murphy metal monday

Markets are markets and will always fluctuate, sometimes defying logic and reason.  Gold, as well as any other market, has typified this trading phenomenon at times over its 20-year bull market.  For example, today’s weak price action is exactly what we saw in 2019, before prices exploded higher. Like today, the bullish sentiment was equally as weak in the earlier part of 2019. Why is that?  Because the price of gold had been moving sideways for several years and investors simply lost interest, even though the physical market was “tight”.  The same scenario is in place today.  Gold has been going sideways to lower over the last year, despite a tight physical market, and most of the public, again, has lost interest.   It’s human nature to lose interest at lower prices and to be excited after prices have run up sharply.  The fact is we know why gold prices are weak so far this year and we know the public has lost interest (while the smart money is quietly buying as much physical as they can get their hands on) and we know physical supplies remain very low.  But, as Warren Buffet will tell you, the ideal time to purchase anything is when the fundamentals are good AND there is “blood in the streets”.  Gold, and gold coins, have a long history of performing this way, and today is no different.  Inflation, negative real interest rates and money supply, are all on the rise.  Strong physical demand will once again stem the current gold price declines and in due time gold will be trading well north of $2,000oz.

Below are some additional thoughts from Mike Savage of Raymond Financial.  Thanks to for posting the piece this weekend:

Fake money = Fake Prices

If it were just that the “money” being conjured up we would likely see higher prices over time. However, what is being done with this “money” is the real cause of our problems. This “money” is becoming worth less and less each day as it is being conjured up in amounts we cannot even imagine and at virtually NO COST and virtually NO LABOR involved. This, in reality, makes this “money” virtually worthless.

When will reality set in? Our country admits to nearly 29 TRILLION in debt and has unfunded liabilities of nearly $200 TRILLION. In addition, we are running deficits (admitted to) of $3.6 TRILLION. (US Treasury).  Using GAAP accounting it is likely over $9 TRILLION ANNUALLY.

That means we are like a person who has maxed out their credit card and are tapping other cards to keep paying the current one. But don’t worry! You have our full faith and credit. Anyone who thinks these debts can be repaid with our “money” having ANYWHERE near its value is clueless about our financial condition- which in my view is terminal.

Already the US dollar has lost 84% of its value just from the year 2000 vs. gold and it has lost 98% of its value vs. gold since 1971. This simply means that if you had purchased gold in 1971 and measured the dollar against it the dollar would be worth 2 cents today. Keep on “printing” guys- we are on the fast track to ZERO at some point- just like every other fiat (backed by nothing) currency that has ever existed.

When confidence in the dollar wanes, the end will be near for our way of life as we have known it.  Of course, to keep the masses fat, happy and clueless we are bombarded with misinformation daily on financial media and the “news” which has become nothing more than a propaganda machine.  Is it any wonder that many think the economy is booming when all of the economic data has been abysmal for years?

I have written extensively about the manipulation of the gold and silver markets where paper contracts are conjured up out of nowhere and sold into the market when there are few buyers. This is done to fool the many about how our “money” is being debased. I also believe that this may be being done so that the central and major banks can load up on the metals at a steep discount.  Why would I think that? In the first half of 2021 gold purchases by central banks were 333 TONS. This is what they admit to.

With all of the games being played gold and silver are MASSIVELY undervalued- particularly when you look at the amount of fiat currencies being conjured up out of nowhere. Based upon the quantity of “money” gold is as cheap today at $1800.00 as it was in 1970 at $35.00 or in 2000 at $300.00. Anyone who thinks gold is expensive today has NO idea what is happening.

Bonds are being bought to keep interest rates artificially low. This allows governments at all levels to go deeper and deeper into debt with few consequences in the near future but possible DIRE consequences in the medium to long term.  This also allows companies and individuals to go deeply into debt. This actually seems like a good thing since our dollars are becoming worth less it allows many to maintain their current lifestyle- at least for a while. Since little can be earned in cash or bonds many move to stocks to provide much needed income. Some even buy real estate. These suppressed rates are actually artificially propping up these “markets”.

Another interesting aspect to the free money is that it makes people gamblers as opposed to investors.  What we have is a lot of cash chasing dreams of quick riches at the expense of future innovation and good long-term gains. This stifles innovation, punishes job growth and limits future opportunities for many.

Ask yourself a few questions:

  • Do I believe that “printing” money and issuing new debt to solve a problem of being over-indebted a plan that can work long term?
  • Do I believe the central banks can stop the “printing” without causing the greatest crash in human history?
  • If they don’t stop when will our “money” be no longer accepted as having any value?
  • Do I have a belief that those who are promising me repayment can actually pay?
  • If they do pay, what value am I going to be receiving? Notice I didn’t say “amount” I said value.
  • Have I done anything to protect myself from the loss of purchasing power of all fiat currencies?
  • What do I believe are the assets that can preserve my wealth best over time?
  • Why are central banks- who can conjure up trillions with a mouse click buying record amounts of gold?  
  • Am I prepared for a period where the economy may not function anywhere near what we are accustomed to?

These are just a few questions that we should take seriously. I believe the biggest problem of our time right now is complacency. We are seeing our rights trampled on, we are seeing our “money” and therefore, the value of our labor being destroyed and just because the water isn’t fully boiling yet most people are confident that even though we are going down a path that has a 100% failure rate- it won’t happen here.