The “top” – Or The “bottom” – Of Precious Metals

It’s Thursday morning, in the aftermath of another massively dovish FOMC statement; which I described in detail in yesterday’s must hear Audioblog, “the irrelevant Fed, and the End of Europe.”  Which, of course, we loudly predicted, despite unrelenting propaganda of how the Fed would “lay the groundwork” for a July or September rate increase; LOL, due to a supposedly “recovering” economy, which flies in the face of everything from dismal economic data; to collapsing commodity prices; to a…drum roll please…plunging dollar, despite the fact that Greece may blow sky high – this week.  Yes, the mythical “recovery” we have heard of for years, in the propaganda of Washington, Wall Street, and the MSM.  Which ironically, the Fed significantly downgraded yesterday, when it dramatically reduced its 2015 GDP expectations; likely, based horrific data such as this.

European stocks are plunging anew; the historic Chinese equity bubble is showing serious signs of cracking; the dollar is down sharply; and Precious Metals are surging – with gold again  above the Cartel’s two-year’s “line in the sand” at $1,200/oz, having again defended the $1,170-$1,180/oz level that has served as its “hard bottom” throughout this period.  But have no fear, the PPT is here; as yet again, they arrived to save the day; which undoubtedly, will be spun by the MSM as “investor excitement” about the prospect of continued easy monetary policy (as if a quarter point rate increase, from ZERO, should be considered “tight”).  Conversely, if the Fed raised their GDP expectations, and said they would imminently raise rates, the PPT would have taken stocks higher as well – so the MSM could chalk it up to a “recovering” economy.  That said, the “end of the new normal” I wrote of earlier this week – of relentlessly manipulated markets – will inevitably end.  Perhaps, much sooner than most can imagine – when the “unstoppable tsunami of reality” overruns TPTB’s petty manipulations, no matter how powerful their derivatives and HFT algorithms are.

Thankfully, there’s not much material “news” to speak of this morning – other than the fact that the latest “last ditch” efforts to reconcile Athens and the rest of Europe are ongoing in Brussels.  And according to representatives from both sides, there doesn’t appear to be a chance in hell of anything positive transpiring.  Certainly not in time for either side’s Parliament to ratify such actions – as Greece must pay the IMF €1.5 billion by tomorrow, or it will officially be in default.  To that end, recall that when Greece missed three interest payments totaling €1.2 billion on June 5^th, 12^th, and 16^th, it claimed a “Zambian precedent” from the 1980s, enabling it to bundle together all interest payments due in the same month.  Well, the last of June’s four scheduled interest payments to the IMF – of €348 million – is due tomorrow, and if it isn’t funded by then, Greece will officially default.  Not to mention, the 2011 bailout (#2) expires on June 30^th; and without a “bailout #3” in place – estimated at €30-€50 billion – the long-awaited European implosion will imminently commence.  But again, the PPT wants you to buy stocks – at record high valuations, amidst record low interest rates.  What could possibly go wrong?

Which brings me to today’s very important topic – in the Miles Franklin Blog’s ongoing quest to demonstrate the dangers of trading “paper PM investments” like futures, ETFs, closed-end funds, and mining shares – as opposed to saving your hard earned capital in the form of physical gold and silver, the only substances to have performed all the functions of money throughout time.  In today’s case, my article was inspired by this piece by Larry Sartoni, titled “goldbug analysts’ capitulation.”

What strikes me most about the article is not only its primary thesis – i.e., years of disappointment have caused “goldbugs” to capitulate; but the sheer amount of vitally important “pink elephant” information ignored.  Starting, of course, with the manipulation of gold and silver prices that is not only, far and away, the most important factor in the market, but the primary cause for the horrifying, irreversible economic cataclysm the world is undergoing.

Regarding the former, I personally found “religion” on this topic when, after nine years of both investing and working in the mining sector, I sold my last mining stock, never to return, in July 2011.  Which coincidentally, was three months before I joined Miles Franklin.  And I’ve got to tell you, since that fateful day nearly four years ago, I have slept the “sleep of the just” each and every night, despite some of the most violent Cartel attacks to date.

To that end, since “dollar-priced gold” peaked amidst TPTB’s manipulation “point of no return” in September 2011, sentiment amongst Precious Metals “investors” and “savers” alike has precipitously plunged, whilst supply/demand fundamentals have unquestionably achieved unprecedented highs.  In last month’s “record high demand, record low sentiment,” I described this unnatural phenomenon in detail – highlighting myriad, mega-PM bullish themes from surging demand; to plunging supply; and miniscule inventories.  Heck, back in November, when the Swiss National Bank led history’s most aggressive propaganda/price manipulation campaign to prevent Swiss citizens from voting for the “Save our Swiss Gold” referendum, I wrote of the “unprecedented skepticism” emanating from everyone from Wall Street “analysts” to Precious Metal investors, to the newsletter writing community.

And yet, and yet, prices continue to hang in there – absorbing unrelenting head shots and body blows from everyone from Wall Street “analysts,” to Precious Metal investors, to the newsletter writing community.  And most importantly, the gold Cartel, which can best be analogized as the Grucci fireworks company launching its “finale” – i.e., every imaginable anti-gold and silver firework in its arsenal, simultaneously.  And yet, and yet, gold continues to hang around $1,200/oz, and silver $16/oz, due to a combination of inexorably rising global demand, rapidly shrinking supply, and the ominous specter of peak production.

As for the latter, the article has many positive attributes – describing exactly what I have emphasized for years.  Which is, that investors – and particularly, “paper PM investors,” – have been, and always will be sheep-like; assuming the current trend will continue indefinitely, no matter how irrational such beliefs may be.  In other words, contradicting the immutable economic law that “past is not prologue.”  And oh yeah, “buy low, and sell high.”  That said, the article subsequently lapses into the same nonsensical, useless “technical analysis” that dooms investors, newsletter writers, and anyone else attempting to bring “logic” and “order” to the manipulated world of paper gold and silver markets.  At least he acknowledges, unlike 99% of the industry’s commentators, that prices have risen strongly in nearly all other currencies; which, broadly speaking, has been a key component of the record physical demand we have written of.

As for today’s title, we cannot emphasize more how perilous it can be to try and call “tops” and “bottoms” in Precious Metals; as not only is the paper market completely rigged – be it COMEX futures, ETFs, closed-end funds, or mining shares; but if you are not holding actual, physical metal when the next, potentially cataclysmic crisis commences, you will be as unprotected as a policeman in a shootout without a bullet-proof vest.  Worse yet, if you rely on newsletter writers for trading advice – particularly when they recommend buying and short selling mining stocks based on their expectations for gold and silver prices (the correlation between the two has been nearly non-existent for years), you risk losing your shirt entirely.

Trust us, we are well aware of the damage top and bottom calling has done; which, whether the specific newsletter writer realizes it or not, inadvertently plays on the emotions of readers desperate for the “logic” and “order” that doesn’t exist.  To wit, our old friend Harry Dent, who has gotten much – salivating – press for his prediction that gold is “doomed” to fall to $700, despite exactly the same economic forecast we at the Miles Franklin Blog have.  That said, this “deflation boogeyman” is best known for his 1999 prediction that the Dow and NASDAQ would reach 41,000 and 20,000, respectively, by…drum roll please…2008; and his April 2011 prediction that the Dow would plunge to 3,000 by…again, drum roll please…2014.  Rest assured, when gold inevitably breaks above $2,000/oz, he’ll be out in full force with predictions of $10,000+.

And then there’s Larry Edelson, who decidedly called gold’s “bottom” in June 2014; but after having been proven wrong, changed his tune in February 2015 – citing his updated expectation that gold will bottom “below $1,000/oz, later this year” – before turning higher, and eventually hitting $5,000/oz.  Ironically, while he claims “deflation” to be the cause of his PM fears, he simultaneously believes the Dow could explode to 31,000.  Well, it’s four months later; and thus, his “later this year” prediction for gold falling to $1,000/oz is running out of time.  Not to mention, the Dow’s breakout to 31,000 – LOL.

And then there’s the pure technical analysts, relying on everything from “waves” to sunspots for their inspiration.  And don’t’ forget the Shemitah – which, true or not, is scheduled to arrive three months hence.  As for “wavists” like Bo Polny, he made quite a splash last year, crawling out from the woodwork to claim gold would bottom by July 2^nd, 2014, before hitting $2,000 by year-end.  Much hype surrounded the aura of his mystical forecasts; not to mention, his confident, charismatic interviews.  And yet, gold ended the year at $1,183/oz, quite a bit below $2,000.  And do you know what his current prediction is, which he made a month ago?  Yep, a “gold and silver spike before June 21^st, 2015.”  Which, given that the 21^st is a Sunday, he had better hope for a hell of a Greek headline tomorrow.

And last but not least, “famed” sunspot theorist Charles Nenner, of Goldman Sachs pedigree; who incredibly, claims to NEVER be wrong (this video begs to differ).  In his case, he simply “strings readers along” by constantly intimating tops and bottoms, without directly saying so (a variation of the time-honored newsletter “hedge” of claiming things appear to be topping or bottoming, subject to myriad variables).  To wit, in March 2014, he said gold would bottom by summer 2014.  In October 2014, he actually said gold was “in its lows”; but a month later, backpedaled by saying gold was “close to a major bottom”; and two months hence, “looking for a bottom, which seems to be forming.”

All along, whilst readers of speculative newsletters like these desperately seek “bottoms” – and “tops” – mining shares have collapsed further; physical metal tightness has intensified; and the fundamental reasons to own physical gold and silver have exponentially increased.  In other words, the forest is not being seen through the trees; and the more you are distracted by such misinformation, the closer you are to the moment when you are the proverbial, bullet-proof vest-less police officer.Similar Posts:

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