The Fed and Central banks are manipulating the gold and silver price because they are horrified that the biggest global BANK RUN in history will take down the entire system. Unfortunately, a lot of investors are still being misled about the fundamentals of precious metals market manipulation. While the Fed and Central Bank are indeed intervening in the gold and silver market, they are also propping up the majority of asset values across the board. This is especially true for most stocks, bonds, and real estate.
Yes, it is also true that billions of Dollars worth of paper gold and silver are dumped into the market in nanoseconds during very light trading days. Thus, the impact is to cap the gold and silver price, making sure that 99% of investors stay fast asleep. These are the very same investors who the Central banks are working extremely hard to keep their funds placed firmly in stocks, bonds, and real estate.
I continue to receive emails from individuals who believe the Central banks can push the price of gold or silver anywhere they, please. This is total RUBBISH. However, there is some method to their madness. It is a crying shame that there are still analysts out there misleading their followers with that sort of superficial nonsense.
All the Fed and Central Banks can do is keep the gold and silver price from exploding higher. They cannot push the value of gold or silver (too far) below its cost of production. Here is a chart from my previous article showing the gold price versus the top two gold miners (Barrick and Newmont) cost of production:
The gold market price was always HIGHER than Barrick and Newmont’s cost of production. So, as we can see, the Fed and Central Banks NEVER pushed the annual gold price below Barrick and Newmont’s cost of production from 2000 to 2016.
NOT EVEN ONCE...
This means, the notion that the Fed and Central banks can push the price of gold down to $500 or even zero, is total nonsense. They CAN’T do it, and they know it. Furthermore, I have older Homestake Mining Annual Reports from the 1970s. Homestake Mining was the United States' largest gold producer for more than 50 years. I plan on writing an article showing how Homestake’s cost of production increased substantially, along with the oil price, during the inflationary decade of the 1970s.
That means, the surging gold price during the 1970s was not due to increased demand, rather it was due to the skyrocketing oil price. Now, I am going to post these charts again, because it seems as if some folks are still a bit DENSE. Moreover, I have added another chart for KICKS & GIGGLES. Please take a close look at the following gold, silver, and copper charts:
According to these charts, the price of GOLD, SILVER, and COPPER have been tied to the OIL PRICE. While their movements are not exact, we can see that each moved in tandem with the oil price, especially during the huge surge during the 2000s. If we look at the new copper-oil price chart, we can see that the copper price, starting in 2003, moved up and down twice right along with oil.
EXTREMELY IMPORTANT TO UNDERSTAND BELOW:
Investors need to understand that the market “INNATELY” balances supply and demand over the long term. For example, the copper mining industry is not going to bring on twice as much copper supply onto the market as the world needs. Furthermore, the copper mining industry only makes a small percentage of profits to build production slowly. Thus, small profit margins LIMIT the growth of the copper mining industry.
This is the same for the gold and silver mining industry. While supply and demand play a small role in determining price in the short term, it is less of a factor in the longer term. The COST OF PRODUCTION is the leading factor in determining the price of GOLD, SILVER, and COPPER.
Now, if you read that, you would understand that the Fed and Central Banks CANNOT push the price of gold and silver (too far) below their cost of production. The only TRICK the Central Banks have is to CAP the precious metals prices. And the reason they do this is to make sure that the 99% of the WALKING DEAD keep funneling their funds into stocks, bonds, and real estate.
Despite All The Grand Conspiracies… Americans Still Living Life High On The Hog
I do realize that the American standard of living has declined over the past several decades. While many analysts believe this is due to the ELITE stealing most of the wealth, it has more to do with the Falling EROI – Energy Returned On Investment. The falling EROI is destroying our LEECH & SPEND SUBURBAN way of life in the Good ole U.S. of A. That being said, I continue to see homes and business pop up all over the place. Sure, some areas of the country aren’t doing as well as others, but the restaurants, movie theaters, stores, and highways are full of traffic. Americans are busy moving everywhere and nowhere spending credit or money they don’t have.
