The Charge Of The Bullion Banks

October 31, 2021

“Storm’d at with shot and shell,
While horse and hero fell,
They that had fought so well
Came thro’ the jaws of Death,
Back from the mouth of Hell”

(“The Charge of the Light Brigade” – Sir Alfred Lord Tennyson)

In case you had not yet noticed, there are some weeks where my patience and resolve pertaining to the maintenance of an overweight position in junior gold and silver developers is severely put to the test. As a case in point, one of the tried-and-true disciplines for avoiding whipsaws (in those markets that appear to be reversing a prior trend) is the “two-day close” rule. Because the bullion banks just love to manufacture chart patterns designed to lure in a maximum of armchair tape-readers, they will purposely nudge gold or silver through a resistance (or support) point only to wait for abnormally-high volumes to commit to that pattern with accelerated order flow. Then, at the point where they have filled their books with the other side of the trade, they will then lower the boom and move price in the opposite direction and usually in an exaggerated manner.

Such was the case this week when gold was “allowed” to close on both Wednesday and Thursday above the magical $1,794 level. It gave literally every gold and silver bull a false sense of bravado that this 100-dma magnet was finally in the rear-view mirror and a large flashing green light lay directly ahead. Alas, as that big red candle clearly shows, the bullion bank behemoths faded the breakout with mind-boggling finesse and as can be seamlessly executed by only those expert NY Fed traders, they slammed the market down to $1,772.40 shortly after the Crimex opening at 8:30 EST. Even a cynic such as I was impressed…

There really are no surprises here and certainly nothing that would serve as either a shock or a surprise but what remains is a resigned numbness. After all we have read and heard from the original champions of market integrity like GATA founders Bill Murphy and Chris Powell concerning this malodorous campaign to suppress the monetary metals. Day-in and day-out, they have detailed the relentless slamming of unregulated heels of hobnail boots into the throats of hard asset disciples only to have their findings fall on the deafest of ears and most inattentive of eyes. It is no wonder that Millennials and GenExers have said “No Mas” in Duran-like resignation for the unregulated safety of crypto.

Since you all have heard this pity party before, I will punctuate today’s narrative by reminding you all that when an irresistible force meets an unremovable object, “something’s gotta give” and in a case where these dedicated sellers are seemingly invincible, the dollar-denominated prices for gold and silver are being irresistibly forced to the upside not by fiat degradation so much as simple physics. Do you remember as a child when you tried in vain to stop a stream of water from a large puddle or creek from finding its way to a lower point? You could stomp your rubber boot in its path or pile up mounds of dirt or even large pieces of wood acting as berms but the water always reached its destination because everything revolved around gravity and physics. That is exactly the case for the precious metals; they are headed sharply higher and the more artificial resistance that is introduced, the great the ensuing move will be. Think slingshot; think whiplash; think Theory of Relativity where “for every action there is an equal and opposite reaction” but in the case of monetary metal price movements in an ocean of monetary debasement, that reaction will be staggering. The challenge for us all is timing and stamina which in due course a function of age and financial circumstances.

Metals markets are caught in a crossfire (with great reverence to the greatest blues guitar player of modern memory Stevie Ray Vaughan). The “deflationistas” claim that when David Rosenberg and Lacy Hunt are vindicated with the inevitable arrival of the deflationary tsunami, you had better be out of your gold and silver stocks while the “inflationistas” claim that you better own crypto and all of the electrification metals because they will outperform gold and silver. Reality, in my view, lies somewhere in the middle, snugly tucked between the wild-eyed anarchists and the laser-eyed crypto crowd.

I urge you all to read Adam Fergusson’s superb novel “When Money Dies” chronicling the 1920-1923 Weimar Republic hyperinflation where the poor got absolutely destroyed and the rich further enriched because the poor depended on the depreciating Reichmark as a unit of both compensation and savings while the wealthy owned stocks and bonds paying dividends and interest in non-Reichmark currency and were completely insulated from the ravages of policy-maker idiocy.

I am sure you all suspect this but it is essential that you all understand this: We in the civilized world are now in the early stages of the New Hyperinflation. Nobody has the right to tell you how to manage your finances, least of all the Federal Government, but government surely has exercised their Divine Right to debase your unit of labour compensation and unit of savings. By doing so, they have made it veritably impossible for new generations of educated citizens to retire student loan debt before they even think about buying a house. They have pointed a policy-defined shotgun at the head of pensioners and said “BUY STOCKS NOW!” in order to have them removed from the Mother’s Milk of compounded interest from government guaranteed bonds while programming our children to the necessity of owning only equity while the debt portion is rendered “irrelevant”. Absolute, total, mind-numbing insanity…

Disclaimer: This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.


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