For those that think gold and silver bulls are perpetually long gold and silver no matter the present condition of the PM markets, that is a patently false notion. In light of the recent steep silver correction, an asset that periodically has steep corrections every year (the majority of which are induced and engineered by corrupt bankers) does not a bubble bursting make. Personally, I have been a gold and silver bull since 2005 (admittedly a little late to the party but still far enough ahead of the curve). Since that time, I have grown to know many precious metals bulls that were bulls for an even longer period than I. And what I’ve learned is the following. Those among us that understand the Central Banker effort to transfer wealth to the top 1% of people in their country through their Ponzi reserve fractional banking schemes, their constant schemes to devalue fiat money, and their unfair manipulation of stock markets, have NEVER advocated staying long at all times in all precious metal assets during the current gold and silver bull. Despite bankers’ allowances for paper gold and paper silver to be substituted for physical gold and physical silver in their Exchange of Futures for Physical (EFP) transactions and their clever invention of unregulated paper derivative commodity products that are hardly backed by any physical product, gold and silver has rebounded every year from banker attacks to keep trending higher. And the uptrend is still not only intact but it is intact and strong.
In fact, among all those I know that have been long-term gold and silver bulls for at least 6-10 years, all of us adequately manage the volatile downside engineered manipulation of gold and silver futures quite well most times with temporary hedging strategies that combine shorting gold and silver, cashing out, and/or buying puts on mining stocks/ETFs. Yes the intelligent silver/gold bulls among us will always have core positions in gold/silver whether that core position consists of just the physical metals, a fraction of the mining shares, or a combination of both physical and mining shares. But the intelligent silver/gold bulls will also fully expect banker manufactured price suppression schemes executed against gold and silver to occur every year without fail as well. However, since we have understood this global fiat monetary crisis for so long and have accordingly been precious metal bulls for many years now, due to our cost basis in gold and silver that remains far below the banker-manufactured steep drops in the price of paper gold and paper silver, the recent steep drop in silver is rendered nearly irrelevant (for example, for my newsletter subscribers that have been with me since the launch of my newsletter, the cost of silver, even after this dip, at $38 a troy ounce today, is still more than a couple hundred percent above our cost basis).
For some odd reason, gold and silver bears often assume that gold and silver bulls are unidirectional traders that always buy gold and buy silver no matter what direction gold and silver are heading and that they continue to blindly buy into short-term peaks. This assumption, besides being patently false, is an assumption with very little merit. Sure, there may be some among gold and silver bulls that buy heavily into short-term peaks but there are likely far more investors, from a historical perspective, that have heavily bought into short-term peaks in major stock market indexes right before they collapsed than those that have committed the same error with precious metals markets. Consider this April 23, 2008 article in which I warned of a very strong possibility of an imminent severe crash in US markets. Just 18 trading days after I posted the article, the US markets began a 50% decline, yet the majority of comments that followed my article reflected very strong bullish sentiment towards the US markets. I consider myself a gold and silver bull yet have never suffered huge losses even in years when my newsletter portfolio has been heavily over weighted in gold/silver mining shares and gold/silver mining shares ended the year heavily down. For example, in 2008, when stock markets crashed, I managed my Crisis Investment Opportunities newsletter so that it still returned a small gain versus the very large 38%+ losses of most global major indexes and the very substantial -28.56% loss of the PHLX Gold/Silver Sector Index. In the following year, when the PHLX Gold/Silver Sector Index rebounded significantly and returned a very substantial +37.55%, I still managed the downward volatile periods in gold/silver to end the year with an even greater +63.32% return. A couple of weeks ago, on April 26, 2011, I sent a very comprehensive warning to my Platinum Members. A very brief excerpt of that warning is below:
“I can’t see the bankers letting this opportunity go to waste, now that they have sold down silver by 10% already…As they say, to catch a criminal, you have to think like a criminal, so here is what I think will transpire the rest of this week. If I were a banker, silver at $50 absolutely mortified me and gold over $1,500 further mortified me. If I were a banker, I knew that if I didn’t cap the rise yesterday, there was going to be no way out from the huge short positions I hold in gold that expire in June and the huge short positions I hold in silver that expire in May and July. Thus, my best plan, and probably only hope, to exit those gold and silver short positions, is to attack gold and silver right now. Furthermore, if I were a banker, I would also take down mining shares as much as I could right now to keep people from investing in them in the future, especially with all the talk about the underperformance of the mining shares’ performance when compared to the metals. Drag down the mining shares now and that should keep people out of the mining shares for a while.”
After I issued that warning, silver dropped more than 27% in the next 7 trading days, and as I predicted, the mining shares were hit hard with the Amex HUI Gold Bugs index dropping more than 9.38% and the PHLX Gold/Silver Sector Index dropping more than 9.59% over the next 8 trading days. Foreseeing this activity, in preparation for the annual banker attack against gold and silver, I employed extremely tight trailing-stop-losses in my newsletter that moved many of our mining shares into cash at near 52-week tops and we also shorted silver on a short-term play and exited this position one day prior to a very significant silver rebound for a short-term 37% gain. In addition, during the severe silver pullback, my private consultation clients recently employed GLD ETF puts that we deployed for two days only and then exited at about 60% profits and many of my Platinum clients recently exited a very significant position of silver shorts last week at 125% to 135% gains in just a few days. While true that it is impossible to perfectly catch the tops and bottoms of steep corrections in gold and silver often manufactured by bankers, by understanding banker manipulation of PAPER gold and silver derivative products that they specifically invented to scare people away from investing in gold and silver, it is very possible to avoid the bulk of these huge corrections that happen every year and even use them to your advantage.
