Gold Prices Will Keep Rising Because Crash Conditions Are Becoming Obvious
The comments below are an edited and abridged synopsis of an article by Brandon Smith
The price movements of precious metals can be difficult to understand. In the world of equities, investors are mesmerized by tickers, and market movements occur minute by minute. This shortens memories, attention spans and patience. With gold and silver, investors buy and sell according to cycles that last years or decades, the complete opposite of stocks.
This is why gold gets a lot of criticism. It does not behave the way day traders want. It sleeps, and then it explodes. It is not surprising that the average stock market player is usually caught completely off guard when an economic crisis hits, while the average gold investor saw the event coming months in advance. The gold mentality lends itself to caution, observation and historical relevance. The stock market mentality lends itself to carelessness and the denial of history.
There is plenty of evidence of paper market manipulation of gold and silver to the downside by major banks like JP Morgan. Any investor in metals should take this into account. However, it is also important to realize that during economic uncertainty, the physical market can and does overtake paper manipulation, and prices rise anyway. This is what happened in the lead up to the 2008 crash, and it’s happening again today.
Smith discusses the Fed and its announcement that there will be no new stimulus, and that aggressive rate cuts are unlikely; the Fed’s false claim that US economic growth is strong, and that a recovery is still underway; the continuing trend of a rising gold price; and some temporary downside risks ahead.
For now, Smith sees an uptrend ahead. There is no end in sight to the flow of negative incoming data. The Fed is not going to intervene, at least not until the situation becomes so awful that people start demanding a response. Brexit looks more volatile every day, and will be blamed for economic tremors in the EU, just as the trade war will be blamed for the recession in the US. These are the perfect storms that will drive gold to record highs. A repeat of gold’s performance during the 2008 crash is possible. Smith thinks the next rally in metals will far surpass the 2008 event.