Servias Ministries Blog

No, I am not talking about Denny’s breakfast.  Gold, silver, and related stocks continued their “slam” today as margin investors had to liquidate holdings, even grandma’s jewelry.  It was a good day to add a few shares of stocks you believe in.  The macroeconomic picture has not improved but only worsens day by day.  The volatility is as predicted.  Once the margin investors are out of the picture, prices will firm up.  I hope they stay low until I get some more cash to buy at these levels.  I do not recommend you follow suit unless your licensed professional investment advisor recommends any purchases.

Is the Federal Reserve increasing the quantity of dollars every month by $85 billion  Yes, they are further debasing the dollar by transforming debt into currency.

Is the unemployment higher today than it was 7 years ago?  Yes, the economy is not in recovery.

Is the euro strong?  No, It goes from one crisis to another.  The Dutch Finance Minister to the EU wants to confiscate depositor money in banks in Cyprus and use it as a template for future bailouts.

Is the yen going to strengthen?  No, the Japanese government and central bank are debasing the yen even more rapidly than than the speed at which currencies of other industrialized countries are being debased.  The population will look to precious metals as an alternative.

Today’s action will help remove the feint of heart from the market.

This last week, a major market veteran indicated that there were 50 buyers for every one seller of gold & silver bullion.  Friday was intense.  People were looking for this opportunity to trade in their fiat currency for “real” money.

What is the intent behind this “smash”?  Those in power are not telling us.  Their actions are transmitting to us that there is something major lurking below the surface.  Their desperate attempt to save the U.S. Dollar from further depreciation appears to be the focus.  Further decline would bring a demand for higher interest rates.  In turn that would cause an explosion of deficit costs to pay for interest against the current outstanding bonds.  Ultimately the Federal Reserve would lose control.

On the technical side, gold could retrace to $1,250 before roaring back up.  If it were to do that, physical supply would probably be nonexistent or premiums would make up for the shortage.  Either way, this is the epic battle between the West and the East.  Volatility will remain high.  For those who invest in anything, do not borrow to invest.  These are perilous times.  For the rest of us, hang on and watch history in the making.

The paper market intervention in the gold and silver markets are acts of desperation.  The cascading downward on the charts are clear indications of government intervention.  Ninety tons of gold were reportedly purchased by central banks once the price dropped below $1,550.  Thank you very much.

Goldman Sachs heavily promoted selling short gold this week.  They herded their followers into the slaughter house.  500 tons of “paper” gold were sold during this takedown.  About 800 tons of physical gold have been delivered in the last 45 days and have been taken out of the market.  A friend of mine tried to buy Canadian Maple Leaf gold coins and his supplier was out.  Expect to see short supply moving forward.

I believe that the buyers and holders of precious metals and their related stocks have just about figured out the game that the central banks have been playing and are no longer “thrown off the bull” during corrections in price, whether market or government generated.  The market’s volatility will definitely increase going forward.  If you believe that gold and silver are heading up, then you won’t worry about paying $1,600 versus $1,500 for gold.  Keep you Maalox on hand, there is turbulence ahead

I like to post what the experts are saying to media in other parts of the globe where there is less sanitizing occurring.  In a SPIEGEL interview, Harvard economist Carmen Reinhart:

“Reinhart: The best way of dealing with a debt overhang is to never get into one. Once you have one, what can you do? You can pray for higher growth, but good luck! Historically it doesn’t happen — you seldom just grow yourself out of debt. You need a combination of austerity, so that you don’t add further to the pile of debt, and higher inflation, which is effectively a subtle form of taxation …

SPIEGEL: … with the consequence that people are going to lose their savings?

Reinhart: No doubt, pensions are screwed. Governments have a lot of leverage on what kinds of assets pension funds hold. In France, for example, public pension funds have shifted money from shares (on the stock market) to government bonds. Not because their returns are great, but because it is more expedient for the government. Pension funds, domestic banks and insurance companies are the most captive audiences, because governments can just change the rules of the game.”

See: http://www.spiegel.de/international/business/interview-with-harvard-economist-carmen-reinhart-on-financial-repression-a-893213.html

My takeaway:  Savers and Pensions are screwed, the very point I was making last Sunday night.  Everyone who has studied economics knows that there is no painless way out of this financial mess.  The key is to not be the last one to respond.  Roughly 40% of the baby boomers are in deep trouble for they have virtually no savings to take and their Social Security will be minimal with the new changes that are expected to reduce their payments.  Kids, make room for mama and daddy.  It’s going to be cozy.

We are all called to obey the “rule of law”.  Except for Our Heavenly Father’s Law, governments will continually redefine the law to meet their agendas thus they will be inherently lawless.  Politicians sneak in changes to the law to support their upcoming agendas and then hide behind the new law as though they are statesmen.  What a sad commentary.

Concerning today’s smash on gold, the bullion and related shares I discussed last Sunday night suffered a huge drop today.  I want to thank the manipulators for pushing prices down so I could buy a little stock at a lower price. This market is not for the feint of heart.  The volatility is liable to increase from this point forward, maybe to seismic proportions.

Former Assistant of the US Treasury, Dr. Paul Craig Roberts, warned:

“This is an orchestration (the smash in gold).  It’s been going on now from the beginning of April.  Brokerage houses told their individual clients the word was out that hedge funds and institutional investors were going to be dumping gold and that they should get out in advance.

Then, a couple of days ago, Goldman Sachs announced there would be further departures from gold.  So what they are trying to do is scare the individual investor out of bullion.  Clearly there is something desperate going on…. “

Who is buying the gold at lower prices?  I suspect they are agents of the Kings of the East and they are smiling today!

John Williams of Shadowstats.com commented- “Despite Concerted Central Bank and Wall Street Efforts to Tarnish Gold, Gold Does Not Tarnish; It Remains the Primary Hedge Against Looming Fiscal Fiasco and Dollar Debasement”.

Fridays are always a focus on those who want to manipulate the overall market.  Some technical traders use weekly closing prices to determine their actions.  It is a scare tactic to shake out those who are moved by fear and greed.  It you have conviction about your position, you simply go for a walk for add to your position at lower prices.  For me, I like to add to my position whenever I can.  As always I make no recommendations to others and suggest that you seek the advice of a licensed professional.

Yesterday, I shared the Fed’s goal was to keep the public out of the physical gold market.  The following two graphs depict the scenario that scares them:

Source:http://people.hofstra.edu/jean-paul_rodrigue/jpr_blogs.html

Only Our Heavenly Father knows when or if the “Mania Phase” will occur.  If it does occur, the Fed’s investment of Trillions will be wasted.