Those that refuse to acknowledge the heavy intervention of bankers into gold and silver markets seem to be among those investors that are caught off guard every year by steep gold and silver corrections. At maalamalama, we have been able to consistently outperform the gold/silver sector every year quite significantly even though we tend to be very heavily concentrated in gold and silver from year to year because we have intensely studied and understand banker manipulation schemes executed against silver and gold. From launch of my newsletter in June 2007 until April 28, 2011, my newsletter has cumulatively returned, in a tax-deferred account, 221.73% with very low turnover as compared to the +59.08% return of the PHLX Gold/Silver Sector Index during the comparable investment period. I know that there will always remain people that I will never ever be able to convince of the existence of banker take down schemes executed against gold and silver primarily with the use of paper gold and paper silver derivative products.
Central Banks execute these takedowns primarily in the fake and bogus paper market because they do NOT want to sell any of their REAL PHYSICAL PRECIOUS METALS as reflected by the fact that they became net accumulators of physical gold in 2010 and remain net accumulators of gold in 2011 after two decades of being net sellers. This divergence between the price of paper PMs and the actions of Central Banks is precisely the reason why Silver Eagles and Silver Maple Leafs continued to sell for anywhere between an 8% to 12% premium above the paper price of silver all throughout the recent banker executed take down in the paper silver markets.
If banker manipulation of gold/silver didn’t form such well-developed predictive patterns, and if I didn’t know that I can always depend on “regulators” like the CFTC, the CME and the SEC to aid and abet these take down schemes, there would be no way in the world that my newsletter could have outperformed the PHLX Gold/Silver Sector Index by more than 162.65% in an investment time span of less than four years. To say that I’ve been heavily concentrated in PMs for five years now and that I’ve been able to outperform the PHLX Gold/Silver Sector Index significantly every year based upon pure luck rather than accepting that my outperformance is based upon my knowledge of banker manipulation schemes executed against gold and silver would seem to be more apropos of a conspiracy theory than the opposite side of that equation. While we would ideally prefer to end these banker manipulation schemes that create great price distortions in gold and silver to the downside (yes, gold and silver bears, they create downward price distortions!), and we certainly have put in our fair amount of work in exposing these schemes for six years running now, if we can’t prevent them, we certainly will ensure to our best ability that they don’t hurt us.
Among the long-term investors in gold and silver that view physical gold and physical silver as a store of value and that don’t trade gold/silver as the speculative commodity it is not, these huge sell-offs don’t cause weeping and gnashing of teeth among a great many gold/silver bulls as the gold/silver bears often erroneously presume. Just because we are gold/silver bulls does not mean we are perpetual gold/silver cheerleaders every hour of every day of every year. That would be foolish, especially in light of our acknowledgment of banker price suppression schemes executed against gold and silver through paper markets. In fact any gold/silver bull that has done his or her homework should fully understood the banker manipulation game of gold and silver and understand when and how to hedge for these occurrences to preserve capital for the next ride up. True gold/silver bulls understand that we can use this volatility to sell high and buy back low at least once a year if not a couple of times a year. As far as the latest “hit” on silver, I would fathom that the US Federal Reserve had a very large role in colluding with the CME to raise silver margins and that they helped direct the latest takedown in silver specifically to bail-out the enormous bullion bank short positions in silver that would have been impossible to unwind had it not been for the most recent episode of “today in banker take downs of precious metals” (especially given the lack of physical silver backing the bullion banks’ short positions).
Don’t ever forget that on July 24, 1998, former Federal Reserve Chairman Alan Greenspan, in testimony before the House Banking Committee, when informed of the huge gold short derivative positions held by bullion banks that could potentially bankrupt them if gold moved upward, stated: “Central Banks stand ready to lease gold in increasing quantities should the price [of gold] rise.” Now that central banks are net accumulators of physical gold and want to hold on to their gold, people should realize that Central Banks, with the help of corrupt regulators that are really allies of banks, “stand ready to raise margins at a ridiculous pace and with ridiculous frequency should the price of gold or silver rise.”
P.S. I’ve been working on two short books that further expose the anti-gold and anti-silver promulgated banker propaganda and will be releasing them online soon at a very nominal cost. I plan to donate100% of the profits from the sales of these two books to charitable causes and the provision of microloans to help people in developing countries. I will provide more details upon the release of these two short books, so please stay tuned for further information.
About the author: JS Kim is the Chief Investment Strategist for maalamalama, a fiercely independent investment research, education, & consulting firm that helps clients position themselves properly to profit from the ongoing global monetary crisis being executed by the world’s Central Banks.
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