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It’s the elephant in the room that is impossible to ignore, but most of you don’t mention it.  Will gold ever break free from the endless short-selling by the bullion banks and the hedge funds?  Will gold be smacked down to $1000 or lower?  Why should we believe that gold is about to take off and double or triple in price?

These are the questions that many of our readers and clients think about, but don’t ask us.

Well, I have a question for you.  Why would you believe what Harry Dent or Martin Armstrong or for that matter, even Larry Edelson’s bearish views?  What do they offer you except a few technical analysis charts that are questionable at best, in a market place that is manipulated and painted on a daily basis?  Can these charts be counted on in the midst of China and India’s insatiable appetite for gold – that pretty much accounts for every ounce of gold that will be mined this year?  Do you think that Janet Yellen will sit by and taper away until the stock market, the bond market and the economy finally tap out?  Who do you give more credibility to – Harry Dent or Jim Sinclair?  Martin Armstrong or John Williams?  Even Richard Russell sees the brightest of futures for gold and he has followed and written about gold since I first started reading his Dow Theory Letters in 1983.

But let’s just say maybe Edelson is right – Bill Holter addressed that issue in the last paragraph in his article yesterday.  He wrote:

Before finishing I’d like to put “credibility” in perspective.  Some of you know Larry Edelson, some of you don’t.  He is a “timer” and has been bearish gold since it broke $1,650 last year…and correct so far…sort of.  He has not reentered and in fact is warning people that we are currently in a “suckers rally” to use his words.  He says you must wait until $1,080 or even $980 before buying…and then it’s off to the races as in a $5,000 gold price.  I would say what’s the difference?  Yes you will have more ounces but what are the risks?  The “risks” as in what if he’s wrong and we do barrel upward from here without ever looking back…?  What if gold and silver go into hiding because of some geopolitical or financial event…and you can’t get ANY?  To answer the question “what’s the risk?” the answer is your financial survival that’s what!  To be as wildly bullish long term yet try to nit-pick and call exact bottom doesn’t make any sense at all to me because if he’s correct you will win just as if you bought today…but if he is wrong YOU are dead with no chance of ever recovering.  How credible is that?  This is a bet that if you are correct you live but if wrong you are dead, why even bring your potential death and destruction into the equation?  Those are poor odds in my opinion.

Miles Franklin, February 18, 2014

Read Holter’s short article from yesterday titled, So What About Silver?.  See if you think his logic is flawed.  See what Bill has to say about silver, a topic he doesn’t often discuss.

Be sure and read Andy Hoffman’s section today.  Andy lists the 9 most important reasons to own gold now.  Andy is turning the spot light on the elephant in the room.  I do hope you will read his entire article – here is how he wraps it up.

Not that the first eight reasons – and countless others – don’t have strong merits in their own rite.  However, when it comes to gold and silver, the main reason we own them is their impeccable, 5,000-year track record as the world’s best store of value against inflation.  In other words, no matter what governments tell you inflation is, gold and silver have enabled you to actually buy things with constant amounts of metal over time.  And in this, unique snapshot in time, they will eventually enable you to buy many more things with constant ounces; as not only is the entire fiat monetary system on the verge of collapse, but gold and silver prices have been suppressed at unprecedented levels for the past 15 years.  And thus, here’s “#9”…

9. Back in February 2011, I penned “Rice, not oil: the most important commodity in the world”; and in July 2013, “Population growth supersedes all.”  In both cases, I was highlighting the massively upward, long-term pressure on food prices; of which, only gold and silver have been able to “hedge” against throughout time.  And now, with global money printing at unprecedented levels – frankly, on the verge of explosion, simultaneous with “extraneous factors” such as the historic California drought – food prices could surge uncontrollably in the very near term.           

Regarding such, we could not be more vehement about the dire situation California is in; as the worst drought in 500 years shows no signs of letting up.  And no, it’s not just California, but ten other Western States suffering the same fate.  Consequently, the U.S. cattle herd has fallen to its lowest level in 63 years – resulting in all-time high beef, chicken, and milk prices; and equally ominously, Americans’ exposure to potentially exploding produce prices has never been higher. 