Moreover, most Americans live in one of these diverse and classy suburban neighborhoods below:
The majority of Americans live in three-bedroom homes with two baths and all the modern appliances and amenities. A lot of the newer homes have four bedrooms and three baths. Now, all of these homes are stuffed full of gobs and gobs of furniture, TVs, appliances, and thousands of assorted clothes, books, electronics, and all kinds of trinkets and garbage. In addition, neatly parked in the garage of these homes, Americans have at least two cars. Although, easy finance has allowed some to be more fortunate to have three cars, a boat, an RV, and several ATVs.
Sure, the ELITE control more stuff today than ever… but so do AMERICANS. We have more CRAP filling our homes, garages, and storage facilities than we did 50 years ago. I mean… who in the hell stored their stuff in a private storage facility 50 years ago?? I would imagine very few. Today, if you don’t have a storage unit… something is wrong with ya.
Our motto used to be “As American as Baseball and Apple Pie.” Now it's, “Americans work jobs they hate to buy crap and garbage they don’t need.” Amazing what 50 years can do to a society.
Anyhow, if you think the Americans are the only ones perfecting the COOKIE-CUTTER Suburban housing development, think again. The Chinese have taken it one step further... LOL:
Yes, that is a real picture of suburban housing development in China. Talk about cookie-cutter. You can’t get any more identical than that. Well, on the other hand, you will see some blue color mixed in here and there. Some owners decided to stand out from the rest by installing a swimming pool.
Regardless, Americans have more stuff today than ever. So, things aren’t all that bad in West’s Greatest Empire when we compare ourselves to the poor slobs living in many other third-world countries.
Okay, so what does all that have to do with precious metals manipulation? Good question.
You see, the majority of the American’s wealth is tied up in STOCKS, BONDS, and REAL ESTATE. Also, these assets are where the Federal, State, and Local governments receive the overwhelming majority of their tax revenue. Rapidly falling values in any of the assets listed above are the DEATH KNELL for governments. So, it is in the best interest of the government to make sure Americans remain BRAIN DEAD when it comes to understanding real money such as Gold and Silver.
While many believe this may be a Grand Conspiracy to manipulate Americans, it’s not. Rather, I call what has taken place in the United States, decades and decades of WINGING IT. That’s correct. Shooting from the hip by growing and expanding our economy without any regard for wisdom, prudence, and long-term thought.
For example, individuals who live in a large metropolis like New York City, you have my sympathies. The picture below shows what a construction company had to deal with as it pertains to the massive amount of old underground infrastructure. Many of the water and sewer pipes in big cities are 50-75 years old. Well beyond their life expectancy.
Folks, we are in BIG TROUBLE and most Americans have no idea. Thus, the Central Bank market intervention is to keep this INSANELY COMPLEX world of ours going for another day, week, month, or year. Unfortunately, time is running out. Not because the Central Banks are running out of paper to print money, but because of the cheap and affordable energy that runs the system... IS RUNNING OUT.
I wrote about this in my article, THE BLOOD BATH CONTINUES IN THE U.S. MAJOR OIL INDUSTRY:
That article received the most FACEBOOK hits ever at 1,300+. Which means, some people are finally WAKING UP. Precious metals investors ignoring the energy data are making a big mistake. Why? Because the Fed and Central banks can continue manipulating the markets forever if it wasn’t for the coming ENERGY CLIFF.
Unfortunately, a lot of folks in the “Alternative Media” believe in the “Abiotic Oil Theory.” This is the oil theory that suggests oil is made deep below the mantle of the earth which allows oil fields to magically refill… so there is no real threat of peak oil. Individuals who believe this nonsense, such as Jerome Corsi and his book, BlackGold Stranglehold, have lost all sense of logic and reason. While many of these individuals who believe in the Abiotic Oil Theory are quite intelligent, I am surprised how completely STUPID they can be on this subject matter.
