I’m aboard a flight as I write, heading to my home town of New York City. Thus, I have plenty of time to gather my thoughts.
Precious Metals investors are licking their wounds from yesterday’s Cartel attack, just another day at the office as far as I’m concerned. Today, I wanted to help you understand the planning, execution, and most importantly, mindset of such attacks, as they pertain to the overall GOVERNMENT STRATEGY of keeping precious metals MOMENTUM to a minimum. And mind you, the key word is MOMENTUM, not suppression!
My decade of experience in this sector, which as you know incorporates an exhaustive level of research, tells me the MOST IMPORTANT FACTOR in gold and silver trading is MANIPULATION, hands down. PHYSICAL gold and silver demand has EXPLODED over the past 11 years, and thus it is IMPOSSIBLE to prevent prices from rising. However, by exponentially increasing the PAPER supply of FAKE gold and silver (via creation of OTC derivatives and unbacked ETFs, plus naked shorting of ETFs and futures contracts ), TPTB have been able to not only slow gold and silver’s ascent, but make trading in all related securities mind-numbingly volatile and enigmatic.
I have to laugh when I read so-called pundits conclude that “if they are really conspiring to keep prices down, how come they keep rising?” As well as, “how can they continue to be short if they are losing so much money?” These are two of the most asinine statements I have heard, made worse when coming from people who spend their time analyzing and often publicly commenting on the myriad other frauds and corruptive practices of the world’s bankers and politicians.
To refute the first statement (per my above commentary), the goal of TPTB is NOT to keep gold and silver from actually rising, but to PREVENT THE PUBLIC FROM THINKING OF THEM AS SAFE HAVEN ASSETS! Not only are Precious Metals fundamentals stronger than at any time in recorded history (going out on a limb, but certainly arguable), but essentially EVERY COMMODITY has been in a strong uptrend for the past decade as well. So no, they can’t stop it from RISING, just from rising TOO QUICKLY, and with AS LITTLE FANFARE as possible.
Remember, humanity has 6,000 years of history with Precious Metals, which not only meet the actual DEFINITIONS of wealth, fortune, and MONEY, but have also become synonomous with these concepts in the same generic fashion as the brand names Band-Aid or Q-Tip (i.e. “good as gold”, “worth its weight in gold”, “gold star”, “gold standard”, “silver lining”, etc.). This association has become so ingrained in the human psyche, that it in some ways can almost be considered GENETIC. And history demonstrates this “gold gene” can get turned on extremely quickly when prompted by either FEAR (depression, hyperinflation) or GREED (gold rushes, soaring prices).
More importantly, just as investors have been conditioned that the DOW JONES INDUSTRIAL AVERAGE is a “barometer of economic health” (which is why it is so maniacally supported by the PPT), gold is seen as a “barometer of bad tidings.” My STRONG belief is that even the least sophisticated investors in the world, and even most “Joe Six-Packs” with little or no investing experience, understand that a rising Dow and falling gold price are considered “good”, while a falling Dow and rising gold price infer something “bad.” THAT is the fundamental precept behind what Jim Sinclair calls MOPE, or “Management of Perspective Economics,” or per Bill Murphy of GATA, “behavioral finance.” In other words, if the government can cause you to PERCEIVE economic improvement by propping the Dow and attacking gold, you are less likely to sell your stocks, protest against TPTB, and stay quiet and submissive to their whims.
As I’ve written NUMEROUS times in the past, the Dow ALWAYS seems to be rising (care of the PPT), but never goes anywhere due to its poor fundamentals, while gold ALWAYS seems to be falling (care of the Cartel), yet rises each year due to exponentially rising demand and stagnant supply. Moreover, the Dow’s volatility has in recent years reached all-time lows thanks to these manipulations (which tend to have a calming effect on investors and the public in general), while gold and silver prices, and even more so the mining shares, are among the most volatile in the market thanks to these constant (think 24/7) suppression.
