The Phaserl


Precious Metals: Fake-Rally Ends, Hostage Markets Return

by Jeff Nielson, Sprott Money:

Back at the beginning of 2009, we had a real rally in the precious metals sector. The price of gold increased by roughly 2 ½ times. Silver led the way, rising more than double that amount. And the precious metals miners soared much higher, leveraging the gains in metals prices – as they must do, in any legitimate rally.

The rally occurred immediately after the Crash of ’08, the manufactured crash at the end of the Big Banks’ previous bubble-and-crash cycle. It occurred after a sharp, ruthless take-down of precious metals prices had established a clear “bottom” in those markets. That rally was terminated in 2011, by the Big Banks, in one of the most-obvious price-capping operations in the history of markets.

What has followed is 5+ years of what has previously been referred to as “Hostage Markets” : markets which were kept in a permanent choke-hold since that date, with prices grinding steadily lower and lower. This brings us to the beginning of 2016.

At the beginning of this year; the price of gold did something which we had not seen for several years: it went up. At the beginning of this year; the mainstream media did something which we had not seen for several years: it began praising gold as an asset class – and announced that “a new rally” had begun. The talking-heads proclaimed that the “fundamentals” for gold were now bullish, and thus the price should start to steadily rise.

There was never any reason to consider this to be a real, spontaneous rally, and several strong argumentsto conclude that this was an upward price-fixing operation of precious metals prices, to set the stage for a larger, general crash, at the end of the current eight-year, bubble-and-crash cycle from the Big Bank crime syndicate .

1) Nothing at all has changed in precious metals markets (except the rhetoric of the mainstream media) versus the last 5+ years.

2) Silver has failed to “lead the way”, as it must in any/all legitimate rallies.

3) The Big Banks remain in complete control of all markets.

Taking these reasons in order, mainstream propagandists have proclaimed that precious metals markets are now supported by bullish fundamentals. However, the “fundamentals” for gold and silver have remained equally bullish throughout the 5+ years where we were forced to endure Hostage Markets. In other words, any “reason” that could be made for gold and silver prices to rise now was equally valid, at all times over the past 5+ years.

“Technical analysis” (a pseudo-science with little statistical validity) would argue that the reason we are supposedly seeing a rally in 2016 is because gold and silver have “built a base” over the past 5+ years, and thus are now “ready” for the next leg higher, in their long-term bull market. However, this argument only applies to asset classes which have already risen to fair-market value.

In 2011, even after the large 2+ year rally in these sectors, neither gold nor silver was even close to any fair-market price . As “monetary metals” the primary fundamental of gold and silver is that their prices mustreflect any/all increases in the supply of money (i.e. “inflation”).

When B.S. Bernanke perpetrated his infamous “helicopter drop”, printing U.S. funny-money at an astronomical rate, never before seen in any large economy in modern history, he ultimately quintupled the U.S. monetary base. The price of gold would have had to duplicate this quintupling, as a starting point, before one could even begin to consider this a fair-market price.

At the beginning of the Bernanke helicopter-drop, gold was priced at roughly $800/oz. This meant that the price of gold would have had to rise to at least $4,000/oz (at a minimum) before it would/could be necessary for the market to “build a base” (to support even higher prices).


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3 comments to Precious Metals: Fake-Rally Ends, Hostage Markets Return

  • DDearborn


    Great article. You hit the nail on the head. The very same reasons that the “financial establishment” used to justify gold/silver decline is now being used to justify its rise. All the real world reasons for gold to now be trading above $3000 like the untold trillions of dollars pumped into world markets by the Fed since 2008, the massive real unemployment, collapsing growth etc. are studiously being ignored now, just as they were when the establishment knee capped the metals in 2011. If ever there was proof that US markets are rigged, the totally unbelievable price movement of the metals over the last 5 years is it. Of course the fact that a whole host of financial institutions have recently admitted under oath in court that they were in fact colluding to rig gold and silver prices should have given the media a clue. We may never know the real reason.

    A family matriarch once quipped when a disgruntled relative asked her about her rational behind the inequitable timing and distribution of funds within the family. Specifically, wanting to know why weren’t funds being distributed equally. She responded with genuine surprise; “Where is the fun in that”. Perhaps it really is that arbitrary and capricious. Who knows. One thing is for sure, by all rights, gold and silver should be one hell of a lot higher, and the dollar one hell of a lot lower right now.

  • E.

    The end of free financial markets heralds the end of our personal freedom.
    Let’s face it: we are being hypnotised by computer algorithms.

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