We received many e-mails and phone calls yesterday re the gold and silver trashing. First, this is not 2011 in any way shape or form. Back then, we were at the end of at least 2 1/2 years of very strong action coming off the 2008 GFC lows (or 10 years off the 2001 lows). Today we are less than 6 months off the lows. While physical demand was good in 2011, physical demand today is off the charts and stronger than ANY time in memory. In fact, Miles Franklin saw almost zero sells yesterday as the already very busy phone lines exploded with new buy orders!
Add to retail demand the fact that central banks bought nearly 20 tons of gold over the last 30 days. Understand, central banks do not buy gold to trade, it is an effort to shore up their shaky foundations because they know where the current financial lunacy leads to. Also, COMEX August deliveries look to be a barn burner! First notice day saw 143 tons standing which prior to this June was simply unprecedented. As of yesterday, that number has increased to slightly over 150 tons. Until about 18 months ago, standing amounts would always leak down into final delivery day, now each and every month sees queue jumping where the amount standing for delivery increases on a daily basis each and every month. Physical demand will mathematically overwhelm the available supply that paper exchanges can deliver, we are very close to this realization.
Yesterday’s action was kicked off with what I understand was a $4 billion paper order Monday night/Tuesday morning. We also have seen (and there have been many questions over the last week) the shares trade like crap for the last 10 days. This action in past years ALWAYS preceded raids on the metal prices. In other words, yesterday’s action was pre planned as so many past raids have been.
That said, we were certainly due a pullback from such overbought levels. We have been telling subscribers during our weekly calls to expect huge volatility that would only grow larger over time, it has certainly begun. Jim mentioned to me this morning that he is encouraged to see such high volatility so early in the move. Normally volatility does not rear such a large head until later in moves…but, this is gold and silver we are talking about where “unofficial” coordinated attacks occur. If you thought silver moving 7% higher several days in a row was volatility, just wait!
Many were looking for a pullback to make purchase or further purchase. You may have gotten the full correction yesterday or possibly more to come. In any case, this is the third, final and most exciting leg of the bull market in metals! Another way to say this is; the end and final meltdown in fiat currency is in sight. And with that, our advice as it has been for the last year or more is that this is the rally in gold and silver that should not be sold until a new currency comes forth that can be trusted. To be trusted of course will mean some sort of real backing and not just a promise the check is in the mail.
Stay calm and understand “why” you bought gold or silver in the first place. If you purchased to “make a profit” then good luck to you. If you bought to get out of the system (GOTS), then stay out of the system and move further capital to safety on this pullback if able. As for volatility, the last couple of weeks and yesterday are only the beginning tremors before the total eruption which also means the meltdown of fiat and credit. Please use your common sense and your own eyes to see credit (which is now 120 days late all over the world) is broken to the point it cannot be fixed. The explosion in global demand for metal is a direct result of big money understanding the only place to hide in a credit meltdown can only be where liability does not exist. There is ONLY one financial place in the world where liability does not exist, and you witnessed a coordinated effort to scare you away from it yesterday…!
Standing watch,
Bill Holter
Holter-Sinclair collaboration
