The Most Resolute Precious Metals Bulls

I don’t normally write twice in a day.  However, it’s late Thursday afternoon and after watching what could be the “beginning of the end” of three-plus years of money printing, market manipulating, propagandizing infamy, the title of a recent article continues to reverberate throughout my head.

Following yesterday’s disappointing ADP report and wildly dovish FOMC statement, we started the day with the extremely ominous news that the Portuguese bank crisis is clearly not “contained”; the sovereign nation of Argentina defaulted, and the U.S. push to provoke Russia will clearly have no bounds.   And then, the utterly shocking news that the one of TPTB’s last remaining propaganda “safe harbors” – i.e., the Chicago PMI index – collapsed from 62.6 in June to 52.6 in July.  No that’s not a typo, as the so-called “proof” of economic “recovery” that was this soaring “diffusion index” was shattered like a piece of glass in a Colorado hailstorm.

The day just ended with the “Dow Jones Propaganda Index” down 316 points or nearly twice the PPT’s daily “limit down” of the past three or so years; and given ADP’s seemingly sole aim has become “goal-seeking” its way to the BLS’s methodology – likely, using the same unsubstantiated “adjustments” – it would appear difficult for the BLS to somehow report a significantly “better than expected” NFP number tomorrow.  And even if they do, with a frothing PPT following it up with as many markets stabilizing buy algos as possible, the fraud involved would likely be seen right through; let alone, the horrific internals that have characterized every NFP report since the global economy broke in 2008.

As usual, TPTB were busy enforcing “Cartel Rule #1” today; i.e., “thou shalt not allow PMs to surge whilst the Dow plunges” – starting with their initial attack at the 8:20 AM COMEX open, to another when PMs threatened to go positive around the 12:00 PM “cap of last resort,” to a final smack down in the day’s final minutes when gold and silver again threatened to rise sharply in the face of plunging equity markets.  Silver actually closed above both its 50 and 200 day moving averages whilst gold closed barely below both.  All in all, pretty good performances during a “hell week” featuring nearly all imaginable “key attack events,” from Monday’s COMEX options expiration, to Wednesday’s FOMC meeting, to tomorrow’s NFP report.  However, the reason I’m writing this short missive is to highlight a June 25th article written by technical analyst Bo Polny, titled, “None but the Resolute Bulls will be Left Standing to Experience a Moon Shot to $2,000!”

As you know, I have very little faith in technical analysis in today’s 100% rigged markets, excepting ultra-long-term technicals that are nearly impossible to break down – as I wrote of in January, and Bill Holter last week.  Some people believe in technical analysis religiously; and in fact, given Jim Sinclair has posted Polny’s work on his website in the past, I wouldn’t be surprised if it is part of the reason he, too, believes $2,000 gold will be achieved by year-end.  Well, that, and what he predicted at the June 21st Q&A meeting he hosted in Denver; i.e., a “significant attack on dollar hegemony.”

Anyhow, it’s not the substance of the article itself I’m focused on – although, for the record, his claim was that gold (trading at $1,315/oz. at the time of publication) would have a steep decline “this summer,” followed by a surge to $2,000 by year-end.  Or, for that matter, his belief that no matter how steep said decline turns out to be the June 2013 bottom of $1,180 will hold.  No, I have little interest in such precise figures; but instead, the insinuation that only the “most resolute” PM bulls will survive it.

First of all, if the price of gold falls from $1,280 – where it closed today – to $1,180, it would represent a measly decline of just 7%.  Heck, gold started the year at $1,205 so at $1,180, it would barely be down.  Secondly, the further prices fall, the more likely Eastern physical demand will go berserk, and additional mining companies bankrupt.  But most importantly, since I only own physical gold and silver – much of it stored at Miles Franklin’s Brink’s facility in Montreal – there’s not a chance I’d even consider selling it even at prices far lower than $1,180.  Perhaps I might need “resoluteness” to maintain my sanity, but nothing could pry the physical metal from my possession certainly not such a paltry decline.

Conversely, if I held the majority of my PM assets in paper form such as mining shares, closed-end funds, open-end funds, or other direct or indirect proxies for gold and silver prices, the possibility of significant losses would be very high.  Believe me, I know, as before moving 100% to physical metal in Spring 2011, there were a time when sold at the lows due to Cartel-inspired fear.  In fact, I wrote of this very psychological trauma last Spring, in “the Holy Grail of the Financial World – Revisited.”

To conclude, only you can decide how to best invest your assets.  However, in a world potentially on the brink of an historic financial cataclysm, the argument for “financial defense” has never been stronger.  Owning physical gold and silver not only have you protected yourself with the only time-honored anecdote to inflation, but not a single ounce of “resolution” is required to do so!

http://blog.milesfranklin.com