Over the last 2 weeks or so there has been more discourse and infighting amongst the gold community than I can ever remember. When I first thought of writing on this subject I considered writing about “who” has said “what” but seeing as how that would probably start a firestorm I’ve decided to not do that. I’m not sure exactly why this is happening, maybe it’s because the length of time (nearly 2 years) from the last time gold has gone on to a new high. Or maybe even more likely, gold has gone down (the dollar appreciated) during a time when the fundamentals for this were NOT to have happened. This has never been stronger or more obvious.
So what “discourse” or in fighting am I talking about? Hard to know where to start but it here goes. We have those that say the metals inventory drawdowns are proof positive that tightness exists and will be followed by price. On the other hand there are those out there that say inventories mean little to nothing so they should be ignored. Some say that “backwardation” exists in the LBMA while others point to COMEX and say there is no evidence. The “GOFO” backwardation has even been pointed to as “goofy.”
Some say that the Chinese, Russians and Indians have no clue that gold is manipulated (they just buy because that’s what they do) while others believe that these countries know this so well that they will spearhead a new “gold backed” currency that will supplant the dollar as the reserve currency. We hear the cost of production is $800 per ounce. $1,300 per ounce and even $1,600 an ounce. Each number that we hear is defended and “proven” with “facts” that differ from study to study.
There are those that swear by the COT numbers as the end all indicator and others who say that even those numbers are rigged and are not reliable. We have differing takes on open interest movements both up and down. Some say that JP Morgan has taken over from Goldman Sachs as “manipulator in chief” and others who say forget about JP Morgan because they are not big enough to move or contain the markets. While on the subject of manipulation, we have those who say that everything is manipulated and others who say that nothing is manipulated. We even have those who say that everything is manipulated EXCEPT for gold and silver (I don’t know of anyone who believes that ONLY gold and silver are manipulated).
Then of course we have the “timers,” they say “I called the “top” or the “bottom.” Others point their finger and say that yes, you called the top but never got back in or you called the bottom but forgot to sell at the top. We also have the “all inners.” These are the people who say that you should be all physical metal or all mining shares. We have the “QEers” who say that the printing will destroy the dollar and conversely those who say that printing doesn’t matter; these groups include those who believe there is too much debt and those who think it matters not.
I hope you get the picture, the metals arena has become one giant “pissing match” to see who is “first,” who is the “rightest or wrongest” (I’m from Texas so pardon my grammatical faults), who exposed “the” smoking gun etc. etc..
So, where do I stand? First off, I am as guilty as anyone else in forming a strong opinion and believing that the “newest revelation” is the one that will break the camel’s back. Truth be known, there is no way that 5 years ago I could have been convinced that we could have arrived to where we are now…without some sort of massive train wreck already having taken place. I look at all of the debates mentioned above and many others …then connect the dots. I am a big picture guy. To me, the bigger the picture…the clearer it is, the more anecdotal evidence there is the firmer my convictions become.
Before finishing I have just a couple of other thoughts. I believe that when all is said and done and the curtain gets pulled back and more truth is known, I believe that 99.9% of the population will be shocked as to exactly how “evil” the system really was. I am sure that even I will be shocked and as you know from my writings, I’m pretty skeptical and believe that crime and fraud rules the day currently.
I also believe that all of the above really and truly will not matter when all is said and done. Who was the smartest? Who was first or uncovered what, when, where or how? Who stacked, who traded? Were we in backwardation, inventory issues; was it JP Morgan or invisible aliens? It won’t matter. What will matter is that you have some metals and have some shares. Gold will without a doubt go much higher and become “monetized” in some fashion. You will either have it or you won’t. 98-99% will not have any metals exposure and will have to “start over.”
So please keep in mind that while we sit here and watch the “shootout at the white hat corral,” ALL those who write and recommend gold and silver for WHATEVER reasons are at least trying to do a public service. They may not be correct for the right reasons but if they even get just a handful of followers who buy metals exposure…even for the wrong reasons…they have done a public “good.”
I hate to see the community in such turmoil and disarray. It is what it is and gold will go up whenever it is good and ready to or whenever it is “deemed” to happen. We will all have other more important things to think about in the future other than the price of gold. Gold will take care of itself and take care of you when you most need it. Enjoy the current “normal” while it lasts, peace and “kumbayah” to all of you!
Bill,
Ever heard the expression “…Don’t bring a knife to a gun fight…”?
