I am adjusting my 2nd potential smackdown gold price to the $1,100 to $12,50 range, $18 to $21 for silver. Clearly, these are paper market spot prices.
My assumption is this. The markets are managed by the collusion of central banks. The global economy is slowing. The drop in precious metals coincided with the announcement that growth in China had slowed down. In Cyprus we see that insured deposits are being used for planned bank resolutions. The Bank of England and Fed recently published an overview of how this would happen. Investors, uninsured depositors and creditors are the ones at risk.
Uninsured depositors and creditors in the fixed income markets (including your large pension funds) are worried. If they become too worried, where would the logical place to direct their funds be? Physical precious metals. From the central planner perspective, the last thing you want to happen is for the price of gold to skyrocket while your are attempting to keep people’s money in the banks. They don’t want gold to replace bonds as a the safe haven. If that did happen, the bond market would disintegrate.
So the question becomes: “How do you dissuade people from moving their deposits into gold?” Make gold look riskier and more dangerous than an FDIC-insured deposit. You do a takedown on the price of gold. The central planners want to keep the trillion dollar bond market going where nobody is earning any money. They must use fear of loss as their primary tools to keep the current system in place. They need to make the bond market and stock market look more stable than the alternative thus they need to make gold look too volatile for the average person to move their wealth from the bank to the precious metals. They must attack the price of gold and silver and promote fear in those investments at the same time they are promoting safety in fiat currency-based investments.
This is a game of epic proportion. The central planners will use every tool in their bag of tricks in an attempt to keep the current system afloat. Their ship is taking on water that cannot be successfully pumped out. The endgame is at hand.
Central planners have used fiat currency to transfer wealth for their use. Their endgame is to convert their wealth to sound money and leave the masses holding the bag (containing worthless paper). By smashing the price of gold down, they want to convince the precious metal holders to sell their positions. Remember, for every seller there is a buyer. Using the whipsaw technique in the markets helps the big players free up the underlying asset from the small, fearful trader.
If I am wrong then the price of gold will not move under $1,400 again. If I am correct in my assumption, another one or two great buying opportunities is ahead for gold, silver, and related stocks. Only Our Heavenly Father knows for sure.
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