With gold and silver bulls, since the beginning of this new PM bull in 2001, the four dreaded words that every gold/silver bull has been reluctant to say because it has served as the kiss of death every time gold/silver has been on the verge of a seemingly enormous breakout, is “This time it is different.”
Yet this time it IS different and here’s why. At the rate of currency devaluation being inflicted upon the world’s major currencies today by Central Bankers there are, and there will be, no real gains in any of the world’s leading stock markets. As every gold bull reader is aware of, if you price the world’s leading stock markets in gold, all Western government/banker engineered rises in stock markets are exposed for what they are - illusory gains, not real gains. Real gains for the last two months in most Western stock markets when priced in gold are firmly negative. The rigged rises in Western stock markets have been nothing more than shenanigans designed to fool the people into buying the economic recovery fable that bankers/politicians so desperately are attempting to sell, especially in the US, where November mid-term elections loom. For example, price the S&P 500 index in gold since early August, and one will discover that the S&P 500 has dropped more than 9.3%. Price the S&P 500 in silver and the losses are even more marked, at nearly 20%.
While is true that gold/silver are heavily overbought now and PM stocks are either in heavily overbought territory or rapidly approaching heavily overbought territory, during strong runs in past gold/silver bulls, the underlying metal prices and stock prices can remain in overbought territory for months on end. This alone is not a reason for a correction as Central Bankers have been fighting the fundamental weaknesses in their fraudulent global monetary system daily for quite some time now. When bankers legalize fraud through the legislation they sponsor/endorse, technical analysis is insufficient to ascertain the short-term direction of not only stock markets but also gold/silver markets. One must understand the history of Central Banker engineered attacks and price suppression schemes against gold and silver to estimate the probabilities of short-term corrections in addition to the use of technical analysis.
Today, Central Bankers are increasingly having a more and more difficult time suppressing the price of gold and silver. This is a marked departure from years past, even as recently as 2008, when they engineered a gold/silver crash to coincide with their engineered stock market crash. Though they still have the power to engineer short-term corrections in gold/silver markets, their power to do so has been fading this past year. They must resort to more and more trickery to engineer these collapses. If they decide to engineer a strong rapid decline in major US indexes in the near future, you can be sure that they will use this event to also use all of their abilities to engineer a simultaneous sell-off in gold and silver. Still, any correction we receive in gold/silver markets before the end of the year will be likely to be very short-lived as various global players will step in, stop the decline with buying, and continue the rising trend in gold/silver prices. In any event, the fading influence of the Bank of England and the US Federal Reserve over gold/silver markets has happened for a number of reasons.
Western Central Banks, specifically the US Federal Reserve, very likely possess much less gold than their “official numbers” indicate. Though the US Federal Reserve only owns paper certificates, these gold certificates give them ownership of the gold reserves at Fort Knox. The Fed’s price suppression schemes against gold and silver over the past several decades have involved leasing gold to bullion banks, who then sold the bullion into the market. Much of this gold has never been returned to the official US gold reserves. During periods when the Fed was known to be leasing gold via the cooperation of bullion banks, the reported US gold reserve numbers never changed, revealing the official numbers to be a total fraud. This, among numerous other instances of verifiable and exposed lies regarding the Federal Reserve statements regarding their official gold reserve figure, is why I am quite confident that the Fed currently owns much less physical gold than they claim. Selling gold into the physical market through their leased gold operations was one of the most important mechanisms that the Fed used to suppress the price of gold and silver. With the efficacy of this mechanism largely gone as well as the desire of Central Bankers to sell gold almost non-existent, supply/demand dynamics for physical gold and silver are extremely different than they were just a mere five years ago.
The price of gold/silver used to be set exclusively in London and New York. Dynamics have greatly changed over the past decade with China, Russia and the Middle East collectively exerting more and more influence over gold/silver prices with each passing year. More importantly, these countries/regions now have the cash surpluses to step in and actively set a backstop to Western banking price suppression schemes. In fact, antagonists of the Western Central Banks have visibly done just this in recent years. As further proof of the failing nature of the above selling scheme (which is likely due simply to dwindling gold reserves that Western Central Bankers wish to hold on to for now), the proliferation of paper gold products over the past 5 years or so have been noticeable as the “replacement” price suppression scheme to the lack of physical selling by Central Bankers.
For about a hundred years, bankers have imposed an absolutely immoral, fraudulent monetary system upon the people of the world. As the masses' knowledge about this fraud escapes the grip of bankers' miseducation schemes and gains momentum, the retail investor is increasingly buying more and more physical, not paper, gold and silver. Consequently, the risk that the entire global monetary system crumbles increases and the time line for monetary collapse shortens. The end game would be the end of the US dollar, Euro, Yen and/or Pound. All of these major global currencies are in fundamentally disastrous positions right now. Obviously, the end of a hundred-year-old fraudulent monetary system would be an event that none of us have experienced and will produce an economic state that is different than anything we’ve experienced at any point in our lives up until now. The probabilities that this will happen grow greater every year. I predict a complete collapse of at least one of these fiat currencies sometime between 2015 to 2018.
Finally, some analysts have professed that the Feds and the Bank of England can suppress gold/silver anytime they desire. The last nine years have obviously proven this theory to be wrong. If the bankers could absolutely control the prices of gold and silver, then gold would still be $250 a troy ounce and silver would still be $4 a troy ounce, because those are the price points at which bankers would have desired these PMs to remain. While it is true that they have consistently schemed to suppress the prices of gold and silver during all nine years of this present gold/silver bull, all this means is that gold/silver and PM stocks have only begun to gravitate to their free market price discovery as of today.
Today, many people still do not understand what I mean when I state that the monetary system is a complete sham designed by bankers to rob wealth from the people upon whom they impose this illegitimate system. Though I know the sophistication of Zero Hedge readers is such that the majority of you fully understand this statement, sometimes simplicity helps to bang home a concept that others fail to grasp. So to explain the fraudulent, immoral nature of our present monetary system in as simplistic a visual manner as possible, I have produced the following short-video below, which also explains why gold/silver, after it likely corrects sometime before the end of the year, will soar to many multiples of its present price in future years.
Below is an abbreviated 6 minute version of the above video for those that don't have the patience to watch the full video above!
About the author: JS Kim is the Chief Investment Strategist for SmartKnowledgeU, a fiercely independent investment consulting and research firm dedicated to helping the retail investor build profitable strategies to counter the fraud of the investment industry. Many investments suggested to SmartKnowledgeU Platinum Members in 2006 are now up well over 200% while SmartKnowledgeU Crisis Investment Opportunities newsletter subscribers are up well over 135% in the investment period since our launch in June, 2007 until October, 2010 (in a tax-deferred account).