Best of the Week
Most Popular
1.The Trump Reset, US Empire's Coming Economic, Cyber and Military War With China (2/2) - Nadeem_Walayat
2.Now Is the Time to Buy Gold - 5th Jan 17 - John Grandits
3.CIA Planning Rogue President Donald Trump Assassination? Elites "Manchurian Candidate" Plan B - Nadeem_Walayat
4.The Trump Reset - Regime Change, Russia the Over Hyped Fake News SuperPower (Part1) - Nadeem_Walayat
5.Most Popular Financial Markets Analysis of 2016 - Stock Market Crash Postponed Again - Nadeem_Walayat
6.No UK House Prices Brexit Crash 2016 Despite London Weakness, Forecast 2017 - Nadeem_Walayat
7.President Trump Understands the NSA, CIA... LIE, America's Intelligence Agencies Crime Syndicate! -Nadeem_Walayat
8.President Donald Trump's 2017 New Year Message, BBC Fake News, Was 2016 a Dream? - Nadeem_Walayat
9.Major Stocks Bear Market Still Looms - Zeal_LLC
10.Biased 2017 Forecasts - Debt, Housing and Stock Market (1/2) - James_Quinn
Last 7 days
Stock Market New Highs For 2017? Yes, But When Do I Enter? - 22nd Jan 17
Active vs Passive Investing: And the Winner Is ... - 22nd Jan 17
The Epidemic of Bad Ideas - 22nd Jan 17
Gold Futures Prices Looking Bullish - 22nd Jan 17
Time for Crude Oil Price Drop below $50? - 21st Jan 17
AI and Robotics - We Are All Low-Skilled Workers Now - 21st Jan 17
The Trump RESET Starts on US Presidential Inauguration Day 2017 - What to Expect - 20th Jan 17
Will the CIA Assassinate Rogue President Donald Trump Like JFK? - 19th Jan 17
Bonds, Dollar, Stocks, Gold, Silver Major Markets at Turning Points - 19th Jan 17
Populism; the Danger? What About Debt? - 19th Jan 17
Gold Price 50-DMA Breakout - 19th Jan 17
Turkey, 'Axis of Gold' and End of US Dollar Hegemony - 19th Jan 17
The Most Important Market Chart on the Planet - 19th Jan 17
Trump Deficits Will Be Huge - 19th Jan 17
Stock Market Trading Patience Pays Off with CHK Using Momentum Reversals - 19th Jan 17
Gold - How to "Buy Low and Sell High" Like a Pro - 19th Jan 17
State of the Global Stock, Financial and Commodity Markets Report 2017 - 19th Jan 17
The Hunt for Russia's Next Enemy - 18th Jan 17
Returning Gold Bulls - 18th Jan 17
Biotech Breakthrough Could Create A $11.4 Trillion Opportunity - 18th Jan 17
Bitcoin and Gold - Outlook, Volatility and Safe Haven Diversification - 17th Jan 17
Stock Market Uptrend on Borrowed Time - 17th Jan 17
The One Stock to Retire On - 17th Jan 17
Trump anti-Communist Counter Revolution - 17th Jan 17
US Stock Market Update as the Trump Inauguration Approaches - 17th Jan 17
The American Crisis - Common Sense 2017 - 17th Jan 17
Obama Leaves, Hope Arrives, Will Stupid Stay? - 17th Jan 17
Damage Inflicted by Precious Metals Manipulation Is in the “Multi Billions” - Keith Neumeyer - 17th Jan 17
Gold Price Forecast 2017 Update - Video - 17th Jan 17
The Story of the U.S. Regime Change Plan in the Philippines - 16th Jan 17
Gold Price 2017 Trending Towards $1375 as Forecast - 16th Jan 17
'Deep State' CIA Director States We are Not NAZI's, Warns Trump Does Not Understand Russian Threat - 15th Jan 17
UK House Prices Forecast 2017 - Crash or Bull Market? - Video - 15th Jan 17
SPX Stocks Bull Market Update - 14th Jan 17
President Trump vs the Deep State that Hides in Plain Sight - 14th Jan 17
The Impact of Sir Alex Ferguson's Retirement on Man United's Share Price - 14th Jan 17

Free Instant Analysis

Free Instant Technical Analysis


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