“…Consensus, Wall Street, Administration and Federal Reserve hype of a "V" shaped economic recovery should begin to fade, as data in the next several months tend to confirm a re-intensifying economic contraction. I would describe the shape of this recession/depression as one tracing out the path of an inept skier trying out a ski jump: sharp decline, then some leveling out with a brief up-blip, followed by a renewed plunge with the potential for an unexpectedly disastrous landing…”
“Ski-Jump-Shaped Depression”
John Williams’ Shadow Government Statistics, Commentary Number 302, 6/11/10
The Friday June 4, 2010 Market Action for Gold (Bullion and Shares) and Equities was especially revealing of Profit Opportunities in Precious Metals.
It also revealed the Threats to Precious Metals Profits and Prices, and Keys to insulating oneself against Price Takedowns.
On that Friday, when Equities prices were getting crushed, Gold Bullion opened down nearly $12, but rallied and closed up $20.
But the Gold Shares had a lousy day with both the HUI and XAU down over 2%.
What gives?
Such a Divergence – Bullion Prices Increasing Dramatically while Gold Mining Shares are Taken Down Dramatically is no surprise to us.
Several weeks ago we explained why it was likely that Cartel* Attempts to Suppress Gold (and Silver) Bullion prices would likely encounter increasingly heavy resistance from here on out. (See Deepcaster’s recent Articles in “Articles by Deepcaster’ Cache at www.deepcaster.com.)
Among the reasons were that Gold and Silver Bullion Price Suppression by a Fed-led Cartel* of Key Central Banks and their agents and allies was
- Becoming ever more widely known via Deepcaster, GATA (see below) and others, and
- Increasingly widely distributed Revelations that some of the largest Gold (and Silver) Repositories likely do not have nearly as much Physical Bullion as they claim they do. Thus, this is leading more and more buyers to demand delivery and possession of Physical.
Result: Record demand for Possession of Physical Bullion (i.e. not merely Paper Certificates ostensibly evidencing bullion ownership), with Consequent Robust Prices.
BUT Gold Shares prices, being “Paper” (i.e. more likely, electronic data on some remote server) are much easier for The Cartel* to manipulate.
Thus, The Explanation for the Divergence in June 4 Market Price Action as between Bullion and Shares.
*We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2009 Letter entitled "A Strategy For Profiting From The Cartel’s Dark Interventions & Evolving Techniques - II" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.But the Market Action on the following Monday June 7, was in our view a Harbinger of The Strengthening Golden Bull Market. Both Bullion and the Shares were up strongly.
Nonetheless, although The Cartel has been weakened considerably in recent months, it is still Potent and increasingly stressed.
And an increasingly stressed Cartel is Dangerous, and will take any opportunity to take down the prices of paper Gold and Silver as far as they are able. (The Silver, and Golden, lining, as it were, is that Premiums for Physical remain 5% to 20% or more over Spot for reasons we earlier explained.) The mid-May Takedown is a good example.
In any event, we should continue to expect periodic violent Precious Metal Price Takedown Attempts. And Deepcaster has developed a Strategy to minimize the adverse effects of these attempts (See “Defeating the Cartel... With Profit, Part 2” (6/19/2009) and “Defeating the Cartel... With Profit, Part 1” (3/28/2008) in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com).
It is in The Cartel’s interest to try to delegitimize Gold as The Ultimate Monetary Metal and Authentic World Reserve Currency, in their ongoing attempt to legitimize their Fiat Currencies and Treasury Securities.
In sum, given the recently diminished potency of The Cartel in their attempts at Precious Metal Price Manipulation, other factors loom somewhat larger as price determinants.
Thus, for example, Short Term, we expect Mining Shares to move somewhat in harmony with the anticipated next move in Equities (see Deepcaster’s Recent Alert in the ‘Alerts Cache’ at www.deepcaster.com for our specific Forecast).
Even so, we expect further Cartel Takedown attempts in Shares Prices to the “resisted” by Bullion Prices, with Bullion moving perhaps modestly lower at worst, but not nearly as much as the Shares. That said, we believe the days when The Cartel can effect dramatic and sustained Takedowns of Precious Metal Prices are over.
Most important, we should regard any Price Takedowns as Buying Opportunities for both Bullion and Shares. Indeed, we relish the prospect of the Buying Opportunities which are being created by prospective mini-Takedowns.
In sum, consider any such Takedowns in Bullion or Share Prices as a Gift and an Opportunity. Stay tuned for timing.
