This article was written Michael Krieger and originally published at his Liberty Blitzkrieg site.
Editor’s Comment: Is this gold rally for real? Will precious metals reflect anything near their true worth in a phony inflated market filled with made up numbers and those who would like to suppress gold and destroy goldbugs?
It may be inevitable, and negative interest rates may push it there in a way that makes sense for even mainstream investors. There are reasons to think it may reclaim much of the value it has lost on paper in recent years, and may go well beyond that, particularly as its value in a cashless and chaotic world remains solid and wise. But then again, who knows?
GOLD – It’s Time to Pay Attention
by Michael Krieger
The last time I shared my thoughts on gold, a subject I had previously wrote about constantly, was all the way back in July of last year. That post was titled, 4 Mainstream Media Articles Mocking Gold That Should Make You Think. Here’s an excerpt:
There are many reasons why I stopped commenting on markets, but the main reason is that I started to recognize I wasn’t getting it right. In fact, in some cases I was getting it spectacularly wrong. Whenever this happens, I try to isolate the problem and fix it. In this case there was no fix, because much of why I was no longer getting it right was rooted in the fact that my heart, soul and passion had moved onto other things. My interests had expanded, and I started a blog to express myself on myriad other matters I deemed important. Providing relevant market information needs intense focus, and my focus had shifted elsewhere. I recognized that I wasn’t intellectually interested enough in centrally planned markets to provide insightful analysis, and so I stopped.
Years ago, Martin Armstrong was saying that nothing goes up in a straight line and that gold would experience a severe correction before beginning its real bull market. We are seeing his prediction unfold before our very eyes. What he also said is that as gold approached the $1,000 per/oz mark or even below, everyone would proclaim that “gold is dead” and start making comically bearish statements. In a nutshell, negative sentiment would plunge to levels not seen in years, if not more than a decade. We are starting to see this now.
I didn’t write this article to “call the bottom in gold” or anything like that. I merely want to flag these four articles due to the hyperbolic nature of some of the statements made (they are exhibiting pretty much exactly the same behavior as the gold bugs they mock do). I do think that something is happening on the sentiment front that warrants we are closer to the bottom than the mid-stages of a bear market.
Fast forward six months, and gold has been more or less flat. Nevertheless, a lot has changed in the interim and it’s time for an update. Specifically, the multi-year fundamental outlook has turned far more bullish, while sentiment remains depressed. Yesterday, following multiple back-to-back messages about gold on Twitter, someone asked me for my bullish thesis, I wrote:
@BrianZaratzian Negative yields, central banker panic at next downturn, bearish sentiment turns bullish, cashless society calls.
— Michael Krieger (@LibertyBlitz) February 2, 2016
But there’s more to it. A lot more. First, let’s look at the improved fundamentals. Gold bugs will exasperatingly proclaim that fundamentals have been great for the past four years yet the price plunged anyway, so who cares about fundamentals? To this I would respond with two observations. First, large institutional investors and sovereign wealth funds have been anticipating a rate hike cycle for a very long time now. They didn’t know when, but they expected it. The fact that the gold bugs never believed this is irrelevant; what matters is that big money believed it, and it was perceived to be very gold negative. In their minds, this anticipated rate hike cycle would confirm that things were getting back to normal, and if things are normal you don’t need to own gold, right?
The problem is that this assumption is quickly being called into question. Sure the Fed hiked rates once, but it is starting to look more and more like a policy error. Meanwhile, other major central banks around the world are going in the opposite direction, toward negative rates. I am a huge believer in market psychology, and the psychology dominating the minds of most institutional investors over the past few years has been that things were slowly getting back to normal. This has weighed on institutional demand for gold in a big way, and been a meaningful factor in the bear market (manipulation aside). If this psychology shifts, the shift back into gold could be very meaningful.
While that backdrop is interesting in its own right, what may make the move into gold that much more explosive is the lack of alternative investments. Let me explain.
