I got a couple of interesting questions this week that I believe will make a few points that we should pay attention to.
First of all, with regards to these questions the first thing that came to mind is the Warren Buffett quote “price is what you pay- value is what you get”. To me, this is one of the most profound statements that could ever be made-particularly in the situation we are facing right now.
As I have said a million times there is NO price discovery in virtually ANY asset. The entire financial edifice is nothing more than a manipulated mess. It is manipulated in a manner to benefit the few at the expense of MANY.
The first question was in regard to the price of gold and silver. After a large run-up in price, it was a legitimate question. “This pullback in gold- is it temporary or is it going to keep going?”
This is a question that, as soon as it was asked, I immediately thought how programmed we have been in the past few years to EXPECT disappointment every time the PRICE appears to be taking off to reflect the true VALUE of our holdings.
This also reminds me of the World War 2 story where the allies made many raids but didn’t do any damage. They did this so many times to trick the enemy into thinking that this was the way it was always going to be. UNTIL the day of the actual attack and the enemy let their guard down and the raid was a smashing success. (To me, it appears that it is time to EXPECT different outcomes. Throughout history- as we look back it takes people time to realize that a change has taken place leading to missing out on major gains). Take gold being up about 25% in the last 6 months with virtually NO COVERAGE until recently.
My response was something similar to – disregard the games being played by the banks and the computer algorithms. With each dollar conjured up out of nowhere the VALUE of gold, silver and tangible assets RISE. It is not that a hunk of gold changes in any way, but it is the dollar and all fiat currencies losing purchasing power that gives theillusion of a price increase. I believe the pullback Is temporary and I believe that the biggest RISK we face right now is not realizing that there has been a paradigm shift. Because of this, if we try to be cute and time things, we could miss out on the gains that we have been anticipating for years.
Question 2- similar to question 1 was : The gold and silver all appear to be over bought. What do you think? Should we sell some assets and buy back lower?
My answer was a simple “NO!” I immediately thought “spoken like a true trader”.
While the manipulators have had the upper hand because they can conjure up paper gold in unlimited amounts, and since computers don’ think- they just DO as they are programmed it has been fairly easy for the banks and their minions to keep the price suppressed. This has gone on FAR longer than anyone could have imagined but we are beginning to see what we have been anticipating for a long time.
When physical supply becomes unavailable, and demand remains robust (even with western “investors” mostly on the sidelines so far) all the manipulation they TRY to carry out gets met with fierce buying and thwarts those efforts. It is my opinion that we haven’t seen anything yet.
As a matter of fact, my friend Andy Schectman has said that “Central banks are using PRICE as a distraction”. By saying this it means to me that they are keeping the price suppressed so that they can buy it all without interference by the retail public.
Even though I have been observing massive interventions on the price charts the takedowns are almost automatically being met with large purchases to make the manipulation do nothing more than keeping the price of gold from going parabolic- which it will do anyway in my opinion- and not too far in the future as the US dollar appears to be nearing a fatal end. Forget that it is “strong” in the forex “market” and realize that inflation is NOTHING but our currency being destroyed.
With this in mind, I certainly believe that those who have been patiently waiting for reality to rear its head are likely to be pleasantly surprised if they are in hard assets and are likely to be severely disappointed if they are in debt-based assets. With each intervention- which has been taking place for DECADES- the chasm between PRICE and VALUE gets wider and wider. As gold is manipulated LOWER the value becomes FAR higher than its PRICE reflects. As stocks, bonds and Real Estate are all artificially propped up the VALUE APPEARS far higher than it actually is- leading to all sorts of malinvestments.
For these reasons I believe we could see a 75-90% DROP in debt-based assets while we could see an exponential rise in hard assets as currencies go to their intrinsic VALUE of near ZERO.
Many people ask me for a price projection. Recently, I have been saying that I believe you won’t be able to get an ounce of gold for ANY amount of green paper or computer blips.
Be Prepared!
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