Gold and Silver Well Engaged in the War Against Fiat Currencies

Since March of this year, gold have silver have made steady, if not spectacular gains in the face of the COVID pandemic, government shutdowns, media sensationalism, and international protests over racial injustice and wealth inequality.

Being safe havens in times of panic, price appreciation in the precious metals was expected, but the degrees by which both gold and silver have gained were only exacerbated by the fear narrative promulgated from government and media sources. Emergency measures taken by the Federal Reserve and other central banks and government "pandemic relief" packages approved by the US federal government and others around the world added to the allure of coins, bars, and jewelry made of shiny metals.

When the stock market crashed from February into March, the rush out of stocks took down the price of gold and silver with it. After all, we can't have real money maintaining value when the world's fiat economies are failing, can we? None the less, while the equity markets have rebounded nicely, the performances of gold and silver overshadow them. Mid-March, gold bottomed out at $1471.40 an ounce on the spot market. In the four months hence, it has ripped ahead, surpassing the previous all-time high against the US dollar this past Friday. On Monday, investors put their stamp of approval on the higher price regime by sending gold to a close in New York at $1943.00, though most of the gains were made overnight in Hong Kong and Shanghai markets.

Overnight, gold shot up again in Far East trading, vaulting above $1980.00 before being viciously slammed down in two short selling raids to a low of 1907.70. The smackdown took little time as has always been the case in these late night, early morning raids. The forces of fiat hegemony have few bounds, and the price of precious metals was getting a bit out of hand for their tastes, apparently.

Hard core gold bulls have been calling for a pullback - and another buying opportunity - and the overnight raids may have played right into their hands. Gold demand is not waning in the least and a price that's a little bit lower will only add to the gold rush that has been forming over the past year. The price hammering won't matter much at all in the long run - or even the short run. Taking the gold price down by five percent in two overt market actions is not going to deter anybody intent on acquiring physical metal. Besides, premiums range anywhere from $35 to $100 over the spot price, so anybody wanting to buy gold at the current spot or futures price ($1935.20 as of this writing) is going to pay the price it had risen to overnight in any case.

Thus, gold being on sale due to futures market mechanisms or manipulations will have little to bear on the real world. Perhaps when gold is selling for $2500 an ounce (within 6-12 months, almost for sure) the powers that be (for now) will try to send it careening south of $2000. That would be a real pullback that would take months, not minutes, to execute and certainly one that would not go unanswered by all interested parties, including the BIS, central banks, gold and precious metal funds, individual investors, and family trusts. It's likely that there will be wild gyrations in the price of gold as national currencies like the dollar, yen, pound, and euro are reduced to their intrinsic value, zero.

As for silver, the rise from the depths of March (11.94 an ounce) was nothing short of spectacular, the gain more than 100% to Monday's close at $24.62. It too ramped higher overnight, reaching $26.00 per ounce in Hong Kong before the same forces that took down gold put the hammer to silver, knocking it as low as $22.36.

The rise and fall in the price of silver is sadistic in a way. The last time gold set a record high was back in 2011. At that time, silver was $48 an ounce. When gold rocketed up on Monday, silver was roughly half of what it was nine years ago. As the phrase goes, silver has some "catching up" to do.

Being that silver is a much smaller market and the price about 1/80th that of gold, it's attraction to the masses is unmistakable. It's a metal and source of wealth that is obtainable by many, which makes it a natural target for the wealth hoarders and paper-chasers of the world. Expect the swings in silver to be even more wild than those in the gold or equity markets as the destruction of the global economy and fiat currencies commences over the coming months. Priced at $23.86 at this writing, silver is down only 85 cents from Monday's New York close. However, as is the case with gold, buyers are more than willing to pay outrageous premiums for delivery. One ounce bars and coins will continue to fly off eBay - the only place right now one can reliably buy silver with delivery guaranteed in under a week - at $32 and up. There's no stopping the physical market. No matter what happens in the spot or futures market, the real world will more than compensate with high premiums on restricted supply.

Tuesday morning's overnight raids notwithstanding, the recent rise of gold and silver as alternatives to fiat currencies is only the beginning of a fight that is destined to end with one side victorious, the other in tatters. Having had their way for decades, the central banks are fighting a losing battle, creating trillions in unbacked new currency to appease the wanton desires of both the wealthy and downtrodden.

Nobody likes fraud, and that is exactly what central banks have committed.

At the Close, Monday, July 27, 2020:
Dow: 26,584.77, +114.88 (+0.43%)
NASDAQ: 10,536.27, +173.09 (+1.67%)
S&P 500: 3,239.41, +23.78 (+0.74%)
NYSE: 12,553.13, +91.35 (+0.73%)