Bullish Case For Gold (and Silver) Is Now Complete

As a life-long Contrarian; these days I spend the vast majority of my reading/research time studying the bearish drivel on precious metals which emanates (in greater quantities than ever) from the Corporate Media. Indeed, this propaganda machine never displayed as much zeal to cover the gold market during the last twelve years of rising prices as it has this year – now that it has absurdly proclaimed a “bear market” for gold.

Why choose to study drivel?

Because (as any Contrarian can tell you) you always obtain the strongest arguments/evidence to support your own position from those with the opposite perspective. The logic here is simple enough. Assuming one’s own position is valid, then those with the opposite perspective are advancing false arguments.

At this point, it simply becomes a matter of carefully watching/listening, as your opponent(s) inevitably exposes their own weakness(es). With the Gold Bears never having had as much to say as they have lately; Contrarians have never been gifted with so many strong arguments as to why we should all be buying gold (and silver).

As the loudest of the Gold Bears, let’s let Bloomberg do the talking today, in an article titledGold Bears Dominant Again as U.S. Growth Quickens:

…“Why would I want to hold gold if the U.S. economy is recovering and equities are doing so well?” said Andrey Kryuchenkov, a commodity strategist in London at VTB Capital, a unit of Russia’s second-largest lender. “Physical buying probably won’t be enough to revive the gold market and have a sustained rebound. The sentiment will still remain bearish.”

Let me bite-off the the first chunk of this Big Lie: the U.S. economy is “recovering” and “equities are doing so well.” As all regular readers know, there is no bigger lie than that of the mythical “U.S. recovery”. As we get more B.S. from the BLS today proclaiming another 160,000 “new jobs” in the U.S.; back in the real world the U.S. has been losing jobs at the fastest rate in history throughout this “recovery”:

Then we get to the second half of that Big Lie: “equities are doing so well.” Indeed, with the Federal Reserve pumping $85 billion per month of its funny-money into the greedy maw of the One Bank solely to pump-up market valuations, one would hope they are getting a little “bang for their buck” ($1 TRILLION per year, to be precise).

So with a fake-recovery in the U.S. and $1 trillion per year (of new, funny-money) pumping-up U.S. equities to record levels, what do we have? That’s right: yet another U.S. market-bubble.

What happens next? For the answer to that question, we need only refer to that Monetary Oracle, Benjamin Shalom Bernanke, when he proclaimed the U.S. “a Goldilocks economy” in 2007. Chairman Ben told us that U.S. markets, and U.S. home prices, and the U.S. economy itself would just keep going up and up forever. Of course that’s not exactly how things turned out, is it?

Contrary to the wisdom of B.S. Bernanke; bubbles do not go up and up forever, and just weeks after assuring Americans of essentially infinite growth, the U.S. housing bubble (and U.S. economy) collapsed. Conversely, in the previous Bloomberg article we’re alerted to the fact that the price of gold just hit a “34-month low of $1,180.50 on June 28^th”.

And there we have it: straight from the propaganda machine itself. U.S. equity prices are sitting (once again) at bubble-highs, while the price of gold is near a 3-year low and “sentiment” is “bearish”. Add in the Ultimate Market Maxim (“buy low, sell high”), and the Corporate Media has made the strategy of any rational investor crystal-clear.

The U.S. equity markets are currently in a rigged bubble, thanks to $1 trillion per year of Fed funny-money pumping them up. The same propaganda machine assures us that this time (after 4 ½ years of false-promises) that the Fed is definitely going to start “tapering” that money-printing in the near future (this time).

At that point, the sound we hear is the “pop” of another U.S. asset-bubble blowing up. Thus (rational) investors should bail out of those U.S. fraud-markets now (locking in their profits), and move into the undervalued gold market – before gold prices shoot right back up again.

How do we know that the price of gold must rebound? The Corporate Media provides the answers there as well. The previous quote already acknowledged strong “physical demand” – i.e. demand for real gold. The “bearish sentiment” to which the Bloomberg talking-head refers is (of course) only directed toward the paper-called-gold being (fraudulently) flogged by the One Bank.

Thus we have strong demand for (real) gold, while false bearish sentiment artificially (and temporarily) depresses the price. But the propaganda machine has still more ammunition for gold bulls, in a separate Bloomberg article published on the same day. Here we find out that the world’s largest gold miner is conducting a fire-sale as it fights for its survival:

Barrick Gold Corp. (ABX) plans to either sell, close or curb production at 12 of 27 mines as the world’s largest gold producer tries to bolster profitability after reporting the industry’s biggest write-off…

To be a little more specific than this Bloomberg quote, this $8.7 billion “write off” is equal to roughly half the market cap of the entire company. And as a result, future production from nearly half the mines of the world’s largest gold-producer is now in doubt. Even in any best-case scenario here, we are looking at a significant drop-off in supply from the world’s largest producer.

This comes fresh off the heels of a separate article showing U.S. gold mine production falling 5% month-over-month from March to April, and with the year-over-year numbers also being lower. Clearly the destruction wreaked by the One Bank in the gold sector with its savage price-manipulation is now directly impacting supply, with similar developments in the silver market.

Combine strong demand with waning supply (along with a sudden “run” on physical gold), and  the result is that COMEX gold inventories have collapsed by more than two-thirds.

Our bullish case for gold (and silver) is now complete – with most of the ammunition supplied by the Corporate Media itself. The world’s best “safe havens” for the last 5,000 years are currently undervalued, with strong demand, plummeting supply, and inventories on the verge of complete collapse.

Meanwhile, in the largest Chump Market in the world (U.S. equities markets); we now have another asset-bubble – which yet again is totally ‘invisible’ to all the media talking-heads and their “experts”. With all these experts assuring us that these U.S. bubble-markets are going to keep going higher and higher, we know the bubble is about to burst.

Thus, while not needing any more bullish drivers, we know that there will soon be a panicked stampede of Chumps out of U.S. equity markets (after the bubble bursts) looking for a new “home” for what’s left of their investor dollars. The logical destination for those panicked investors would be either the world’s best safe-havens or the world’s most-undervalued assets.

Fortunately for investors, both of those avenues lead directly to precious metals.

Jeff Nielson

www.bullionbullscanada.com