Central Bank Gold-Grab Intensifies Further, Part II

Jeff Nielson: In Part I, readers had revealed to them the latest chapter in Western bankers’ newfound love-affair with gold. Indeed, as central banks around the world swap their own paper for gold at the fastest pace in history, it’s quite clear which monetary asset these charlatans really believe is a “barbarous relic.” After bad-mouthing gold for decades (and continuing to get their media trolls to attempt to frighten people away from gold today), we are currently witnessing history’s greatest “bash and buy”.

Both European banking authorities and those in the U.S. are now proposing reclassifying gold as a “Tier 1” financial asset. As was previously noted, this would have the effect of instantly making gold twice as attractive and twice as valuable to all of these large, Western financial institutions. What makes these developments especially interesting at the present time is that they are occurring at the end of another long period of sideways trading in the gold and silver markets.

Throughout this 10+ year bull market, these temporary periods of sideways price-action where the bankers are able to trap gold and silver within trading ranges have preceded the largest/longest rallies over the past decade – where gold and silver prices smash through all previous (nominal) highs. While the bankers are typically the last to notice and understand the consequences of their relentless manipulation, if you hit a dog over the nose with a rolled-up newspaper enough times, eventually the dog will get the message.

Thus the bankers themselves know their “fun” has nearly come an end (at least for an extended period of time), and they will have to once again sound the retreat on gold and silver prices. Being greedy (above all else), these banksters manage to be quite pragmatic: when they know that gold and silver are set to blast-off once again, many of them like to come along for the ride.

So, with a long period of sideways trading in the precious metals sector nearly at an end; with the bankers themselves in the process of reclassifying gold to make it much more valuable (for themselves); and with the bankers having a known tendency to switch sides and jump on the bandwagon (for short stretches); now is the time for all savvy precious metals investors to empty-out their bank accounts and sink every last dollar into silver and gold. Right? Not so fast.

There is, in fact, only one thing that the banksters like to do more than make money, and that’s to be able to make money while simultaneously whipsawing other investors (and hopefully totally destroying them). As a result, the banksters have come up with a particularly fun game that they like to play called Bait the Chumps.

It’s actually a really easy game to play when you are given complete and utter freedom by both government and “regulators” to rig/manipulate markets. First you target a sector with especially bullish long-term fundamentals – meaning that precious metals is the banksters’ favorite playground for this game.

Then, at a time when investors are already sensing that a rally is imminent you send out some really obvious “bullish signals”. Then you simply wait for the mice to take the cheese. Once the rodents have all latched onto their fromage, you spring your ambush. All the greedy, new “longs” who went out and leveraged themselves to the hilt on margin because they “knew” the sector was about to take off are instantly obliterated.

The downward momentum this creates then makes it possible to blow even moderately leveraged traders out of the water, and so the dominoes fall. With the whole market expecting a sector to “zig”, the bankers simply rig a “zag”. This is a classic win/win for these Vampires: not only do they get the tactile pleasure of destroying other investors, but the downward price action generated in the process then allows the bankers to do their own buying even cheaper.

“Aha!” thinks the Crafty Gold Investor to himself. With the bankers getting ready to play their old “zig/zag” game again, CGI decides to short the market. Then CGI will also get his own win/win, and can brag to all his friends about his ability to “trade with the Big Boys.” Sadly, most of the CGI’s in the world end up quickly becoming exposed to another acronym: RIP.

Putting aside convoluted scenarios where there is some feint-within-a-feint, there is one very good reason why we should never attempt to anticipate the bankers’ shorting escapades in the bullion market and attempt to mimic/join them: because they often fail.

When the bankers manipulated gold below $300/oz and silver to under $4/oz, they did not do so with the long-term objective of marching gold to $2,000/oz (and eventually much, much higher) and marching silver to $50/oz (and eventually much, much higher). Rather, the reason why gold prices are six times higher than their absolute low today and silver prices are eight times higher than their absolute low today is because the bankers have repeatedly failed to contain prices – despite their best efforts.

There is only one thing more idiotic than being part of the gigantic flock of Lambs being led to the Economic Slaughterhouse: being a gold/silver investor who is smart/savvy enough to position themselves in this sector prior to the slaughter, but still managing to lose money on their gold/silver investing. Hopefully astute readers have already deduced the “moral of the story” here, however for those still not clear on this point I’ll connect the dots: never try to anticipate the next move in a rigged game – when you are not the one doing the “rigging”.

Simply by converting much/most of our wealth from “leaky” paper to (eternal) silver and gold, we will do much better for ourselves than the vast majority of the Lambs. We have no need to attempt to aggressively out-guess the next move in these markets, and then gamble accordingly.

That is not “playing defense”. There is nothing more foolhardy than to adopt a strategy which is totally inappropriate for the game that one is playing. We neither created this game (of theft-by-currency-dilution), nor do we have any input at all in the (crooked) rules. Given these realities we must adapt to the parameters of the game, or perish.

Knowing that the precious metals sector is ripe for another major rally; knowing that the bankers are currently sending out some very “bullish signals” on their own plans for this market; what do we know about the direction for gold and silver prices over the short term? They will either go up, or they will go down.

Obviously this is not what readers are wanting to hear. However, I’m not here to pander to people, I’m here to inform them. We can never “know” where gold/silver prices are heading over the short term. Period. Placing large bets on mere probabilities is not investing, it is simply gambling. That’s the bankers’ game.

We must never use margin. We must never try to out-guess this (rigged) market. We must never place large bets (all at one time).  We must react to trends, not make guesses based on hunches. The former strategy is our path to Financial Salvation, while the latter gambit is nothing more than playing a game of Russian Roulette with one’s financial future.

Jeff Nielson is from Canada and is a writer/editor for Bullion Bulls Canada www.bullionbullscanada.com. He has a personal background in law and economics. Bullion Bulls  C

anada provides general macro-economic and political commentary,  since the precious metals markets are among the most complex (and  misunderstood) in the world.

Bullion Bulls Canada also provides basic coverage of Canadian precious metals mining companies. Canada is the global leader in mining exploration, and Canadian-listed mining companies (on the Toronto Stock Exchange and Venture Exchange) are responsible for the majority of the world’s most-promising discoveries.

Source: http://etfdailynews.com/2012/07/26/central-bank-gold-grab-intensifies-further-part-ii/