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Gold & Silver, Managed Media

The stock markets are in rally mode, aided by strong earnings from Morgan Stanley and FedEx following a positive report yesterday of an increase in the construction of new homes and apartments. Treasury notes and bonds are flat to slightly positive and the U.S. dollar is stronger versus the yen, but lower against the euro, Swiss franc and Canadian dollar. Overall, commodity prices are mixed and showing little volatility so far in today’s trading session with the only noteworthy mover being unleaded gasoline following the report from the Energy Department.

Crude oil inventories grew by 1.4 million barrels from last week and are 4.9% higher than a year ago, but traders are reluctant to sell crude lower due to ongoing geopolitical tensions. Iran remains a wild card and Nigerian oil production is off by 25% from rebel attacks. Overall oil demand in the U.S. is firm, but only higher by 0.3% from the same time a year ago. I have not been able to find the expected increase for the inventory of unleaded gasoline, but the number came in lower than anticipated with a build of only 300,000 barrels. The lower than expected build has moved the price of gasoline higher by roughly a nickel to $2.06 per gallon, a gain of 2.7% about half-way through today’s trading.

The Mortgage Bankers Association said their applications index declined by 0.8% from a week ago with the purchase index flat and the refinance index lower by 2.2%. From the same period last year, the purchase index is down by 22% and the re-fi index is lower by 43%. The Federal Reserve under Alan Greenspan expressed their desire to take the froth out of housing and have accomplished the task as the cost of borrowing to buy a house is at its highest level in over four years. Over the last week the 30-year fixed rate moved 12 basis points higher to 6.73%.

The oil inventories and report from the Mortgage Bankers Association are all there is in the way of economic news to report for today. Generally speaking it is all quiet on the financial front. Investors and traders seem to be waiting around for nothing in front of the Federal Reserve meeting next week. Until then we will get limited economic news with the Jobless Claims tomorrow and Durable Goods Orders on Friday. Next week we get New Home Sales on Monday followed by Existing Home Sales on Tuesday along with the report on Consumer Confidence. The only other noteworthy events coming up next week prior to the Fed meeting are the Treasury Auctions of two-year notes on Tuesday and five-year notes on Wednesday.

Gold, Silver, HUI Index

Many of you readers that check into the articles on Financial Sense are avid followers of the precious metals and mining shares. When I wrote two weeks ago I said that I expected the HUI Gold Stock Index to fall below the 300 level. Last week it dropped to a low of 270 and today it has rebounded back above the 300 mark to reach a high of 307.7 with roughly two hours of trading to go. With the recent declines I believe we are in the process of base-building having seen the lows for the current correction. Since my earlier comments the dollar has moved lower and gold has moved $9.40 higher to $590 and silver has moved 21 cents higher to $10.48 an ounce. The metals look like they want to get bought to higher levels, but I have a gut feeling we will see them get whacked one more time for a good scare to shake out the weak longs before the prices move significantly higher.

When I was mentioning the economic news to come before the Fed meeting, I included the Treasury auctions on Tuesday and Wednesday. On Tuesday we also have options expiration for the July silver contract. With those events just around the corner, I’m expecting gold and silver to remain in check. Over the last couple of years it has been very rare to see the precious metals run higher just prior to announcements from the Federal Reserve and borrowing by the Federal Government.

The trading patterns could certainly change, but on a short-term basis I’m still wary of the political agendas of the Fed and Treasury. I will be watching closely to see if the commercial short sellers get heavy handed again to drive the prices lower or if the specs pile-in to buy cheap gold and silver (along with overseas “oil money” and buyers from China and Russia). If you have been a recent buyer of gold and silver shares, good for you! Even if we do see a test of the recent lows, I don’t believe it will last very long as inflation is baked in the cake! I consider the current levels of the mining shares to be relatively low-risk entry points prior to the next move higher.

Our Managed Media

In many of my past Wrap-Ups I have been heavy handed ranting about our managed media and what many analysts refer to as “our lap dog press.” Soldiers continue to die in Iraq, but you will not see a coffin on TV covered with an American flag. Message discipline in the mainstream media is dictated by our government and some very powerful players behind the scenes that “influence” our government officials.

When I was just entering my early teen-years back in the late Sixties I was sitting on the couch intently watching Walter Cronkite as he reported on new developments in the Vietnam War. Sitting next to me was my Aunt Nat. She was my Grandfather’s sister and my Mom was her favorite niece. Aunt Nat was staying at our home while relaxing for a well deserved vacation. In her younger years she was a linguistics expert for the U.S. Navy being fluent in eight different languages. At the time of her visit she was a very high-level operative for the CIA; in my eyes a highly credible person.

As we listened to Walter Cronkite report on the war, my Aunt suddenly BURST OUT in laughter!! I was shocked at her spontaneous response to what I thought was very serious business. I asked her to quiet the laughter so I could hear, but also asked what was so funny? She said she also wanted to hear, but would explain at the next commercial break. When the next ad came over the air she said, “It’s been so long since I’ve watched the national news, I forgot how funny it was.” Her comments made such a profound impact on me at the time; I remember it like it was just yesterday.

I prodded for more information, but she absolutely refused to tell me anything of substance. She was sworn to secrecy and lived her entire adult life with absolute adherence to the code of conduct mandated by her superiors. The only thing I could finally get out of her was this: She told me that what I was hearing from Walter Cronkite was maybe 5% of the truth and the other 95% was being told to the American people as a way of formulating public opinion. The only other thing she told me was to NEVER try to figure out what was really going on behind the scenes, because I would never know and it would only cause me unending frustration.

I’m angry about the lies in the press! With the advent of this thing we call the internet, we can at least get a glimpse of what is going on behind the scenes. In hindsight to my conversation with her, I wish I could have asked her something about Operation Mockingbird. I have done some research on the message discipline in the media and have learned much about what she knew at the time.

I bring this up in today’s WrapUp because CNBC aired a rousing debate between Alan Murray of the Wall Street Journal and Gene Kimmelman, Senior Director of the Public Policy and Advocacy Consumers Union. The debate centered on current considerations of the U.S. Federal Communications Commission to review media ownership rules. Mr. Murray said to go ahead and let the big corporations get bigger and Mr. Kimmelman was the voice of free speech and allowing more opinions to be aired by smaller news organizations. In the print media, Reuters reports as follows (link to complete article):

US FCC to kick off review of media ownership rules

WASHINGTON, June 21 (Reuters) - The U.S. Federal Communications Commission on Wednesday will embark on a new attempt to revamp media ownership restrictions and the battle lines over whether to allow more consolidation are already being drawn. 

FCC Chairman Kevin Martin has long advocated lifting a 1975 restriction preventing a company from owning a newspaper as well as a radio or television station that serves the same market, arguing there was robust media competition. 

Several companies, including Tribune Co. (TRB.N: Quote, Profile, Research) and Media General Inc. (MEG.N: Quote, Profile, Research), have pressed the agency to lift the ban, citing cost efficiencies, among other reasons.

"A change in the FCC cross-ownership rule would be a strong positive for our company," Marshall Morton, chief executive officer of Media General, told investors on Tuesday at an industry conference. "We'd like to be able to do it in every format we need ... we need convergence."

"There is enormous public concern about bias in media, about lack of diversity in the media, and about unfair presentation of all kinds of information that communities care about," said Gene Kimmelman, vice president for federal and international policy at Consumers Union.

In 2003 the FCC tried to lift the cross-ownership ban in all but the smallest markets as well as ease other ownership rules. The effort was halted by a U.S. appeals court that said the agency failed to justify the limits it set.

I am not going to plaster this article with my own opinion of what I think the FCC should do about their ownership rules of media companies. I just ask you to read a bit further and make up your own opinion. The information is readily available in the public domain, but I will provide a couple of links to make your research a little easier. This is a link to an article I found from the onlinejournal.com and a very short excerpt from the article as follows:

Welcome to the New World Order -- Ready or Not

David Rockefeller -- the godfather of the New World Order - a member of the Bilderbergers and the Council of Foreign Relations and co-founder of the Trilateral Commission, thanked the media facilitators (most of whom are also members of one or more of these groups):

“We are grateful to the Washington Post, the New York Times, Time and other great publications whose directors have attended our meetings and respected their promises of discretion for almost 40 years . . . It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is more sophisticated now and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto determination practiced in past centuries”

David Rockefeller gave this talk at the annual Bilderberg meeting in June 1991 held in Germany.

