The Fed and Central banks are manipulating the gold and silver price because they are horrified that the biggest global BANK RUN in history will take down the entire system.  Unfortunately, a lot of investors are still being misled about the fundamentals of precious metals market manipulation.  While the Fed and Central bank are indeed intervening in the gold and silver market, they are also propping up the majority of asset values across the board.  This is especially true for most stocks, bonds and real estate.

Yes, it is also true that billions of Dollars worth of paper gold and silver are dumped into the market in nanoseconds during very light trading days.  Thus, the impact is to cap the gold and silver price, making sure that 99% of investors stay fast asleep.  These are the very same investors who the Central banks are working extremely hard to keep their funds placed firmly in stocks, bonds and real estate.

I continue to receive emails from individuals who believe the Central banks can push the price of gold or silver anywhere they please.  This is total RUBBISH.  However, there is some method to their madness.  It is a crying shame that there are still analysts out there misleading their followers with that sort of superficial nonsense.

All the Fed and Central Banks can do is to keep the gold and silver price from exploding higher.  They cannot push the value of gold or silver (too far) below its cost of production.  Here is a chart from my previous article showing the gold price versus the top two gold miners (Barrick and Newmont) cost of production:

The gold market price was always HIGHER than Barrick and Newmont’s cost of production.  So, as we can plainly see, the Fed and Central Banks NEVER pushed the annual gold price below Barrick and Newmont’s cost of production from 2000 to 2016.

NOT EVEN ONCE….

Which means, the notion that the Fed and Central banks can push the price of gold down to $500 or even zero, is total nonsense.  They CAN’T do it, and they know it.  Furthermore, I have older Homestake Mining Annual Reports from the 1970’s.  Homestake Mining was the United States largest gold producer for more than 50 years.  I plan on writing an article showing how Homestake’s cost of production increased substantially, along with the oil price, during the inflationary decade of the 1970’s.

That means, the surging gold price during the 1970’s was not really due to increased demand, rather it was due to the skyrocketing oil price.  Now, I am going to post these charts again, because it seems as if some folks are still a bit DENSE.  Moreover, I have added another chart for KICKS & GIGGLES.  Please take a close look at the following gold, silver and copper charts:

According to these charts, the price of GOLD, SILVER and COPPER have been tied to the OIL PRICE.  While their movements are not exact, we can see that each moved in tandem with the oil price, especially during the huge surge during the 2000’s.  If we look at the new copper-oil price chart, we can see that the copper price, starting in 2003, moved up and down twice right along with oil.

EXTREMELY IMPORTANT TO UNDERSTAND BELOW:

Investors need to understand that the market “INNATELY” balances supply and demand over the long-term.  For example, the copper mining industry is not going to bring on twice as much copper supply onto the market than the world needs.  Furthermore, the copper mining industry only makes a small percentage of profits to build production slowly.  Thus, small profit margins actually LIMIT the growth of the copper mining industry.

This is the same for the gold and silver mining industry.  While supply and demand play a small role in determining price in the short term, it is less of a factor in the longer term.  The COST OF PRODUCTION is the leading factor in determining the price of GOLD, SILVER and COPPER.

Now, if you read that, you would understand that the Fed and Central Banks CANNOT push the price of gold and silver (too far) below their cost of production.  The only TRICK the Central Banks have, is to CAP the precious metals prices.  And the reason they do this, is too make sure that the 99% of the WALKING DEAD keep funneling their funds into stocks, bonds and real estate.

In Spite Of All The Grand Conspiracies… Americans Still Living Life High On The Hog

I do realize that the American standard of living has declined over the past several decades.  While many analysts believe this is due to the ELITE stealing most of the wealth, it has more to do with the Falling EROI – Energy Returned On Investment.  The falling EROI is destroying our LEECH & SPEND SUBURBAN way of life in the Good ole U.S. of A.  That being said, I continue to see homes and business pop up all over the place.  Sure, some areas of the country aren’t doing as well as others, but the restaurants, movie theaters, stores and highways are full of traffic.  Americans are busy moving everywhere and nowhere spending credit or money they really don’t have.

