Financial World Is A House Of Cards Built On Sand

(H/T Gold Silver Worlds)

Take heart PM community, your turn is coming. What is happening in the stock market is a harbinger of what is sure to come for gold and silver, at some point in the future. When? Ah, that elusive question the answer to which so many want to know, the same answer to which so many so-called prognosticators have serially gotten wrong over the past few years. The best answer is patience.

It is highly unlikely that a single bank, at least in the Western fiat central banking system, is solvent. All, repeat, all banks are insolvent, propped up by the Rothschild system that few can successfully challenge. All banks exist by accounting deceit and every kind of threat, indirect or otherwise, that it is not wise to challenge the international banking cartel [on the verge of collapse]. Russia and China are rising to the occasion rather timely.

What is the result of “printing” trillions upon trillions of fiat currency? While it has not yet played itself out, due to market distortions by “The Powers That Be,” history shows that all fiat paper currency systems fail. Is it any different this time around. No! The only thing “different” would be the mechanics of how the Western system will fail. A combination of computers and the internet have given the elites a decided upper hand that has enabled the “disenabling” system they run an extended life, if you will, in their ability to perpetuate fiat deceit.

As an aside, most people are totally unaware of the extent to which the elites have been able to dominate every facet of human life on this planet. Control is not a strong enough word to describe the extent and depth of the evil they wrought in their utterly corrupt ambitions to rule as a one-government New World Order.

We believe we have a degree of insight on some of the ways in which events have been played out on the world’s stage, the coup d’etat against the United States by the Rothschild moneychangers, the final nail in the proverbial coffin being the takeover of the United States currency with the passage of the Federal Reserve Act in 1913, and the simultaneous abdication of Congress in its Constitutional duty to Article 1, Section 8: “To coin money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

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An Ebola Armageddon Could Trigger a Rebirth in Gold and Silver Prices: Eric Sprott

(H/T GoldSeek.com)

Source: JT Long of The Gold Report  (10/20/14)

Could an infectious disease kill the monster that has been choking gold and silver prices for more than a year? On the heels of a lively Sprott Precious Metals Roundtable discussion, The Gold Report caught up with investor Eric Sprott to ask how a tragedy in Africa could impact the price of precious metals and mining stocks. We also spoke to his Executive Vice President of Corporate Development John Ciampaglia about a new way to gain exposure to gold.

The Gold Report: Deutsche Bank warned in a recent note that the Ebola virus could impact commodity markets, including gold and cocoa, as it spreads to producing countries in West Africa, particularly Ghana and Mali. In a recent article titled “Ebola, The Tipping Point,” you mourned the unnecessary loss of life and predicted 5% less global production next year than this year. Could a lack of supply due to Ebola-related closures really cause the price of gold to rise?

Eric Sprott: There is already a shortage of gold and silver in the markets without a corresponding increase in the price. I wrote an open letter to the World Gold Council questioning its data on China. If you believe the Shanghai Gold Exchange data, China consumes more than 2,000 tons (2 Kt). In 2011, it consumed only about 1 Kt. In the last two years, China has bought an extra 1 Kt gold—25% of a 4 Kt market. If any country came in and bought 25% of the oil market, the wheat market or the orange juice market, the commodity price would not go down. Obviously, the physical gold market is not manifesting itself in the price changes.

We also see that in silver. Last year, Indians bought an extra 18% of the silver market, yet the silver price declined. That’s because the price is being run by someone who has avoided the physicality of the market. I hope the U.S. Mint will announce that it has to stop selling 2014 silver because the demand has picked up so much. That’s what I expect the Mint to do if it’s running out of silver. It would be interesting if some of these futures players were to stand up and demand delivery, because I don’t think the Mint could deliver.

Closing mines in Africa would just exacerbate the supply problem and cause things to finally change dramatically to the upside in prices as people publicly acknowledge the fundamentals.

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Precious Metals Getting a Temporary Reprieve

Gold closed last week below $1200 for the first time but has since rebounded from support at $1180. Silver has also rebounded but only after declining in 11 of the past 12 weeks. Precious Metals endured a very rough September and became very oversold. With Gold near its daily low and the gold miners (HUI, GDX) near their December lows, a rebound was probable. Precious metals bulls need to stay patient and disciplined as we believe this is an oversold bounce in a sharp downtrend until proven otherwise.

