End Game?

Hi Bill!
I am trying to figure out what the plan is for the short term, given that it appears the Cartel is in complete control right now. There are some smart people that are not gold bugs, nor gold haters, who have suggested we are seeing the effects of a long term decline for the metals. These guys may not have a clue about what is going on behind the scenes for gold, and they may not be able to distinguish between real bullion or the paper variety. Nor, I suspect do they question if the big bullion ETFs hold just partial bullion (or none at all) to back up the units trading in the market. Nonetheless they appear to be convinced that we are headed much lower for gold, silver, copper, and most other metals. The sell advice presented is not necessarily part of a Cartel, but seems to be influenced by the Cartel antics and it still resonates with a lot of individual traders.

Now consider that the deflationists never went away, and I have been reading commentary that the metals were going to descend in a deflationary spiral for years. These people are really pounding the table now, even though the DOW rising to new highs seems to contradict their position, but the deflationists never let the facts get in the way of their outlook so I suppose its too late to expect they may start now.

Add in to the bear camp the perma-bears that have hated gold all the way, and in this group there are a number of establishment guys that have a wide following. These guys are in their glory with every waterfall decline for gold and they are very quick to make sure everyone knows it.

And then you have the momo crowd, that look to gold as a vehicle to trade the same as they would consider crude oil or soybeans. With such downward pressure, and breaking support, the momo traders are playing the short side here, and probably with great leverage. This probably accounts for why there is so little traction to rebound even with the heavy buying of bullion that has been reported. The momo trade is not interested in actual bullion and will flip paper to make a buck.

So where are we in the big picture then? I have no doubt that everything we have put up with for the couple of quarters is entirely according to a script. There is a plan and an endgame. All of the groups that I have referenced above are being herded along and influenced by this plan. They make the job easier for the Cartel, but they are not driving the bus.

Consider that we have had several specific intervals where extremely gold bullish events have occurred and in each and every example, gold was driven lower. This was not a trade put on by the tourists and traders, but instead is the result of an intervention to set the tone that the trading crowd will pounce on. Lets consider the obvious and widely reported examples:

The devaluation of the Suissie

The announcement of QE3

The devaluation of the Japanese Yen

The intensification of QE3 to more than $85 billion per month

The confiscation of private depositor money in Cypress

EACH time we got a severe downturn in gold within a trading session.

Now add in other gold bullish events in recent months as Europe, Australia, and South Korea, have all cut interest rates and loosened monetary policy. Consider that the real interest rates are deeply to the negative side, which is also gold bullish. And then add in the real risk that other nations are going to allow banks to confiscate depositor money as a means to recapitalize balance sheets. Not one of the above factors should motivate one person to sell one ounce of gold. And gold has been driven lower on each and every news event nonetheless.

This is a planned event. And the people who are capable of organizing this plan are also going to have an end game. Is it the complete collapse the PM sector? Or a bottomless sell-a-thon until every gold market eventually goes into default because no one can come up with any of the real stuff anymore? I dont think so.

I think this gold rout has been orchestrated from the start to keep the metals from sending an inflationary signal while all the money printing has been going on in most parts of the world. Mission accomplished. And I think there is also a drive to force longs to capitulate and allow trapped bullion shorts to exit positions. So far that has not happened, and perhaps that is why this latest attack has gone on for so long.

At the point of being redundant I frequently state that all interventions and corrections have a shelf life. This one has gone on way too long already. Continuing to press the case at this point will create the risk that a default is going to happen somewhere and that would be counterproductive to the message the Cartel is trying to send. We are very close already if some of the data points I have seen from physical bullion markets is accurate.

Again, there is an agenda in play, a very specific plan at work here. If I thought it was all an efficient market, with no intervention, I would have sold a long time ago. Consider that Blackrock sold out most of their PM stocks held in the funds they manage, to the tune of millions of shares of blue chip stocks, in the quarter before this major intervention started. I am sure that many other funds were also in on this move, with astonishing precision, to dump most or all of their holdings right before the endless decline kicked off. And consider how the short interest has held stubbornly firm with very little rush to cover during this long down move. Both strategies would be a very poor decision in a long term cyclical bull market unless one knew that a major intervention was coming that would last for months.

I do think the people behind this plan know exactly what they are doing, and have fully coordinated all markets to allow them to get away with major financial events and have the market completely ignore the consequences. As long as the DOW is rising and gold is in decline, it seems no one cares that money printing is off the charts, debt loads are spiraling higher, corporate earnings and basic employment are in decline, and the financial fraud is continuing in full view on a magnitude previously unknown.

The gold bears seem to think this kind of behaviour can continue on indefinitely. I am convinced the plan is coming to a close. I truly believe that to press the case much further will destabilize the market and eventually trigger defaults. Since most of the shortfall is about paper gold, I think the solution to restore balance will also be a paper event. Rather than have paper longs standing for delivery to clean out the inventory, I think it will be rapid recovery in the metals prices that leaves the huge short interest stranded and scrambling to cover.

Only by restoring a higher gold price can the market clear and some balance return to physical supplies. Only higher prices will encourage those who now own bullion, and have held through this long decline, to perhaps take some profits and release some supply to the market. I think the Cartel got the ball rolling, and drew in all of the momo traders and gold haters on the short side. Those people who think a parabolic collapse can be sustained to zero are just as clueless as the specs that were leveraging the house to buy the tops 2 years ago. And watch the Cartel quietly cover into the confusion as the last great selling wave sweeps this sector, then spring the trap.

I have no idea how much longer things can go on before we get a reversal. I think most historic ratios are at or are near all time lows. When the recovery kicks off its going to a thrill ride and right now so few people are expecting it, the exact set up that has powered some of the biggest market moves in history. This is not a random market event. It is a plan. Too much gold is being drained too quickly from the western nations to Asia. The market reaction will kick off and leave the shorts holding the bag, just as there is very little bullion left to clear delivery demands and when there are few paper sellers left who are not fully leveraged short. It would not surprise me at all to see some real fireworks as this gets resolved.

I am going to hang in no matter how it plays out. Perhaps the plan really is to collapse the entire sector, have all senior gold miners go bankrupt, nationalize the sector, make gold illegal for private ownership, or any of the other theories that are floating around out there. My instincts tell me the same crooks that are behind this intervention, with the blessing of the political regimes in the developed world, will play the same game they always have: suck the market dry running it one way, then reverse it all suddenly and profit on the reverse move as the specs get slaughtered. Lets see how long this goes on for before we see clear evidence that the end game is on.
Cheers!
MexicoMIke