Wednesday, March 28, 2012

CNBC Doesn't Want You To Own Gold

Most people who work in the investment industry are well aware that CNBC is a big promoter of stocks earning them the name "Bubblevision". That should be no surprise at all given that CNBC's ratings exploded through the stock bubble of the 1990's. Its understandable that they would love to see viewership come back along with the stock market. I bring this up because its important to understand what biases exist from the places where you may be counting on for accurate market information.

But its not enough for CNBC to promote stocks. They have regularly downplayed or even belittled gold ownership as an investment over the past several years, even as gold reached new highs for over ten years as the stock market had some of its poorest 3, 5 & 10 year returns since the great depression of the 1930's (As of this date the S&P 500 returned 2% over the past 5 years and 4.38% over the past 10 years. See link.)

Peter Schiff has been a regular on CNBC and is a straight shooter that in the past has been laughed off the set for saying gold would go higher and the real estate market was in big trouble. In recent years though he's often met with nervous laughter from the so called "experts" on the TV show "Fast Money" who are aware that he has been eerily correct. Knowing that, watch this video from yesterday where Schiff gives his update on both stocks, treasuries and inflation. Pay particular attention to Guy Adami breaking with the pro stock bias (at around 3:30) and Melissa Lee's attempt to reassert the CNBC bias (at 5:15). Notice she calls him "extreme". Guy Adami is no longer buying the CNBC line.

Interesting no?

Now to get a better feeling of CNBC's bias against gold take a look at this gold story posted March 27th. Notice the title:"Gold Prices Already Peaked in 2011: Report".

The story is about CPM Group's report that is generally positive on gold but points out new highs may not be seen in 2012. CNBC spun te report to sound highly negative and yesterday implied the price target was $1,400. Today the story has been changed to read as follows:

“We are looking for the price to stay above $1,500 [an ounce] this year and above $1,400 over the next few years,” says Jeff Christian, Founder and Managing Director of the CPM Group.
 The first version which was highly negative was at the top of CNBC's webpage on the evening of March 27th. The updated, more balanced, article is buried on the bottom of the page on March 28th. I seems as if there is one story for the retail investor who may be viewing the web page in the evening and a different version for professionals who may be viewing it during the day. Sound paranoid? Well how about this...

The original article showed a graph of gold with a not so subliminal message. Take a look at the graph posted in the original story that evening:

Now compare it to today (March 28th):

How the original graph could be a mistake is hard to imagine. Notice in the bottom left it says "Source: CPM Group". So is this reputable commodities research group so incompetent that their graph showed gold at zero??

So what am I getting at with my little conspiracy theory? Its generally commonly accepted that the Federal Reserve is using its primary dealers like JP Morgan to keep the price of gold and silver down by taking short positions (a bearish trade) and occasionally selling massive amounts of contracts all at once to trigger algos that will further the selling (As happened on Feb 28th Leap Year Massacre). The reason is simple: the Fed is printing like crazy and is afraid people will lose confidence in the dollar and pile into gold and silver. Because despite what Ben Bernanke says, gold IS money. For QE to work, it needs people to keep holding dollars and buy stocks even as it devalues dollars and artificially inflates the price of stocks. This is what Schiff was referring to in the video.

So is CNBC acting on behalf of the Fed? Who knows, but if they were just interested in reporting on the market why so negative on precious metals?

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