Today James Turk told King World News that gold and silver prices are about to break free from manipulation.
June 14 (King World News) – James Turk: With the FOMC meeting this week, Eric, today’s selling pressure on the precious metals is not a surprise. With inflation busting out all over the place, the last thing these Fed officials want is to be reminded about how little the dollar is purchasing compared to a couple of years ago because of rising prices.
This ongoing battle to “tamp down” gold and silver prices raises an important question. Why take the long side of this trade by buying physical gold and silver when central banks seem determined to cap their price?…
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There is the old Wall Street adage that says: Don’t fight City Hall, which of course are the central banks. They have a lot of resources at their command, including the ability to print an infinite amount of currency. But as we know from examples like Weimar Germany, Zimbabwe, Venezuela and many other countries, this ability to create currency on demand when used unwisely can bring about a central bank’s downfall, which is the important point.
So if you choose to fight City Hall you need to pick your moments carefully, namely, when the value of the asset they are attempting to control is out of line with their objectives. And right now, with inflation taking hold, gold and silver are undervalued and of value to anyone seeking to protect their purchasing power from the growing inflationary threat. So it can be okay to go against what City Hall wants.
For example, one of the greatest trades of all-time is when George Soros broke the Bank of England in September 1992. Another example is the collapse of the London Gold Pool in March 1968 when central banks threw in the towel after the federal government dishoarded from Fort Knox over 10,000 tonnes of gold at $35.
So when someone says don’t fight City Hall, ignore them. They either don’t know what they are talking about, or they are working for City Hall, like most of the mainstream media when their handlers in government want to propagandise their position.
If governments can get away with propaganda to influence and control market prices to achieve some short-term goal, they will do it. Talk is cheap, but selling paper forward has consequences. And selling physical metal is expensive for countries that do it as the US found out in the 1960s and as Gordon Brown found out in 1999 when he forced the Bank fo England to sell one-half of its gold reserves at less than $300 per ounce.
The key to successful investing is to buy undervalued assets and sell overvalued assets, but another ingredient is needed – patience. We cannot predict the future, so even if an asset is undervalued, the timing of when it becomes fairly valued or overvalued is unknowable. Consequently, an asset can remain undervalued for awhile, but natural market forces eventually take over to bring assets back to fair value. This will happen with both gold and silver prices.
***To listen to Gerald Celente discuss his prediction that silver is headed to new all-time highs, gold, and the big surprises to expect in the back half of this year CLICK HERE OR ON THE IMAGE BELOW.
To listen to Alasdair discuss what to expect in the gold and silver markets going forward CLICK HERE OR ON THE IMAGE BELOW.
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