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Retail Silver Market Gets Super Tight, Short-Covering Rally Possible

Michael Rivero Speaks on Fake Gold, War in Europe, War on Cash

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Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up you’ll hear a wonderfully fascinating interview from Michael Rivero of WhatReallyHappened.com. Michael offers perspectives you won’t hear anywhere else on a range of topics -- including the possibility of a war erupting in Greece, the War on Cash, concerns over fake gold and many other topics. You will not want to miss my interview with Michael Rivero, coming up in just a moment after this week’s market update.

A rising U.S. dollar put downward pressure on hard assets this week. The U.S. Dollar Index rose to a three-month high as investors moved out of the euro. Eurozone finance ministers put together a new 7 billion euro bailout package for Greece. But the troubles for Greece are far from over. Its future in the Eurozone is far from certain. The future viability of the euro as a regional currency is also far from certain.

As the credibility of fiat currencies comes undone, precious metals are a logical place for investors to seek refuge. For the time being, however, that’s not happening b at least not in the futures markets where spot prices are set. But the flight to gold and silver is happening in a BIG WAY in the retail bullion market. We’ve seen record sales so far in July, leaving some dealers scrambling for inventory.

Meanwhile, gold prices are now at a critical support level near last fall’s low. As of this Friday morning recording, gold trades at $1,133 an ounce, down another 2.7% for the week. Silver also took a beating this week, off 3.8% through Thursday’s close at $15.00 an ounce. The white metal is drifting lower again today and is now hovering around Tuesday’s low point and currently trades at $14.91, for a weekly loss of 4.5%.

Turning to platinum and palladium, the market action there isn’t especially encouraging. Both platinum group metals got pounded down to new lows for the year, with platinum now coming in below $1,000 an ounce at $999 and palladium at $621 an ounce.

If there’s anything encouraging to report from the ugly looking precious metals charts, it’s that negative sentiment among Wall Street types has reached an extreme. And now some see that as an opportunity to get long. Bank of America Merrill Lynch noted in its latest survey on fund managers that gold had entered "undervalued" territory for the first time since August 2009.

Frank Holmes of U.S. Global Investors, who spoke with us in a Money Metals podcast interview earlier this year, is one analyst who sees opportunity amidst these dismal market conditions. Holmes notes that speculative short positions in gold have reached their highest levels of the year. Meanwhile, net long positioning among futures traders is at the lowest point since October 2006 b back when gold traded at under $600 per ounce.

The hedge funds are about as bearish on gold as they can get. B As we discussed with Dan Norcini in last week’s podcast, this sets up the potential for a furious short-covering rally once the gold market starts moving higher and taking out trading stops. But first, the market needs a catalyst to start rallying.

Neither the Greece situation nor Fed Chair Janet Yellen’s testimony before Congress this week caused traders to shift from short to long on precious metals in the futures markets. Yellen reiterated the Fed’s desire to be able to raise rates before the end of the year. She also fended off some hostile questions by Republicans concerning the Fed’s lack of transparency.

News Anchor: Federal Reserve Chair Janet Yellen told the House Financial Services Committee monetary policymakers are on track to raise interest rates this year after more than six years at near zero.

Janet Yellen: If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate.

News Anchor: But interest rate timing took a back seat to House Republican concerns for more oversight and accountability over the central bank. There were calls for a more transparent and structured interest rate policy and several lawmakers clashed with the Fed Chair over the refusal to turn over material regarding the investigation of a 2012 leak of market-sensitive information to a private newsletter.

In Yellen’s carefully crafted statement, she emphasized that rate hikes would be contingent on the economy performing in line with the Fed’s expectations. In other words, rate hikes are far from being a done deal.

You may recall Jim Rickards comments here on our podcast that the Fed has the worst track record imaginable when it comes to market forecasting, having wildly missed their economic growth predictions every year dating back to the 2008 financial collapse.

But if the dollar does continue to rise and exert downward pressure on commodities prices, concerns about disinflation could dissuade the Fed from hiking. The CRB commodity index is now nearing new lows for the year. If oil prices slide a little further in the days ahead, we could be looking at fresh multi-year lows in the CRB index.

That’s good news for consumers, but not necessarily a good sign for nominal economic output. The Fed wants to see an official inflation rate of 2%. That means there is only so much dollar strength vis-C -vis the euro that the Fed will be willing to tolerate.