Moreover, most Americans live in one of these diverse and classy suburban neighborhoods below:

The majority of Americans live in three bedroom homes with two baths and all the modern appliances and amenities.  Actually, a lot of the newer homes have four bedrooms and three baths.  Now, all of these homes are stuffed full of gobs and gobs of furniture, TV’s, appliances and thousands of assorted clothes, books, electronics and all kinds of trinkets and garbage.  In addition, neatly parked in the garage of these homes, Americans have at least two cars.  Although, easy finance has allowed some to be more fortunate to have three cars, a boat, RV and several ATV’s.

Sure, the ELITE control more stuff today than ever… but so do AMERICANS.  We have more CRAP filling our homes, garages and storage facilities than we did 50 years ago.  I mean… who in the hell stored their stuff in a private storage facility 50 years ago??  I would imagine very few.  Today, if you don’t have a storage unit… something is definitely wrong with ya.

Our motto used to be “As American as Baseball and Apple pie.”  Now its, “Americans work jobs they hate to buy crap and garbage they don’t need.”  Amazing what 50 years can do to a society.

Anyhow, if you think the Americans are the only ones at perfecting the COOKIE-CUTTER Suburban housing development, think again.  The Chinese have taken it one step further… LOL:

Yes, that is a real picture of a suburban housing development in China.  Talk about cookie-cutter.  You can’t get any more identical than that.  Well on the other hand, you will see some blue color mixed in here and there.  Some owners decided to stand out from the rest by installing a swimming pool.

Regardless, Americans have more stuff today than ever.  So, things aren’t really all that bad in West’s Greatest Empire when we compare ourselves to the poor slobs living in many other third world countries.

Okay, so what does all that have to do with precious metals manipulation?  Good question.

You see, the majority of the American’s wealth is tied up into STOCKS, BONDS and REAL ESTATE.  Also, these assets are where the Federal, State and Local governments receive the overwhelming majority of their tax revenue.  Rapidly falling values in any of the assets listed above is the DEATH KNELL for governments.  So, it is in the best interest of government to make sure Americans remain BRAIN DEAD when it comes to understanding real money such as Gold and Silver.

While many believe this may be a Grand Conspiracy to manipulate Americans, it’s not.  Rather, I call what has taken place in the United States, as decades and decades of WINGING IT.  That’s correct.  Shooting from the hip by growing and expanding our economy without any regard for wisdom, prudence and long-term thought.

For example, individuals who live in a large metropolis like New York City, you have my sympathies.  This picture below shows what a construction company had to deal with as it pertains to the massive amount of old underground infrastructure.  Many of the water and sewer pipes in big cities are 50-75 years old.  Well beyond their life expectancy.

Folks, we are in BIG TROUBLE and most Americans have no idea.  Thus, Central bank market intervention is to keep this INSANELY COMPLEX world of ours going for another day, week, month or year.  Unfortunately, time is running out.  Not because the Central Banks are running out of paper to print money, but because the cheap and affordable energy that runs the system…. IS RUNNING OUT.

I wrote about this in my article, THE BLOOD BATH CONTINUES IN THE U.S. MAJOR OIL INDUSTRY:

That article received the most FACEBOOK hits ever at 1,300+.  Which means, some people are finally WAKING UP.  Precious metals investors ignoring the energy data are making a big mistake.  Why?  Because the Fed and Central banks can continue manipulating the markets forever if it wasn’t for the coming ENERGY CLIFF.

Unfortunately, a lot of folks in the “Alternative Media” believe in the “Abiotic Oil Theory.”  This is the oil theory that suggests oil is made deep below the mantle of the earth which allows oil fields to magically refill… so there is no real threat of peak oil.  Individuals who believe this nonsense, such as Jerome Corsi and his book, BlackGold Stranglehold, have lost all sense of logic and reason.  While many of these individuals who believe in the Abiotic Oil Theory are quite intelligent, I am surprised how completely STUPID they can be on this subject matter.

REAL PROOF…Why Abiotic Oil Is Another Lousy Conspiracy Misleading Investors

Those who perpetrate the Abiotic Oil Theory say that the Russians are producing more oil than ever because they are drilling ultra-deep wells tapping into this limitless supply of oil.  Well, if that was true… SOMEONE NEEDS TO TELL THE RUSSIANS.  The Russians aren’t drilling ultra-deep wells to get to their oil, rather they are drilling a hell of a lot more horizontal wells, just like the insane U.S. shale oil industry.  The proof is shown below:

In just two years, Russian horizontal well drilling has increased from 22% of the total in 2013 to 34% in 2015.  Folks, horizontal wells aren’t ULTRA-DEEP WELLS tens of thousands of feet down.  Rather, they are more like the typical shale wells that are 7-10,000 feet down with long laterals to get to the oil.  If Russia is drilling more horizontal wells, just like the U.S. shale oil industry, they are also running out of cheap high quality oil.