As I said earlier, I wish I had enough knowledge when I was a kid to ask my CIA Aunt Nat about “Operation Mockingbird.” The article appears in Wikipedia, who claim to be “the free encyclopedia.” The link will take you to the full article, but here are the first few paragraphs to whet your appetite:

Operation Mockingbird
From Wikipedia, the free encyclopedia

Operation Mockingbird is an Central Intelligence Agency operation to influence domestic and foreign media, whose activities were made public during the Church Committee investigation in 1975 (published 1976).

The word Mockingbird was first used by Deborah Davis in Katharine the Great (1979). There is no evidence that the CIA called it this. Cord Meyer said that when he joined the operation in 1951 it was so secret that it did not have a name.

In 1948 Frank Wisner was appointed director of the Office of Special Projects (OSP). Soon afterwards OSP was renamed the Office of Policy Coordination (OPC). This became the espionage and counter-intelligence branch of the Central Intelligence Agency. Wisner was told to create an organization that concentrated on "propaganda, economic warfare; preventive direct action, including sabotage, anti-sabotage, demolition and evacuation measures; subversion against hostile states, including assistance to underground resistance groups, and support of indigenous anti-Communist elements in threatened countries of the free world." ^[1]

Later that year Wisner established Mockingbird, a program to influence the domestic and foreign media. Wisner recruited Philip Graham (Washington Post) to run the project within the industry. According to Deborah Davis (Katharine the Great): "By the early 1950s, Wisner 'owned' respected members of the New York Times, Newsweek, CBS and other communications vehicles." ^[2]

In 1951 Allen W. Dulles persuaded Cord Meyer to join the CIA. However, there is evidence that he was recruited several years earlier and had been spying on the liberal organizations he had been a member of in the later 1940s. ^[3] According to Deborah Davis, Meyer became Mockingbird's "principal operative". ^[4]

In 1977, Rolling Stone alleged that one of the most important journalists under the control of Operation Mockingbird was Joseph Alsop, whose articles appeared in over 300 different newspapers. Other journalists alleged by Rolling Stone Magazine to have been willing to promote the views of the CIA included Stewart Alsop (New York Herald Tribune), Ben Bradlee (Newsweek), James Reston (New York Times), Charles Douglas Jackson (Time Magazine), Walter Pincus (Washington Post), William C. Baggs (Miami News), Herb Gold (Miami News) and Charles Bartlett (Chattanooga Times). ^[5] According to Nina Burleigh (A Very Private Woman) these journalists sometimes wrote articles that were commissioned by Frank Wisner. The CIA also provided them with classified information to help them with their work. ^[6]

A final excerpt from the Wikipedia report:

First exposure

In 1964 Random House published Invisible Government by David Wise and Thomas Ross. The book exposed the role the CIA was playing in foreign policy. This included the CIA coups in Guatemala (Operation PBSUCCESS) and Iran (Operation Ajax) and the Bay of Pigs operation. It also revealed the CIA's attempts to overthrow President Sukarno in Indonesia and the covert operations taking place in Laos and Vietnam. The CIA considered buying up the entire printing of Invisible Government but this idea was rejected when Random House pointed out that if this happened they would have to print a second edition. ^[1]

I get pretty fired-up when I read this kind of material, but I want to present it as matter-of-fact. Like I said, you decide for yourself. I think it’s an absolute shame we have to dig so deep to find TRUTH. Some of you will be like my wife who believes “ignorance is bliss” and still others will know the truth, but choose to remain in denial. Sometimes I freak-out and think this will surely put me in some big federal database as a dissenter, but the truth be known! I just hope someone from the goon-squad doesn’t come knocking on my door. Do we really have to live in fear of our own government? Ponderous…

Have a Great Evening!

Mike Hartman

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