrorist attack in one of the World’s largest cities is to jam the US futures up 0.5%? Perhaps part of the problem is that oil, like gold doesn’t actually exist. That’s right – we already know that the NYMEX trades over 4Bn barrels worth of contracts per month and delivers less than 30M – so the physical barrels of oil to the traded number of contracts is a ratio of 1:133 or 0.67%, almost a rounding error to zero. Well, it turns out that gold is just as bad as last week’s CTFC Public Hearings on Precious Metals reveal gold trading to be nothing more than a huge Ponzi scheme in which there are over 100 times more contracts for gold than there is physical gold. Here’s a great video of the testimony, and a part 2.
1,625 tons of gold are mined on an annual basis but the LBMA is trading 20M ounces (625 tons) PER DAY or 150,000 tons a year, which is the sum total of ALL the gold that has EVER been produced in history and roughly 100 times the actual physical float of gold and most of that float is being churned over and over by the various ETFs (see chart) who have been doing 1/3 of the world’s buying for the past 5 years.
Does the lack of actual gold make the bullion you hold more valuable? That’s an interesting question. Mortgage backed securities didn’t get more valuable as mortgages diminished in value but I suppose this gold…
