Craig Hemke: Palladium Blowup Could Expose Scam Of Gold & Silver Futures

(Audio length 00:28:02)

Mike Gleason: It is my privilege now to welcome Craig Hemke of the TF Metals Report. Craig is a well-known name in the metals industry and runs one of the most highly respected websites in our space and provides some of the best analysis on banking schemes, the flaws of Keynesian economics, and evidence of manipulation in the gold and silver markets that you will find anywhere.

Craig, welcome back. Thanks for the time again today, and how are you?

Craig Hemke: Mike, I'm fine, thank you. It's always a pleasure, and it's great to visit with you. I can't believe it's already been 90 days since the last time we spoke. I'm not sure where the time goes. All I know is it's still winter.

Mike Gleason: Yeah, I've got lots of action in the metals markets to digest with you. A lot's transpired over the last few months, a lot of the same sort of shenanigans, but we'll get into it nonetheless. As we begin here, Craig, you observed the bullion banks increasing the silver float, the number of open contracts, by 45,000 during the recent price rally in silver.

All that fresh new paper theoretically represents 225 million ounces. They sold all that paper short, but they certainly didn't go out and procure even a fraction of that quantity in physical metal to back it. There was no fleet of semi-trucks with 15 million pounds, which is what 225 million ounces is. We did the math here. They weren't backing up to COMEX delivery bays.

The banks simply sopped up the speculative demand by printing new contracts, enough to satisfy all comers. Pretty much none of that demand trickled through to the markets for actual bullion. Now, they're ringing the till, covering all those shorts. We aren't sure why, given your coverage as well as others, that there are so many investors foolish enough to walk into this rigged casino and make paper bets against these banks. Do you have any guesses about why folks still seem willing to play there, Craig?

Craig Hemke: Yeah. Again, I think it's too few people understand what's going on, and too few people have a vested interest in getting to the bottom of it. Look, we already know that the bond market is manipulated. That's what Quantitative Easing programs are around the world. We know that the Forex markets are manipulated, countries manipulate their currency all the time. We know the LIBOR market is manipulated, but yet everybody wants to tell you that gold and silver are these sacrosanct, perfect, free and fair markets. It's ridiculous.

The reason why this game continues is, too many hedge funds have their heads in the sand and don't realize it, and have no interest in getting to the bottom of this. What they are looking for when they buy these contracts is just typically exposure to the price.

They don't have any desire to buy any physical silver. They don't have any desire to hold any physical gold. They just want exposure to the price, and a lot of that exposure to price is just driven off of technical signals.

So, they'll sit there and, a little long, a little short, and then all of a sudden price will surge up through, say, the 200-day moving average. Then all of a sudden every technical and trading hedge fund that deals with silver suddenly want some exposure, because the lights are flashing off of their screen. They're not ever intending to take delivery, as you said. In fact, they're not even paying for their contracts. Everything's on margin. So, they put up $1 to get $8 or $9 worth of leverage. The banks issue the contracts under the same pretenses. They don't have the silver, nor do they have any intention to deliver it.

So you've got on one side, a seller that doesn't have any metal with no intention to deliver it. On the other side a buyer that doesn't have the money and has no intention to take delivery. But yet what's just such a scam is the fact that this process is what's used, still to this day, as price discovery for the actual physical metal, which is just nonsense.

But you're right, this is what happens. It's the market system that we have, and you're right, nobody really seems to get too upset about it, except you and me and a few other folks that all we want is just a free and fair price discovery system. Unfortunately, this last couple of weeks shows you we still don't have it.

Mike Gleason: Yeah, that's for sure. Now, despite the bullion bank suppression schemes, you're looking for a bottom here in the next few weeks, and then another rally higher, markets moving two steps forward and one step back. Talk for a minute if you would about what you're expecting in the months ahead.

Craig Hemke: Well, I haven't mentioned... Maybe the last time we spoke we might've talking about this too. Talking? Let me say that again, okay Mike?

Maybe the last time we spoke we might have discussed this too. This year, 2019, and into 2020, reminds me a lot of the years, 2010 and '11, when I first got rolling with TF Metals Report. In that, back in 2010, the economy had come out of the whole green shoots thing and QE number one, which was going to be a one-off.

Everything was rolling and the GDP was at 3% in the second quarter of 2010. Everybody thought we're great. And at that point, gold and silver were trending up, but mostly sideways. Silver was actually right around this same price level. $16, $17. Then we got to the fall of 2010, and that's when the economy started to slow.

All of a sudden we had QE two. Everybody lost confidence that the Fed had things under control like they'd been telling us that they had. The dollar started to drop, and it was then that gold and silver really took off. We get into 2011, and there's all kinds of political discord, like we have now, only it's opposite parties.

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