Each day that goes by brings us one day closer to the “end game.” One would have to be genuinely silly to try and put a date on that event, but you all know it’s coming. The US dollar’s days as the world reserve is going to come to an end.
Last Friday, “someone” or a bunch of “someone’s” thought it a good idea to dump 34 billion worth of paper shorts onto the Gold and silver market. All of it at basically the same time. Yet it brings into question, well, several questions.
When you look at the open positions from that day, you see that they weren’t opened to close out shorts, they were opened as sells. In other words, they were shorting the price of gold and silver, and since it’s price is based on paper transactions at places like the COMEX, we saw big moves down on gold and silver that day.
What was that all about? Well, obviously those “someone’s” didn’t like the look of gold and silver both looking like they were about to break out into a nice run higher. But why? Who has the ability to conjure up 34 billion worth of paper? And why don’t they want the price of these two metals going higher?
Listen up folks, this wasn’t mommy and daddy in their PJ’s trading on their Etrade account while eating Cheetos in bed. This was big time. If you add up all the gold that all the contracts represented that day, we’re talking about over a hundred tons of gold. So obviously they didn’t want the price of gold or silver going much higher. But why?
One way to look at it is this: Back in the big run up from say 2007 – 2011, the gold and silver markets were just days away from being over run. The US mint had several times “run out” of silver to make one ounce Eagle coins and the amount of gold on the COMEX for delivery, was within one big buyer of default. ( Note, the COMEX has already defaulted in the past, by passing a rule that they could settle a delivery in cash in stead of a metal, if they couldn’t get the metal to satisfy the demand)
After they finally got a handle on it and turned gold and silver lower, the pressure came off and the metals have been forgotten for a long time. But that’s not really true at all. While a lot of mom’s and pops, stopped buying it, and a lot of people who got seduced into thinking that Crypto currencies were really like gold and swung from buying it, the “big guys” kept right at it.
Let me repeat that line for a second, just for clarity. An awful lot of people that were silver ( and gold) bullion buyers, got lured into thinking that things like Bitcoin were just as wonderful, as they were told it was anonymous, and there was only “so much of it” etc. They not only stopped buying gold and silver, a lot of them sold their metals and went into crypto.
But guess what? The Chinese didn’t stop buying it. Nor did the Russians. Nor did the Central banks. In FACT, just from the first quarter of 2017 to the first quarter reading of 2018, gold buying has surged 42% at the sovereign level. (NOTE>> Russia has effectively sold half their US treasuries, but they have increased their gold holdings since the first of the year)
So that brings up the question: Who wanted to smash the price of gold and silver last Friday? I tend to think it was the very sovereigns themselves. Sure you could suggest that as the metals were about to break out, money that flowed into Crypto’s might come funneling out and back into gold and silver, especially the folks that bought bitcoin at 16,17,18 or 19,000 dollars, only to see it evaporate to 7000.
And yes a tidal wave of newly revived demand could once again push the COMEX into the situation of not having the very metal they’d be called on to deliver. But I tend to think it’s more than that. I think the CB’s, and the sovereign Governments themselves are the big players behind trying to keep the price suppressed.
Think about it like this. Let’s suppose you’re Russia and you hate the idea of the US shutting you off the SWIFT system, and being able to shut down your financing. Or you’re China and you hate that you have had to amass dollars to buy things such as oil. Or you’re one of any number of nations that see’s the US enjoy benefits of being the worlds reserve currency. If your plan is to one day reject the US dollar, who is going to want your currency? No one if it’s just another fiat currency whipped up out of thin air. But, if you back your currency with a percentage of gold, now you’ve got a more interesting animal.
I said long ago, that when the eventual “reset” hits, and there will be one, no one on earth is going to want a currency based on nothing. We’ve had decades of fiat money and all we’ve managed to do is create more debt than the planet has ever seen. We’ve seen it translate into unfair trade, currency wars, etc.
If your ultimate goal is to ride the current system until it implodes, while building a reserve of real gold in the meantime, so that when the system does implode, you have the means to back up your resultant currency, wouldn’t you want to amass it as cheaply as possible? You sure would.
And, if you realized that you could indeed keep the price low, or at least keep it from breaking out and running, just by paper shorting some criminal market, wouldn’t you do it? You probably would and SO WOULD THEY. And that’s what I think we’re looking at here folks.
They don’t want any excitement coming into the metals market. They want the public playing with overpriced stocks, and chasing this dog and that pony, and pushing any one of the 1700 crypto currencies. As long as they’re trying to amass as much of it as they can get, they’re going to do their best to keep the price from rising.
Each day that goes by brings us one day closer to the “end game.” One would have to be genuinely silly to try and put a date on that event, but you all know it’s coming. The US dollar’s days as the world reserve is going to come to an end. The big wheels at Brussels have already mentioned many times that the world doesn’t like the set up any more and want it changed. They’ve added China into the SDR basket. We’re seeing more and more nations attempting to trade with each other without the dollar. We’re seeing nations curbing their buying of Treasuries. We’re seeing nations selling their treasuries. Yet through it all, we see month after month, the unrelenting push to buy more gold.
Are the Chinese stupid? I think not. Are the Russians stupid? I assure you they’re not. India, Switzerland, France, and a host of other nations have a sizable gold hoard. And they’re all buying more. If your ultimate goal is to reduce your dependence on US treasuries and dollars, the only real alternative you have is gold ( and silver) Yet there’s only so much of it around. Many are suggesting that global mine output is falling rapidly. All the “easy stuff” has been found already.
It appears that they’re going to continue to suppress the metals for as long as they can. They’ve already kept it unrealistically low for the last 7 years. Friday’s attack was proof positive that they still have the ammunition to take the momentum right out from under the metal market. One day they won’t be able to pull it off. Or, one day their entire concept will flip. Once they have all they think they need, their mindset will change and they’ll hope the value goes sky high.
I think it will. I believe that one day, the suppression will stop and these nations will be more than happy to see gold over 3000 dollars and silver over 100. Once they have as much as they can get/need, consider the payday they’ll get once it’s allowed to soar. As we’ve stated before, we can’t back our dollars with any realistic percent of gold backing right now, We simply don’t have enough gold to match the amount of dollars. But we could in an instant if gold was 8500 an ounce instead of 1200. And that’s what I think their ultimate goal is. Get enough metal that at some point they can back their rubles and Yuans with say a 30% gold backing. And they can all do it if gold is over 8 grand an ounce.
Let me wrap this up. I love gold. I love silver. I know how much they “should” be worth, but they’re not allowed to go there ( yet). I’ve seen my dollars inflated away to the point that Uncle Sam says they’re worth 3.9 cents as compared to the 1913 dollar. The day that the Federal Reserve has to reverse course, restart QE, and cut rates again ( and they will one day) that is going to be the big test. People will realize that the Central banks have no choice but to print forever and the metals will go crazy. That’s when I want to see if they can still keep the price down. What a war that will be.