A few months back I stated that I was going to write an article on this subject matter.  I need to do so because a lot of people are still being mislead by this erroneous conspiracy theory.

Now, the reason I have been laying out all this information is to explain Central Bank precious metals manipulation and how it’s all tied together with energy and the markets.  If you are only looking at the COMEX paper trading and daily charts, then you only have a small window of the overall market manipulation.  Furthermore, precious metals price rigging is only a small part of the total amount of Central Banks market intervention.

David Stockman discussed this in his recent interview, Fiscal Bloodbath Coming This Fall – David Stockman, on USAWatchdog.com.  In the interview, Stockman goes on to say that the Fed and Central Banks have propped up the Bond market by purchasing $20 trillion in Treasuries and Bonds over the past 20 years.  This doesn’t include the Trillions spent propping up the global equity (stock) markets.

All this is being done to hold off the world’s largest bank run in history.

Central Banks Terrified About The World’s Largest Bank Run In History

What the Fed and Central Banks are really worried about, is the WORLD’S LARGEST BANK RUN in history.  This is why they are now throwing everything and the kitchen sink to prop up the markets.   We must remember, all the debt, derivatives and money printing is being done to keep people from freaking out and starting a global bank run.  Thus, the Fed and Central Banks are manipulating the market by controlling “MARKET PSYCHOLOGY.”  This goes well beyond gold and silver price rigging.  It’s a full spectrum, wide-ranging, all encompassing market intervention never seen before in history.

This chart provides the reason (numbers) why Central banks continue to rig the markets:

According to data for 2015, of the $369 trillion in global stocks, bonds and real estate, gold and silver only represent $3.1 trillion or less than one percent of the total.  Actually, David Stockman, in his interview posted above, states the the global bond market is closer to $100 trillion.  Regardless, the massive amount of money-digital printing has been done to prop up the $366 trillion in stocks, bonds and real estate.

We must understand, ALL THE DEBT & LEVERAGE in the system is the same as when banks in the 1920’s loaned out a great deal more GOLD CERTIFICATES than they had gold in their vaults.  Printing and issuing a lot more gold certificates worked fine until the point, it didn’t.

In all reality, the U.S. and global financial system are already DEAD.  The citizens of the world just don’t know it yet.  The only thing that is holding it up is a lot of HOT AIR and Central bank market intervention.  However, the factor that will take away the Fed and Central banks printing press, is the disintegration of the U.S. and global oil industry.

I am working on an article about the U.S. OIL INDUSTRY IS NOW CANNIBALIZING ITSELF.  While there have been news releases stating that the oil majors, such as ExxonMobil and Chevron, are now making profits…. this is nothing more than white noise obfuscating the facts.

For example, ExxonMobil, Chevron and ConocoPhillips reduced their capital expenditures (CAPEX) by a stunning 40% Q1 2017 versus Q1 2016.  The major reason for the reduction in CAPEX spending is that these companies are in desperate need of free cash flow.  In the past few years, they have been borrowing money to pay for CAPEX, or worse… dividends.

Many investors who are shareholders in ExxonMobil or Chevron, do so because they get a nice fat quarterly dividend.  The oil companies realize that if they start cutting dividends, what is the motivation for investors to hold onto their stock???   This is especially true as ExxonMobil and Chevron’s stock prices continue to fall due to lower oil prices.

We are now experiencing the beginning stages of the disintegration of the U.S. and global oil industry.  While the Central banks continue to prop up the markets with money printing and massive liquidity, the biggest GLOBAL BANK RUN IN HISTORY is on its way.

Check back for new articles and updates at the SRSrocco Report.

The Gold bugs and Gold experts must be going through hell; almost seven years later and the Gold Markets refuse to follow the path these individuals have laid out for it. Proclamation after proclamation has failed, and the detested dollar much to their angst and surprise has continued to trend higher. Inflation has not taken off as they expected; well at least based on the distorted figures the government issues. The masses believe this data is real and that is all that matters in the end. Truth or a lie is based on a perception and perceptions are driven by emotions, which means that everything is up for debate. What holds true today might not hold true tomorrow or what is deemed valid today might be deemed as rubbish tomorrow.