We plot Gold and Silver in the weekly candle chart below. First, we should note that triple bottoms (in the bullish sense) are extremely rare. Gold does not have the look of a triple bottom or reverse head and shoulders pattern. Over the past 15 months Gold has continued to make lower highs. The most recent high (this summer) indicated greater weakness as it reversed course before reaching trendline resistance. Meanwhile, note that Silver recently brokedown from what appeared to be a triple bottom. Silver has declined in 11 of the past 12 weeks. It could rebound back to previous support in the mid $18s before resuming its downtrend.

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The U.S. Government’s War On Gold: It Will Fail

Before I turn to the title topic, I wanted to mention that one our portfolio holdings, Chaparral Gold, is being acquired for $66 million in an all cash deal.  The price represents about a 20% premium to yesterday’s closing price.  Chaparral is a Nevada-based junior exploration company which potentially has several million ozs of gold.  I bring this up because one of my research report ideas is actually up 12% since this latest attack on gold started in mid-July and since the time I posted the report at the end of August.  I plan on redeploying some of gains from Chaparral into more of this stock today.  The stock is getting hit today in this general equities melt-down and I think it’s a great time to start, or add to, a position.   You can access the report by clicking on Mining Stock Reports or on this logo:
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My friend, colleague and technical analyst extraordinaire Nick of DenaliGuide’s Summitdrew my attention to an incredible correlation between the credit rating downgrade of the U.S. Government’s Treasury debt and the renewed war on gold.  He actually sourced the idea from the Wealth Watchman blog and I find it to be an extraordinary insight.

The Egan-Jones ratings agency, which I have found to always have been the most authentic and credible – and the only one that has not sold out to Wall Street –downgraded the U.S. from AAA to AA+ on July 18, 2011.   The price of gold was roughly $1570 and it abruptly ran up close to $100 by August  6, 2011, which is when S&Pdowngraded the U.S. from AAA to AA+.  Moody’s, of course being owned by Warren Buffet and who is of one the Government’s puppeteers and infinitely unethical and corrupt, has never downgraded the U.S. debt rating.   After the S&P downgrade, gold quickly spiked up and over $1900 and the fate of the U.S. dollar was in question.   This graph below shows the time sequence of events (click to enlarge):

WarOnGold

In less than 3 weeks after the S&P downgrade, after gold’s initial spike to $1900, the Government’s renewed war on gold began. The reason for this is that, in the face of trillions being printed by the Fed and trillion dollar deficits being incurred by the Government, gold was about to take out $2,000. This was a milestone that would have likely triggered a flood of capital into both physical gold in this country and into the futures. A move like this would have destroyed the credibility of the U.S. dollar as the world’s reserve currency. It further would reflect the actual truth regarding the collapsing economic/financial condition of the United States.

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Gold Price: Are We At The Preface of A Significant Rally?

In our article on September 23 we postulated that gold seemed to be setting up for a triple bottom, but it was too soon to tell for sure. As of this week gold has reached the level of support drawn from the two previous bottoms, and it has bounced off that support. It is not yet a robust bounce, but it is at least a first small sign that a long-term bottom may be forming.

In the chart below we can see the three bottoms that have formed at about the 1180 level. The recent bottom is not very prominent, but it hints at the possibility of a continued rally, and shows a window of opportunity beginning to open for gold bulls. The negative part of this picture is that the support line is part of a consolidation that is called a continuation pattern, which implies that it is just a pause before the preceding decline continues.

gold price daily 2007 October 2014 price

The indicator at the bottom of the chart shows that sentiment for gold is still negative. Central Gold Trust (GTU) is a closed-end fund that owns gold, and, because it is closed-end, its shares which trade like a stock, can trade at a discount or premium to the actual value of the assets the fund owns. Because GTU is selling at a heavy discount to net asset value, we know that traders are not at all anxious to own gold. What we want to see is for GTU shares to start selling at a premium, because that will help confirm that any rally has market sentiment on its side and is likely to persist.

Essential to the continued strength of gold is the continued weakness of the dollar. The next chart shows that the dollar, which experienced an unusually sharp advance, has begun to break down.

dollar daily 2013 October 2014 price

 

However, the weekly chart shows that this weakness may only be a technical pullback after a long-term breakout.

dollar price weekly 2008 October 2014 price

Conclusion: Thanks to a sharp pullback by the dollar gold has managed to bounce off an important support line, and offers the possibility that another rally is beginning, a rally that could end the long decline from all-time highs. It is a time for increased attention for those who want to catch the next gold rally.