Silver and gold price sentiment is an unmentionable reflection of the desires of central banking, backed by a currency enforced by decree. Real price discovery is the forbidden yet beating heart of darkness – where few are willing to travel.
A million barriers are self-constructed to protect the sinister truth. And a million barriers rise up to justify price action, whether up or down.
Ukraine and the Non-influence on Prices
These issues are exceedingly complex and long standing. They involve conflicts that have been gathering and off-gassing for years.
Developments in Asia can be tracked decades and more. There are risks and convergences that would have been priced in long ago if the markets were not broken.
To suggest that prices have been or are suddenly being “priced in” is borderline absurdity.
For the professional trader, there is an overlapping yet prevailing mentality that the real drivers of the market are the hedge funds and the speculators. The overlap is where many of these professionals can see perfectly that the big picture is unsustainable. But there is a desperate need to justify what is left of a disappearing art. Technical analysis is resurrected daily to justify a futile game where the machines took over long ago.
Long time readers know that in order to understand the massive disconnect between current price and fundamentals, one must follow the money to price discovery. This is becoming universal across all asset classes – whether equities, bonds, or even real estate.
Paper futures markets were once the cleanest mechanism for sorting out fair price by matching production with current and near future demand. Now they are completely dominated by speculators – wolves in sheep’s clothing pretending to be commercial entities. But in reality they are massive consolidated multinational hedge funds that own the sellers and control the regulators; massive and consolidated positions which allow them the constant potential to move the price any way they decide.
But they are parasites without any concern about fundamentals. They are pure short term – profit-driven and played by the most powerful forces. Contrary to popular belief, they are not selling, but accumulating illegally by gaming the price at will.
The HFT revelations have entered the limelight and burned yet another construct into the unconscious minds of the masses. Most people will not take the time to understand the subtlety, but the underlying effect is a more gradual loss of confidence in the institutions that informally back the world’s reserve currency.
But make no mistake: the return to fair value will be set upon and accompanied by another million false comments.
Those whose livelihoods depend on these markets love to ridicule those who protest rigged markets. A favorite argument goes something along the lines of: “You notice how these guys never complain when the price is flash-crashed up?” Any honest observer of these markets recognizes the gaping disconnect between the false reality of price massively below inflation-adjusted reality. The return to fair price will not be like a journey to the moon. It will be more like finally arriving back home to earth in an instant. Up or down, range bound prices are a fixed affair benefiting the men behind the curtain either way.
Once price control mechanisms ultimately fail, there will be absolutely no question about the value and scarcity of monetary assets. History will be written by those who held some part of reality as a literal and metaphysical anchor.