247Bull.com Editor: Those predicting an end to the bull market in gold (and silver) are missing the big picture. The bull market in gold is really a bear market in paper currencies such as the British pound, US dollar, Euro and Japanese yen. Under our present global fiat currency regime, in which money is backed by nothing more than a politicians promise, there is nothing to prevent governments (via their central banks) creating unlimited amounts of money at the touch of a button, and that is exactly what they are doing. We are likely still in the early stages of the process of deliberate paper money devaluation (aka currency wars), and when it becomes clear the policy of QE Infinity has not resolved our structural economic and monetary problems, we can expect politicians to double down on their failed strategy. It is then that gold and silver will come into their own. In the meantime we can continue to benefit by owning assets such as Japanese and US equities.
One of the lessons that gold bugs are learning, in the most painful way possible, is that you can’t trade a manipulated market. When big players with regulatory immunity can move an asset’s price — and can see resistance/support levels and moving averages just as clearly as anyone else — smaller traders don’t stand a chance.
In the gold-is-manipulated script, governments and their bullion bank proxies push the price to levels where they know hedge funds and other traders have stop-loss orders, which kick in and send the price careening lower. Then the manipulators buy back their short positions, thus gaining a two-fer: fleecing the flock for a nice profit, and crushing the spirits of stackers and preppers and regular folks who value honest money.
Which brings us to the following article, published by a major bullion dealer:
Rarely in bull markets do we see opportunities like the one being presented to silver and gold investors right now.
Silver & Gold spot prices are now retesting their recent low price points.
Current and favorable bull market fundamentals have not changed.
Below is a longterm view of gold’s bull market valuation channel over the past 15 years:
We view this current price pullback as a buying gift for gold and silver investors.
Now, for chartist in a normal market this picture would indeed imply a nice trade setup. But bullion bank traders can see this channel too, and for them it’s a bullseye. Just push gold through the bottom of the channel and a whole world of technicians who for some reason think their charts still have meaning will see that the up-channel has been broken, and, like good, dispassionate traders who cut their losses when they’re wrong, will sell their futures contracts, their GLD shares, and maybe their mining stocks, tacking yet another vertical drop onto this correction.
This might not happen, but if it doesn’t it will be because the bullion banks have had their fun and are now on the other side of the trade. But make no mistake, it’s their decision; in the short run this is their game.
Longer term, of course, is a very different story. Fundamentals always win eventually, and with the whole world on a borrow/print/lie-about-it binge, gold’s fundamentals just keep getting better. Excessive debt leads to currency war leads to soaring gold. And when the paper players are finally overrun by physical demand, the people who have been quietly accumulating bullion and high-quality mining stocks will barely remember this month’s drama.