paper gold and silver

7/31/2019 Paper Gold and Silver

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THE PAPER GOLD AND SILVER GAME IS ABOUT TOEND.

MARKET UPDATE MAY 2012

There has been a constant debate over the years on what drives the price of goldand silver. Obviously we have the fundamentals that have put the metals in a bullmarket for the last 10 years. The powers that be have total control over money, as

they set the price for capital via manipulating the interest rates. So it is not a stretchthat they would be concerned with a rising gold price because gold is a threat to howthe current fiat regime functions on a day-to-day basis. Without Mr. Bernake able tostep in and buy US treasury bills, where would interest rates be? How would we fundour deficits? These are just some of the reasons why it is important for the elites topay attention to the price of gold and silver.

Knowing this, the powers that be have instructed their banking arms JPMorgan,HSBC, Goldman Sachs and the like, to create paper derivatives to help manage theprice. But what happens when we get to a threshold point where the physical marketbreaks the back of the paper derivatives? We think that time is near.


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Market Update May 2012

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The Accumulation Distribution Line developed by Marc Chaikin is a volume-basedindicator designed to measure the cumulative flow of money into and out of a security.Chaikin originally referred to the indicator as the Cumulative Money Flow Line. As withcumulative indicators, the Accumulation Distribution Line is a running total of eachperiod's Money Flow Volume. First, a multiplier is calculated based on the relationshipof the close to the high-low range. Second, the Money Flow Multiplier is multiplied bythe period's volume to come up with a Money Flow Volume. A running total of theMoney Flow Volume forms the Accumulation Distribution Line. Chartists can use thisindicator to affirm a security's underlying trend or anticipate reversals when theindicator diverges from the security price.

We think this, along with other technical indicators, is screaming BS on the paper goldand silver game. If you take a look at the chart below, you can see that the indicatorhas confirmed this bull cycle as money has continued to move out of paper assets andinto the physical. Currently we see an extreme divergence.


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The volume and the MACD are also calling BS on this latest paper assault on themetals prices. It is even more obvious when you look at this chart of silver below.

The recent lower volume in the metals and the related mining shares are notconfirming this move lower. If the gold and silver price were to have kept a correlationwith this indicator we would currently see close to $1900 and $50 silver.

Our experience tells us that this type of disconnect usually ends in violent correctionsto the norm. In this case it could mean that we are witnessing the straw that breaks thepaper gold and silver games back.

There is an even more extreme disconnect in the related mining shares. Today wewitnessed a silver producer lose 10% ($15 million in market cap) off a $250k marketsell order. The shares are now in the strongest of hands; the problem is that most ofthe strong hands are fully invested at this point, allowing an emotional mom and popliquidating their 401k position due to mass fear in the markets to knock down the pricesignificantly.


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An example of this is one of our favorite silver producers Impact Silver IPT. The moneyflow divergence is blatantly obvious.

The writing is on the wall for an event to take place. Fortune picked up a story onApril 6, stating:

After completing a series of public lectures in Washington, D.C. last week, FederalReserve Chairman Ben Bernanke quietly slipped into New York City for a privateluncheon on Friday with Wall Street executives.

Fortunehas learned that attendees included Jamie Dimon (J.P. Morgan), BobDiamond (Barclays), Brady Dougan (Credit Suisse), Larry Fink (Blackrock), GeraldHassell (Bank of New York Mellon), Glenn Hutchins (Silver Lake), Colm Kelleher(Morgan Stanley), Brian Moynihan (Bank of America), Steve Schwarzman(Blackstone Group) and David Vinar (Goldman Sachs).Sources say Bernanke spoke at length about monetary policy, in an apparent effort topersuade attendees that they needed to take a more active role in helping to deal withthe European debt crisis. He spent virtually no time discussing regulation, althoughthat mantle got taken up by both Dimon (domestic regulation) and Schwarzman (globalregulation).


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Another red flag was the recent 2 billion dollar loss JPMorgan announced because of abad bet with credit derivatives.

We are also seeing bearish divergences in the fixed income market. The recent breakout of the IEF which represents the Barclays 7-10 year Treasury bill fund was notconfirmed by the MACD, Accum/Dist, or volume.

Dont be fooled by this latest market mirage. As always if you would like more

information about KSIR you can email:

[email protected]

[email protected]

Full disclosure: Long gold, silver, IPT, and many other precious metals mining companies.

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