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Jeff Nielson is the writer/editor of Bullion Bulls Canada. He came to the precious metals sector as an investor in the middle of last decade, and quickly decided this was where he wanted to focus his career. Jeff's background includes four years of Economics at the University of British Columbia, before he went on to earn his law degree from that same institution.

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Bankers Declare War on Commodities

[This commentary originally appeared at http://www.bullionbullscanada.com/ as:  Bankers Declare War on Commodities]

Some may suggest that my choice of subject for this commentary is misplaced, given that the “reason” why the oil market plummeted yesterday was the big oil-dump of 60 million barrels by the International Energy Agency (IEA). My reply to that is that the response of all of the commodities markets to that news demonstrates conclusively that the bankers are attacking all commodities.

Furthermore, half of the 60 million barrels came from the U.S.’s “Strategic Reserve” – and as we all know, no government serves the interests of the international banking cabal more slavishly than the U.S. government. Once we look at this development in detail, the motivations become completely transparent.

To begin with, yesterday’s action by the IEA was a “fundamentals” based development in the oil market (even though totally artificial), in that it clearly changed the supply/demand parameters – if only over a short-term basis. Thus, if our markets were free (or “open”, or “rational”, or any other synonym for “legitimate”) then those markets would have responded in accordance with that change of fundamentals.

In the case of the commodities complex, for obvious reasons the fundamentals for the oil market (in terms of supply and demand) are completely inverse to the demand profiles of all other commodities (except for other energy commodities). Because oil remains the key component of our 21st century global economy, any increase in the price of oil functions exactly like a broad-based tax increase.

It raises the price of goods, lowers profit-margins for many/most businesses (which use significant amounts of oil), and reduces the purchasing power of consumers. In other words, it has a depressive effect on economies – and by necessary implication,  on commodities (the raw materials which fuel our economies). Conversely, when the price of oil falls, that dynamic reverses, and is very “stimulative” and bullish for commodities and the global economy.

This means the only rational response to the plunge in the price of oil for other commodities markets would have been for them all to rally sharply. The fact that commodities did not rally (but in fact moved sharply lower) indicates that it is in fact the bankers who were behind this assault on the oil market. This can be demonstrated in more than one way.

To begin with, we must ask ourselves how/why commodities moved precisely opposite to the direction they should have moved – and in complete lock-step with the price of oil? In partial terms, the answer is obvious: the market abominations known as “trading algorithms” now do virtually all of the “thinking” for the traders who dominate activity – making the banksters nothing less than a real-life “Pied Piper” (and traders nothing but mindless rats). And as most of us already know, the banksters have programmed their trading algorithms (and traders) to have all commodities move ‘in synch’, despite the fact their supply/demand fundamentals are completely opposite.

Again, we must ask ourselves why these trading algorithms defy fundamentals rather than embracing them? Here there are only two possible explanations – and both completely support my initial hypothesis. One obvious possibility is that these algorithms are totally manipulative (i.e. illegal), and the reason why they are programmed to move totally in tandem is because the easiest way to manipulate the entire complex of commodities is with a single algorithm. Attempting to manipulate commodities as a whole, when they are being moved in different directions by different trading algorithms would be immensely problematic – akin to ‘herding cats’.

Of course there is another equally obvious possibility here, one which is regularly put forth by myself and other writers in the precious metals sector: that a single, dominant driver now rules commodities today (which even drowns-out the supply/demand fundamentals). Obviously that “driver” is the reckless, totally unprecedented money-printing by Western bankers.

Currency-dilution is the only “fundamental” which impacts all commodities in an identical manner, and thus it is the only possible legitimate basis for programming the trading algorithms to have all commodities move in an identical pattern. This means that the only possible explanations from the banksters themselves for playing “Pied Piper” in commodity markets is that they believe that their own dilutive money-printing is so out-of-control that it drowns out all other fundamentals; or they can simply acknowledge this to be ‘pure’ (illegal) manipulation.

What adds symmetry to this argument (if not rendering it conclusive) is that, in fact, these two explanations collapse into a single motive. The banksters do believe that their exponentially increasing money-printing now drowns out all other considerations in markets. Similarly, they are manipulating all commodities markets (lower), because obviously if you manipulate the value of goods lower this has precisely the same effect as raising the value of their paper currencies.

