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You Gotta Own Physical Gold and Silver – Especially When Prices Are Rigged Against You

Banks rig markets and government regulators aren’t taking it too seriously. In fact, central bankers at the Federal Reserve, the primary regulator for banks, are the biggest market manipulators of all.

With forces like that allied against precious metals and free markets, it is no wonder the past several years have frustrated gold bugs. They have been continually punished for doing the right thing. It’s been excruciating. Yet the wisdom behind holding physical metals is still sound.

Crooked markets cannot last forever. Banks and traders are undermining confidence each time their cheating makes the headlines. If you are a believer in honest money and own it in the form of bullion, it’s important to remember you aren’t the only one frustrated by these markets.


Speculators just trying to make a buck trading gold and silver futures have also been whipped mercilessly by the bullion banks. Taking a long position (with the leverage that accompanies futures contracts) in gold or silver against the banks has been devastating for most players. They too are reading the stories about private chat rooms where bank traders conspire to stick it to their clients. One must wonder how much reputation the major banks have left.

The jig will be up when honest players start to walk out of the rigged casinos that markets such as the COMEX have become. Only they may be stampeding for the exits, not walking.

When confidence is lost it tends to happen gradually at first, then suddenly following some unforeseeable catalyst. People wake up one morning to find markets in turmoil – like when Bear Stearns collapsed in 2008.

It isn’t just Wall Street banks where trust is undeserved. Central planners have a shoddy track record when it comes to maintaining healthy and sustainable economies, despite the worship they generally get in the financial press. They are really only good at two things; blowing bubbles and avoiding the blame for it with some outstanding public relations.

Plenty of Americans have been somehow convinced the fine people at the Fed are looking out for them. The actual job of the Federal Reserve is to make sure its political masters in Washington aren’t constrained by budgets and its bank masters on Wall Street never pay for their sins. Central bankers exist to make sure systems stay broken, not get fixed.

Federal Reserve stimulus, bailouts and the central bank’s failure as a regulator played a key role in cultivating the Dot Com bubble. Officials took no blame for their role in those events and doubled down instead. The global financial system nearly imploded when the bubble in housing collapsed in 2008, revealing an epidemic of mortgage securities fraud.

Central bankers responded to that crisis by furiously pumping the next bubble. Their “solutions” included zero interest rates, outright monetization of Treasury debt (printing money to pay government bills), bailouts for too-connected-to-fail banks, and more aggressive intervention in a wide range of markets.

Federal Reserve Building

The Federal Reserve intervenes
surreptitiously in many markets.

The Fed and its counterparts around the world have active trading desks and they never run out of money to back their positions.

Anyone frustrated by the price action in precious metals should stop for a moment of honest reflection.

These extraordinary measures do not represent the final victory of central planning and control over markets. They represent the last ditch effort of a small group of people who have been appointed to ensure Wall Street and the federal government need never exercise restraint.

The bubble will inevitably pop. This time around, however, federal debt will be 2-3 times what it was in 2008 and confidence in the banks and in the federal government will be far lower than a decade ago.

There is no certainty the political and banking elites will retain enough confidence to push through another round of bailouts and even greater stimulus. They may not be able to push their game for one more round. Physical gold and silver will be among the best assets to hold when the misplaced faith in these people and their rigged systems evaporates and the game is finally up.

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