James Turk continues:

“Then the auction for the Greek credit default swaps concluded smoothly, suggesting the Greek default would not be disruptive.  So the shorts had every chance today to deliver another crushing blow to the precious metals to continue the selling pressure from last week.  But it didn't happen, Eric.  The precious metals came back and put in a good day by holding above important support at $1650 for gold and $32 for silver.

So while the precious metals market may appear quiet on the surface, there are some meaningful crosscurrents going on underneath.  Today's action is another good example that the paper shorts can only push the gold and silver market so far, even with news that should have helped them pressure prices....

Continue reading the James Turk interview below...


To hear legendary Jim Sinclair discuss which company he believes

is the best investment and why click on the logo:

“That limit - which we have seen time and again over the years - is when the demand for physical metal starts to overpower the selling pressure in futures, forwards, options and other markets for paper-gold, which is what we saw today.

I think more and more people are starting to recognize this seemingly endless daisy-chain, Eric.  Banks gets bailed out by governments, and then governments get bailed out when banks buy their paper.  Central banks provide the grease to make it all happen with their ongoing money printing.  For example, Spanish banks are borrowing EUR 152 billion from the ECB, three times the amount from one year ago.

So in the end, nothing gets resolved.  All the bad debts remain.  Even worse, more debt is added creating an ever greater burden.  That is not a solution, and as I have said before, the so-called ‘can’ the central planners have been kicking down the road is now a 2-ton boulder.

It is only a matter of days - or weeks at most - before more banks and governments strap on the ECB's bottomless feedbag to try keep their head above water.  But importantly, money printing does nothing to fix so many insolvent banks - and insolvent governments too - here in Europe.

The next step for the precious metals, Eric, is to start probing overhead resistance.  There are two levels to watch on silver, with $34 coming first, but the critical level, of course, is the $35 level we’ve been talking about for months now. 

The key areas for gold are $1,700 first followed by the $1,800 level.  If gold can decisively break above $1,800, the big move I have been expecting will be well under way.  There is a fly in the ointment here.  Next week is the important gold option expiry and we know from past experience that the shorts try to pressure prices during expiration.

So we have to keep that in mind going forward.  But don’t let any volatility cause you to take your eye off the ball.  The outlook for gold and silver remains very bullish as the debt crisis continues to work its way through the global financial system. 

The way I see it is the metals bounced back strongly today when they needed to.  The physical buyers won the day.  The paper shorts may not yet be running for cover or retreating, but I expect that moment will come soon.”

© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

Eric King

To return to BLOG click here.

© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,

rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

Subscribe to RSS
KWN Blog