No surprise in recent moves in gold and silver markets

March 8, 2017 01:59 PM

Given the big down move this week in the precious metals, it would certainly follow that the activities of the Commercials would be no surprise. They matched all of the demand brought to bear on the Crimex gold pit by selling over 40,000 contracts representing over 4,000,000 ounces of synthetic gold, and then nudged the gold market off the ledge. They did it with much-revered aplomb, but nowhere more daunting than in the nearly $1.00 collapse in silver that had the blogosphere buzzing last week.

After several decades of this maddening collusion, nothing surprises me anymore. To have an order executed with such virulence and total disregard to "Best Price Possible" is a clear signal from the ruling elite that removing fiat currency from the system in favor of real money will not be tolerated. To deplete your bank balance at your local Fed-member bank is considered to be blasphemy in the religious order of fiat worship, because every dollar you deposit of your own fiat allows the bankers to play around with ten to fifteen times that in discretionary deal flow and trading. The more fiat you remove in favor of real money, such as gold and or silver, the less room (leverage) the banks have to "play."

ballangercover3-8The Indian central bank has been battling this for decades because Indian citizens have grown accustomed to watching the purchasing power of their currency evaporate under the debasement regimes of central bankers. In other words, by removing cash from your bank, you are taking cash from the pockets of the bankers, and nothing removes cash quicker than gold and silver because when it leaves, it leaves for good, and that is an anathema to the banking brethren.

I have been warning all of you against rushing to replace your miners (HUI) and the various ETF positions due to the numerous dead-cat bounces since the breakdown in late February, which were the same type of bounces that lured me back in too early on previous occasions.

All charts courtesy of Michael Ballanger

Whenever I ignore the optimum entry point for the RSI (relative strength index), I end up getting punished. So, here we are at 31.29 for the HUI's RSI, which is, incidentally, the very place where they have turned in earnest since the bottom in late 2015. Now, the vast majority of letter writers here at the PDAC in Toronto are unanimously insinuating that gold "might" have a corrective phase in here, corresponding to the seasonal tendency for downside in March-April.


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About the Author

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance.