Wednesday, 5 February 2014

Precious Metals Prices Will be Set Free

With regard to precious metals, artificial pricing has gone on for so long that consideration of the fundamentals seems to be an exercise in the abstract. At some point, prices will move freely - though not necessarily orderly. How will one know?

You will see it in the character of the trading. In fact, we caught a glimpse of what a parabolic might look like in 2011. Then, the power of a short covering rally pushed prices to a nominal resistance level not seen in some 30 years.

And the fact that it was a nominal high is one key to framing the mis-pricing. Even the average price of the late 1970's into the early 80's would be unrecognizable if expressed in real inflation adjusted terms.

The initial power of a price return untethered by the bullion banks would be like nothing you we have ever seen. However, it will still be accompanied by a wall of worry and anxiety - though of a different caliber. Just as we saw in the run up to the colossal price smash in early May of 2011; the character of anxiety changed significantly as speculators poured in late.

Not to mention the havoc it will cause to the trading platforms. Circuit breakers would be triggered as the market goes limit up each time it opened.

And the chaos and uncertainty surrounding a closed market would place another layer of bid under the prices.

The worry will shift from concern over when price will rise come back down to concern over the time to take profits. Fear over confiscation could feed on itself.

Not to mention the barrage of bubble callers that will rise up like a phoenix.


-  Source, Gold Silver:



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