MANIPULATION GOLD MARKET HAS CREATED RAREST OF OPPORTUNITES
The banksters, by manipulating the price of gold and artificially creating a bear market, have created what will likely turn out to be one of the greatest opportunities ever seen. I’ve maintained all along this was their goal. To create the most destructive bear market in history, which would then generate the largest bull market the world has ever seen.
Folks, you might as well take advantage of this opportunity. The banksters aren’t the only ones that deserve to get rich. They have destroyed millions of peoples lives as the authorities stood by and watched them run the precious metals markets, and especially the mining sector, down to absurd levels over the last few years. Now they have switched sides and the attacks have stopped. It’s time for price to swing in the other direction. And it’s going to swing so far in the other direction, that I have no doubt before it is over this will be the largest bull market the world will ever see.
In 2008, as the housing bubble was imploding, the Fed embarked on a reckless campaign of rate cutting and money printing aimed at halting the real estate collapse. It did not stop the bubble from popping. As you can see in the next chart all that liquidity just drained into the commodity markets, especially energy. This had the exact opposite effect the Fed was looking for. The sudden massive surge in inflation broke the back of consumers, triggering a deflationary spiral into a recession.
I’ve tried countless times to educate investors that it is always inflation that occurs first. Inflation is what collapses consumer spending. Inflation damages the economy and leads to deflation, not the other way around.
This is one reason why I knew the stock market is not now entering a bear market. We haven’t had the inflationary shock yet. But we will. There are always consequences to money printing. Without exception it always creates inflation.
So now let’s look at the next piece of the manipulation puzzle.
In 2011 & 2012 the stock market experienced a second crash as QE2 came to an end. At this point it became clear to the Fed that they would have to continue printing in order to keep markets inflated. Without it, the house of cards would come crashing down.
But this time they had a problem. Oil was already over $100. QE3 risked a repeat of 2008 and that risk being that liquidity might flow into the commodity markets, triggering another inflationary shock and collapsing the economy yet again. As a matter of fact you can see in the chart below, right as Operation Twist/LTRO/QE3 began, markets started to surge higher.
So now the Fed had a problem. They were on the verge of repeating the mistake of 2008. They had two choices. Either end QE and let markets collapse naturally to find their true bottom… or find some way to prevent liquidity from flowing into the commodity markets. In essence find a way to direct the inflation solely into the stock market and real estate market.
In a natural market this would be impossible as liquidity would tend to flow into all markets equally (this is why I keep saying all markets will rise together). But as I’ve said many times in the past, we haven’t had free markets since the SEC banned short selling in financials in the fall of `08.
So the Fed could try to suppress all commodity markets (impossible) or they could focus the manipulation in the one commodity that tends to lead the entire commodity complex – gold.
You can see in the next chart I’ve marked the point at which the middle of the night attacks began. Notice that the entire commodity complex stagnated at that point. There was simply no way oil, or wheat, or copper, or any of the commodities, was going to go parabolic with gold collapsing.
This was right about the time that position limit laws stopped being enforced. The bullion banks were now able to overwhelm virtually any buying pressure by dumping unlimited amounts of shorts on the market, usually in the most illiquid hours, in the middle of the night. So traders would wake up in the morning to having their stops run.
It wasn’t long after this that I realized that a few big banks were going to try to create a bear market. A bear raid. The purpose being to artificially force price as low as possible before switching to the long side. Let me give you an example of what I mean.
Let’s say the next leg of the bull market had begun at $1550 and run to $5000 over the next several years. That is a 220% increase.
But now let’s take that same bull market top, but instead of starting the run at $1550, let’s factor in an artificial bear market that drops price to $1050. A run from $1050 to $5000 is a 370% gain. Almost double the natural market gains that would have been attainable if the market had been left to trade freely.
But now let me blow your mind and show you where the real opportunity was created, because it wasn’t in gold.
The HUI index was at roughly 400 when the attacks began on the metals market. If the bull had begun at that point and assuming a modest 2 to 1 outperformance we could have reasonably expected the HUI to rise to maybe 1600. A 400+% move.
But the bull market isn’t going to start with the HUI at 400. It’s starting with the HUI at 100. The banksters managed to create one of the most destructive bear markets the world has ever seen in the mining indexes.
