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May 21, 2010 / Hal (GT)

Metals Consolidate.

Boy, the markets got raked over this week and risk aversion is the whisper that turned into a roar. I know… I know… If it’s all about risk aversion then why aren’t people flocking to gold and silver, the currencies of historical choice?

Well, there’s a number of reasons for that which I’m sure we will discover as the days tick away, but on first blush I’m going to go out on a limb and just say that people don’t know their history. The longer I follow things, which arguably isn’t that long compared to others in this market that I am attempting to learn from, but the longer I look, the more convinced I am becoming that there is a delusion resting upon people. A delusion of course is something that disregards reality. Reality being that government currencies the world over are nothing more than a complex magician’s illusion!

That said, Eric King has this to offer as to why Gold and Silver are being sold down at the moment: Commercials Continue To Smash Metals.

Continued covering in both the gold and silver markets are just business as usual for the commercials. This is all part of the process of the bull market where the commercials steal money from small and large speculators. These are managed markets, it is a racket that continually fills the pockets of the commercials.

Following upon my magician’s illusion comment above I want to point you at this article by Eric Fry: Beauty is Truth

Despite the severity of America’s indebtedness, most people in positions of power refer to this disaster as if it were merely a broken water pipe. “We really should fix it,” they say, as if we could turn a valve here or replace a gasket there and get everything running smoothly again. But no quick fix is possible.  In fact based on the numbers, no long fix is possible either.

I would note that while the politicians would tell us it’s a broken water pipe, I think a more accurate description would be a broken oil pipe poisoning our financial market at a rate that is being misreported.

Oh, and while we are on government bailouts and debt check out these posts:

Oh, and check out this video about how great our gov is right now when it comes to investing in the housing market: Whalen: Housing “Recovery” = Government Subsidy

FDIC Insurance Fund Still $20 Billion in the Hole

The Keynesian Race to Bankruptcy

Proof that I think the people at the top are delusional or lie outright to us is Geithner telling us that the debt from Fannie Mae and Freddie Mac should not be thought of as sovereign debt. So, if I understand that correctly, the government who know owns them gets to ignore the company debt? That’s lunacy: Geithner: Fannie, Freddie Debt Isn’t Sovereign Debt

Worth checking out David Engstrom’s: Gold vs. Stocks – Gold Wins Another Round

They said the flash crash was an accident and who knows, maybe it was.  Nonetheless, we revisited those levels, down 10% or so from post crisis highs.  Now, the question remains, did the market experience a natural correction or is there another round of beatings ahead?  Time always tells.

Meanwhile, gold appears to have suffered a similar beating.  Gold reached new highs around $1250 an ounce on May 12, only to slide back to $1185 as I write.  So we ask the same question.  Has the overall direction of the gold charts changed from bullish to bearish?

David concludes that, no we’ve not moved into a bearish market for gold. I tend to think that as well, in fact I would say that if things can hold between $1,160 and $1,180 we will see a nice floor build for it to bounce off of. Time will show us the reality eventually, so until then we just need to watch and hold to what we know as truth.

And on that I will end this week with this link worth looking at:

10 Gold Charts Commercial Investment Firms Never Want Clients to See

Now having said all that don’t forget that you can track on your mobile device and on your desktop the current prices for gold, silver, and platinum with Lear Captial’s free real time application, ExactPrice.

If you do you use it leave me a comment and let me know about your experience with it. Even better, if you have a great idea on a feature you’d like to see in it or an improvement in it, I’d love to hear it.

Until next time.


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