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Dear Friend of GATA and Gold:
Today a friend asked if the monetary metals sector was turning upward and even breaking out. Your secretary/treasurer replied as follows.
A few things do seem different:
1) While gold shares were clobbered Monday afternoon even as the gold price itself wasn’t, the sort of action that ordinarily has foretold a smashdown in the metal for the next day, such a smashdown didn’t happen on Tuesday.
2) Lately gold has seemed to rise during trading in New York instead of falling as it has mainly done for years.
3) Many foreign currencies have devalued. Is it time for the U.S. dollar to devalue too? Certainly the world is clamoring for the United States not to raise interest rates and thereby increase the burden of debt around the world, and delaying a rate increase would facilitate devaluation. Of course the easiest and most traditional way to accomplish dollar devaluation would be for the U.S. government to ease off the gold suppression scheme.
4) Devaluing by letting gold rise simultaneously with a small increase in interest rates would let the Federal Reserve keep one foot on the accelerator and the other foot on the brake, applying pressure and policy implementation alternately as desired.
5) Your secretary/treasurer doesn’t think for a minute that the central banks have lost control of the gold market. If that ever happens, there may not be enough zeroes to put behind the gold price. (Of course, just as when you’re a hammer, everything looks like a nail, when you’re an exposer of gold price suppression, everything looks like market rigging by central banks.) But if governments and central banks want to devalue currencies generally and thereby devalue debt worldwide, raising the gold price long has been a primary mechanism for that.
6) Maybe most telling, yesterday, at the direction of GATA’s board, your secretary/treasurer moved some of what remains of the organization’s tiny endowment into shares of gold mining companies, and nevertheless those shares rose in value today.
7) Of course No. 6 may have been only the prerequisite for what Toronto-based mining analyst Mike Ballanger wrote in his daily market commentary published tonight at GATA Chairman Bill Murphy’s LeMetropoleCafe.com:
“The weaker the U.S. dollar, the better the metals will perform. It’s that simple. And with gold lunging above the 200-day moving average at $1,176, the word ‘breakout’ is the most commonly-printed descriptive in the blogosphere this week. Now — and I know I’ll take heat for this — the commercials are lurking in the weeds just waiting for the technical trading funds to pile into the market based on this breakout and I have to repeat those immortal words one more time: You sell breakouts and you buybreakdowns. Rigged markets devour technical traders like sharks in a feeding frenzy. So I am selling my call options into this move and half my leveraged exchange-traded funds (NUGT and JNUG). That will still leave me with my core positions in GDXJ and selected junior miners.”
Breakout or breakdown, your secretary/treasurer is not an investment adviser. The only advice he can offer is the advice he has been offering for years: Get all the gold and silver you can, find a safe planet to keep it on, and when you find it, please call me.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.