Now if we just assume that same 1600 top, the potential gains in the mining stocks are now 1500%. And I can assure you the HUI is going a lot higher than 1600 before the gold bull is over. The level of destruction in the mining sector is unparalleled, and it’s going to generate a bull market possibly bigger than anything the world has ever seen before.
And I’m going to suggest that was the banksters goal all along. To create a massive bear market so they could then get long at the very bottom, and ride one of, if not the largest, bull market in history.
The banksters may very well have continued beating on gold if not for one unforeseen problem.
When oil collapsed it threatened to trigger another financial panic. It became imperative that the price of oil go back up. That meant the attacks on the gold market had to stop. And that my friends is exactly what has happened.
Ever since the bottom in December we haven’t seen any of these absurd 10,000 – 20,000 contract dumps in the middle of the night, and not surprisingly, the natural trend in the metals has returned.
At this point the banksters are no longer a gold bugs worst enemy, they are your best friend. This was all done to create a monster bull market. The banksters are certainly positioned to profit from it. Are you?
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Great post, Gary. Makes alot of sense. Most investors/analysts/Gurus are short term bearish right now. They are all expecting a minimum 20% correction in miners very soon. What do you think?
Hi gary, do you see alot of rotation in the commodity market comming up? I noticed when britexit passed gold went up in relation to oil going down. Thanks
The Brexit was just a temporary event that triggered an ICL in stocks and the euro. It’s now going to fade into memory.
Too early in the intermediate cycle for that.
wasn’t the rise in the USD the trigger of the fall of all commodities?
The dollar was hovering around 80 when the attacks on gold began. I think we can safely assume that the dollar had nothing to do with the crash in gold.
Great story Gary. The bankers must love playing ‘whack a mole’.
Gary is not the only one that noticed the attacks on gold.
https://youtu.be/_u2wkW4tYEg
Great insight ~
Thanks Gary
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4th of July, the National Day for Americans and we have a gravestone doji in S&P500 😛
The esoteric trendline from 87 bull is still intact Gary, I’ve mentioned it a kazillion times here before, sits at 2150ish for Spx right now. A possible short lived break going into 2017, but I wouldn’t count on it.
Then a final fifth wave for US markets in 20th decade, a last hurray for USA and then it’s Asias time to shine for a century or two!? Yuan will become the new reserve currency in 2049 a hundred year anniversary from the Mao revolution.
No deflation, look at oil if that’s not a deflationary move what is ?
I am very suspicious about markets these days, I see a debt deflation reformation coming within a couple of years. Maybe not a full blown crash but a major correction.
Your bias is going to prevent you from profiting from the bubble phase in stocks, and then a bubble in gold.
Lose the perma bear bias and make some money as this new 7 year cycle is just getting started.
Gary I absolutely agree with you about manipulation, but in every area not just the gold market. There are no free markets anymore. We are controlled by the elites just knowing what there plan is ahead of time to front run it is the challenge. Overall really good article and makes a lot of sense.
“When oil collapsed it threatened to trigger another financial panic.”
Why did oil collapse?
A normal move down into the 3 year cycle low.
How does this explain the most massive commercial short position in the history of COT report ever reported? I cannot go long knowing that position is still there.
https://www.tradingster.com/cot/legacy-futures/088691
The same thing happened coming out of the 08 bottom. You need to study some history instead of just listening blindly to the majority of analysts who don’t know what they are doing.
‘At this point the banksters are no longer a gold bugs worst enemy, they are your best friend. ‘
When do you think they might want to be worst enemy again?
When the bubble phase is ready to pop and they want to hand of their shares to you 🙂
Gary,
Very good cause and effect narrative on the dynamics between markets.
Question: If the Fed and PPT stopped manipulating gold down in fear of an oil price plunge causing a potentially new crisis back in December, …then what is our guarantee that after oil has regained its price, say between $50 and $70, the central banks and the Fed will not then resume their attacks on gold(as they want all the liquidity to go into stocks only again) and drive gold price down again after the ‘danger’ has passed?
There is that risk, but I think it is small. The banks now want the bull market to play out. They got price as low as possible, now it’s time to let the bull loose and reap the profits from the manipulation.
I agree about the manipulation that was done to keep Gold suppressed, but how do we know the banksters won’t exit their longs, flip to the short side, and resume the manipulation again at a certain price level, such as 1400? Is there an indicator that will show you when the banksters have exited their longs and/or flipped short?
The establishment needs oil to go up. No way they would attack gold now and risk having oil follow it back down.
