Central Banks Force Us into Gold — Central Bank Intervention and Gold
Today, we stretch into our fifth week of almost uninterrupted coverage on gold.
I can’t remember a time in the past decade where gold has caught such consistent and mainstream attention.
Open a browser page, and a story about gold isn’t too far down.
A legendary ‘stock picker’ buys a stake in a gold miner, and then the internet chews over it for a week.
The yellow metal is getting headlines and attention not seen since 2011.
What does that tell you?
Believe it or not, today’s edition of The Daily Reckoning Australia says all this news brings with it a warning…
Defying the laws of financialisaton
In market terms, I’m young. My career is really only two-stock-market-crashes old.
I began in the business in the early days of a stock market crash that almost crippled the financial system. Kicking off your market career in March 2007 is one heck of way to cut your teeth in this industry.
Although in saying that, it’s been a long 13 years. I swear the evidence of it is marching across my face.
Nonetheless, something I’ve been steadfast on throughout this time is the ownership of physical gold. Bull market or bear market, I haven’t waivered.
Not just gold stocks either (check this out if you’re interested in those), but shiny lumps of gold and silver metal that belong to you, and only you.
Yet with gold back in the headlines, I wanted you to pause for moment. Step away from the headlines talking about the dizzying price highs.
See, gold never gets mainstream attention until the price goes up.
When it cracks a new high, the amount of attention doubles. Then when it starts to sell-off, there tends to be a small celebration by the mainstream. Sometimes with a mocking tone, that only cranks have faith in the yellow metal.
And let me tell you something, get ready for the jeers.
Over the past couple of weeks, I’ve made it pretty clear that I anticipate a fall in the gold price.
And today’s drop back to US$1,920 has set the stage.
Only yesterday I wrote to my premium subscribers that a dip to its current price is merely a stopover. That a trend down to US$1,850 over the next few weeks should be expected.
Furthermore, if it hits US$1,850, there’s a slim chance we’ll see it spike even lower into the US$1,700s.
Let me make this clear.
What happens from now into November — so let’s say the next two to three months — could be your last chance to buy gold under US$2,000 per ounce.
Not just this year. But ever.
My point is, get ready for a bigger dip in the gold price. This could be your last opportunity to get it under two gees.
However, I want you to stop thinking of this as the gold price going up.
Because, it’s the value of your fiat dollars falling in relation to gold.
It’s not gold going up, it’s the fiat monetary system on its last shaky legs. And we know this because of how desperate central banks are getting…
‘The mother central bank to the world’
How do we know that the monetary system is wobbly?
Our precarious reality hit home for me during the Sprott Natural Resource Symposium back in July, where I interviewed investment author Nomi Prins.
If you want to know what the Federal Reserve Bank is thinking, she’s the sort of person you want to follow.
Nomi and I met some years ago back in Berlin, where we talked all about the problematic banks rattling around in the financial system. But this was the first time we were able to get together on camera.
Fast forward a few years, and it wasn’t problematic global banks that caught our attention. This time, it was the trouble brewing with central banks.
The most surprising thing to come out of my interview with Nomi was central banks’ ‘no limit’ approach.
According to Nomi, the Fed as ‘the mother central bank to the world’ has made it clear there is nothing it won’t do to prop up the ‘financial economy’ at the expense of ‘Main Street’.
Based on Nomi’s research, the three trillion dollars the Fed has thrown into the US economy in three months is only the start. There’ll be more. Exactly what more is, we don’t know yet.
The important point that Nomi was keen to drive home is, central bank intervention isn’t going away, it’ll increase over the coming years.
That my friends, will be incredibly bullish for gold in the long term.
And this dip in the gold price will look very cheap a year or two from now.
Until next time,
Editor, The Daily Reckoning Australia
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