Very wealthy people in the Western world do not like gold. In fact, if you talk to them, most will sneer at you with a combination of disgust and bewilderment at the mere suggestion of buying physical gold. These people will scour the planet for every and any alternative they can find before buying any gold, and this bias has been evident globally over the past few years. We have seen mansion prices and luxury real estate generally soar to unforeseen heights across the globe, and we have seen tremendous bull markets in equities. Similarly, competing “safe haven assets” such as sovereign bonds have rallied to the point many of them offer negative returns. Specifically, the FT just noted that negative yielding bonds now account for one-quarter of the entire government bond universe. Think about that for a second.
So what we are looking at is a far stronger fundamental backdrop for gold, coupled with an investment landscape in which almost all the alternatives look overpriced and unattractive. While wealthy Westerners will be dragged into the next gold bull market kicking and screaming, dragged into it they will be. They may not like gold, but they like losing money even less. This will create the buying power so desperately needed for a new gold bull to catch fire, and many people will be caught off guard. Personally, I think a new bull market in precious metals will be birthed with the next 12-months, and it’ll be a big one.
*Note: I think it is beyond obvious that all financial markets, particularly precious metals, are actively manipulated by Central Banks around the world. Recognition of this fact does not help one determine when the psychology of markets and related price action will change, which is why it was not addressed in this article.
Finally, in case you missed it the first time around, you should check out the July 2015 article: 4 Mainstream Media Articles Mocking Gold That Should Make You Think.
O’NEGRO just signed the TPP. Tufts says it will kill 500,000 jobs. IF YOU HAVE A SINGLE NEURON FIRING YOU KNOW IT WILL KILL A FUCK OF A LOT MORE JOBS THAN THAT.
TAKE A GOOD LOOK AT RHODESIA, NOW ZIMBABWE. THIS WILL BE YOUR CHILDREN’S FATE. Thanks for your great custodianship of this nation, you baby boomer fucking scum. Nobody can deny the boomers are the worst fucking people who ever lived. Now do you fucks understand what you have done? You fucking turds.
Cell phones mutate your sperm. But what’s the destruction of the human race compared to your right to call your aunt Flo from the mall? Idiots.
FREE TRADE IS A FORM OF CULTURAL MARXISM
ITS THE DESIRE TO MAKE ALL RHODESIAS INTO ZIMBABWES ROUND THE WORLD
America is being destroyed beyond repair.
We will need a new place to live eventually.
Why not rebuilt Rhodesia?
Why don’t we just do like we did 300 years ago? Go kill all the africans and put the few left on reservations and take over their country and fook it all up too! Africans are a lot stupider than native amerikans, should be pretty easy to do 🙂
Gold strong because of dollar weakness.
You still can’t eat gold.
You can’t eat gold that’s for sure, but you sure the hell can buy a lot of cheeseburgers with it.
Silver hit above $15 Today. About time. I don’t see any real pressure holding it back for a real Bill Run.
CASH IS BEAUTIFUL
CREDIT IS GRAND
BUT GOLD IS THE MONEY OF THE BIG BOSS MAN 🙂
Florida House just passed a vote 80 to 38 in favor for Open Carry for Concealed Permit Holders. The FL Senate already passed it. Now the Pro Gun Gov Rick Scott needs to sign it into law. Glad to also live in a declared MooseLimb Free Zone area. Take charge people of your politicians and policy in your State. Save America, one State Rights laws at a time
Uh, yes you most certainly Can eat gold.
Look up the world’s most expensive desert. There are several.
That said, I’ve yet to see a recipe calling for paper Dollars.
Hi Helot, yes I’ve read about these desserts in the past. Personally, I was never much interested but your point is certainly pointent. True, never saw a fiat bill burning in any desert, flaming or otherwise. Dessert for thought.
Tks, that was fun!
But you can eat all those worthless FRN’s, right?
Lamest catch phrase ever. Shows low IQ about history and how things work.
Keep stacking those FRN’s, they’ll keep you warm for about 5 minutes.
I like silver a lot more than gold. I can break it into smaller bits and my butcher will accept it in trade. FRN is and will be more accepted at first. I don’t have any wealth that I need to preserve, my wealth is my family, my rural off grid middle of nowhere home, and my skills. Now if I did have a big old pile of FRNs and I was still living in or near a big ole city, I would be trading those for an off grid retreat filled with food before I bought any gold.
Who claimed you can eat gold?
Why would you think someone that purchases gold doesn’t understand they need to eat?
