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!