Author Topic: My take on the metals crashing in price  (Read 186 times)

virtuoso

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My take on the metals crashing in price
« on: April 21, 2013, 07:51:51 AM »

Okay, so I have been analysing what the drop in metals portends and surprisingly no one seems to have stumbled across the most obvious.
The first suggestion was that the metals sell off was done to undermine the confidence in the metals ......zzzzzzzz
The second suggestion is that this is gold and silver manipuation, show me a friggin market which is not manipulated so.....zzzzzzz
Gold is dropping in value because of new finds of oil?????.....zzzzzzz
Gold is dropping because the IMf demanded Cyprus gold.....zzzzzzz (their inventory of gold would cause a slight ripple not this panic

As far as I am concerned all of these suggestions or absolutes as they are in some cases are just noise, what I consider is a more likely reason is this, gold is the green light for inflation, gold moves prior to that wave, now let's see what gold has just done, it's crashed, and some analysts like Martin Armstrong say that it could fall below 1200 even and maybe even below 1000!. Now, I must admit that the size of the drop is alarming BUT, now using the rationale of gold as a gauge of what lies ahead, we can more than reasonable suggest that a horrific deflationary collapse is around the corner.

What would cause this deflationary collapse? well, and I am pissed off at myself for ignoring my own instincts on this, but in hindsight the first shots were fired with the theft of billions from Cyprus accounts. The market then threw a head fake (which i bought into) that this would push the metals up, but NOW, the metals are falling through support level after support level, the deflationary collapse which is therefore being suggested is likely to come from a Europe wide bank theft akin to what has happened in Cyprus.

So why would the metals sell off? simply this will wipe out a lot of economic activity, which means less demand for silver and less for gold as cash becomes king. Blood is now flowing on the gold and silver streets, so why this is good for gold and silver? (potentially) this supposition is dependent on behaviour of course but silver does not have a lot further to fall as there are certain fixed costs which are built into any price. For example when silver fell to $8 during 2008 you couldn't buy silver at 2008 because dealers had their costs to satisfy (their labour, overheads) (their profit margin) miners had their costs to cover (refining, extracting) and then there was the cost of the distribution. Which meant in reality that silver price to the consumer was more like $14, factor into this rising energy costs and the cost now is more like $19-$20. o could silver fall some more? yep, I guess it could even fall to single digit numbers in theory which would wipe out most miners and if that happened, then it would definitely add value to the existing silver.

Gold and silver....spin the wheel make your choice really, demand could wane (this is true) but any hard asset has a good investment price and when panic sets in (blood on the streets) is a good time to buy. Why else it would be a smart buy? lets suppose the value falls again, at least by owning it, you have it and enough wealthy people will catch on to that and realise that keeping their money in a bank is not safe as the green light has been given to steal their accounts.

When confidence collapses, gold will rise a lot (in my opinion) but it's interesting the way in which markets sell off, as they are looking at the next move, rather than the moves after it.

Whatever you do, be smart enough to preserve some capital instead of acquiring meaningless bs, peace.