Current News – Affecting Precious Metal Markets

This past Friday saw strong gains being recorded within gold and silver markets, the main driver being weak volume in the New York Comex market. On the other side of the spectrum the “dark forces” once again were on hand, buying open interest in gold and silver contracts on a massive scale. An increase of 14,000 new gold contracts and 4,000 new silver contracts are seen, as a planned setup to drive out the small speculators. This quantity of new open interest contracts is staggering, a frightening amount.

For those who don’t understand these numbers let me simplify it for you. Using the 4000 new silver contracts as the example; this equates to roughly 20 million silver ounces. That’s 20 million ounces being shorted. For comparison, on any given day globally, the total quantity of silver that comes out of the ground is only 2.5 million ounces. Understand that this upward attack on gold and silver’s prices is being resisted aggressively.

Ultimately in the end there will only be one resolution remaining for these manipulation games constantly and consistently being played out. That will be the death of manipulations and those behind it, because gold and silver will massively explode in price, the manipulators will not be able to cover their shorts any longer and finally die.

Due to the Thanksgiving holiday there were also less market participants on Friday to take advantage of a long weekend. In order to see a true breakout from current price levels for gold and silver, they must remain above $1,740 and $34 respectively before any substantial upward price breakthrough can occur.

Regardless if Monday’s (today) meeting of the European finance ministers ends up agreeing to throw more aid onto Greece or not, prices on precious metals are holding above these resistance levels and have been throughout the day. This is very encouraging to the bulls myself included. With yields down among US Treasuries, the EUR/USD, The all-world equity index even copper were still seeing impressive strength and resiliency between gold and silver taking into account high demands on growth assets.

With market price moves occurring daily up and down, often is little logic to support these unstable moves. We can use last Friday as an example, or case in point. With Bad news coming out regarding the EU budget discussions coupled with a new surge on the euro against the dollar, the opposite occurred from what would normally be expected.

However, with long term trends being more certain, one trend in particular should have the spotlight. That being how the yen’s performance has been fairing, against gold. Gold clearly has broken out from a long period of consolidation against the yen. At last it appears Japanese politicians are all in agreement to convince the financial markets that a weaker yen is imperative.

The current gold price in yen is just a breath away from its all time high of 146,000 yen per ounce. Now against all sanctions on Iran we have Turkey non conforming. Iran supplies Turkey with 17% of its natural gas requirements, Turkey now admits they have been making transactions against all sanctions by buying natural gas from Iran and paying for it in Gold. Iran is becoming cleverer, as they are being squeezed. Because gold has been used as money for thousands of years why not use it now.

Rick Rule & John Embry – Gold Juniors Performance Next 18 Months

Rick Rule self-made billionaire, legendary investor and chairman of Sprott Asset Management

Is one of the biggest names in the natural resource sector, where he has made his entire vast fortune inside commodities.

Just recently Rick Rule was speaking at the San Francisco Hard Assets Show. Rick shared his predictions in which a major consolidation will occur within the junior gold mining sector. The stocks in these mining companies will bottom out over the next 18 months. Furthermore Rick said that many of the best junior miner stocks have already hit their bottoms.

Not to fret however, because as Rick sees it, getting in now is not too late because the forward looking trend is only going UP. Those investing will see gains moving forward, after bottoming out has completed.

Rick also cautions “it’s not for everybody; however this is most likely the best way one can make money within this gold bull market”. Ensure you do your due diligence however before selecting junior mining companies to invest in.

John Embry, chief investment strategist at Sprott Asset Management

Has mentioned that current actions within the junior mining shares space as of late, has been terrible. John says; trading in this space is not natural either. The hedge funds are all over the short side. On top of that, there is a shared desire on the part of the manipulators, to keep people out of physical gold and silver.  It is apparent the manipulators are doing their best to keep investors in paper instruments only, where they can control everything.

These negative actions are pushing back the mining shares, their take a beating and look less attractive. The reality here is that lots of the quality mining shares are incredibly cheap in terms of their imbedded capital. They are also considered enormously cheap in terms of their earnings potential.

John agrees with Rick on the time-line that within 18 months things are going to turn around, impressive gains should start being realized. John says; “People have been beaten up so badly in these things that many of them are giving up. They are making a horrible mistake in my opinion.” Those with the stomach, to ride-out the current market negativity and hold for the long-term will be rewarded.

Tom Genot –
 

Photo Credits: Toi ore gold 30g silver 250g for 1 ton with visible gold specks, By PHGCOM (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0) or GFDL (http://www.gnu.org/copyleft/fdl.html)], via Wikimedia Commons