Moreover, the Cartel plays on your EMOTIONS by making sure the sector never does what it SHOULD do, constantly COLLAPSING when a new high is achieved and not only falling, but often PLUMMETING upon the release of gold-bullish news (yesterday’s bank stock collapses are a perfect example). Moreover, they employ dozens of other “dirty tricks”, many of which I have described EXHAUSTIVELY in the past such as “Don’t let it turn green” and “never let gold, silver and the PM stocks rise sharply SIMULTANEIOUSLY.” Cumulatively, these attacks wear you down, so one must not only be savvy to both SURVIVE and PROTECT ONESELF, they must also be MENTALLY STRONG, the opposite of what is required to invest in GOVERNMENT-SUPPORTED MARKETS such as the Dow and U.S. Treasury Bonds.
I’d bet 95% of all investors that have touched mining stocks have lost money over the course of this 11-year bull market, as the constant enigmatic attacks, “technical breakdowns”, and fear-mongering via both “official” and Wall Street lies and propaganda takes its toll financially and psychologically. That is why you MUST have a core position in the actual, physical metal (you will NEVER sell it), and why you need to resist blind purchasing of mining stocks on “technical breakouts”, contrary to the investing mantra most investors utilize for essentially every other asset class. Mining stocks are as historically cheap as at any time in the past decade, but one must adjust his accumulation patterns to escape the continuous rain of Cartel daggers, acquiring more when prices DECLINE and less when they rise.
As for the second flawed “guru conclusion” that no suppression could possibly occur due to the losses generated by such activities, that has got to be one of the stupidest statements EVER. For one, the U.S. government has an unfettered printing press, with essential carte blanche from the rest of the world (for now) to not only permit $2 trillion annual deficits upon $16 trillion of public debt and $100+ trillion of “unfunded liabilities”, but also to monetize essentially ALL Treasury bonds, nationalize ALL failed industries (FNM, GM, C, to name a few) and even perpetrate WAR on half a dozen nations at any given time.
ALL the gold EVER MINED on earth is worth just $10 trillion or so, of which perhaps 5%-10% is actually SALEABLE and INVESTABLE. And in the case of silver, nearly all the silver EVER MINED has been consumed by industry, with the remaining SALEABLE and INVESTABLE silver (i.e. in bullion form) worth no more than $40 BILLION at current prices. Thus, gold is just a tiny portion of global financial assets, while silver barely qualifies as a rounding error. So when commentators write things like “my god, the COMEX silver shorts are sitting on $2 billion of losses, I have to laugh, as even $2 TRILLION of losses is currently manageable by a combination of unfettered money printing and corrupt markets. Heck, the U.S government’s public debt rose by $400 billion IN AUGUST!
And oh yeah, how much of those losses are offset by illicit, insider trading profits when engineered PM smashes are orchestrated, such as the past two weeks’ DEATH STAR ATTACKS or, even better, major operatives such as the SUNDAY NIGHT PAPER SILVER MASSACRE?
Which brings me to the point of this RANT, GOLD INVESTOR LIMBO.
If I could get online, I’d look up the precise definition of limbo to wow you with trivia, but I don’t so I’ll wing it. The way I understand the concept, limbo is a place where one’s spirit goes before God’s decision to send it to heaven or hell. In other words, a time of great consternation, frustration, and reflection.
From my decade of Precious Metals investing (ALL IN SINCE MAY 2002), I can tell you confidently I have been in the equivalent of investing limbo DOZENS OF TIMES thanks to the Gold Cartel and other market/media/public manipulating mechanisms that work synchronously to affect asset prices and investor psychology).
A typical example looks something like this (if it seems familiar, it’s because it just happened!):
After consolidating for weeks on end, with constant 3 AM EST smashes, underperforming mining stocks, silver “flash crashes”, enigmatic, counterintuitive “technical failures”, and of course endless “top” and “bubble” calling from “good” and “bad” guys alike, gold suddenly takes off on a nice run for a few weeks. The Cartel’s 1% and 2% cap rules are of course enforced each day, and no real excitement or, god forbid, “froth” ever enters the market, but once again gold’s price trend is again reflecting the relentlessly positive fundamentals by rising.
