For the last year and a half, gold has been in a trading range of consolidation. I expect a violent move up and it will not be expected by the market. Paper gold in the futures market is risky since there is not enough gold to satisfy delivery. The paper market has been manipulated by the agents of the Fed. Just like clockwork when the Fed announces a new program of Quantitative Easing, the price of gold and silver get smacked. These are times when those who believe in gold and silver as insurance against epic money printing can add to their positions.
These price manipulations play into the hands of the Chinese. They continue to acquire more gold reserves at these prices. It reminds me of Great Britain’s sale of gold at the bottom of the current price cycle- “Between 1999 and 2002, Gordon Brown, Chancellor, ordered the sale of almost 400 tons of the gold reserves when the price was at a 20-year low.” This single decision cost British taxpayers Seven Billion Pounds at today’s prices.
Acquisition of gold and silver and their related stocks is not for the faint of heart. Price swings have been substantial and will prove to be wild in the future. Macroeconomic factors support hard asset investments over the long term but it will not be without some heart stopping moves.
On a six month basis, gold looks like it may of peaked out:
However on a ten year basis, the trend is intact:
Note the similar consolidation phase in 2008. At $875, many were calling the top in gold then. They now hope that everyone has forgotten their market calls.
Production in the mining sector is in serious decline. India is being strong armed into selling gold reserves but it is not working. Governments can put up barriers but the people will continue to protect their families. The “gold cartel” is now desperate and China will be happy to buy up all the cheap gold they can.
Silver has even greater volatility which requires even greater courage to stay the course:
During the last days of the year, the cartel can manipulate the price with greater ease since many traders are on holiday. They attempt to “paint” the charts to dissuade technical traders from buying.
The need for manipulation speaks volumes.
Disclaimer:
This website contains the ideas and opinions of the author. It is a conceptual exploration of financial and general economic principles. As with any financial discussion of the future, there cannot be any absolute certainty. What this article does not contain is specific investment, legal, tax or any other form of professional advice. If specific advice is needed, it should be sought from an appropriate professional. Any liability, responsibility or warranty for the results of the application of principles contained in the article, website, readings, videos, books and related materials, either directly or indirectly, are expressly disclaimed by the author.