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Golden Bullseye

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Published : May 16th, 2013
426 words - Reading time : 1 - 1 minutes
( 18 votes, 4.7/5 ) , 5 commentaries
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Category : Editorials

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:

The Golden Bull & Price Pullback Gift

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:

24hGold - Golden Bullseye
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.

Companies Mentionned : Bullion |
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John Rubino is the author of The Coming Collapse of the Dollar (co-written with James Turk), How to Profit From the Coming Real Estate Bust (Rodale, 2003), and Main Street, Not Wall Street (William Morrow, 1998). A former Wall Street financial analyst and columnist with theStreet.com, he currently writes for Fidelity Magazine and CFA Magazine He lives in Moscow, Idaho
Latest comment posted for this article
I don't believe they are either, I didn't say that. I was just pointing out that HSBC have bought a considerable amount of Silver, which speaks for itself really. So, why wouldn't central banks buy Silver? We know how corrupt they are, helping others t  Read more
Will_ISN - 5/21/2013 at 11:21 AM GMT
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Now here is an article with real credibility.
Thanks for simplifying the market for gold futures and the short term and long term driving forces. As a silver mine investor I see the same short term driver for silver contracts (almost the same as gold), but long term differently for silver. No central bank is going to load up on silver bars, so the long term driver is manufacturing, medical, battery, low priced jewelry and poor man's inflation hedge. Like silver eagles and the like, if ENOUGH silver coin buyers and miners would buy up or hold up the mining outflow, the other users would soon drive the price up, because the actual stored number of AVAILABLE silver bars are manufactured to insure the continued market manipulation. I have found myself becoming more of a skeptic about the honesty of the system as I grow older and become better educated by people such as Mr. Rubino.
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Why would no central bank load up on silver bars? Where do you get that strange idea from? HSBC bought over $850 million worth of silver bars from Poland.
I don't believe HSBC is a central bank. Obviously Poland was trying to rid themselves of a large storage problem that gold of equal value could easily solve. I meant to say any central bank of a major economy is using silver as a storage or backup to its currency. The US mint is trying to get silver to mint coins and bars for US citizens. It sounds as if the US would coin any silver laying around in its treasury. As far as gold goes, does anyone know if the gold held by the US and owned by the US is still accounted for publicly. Or has the JPM and such borrowed it to serve their speculation interests. Thanks for letting me know POLAND HAS SOME SENSE BUT NOT ENOUGH TO KEEP ITS SILVER HOARDE WHEN THE BIG PRICE INCREASE COMES!
I don't believe they are either, I didn't say that. I was just pointing out that HSBC have bought a considerable amount of Silver, which speaks for itself really.

So, why wouldn't central banks buy Silver? We know how corrupt they are, helping others to force the price of precious metals down, especially silver. It goes down to the required price for them, they buy, the price goes up, BOOM, nice little earner plus a store of wealth as they know the printing can not carry on. They have no choice but to print more and they know what effect it's ultimately going to have. Acquiring Silver is a great asset for them.