I think the attacks are done.
It can only both go up at once in case of hyperinflation though. And i believe that stage hasnt been met yet and its even unlikely if it will. In theory they can qe the market in an infinitive trading range. However they want. And pm will act as a fear element nothing more nothing less.
The recent climb is entirly because of eu insecurity (brexit and banks) and because of the yuan (chinese fleeing). And even then its beeing manipulated.
Central Banks, including the Fed, needs inflation now.
Observations on stocks and their 200ma – both weekly and daily:
1) no sooner Hang Seng touches its 200dma than world’s stocks markets get a cough;
2) it’s so funny to watch XBI’s and IBB’s crawls on their respective 200wma – that shows eagerness to get a break-down
3) both NYSE and Russell 2000 have re-tested their 200wma twice in the last two months – will the next test render a break ? 🙂
on the other hand, consumer staples are producing a weekly follow-through to their breakout.
Simply put, I am double-short stocks with a 12% portfolio weight (in SDS), rest is cash
…ooh! I almost forgot: transports are now fighting their 200wma as I write this.
PS: USX is also set to break out of its bearish flag on the daily chart.
error: bullish flag
The most dangerous time to short stocks is very early in an intermediate cycle. This one is on day 5 of a 20-25 week cycle. Even if the cycle were destined to top in a left translated pattern it would be unlikely to do so for at last 6-8 weeks. Shorting right now (other than just as a day trade) is a very poor strategy.
It’s even more dangerous considering the blatant PPT intervention to abort the ICL prematurely. Why anyone thinks they could successfully beat the Fed’s printing press is beyond me.
I do not think stocks left behind an ICL but merely a DCL – we are in the same IC !
I do not believe in a day-by-day activity of FED to prop the market.
I believe they do it but in extreme situations. Now going from that to extrapolate to day-to-day business of FED to grant free cash to large market makers to manipulate the market along the way all the time is too extreme for me to fathom.
Who said they intervene daily?
I said they clearly intervened to halt the DCL/ICL. The daily cycle was turned on day 25. That’s way too early for a natural DCL, and the intermediate sentiment levels were not allowed to reach oversold.
Without a doubt we had a market intervention last week, and without a doubt it was wildly successful.
So why would anyone choose to fight that? Death wish?
Bottom line: We simply can’t have a bear market with every central bank printing trillions of currency units annually. Period. End of story. So get that out of your head. If that were possible the market would already be well on its way down, and well below 1800 by now. We’ve had plenty of time, over a year now.
We can however have a bubble or series of bubbles form with every central bank printing. And in fact that is exactly what history has shown us.
Now once the bubble forms and pops, THEN you can get a bear market, but not before.
Can’t argue with that….we haven’t seen anything resembling a normal bear market since the summer of 2011 and they halted the bear.
Another week another the world is ending day ( this time for sure they say )…retail traders never learn.
No doubt.. Gary would be saying now BTFD!! *for SPX’
We already bought early last week and are holding positions for the time being assuming that a new IC has begun. It shouldn’t top for another 15-18 weeks.
Gary, please remember that I accurately forecast and called here DCLs for stocks both on MAY19 (at mid session) and on JUN27.
I was confident snap-backs would occur w/o giving any credit to any would-be intervention –> these temporary bottoms in stocks were simply very very easy to call.
So….what intervention are you talking about ?! How could a guy who does NOT give credit to REGULAR interventions “guess” so promptly and accurately the last two temporary bottoms in stocks ?!
The answer is simple: because it was no intervention, it was statistical assessment.
On June 27th you were just looking for a snap back, nothing about a DCL. So unless you are trying to trade every wiggle in the market you got caught when the ICL bottomed. You also took profits too soon in gold and metals on that day.
On May 19th you called the DCL but were just looking for a very short term bounce. Instead the market rallied above the November high. We added over 20% to the stock portfolio on that bounce, and we did the same on the bounce out of the recent ICL. You are missing these very profitable moves because of your perma bear bias.
Short term mentality is causing you to miss chunks of the move, especially in silver.
Thanks Alex and Gary for the insights.
Time will reveal more about today’s dip.
Personally I do still have some doubts on whether the stock markets have indeed turned the corner or we get at least another dip. It need not be lower than 1,810.
Qn is whether the low we had last week post Brexit is DCL or ICL; time would tell. ☺
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