And it starts!
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Long predicted by the Mayans to represent Armageddon, 2012 could prove just that, if only politically and economically. There is no way of knowing what will happen in the next 12 months, and typically the safest bet is with the status quo. But nothing about my writing is safe, as my goal is to PROTECT you from the worst-case scenario, and while comets, earthquakes, and tsunamis may not be in the cards, collapsing currencies and soaring inflation just might.
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The key point is this scenario is INEVITABLE, proven by historical experience and simple math.  ALL fiat-based currency systems throughout history have failed, and 40 years is typically the longest such systems survive before collapse or mass devaluation. It is impossible to create value by printing money, and human nature proves leaders will always choose the path of least resistance, i.e. HYPERINFLATION, when faced with the final stages of currency Ponzi schemes. Moreover, in societies such as America and Western Europe, where people have been brainwashed to believe above average living standards are a right, not something earned, politicians have no choice but to increase entitlements when reductions are needed most, ensuring a more rapid, and ultimately more spectacular, systemic collapse.
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Thus, the only questions left are WHEN and HOW, and in my view, it appears a near impossible task for even today’s crop of sociopathic “elites” to maintain the status quo for another year.  True, they are armed with unlimited, COVERTLY printed money; complex, market moving computer algorithms; secretive “dark pool” derivatives, and a doting, 24/7 mainstream media network. However, as the old saw relates, “you can’t draw blood from a stone,” and the stone that is the global financial system is BONE DRY.
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Before I get to 2012, let’s put 2011 behind us, starting with Friday’s fitting end to the year, one of the most blatant Cartel manipulations yet. Fitting with the ongoing theme of “OPERATION PM ANNIHILATION II,” which started December 8th when the later-retracted “gold sale headline” appeared as gold broke through $1,750/oz, the Cartel “spared no expense” in its goal of ending the PM year on a sour note.
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As I have mentioned exhaustively, the Cartel essentially NEVER allows gold, silver, and the mining shares to act well simultaneously, and any time one or more of the three “acts well” on a given day, you can bet the outperformer will suddenly contract “performance cancer” the next day. On Friday morning, I mentioned how silver lost half of Thursday’s $0.80 gain in the two hours directly following the NYSE closing (the thinnest hours of the global trading day), and thus when gold surged the next morning silver, of course, was barely higher.
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My Friday RANT started with the fact that walking in the gym gold was up the comically obvious 1.95%, a number that no doubt would serve as the high of the day, and of course I was right. Gold clearly wanted to recoup some of the past weeks’ artificial declines, forcing the Cartel into action at ALL FOUR typical attack times – EXACTLY 3:00 AM EST, when gold first attempted a sharp increase, 8:20 AM EST, i.e. the second the COMEX opened; EXACTLY 10:00 AM EST, when gold once again threatened to surge higher; and the coup de grace, at EXACTLY 12:00 PM EST, the “cap of last resort,” when gold had the nerve to attempt to rise above 2% for the day (which, by the way, is exactly what most of the base metals accomplished).
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Not only that, but they attacked again late in the day to make sure gold’s gains were barely more than 1%…
…and that silver would actually go DOWN for the day, falling by nearly $1.00/oz at 2:45 PM EST while the Dow DIDN’T BUDGE and all other commodity markets, INCLUDING GOLD, were stable. Take a look at this beauty of a PAPER Cartel attack at 2:45 PM EST, a whopping $0.30/oz, or 1.2%, in MINUTES to make sure silver ended the day, and year, poorly.Â
Thankfully, 2011 is behind us, as the thin market conditions that allowed the Cartel to push gold and silver to such oversold levels amidst such bullish fundamentals will shortly be a distant memory. Gold is not only 4% below its 200 DMA, a level observed on just 5% of ALL TRADING DAYS over the nearly 12-year bull market, but is also trading at its lowest RSI and MACD factors of the past three years. Again, short-term technical analysis is MEANINGLESS in a rigged market, but long-term analysis is extremely relevant.
Silver’s undervaluation is even more extreme, trading an incredible 24% below its 200 DMA, at an RSI level from which the price has jumped materially EVERY TIME it has traded there over the past three years.
Irrespective of the vile, blatantly illegal PAPER attacks over the past three weeks, taking gold down by $200/oz, or 11%, and silver $5.00/oz, or 15%, while no other market materially changed, Precious Metals were STILL among the world’s best performing asset classes of 2011. Let’s just forget “OPERATION PM ANNIHILATION II,” one of NINE major attacks this year, which barely cracked the top three as early May’s “SUNDAY NIGHT PAPER SILVER MASSACRE” and early September’s “OPERATION PM ANNIHILATION I” were worse. By ALL MEASURES, 2011 was by far the most vicious, intense year of Cartel attack, as TPTB fought for their lives like the cornered rats they are. Clearly, my analysis that the Cartel first experienced true FEAR a year ago is correct, EXACTLY why we have had to put up with such blatant, intense attacks since then, commencing November 9th, 2010, or as I like to call it, “D-DAY.”
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Think long and hard of the misery “goldbugs” dealt with in 2011, be it in gold, silver, or particularly, mining shares, then look at the table below and pat yourself on the back. After all the sector endured, gold STILL was the TOP PERFORMING ASSET CLASS ON EARTH, rising by 12% while only the heavily PPT-supported Dow managed to crack the positive column and, on average, global stock markets declined by 16%. Only the PPT-supported American stock markets significantly outperformed silver’s 9% decline, while the Mexican and UK stock markets roughly matched its losses. And round the world, from the collapsing Euro economies to the supposedly immune BRIC nations, stock losses were endemic, with bond, real estate, and “alternative investment” losses dramatically worse.
