David Mcalvany (www.mcalvany.com) covers the reasons behind the major pullback in metals on April 12, and where they may go from here, in this most enlightening and re-assuring 8:14 minute video.
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What happened?! is the question so many are asking about Friday’s waterfall in prices. A better question is, “Why?” Outside of the insiders, no one really knows. Yes, there can be some fairly cogent explanations, lots of glib answers, but no one knows, for sure. What we do know for sure is that the market is always the final arbiter [and this is what the market is saying:]
I have no problem with corrections in general, as they are a healthy part of any bull market and provide a platform from the which the next upleg can spring but something is not quite right about the recent price action in precious metals as the markets have become increasingly divorced from reality over the past few months. Let’s look at some of the glaring contradictions and then discuss the implications.
By its obvious and concerted attack on gold and silver, the U.S. government could not give any clearer warning that trouble is approaching. The values of the dollar and of financial assets denominated in dollars are in doubt. For Americans, financial and economic Armageddon might be close at hand.
If central banks are preparing for a major change in the value of the dollar, shouldn’t we? The US dollar cannot and will not survive the ongoing abuse heaped upon it by government planners and federal officials. That not only means the gold price will rise, but that many, if not most currencies, will lose a significant amount of purchasing power. This has direct implications for all of us.
Measuring market data using fiat currencies can be misleading. Even though an asset may rise in dollars, it may be because of declining currency value rather than true economic process. With central banks devaluing currency at record rates, gold’s steady purchasing power makes it an ideal alternative pricing mechanism.