Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
SNP Controlled Scottish Parliament Demands Right for Scotland to Commit Suicide - Indyref2 - 29th Mar 17
USD Gold Myriad of Signs - 28th Mar 17
Ominous Social Trends That Will Shape Our Future - 28th Mar 17
Foundation And Empire: Is Donald Trump The Mule? - 28th Mar 17
Top Ten US Dollar Risks - 27th Mar 17
The Popularity of Gambling and Investing Amongst Students - 27th Mar 17
Is Political Betting on the Rise? - 27th Mar 17
US Stock Market Consolidation Time - 27th Mar 17
Russia Crisis - Maps That Signal Growing Instability and Unrest - 27th Mar 17
Goldman Sachs Backing A Copper Boom In 2017 - 27th Mar 17
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

Gold Market Manipulation Has Created Rarest of Opportunities

Commodities / Gold and Silver 2016 Jul 04, 2016 - 07:01 AM GMT

By: Gary_Savage

Commodities

The banksters, by manipulating the price of gold and artificially creating a bear market, have created what will likely turn out to be one of the greatest opportunities ever seen. I’ve maintained all along this was their goal. To create the most destructive bear market in history, which would then generate the largest bull market the world has ever seen.

Folks, you might as well take advantage of this opportunity. The banksters aren’t the only ones that deserve to get rich. They have destroyed millions of peoples lives as the authorities stood by and watched them run the precious metals markets, and especially the mining sector, down to absurd levels over the last few years. Now they have switched sides and the attacks have stopped. It’s time for price to swing in the other direction. And it’s going to swing so far in the other direction, that I have no doubt before it is over this will be the largest bull market the world will ever see.


In 2008, as the housing bubble was imploding, the Fed embarked on a reckless campaign of rate cutting and money printing aimed at halting the real estate collapse. It did not stop the bubble from popping. As you can see in the next chart all that liquidity just drained into the commodity markets, especially energy. This had the exact opposite effect the Fed was looking for. The sudden massive surge in inflation broke the back of consumers, triggering a deflationary spiral into a recession.

I’ve tried countless times to educate investors that it is always inflation that occurs first. Inflation is what collapses consumer spending. Inflation damages the economy and leads to deflation, not the other way around.

This is one reason why I knew the stock market is not now entering a bear market. We haven’t had the inflationary shock yet. But we will. There are always consequences to money printing. Without exception it always creates inflation.

So now let’s look at the next piece of the manipulation puzzle.

In 2011 & 2012 the stock market experienced a second crash as QE2 came to an end. At this point it became clear to the Fed that they would have to continue printing in order to keep markets inflated. Without it, the house of cards would come crashing down.

But this time they had a problem. Oil was already over $100. QE3 risked a repeat of 2008 and that risk being that liquidity might flow into the commodity markets, triggering another inflationary shock and collapsing the economy yet again. As a matter of fact you can see in the chart below, right as Operation Twist/LTRO/QE3 began, markets started to surge higher.

So now the Fed had a problem. They were on the verge of repeating the mistake of 2008. They had two choices. Either end QE and let markets collapse naturally to find their true bottom… or find some way to prevent liquidity from flowing into the commodity markets. In essence find a way to direct the inflation solely into the stock market and real estate market.

In a natural market this would be impossible as liquidity would tend to flow into all markets equally (this is why I keep saying all markets will rise together). But as I’ve said many times in the past, we haven’t had free markets since the SEC banned short selling in financials in the fall of `08.

So the Fed could try to suppress all commodity markets (impossible) or they could focus the manipulation in the one commodity that tends to lead the entire commodity complex – gold.

You can see in the next chart I’ve marked the point at which the middle of the night attacks began. Notice that the entire commodity complex stagnated at that point. There was simply no way oil, or wheat, or copper, or any of the commodities, was going to go parabolic with gold collapsing.

This was right about the time that position limit laws stopped being enforced. The bullion banks were now able to overwhelm virtually any buying pressure by dumping unlimited amounts of shorts on the market, usually in the most illiquid hours, in the middle of the night. So traders would wake up in the morning to having their stops run.

It wasn’t long after this that I realized that a few big banks were going to try to create a bear market. A bear raid. The purpose being to artificially force price as low as possible before switching to the long side. Let me give you an example of what I mean.

Let’s say the next leg of the bull market had begun at $1550 and run to $5000 over the next several years. That is a 220% increase.

But now let’s take that same bull market top, but instead of starting the run at $1550, let’s factor in an artificial bear market that drops price to $1050. A run from $1050 to $5000 is a 370% gain. Almost double the natural market gains that would have been attainable if the market had been left to trade freely.

But now let me blow your mind and show you where the real opportunity was created, because it wasn’t in gold.

The HUI index was at roughly 400 when the attacks began on the metals market. If the bull had begun at that point and assuming a modest 2 to 1 outperformance we could have reasonably expected the HUI to rise to maybe 1600. A 400+% move.

But the bull market isn’t going to start with the HUI at 400. It’s starting with the HUI at 100. The banksters managed to create one of the most destructive bear markets the world has ever seen in the mining indexes.

Now if we just assume that same 1600 top, the potential gains in the mining stocks are now 1500%. And I can assure you the HUI is going a lot higher than 1600 before the gold bull is over. The level of destruction in the mining sector is unparalleled, and it’s going to generate a bull market possibly bigger than anything the world has ever seen before.

And I’m going to suggest that was the banksters goal all along. To create a massive bear market so they could then get long at the very bottom, and ride one of, if not the largest, bull market in history.

The banksters may very well have continued beating on gold if not for one unforeseen problem.

When oil collapsed it threatened to trigger another financial panic. It became imperative that the price of oil go back up. That meant the attacks on the gold market had to stop. And that my friends is exactly what has happened.

Ever since the bottom in December we haven’t seen any of these absurd 10,000 – 20,000 contract dumps in the middle of the night, and not surprisingly, the natural trend in the metals has returned.

At this point the banksters are no longer a gold bugs worst enemy, they are your best friend. This was all done to create a monster bull market. The banksters are certainly positioned to profit from it.  Are you?

Like our new Facebook page to stay current on all things Smart Money Tracker

Gary Savage
The Smart Money Tracker

Gary Savage authors the Smart Money Tracker and daily financial newsletter tracking the stock & commodity markets with special emphasis on the precious metals market.

© 2016 Copyright Gary Savage - 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