Thoughts of increasing gold mining stock positions race through your mind (even on margin!), as you ponder whether this is FINALLY the time when the sector BREAKS OUT for good, yielding the “internet-like” mania that SHOULD finally occur. Chatter about rising gold prices, while reluctant, spans the airwaves and circulates on the internet, ZeroHedge content becomes increasingly gold bullish, and each Sunday afternoon is enthralling as you wait for Asian markets to open, potentially yielding the elusive $100+ gold opening print that you KNOW is coming, with gold NEVER to look back afterwards.
Then, just as the fundamentals AND market action SCREAM for this to occur (think 120% yield on Greek bonds and collapsing bank stocks yesterday), gold abruptly peaks at EXACTLY 3 am EST one night, or in the case of the aforementioned silver massacre, in the first hour of trading on a thinly traded Sunday night when China was closed for a holiday. Suddenly, the entire rally vanishes into thin air for ABSOLUTELY NO REASON while no other markets do ANYTHING significant, and you stare at your screen, at the PLUNGING metal prices and mining equities, cursing the world and thinking about which stocks you need to sell to prevent a margin call and the immediate loss of week’s worth of profits.
When you finally look up and catch your breath, you realize the Cartel has ILLEGALLY inflicted still more losses on you (THAT is where they make their profits), the gold top/bubble callers are again out in full force to rub salt in your wounds (pointing out “technical breakdowns” and “market action makes commentary” reasons), and, worst of all, it “feels” like the PM markets are ready for yet another long bout of doldrums. Or, as I view it, additional weeks and potentially months stolen from my life.
It is at these times that the INNER FORTITUDE noted above is required most, because believe me the whole world IS out to get you. However, you have one MAJOR arrow in your quiver, one that will likely REMAIN THROUGHOUT YOUR LIFETIME, and that is that gold and silver are in the VERY EARLY STAGES of a potentially MULTI-DECADE bull market.
I believe simple math regarding cumulative money supply creation GUARANTEES a gold price of AT LEAST $10,000-$20,000/oz before economic equilibrium is reached, and likely dramatically more (perhaps infinitely so) if the current, seemingly inevitable path toward Western world hyperfinflation is realized.
As for silver, given its level of scarcity (DRAMATICALLY less investable silver than gold), dual roles as both STRATEGIC INDUSTRIAL METAL and MONEY, and historic correlation to gold, I believe it NEARLY IMPOSSIBLE that the gold/silver ratio, which fell as low as 31 in April, will NOT decline to AT LEAST 10-15 in the coming years. Do the math of $10,000-$20,000 gold and a 10-15/1 gold/silver ratio, and you get my “pre-hyperinflation” silver target price of $650 at the low end and $2,000 in the best-case scenario.
Hopefully, this RANT will help you to IDENTIFY with the emotions I have encountered for the past 9½ years, and to make the correct INVESTMENT options during periods of LIMBO, which is what the Cartel has tried to inflict on us since gold first broke above $1,900/oz two weeks ago.
Remember, we have only spent a few WEEKS above $1,800/oz in gold’s HISTORY, and not more than a MONTH OR TWO above $40/oz silver. These are the EARLY STAGES of the Precious Metals bull, the time when 99% of the public STILL is not aware of it, and equally importantly when INVESTABLE SUPPLY remains for the taking (remember, gold and silver WILL go “no offer” at sometime in the future).
Use these periods to ACCUMULATE positions in the Precious Metals sector, making sure you have a core position in the metal, of course. Moreover, Gold mining stocks are trading at essentially all-time low multiples of earnings and reserves, so when you see a particularly hard SMASH of the sector, take a good hard look at the equities, making sure to do INTENSE DUE DILIGENCE before committing your capital.
I strongly believe gold will be above $2,000/oz later this fall, and when it pierces that hallowed level, please make sure to take heed of the advice given in this RANT!
Finally, I wanted to end this missive with a piece of potentially good news, one I had forgotten over the summer. Bart Chilton of the CFTC, the “lone wolf” who earlier this year declared his belief that COMEX silver prices are manipulated, stated that if the CFTC has made no official conclusions regarding its ongoing, 2+ year investigation into this matter, he will personally make a public statement on the topic by the “third week of September”, i.e. next week.
Hopefully, this will be a positive catalyst for the group (as was his first silver manipulation announcement), even better if it occurs on my BIRTHDAY on the 22nd!