Best of the Week
Most Popular
1.Gold Price Trend Forecast, Where are the Gold Traders? - Bob_Loukas
2.Stocks Bear Market of 2017 Begins? Shorting the Dow At its Peak! - Nadeem_Walayat
3.Betting on President Trump Leaving Office Early, Presidency End Date - Betfair Market - Nadeem_Walayat
4.Why Stock Market Analysts Will be Wrong About 2017 - Clif_Droke
5.Is This The Best Way For Investors To Play The Electric Car Boom - OilPrice_Com
6.Silver Price 2017 Trend Forecast Update - Video - Nadeem_Walayat
7.Gold Price Set For Very Bullish 2017, Trend Forecast - Austin_Galt
8.10 Things I learned From Meetings With Trump’s Transition Team - - John_Mauldin
9.How Investors Can Profit From Trumps Military Ambitions - OilPrice_Com
10.Channel 4 War on 'Fake News', Forgets Own Alt Reality Propaganda Broadcasting - Nadeem_Walayat
Last 7 days
Gold’s Fundamentals Strengthen - 18th Feb 17
The Flynn Fiascom, the Trump Revolution Ends in a Whimper - 18th Feb 17
Not Nearly Enough Economic Growth To Keep Growing - 18th Feb 17
SPX Stocks Bull Market Continues to make New Highs - 18th Feb 17
China Disaster to Trigger Gold Run, Trump to Appoint 5 of 7 Fed Governors - 18th Feb 17
Gold Stock Volume Divergence - 17th Feb 17
Gold, Silver, US Dollar Cycles - 17th Feb 17
Inflation Spikes in 2017, Supporting Gold Prices Despite Increased Odds of March Rate Hike - 17th Feb 17
Roses Are Red... and So's Been EURUSD's Trend - 17th Feb 17
Gold Trade Note Sighted - 17th Feb 17
Gold Is Undervalued Say Leading Fund Managers - 17th Feb 17
NSA, CIA, FBI, Media Establishment 'Deep State' War Against Emerging 'Trump State' - 16th Feb 17
Silver, Gold Stocks and Remembering the Genius of Hunter S. Thompson - 16th Feb 17
Maps That Show The US’ Strategy In Asia-Pacific - 15th Feb 17
The Trump Stock Market Rally Is Just Getting Started! - 15th Feb 17
Tesco Crisis - Fake Prices, Brexit Inflation Tsunami to Send Food Prices Soaring 10% 2017 - 15th Feb 17
Stock Market Indexes Appear Ready to Roll Over - 15th Feb 17
Gold Bull Market? Or was 2016 Just a Gold Bug Mirage? - 15th Feb 17
Here’s How Germany Buys Time From China - 15th Feb 17
The Stock Trader’s Actionable Guide to Trump - 15th Feb 17
Trump A New Jacksonian Era? The Fourth Turning (2) - 14th Feb 17
Stock Market Yet Another Wall Street 'Witch's Brew' - 14th Feb 17
This Is Why You Don’t Own A Lot Of Stocks - 14th Feb 17
Proposed Tax Reforms Face Enormous Headwinds - 14th Feb 17
BBC Inside Out Tesco Rip off Offers - Determined to Lose Big Spend Customers! - 13th Feb 17
Is the UK An Economy Built on Debt? - 13th Feb 17
Stock Market VIX Cycles set to Explode in March/April 2017 – Part 2 - 13th Feb 17
Stocks At Record Highs - Will Uptrend Accelerate? - 13th Feb 17
US Dollar: 'Rumors of My Death are Greatly Exaggerated' - 13th Feb 17
Is This The Top Commodity Play For 2017? - 13th Feb 17
Trump a New Jacksonian Era? - 13th Feb 17
Stock Market at High Tide - 13th Feb 17
Channel 4 War on 'Fake News' Ends - The New News Age - 12th Feb 17
Uptrend in Silver (XAG/USD) Continues to Strengthen - 11th Feb 17
Greece Debt Crisis Outrageous Malevolence - 11th Feb 17
SPX Stock Market 1-year Anniversary New Highs - 11th Feb 17
Gold and Gold Stocks Hit Upside Targets. Now What? - 11th Feb 17
Moving Stock Market Targets: Investors Need to Discriminate! - 11th Feb 17
Sheffield Trees Felling Crisis, Police Dawn Raids and Arrest, Amey £2bn PFI - 11th Feb 17

Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

Precious Metal’s War: Central bankers have Not lost & Never will

Commodities / Gold and Silver 2016 Feb 18, 2016 - 11:50 AM GMT

By: Sol_Palha

Commodities An empty head is not really empty; it is stuffed with rubbish. Hence the difficulty of forcing anything into an empty head. Eric Hoffer

They might lose a battle or two, but war is a composition of battles, and when it comes to war, these guys never lose as their principle is simple. Take no prisoners, shoot to kill and ask questions only if the enemy survives the onslaught of bullets.  This would be a good time to read the book “the art of war” by Sun Tzu.


