This morning, I’m writing at the airport, en route to San Diego for the Oxford “Investment U” Conference and thus, I must be brief. However, I won’t be any less passionate, as I have a very important topic to discuss. And that, per today’s title, is the “Cycle of Bad Advice” prevalent in the world’s most important asset class, real money.
In yesterday’s “Golden Life Preserver in a Sea of Lies,” we wrote of how the most useful tool in your due diligence process is the ability to ferret out lies from truth, in an increasingly deceptive world. For instance, understanding that this article, explaining the true, horrific state of U.S. earnings “growth” – should be accepted in lieu of the unabashed lies published by corporate America fostered by Wall Street “analysts” and sanctioned by U.S. “regulators” like the Financial Accounting Standards Board, or FASB. You know, the same group that in April 2009 allowed insolvent banks to value toxic assets at whatever values they desire – i.e., “mark to fantasy” – to enable them to continue pillaging depositors and creditors.
The “elites” – and many other “not-so-elites” – are out to take every penny you have; and thus, the ability to distill the handful of “good, smart people,” who not only speak the truth, but have your best interests at heart, – from those seeking to separate you from your money, may determine if you financially live or die in the coming, tumultuous times. Not that they’re not tumultuous already; but if you think times are tough now, consider what they’ll be like when the next, “2008-like” crisis inevitably emerges – with no “QE safety net” to “save” us.
Until last Sunday night, PMs had strongly outperformed essentially all asset classes year-to-date – and did so amidst an environment of significant political, economic, and market turbulence. Subsequently, a terrified Cartel went into action, with a six trading day blitzkrieg attack that took gold and silver down by 6% and 8%, respectively. The familiar “attack patterns” were all there, making this raid – in our extremely trained view – as run of the mill as they come. In other words, just another attempt to calm burgeoning PM sentiment, amidst extremely bullish technical and fundamental factors; as has been TPTB’s strategy for the past 14 years, but particularly the past two-and-a-half, since “dollar-priced gold” achieved a new all-time high.
Here we are, barely a week later, and nothing has changed in the world. The global economy is still rapidly deteriorating the “final currency war” continues to expand – as it must, in the final stages of a dying fiat regime and the dire geo-political issues that plagued multiple regions are all still there. However, following the PM takedown, the evil Troika” of Wall Street, Washington, and the MSM are trumpeting that “all’s clear” – causing some PM investors to wonder if they’re right. This is particularly the case for those holding “Paper PM Investments” like mining shares and ETFs – who unfortunately don’t realize that such investments are not substitutes for the real money that is physical gold and silver.
Consequently, the bashers, top-callers and supposedly “good guys” that publish PM newsletters are out en masse, stating the same mantra as in 2002, 2008 and 2012, etc. – i.e., they are “long-term bullish, but short-term bearish.” And in most cases, their primary “tool” for such predictions is technical analysis – invariably, of the very short-term variety.
Given that we aim to protect – not “grow” our wealth – against inflation, and potentially hyper-inflation, we simply hold physical gold and silver and wait. We are not “scared out” by paper raids, and don’t count our wealth in terms of dollars, but ounces. Sure, said ounces have dollar values, which we of course want to increase. However, this is why we strongly advise to only hold amounts that you don’t expect to need in the coming months to buy things; as when one doesn’t adhere to such a strategy, their physical PM savings morph into highly speculative investments. And by “speculative,” we don’t mean that gold and silvers’ value changes dramatically, but their prices can be subject to sharp moves, care of the aforementioned Cartel.
Anyhow, this week’s Cartel shenanigans have already created the desired, scaremongering effect; particularly as they were paired with the heinous anti-gold propaganda published “coincidentally” by Goldman Sachs – which we discussed in yesterday’s article. No less than a half-dozen “PM-bullish” newsletter writers have come out with their “long-term bullish, short-term bearish” technical charts – as usual, ignoring the fact that fundamentals can’t be more bullish, or that prices are well-below the marginal cost of production. And as usual, such commentary is predicated entirely on short-term technical analysis – which as we have proven over the years, is completely useless in manipulated markets, be the stocks, bonds, currencies, or commodities. And better yet, the resultant fear has catalyzed the typical “search for justification” as to how such a sharp, unanticipated bearish trend could have developed.
Regarding the latter, I understand the thought process entirely – as when things go wrong in my world, I do everything in my power to understand why. However, when it comes to Precious Metals, I already have – over a period of 12 years. And thus, I don’t spend a second worrying, now that I’ve determined that by holding PHYSICAL gold and silver – as opposed to “Paper PM Investments” – there is essentially nothing TPTB can do to separate me from my “protection.”
To demonstrate just how irrational said fear can get, I have gotten several worried emails wondering if gold is down because the “Ukrainian gold” that was supposedly emergency air-lifted to the U.S. is being used to hold prices down. For one, I find it amusing that anyone would believe such a rumor, given that not only is it un-confirmable, but makes little sense. Why, I ask, would the Ukraine give its gold to the United States particularly when the Germans can’t get theirs back? Not to mention, during the Ukraine’s most desperate hour, when it may in fact need its gold?
But let’s assume they did, hand over their gold to the New York Fed (and if they did, you can see why the nation is collapsing). Said gold, assuming all 42 tonnes of it was mobilized, was supposedly air-lifted to the States on March 10th. This amount equates to roughly 1.3 million ounces, worth a measly $1.7 billion at $1,300/oz. gold. Such an amount, putting it into perspective, represents barely 2% of the Fed’s current, “tapered” QE program, or 1% utilizing our assumptions of what they are really printing. But better yet, it’s roughly the exact same amount the Iraqi government admitted to buying in March, announced this morning; which in and of itself, makes the supposed Ukrainian gold sale a wash. And by the way, if the Fed actually put that kind of size on the market – PHYSICAL size, not PAPER futures – it would have been sucked up within milliseconds by real buyers – such as the Chinese, who bought 34 tonnes last week, and 488 tonnes year-to-date; and the Russians, who have been buying 32-34 tonnes per month for years.
Well, my time is running out for this article. Hopefully, it helps you understand just how repetitive the Cartel’s actions have become – and with them, the “PM community’s” cycle of bad advice, in attempting to scare the public into selling, with the hope of “buying back” at lower prices. For 99% of PHYSICAL PM holders, such an option doesn’t even enter into one’s consciousness, who continue to sleep the “sleep of the just.” However, for those on the fringe, and perhaps half (or more) of “Paper PM Investment” holders – whom have seen their brokerage accounts sharply decline in a week’s time – they sadly follow these Pied Pipers to financial doom, per the “Second Holy Grail of the Financial World.”
For those pondering the future of the global economy, this is the time to take action. With prices pushed well below the cost of production, PMs have never been more attractive on a simply commodity basis. Moreover, the reasons to protect one’s assets from the emergence of “bad things” have never been more salient, in our view; and with gold completing its technical “golden cross” this week (i.e., its 50 DMA crossing above its 200 DMA for the first time in a year) – with silver’s “golden cross” shortly behind it – much of the supposed “technical damage” the chartists will point to could easily be offset by “black box” buying.
But irrespective of what the PAPER market does, global PM demand will continue to surge. In both gold and silver, this year has already started well ahead of last year’s record pace; and given what’s going on in the world – for instance, per this commentary from Jim Sinclair, which we agree with whole-heartedly – it’s hard to believe such trends will not continue – and consequently, PM prices rise.