Gold Smells Blood

Posted at 12:30 PM (CST) by & filed under USAWatchdog.com.

Courtesy of Greg Hunter’s USAWatchdog.com

Dear CIGAs,

One day after the Federal Reserve announced a $600-$900 billion second round of Quantitative Easing (QE2), gold and silver hit fresh all-time highs.  Yesterday, the yellow metal surged more than $40 an ounce to well over $1,390 before falling back a few dollars in after hours trading.  Silver, also, had a monster move!  It was up more than a $1.50 per ounce.  It, too, retracted slightly in after hours trading.  That surge in precious metals is a debilitating rebuke of the Federal Reserve’s wild and unprecedented money printing policies.   How bad is it, really, for the Fed to feel this is a good idea?  Gold is acting like a predator that smells the blood of wounded prey.  In this case, the prey is a much weakened Fed that seems desperate to keep its banking cartel afloat from the undertow of a sea of red ink.

It is reported that Sprott Asset Management bought 6.5 million ounces of physical silver at nearly $26 an ounce.  Respected financial blog Jesse’s Café American wrote yesterday about the deal, “Some might consider the price that Sprott paid to be a ‘leading indicator’ of where silver will be going. I think when the paper Ponzi scheme actually collapses silver will be much higher than that. After all, “he who sells what isn’t his’n must buy it back or go to prison.” Unless, that is, they are running the game. Then they just pay a fine and admit no guilt.” (Click here to read the entire post from JCA.) This kind of silver buying is a big plus for the physical market and a big negative for the often questionable paper market.

Big-time buyers are driving over-sized price moves in precious metals.  Hedge Funds, Sovereign Wealth Funds, big banks (like Goldman and JP Morgan) and Central Banks are now moving the markets in gold and silver bullion.  Movements like the one yesterday are not mom and pop retail buyers looking to purchase a dozen Silver Eagles or a Gold Eagle coins to put into a safety deposit box.

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