In Jan of this year, we published an article titled Gold market ready to breakout? A small excerpt is listed below:

 Throughout 2016, we stated we did not expect much from Gold, and we stuck to this forecast, even though many experts went out of their way to report that Gold was ready to soar to the Moon or even to the next Galaxy. In fact, since 2011, we have continuously said that until the Trend turns positive, it would be best to play other lucrative markets, such as the general equities market, the US dollar, etc. During this time several experts stated that Gold was ready to surge and some issued insane targets ranging from $20,000-$50,000.

You would think that experts would try to release targets that made some sense. After all, Gold has not even traded past $2,000, so it makes one wonder how any individuals with a shred of common sense could issue a target of over  $5,000. Even this target is quite high, and we only envision it being struck under extreme conditions.

It appears nothing has changed and the overall outlook remains as uncertain as it did in 2014, 2015 and 2016. In January we stated that the Gold market had triggered several bullish signals that should have taken Gold to the 1360 ranges. In any other market, such a confluence of bullish signals would have produced a much stronger effect; the word muted is a kind way to describe Gold’s move to date. However, as the overall trend was still neutral, we also stated we were not ready to fully embrace the Gold markets.

Gold has now given the first signal that it is getting ready to test the $1360 ranges with a possible overshoot to the $1380 ranges. A weekly close above $1380 will set up the path for a test of and potential challenge of the 2011 highs. Tactical Investor 

It could not even trade past $1300 on a weekly basis; the word pathetic comes to mind when one examines the Gold markets actions over the past few months. It appears that Gold markets are destined to experience more pain before attempting to challenge the $1300 ranges. Adding to the misery; the dollars consolidation is drawing to an end, and Gold is now trading in the overbought ranges.

The trend is what determines whether we embrace an investment or not. The trend was neutral in back in Jan, and it remains neutral on the long term charts and negative on the short term charts. In other words, the Gold market appears ready to pullback as opposed to breaking out.  We will not embrace Gold until the trend changes as there are many other markets out there that make for a better investment. One such example is the biotech sector; however, one needs to tread with caution as this sector is full of speculative plays.

Gold has been unable to trade above the main downtrend line, and the layer of resistance continues to grow in the $1300-$1350 ranges. The longer it takes a market to trade above a specific zone the stronger the resistance becomes; conversely when it eventually does manage to close above this zone former resistance will turn into support. In the interim, it looks like Gold is headed lower and a weekly close below $1200 could take it as low as $1100. As of Dec 2016, Gold has been putting in higher lows, and as long as this trend is maintained, then the overall long-term outlook will remain neutral.  To change the outlook to bullish, Gold needs to close above $1350 on a monthly basis.

The dollar has been consolidating since Dec of 2016, and the consolidation appears to be drawing to an end. There is a strong zone of support in the 97.80-98.40 ranges, and as long as the Dollar does not close below 97.80 on a weekly basis, the outlook will remain bullish.  Even though the dollar has experienced a strong run over the past few years, the pattern is a lot more bullish for the dollar than it is for Gold

Conclusion 

The Gold standard won’t make a comeback for the next several decades as the current generation does not view Gold as money and has shown no interest in trying to find out the important role this metal played in providing financial stability for the past several centuries.  Gold has to be viewed as any other investment; there is a time to buy and hold the investment and a there is a time to close and fold.  As Gold appears to be heading down, it would not be a bad idea to allocate some money to this metal.  The keyword to keep in mind is some and not a lot of money; as we stated earlier, there are many other sectors out there that look more attractive. For example, the biotech sector looks a lot better than Gold and one way to play it would be via the ETF IBB.

Almost every Bull Market experiences a feeding Frenzy stage; Gold never experienced this stage so from a very long-term perspective, so the odds suggest that the bull market is not dead but in a deep coma.  The feeding frenzy is the point that the masses embrace the investment and that usually marks a long-term top in the markets.  Oil experienced this stage when it traded past $120 and surged past $140 before collapsing.

Genius may have its limitations, but stupidity is not thus handicapped.

Elbert Hubbard