And paper prices for precious metals can only fall so low before physical shortages emerge. We seem to be at or near an inflection point in these markets, as spot prices continue to remain below all-in production costs, especially for silver, and brisk demand for silver coins, bars, and rounds overwhelms inventories at the U.S. Mint and many bullion dealers. That’s not to say that technical futures traders can’t push prices even lower on a temporary basis. The shorts smell blood in the water and would love to take out support levels in order to inflict more pain on longs.

The sharks who aggressively manipulate futures markets with their outsized positions know no shame. They don’t care if they create havoc in the coin market, if they bankrupt mining companies, or if they scare small investors out of the market. They just want to cash in by gaming the system as best they can.

The best we as individuals can do to counter their influence is to avoid trading with them. Stay out of the paper markets that they control and stick with physical bullion. The big banks and hedge funds cannot dictate the supply and demand fundamentals for physical gold and silver. But to the extent that they keep spot prices artificially low, mining output will in turn be artificially low. That makes the fundamental case for higher prices down the road even stronger. So if you’re a long-term investor in physical bullion, you should welcome these raids in the paper markets. They, too, shall pass.

Well now, without further delay, let’s get right to this week’s exclusive interview.

Mike Gleason: Welcome to this week's Market Wrap Podcast. I'm Mike Gleason. It is my privilege now to welcome in Michael Rivero, founder and editor of WhatReallyHappened.com and a talk radio host. Michael is a renowned student and commentator on geopolitics, banking, financial markets, and many other topics, and it's great to have him on today. Michael, thanks for joining us.

Michael Rivero: Thanks for having me.

Michael Rivero

Michael Rivero of
WhatReallyHappened.com

Mike Gleason: You've got some really interesting things to say on the whole Greek situation, help us cut through all the nonsense here. What is really happening over in the EU with all of this?

Michael Rivero: What is really happening here is an attempt to assert total control from Brussels over all the member nations of the EU because Greece is not the only member state that is in serious financial trouble because of the problems that we have with the central bank generating more debt than money with which to pay the debt. As a result, we've got ... Italy in trouble, Spain is in trouble, France is in trouble, and everyone was watching Greece to see if they were going to be able to break free of the Euro and the EU, and go back to running their own business with their own currency, and there was definitely a plan to do that. In the end, the money junkies won out. (Greece Prime Minister Alexis) Tsipras has absolutely betrayed the Greek people who voted him into office. He went back on virtually every promise that he made, and in the long run, Greece actually wound up with an even worse deal at the end of it all, possibly as kind of a message from the European Union that they're going to punish anybody who dares stand up and defies the rules they've set up to basically enslave everybody under this system of economics.

We know that every nation that has one of these private central banks issuing the public currency as a loan of interest, it by design drives the nation and the people into hopelessly unpayable debt in order to use that debt to control them. There was a wonderful movie not too long ago called The International talking about a bank that was sort of modeled on BCCI getting into the arms trade business to stir up wars just so that they could loan money to both sides at interest and make money off of the conflict. It was a very insightful movie, which is why the corporate media kind of panned it, and a lot of people haven't heard about it.ut in the end, we heard from the German negotiators, their attitude was basically they had to toe a hard line.

They were not going to cut Greece any slack whatsoever because the moment they did, all of the other member nations of the European Union who are in serious economic trouble were going to demand exactly the same treatment.

Mike Gleason: Why doesn't Greece seem willing to ditch the Euro? To many observers, it seems that would be in their national interest to do so. What do you make of that?

Michael Rivero: Certainly that's the way much of the Syriza party wanted to go. The recently reasoned finance minister said that yes there was a plan. They had printed up drachmas. Some of them were even being seen on the streets. In the end, either Tsipras' price was met or that he got black-mailed but he just did a complete about-face and sold out Greece to the European Union money junkies. People are very angry with him. The civil servants have gone on strike over in Greece. I'm concerned that we may see riots possibly, even a civil war because this is not what the Greek people wanted. I'm beginning to think the only thing that really makes a lot of sense is that Tsipras was persuaded to keep Greece in the EU. We know the United States certainly wanted that because had Greece left the European Union, they would have also left NATO, and that would have drastically changed force projection for this coming confrontation with Russia. We know that the Greek government and the EU were under tremendous pressure from the White House to find some way to keep Greece in the EU.