All along we have stated that the world is the midst of a full-blown currency war:  Japan just upped the ante by cutting rates into negative territory, and Sweden has driven the knife deeper in by pushing negative rates even lower. In fact, Sweden has stated that they are prepared to do this, till inflation is at the 2% mark. Interest rates are -0.5% currently, so one wonders how low rates will have to drop for them to hit this pie in the sky inflation target of 2%

 This going to put pressure on China and a host of other nations to take the same route; the velocity of the “devalue or die” currency war game has increased five-fold.  It won’t be long before the Fed is forced to take a similar path. Start paying attention to the news, for our central bankers are suddenly going to start listing a slew of factors to backtrack on their claims that the economy was sound.   Many Gold bugs have been stating that the central bankers are running out of room to manoeuvre; our response to this is a dream on.   Look at the stunning rally the markets mounted when BOJ (Bank of Japan) fired its latest shot. The only day the central bankers will run out of ammunition is the day the masses wake up and that day is sadly still a long way in the making.  Central bankers don’t need to continuously lower rates; they can simply flood the markets with money while maintaining an ultra-low rate environment.   What’s another 1-2 trillion dollars when our debt is now over $19 trillion? What has changed between 2000 and 2016; our debt in 2000 was significantly lower, and it was even lower in 1990; from the 1980‘s the debt has tacked on roughly $17.6 trillion dollars and the masses are still quiet.

The short answer is that nothing has changed other than the level of the misery individuals are forced to endure. 76% of families are living from pay check to pay check, does that signify an improving economy for you.  It seems that this phenomenon is not restricted to the poor only, according to CBS 33% of families earning 75,000 per year are living from pay check to pay check.

Today the average hourly salary is approximate $25.00 an hour.  Do you know that $22.41 today has the same buying power as $4.03 which was the average salary in 1973?  So $25.00 has roughly the buying power of less than $5.00.  Welcome to the nefarious and deadly game of inflation.  Things are only going to get worse; the dollar amount might look like it's trending upwards, but individuals are working more for a lot less; to solve a problem you have to understand the problem, the masses are blind to the concept of inflation. They are caught up in a vicious game of just trying to pay the bills and survive. They hardly look up to see what is going on. This sort of like Plato’s allegory of the cave; if you are unfamiliar with this famous concept, you can view it here

 Against this backdrop, we can safely state that the Fed is omnipotent and that those gold bugs and hard money experts are smoking some strong medicine that they need to get off immediately when they falsely assume that Gold will surge to the moon simply because the Fed has the pedal to the metal.  We believe in the concept of hard money, and we believe that the world would be a better place if central bankers adhered to such rules. However, we are not fools as we understand that being right does not equate to success in the markets.  The key to the markets are the masses, and the masses believe that the Fed and the government can solve their problems. Until they think otherwise, the Gold bugs and the hard money experts will experience small moments of victory followed by massive periods of punishment. This is why they cannot understand why gold and the precious metals sector have taken a beating since 2011.  Gold will rise again, but then any crappy sector can have its day in the sun given enough of time. This is why it is dangerous to be a Gold bug, for they assume that precious metals can rise forever in price. They will make the same mistake during the next Bull Run in metals. No market can simply trend upwards forever; the only exception being stupidity; it has been in a perpetual bull market, and there are no signs of even a small correction.

Main Point to keep in mind

Central bankers have not run out of firepower, in fact, we think they are so cocky now that they have just barely started to fire their bullets. So far they have been using pistols and rifles; they are about to transition to machine guns.   The masses are sedated, so this process of pillaging the populace will go on for a long period. Translation; very strong market corrections or as the naysayers would have you believe “market crashes” have to be viewed as buying opportunities.  

Game Plan For precious metals


We are not stating that Gold and Silver will not have their day in the sun again. In fact, we still hold onto the view that Gold could trade high as $5,000 and silver north of $200.  We have still not had the feeding frenzy stage; in other words, the masses did not participate in the last Bull Run that ended in 2011. However, do not assume that Gold or for that matter any market will trend upwards forever.  At this point of the game, it makes sense to deploy some money into Bullion. Until there is a clear signal that a bottom is in place, it would be wise to limit your foray into Gold stocks.

Strange as it may seem, no amount of learning can cure stupidity, and formal education positively fortifies it.

Stephen Vizinczey

by Sol Palha

www.tacticalinvestor.com

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

© 2016 Copyright Sol Palha- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife