Legendary Gold Trader on "The Rally You NEVER SELL!"

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“The rally you never sell”! This is a topic Jim and I have spoken of and just recently discussed in our latest recorded chat. This is also a topic very fitting to start off with for our “gold subscribers” because of where we are economically and financially on a global basis. Hopefully as you go through this missive, a light bulb will go on (if it has not already) and fully understand that “when and how” are not really relevant, the big question is “what”, I’ll explain.

We all know the system as a whole has hit “debt saturation” levels where even sovereign treasuries and central banks have been stretched. It is no longer just about the banks or financial institutions, the danger is now risen to the level of “countries”. Please remember, the 2008 episode was aborted (saved) ONLY because sovereign treasuries and in particular central banks stepped in and flooded the world with liquidity. Since we now have negative rates permeating the financial world, it tells us central banks are approaching their greatest fear of “pushing on a string”.

When looking at the real economy, we know from simple deduction and first hand views that the global economy is at best stagnant and most probably shrinking (especially if you look at trade numbers). We also know this stagnation or decline is occurring AFTER eight years of total monetary and fiscal ease. Call what has happened a period of “helicopter money” if you will because it is exactly what they’ve done …yet we now run again into tightening liquidity conditions.

What do the above two paragraphs have to do with “the rally you never sell”? They both lay the groundwork or foundation for our final conclusion! The thought process has gone like this; the central banks have got the market’s back and they will be able to tighten once “escape velocity” is reached …tightening will ultimately be bad for gold and silver. That was the theory, the reality is quite different! As we have suggested all along, “printing” currency has never worked throughout history and would not work this time. Here we are with proof positive of a failed experiment, negative interest rates are your proof! 

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