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The tactic by the Fed and Central Banks is to inflate the stock markets while
manipulating the price of gold and silver lower and it’s working. They are deluding the public into believing their 401ks, pension plans, stocks etc. are safe investments in a deteriorating economy, while at the same time destroying the faith in owning gold and silver. [An analysis of the Dow/silver, Dow/gold and Dow/HUI ratios make that very evident. Let’s take a look.] Words: 555; Charts: 3
So writes Steve St. Angelo (http://srsroccoreport.com) in edited excerpts from the original article* entitled Controlling the Beginning Stages of Hyperinflation by Manipulating the Precious Metals. A big HAT TIP to SeniorD for recommending this article for inclusion here.
This post is presented by Lorimer Wilson, editor of www.munKNEE.com and the FREE Intelligence Report newsletter (see sample here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.
St. Angelo goes on to say in further edited excerpts:
This achieves two goals:
- it reassures the public’s faith by pumping up stock prices while the economic indicators continue to deteriorate and
- it elevates the dollar while it destroys market sentiment in the precious metals.
So far, the strategy has worked….Gold and silver bugs are becoming extremely frustrated and downright bearish…[as can be seen in the following] charts…[shows]…
[Usually] stock and commodity asset prices rise together in typical inflation-hyperinflation[ary situations but] since the Fed announcement of Q3, only certain asset classes have risen — mainly stocks, real estate and to a lesser extent, bonds.The Dow/Silver Ratio
In August of 2011, you could buy 250 oz of silver for the Dow Jones Average, however today, it takes over 650 oz of silver to purchase the Dow – an amazing 160% increase. Furthermore, you can see just how extreme the Relative Strength Index has become.
Let me clarify my position on Technical Analysis. Most of those who read my work, know that I have stated that technical analysis is meaningless in a rigged market. I truly believe this to be true as it pertains to forecasting short-term moves in the prices of gold and silver. On-the-other-hand, using charts to show trends and extreme patterns is useful.
The Dow/Gold Ratio
The disconnect of silver after QE3 really takes place around November 2012, when the Dow-Silver ratio had fallen to 375 oz. This is the same for gold [as can be seen in the chart] below [where,]…when the price of gold peaked at $1,900 an ounce, you could buy 5.7 oz of the yellow metal for the Dow Jones Average. Today it takes 10.7 oz of gold (85% increase) to equal the value of the Dow.
As I mentioned above in the case of silver, if you look at chart in Nov 2012, you will see how the Dow-Gold ratio fell to approximately 7.2 oz. Both gold and silver disconnected from the Fed’s inflationary program at the very same time.
The Dow/HUI Ratio
Even though Dow-silver ratio has nearly declined twice as much as the Dow-gold ratio, the HUI index has suffered much worse. [In the chart below] we can see that in Sept of 2011, you could have bought 17.5 shares of the HUI compared to the Dow Jones Average, but it takes an amazing 58.5 shares today. As such, the Dow-HUI ratio wins the extreme trend award by losing 234% of its Sept 2011 value compared to the Dow in less than two years. [That being said,] any time there is an extreme trend in a stock or commodity, it always reverses… it’s just a matter of time…
Conclusion
Many frustrated gold and silver investors today are searching for any articles or any information that validates holding onto their precious metal investments. This is the simple rule of thumb:
- if you feel euphoric, it’s time to sell, and if you feel sick to your stomach it’s time to buy…
(Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)
*http://srsroccoreport.com/controlling-the-beginning-stages-of-hyperinflation-by-manipulating-the-precious-metals/controlling-the-beginning-stages-of-hyperinflation-by-manipulating-the-precious-metals/ (© 2013 SRSrocco Report. All rights reserved; If you are worried about protecting your wealth or sick of reading the same old worn out data and information, please consider subscribing to the SRSrocco Report.)
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I think the Central Banks know how to “fix” the charts (by manipulating their paper money and Gov’t. numbers) to give those that use charts a false picture of reality, that is designed to protect paper money!
Behold: Fiscal Propaganda through the use of Twisted Charts – SeniorD
I still think we will continue to see a “full court press” on PM’s by the Central Banks who are using all their fiscal power to push the PM market lower, while at the same time acquiring PM for themselves.
The key indicator for me is the availability of PM’s, when dealers are awash in PM’s then I will believe that the “value” of PM’s have really dropped, until then we are just seeing PM’s being “PLAYED”.