Probably a lot of back-channel deals were being made. The only thing that really makes sense is that Tsipras and everybody else were expecting this referendum to fail or at least be close enough to be stolen, so then Tsipras could say, "okay, the Greek people are okay with going back to more austerity." Then he would have had the political cover and justification for making the deal that he did.ut the referendum of course was an absolute land-slide, and the thing about vote fraud is it can shift and election a few points. It really can't reverse a land-slide without being obvious that that's what happened.

So that's the only thing that really makes sense is that everybody was betting the referendum was going to fail. When it didn't, Tsipras had to go on and make the deal he was told to make anyway.

Mike Gleason: Backing up there a moment, you actually think military action is a possibility at some point? Could we actually see some sort of a war develop out of all this?

Michael Rivero: Well, unfortunately we very much could. We might see the Greek people rise up and kick out their Euro-centric government and immediately their first move would be to pivot toward Russia. Russia is holding out the red carpet.riggs is agreeing to finance Greece for rebuilding industry and jobs. Right now the problem with all these bail-outs that Greece is getting is the money comes in one door and immediately goes out the other back to the banks holding Greece's debt. None of this bail-out money stays in Greece to actually improve conditions there.

If there was an uprising that kicked out the Greek government, I'm expecting that the US would basically go on in the way they've done in Yemen and Libya to slap the people down and say, "look, you're going to accept our puppet rulers, and you're going to accept being enslaved to our financial system." Yeah, would could easily see a civil war erupt in Greece out of this.

Mike Gleason: Here in the US, what do you think our Fed's response will be to the whole situation as this unfolds in Europe?

Michael Rivero: Well, the Federal Reserve is watching events very, very closely. The reality is that all they've done from the economic point of view is kick the can down the road just a little bit further because the reality inside Greece, they still don't have the jobs to allow the Greek people to trade their labor for new wealth to pump into the system to make the payments. The terms of this new deal are absolutely Draconian where Greece basically loses its sovereignty the first time they make a mistake. They've already had to surrender control of much of their national assets to German control for privatization, the airports, various other facilities, even the banks themselves.asically, it's a foreclosure for a lack of a better word from the point of view of the European Central Bank, the IMF, and the World Bank, but sooner or later, that debt is going to come due again and there's not going to be a payment available coming from Greece.

They'll talk about another bail-out and there'll be more demands, but at some point they're going to hit the wall. There's going to be nothing left in Greece to plunder. Greece is not going to be able to make the payments. Nobody's going to want to create more money to run through Greece and basically bail-out the central banks one more time. This is getting to be an emerging pattern all over the world, whether it was Cyrprus or Greece, the trouble that we're in here in the United States of America because by design all private central banks create more debt than money with which to pay the debt, and the debt grows and grows and grows until finally it collapses the entire system. That is always the end.

What makes it different this time is because of globalism and all the inter-linking and all the derivatives, when it goes down, it's going to go down everywhere at the same time, which is going to be a once in a lifetime opportunity to restart the global economy without private central banks in charge of the various currencies.

Mike Gleason: What do you make of the war on cash that's been developing? Should it concern people, and why might it be so dangerous?

Michael Rivero: Well, it's dangerous because having money in your own pocket is a fundamental freedom for people to simply walk around with wealth and buy whatever they want and not have to go through a card. The issue with banning cash I think is intended to transfer the cash that's in our pockets back to the banks to put on their balance books to keep them that much further away from default. It's estimated there's about 1.3 trillion dollars in cash in the pockets of the American people. The bankers would love to have that forced back into their bank accounts so that they can play with it. Of course, if there's no such thing as cash, it makes runs on the bank absolutely impossible. All you can do is go in and say, "Move my money from your bank to somebody else's bank," but it's still in the banking system.

The bank you move it to can turn it around and send it right on back to the bank that's in trouble. This is all about protecting the banks. Along with a cashless society, every transaction you make comes under government scrutiny, every newspaper you buy, every jelly doughnut you buy, what movies you go to, comes under the totally surveillance state. I think there are serious practical reasons why they're not going to be able to ban cash. Certainly for the Central Intelligence Agency, which controls much of the world's drug traffic, they have to have untraceable cash in order to carry out these non-sanctioned intelligence operations.

Let's be very honest, what are the politicians going to tuck into the g-strings over at the strip club if they don't have cash anymore?

