The Incredibly Bullish Set-Up for Gold

Thursday, October 18, 2018
By Paul Martin

By: Michael Ballanger
GoldSeek.com
Thursday, 18 October 2018

Precious metals expert Michael Ballanger discusses the bullish set-up for gold and why he believes this time is different.

For the first time in months, Fido the Wonder Dog has been in my office and at the foot of my bed 24/7 for the past few days giving me great solace that the current advance in precious metals prices is here to stay. Gone are his nervous tics every time my chair squeaks or when I give a little “Whoop-whoop!” at the sight of decent gold quote and most certainly absent are all of the caked mudballs in his fur from having to sleep (hide) under the tool shed.

It was only last February that I found myself waking up to the sight and sound of my faithful pet soundly (and safely) asleep at the foot of the bed. Those were the days of gleeful celebration in the certainty of a $1,400 breakout as gold was being heavily promoted by all of the letter writers and bloggers and Bay St. analysts with the HUI (NYSE Arca Gold BUGS Index) was around 210 and all seemed right with the world. However, that fateful morning when I woke up to see gold down $10 to $1,365 after enduring yet another “failed breakout” and was about to slam my chair into my desk, I suddenly stopped because that was Fido’s favorite locale during the day. To my astonishment, he was outside my main floor den window, looking in at me with a stressed look on his face and tail firmly between his legs. As I was about to admonish him for his absence, he suddenly turned on a dime and tore off towards the tool shed as if fleeing from a mountain lion, whereupon I was devoid of dog for what I am sure was the entire month of February, during which, I might add, the HUI crashed from 210 to 168 and gold cratered from $1,365 to $1,301. The direct correlation between the future trends of gold and silver prices and the future living accommodations of my dutiful dog was then and remains today intact. With gold in its current rally mode, it is as if Fido senses a buried and very dead fish in the ground and is reveling in the mere thought of rolling in it. Ergo, gold is going higher—MUCH higher. (Fido takes a bow.)

What the Fed is attempting to do is remove the punch bowl during a time when rising domestic prices are empowering the labor force to demand wage increases but since outsourcing (and the threat thereof) has crushed any and all leverage for North American workers, they are making a mistake. The Federal Reserve Board and all of its global central bank brethren are REACTIVE in their policy moves; they are never PREDICTIVE. They are simply trying to manage the bubbles now floating in the global atmosphere and ensure that they are not going to cause anything close to the panic that gripped the world in 2008. The problem with that is the sheer magnitude of the fiscal impropriety of governments and by that I mean ALL governments whose experimentations and speculations have disrupted the natural order of Darwinian economics and created an ocean of moral hazard the likes of which we shall never again encounter.

If there were no central bankers out there tampering with the natural ebb and flow of goods and services for the enrichment of the elite classes (née bankers), they would never have to arbitrarily set the Fed funds rate or have a meeting to discuss economic policy. I have written about this before but the boom/bust nature of capitalism that is the Battle Hymn of the Socialist State is not caused by big business or billionaire entrepreneurs with black top hats and handlebar mustaches; it is caused by corrupt politicians and even MORE corrupt non-elected, government administrators appointed to positions of power on a platform of protecting the elite classes by way of bureaucratic edicts and rules and regulations raising the barriers to entry and lowering the barriers of abuse.

The problem today lies in one word—DEBT. DEBT is the leviathan lurking beneath the waves of economic stability. It used to be self-cleansing, in that countries that went to war (such as Great Britain) without the resources to finance a campaign usually lost their status as purveyors of the world’s reserve currency because in order to maintain their military advantage, they were forced to extend their budgets beyond their means by way of DEBT. It crushed the once-thriving German economy in the 1920s (War Reparations Act) and the British economy in the late 1940s (debts owed to America) and the U.S. economy in the 1970’s (Vietnam) before the Americans figured a way to flood the world with U.S. dollars thus ensuring the longevity of its reserve currency status and minimize any need whatsoever for fiscal prudence or monetary accountability.

The Rest…HERE

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