Sunday Evening 27 November 2011
Central bankers, hyenas to the core, mercilessly destroying
country by country, currency by currency, for that is how it is
done, are running out of credibility. Everyone in the world sees
this, but cognitive dissonance keeps the masses at bay, numb
with day-to-day issues, failing to focus on the big picture. Not a
single banker has gone to jail for the massive fraud perpetrated
in the housing market. They are rewarded, instead, with huge
bonuses. Trillions to bail out those who created the now world-
wide financial crises...while the "people" get cash for clunkers.
Let them eat cake. Et tu, MF Global. Impunity reigns in the
world of bankers
[For those impatient with a view of factual circumstances, there
are charts at the end]
What is on the minds of most in the metals arena, the so-called
gold-bugs, is why aren't the price of gold and silver reflecting this
reality and "going to its destiny"...[insert your own price target
here]? Anyone participating in the precious metals market has to
declare their purpose, and then adhere to it.
Are you a trader, looking to make money, [a seemingly stupid
question, but not]? Well, the PTB, [the Powers That Be], have
pretty much put a fork in those hopes by raising margin
requirements including not letting day-traders get their standard
no overnight margin requirements. The CME, instead of being a
market-overseer has chosen, instead, to act at the behest of one
or two firms, you know, the ones who are naked short without
having to put up a penny in margin.
Unfair? Absolutely! But also a very strong message of how
afraid and concerned the institutional bullies are. "Suppose
they gave a war and no one came?" What if they had a metals
exchange and no one participated? Who needs them?! If you
are a trader, consider the company you are in. If you are
comfortable in that kind of environment, good luck to you, for
your perspective is myopic, irrespective of longer term goals.
Are you an investor? The smart ones are, but they fall into two
categories...1. those who are unshakeable in their beliefs that
precious metals will eventually win out over the destructive central
bankers and that irrelevant class, called economists, who spew
endless theories that are dependent upon circumstances never
reflected in the real world, but that is another topic. and 2. those
who think they are in the first category but lack the conviction and
staying power. When price corrects, they cannot stand the "heat,"
often stand aside.
At this point, in "precariouser" and "precariouser" world events,
those in the first category, and the new legions joining them,
[ironically, including the hyena central bankers...they ain't stupid],
will eventually win out. Category one investors are not concerned
with the day-to-day, even month-to-month price fluctuations in the
precious metals. They know what the end results will be, and they
are willing to be patient. It is easy to see how that patience has
paid off over the past several years.
As Mr Partridge, [Reminiscences Of A Stock Operator], used to
say, "Well, it's a bull market, you know." He knew, and Jesse
Livermore was the source and also said, more money is made
sitting on a position than trading. Owning precious metals is the
quintessential example of such a strategy in what is now
becoming the perfect storm for such an investment. From this
perspective, who cares if the price of silver is $35, $32, or $30?!
History is on the side of those who choose to own and hold
NO country has EVER spent its way out of debt. The poster
child for that is the Weimar Republic. It is pure lunacy that the
only solution offered by the central bankers, [how Socialistic in
sound], is to create more debt to "save" those countries drowning
in it. It is political suicide to invoke the necessary discipline to
reverse this downward spiral, but, in an acknowledgement of the
cognitive dissonance mentioned above, people, in general, are
dumb enough to "go along" with the status quo. Lemmings also
have a proven historical outcome.
In the United States, there is one solution, and one solution only,
and Lying Ben has been driving this country relentlessly down that
path, leading to a cliff, and that is the total debasement of that fiat
Federal Reserve Note, which, contrary to popular belief is NOT a
dollar, even though the word appears on each fiat piece of paper.
Sad that the United States population knows nothing about what
is passed as their own "currency."
The essence of the precious metals market can be summed up in
four words, [one a contraction]:
It's a bull market.
All we are saying is that the emperor is wearing no clothes.
To the charts!
In our last article, Silver - Futures Market Irrelevant?, we talked
about overlapping bars on the daily chart, reflective of a balance/
struggle between the forces of buyers and sellers, [click on
http://bit.ly/rLJSc2, second paragraph after second chart].
The "battle" goes on, yet to be resolved. We give an edge to the
upside, [but until confirmed, price can still go lower].
The reason for the edge higher lies in the read of volume. We
noted, last time, that volume had increased but did not reach new
lows from the effort. For us, that means that buyers are more than
meeting the effort of sellers; they are containing that effort. That
can be seen clearly from the last two days of trading. The second
day, while lower, was on decreased volume. Yes, it was a holiday
environment, but that is how it ended.
Keep it in perspective. This is not pivotal, just another piece of
In that same article, we mentioned how the monthly was another
inside bar, [http://bit.ly/rLJSc2. See first chart.] It is an instance
where volume is of little help, here, so we have to rely upon the
price behavior. There are three more trading days left to the month,
so anything can happen between now and then. If little happens to
send price lower, it has to be construed as more positive than
negative, as once again, sellers will have been kept in check.
Weekly price and volume are different from the daily. Here, we
see volume increased to the highest level in a few months, yet
the range of the bar was relatively small. We posed the question
"Why?", knowing the answer. Increased volume and less results
downside for the effort comes from buyers stepping up their effort
and keeping sellers from extending price lower. Notice how the
low is just marginally lower than the week before. It shows that the
downside momentum has lessened, for the reason just cited.
As a category 1 investor in precious metals, these movements are
of less consequence to the overall picture, and we relentlessly
continue to advocate accumulating both silver and gold at current
levels. For traders, the charts, as we see them, remain constructive.
Where is the rally? Silver rallied from $20 to $50, and has since
been consolidating. Same for gold.