I have been getting many calls about the action in the gold markets. While gold has held up better than stocks recently, many are disappointed by the recent action. I was not at all surprised by the fall that took place up to last Thursday as it appears that gold was sold along with everything else in what appeared to be a global margin call. The equity “markets” going from all-time highs to a bear market in less than 3 weeks will cause a lot of pain for those “buying the dip” or buying on margin.
The cascading declines in the “markets” likely led to substantial weakness in most other asset classes also because the margin clerk has no qualms about selling whatever is available when a margin call is not met. Basically, it ALL goes, if necessary, with no thought as to WHAT to sell. They just want the cash for whatever is sold.
On Friday when the gold price continued to fall while the “markets” overall were rising it appears to me that the falling bond rates and falling commodity prices, along with gold are telegraphing that the “markets” are anticipating DEFLATION. The problems with the virus and resulting slowing economy seem to make that a likely outcome- at least in the very short term.
Many people worry that in a deflation gold and silver would not perform well. I believe gold would greatly outperform silver in deflation because silver has a large industrial component where gold is a mostly a monetary metal. This is key.
In a deflation, particularly with the entire world awash in debt, and incomes falling in a very concerning manner, most every investor will be worried about getting paid back by the people, companies, cities, states and even nations that owe them a debt. At some point the majority will realize that the debts that we have rung up both here in the USA and globally cannot be repaid with the value of our currencies where they currently reside.
As we are seeing in this current crisis the government is talking about an $850 billion bailout for citizens and hundreds of billions more for bankrupt companies. This is in addition to the over $1 Trillion deficit the government is running before all of this took place. Many of these companies may have been flirting with bankruptcy even if the virus never showed up. It is amazing how little we learned from 2008!
We also shouldn’t forget about the many trillions of dollars being funneled to the banks as we speak with the numbers and time frames increasing exponentially from overnight $50 billion to $500 billion for 1 and 3 months along with overnight repos and $60 billion per month in treasuries being bought with freshly conjured up currency by the Fed.
If these actions are ultimately taken I expect the US dollar to be worth a lot less going forward and the price of commodities (the stuff we need to live) will likely be much higher going forward and gold would likely outperform most of the commodities because it has no counterparty risk (No risk that you won’t get repaid because it is not debt) and the fact that dollars buy less of everything the dollar price of gold could skyrocket. It has already reached all-time highs in most other currencies already.
Just with the current angst in the “markets” physical gold and silver, if you can find any, is trading at large premiums to the fake gold paper price.
They will manipulate gold for as long as they can because it is the measuring stick that shows how currencies are being debased across the globe. As long as the currencies are measured against each other they can all fall together and many don’t notice the severity of the loss of purchasing power.
The illusion is that “things go up” when in reality your currency is just buying a lot less because it is worth less.
As the gold price is manipulated lower day by day the overall performance has been stellar even though 99 out of 100 have no clue. Many still believe the “markets” are the place to be. Let’s look at the history since the year 2000.
In the year 2000-2020 the major US stock averages were:
2000 2007 2014 1-2020 3-17- 2020 TOTAL Avg. Annual
DOW 11,500 14,000 17,000 29,185 20,250 _+76% +3.8%
S&P 1,500 1,566 1,900 3,321 2,440 +63% +3.15%
NASDAQ 5,000 2,500 4,414 9,834 7,050 +41% +2.05%
- The “markets” are gyrating so much that this snapshot was as of 10:30 on 3-17-2020.
- Even at the all-time highs the “markets” didn’t compare to the returns on gold
- Japan has bought hundreds of trillions of Yen in stocks, bonds and who knows what else- the Nikkei is currently 55% LOWER than the all-time high in 1989. Yes, 31 years later minus 55%. Where is the proof that “printing” money and buying stuff works for more than a brief blip? This is just after they bought $100 billion in stock in one day last week! What would their or our averages be without this massive intervention in stock and bond markets?
GOLD $250.00 $700.00 $1,290.00 $1,560.00 $1513.00 +505% +25.26%
… And what would the price of gold actually be without the constant beatdowns by the banks? What will the REAL price look like when the games are forced to end?
Information from historical prices on Marketwatch.
Has anyone shared this information with you other than me?
Actually, as soon as I started promoting this information my invitations to do the financial game shows dried up. There is a script- it is a show and if your story fits the narrative you can become a celebrity.
With all of the financial shenanigans taking place globally it is increasingly likely that the price of gold will go higher in either inflation or deflation. It actually may do better in deflation because fear is a powerful emotion. This is also likely why real physical gold and silver is getting hard to come by for regular people like us. In an interview on King World News it was said that there is plenty of supply in Switzerland in the form of bars but ordinary people are not buying in that size.
I was also surprised that as the Fed offered up to $1 TRILLION in REPOs yesterday “only” about $35 Billion was actually requested by the banks. This leads me to question if they have NO COLLATERAL to put up because the “markets” suffered a historical decline and in prior sessions we saw stocks tank when the banks were asking for far more than the Fed was supplying- likely why they raised the REPO operations from $50 billion to $100 Billion, then $175 Billion to the current $500 Billion in just a few weeks. Actually, today they are doing a second $500 billion repo after “only” about $189 Billion was requested and granted this morning. By the way each $500 Billion given out is $1428.58 per person (men, women and children) if there are 350 million of us sharing this expense. Keep that in mind!
With the “Trillions” being thrown around both here and globally how long before Joe Six pack gets a clue that we are having our currency debased in an uncontrollable manner. It is growing exponentially and will likely have a moment where it will not only be impossible to hide but will also likely be too late to prepare for that eventuality.
My belief is that gold is on sale and it may not be for much longer.
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