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Hostage Markets: Are The Banksters The Real Hostages?

Articles & Blogs - Gold Commentary

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In our current paradigm of Hostage Markets in the precious metals sector, which has existed in this extreme form for three years now; appearances can be deceiving. By all appearances; it is the One Bank which is in complete-and-absolute control of our fraud-ridden markets, and precious metals investors who are the helpless hostages. But in effective terms, is that really the case?

In fact; it is the One Bank itself that we see with less and less latitude for action, which is a qualitative basis for the definition of a “hostage”. As we see prices “trapped” within an absurdly limited trading range, we begin to see that this paradigm of Hostage Markets is not a strategy of choice on the part of the One Bank – but rather a strategy of lack of choice.

Ever since the One Bank’s minions in our central banks squandered most of the West’s bullion, flooding bullion markets with ridiculously excessive quantities of bullion year after year, simply because they could do so; the final chapter in this game of bullion-manipulation has already been written. The “story” ends with either an (official) bullion-default, or an (unofficial) decoupling – between the banksters’s paper-fraud markets and the real/legitimate bullion market.

This is because even in its least-destructive manifestation, this permanent price-suppression in bullion markets has (inevitably) created a permanent, structural deficit in supply. Regular readers are fully familiar with the dynamics here, summed-up nicely in the title of a previous commentary: “shorting consumes, investing conserves.”

The supply/demand mechanics are simple, and the “chocolate bar” market makes a good hypothetical example. If we were to (under) price chocolate bars at 10 cents apiece, we know what would happen – and in a relatively short amount of time. Store shelves around the world would quickly be stripped bare, as people over-consumed this radically under-priced good.

Simultaneously, chocolate-bar manufacturers would stop making chocolate bars (and go bankrupt) because they couldn’t manage to ‘break even’ selling their product at such an artificially low price. There would be a “default” in the global chocolate-bar market, as buyers tried to buy more chocolate bars, but there was no more supply. This hypothetical example applies to any/all markets for physical goods, because the cost-of-production is significantly greater than zero.

It is long investment (in any such “physical” market) which pushes prices higher – in a healthy manner – until supply exceeds demand, at which point prices level off in equilibrium. But with the permanent price-perversion in our precious metals markets, such an equilibrium can never/will never be achieved; a permanent supply-deficit is the only, possible outcome.

This has reduced the One Bank’s overall strategy in bullion markets to a simple one: to delay losing the game as long as possible. Once we (correctly) identify the only, rational strategy here, it becomes equally easy to determine how successfully the One Bank is playing the game: the size of the supply-deficit. A small supply-deficit means the banksters are playing their game of price-manipulation well; a large supply-deficit means that these psychopaths are executing their strategy in a short-sighted, and ultimately suicidal manner.

Ever since the One Bank launched its first scorched-earth assault on bullion markets (one aspect of the contrived, Crash of ’08); there has been only one relatively short interval where the banksters have been playing their game of price-manipulation well, meaning that the supply-deficit was relatively small. This began in the latter half of 2010, after two, solid years of explosively higher prices.


Put another way; it took two uninterrupted years of relentless price-increases to undo the damage done to supply/demand fundamentals (and the supply-deficit) when the One Bank opted to crash bullion markets, the first time. Here it’s important that readers understand the cause/effect chain, to see how even as far back as 2008, the One Bank has been operating with very little choice.

It was forced to crash our markets/economies in 2008, for two reasons. It did so to hide the fact that the fraud-ridden/bubble-ridden U.S. economy was about to collapse, alone among all major economies. Simultaneously; it had to crash the global economy to derail the beginning of an official hyperinflation spiral – with prices for all commodities spiralling higher, and with everyone expecting even higher prices.

When it was forced to contrive the Crash of ’08; the One Bank was equally forced to push precious metals markets even lower than other sectors. Why? Because over the very short term, (the “panic” itself) it was important for the propaganda machine to successfully sell the lie that precious metals “were no longer a safe haven.”

If it could not successfully sell that lie (backed-up by crashing prices), then in the massive panic which the banksters themselves created, all the Sheep would have suddenly/collectively stampeded into humanity’s oldest and most-reliable safe-havens. This would have been the One Bank’s ultimate, market nightmare.

After having crashed precious metals markets so rapidly/extremely; it would have been impossible for the One Bank to have prevented an upward boomerang in prices – even if it wanted to do so. The point, however, is that it did not want to do so. In 2009, it needed higher bullion prices, because after having destroyed the supply-chain, and super-charged demand (primarily in Asia); the One Bank had created the worst supply-deficit in the history of precious metals markets.

Had the One Bank not followed its Crash of ’08 with the Big Rally of 2009 and 2010 (to cool-off demand); the “game” would have already ended, years before now. But having been forced to contrive the Crash of ’08, and forced to sit back and watch the Big Rally over the next two years; the One Bank was then once again forced to act.

