Gold’s history as a store of wealth goes back millennia. Wealthy rulers, merchants and property owners might have their wealth spread among livestock, merchandise and property. Of course, for transporting wealth, nothing compared to precious metals and jewels.
With the recent move upward, many are expecting hedge funds to be looking at metals more closely again. As bullion prices begin approaching what many consider to be a topping pattern, there is the possibility that hedge fund managers, who haven’t been in the metals’ market heavily recently, may pour some more fuel on the current movement.
Evidence of hedge fund interest includes the shallow drops we’ve seen in metals as they’ve moved up. This represents buyers jumping in on dips, attempting to get the best prices they can. If this action continues, prices can only continue upward.
Gerald Celente has some thoughts that might thwart such movement, however.
They (central planners) are going to destroy the money, and they are going to do everything to try to keep the gold and silver markets down. You see what’s going on in India, how they are making it more and more difficult for people to buy gold because the rupee is collapsing. So the governments around the world are going to do everything they can to stop people from buying (gold). Anything could happen at any time.
But is that stopping Celente from stocking up? No, not at all. In fact, he’s more concerned with the state of the economy and rampant printing habits than any effort the central banks may exert against metals.
What’s shaking out is that the European Central Bank, in their arcane language, has basically said, “We are going to buy up all of the worthless sovereign debt that Italy, Spain, Ireland, Portugal, and any other country in the eurozone that gets in trouble, we will continue to buy up that worthless debt.” Now where are you going to get the money?
“Well, we stole it all from the people already through austerity measures. They don’t have much to give us anymore. I tell you what we’re going to do, get those printing presses rolling. That’s right, heat them up and let them go.” They said they are going to do it continually to keep propping up the falling eurozone from collapsing.
You can listen to the French President, Hollande, and the British Prime Minister, Cameron, even though the UK is not in the euro, they are pushing for more worthless bond buying as well. So as long as they keep printing money abroad, and at home, gold prices keep going up.
As Bill Haynes notes:
These markets are bigger than the manipulators. There just comes a time when the manipulators have to step back and let the market go where it wants to go. Then they can look for an opportunity, if they want, to go in and do some manipulation.
But the thing we have to remember, when silver was below $5, and gold was below $300, there were a huge number of people who said gold could never go up because of the manipulators. And they said that all the way up. They’ve been saying that for the past 12 years. In the long-run, the markets will win out.
Eventually Bill will be proven correct. Manipulation can only go so far. As many state, it seems more like a controlled ascent than true manipulation. Be that as it may, there does appear to be central banker involvement in the metals’ markets both on the bullion and ETF level. The uncovered positions in GLD and SLV are enough to make that point clear.
But the pressures of the market will ultimately have their day. Timing is key to this, and impossible to predict with any degree of certainty. For now, we mentioned last week that we’re expecting a consolidation in the near future, probably by the end of this month. But that should be followed by a new surge that possibly will provide new highs by the end of the year.
Nothing is guaranteed. Prices are moving upward right now, on almost a daily basis. Watch and see what you think about today’s market. Read our past thoughts. Call Goldco Direct and develop a plan. Regardless of whether you do so today or next month, we all should be accumulating some precious metals for the long haul.
For your prosperity,
J. Keith Johnson
The Gold Informant