To the casual observer of the gold market, all that happened this week (as we see metals prices surging strongly today) is that gold regained most of the ground it had lost following the brief-but-improbable plunge in the price of gold at the end of last week – where it was once again pulled below the $1600/oz level. However, such a superficial view of this market would ignore some very important dyanmics which accompanied this price action.

For readers who didn’t notice at the time, at the end of last week Moodys credit rating agency downgraded 15 of the West’s largest banks, virtually the entire banking cabal which is responsible for all of the fraud and financial mayhem in the world’s markets. Those who follow my regular commentaries know that the paper currencies and bonds flogged by these banks are all already essentially worthless. What the ratings downgrades highlighted (to the entire world) is that as all of this paper continues its inevitable journey to zero that the paper-peddlers (i.e. the Big Banks) will be making that journey to zero with it.

Thus we saw the reaction of the banking cabal: another all-out assault on the commodities complex. Not just gold and silver, but also oil was whacked by the bankers’ minions. How do you make worthless paper (and the fraud-factories which play with it) appear to be not quite so worthless? By making all the alternatives to that paper look as dubious/risky as possible. As with all the other short-sighted scheming of the banksters, it is a strategy doomed to failure.

What do we see as this trading week (and the month of June) draws to a close? The price of gold is almost back where it was before this latest attack on the commodity markets, but the downgrades of these bankers are permanent. While precious metals themselves may seem to be spinning their wheels at the moment, this occurs as the bankers’ empire of paper continues to crumble all around us.

Ultimately this is a game of patience and nerves. All that precious metals investors are required to do is to maintain their patience and keep their nerves steady, and they will win this game of attrition.

Before ending my first weekly wrap-up of the silver and gold markets in my new role as precious metals analyst for Silver Gold Bull, a few words for all of the especially downtrodden holders of silver seem to be in order. One of the ways we know the sector is currently in “bearish” mode is because it is clearly gold which is leading the way for silver, and not the other way around.

Conversely, throughout this 10+ year bull market, during virtually every significant rally we have seen silver leading gold. There are two reasons for this. First of all, astute investors know that in historical terms that silver is currently grossly undervalued versus gold (and pretty much everything else). Thus we should expect it to bounce higher than gold during the rallies on that basis alone. The second dynamic here is that silver is a much smaller market. What this means is that any time significant flows of capital enter the sector that this much smaller market is easily pushed higher and faster than the gold market.

So for those who tend to favor the Metal of the Moon (and I put myself in that category): hang in there. Once we get into “rally mode” again in this sector – and silver leaps back toward and above its recent highs – all you silver-holders out there will quickly forget these months of frustration.

A happy holiday weekend for all of our Canadian audience! Drive safely.

Posted in News By

Jeff Nielson