Mike Gleason: Yeah, it's definitely a very troubling sort of movement going on there. It's very anti-free liberty for sure. I couldn't agree with you more. Texas recently followed suit of some countries when it announced it would repatriate the state-owned gold and rescue it from the hands of Wall Street and will soon be storing it inside the Texas borders. What's your take on that announcement? What kind of statement was that? What do these recent announcements by Texas now and Germany and the Netherlands and a few others before them say about the trust factor among and between these sovereign entities?

Michael Rivero: Well, trust is really a big issue. Now, the way the New York Federal Reserve and for that the bank of England and the Bank of France, and JP Morgan has a private bullion depository, they function like a safety deposit box. Countries will rent space in the gold bullion vault to store their gold. The banks are not allowed to go in and use it. It's just like your safety deposit box at the bank. If you rent a safety deposit box, and you put in some gold coins, and you are aunt's heirloom bracelet, you can at any time go on in and remove all of that material. Well, it seems that the Federal Reserve has been playing fast and loose with other people's gold. They've been leasing it out the back door to drop on the market to keep physical gold and silver prices down so that people don't abandon their savings accounts and their stock market portfolio to buy physical metal.

We know that the amount of gold and silver being traded these days greatly exceeds the output of the world's mines, so it's got to be coming from somewhere. This triggered some concern because over in Germany, they were getting some gold bars that had the hallmarks of Fort Knox and the New York Federal Reserve, and discovered they had tungsten cores, so there's some fakes. Germany basically said, "look, we put our gold in the New York Federal Reserve after World War II because we didn't want the Russians coming in and taking it, but that's all over, and we're all friends. Send it back." They got the big stall. Germany said, "Okay, can we at least come in and do an audit and look at it?" The New York Federal Reserve said, "no, we're not really set up to do that. Just trust us. The gold is still here, and we'll get it back to you in maybe five or six or seven years."

This triggered a crisis of confidence all around the world because what little gold has already been returned to Germany are not the original stamped and numbered bars Germany sent over. Tests have shown that the gold being sent back to Germany is nowhere near as pure as it's supposed to be. They're playing these really reckless games, and this has triggered something like seven, eight other countries wanting their gold back. Texas wants their gold back because there's a growing suspicion it simply isn't there at all. We actually covered this last year in an episode of America's Book of Secrets on the History Channel where all of a sudden people are wondering is the gold really there.

Can you imagine going into your bank, to your safety deposit box and the bank manager says, "I'm sorry. I can't let you take anything out of it, but here, I'll let you look into it from across the room," and you see something that kind of looks like some gold coins and maybe something that might have been a bracelet but not necessarily your aunt's heirloom bracelet you put in there. The bank manager slams the box shut and says, "There. Go home and be happy." That's kind of the situation that all of these foreign nations and foreign banks and even now, Texas, are dealing with, that the gold that they paid the New York Federal Reserve to store wasn't stored but was actually re-hypothecated for various financial manipulations.

The New York Federal Reserve's rationale is, "Well, we leased it out the back door, but since it's only a lease, we're still technically in possession of it." That only works if they're able to get the gold back, and right now, they're not. This is why people are getting very, very nervous about what is going on. We could easily see a repeat of Roosevelt's 1933, I think it was, ban on private ownership of gold bars and gold coins in order to rescue the banks from their crimes one more time.

There's no question that the banks are behaving very badly and certainly are very untrustworthy with other people's gold bullion. Basically, if you've got gold or silver, and you should have it, I wouldn't trust it in any kind of gold depository owned by the banks or the government. There are private gold vaulting companies that are much more trustworthy. It is amazing how the New York Federal Reserve, which has tried to cultivate this image of trustworthiness and legitimacy for the 100 years it's been in existence and all of a sudden we're finding out that they've actually been playing dirty with other people's property.

Mike Gleason: That leads me right into my next question. The Fed has heavily resisted an audit of its inner workings and the grassroots movement that started the ball rolling with the Audit the Fed initiative, may now be turning its attention toward the gold at Fort Knox, where there hasn't been an audit in over 50 years. I think I know your answer to this, but is the gold there? If not, what do you think's happened to it?

Michael Rivero: Well there is something that looks like gold there. In response to these growing concerns, the US government or the US Treasury Department refused to do an audit. I think this was in the late 70s after Nixon had ended gold convertibility for the US dollar, which technically brought the Bretton Woods agreement to an end. They had a big press conference where they went into Fort Knox with cameras and a bunch of politicians and they opened up one vault door and showed a lot of gold bricks, but nobody was allowed to touch them. Nobody was allowed to pick them up. Certainly nobody was allowed to run any kind of an assay on them. Of course, back then it wasn't known that you could detect a tungsten core with an ultrasound probe. It was just basically, "Here, we're showing you the gold. Go away happy." Yeah, at this point, there is reason to doubt that all of the gold that is the property of the American people is still in Fort Knox.