It could not allow the Big Rally to continue, and reinforce itself, for several reasons. At the top of the list; we have the obvious point that suppressing prices is the entire raison d’etre for this game of market-manipulation, in the first place.

Gold and silver are the “canaries in the coal mine” when it comes to detecting (and warning us about) “high inflation”. In turn, sophisticated readers now understand that the phrase “high inflation” is simply a banker euphemism for excessive money-printing.

With that money-printing now having spiralled totally out-of-control; the One Bank is forced to continue the money-printing at an excessive, hyperinflationary pace (or all its paper frauds/bubbles will implode). Thus it was forced to abort the Big Rally, or risk the Sheep becoming immediately aware of the hyperinflationary pace of this money-printing.

By now; regular readers should understand that in any major economy hyperinflation is always a “confidence event”, not an economic event. What this means is that in any hyperinflation cycle/spiral; the paper currency in question becomes worthless (in economic terms) before the Sheep realize that the paper is worthless. Thus it is always that realization which triggers the fatal collapse of (what are by that point) fraudulent and worthless paper currencies.

Our paper currencies today are already worthless (in economic terms).  The “strongest” of these paper currencies, currently, in our ultra-fraudulent FX-markets is the most-worthless of them all: the U.S. dollar. Thus the One Bank was not only forced to put an end to the Big Rally, it is forced to ensure there is never another one (for as long as it can continue the game), or it greatly risks the End of Everything (for paper assets), hyperinflation.

And so we arrive at our Hostage Markets of 2014: a severely (terminally?) crippled supply-chain, relentless demand, and a massive (and growing) supply-deficit. This is what the One Bank has, when what it wants is precisely opposite: a solid supply-chain, anemic demand, and the smallest supply-deficit possible. It can only define this as “winning the game” because all of the other options for the One Bank are even worse.

Understand that even if the One Bank was willing to subject itself to the hyperinflation risk of any new Big Rally, it can no longer have any confidence that such a sustained increase in prices would cool-off demand, and/or shrink the supply-deficit, as occurred previously. In the West; the One Bank has already programmed the Sheep to be momentum-chasing idiots: buy high, and (more often than not) sell low. A new Big Rally wouldn’t discourage demand in the West, it would encourage it.

In the even more important East (and other Emerging Markets); the banksters’ savage/fraudulent take-down of all these currencies has ignited “inflation” and thus destroyed confidence in these various, paper currencies. Should another Big Rally ensue in precious metals; the thought going through the minds of the peoples of these nations is not “gold and silver are too expensive”, but rather the paper is going to zero.

Furthermore, with the One Bank’s savage/fraudulent take-down of the mining sector having been sustained for three, solid years; it would/will take much longer for higher prices to begin to cause any improvement on the supply side of the equation. This is why the One Bank has been desperately pressuring the Senior Miners to once again begin “hedging” their production – because this would create an artificial (but temporary) increase in supply.

Meanwhile, for the “strong hands” who still hold precious metals in the West; current criminal prices provide zero incentive to sell any of our holdings, while allowing us to swap our (worthless) paper for metal at absurdly discounted rates. These are not parameters which suggest long-term success for the One Bank in its game of bullion price-suppression. Rather, they are dynamics which guarantee losing, in the short/medium term.

Will Final Defeat in the game of bullion price-suppression come in one week, one month, one year, or one decade? In our corrupt (and opaque) markets and economies; we simply lack sufficient data to estimate an answer with any precision. We can only say with certainty that it will be significantly closer to a year than to a decade.

In our Hostage Markets; the clock is ticking for the real hostages.


[Readers are encouraged to join me for The Daily Grind, my daily dialogue on precious metals markets, and the events which drive these markets]

Comments (3)Add Comment
Jeff Nielson
written by Jeff Nielson, March 28, 2014
Jeff: timing is always the big question, but I agree with you that the end game is closer to one year than one decade. The other side of the coin to future supply deficits will be the always safe haven pursuit (demand) in times of war and revolution, both of which are rapidly approaching, and not just on a regional basis, but globally.

Yes Apberusdisvet, between runaway inflation and the increasingly dangerous world in which we live; one must expect that the propaganda machine's best days for demonizing bullion-ownership are behind us.
written by apberusdisvet, March 28, 2014
Jeff: timing is always the big question, but I agree with you that the end game is closer to one year than one decade. The other side of the coin to future supply deficits will be the always safe haven pursuit (demand) in times of war and revolution, both of which are rapidly approaching, and not just on a regional basis, but globally.
written by zooey, March 27, 2014

I agree. If I was a total cynic. I would be asking how big the selfie-betting derivatives market was concerning "how long to fail".
And the other derivatives "how many will hang?". And the other derivatives concerning the "total suicides".

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