I think this applies equally well, “…Don’t bring Federal Reserve Notes to a financial collapse…”
Bill,
This is an OUTSTANDING article…..well done friend!!!!
thanks
A truly pathetic report has come to me from an acquaintance of an acquaintance. Since it was secondhand I asked to talk the original party by e-mail. What happened was there was a public tour of a US currency printing plant situated in Texas. The grinning tour guide was conducting some high school kids through the “plant” and at one point gestured towards the presses with the FRN’s whizzing off in sheets and she remarked, “This is where our—(brief pause)—nation’s wealth comes from.” The New York Times, July 17, 1929, page 2, reported that the Belgian National Bank held 125 boxcars full of Weimar Republic notes from the great German inflation of 1923-1924, and that as these were worth nothing, announced they’d be burned. One of our best hopes is the movement among some State legislatures to remonetize silver and gold.
I am SO with you when it comes to not believing the economy could have gotten through the last five years unscathed / “without a train wreck.”
I have to give them credit; they are doing better at propping it up than I would have ever dreamed possible. But in the end economic reality will rule the day, all that’s holding this charade up is, “smoke and mirrors” and confidence in the impossible, i.e., something for nothing.
As Dire Straights put it,
“Get you’re money for nothing.
get your kicks for free…”
I don’t care what is going on. I will buy precious metals whenever I have any extra cash and sit on them until, “hell freezes over.” To my way of thinking they are currently the best insurance policy money can buy. Look at the dollar’s track record over the last hundred years, fifty years, ten years… Who wouldn’t love to be able to buy gold or silver at the prices you could get them for in 2003? For that matter, how about being able to purchase them at their 2008 prices?
As you put in in your missive of a few days past, “The whole world is Detroit.”
I think you nailed it. Enjoy the calm while it lasts cause it won’t go on forever. I secretly pray I never have to rely on my pm investments but I am certain one day I will. That’s Why I bought them.
The system is catastrophically broken. There is a giant gash ripped into the hull of the US Dollar Titanic and its citizens are still drinking at the bar. When it finally rolls over it going to be very ugly.
I too am absolutely amazed it has made it this far. I guess it only goes to show what a 29 trillion FED pump can do. When the herd finally figures this out there will be no PM’s to buy. Better to be 10 years early than one day late when it comes to precious metals.
yes
The economy is improving for god sake. i mean would you please stop spreading panic. Look at the data. Housing market improving, low inflation, stocks at all time high, growth in the last 5 quarters, gold and silver getting absolutely raped as of now because of all the good news, that you guys try to debunk. im not saying you shouldnt hold gold and silver. but the collapse aint happening folks. we are back on track, stronger than before the crisis.
Thanks.
Brian.
“we are back on track, stronger than before the crisis”. Really? …and if the Fed were not pumping $85 billion per month? Where would we be right now? THAT is reality. By the way, the Fed “pumping” IS inflation.
The Fed is their for a reason to support the economy. And they are doing a really, really good job at the moment.
Thanks
Brian
yes, a great job!!! is it dark up there?
Thanks for agreeing Bill…
While most of this column is well done and most likely correct I must take issue with this: “I believe that when all is said and done and the curtain gets pulled back and more truth is known, I believe that 99.9% of the population will be shocked as to exactly how “evil” the system really was.” That’s a bet I’d take! In fact well over half the population will not have a clue as to what occurred and will swallow whatever the then current MSM/government lies and propaganda are. If the MSM/government has collapsed and disappeared as well, highly unlikely in my opinion, then they simply will not know what to “think,” if “think” is the applicable word, which I doubt. Cheers.
you disagree? 99.9% will be “shocked”, probably even including myself as I want to see the good in people. If we truly found out about the current evil, I believe it goes beyond what most anyone could imagine.
My point was that most will not have a clue. Those that do may well be shocked but most will simply be oblivious. Do you really think it is possible to be shocked if you have absolutely no idea what is going on and live before your TV? That’s a rhetorical question.
understand
Brian,
You could probably see better if you took off your rose colored glasses.
Things are not getting better!!!
Kumbayah back at you Bill!!))))
I agree with the 99.9% figure. The “economy” has become QE ONLY. No real employment increase since when? 1980? Changing the definitions of words and indexes when real numbers don’t match the party line? New-speak. Corruption with IMPUNITY is now the NORM. What really bothers me is how easily they were willing to sell out America, and how willing the politicians were to let them do it, in exchange for continuous re-election. How did we go from the founding Fathers to this sorry crop? It used to be at least the Pareto Principle, 80-20, but it looks like we now have the 1% crooks, needing to be replaced by the 1% still paying attention.