August 30, 2017
There’s a lot of amazement and wonder at how the
“stock market” can be up today with the devastating news out of Texas
and the latest North Korean missile launch. Longtime readers of TFMR
know exactly how this market levitation is accomplished so this post is
designed as a public service in order to better educate and inform
Let’s just keep it simple…
In 2017…and, actually, since 2008…the
“markets” don’t actually exist. Oh sure, there are trades and prices but
in terms of what the markets were 20 years ago?…those days are long
gone. Instead, what we have now is total HFT domination. Over 90% of all
volume on the NYSE and NASDAQ is now done through HFT machines that
swap positions back and forth. This is common knowledge and if you and I
know this, then you can be assured that The Fed, The ECB and the BoJ (
known henceforth as the G-3) know this, too.
To that end, since the G-3 are dedicated to
market stability and the wealth effect, these central banks clearly seek
to influence the direction of the equity markets by influencing the two
key drivers of the HFT machines. And what are these drivers? The
currency pair of USDJPY and the volatility index known as the VIX.
Simply stated, if your wish is to drive “the stock market” higher, all
you need to do is buy the USDJPY while at the same time selling the VIX.
It truly is that simple.
To that end, daily observation of trading
patterns allows us to observe a clear and obvious, algo-driven program
in the all-important USDJPY. Because of the sheer size of the forex
market (up to $7T/day), any algorithm put in place to manage this pair
could only come from pockets deep enough to make it happen….namely,
And what does this computer-based, G-3 buying
program look like. Again, in the simplest terms, this program sets up a
USDJPY floor at some pre-determined or even random level. Once a bounce
is initiated, a buy program then follows after the pair have come back
down to a newly-discovered double bottom. For today (Tuesday, the 29th),
it looked like this:
By driving a rebound in the USDJPY and selling off the VIX, the G-3 get
the desired impact of a recovering “stock market”. These screenshots
were taken earlier today as the equity bounce was in progress:
Now, lest you think this was some kind of one-off and that my tinfoil
hat is on too tight, please check the charts below. Here’s a chart of
the USDJPY from last evening after the Nork news hit:
Here are three charts from last week:
Here are just four from earlier this month:
And here are just a handful of occurrences where we caught the G-3 redhanded in July:
LOOK, YOU SIMPLY MUST UNDERSTAND THIS:
What you see is an illusion and a mirage. Since
the financial crisis of 2008 and particularly since 2012, the global
central banks have moved to assume nearly full control of the global
markets. They do this through influencing the key inputs which drive the
HFT machines that control nearly every “market”. So going forward, when
you’re perplexed as to how the stock market could be up on a day when
the news is all so bad, just simply check the all-important USDJPY and
VIX and you’ll have your answer. And yes, we have now reached the point
where the stock market won’t decline even in the face of a nuclear event
or natural disaster. So long as the USDJPY and VIX are unchanged, the
S&P will be unchanged too, regardless of a nuclear bomb in Times
Square, an earthquake in Tokyo, a massive bank failure in Europe or any
other type of “disaster”.
Lastly, what does this have to do with Comex
Digital Gold? Well, as we first discovered and reported back in 2014,
The Bullion Banks have their own algorithms which have tied the price of
“gold” to the USDJPY , as well. Simply put, if you want the gold price
to go higher, you need the USDJPY to fall. Period and end of story. All
other technical and fundamental factors are largely meaningless. See the
charts below where the inverse USDJPY is plotted in candles and Comex
Digital Gold is a blue line.
One day (Today, Tuesday 8/29):
HFT now controls everything and the global central banks (but primarily
the G-3) seek to control the HFT. Once you admit and understand this,
the daily action of the “markets” will no longer confound you.
Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities. Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.
The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
Source: Sprott Money