The r0ach report vol 3: Bitfinex scamming intensifies & more on the silver and gold markets

Welcome to the r0ach report vol 3, and thank you, the viewer, for making these market reports possible.  The following show is brought to you by our sponsors:  Halliburton, Exxon, Goldman Sachs, & JP Morgan...just kidding...or am I.

I talked about the sham known as Bitfinex a lot in my last post, and wanted to follow up on that now that they're back online.  I use numerous indicators to read markets like everyone does, but one of my main goals is always to try and identify individual players and bots out of the scroll of 1's and 0's passing by on the screen. When I checked out the trading activity and walls on Bitfinex after they came back up, it was honestly horrifying.

I talked about how it appeared someone was naked shorting on Finex before the thing went down, and once Finex had all this money vanish into thin air while giving users the middle finger, I figured that was it for this exchange and nobody is going to trust money there anymore.  So what do we have in the above picture?  Just as I thought, nobody is putting money on the bid side of this thing, but then you look on the ask side and almost do a back flip out of your chair.

In a real, aggregate market, that lack of liquidity on the buy side is going to be mirrored on the ask side.  Not even close here.  In the above picture, you can see nobody trusts putting dollars on this thing to purchase Bitcoin, which can then easily be transferred off site.  Yet, magically, the same audience who believes it's a horrible idea to store money on this exchange, decides to risk millions of dollars to create intimidation ask walls or shorts, of which, the dollars are much harder to transfer off-site?  Sorry, but nobody believes your bullshit, Bitfinex.

There's a clear pattern of numbers on the ask side in clumps of 200, meaning 90% or more of that volume is probably from a single entity.  A single entity who appears to not care about risking large sums of money to sit on this dangerous exchange.  Gee, I wonder who that could be?  Probably someone affiliated with the exchange itself.  Everyone else is getting their money the hell out of dodge, as can be seen by the bid side and lack of low ball bids, even down at $400.  There is literally nothing down there.  Zero.

These Bitfinex guys must believe everyone who trades Bitcoin is a complete idiot.  It looked like they naked shorted their own exchange before it went down, and here they are, back with a vengeance, replicating the exact same behavior when it comes back up.  There's a term for this in the real stock markets.  When you look at the order books and see what looks like one party in control of the entire thing, that's called, in the words of Max Keiser, a casino gulag.

Nobody should deposit a cent at Bitfinex.  If you lost money there, do not accept their BFX scamtoken, just sue them.  The only way Bitcoin is moving forward is if everyone ignores this exchange completely and pretends it doesn't exist.  The faster it dies, the better.

Now that I've gotten that out of my system for why I really hate trading the Bitcoin markets right now, the thing to talk about is silver.

People are going to start thinking I'm a silver shill because I'm so excited about the stuff.  There's a guy who once said people who diversify just don't know what they're doing.  I think it was Warren Buffet; not a fan, but whatever.  I mostly agree with this statement.  There's always some really stand out investment where diversifying makes no sense.  That is, unless you're already a billionaire and your main goal is just to remain a billionaire and not lose it all.

I've looked at silver from every angle for hours and hours per day for weeks now.  Short term data and data going back hundreds of years.  It is the most undervalued commodity that exists.  It's so undervalued, people are starting to come up with excuses for how it can't be possible to make so much money with it in the future.  They say, hey, the government is just going to label this a "strategic" metal and cap the price.  Oh, please.

If the US government for instance did such a maneuver, other countries would just swoop in and buy it all.  It makes no sense.  Yes, you could ban exports, but it would still all leak out anyway.  There's hundreds of other what ifs about silver like, "hey r0ach, what if the govt backs a new currency with gold and ignores silver?".  This doesn't even matter.  The government has told you for decades that all metals are a "barbarous relic" that's useless for currency.  If they legitimize gold in some manner, they will also be legitimizing silver in the process.

It's even highly likely the west would do such a thing - monetize gold and ignore silver, due to the fact that central bankers already own all the gold, while silver is in private hands.  The east is a different story.  The west attempted to demonetize silver in the past to hurt both India and China.  China didn't come off silver from their own will, and they've recently gone from barring citizens from owning metals, to now encouraging them to, and the creation of a Shanghai silver fix.  

Russia is in the same boat, so a lot military activity with the west vs China and Russia right now might be motivated by the re-monetization of gold and silver, just like how the west decided to try and kill Gaddafi and take the gold.

I already went in-depth on a lot of numbers about silver in my last post, but let's talk about more.  One thing that caught my eye recently is the inflation adjusted numbers on silver and gold (on the bottom right corner) at http://www.usdebtclock.org.  

These numbers appear to just be insanely bullish, but it's a little misleading:  a +6x for gold and +44x for silver.  You had money that was actually made out of silver back then, and silver has been demonetized, so to shift back into some crazy numbers like that you would probably need metals to either be the currency themselves again, or at least backed by it.  Of course, devaluations of a currency can do big things for price without a collapse, but every fiat in history has collapsed regardless with an average lifespan of 27 years.

Without getting hung up on when and if there will be a fiat collapse, the real important thing to note in this equation is that the silver upside is MASSIVELY higher than gold upside regardless of what the final resting price is, and any effort in re-monetizing gold is also going to raise silver in a big way due to thousands of years of historical data.  Plus, as mentioned above, the fact that Keynesian central bankers have tried to tell you all metals are worthless, and monetizing one is going to legitimize both.  Here's another interesting chart I dug up:

What this chart signifies for people who don't understand, is that metals as a whole are an asset class that has basically been dumped to oblivion, to the point where the upside is astronomically higher than the downside is.  Metals are a little higher than in 2009, but it would still be negligible difference from this chart.  Believe it or not, much of the big money is still sitting on the sidelines and just now contemplating buying metals rather than facing things like a negative carry for fiat with NIRP. 

Soros did recently buy a huge amount of gold, but he's an inside trader in bed with the government, that functions mostly as a canary in the coal mine for what other big money is going to do.  What I'm saying is, if you look at those metal charts and think, "oh wow, it's already up a decent bit this year.  It wouldn't be smart to buy now".  All it takes is one look at that above chart to know the party is not even close to started yet, especially for silver.

If you look at the current metals charts, it appears gold is forming somewhat of a descending triple top, probably due to central bankers trying to paint the tape to force it to do so, so this might indicate a small retrace in the near future. I don't expect a sizable drop, probably something like $18.6 for silver at most before it bounces hard. A retrace is not guaranteed; it might go sideways right through it, but if it happens, I'd be looking at that as a good position to get in if you're in the market to buy. I already own lots of silver and am looking to buy more myself. Don't sweat the small moves. You need to buy and hold silver and wait for the big moves to come to you that are going to dwarf these small movements.