You cant eat gun, but you sure as hell can eat a bullet thinking guns are your meal ticket. Do you ever tell people you can’t eat a gun?
Are you getting the drift here? I’m totally calling you a buffoon.
It is just a joke, the point being that when people say “you can’t eat gold”, someone comes in to say that “technically” you can safely ingest gold. Everyone knows that while you can safely ingest gold, it offers no sustenance. A better phrase to avoid the inevitable “can’t eat/can eat” back and forth is to say “you can’t live by eating gold”.
I’d look at silver before gold, fantastic ratio going on right now. 78 to 1! Also, if you have the right setup, can’t you use silver bullion to make colloidal silver? It ain’t food, but would be useful…
No, but it’s a lot easier to bug out with compared to nearly FIVE TONS of wheat per one ounce of gold, that I can buy for $6 for a 50 pound bag. Yes food is great to have, but if you have 401K or several thousand in a savings account etc., then putting that in gold and silver may be a good idea. They wouldn’t go to ZERO value unless Thermonuclear War took place, then eventually it probably would for those who found it 200 years hence. At this point not all of gold in the world could buy my last loaf of bread from me. Barring that it will continue to store value compared to dollars.
I bet an ounce of gold will buy more food than an ounce of dollar bills….
At least 10 cases now in the USA
IF VIRUSES SPREAD MORE RAPIDLY IN THE WINTER, THEN WHY DO ALL THESE OUTBREAKS EMERGE FROM NON-WHITE COUNTRIES WHERE IT’S TROPICAL?
WHY DONT THEY JUST STOP TRAVEL FROM NON-WHITE COUNTRIES?
Ignorance is strong in this one: “At least 10 cases now in the USA”
NoMoreFakeNews <- Go there and get a clue.
You probably won't though, you seem to enjoy spreading the fear our overlords cook up.
WHAT GOOD DOES IT DO US TO INCREASE KIDS’ SCORES IN MATH AND SCIENCE…
IF THERE ARE NO MOTHERFUCKING JOBS IN MATH AND SCIENCE?
LITERACY WAS MUCH HIGHER BEFORE PUBLIC SCHOOLS EVEN EXISTED THAN IT IS NOW
YOU STUPID, STUPID, STUPID, FUCKING BOOMER BASTARDS
Acid, you actually have some valuable information in your posts. I’m so sorry I can’t sincerely deal with your trumoulsoist attitude. I do believe you’re searching as much as we all are.
I so wish and pray for your attitude toward the “Baby Boomer” generation to change. It is what it is and nobody was watching the store. All were brought into a space where they knew that the Viet War was just wrong. I personally think that was an amazing time in History and also the loss of all that was believed in. It was not the “generation…… it was the time.”
Just keep your eyes forward. Baby Boomers, absolutely. New ones on board, absolutely. Stop blaming your Grandparents, your Parents for the past and focus on your future……what’s left of it. I am wishing you all the best the world has left to offer. Sincerely I do.
Kinda of looking for more posts from you but maybe in a format without all your clinkers in there. Stay well.
There will always be motherfucking jobs in math and science. It’s just stupid hubris to assume they’ll always be in this country.
America’s freedom, and the wealth therein derived, created the jobs that drew people here to fill them.
Well, America’s freedom was buried under the fascist regulatory state long ago and America has been showing it more and more over the past few decades, so….
Acidetch, keep up the good work. You are right on the point many times. And your strong expression is entirely appropriate. If the nugatoids understood what’s going on, they’d be shouting louder than you are. I don’t agree with everything you say, but you’re right more often than they are. And often when you’re right, you’re VERY right.
Blaming an entire generation for the evil instigated by a few is what’s stupid, stupid, stupid.
Bernie Sanders wants to kill TPP as President
acid – Shut your hole asstard
RUBIO SAYS HE WONT REVEAL POSITION ON TPP UNTIL AFTER THE PRIMARIES
CRUZ AND CARSON SUPPORT TPP
TRUMP SAYS HE BELIEVES IN FREE TRADE BUT THINKS OUR DEALS ARE MADE BY STUPID PEOPLE
CLINTON SAYS SHE VALUES OBAMAS WORK ON TPP BUT DOESNT SUPPORT IT (BULLSHIT)
SANDERS WANTS TO KILL TPP
I THINK I’M GOING TO STAY HOME AND MASTERBATE ON ELECTION DAY
IT WOULD ACCOMPLISH ABOUT THE SAME
TRUMP says he is a “free trader” but he believes in FAIR TRADE.