Indeed, the entire basis for manipulating (i.e. suppressing) the price of gold for the last several decades has been to  hide the relentless currency-dilution by the Western banking cabal. The reason the bankers need to hide such dilution is that it translates directly into simple theft: we deposit (or “invest”) our dollars with these banksters, and even after the pitiful return we get on our money, the dollars we get back are always worth less than the dollars we gave the bankers. To quote a young Alan Greenspan:

In the absence of a gold standard there is no way to protect savings from confiscation through inflation [i.e. excessive money-printing].

Paper “fiat” currencies are humanity’s oldest Ponzi-scheme, and the current incarnation – the first global version in history – is about due to implode. Put another way, in the first 40 years of this Ponzi-scheme, the bankers have managed to reduce the value of our currencies by roughly 75% (thereby “confiscating” 75% of our wealth), and they are working even harder to destroy (i.e. steal) that last 25%.

Adding further weight to this argument is the obvious fact that there was no possible justification for dumping 60 million barrels of oil onto the global market at this time. The price of crude was not merely stable, it was moving lower – and even the higher quote for “Brent” crude was roughly 25% below its previous peak. Inventories are (at worst) stable, if not abundant. So where was the “emergency”?

Indeed, half of the oil came from the U.S. “Strategic Reserve”, which is explicitly (and obviously) intended to be used only in the event of a bona fide “emergency” in the oil market. The fact that there was no emergency, and the fact that prices were already falling indicates unequivocally that the only “purpose” for the IEA (and the Obama regime standing behind it) was to damage the oil market as much as possible. This would (did) illegitimately drag all other commodities down with it – effectively causing the banksters’ (worthless) paper currencies to rise in value.

We can further demonstrate the illegitimate basis for this assault on commodities by pointing to the wide assortment of vocal critics of this move. The U.S. business community, “Big Oil”, the Republican Party, and OPEC all severely criticized the IEA and the Obama regime immediately after this move was announced. When even such a collection of “strange bedfellows” can reach a consensus in their criticism of this oil-dump, it strongly suggests that the argument this was “pure manipulation” is both clear and conclusive.

This attack on the oil market, and by extension the entire commodities complex is as desperate as it is transparent. As with most manipulation of markets, any short-term benefits which are gained by bankers manipulating prices in accordance with their own, evil plans are lost when supply/demand fundamentals inevitably reassert themselves. Here even a Wall Street banker should be able to connect-the-dots.

As I mentioned earlier on, a drop in the price of oil is highly “stimulative” for all economies. What will this do? It will cause more economic activity, and more consumption all over the world, significantly increasing the demand for all commodities. Similarly, pushing down commodity prices inevitably impacts supply.

A farmer trying to decide whether to plant seed in one more field, or leave it fallow will now do the latter. An oil company trying to decide whether or not to drill a few more wells will now decide “not”. A lead/zinc miner which was considering a mine expansion, or construction of a new mine will now choose to delay that capital expenditure. Simultaneously “squeezing” supply and stimulating demand for commodities can have only one, possible long-term consequence: even higher prices than if this short-term manipulation had not taken place.

There is nothing speculative here. The banksters manipulated the price of gold to such an extreme that they drove more than 90% of the world’s gold-miners out of business. Now the price of gold has increased by nearly a factor of six since then. The banksters drove the price of silver to a 600-year low (in “real” dollars), and the price increased tenfold as an inevitable consequence of that manipulation.

As with the take-down of the silver market by the CME Group in May (when prices were also falling at the time of “attack”), there can be no possible legitimate argument to advance in support of these moves. They were naked, manipulative attempts to increase the value of banker-paper – and amount to nothing less than acts of theft against all commodity-producers.

As with any other criminals perpetrating a “confidence” scam that is rapidly unraveling, “sustaining” the scam is not a possibility. This is merely an exercise in delaying the complete implosion of the banksters’ fiat-paper Ponzi-scheme – which can only end with hyperinflation devouring one or more of these worthless currencies.

The appropriate response for all investors is to place their money where these markets must end up over the longer term, not where they are moving in the short term. With the saturation-level of corruption and manipulation in our markets, only a fool tries to gamble (i.e. trade) in these crooked casinos.

Manipulating commodity markets is always self-defeating over the longer term. The increasingly brazen and desperate attacks being launched on those commodity markets today provide us with a strong clue as to how close the banksters are to losing their “grip” on these markets altogether. Meanwhile, the short-term take-down in commodities prices provides investors with a stellar opportunity to dump their own banker-paper – and buy “hard assets”, on sale.

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