A massive end of day buying binge by the Plunge Protection Team engineered to squeeze the short-sellers and influence market sentiment, triggered just after the released of the FOMC minutes on Tuesday pushed many markets which have been tanking all day, to close up in positive territory.
Whether they can keep supporting the market up for an extended period of time only time will tell but I suspect they would not be able to keep rigging the market for too long as it gets more and more costly to do so particularly in an environment of accelerating government and central banks debt and collapsing paper currencies against a backdrop of the unwinding speculative bets that is now crushing global liquidity/credit supply.
Whether they can keep supporting the market up for an extended period of time only time will tell but I suspect they would not be able to keep rigging the market for too long as it gets more and more costly to do so particularly in an environment of accelerating government and central banks debt and collapsing paper currencies against a backdrop of the unwinding speculative bets that is now crushing global liquidity/credit supply.
The flight to safe haven assets particularly into gold is only beginning to accelerate. Already there are several major banks that is falling victim to this unfolding flight to safety, gold. Bank of America and Society Generale are both on the brink of total collapse and its contagion effect surely has the potential to bring down the whole global financial system. When that happens the flight from fiat paper currencies and into gold should accelerate even faster.
As more and more people realizes that gold is real money that cannot be printed into existense out of thin air, more and more people would exchange their paper money with gold in order to protect their wealth, which will push gold price further and further into the stratosphere.
In 2008 when the banking system collapsed governments and central banks were available to bail them out and pushed the financial system away from the brink of total collapse. For that the governments and central banks are now so heavily in debt and on the verge of collapse themsevles. In fact several countries have already collapsed, first it was Iceland then Ireland and Greece. Now Italy, Spain, France, UK and USA are themsevles on the verge of collapse.
This time around however, when the governments and central banks collapses there is no bigger entity to come to their rescue. Some may argue that Central Banks can print the needed money to bail out the monetary system, which is true, but that would only accelerate the currency collapse of whichever country that would undertake such a silly move, but this is precisely what most government would do in their misguided attempt to prevent the inevitable implosion.
Gold, which would be the prime beneficiary of a flight into safe haven asset, would experience a demand that is unprecedented and would price of gold to go balistic. How high will gold price go to depends entirely on how crazy the world's central bank gets with their printing press. It is very likely that they will print and print until the all fiat paper currencies collapses. When that happens the sky is the limit for gold price because gold is merely reflecting the amount of paper money central banks is printing, the more paper money central bank prints the higher gold price will be as measure in that currency.
Will gold price eventually top? Yes of course one day it will stop going up and then come back down, but that time is still several years away. We are still at the very early stage of currency collapse. It normally takes 2 to 3 years for currency collapse to unfold. It will be clearly evident when that time come.
Just to put the price of gold into perspective, with the current monetary base of the United States, gold price has to go up to between $8,000 to $10,000 per ounce to match gold price high in 1980. But there is an estimated amount of about $12 trillion of US Treasury bond outside the US. If those bond holders starts to stampede of of the US dollar denomiated bonds then US dollar will collapse in a hurry.
Today gold has reach a new price milestone broken above $1.800 per ounce. The stage is set for further explosin in the price of gold as more and more traders who are short the gold market are forced to cover their short positions. Most would lose everything.
The current speed of gold price appreciation is telling me that the shorts are in panic capitulation mode. Once most have capitulated we may get a snap-back decline in gold price that would scare the daylight out of most people. It is possible to see a 38.2% decline within a few weeks just like what happened in the Silver market at the end of may, but that would be just another opportunity for those still left in the dust to come onboad for the final phase of the gold bull market.