To wit, the below chart depicts just how dependent Americans are on “normal” weather conditions in a State known for century-long droughts.  Heck, it’s not just food prices at stake here, but the viability of large cities in reclaimed deserts receiving the majority of their water from other States – many of which are also experiencing rapidly depleting reservoirs.  Living here in Colorado, where my fingers, ankles, and lips have been cracking for the six months due to a lack of humidity; TRUST ME I understand how bad this could get!

Produce grown Chart

Food inflation is the one thing everybody can related to; and no matter what the government says prices are, a combination of record real unemployment, falling real wages, and a rising real cost of living cannot be glossed over with propaganda.  Even MSM outlets like CBS news are discussing this potentially cataclysmic topic – as in this article titled “food prices soar, as incomes stand still.”  And thus, while the Fed guarantees savers will receive ZERO interest rates until “at least mid-2015,” Americans – and European, Japanese, etc. – are doomed to exploding consumer prices for items they “need versus want.”

And thus, when ordinary “99 percenters” like Jane Singer, mother of two from New York, aver that “the things going up in price are the things I absolutely need to buy.  It’s the meat, it’s the milk, it’s the eggs – and it’s getting out of hand” – TAKE HEED, and realize that amidst all the noise, you are witnessing the “most important reason to own precious metals.”

Miles Franklin, February 18, 2014

By the way, we haven’t forgotten about silver. For the record, half of my portfolio is in silver and I expect silver to lead the parade as the bull markets in gold and silver regain steam and breaks free from the last two and a half years of blatant manipulation.

5 Year Gold Chart

Ted Butler’s article, “What Really Happened To Bear Stearns?” is featured in my column today instead of in the Featured Articles section.  It isn’t often that Ted allows his private subscription information out to non-subscribers.

Ted has decided that this issue should be in the public domain.  This falls into the absolute must read category…and the two embedded charts in his essay tell it all.


Theodore Butler | February 17, 2014 – 4:16pm

Six years ago the well-known investment bank Bear Stearns imploded. In February 2008, Bear Stearns stock traded as high as $93; by mid-March the insolvent company agreed to be taken over by JPMorgan for $2 a share (later raised to $10 after class-action lawsuits). In the annals of Wall Street, there was hardly a more sudden demise than the fall of Bear Stearns. The cause was said to be a run on the bank as nervous investors pulled assets from the firm. Bear Stearns was said to be levered by 35 times, meaning it had equity of $11 billion and total assets of $395 billion. This is a very small cushion if something negative suddenly appears.

Something negative did hit Bear Stearns in the first quarter of 2008; although there are remarkably few details of what went wrong. Since Bear had a significant presence in sub-prime mortgages and that market was in distress, it is assumed the fall of the firm was mortgage related. That may be true, but there was no general stress in the stock market through mid-March 2008 reflecting a credit crisis. Was there instead some specific trigger behind the company’s sudden collapse?

I believe that sudden and massive losses and margin calls of more than $2.5 billion on tens of thousands of short COMEX gold and silver contracts were the specific triggers that killed Bear Stearns. Let’s face it – Bear was so leveraged that a sudden demand of more than $2.5 billion in immediate payment for any reason could have put them under. Bear Stearns’ excessive gold and silver shorts on the COMEX are the most plausible reason for the sudden demise. Bear Stearns did fail and due to a sudden cash crunch was acquired by JPMorgan for a fraction of what it was worth two months earlier. Bear Stearns was the largest short in COMEX gold and silver at the time. The day of Bear Stearns’ demise coincides precisely with the day of the historic high price points in gold and silver. That is also the same day the biggest COMEX gold and silver short would experience maximum loss and a cumulative demand for upwards of $2.5 billion in cash deposits for margin. It was no coincidence the music stopped for Bear Stearns that same day.

Gold prices rose from under $800 in mid-December 2007 to $1,000 in mid-March 2008, a gain of more than $200. Silver prices rose from under $14 in mid-December to $21 when Bear Stearns failed on March 17, 2008. That was a gain of $7. This was the highest price for silver and close to the highest price of gold since 1980. Obviously, a $200 rise in the price of gold and a $7 rise in the price of silver is not good if you are the biggest gold and silver short.

Continue reading on Silver Seek.com.