Under The Surface

by Turd Ferguson, TFMetals Report

While the computer-derived paper price of gold continues to be jerked around by the whims of the Forex algos, I thought I'd bring to your attention some far more important items that are bubbling just beneath the surface.

Let's start with a seemingly unrelated story. Did you see this today at ZH: http://www.zerohedge.com/news/2015-04-23/deja-deja-deja-deja-vu-mysterious-us-bond-seller It contains this chart:

Though of us who follow gold should be able to immediately recognize this for what it is, having seen it about a million freaking times through the years. NO DOUBT this is a timed algo trade, meant to influence and direct the Long Bond market. The questions become: Who and why?

  • Who? To move a market as large as the T-bond futures market, you need some real heft…this ain't your average hedge fund. Instead, this is very likely The Fed itself acting through its network of Primary Dealer accounts.
  • Why? How many times have I mentioned that The Fed can't raise short rates without the risk of flattening, or even inverting, the yield curve? Solution? If you can raise the long end by 25 bps, you can raise the short end by 25 bps, too, with no overall change to the curve.

And, to me, that is definitely what you're seeing here. A Fed, desperate to raise the Fed Funds rate in order to promote "normalcy" and "dry powder", attempting to manipulate long rates higher in order to create the "space" needed to raise the Fed Funds rate in June.

If I'm right, does that raise the risk of some "bad Fedlines" next Wednesday? Yes it does as a matter of fact. Am I worried that this may cause the computer-derived paper price of gold to fall a bit further. No I am not. Not in the least.

WHY? Keep reading…

Below are some hidden gems regarding the ongoing, global de-dollarization movement. First this from our buddy Alasdair, regarding gold, the SDR and fading dollar hegemony: http://www.financeandeconomics.org/gold-sdr-brics/

This post from two weeks ago: http://www.globalresearch.ca/chinas-defiance-before-the-imf-incorporate-… which references this from five years ago: http://abcnews.go.com/Business/story?id=7168919

And then this…A translation of a Russian article that discusses some statements made last week at the "Asian Davos", a "forum in Jakarta, created by Beijing as a counterweight to Western Davos, designed as a platform for the discussion of the economy in the post-American world." Though the translation is a bit jumpy, I think you'll be able to get the point: http://fortruss.blogspot.com/2015/04/the-rats-are-leaving-dollar-titanic…

So, again, am I worried about the short-term trends of the fiat-conversion price of gold and silver? Nope. True, I spend a lot of time and energy discussing and forecasting such things but, in the end, we must all remain focused on the MUCH BIGGER PICTURE.

To that end, I'm still excited about the role that Bullion Capital and their new allocated metal exchange can play in the new world. The CEO of Bullion Capital is Tom Coughlin and we had hoped to record an update for you today on the status of the new exchange. Unfortunately, due to his changing schedule, we've had to push back to tomorrow. In the meantime, Tom was on with Max Keiser earlier this week and the program was aired earlier today on RT. Please take the time to watch in preparation for listening to Tom and I tomorrow.

Finally…and I know it's very short notice…since I didn't schedule an A2A this week, having planned on speaking with Tom today, instead…At 1:00 pm EDT (New York time), roughly 2 hours and 10 minutes from now as I type, I'll be in the GoToWebinar "studio", fielding any and all questions from any of you who'd like to meet me there. You can do so by clicking here: https://attendee.gotowebinar.com/register/2329994148146133506  If no one shows up, then I'll just ramble incoherently for a few minutes and post the recording as today's podcast.

Have a great day. Keep the faith and persevere.

TF

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