As someone who writes about gold for a living, even I am a little shocked how on the money (excuse the bad pun) I was about the gold markets today. Last week while reporting for a major gold supplier, I noticed that articles in the New York Times, WSJ and Bloomberg all said that gold was played out and the market was due for a major correction. I was skeptical about everything written on them and told my readers that selling gold right now was the worst idea ever and market manipulations appeared to be in the works. I suggested that if the derivative market saw a huge spike in paper gold sales come Monday, every idiot who read these article were going to panic and gold sales would plummet. Guess what happened exactly as I said?
Today $20 billion in paper gold flooded the market to such an extent, gold sales were even briefly halted today to slow the slide which as of this writing was down almost 8% to a value just under $1400 an ounce. What happened was corporations like JP Morgan bet heavy on the derivative market that gold was going to flounder, which it did by flooding the market with non existent gold shares, causing the gold price to fall dramatically while cleaning up on the fact they bet the gold would lose value. This is why the derivative market is so dangerous. People are purposefully tanking the economy to make a buck. The US government is supporting this, along with Japan, to prop up the failing dollar. Today, many who sold their gold stocks bought US government bonds and dollar assets which soared in value.
Housing is also being touted as an excellent time to buy as prices are rising and everyone should get on that gravy train while they can. It is true that housing prices have increased about 11% over the last year and appear to be going even higher. Interests rates are also at record lows, meaning one can get a mortgage for a fraction of what one would have paid just five years ago.
Here's the rub about all of this: it's all a lie. First off, housing is rebounding because the same practices that cause the crash of 2008 are being done all over again. And it wasn't bad loans by Freddie and Fanny that was the culprit but investors overbuying the market, causing prices to soar, and in true Ponzi scheme methods, crashed when there were not people to buy the houses on the market after saturation had been reached. Those exact same things are occurring right now and houses in Orlando and Las Vegas have already showed signs that the market rise may be ending there. And if they have reached saturation, how long before the rest of the country reaches it as well?
The gold market is much more complicated but what happened today was the powers that be tricked people into thinking gold was plummeting by flooding the market with paper gold, while simultaneously buying physical gold with the lower price. Gold is being stockpiled in unheard of numbers by world governments like China, Italy and Germany yet the price falls. This all has to do with selling paper gold while buying physical gold. If you have paper gold get rid of it before it's worthless. If you have physical gold, hold on it because I expect the price to jump back to record levels by the end of the year.
In the Asian markets right now, physical gold is selling for over $2000 an ounce. It's the paper gold that is tanking the markets. Experts are blaming the slowdown in the Chinese economy as well as a rumor of a massive self off of gold by Cyprus to pay off debt, but neither should have been enough to create this level on panic. The real explanation is some people wanted to make a fortune shorting the market by flooding it with paper gold by the ultra rich who are the epitome of greedy bastards. Incidentally a huge portion of those paper gold sales, $6 billion, have been tied to Meryl Lynch. Shocker.
What we have here is yet another way the little guy is getting screwed blue by the richest among us so they can have more while we deal with less. Recent estimates say that the level of inequality between the rich and the poor have reached epic levels never before seen in human history. That's right worse than the Robber Barons, worse than the French circa 1787, worse than the Romans. And yet we take it still with barely a peep. If we don't standing up for ourselves soon and start demanding more from our employers and our government we will be literally slaves to the our rich overlords. Wake up people. We can't be this stupid anymore.