By Toby Connor, Gold Scents
I think the manipulation after QE4 has accelerated the bull market. We now have the necessary conditions for the bubble phase in gold to begin. I was expecting the second phase correction (the correction that separates the second phase of the bull market from the bubble phase) to occur at the next 8 year cycle low due in 2016. However I think the manipulation of the precious metals markets over the last 8 months has probably shortened the bull market.
Contrary to what many believe manipulation doesn’t delay a market. Manipulation accelerates and intensifies the secular trend as it creates supply and demand imbalances. Once the market breaks free of the manipulation the trend reverses and ultimately goes much further and much more violently in the secular direction than would have occurred normally.
If the metals had been allowed to trade freely then I think we would have gotten another C-wave advance into 2014, followed by a devastating correction into the 8 year cycle low in 2016. That move into the 8 year cycle low would have marked the transition from the second phase to the bubble phase.
However the metals weren’t allowed to trade freely after QE4. They were continually hit with artificial & manipulative selling in the over night and premarket for months. I think this has converted what should have been just a normal correction into the second phase correction, and when gold breaks free it’s going to deliver the bubble phase over the next two years instead of in 2017/18 that would have occurred in a natural market.
Whether you think I’m right or not, pretty much every bubble has to have one of these extreme corrections to completely cleanse bullish sentiment before starting. In 2007 oil dipped 37% convincing everyone that the peak oil crowd were idiots. Oil then rallied 200% in the next year and a half vindicating the bulls and making the critics look foolish.
In 1998 the NASDAQ corrected 40%. Everyone was convinced the secular bull had ended. It had not ended, but the correction did clean the slate and prepare the market for tech stocks to rally 300% in the next year and a half.
Gold has just corrected 37%, miners almost 70%. No one even believes that gold will ever see $1900 again, much less many multiples higher than that. Yet gold has now put in place the necessary conditions for a bubble to begin. And all big secular bull markets end in bubbles.Human nature never changes.
The fundamentals driving gold have not changed. In fact I would suggest the supply side has been severely damaged as many tons of physical gold has moved from west to east during the manipulation event. That gold is never coming back. It’s going to remain locked up inside eastern central banks, and in the hands of Asians for years to come.
It’s always when it looks least likely that major trend changes occur.
Watch gold next week. If the bubble phase is beginning then we should see gold rebound violently as it breaks free of the manipulation. Miners in particular should rally 10-15%.
If gold waffles around coming out of this bottom then the correction isn’t done yet. But either way, whether it ended on Friday or the bottom is still ahead of us, I think this correction is creating the conditions necessary for the bubble phase to begin.
I discuss this topic with Korelin economics in the weekend report weekend report.
A financial blog primarily focused on the analysis of the secular gold bull market.
Silver futures rallied Friday, though steep declines earlier in the week assured losses not only on a weekly basis but also for June. And from there, it just gets worse with atrocious quarterly and year-to-date figures. Despite it all, United States Mint sales of its bullion silver coins continue on record pace. On Friday, silver [...]
By Jeff Nielson, Bullion Bulls Canada
There was more mind-blowing news this week in bullion markets. This is to be contrasted with the deluge of shrill, gold-bashing propaganda being cranked out by the Corporate Media at maximum decibels. As usual (these days); the news centers on India’s bullion markets.
As has been mentioned in numerous previous commentaries; Indian bullion-buyers are notoriously price-conscious. So the recent, unprecedented rape committed in the paper-gold and paper-silver markets has been nothing less than a dinner-bell “chime” for Pavlov’s Dogs.
Gold and silver on sale…at (literally) once-in-a-lifetime-prices.
As reported by many commentators within the sector; gold demand (i.e. demand for real gold) in India has been nothing less than insatiable. This is despite a six-month propaganda blitz by the banking cabal to try to steer Indians into the fraudulent, paper-called-gold market.
The complete failure of that propaganda campaign has prompted a rapid-fire series of what can only be termed “desperation measures” within India. First the Indian government jacked-up import duties on gold. Then (in a world which runs on credit) it prohibited any of the Indian bullion banks from importing gold on credit.
Now we have the most-outrageous move yet:
The All-India Gems and Jewellery Trade Federation (GJF) has asked its members not to sell gold coins and bars to curb imports of the precious metal, and help the government reduce the current account deficit…
This move is effective July 1st. As has been previously explained; there is no “current account deficit” in India resulting from the importing of gold (which is a currency). This is all just an accounting sham. Thus all these moves are aimed squarely at suppressing gold demand in India – blatant restraint of trade, targeting only precious metals.
The increasing desperation is the product of staggering numbers on Indian gold imports. How large are the numbers? We’re no longer quite sure. After reporting massive imports of over 142 tonnes in the month of April; it was originally reported that India’s gold imports exploded to 262 tonnes in the month of May.
This was followed by a near-immediate retraction; with India’s finance ministry (supposedly) claiming it had “made a mistake” in reporting its own gold imports, and the correct number was ‘only’ 162 tonnes. A “typo”? In an official, government release? Are we to believe that in a nation of more than 750 million people that the Indian government can’t find anyone to proof-read its own, official press releases?
While we must suspect that Indians actually imported over 400 tonnes of gold in the months of April and May alone; for the sake of argument, let’s accept the propaganda. India imported more than 300 tonnes of gold in April and May. And with the desperation-measures just being escalated again; we can expect another large number for June’s imports (or perhaps another large lie?).
Regular readers will clearly remember the news trumpeted previously that central bank gold-buying has soared to “all-time records”. Even at record levels; these banks are expected to collectively import less than 600 tonnes of gold all year.
This is still an enormous number. Previously, the central banks were able to squash the gold market for many years; primarily as a result of central banks dumping 500 tonnes per year onto the market. Then there is Indian gold-buying.
The miner is seeking to sell at least a 30% stake in the Minas Rio iron ore project, which has suffered cost overruns and licensing delays.
Sources close to the matter say the steelmaker is targeting the Wologizi mine and talks are underway with Liberia for approvals.
Gold Fields CEO Nick Holland says bullion must rise to $1,500 an ounce for the gold mining industry to be sustainable.
“Never before have such enormous monetary policy experiments taken place on a global basis. If there ever was a need for monetary insurance, it is today.” says Ronald Stoeferle.
Gold is on track for its worst quarter since at least 1968, as worries that the US will wind down its stimulus punctured confidence.
The South African Chamber of Mines says wage talks between trade unions and the country’s major gold producers will start on July 11.
Ever falling gold prices are causing huge stress for gold mining company CEOs as they have to look at closures, cutbacks, writedowns and layoffs.