REAL PROOF... Why Abiotic Oil Is Another Lousy Conspiracy Misleading Investors
Those who perpetrate the Abiotic Oil Theory say that the Russians are producing more oil than ever because they are drilling ultra-deep wells tapping into this limitless supply of oil. Well, if that was true... SOMEONE NEEDS TO TELL THE RUSSIANS. The Russians aren’t drilling ultra-deep wells to get to their oil, rather they are drilling a hell of a lot more horizontal wells, just like the insane U.S. shale oil industry. The proof is shown below:
In just two years, Russian horizontal well drilling has increased from 22% of the total in 2013 to 34% in 2015. Folks, horizontal wells aren’t ULTRA-DEEP WELLS tens of thousands of feet down. Rather, they are more like the typical shale wells that are 7-10,000 feet down with long laterals to get to the oil. If Russia is drilling more horizontal wells, just like the U.S. shale oil industry, they are also running out of cheap high-quality oil.
A few months back I stated that I was going to write an article on this subject matter. I need to do so because a lot of people are still being misled by this erroneous conspiracy theory.
Now, the reason I have been laying out all this information is to explain Central Bank precious metals manipulation and how it’s all tied together with energy and the markets. If you are only looking at the COMEX paper trading and daily charts, then you only have a small window of the overall market manipulation. Furthermore, precious metals price rigging is only a small part of the total amount of Central Banks' market intervention.
David Stockman discussed this in his recent interview, Fiscal Bloodbath Coming This Fall – David Stockman, on USAWatchdog.com. In the interview, Stockman goes on to say that the Fed and Central Banks have propped up the Bond market by purchasing $20 trillion in Treasuries and Bonds over the past 20 years. This doesn’t include the Trillions spent propping up the global equity (stock) markets.
All this is being done to hold off the world’s largest bank run in history.
Central Banks Terrified About The World’s Largest Bank Run In History
What the Fed and Central Banks are worried about, is the WORLD’S LARGEST BANK RUN in history. This is why they are now throwing everything and the kitchen sink to prop up the markets. We must remember, all the debt, derivatives, and money printing is being done to keep people from freaking out and starting a global bank run. Thus, the Fed and Central Banks are manipulating the market by controlling “MARKET PSYCHOLOGY.” This goes well beyond gold and silver price rigging. It’s a full spectrum, wide-ranging, all-encompassing market intervention never seen before in history.
This chart provides the reason (numbers) why Central banks continue to rig the markets:
According to data for 2015, of the $369 trillion in global stocks, bonds and real estate, gold and silver only represent $3.1 trillion or less than one percent of the total. David Stockman, in his interview posted above, states that the global bond market is closer to $100 trillion. Regardless, the massive amount of money-digital printing has been done to prop up the $366 trillion in stocks, bonds, and real estate.
We must understand, ALL THE DEBT & LEVERAGE in the system is the same as when banks in the 1920s loaned out a great deal more GOLD CERTIFICATES than they had gold in their vaults. Printing and issuing a lot more gold certificates worked fine until the point, it didn’t.
In all reality, the U.S. and the global financial system are already DEAD. The citizens of the world just don’t know it yet. The only thing that is holding it up is a lot of HOT AIR and Central bank market intervention. However, the factor that will take away the Fed and Central Banks printing press, is the disintegration of the U.S. and global oil industry.
I am working on an article about the U.S. OIL INDUSTRY IS NOW CANNIBALIZING ITSELF. While there have been news releases stating that the oil majors, such as ExxonMobil and Chevron, are now making profits…. this is nothing more than white noise obfuscating the facts.
For example, ExxonMobil, Chevron, and ConocoPhillips reduced their capital expenditures (CAPEX) by a stunning 40% in Q1 2017 versus Q1 2016. The major reason for the reduction in CAPEX spending is that these companies are in desperate need of free cash flow. In the past few years, they have been borrowing money to pay for CAPEX or worse… dividends.
Many investors who are shareholders in ExxonMobil or Chevron do so because they get a nice fat quarterly dividend. The oil companies realize that if they start cutting dividends, what is the motivation for investors to hold onto their stock??? This is especially true as ExxonMobil and Chevron’s stock prices continue to fall due to lower oil prices.
We are now experiencing the beginning stages of the disintegration of the U.S. and global oil industry. While the Central banks continue to prop up the markets with money printing and massive liquidity, the biggest GLOBAL BANK RUN IN HISTORY is on its way.
About the Author:
Independent researcher Steve St. Angelo started to invest in precious metals in 2002. In 2008, he began researching areas of the gold and silver market that the majority of the precious metal analyst community has left unexplored. These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy.