As Stock Markets Crash The Case For Gold and Silver Grows Stronger
Which to those who have been following the precious metals markets comes as little surprise. In fact to most who have been following the monetary policy of the Federal Reserve over the past decade, in some ways it’s shocking that it’s taken this long.
Just as the
Austrian Economic theory clearly states, while easy cheap money is flowing, the financial asset markets get propped up as the money looks for a home. Yet as the theory also states, when the easy money is removed, the malinvestment and misallocation of capital is exposed.
Which God could only imagine what that would be. Although keep in mind that back in 1980 Paul Volcker raised the Fed’s short-term rate to 20%. And following one year of 1% interest rates, Alan Greenspan raised rates as high as 5.25% before reversing course when the mortgage bubble started to pop. And now both the government debt load and central bank money supply are both substantially larger.
Which means that for those who invested in precious metals and have had their faith shaken, every single reason you initially invested is not only still intact. But also playing out at this moment exactly as expected.
The markets did get inflated with all of the printed money. And now as that money is being taken away (albeit at an incredibly slow and minuscule pace), the exact problems that the Austrian Economists forecast are manifesting as expected.
And while many have grown tired of hearing about the manipulation and wondering if it was just conspiracy theory, now that has been confirmed as well. So despite that the break-point has not yet occurred, the exact reasons why you invested in gold and silver are now demonstrating their influence on the markets.
I watched
The Big Short again this past weekend. Perhaps because during the times when I wonder if there’s something I may have missed, the movie helps remind me about how when markets get out of line, sometimes it just requires time before nature, supply, and demand re-exert their influence.
Could gold and silver trade lower from here? It’s only appropriate for me as an analyst and trader to factor in that anything is possible. And in an environment where investors are panicking and selling, it’s a good idea to expect that any sort of chaotic outcomes can happen.
Yet given how
Deutsche Bank, UBS, HSBC,
the Bank of Nova Scotia, and J.P. Morgan have now all been caught manipulating gold and silver, verifying that those who have asserted that the prices are being distorted by illegal behavior were indeed correct, it makes a lot more sense to own precious metals that are at their lows instead of stocks that are in a bubble that’s collapsing. And which current conditions indicate have every reason to continue declining further.
Perhaps what The Big Short also points out is that making large gains in chaotic situations requires understanding what’s happening. And also then having the fortitude to stay with your trade. Which is exactly how I see the current market for gold and silver.
I certainly understand this is a challenging time for investors. Which is why if you have any questions about the contents of this article, or buying or selling gold or silver, as always you’re welcome to email me at
cmarcus@milesfranklin.com.
The last note I’ll mention is that when I was recently at the Silver and Gold Summit, as well as the New Orleans Investment Conference, all of the folks I spoke with like Rick Rule, Doug Casey, and Peter Schiff mentioned how their most successful trades have been by buying assets that are cheap and out of favor. And then having the courage of their convictions to be patient until the inevitable plays out.
-To buy or sell gold and silver call
Miles Franklin today at (1-800-822-8080).
Proven Probable