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Notably, gold mining shares significantly underperformed PHYSICAL metal, with the HUI down 13%, the XAU 20%, and the TSX-Venture (i.e. Vancouver) stock exchange down a whopping 37%, with ONLY the dreadful 52% decline in the equity of the world’s next third-world nation, GREECE, registering lowering on the scale.
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Would you believe Bob Moriarty of 321gold does not believe the metals are manipulated still? I emailed him to no avail with reason.
Another question that you probably answered.
Investing in gold or silver or both, what is the difference?
Gold is money and some say silver is considered more of an industrial metal than money, is that true?
They say silver is way undervalued compared with gold and will give you much more bang for your buck but does it have any cons compared with gold?
So what should be a good view when investing in them?
Craig,
I’d believe anything, particularly regarding Bob Moriarty, universally recognized as one of the biggest jerks in the business.
As for gold vs. silver, I’ve written about this topic essentially every day for five years, so my first advice is to sift through the volumes of information in my blog archive at milesfranklin.com.
In a nutshell, BOTH have centuries of history as MONEY, but silver is more volatile because it is a much smaller, more manipulatable market.
Silver is far more undervalued because nearly ALL the metal ever produced has been consumed by industry, and thus in time I expect the historic gold/silver ratio to return to at least its 15:1 historical value.
I would advise positions in both, with higher amounts of silver if you are willing to deal with the higher volatility before the Cartel is inevitably broken.
Andy
I have been trading gold and a bit later silver futures since 2003 and have managed to make money every year with terrible trading skills.
I got out of the futures recently after seeing the blatant smash downs in the low volume trading times especially after seeing that Sunday night $6 smash and then 5 increases in margin for silver and ever since then you would have to be nuts in holding any contracts over night. The cartel attacks have been relentless since then. Trading this market is a crap shoot since there is no way to logically be sure you are making the right move on fundamentals. Like you I finally had enough and just want to protect what wealth I have and my sanity. The did a number on me since the September smashing more ways then one. I appreciate your candor and doing your best to educate people on these markets.
However with Obama passing that new law about arresting Americans if he considers them to be terrorists I see a fast tract to Tyranny coming. So I am thinking that people who are speaking against this crooked system in any way will be targeted and the internet will be censored. Have you considered that day is soon to be here? I think this entire system is on its way out and cannot be fixed, broken!
Exactly 10AM they put a stop on gold and silver
I’m new,,,(hello from Canada) and I hope this comment isn’t clipped short. An old Kitco and USAGOLD forum poster needs an outlook for his thoughts so here goes (nothing?:
I think pundits are far to focused on capitulations and market lows being bullish indicators when the game may have changed a LOT!!!! I appreciate all of that argument,,,,but I think the game has changed in another fundamental way in these paper markets and our pundits haven’t realized it yet.
I don’t think the crooks allowed MF Global and all the probable consequences to that to the markets, to JUST aid them in a eight month (started in MAY yes?) intervention…Nope, this is an escalation of a suppression tactic we haven’t seen before,,,,in other words a new STAGE. It is a new stage with all the ominous overtones of systemic insult and consequences that I have worried about in these posts over the past month. But I keep reading the Ranting Andy’s and the Turds, and the Bixes and even the Sinclairs about an exploding market that is already dying and, let’s face it, a physical retail sector that still is, for the most part adhereing to the phony paper price…The signifcant graph of the Ranting Andy piece for me was the declining O.I. data of the COMEX over time showing the impact (clearly) of the MF Global debacle. So what in that situation equates to JPMorgan giving up? From the recent ranting Andy:
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“However, the fact they are covering their short positions (assuming such statistics are not LIES) suggests they KNOW the grip they have on PAPER silver is coming to an end, so keep your eyes and ears open.
gold open interest (missing graph, of course)
Bix Weir believes 2012 is the year the COMEX collapses, when silver and gold are FINALLY traded freely because the PAPER suppression game is “outed” by a combination of declining open interest, mistrust in key players such as JP Morgan, “systemic risk” resulting from the MF Global fiasco, unrelenting trading losses, and a disconnect between PAPER and PHYSICAL PM prices. He may or may not be right about 2012, but if not it’s hard to believe the PAPER Ponzi scheme will endure through 2013.”
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But what JPM et al has done is initiated a repressive stage for a progressive decline in spec interest in involving themselves in the COMEX paper market…All of which in the past means that they have total control over the price of these metals. In other words the paper price WILL reign until the COMEX fails from (literally) lack of interest…That was the real purpose for allowing MF Global!!!!!!!. The banksters know better than us where this market is going,,,,and they are calling the shots as to HOW it fails too!!!!!
So what has changed? We bugs are still waiting for this COMEX failure process to free the market,,,,and have been for over a decade,,,,and we could even say OVER THIRTY YEARS! In case you have missed the point here,,,,the cartel has initiated a process to RE-gain control of the price even as the COMEX inevitably fails,,,,and (this is the BIGGY) why would anyone assume that this is going to happen immediately with everything we should have noted about mob investor learning curves? And why would anyone assume investors are going to flock back to the COMEX and overwhelm paper shorting anytime soon???? So,,,,(the punch line) where’s the price explosion coming from, folks??????
What the HELL am I missing here…Every thing I see this past months indicates all the super bulls are undergoing a schizophrenic style logical disconnect?
Oh yeah, and notice today’s silver chart….Note how they will defend $30 silver,,,,and watch them take this baby down again whenever they need to if the specs out there have a momentary (or computer induced) enthusiasm to get back in…
Best regards, and thanks for your thoughts, Andy.
Galearis