Over time, it's probably been transferred to JP Morgan, the New York Federal Reserve, just dumped on the market because they're desperate to keep physical gold and physical silver prices down. They're certainly over-printing those paper contracts. They're very concerned that people are so distrustful of the stock market and the banks that they're going to start emptying their accounts and just putting their wealth into physical silver and gold, which are wealth preservers. They hold their value. They're universally-recognized as having a value. You can go anywhere on the globe with silver and gold, and you will find somebody who wants you to trade you something for it.

Mike Gleason: Is this potentially an issue of national security or is that over-stating it, the fact that this gold might not be there?

Michael Rivero: It is an issue of national security because were there to be a gold run on the New York Federal Reserve, I mean, nations have gone to war over one nation confiscating or stealing their gold and silver. This could provoke a war. Certainly, it would destroy all trust in the American-centric financial system at a time when so many other nations on earth are trying to move away from a dollar-dominated global economy because as they're seeing with Russia and with Iran, the US government has weaponized the global economic system and uses the world's dependence on the US dollar as a club to coerce compliance. We're always hearing about all these deals where the US is offering financial aid to a country, but they have to allow GMO seeds in, various other things like that, and looking at what's going on with all this sanctions nonsense, I think the world is awake to the realization that the US government has weaponized the global economy in order to exert its control over other countries.

There's definitely an accelerating trend away from using the US dollar. And the US government's desperate to stop it. That's why all of a sudden we've gone to talking about war with Russia and China. Literally the war is against the yuan and the ruble, which are rising threats to the global dominance of the US paper dollar, which is not seen as all that trustworthy anymore because it's not backed by anything except a promise of future slave labor of the American people. That's what the treasury bonds are, a promise that somewhere down the road, some American will have money taken away from them, nothing given back for it, in order to make good on the treasury bonds. If that isn't slavery, I don't know what is.

Mike Gleason: Yeah, I definitely think we're going to continue to see financial warfare unfold, kind of a new brand of warfare here over the next several years. What roles should gold and silver play right now for someone who's hearing about all of these global economic and currency issues? What should they be thinking about, and how should they be viewing gold and silver?

Michael Rivero: All this talk about bail-ins, with the Congress having changed the law last November to make bank savings account holders unsecured investors in the bank and therefore liable to share the bank's losses, the advice we give out to all of our readers and listeners is you should have no more of your wealth in the bank than you need to cover your immediate obligations. You should have the rest at home under your own control and certainly some of it should be in physical silver and physical gold. Under the mattress, buried in a mayonnaise jar, or out by the pineapple plantation, whatever it takes. If they do ban cash, unless they ban physical silver and gold coins and bars along with it, then what you should do is go down to the bank with your little plastic card or go to your broker, like your company, and say "Give me as much silver and gold as I can on whatever's left in my bank account."

Because really, if you remember how this country started, the money had a fixed value. The money was not the coin or the paper. The silver content or gold content of the coin was the money under US law. The paper notes were just claim checks for convenience. Once you had that coin in your hand, there was nothing the bankers or the government could do to change its value, but over time, first of all, they made the money imaginary. Then they made it debt-based. Now they want to take away the physical tokens of paper and coinage so that the banks own all the money, and you're just allowed to use it every once in a while with various fees and interest being charged for the privilege.

Mike Gleason: It's a very interesting world that we're living in right now. Lots of things happening. I definitely enjoyed speaking to you, and thanks for explaining a lot of this, and for your wonderful insights. It was great talking with you. I hope we can do it again.efore we let you go, tell our listeners a little bit more about your website and also your radio program.

Michael Rivero: My website is WhatReallyHappened.com, and I have a daily talk radio show Monday through Friday on the Genesis Communication Network from 3:00pm to 5:00pm Central US time.

Mike Gleason: Well that will do it for this week. Thanks again to Michael Rivero, founder and editor of WhatReallyHappened.com. Make sure you check that out.

And check back here next Friday for our next Weekly Market Wrap podcast. Until then, this has been Mike Gleason with Money Metals Exchange. Thanks for listening, and have a great weekend, everybody.
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