Gold Prices Will Keep Rising Because Crash Conditions Are Becoming Obvious…”I think the next rally in metals will far surpass the 2008 event.”

Saturday, September 7, 2019
By Paul Martin

Brandon Smith
Saturday, 07 September 2019

The price movements of precious metals are difficult for some people to understand. In the world of equities, investors are mesmerized by tickers day in and day out, and market movements occur minute by minute. This realm of investment teaches people to shorten their memories, their attention spans and their patience. In the world of gold and silver, however, investors buy and sell according to cycles that last years – oftentimes decades. It is the complete antithesis to stocks.

This is why gold catches a lot of ignorant criticism at times. The “barbaric relic” does not behave the way day traders want it to behave. It sleeps, they ignore it or laugh at it, and then it explodes. It is not surprising that your average stock market player is usually caught completely off guard when an economic crisis hits Main Street, while the average gold investor already saw the event coming many months in advance. The gold mentality lends itself to caution, observation and historical relevance. The stock market mentality lends itself to carelessness and the denial of history.

I would acknowledge here that there is plenty of evidence of paper market manipulation of gold and silver to the downside by major banks like JP Morgan. Any investor in metals should take this into account. However, it is also important to realize that in moments of economic uncertainty, the physical market can and does overtake paper manipulation, and prices rise anyway. This is exactly what happened in the lead up to the 2008 crash, and it’s happening again today.

Gold and silver have had an exciting run in the past couple of months, and this is taking place exactly because precious metals are doing what they are supposed to do – act as a hedge against economic instability. This is where I see a disconnect in the mainstream media and the stock market pundits in their explanations for the gold rally since July.

The economic media and some in the alternative media expected gold to take a dive in July. Why? Because they also had high expectations for Fed Chair Jerome Powell to massage the markets with an ample interest rate cut and promises of stimulus measures in the near future. This did not happen. Instead, market investors were shocked to hear Powell deny any need for renewed quantitative easing (QE) and they were greeted with a marginal 0.25% cut in rates with no guarantees that any more cuts were on the way.

In August, this message was reiterated at the annual Fed Jackson Hole meeting, and multiple Fed officials indicated that the central bank has no intention of introducing new stimulus, and that aggressive rate cuts are unlikely.

Currently, the Fed continues to hold rates near their “neutral rate of inflation”, they are still cutting assets from their balance sheet despite claims that they would be stopping early, and the Fed funds rate is currently the single HIGHEST rate of all central bank rates in the developed world. Global dollar liquidity is drying up and mainstream analysts are practically begging the central bank to reintroduce stimulus measures.

The Fed also continues to make the false claim that US economic growth is “strong” and that a recovery is still underway, despite the fact that the yield curve has flattened to levels not seen in over a decade, housing sales are falling, auto sales are falling, retailers are expecting store closures of over 12,000 outlets this year, US freight is grinding to a halt, US manufacturing PMI is the weakest it has been since 2009, etc. Some of the Fed’s own data is showing a recessionary storm is about to make landfall, despite all their statistical rigging, and yet they ignore it completely and repeat the mantra that “all is well”.

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