“This week ended with the Mr. Bear tipping over the portfolio valuation of professional money managers, and individual investors, alike. He’s after garbage, and there is no shortage of that in the world’s financial markets. But don’t blame him for the decline of gold and silver. The corrupt ways of central bankers and
government regulators are responsible for that. It’s now official “policy” that when financial assets are under pressure, so too must gold, silver and precious metals
miners.” – Mark J. Lundeen
“The smashing that silver got on Thursday and Friday was even worse than the drive-by shooting that took place on May 1st.” – Ed Steer
Last week my portfolio lost around one-fourth of its value. Am I worried? Hell no, I’m mad! This is the second “drive by shooting” that gold and silver have had to endure in the last four and a half months. Let me assure you, this is nothing more than JPMorgan and their pals at CME forcing a sell-off in paper gold and silver contracts.
CME announced a huge increase in gold (21%) and silver (16%) margins AFTER the market closed on Friday, effective after the market close today (Monday). This will force more liquidation and push the prices even lower on Monday. Increase in margin is supposed to reduce market volatility. Of course, the bullion banks (you know who) know of the pending increases BEFORE they are announced and it encourages them to short the market with impunity. And when it happens during a rapidly falling market, like what we witnessed on Wednesday, Thursday and Friday, it added to the beating that gold and silver took last week.
The Cartel will go to any lengths to discredit gold and silver as safe haven investments. Now ask yourself, “What has changed in the last 30 days to cause this mass exodus from the metals?” The same circumstances that caused gold and silver to soar last month are still in play. Nothing changed. The bullion banks and CME flexed their muscles and smashed the metals with paper sales. But the fly in the ointment is that the lower the price goes, the greater the demand for PHYSICAL metals becomes.
Let me be very clear – this is a fabulous buying opportunity. We are entering into the heavy buying season from the world’s number one gold buyer, India. Their Diwali wedding festival seasonal buying is in October, November and December. Record buying is also coming from the Central Bank of Russia and from China. According to the reports I get, buying is extremely brisk in Europe, England and Australia too. The physical demand will turn the prices upward quickly.
When prices fall like they did last week, buyers of physical metal rush in to take advantage of the Super Sale in gold and silver. We did record-setting business last Thursday and Friday. The phones didn’t stop ringing all day long. We are not alone. Every dealer I spoke to said their business was exceptional.
Sprott Money in Canada actually RAN OUT OF PHYSICAL SILVER yesterday due to MASSIVE, WIDESPREAD public buying (http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/23_Sprott_Money_Temporarily_Runs_Out_of_Physical_Silver.html)
Just like the fall of 2008, when prices plunged, the PREMIUMS INCREASED. Our cost to buy (wholesale) gold and silver is the highest it has been in three years. There is a huge and growing disconnect between the Comex paper price and what you have to pay for actual physical metal. Just like 2008!
These low prices will not last! The premiums will keep rising even if the Cartel manages to force the price even lower and if business keeps up like it has for the past two days, there will be outright shortages and delays in getting your orders filled.
So, even though my portfolio took a huge hit, I sold nothing, I am holding onto 100% of my assets and will add more at these prices. Business is great which is counter-intuitive. I make more money as I lose money in my assets. But the loss is “paper” only and the value will come rushing back. I have not altered my prediction that gold will top $2000 by year’s end and silver will be back at or above $50. If I am wrong, then those numbers will be reached soon thereafter.
The Central Banks must inflate. QE3 is coming, and soon. Hyperinflation lurks around the corner.
Finally, for those of you who are still worried about the falling metal’s prices, here is Mr. Gold’s take on what is now happening:
Market Violence Will Create Large Bear Trap
Dear Extended Family,
A quote from CIGA Eric today completely encapsulates what we are experiencing in the gold market:
“This is a repeat of 2009 – actually even more extreme readings than 2009. We are severely oversold today. Anyone not buying here does not believe in the fundamental story. In my opinion, this will be a huge entry point by 2012.”
In conversations with Kenny we examined the worst-case scenario in terms of the correctness of Eric’s comment with which we both totally agree.
Our conclusion is:
Market situations like this will be found to have held and created bear traps in several instances of similar pattern action over the past 30 years WITHOUT having continued further down to first major support. The current corrective pattern over the past 23 trading days strongly implies that the move below $1690 would continue on down to the core at $1665 at minimum as first bottom, and in the extreme to $1615, but not below $1584. This will happen prior to exhaustion and a return to the full bull trend.
So far the remaining successive levels of $2450/$2510; $2850/$2900, and $3280/$3330 are not affected.
Gold shares are being impacted by a field of problems as a result of the large short positions held in almost all. They are being taken advantage of today by pressuring the entities in hopes of causing long-term holders to collapse in their commitments.