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Michael Ballanger's 2015 'trade of the year' cites rigging of stock and gold markets
10:48a ET Saturday, January 3, 2015
Dear Friend of GATA and Gold:
Toronto broker and mining entrepreneur Michael Ballanger covers U.S. government rigging of the stock and gold markets in his latest market letter on what he thinks will be the "trade of the year" for 2015 -- a variant of which he also thought would be the "trade of the year" for 2014 but turned out to be only the trade of the first half of the year.
Ballanger writes: "The zero-interest-rate-policy of the global central banks has herded money from the bond market into the stock market both indirectly ('QE' bond buying) and directly (central bank buying of stocks). The net result is that historical securities analysis has to be thrown out the window because even garbage stocks (like IBM) are supported by corporate buybacks fueled by cheap and easy money.
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"And how about interventions? All you need to do is take a glance at the chart of the S&P 500. Notice how the price was managed higher after the major correction in late 2011. It was if someone drew the chart going out to 2015 and told the New York Fed's trading desk to 'make it so.' ...
"Despite the greatest physical offtake of the metal in history, the U.S. dollar-denominated price of gold declined. The interventions began at the all-important $1,525 support level in 2013 when unnaturally large amounts of gold futures ('synthetic gold') were dumped into the Comex with zero regard for 'best price' and total regard for the $1,525 support level being shattered. These interventions have occurred at every critical chart point in the same way that every decline in the SPY was rejected at major price points (a decline of 10 percent or more)."
But as their many interventions have failed to revive real economies around the world and resource price declines are beginning to risk insolvency for bank loan portfolios, Ballanger thinks that central banks will try reflating this year by letting gold and silver off the mat.
For whatever it may be worth, your secretary/treasurer would add that shortages of real metal, which are likely to manifest themselves eventually under any price-suppression system, also could induce a change in central bank policy, just as shortages exploded the London Gold Pool price-suppression system of the Western central banks in March 1968. But letting the monetary metals function as mechanisms of currency devaluation always risks getting out of hand, more so now than in 1968, since, unlike back then, there now is so much more naked shorting of metal by central banks and their investment bank agents. Back then gold price suppression was handled directly and openly by Western central banks. These days, with price suppression conducted by central banks surreptitiously and often indirectly, through intermediary banks, rising metal prices in a free market could cause defaults by institutions that are "too big to fail" and thereby cause contagion eventually impugning central banking itself.
That would argue for another option for central banks and the governments they control: still more "financial repression," only this time necessarily out in the open, not just the surreptitious kind undertaken now. If there were such defaults or currency or capital controls imposed to limit their consequences, even the Financial Times might have to report them, and then there would be no more pretense of democracy and market economies. Awful as that might be, at least then the world might know where it stood.
Well, GATA really isn't in the prediction business. We're mainly in the fact-finding business --
-- but we can enjoy the predictions drawn by others in part from GATA's work, so with his kind permission, Ballanger's market letter, headlined "2015 Trade of the Year," is posted at GATA's Internet site in Word format here --
-- and in PDF format here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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