FAIR TRADE is a meeting of the minds between the participants of a transaction, each fully knowledgeable of the elements requisite to a fair exchange; and each receiving comparable value in the transaction.
FREE TRADE is a euphemism for the theft of the American Means of Production and the transfer of that production offshore to the benefit of the Uber Rich Investment Class.
TRUMP does not support FREE TRADE as construed by the NWO PTB who have institutionalized this theft of American assets through NAFTA, GATT, the TPP, TAP, and the WTO; and the deindustrialization of the USA.
This is why he has called for the return of American factories and jobs to the United States. 🙂
Is your blog almost ready so we can learn more from your warped sense of definitions, DK?
What have you named your blog? Is it, BlowhardFallacy?
I’ll bet you don’t have any entries about 3-D printers on your blog. That subject prolly causes you to go berserk.
Will the icon at the top of your blog be of a child throwing a fit with a caption saying, “It’s Not Fair! Whaaa! Daddy, fix it, make them do it how I want!”
“TRUMP says he is a “free trader” but he believes in FAIR TRADE.
You’re out of your damn mind if you’re matching YOUR definition to that man. The man is a predator that’s bilked his creditors, and preyed on the helpless, more than once.
An interesting experiment
The business acumen of government
Fucking nice places up since forever
This will cause gold to go even higher. It may also complete the destruction of America.
I’d Rather Vote to hang all the Psychopathic Commie Fascists. Now that would be entertaining. Watching them beg for their Mommas as the floor drops below them. Snap!!! NEXT!!
Thats too humane. Trow them all in a huge open mine pit and burn them alive. They have burned us long enough, return the favor.
Gold, just ordered another fractional. Get it while you can.
Acid; I thought the topic was gold? Take your racist rant elsewhere,nobody cares,too many other problems to solve.
Do not buy gold yet as an investment, still in a downtrend. check it 2008 to 2009; dropped right along with most other commodities.
Cash or shorting the mkt is best for investing.
RE: “shorting the mkt is best for investing”.
I’ve read about how the shorts might get bit.
Market timing, ,… eh? No thanks.
Also, I thought investments produced returns, like: factories, machines, farms, forests for lumber, etc… But not housing, housing is a depreciating liability, or so I’ve read,… and heard. Anyway, I’ve read gold is insurance, not an investment. Everyone has to make up their own mind though, some just have to learn the hard way I guess.
Don’t buy Gold ! Don’t buy Gold ! Don’t buy Gold ! Gold is not backed by anything ? Buy US$ ! Buy US$ ! Buy US$ ! Is backed by the US government !
As reported by a CNNABCNBCFOX bimbo…
Wow, how stupid do they think we are? Not backed by anything?
Read an article by Bill Holter that stated there is not enough physical gold on hand to meet demand.
This ain’t Alice’s Restaurant, that’s for sure.
“Kill”(used 5 times) “Watching them beg”, “Trow them all in a huge open mine pit and burn them alive”? And that’s just today and with only 25 comments.
Suddenly I feel like I’m in a bad neighborhood, surrounded by very bad people with bad intentions, and that I shouldn’t be here or be offering help or advise.
Rats! Claire. Make a U-turn.
Hell’s comming and aint no rules or morals in hell yea we all know demons are bad but angels are even worse it only took 2 to destroy soddam and Gomorrah just wait till they start blowing the trumpets and pouring out the vials. And dont forget them seals getting broke. Yep better make sure your fighting on the right side cus hells comming
yeah some days I wonder about this place. good luck and good wishes to you in your corner of the world though.
These problems cannot be solved with pretty words.
oddly, I went in heavily on GG and related stocks around Christmas. between the election year and the oil war, I assumed metal was a decent place to be for 1st qtr. So far, I’m making a killing on the fake money side of my preps. Hopefully it lasts long enough to rebalance into tangibles this summer. If so I should be able to flip it into a few cases of 7.62