It is well know that agents of the Federal Reserve have been using the gold paper market to manage the price of physical gold. The current market is as managed as it can get. Large publicly traded companies are buying up their own stock thus reducing their outstanding shares. Why? They can borrow and use tax benefits that take their costs lower than dividend costs. By reducing outstanding stock, their stock price rises in response. This makes the market look stronger and individuals focus on the “wealth effect” of their portfolios thinking that all is good. The problem is until you sell, you have no true profit from your investment.
Employment participation in the U.S. is in depression mode. The current environment somewhat masks this reality because of the more complex infrastructure than that of the 1930’s. The 23% unemployment rate reported by www.shadowstats.com properly reflects the low employment participation rate.
Currently, silver is lagging behind gold in market pricing. I expect the silver/gold ratio to move back in line to the historic 16/1 as overprinting of fiat currencies around the world escalates.
Europe is moving toward winter and they know that Russia holds the energy card and this is why they have not rallied behind the U.S in its foreign policy against Russia concerning the Ukraine. The U.S. has been preparing for war in response to the economic doldrums as it has in the past. The average American is tired of war so there must be some compelling reason to return to a major conflict. Surely another 9/11 event won’t occur causing a major shift in public sentiment.
The 2008 banking crisis of major banks in the U.S. was not resolved. Those banks have further concentrated power and leverage since then. One major unexpected event can take the entire system down as it nearly did in 2008. Every bank in the U.S. is connected by the overnight investing of Fed Funds and interbank processing of commercial and consumer transactions. No bank in the system is totally immune to a banking crisis. If a banking crisis occurs, a bank “holiday” is as likely now as it was in 2008. It never hurts to have a little extra cash in the cookie jar in case such an event happens.
The global economy is in uncharted waters. China and Russia know this and that is why they continue to increase their gold holdings. They are paying close attention to world economic history and its lessons. Maybe you should too.