As I predicted, the prices of gold and silver started to soar within 48 hours of the end of the US elections. Specifically, I had told a number of people that the value of the US dollar would drop, thus causing precious metals to rise.
It wasn’t rocket science to make such a precise forecast. The Federal Open Market Committee (FOMC) was going to conclude their two-day meeting the day after the elections. Since President Obama, Federal Reserve Chair Bernanke, Treasury Secretary Geithner, and the presidents of the Federal Reserve Banks of Boston, Chicago, and New York by early October had called for inflation of the US money supply, I simply took them at their word. It happened that the perfect venue to formally announce the “quantitative easing” (the word “inflation” is no longer politically correct) was in the FOMC announcement, so it was easy to pin down the timing.
I had also told people to expect that the extent of the quantitative easing would be about $100 billion per month spread out over many months. The FOMC announcement about the size of the inflation of the money supply was more deceptive than informative. The FOMC focused only on the $75 billion per month for the next eight months that would be provided by the Federal Reserve, for a total of $600 billion. What was deliberately left off the announcement was the $250-300 billion of Treasury debt purchases that will be made over the next eight months from collections of mortgage payments by Fannie Mae and Freddie Mac. This grand total of $850-900 billion over the next eight months comes slightly above my expectation of the $100 billion. The number I projected wasn’t a guess. It happened to be about the average monthly federal budget deficit for the coming year.
So, neither the timing of the jump in gold and silver prices nor the extent of the quantitative easing that sparked the drop in the dollar and rise in precious metals was a surprise. In my mind, it was not difficult to see where the gold and silver markets were headed this week. Yet, if you were to ask the general public in mid-October what they would expect to happen to gold and silver prices in the few days after the US elections, I suspect very few would have anticipated the price jumps we have seen.
I blame the mainstream media for failing to accurately inform the general public. Not only are they failing to report the full truth about financial markets, they are actually deceiving the public when they focus on information that is inaccurate or deceptive. It should be no surprise that some of this disinformation comes from the US government and its trading partners, who have a vested interest in suppressing gold and silver prices.
The extreme efforts to suppress gold and silver prices on Wednesday before the FOMC announcement apparently cost the US government and its trading partners to shoot a lot of the financial ammunition, as they have made minimal efforts since. One analysis calculated that the COMEX gold and silver short positions held by JPMorgan Chase and HSBC, the two banks now being inundated with lawsuits alleging that they have manipulated the gold and silver markets, have cost those two banks at least $3 billion in losses just in the past three days!
Since you cannot rely on the mainstream media to give you the straight story, it is up to you to do your own research. There are so many websites that report real news and opinion that the US government would rather people didn’t know, that it would be hard for me to try to name only a select few websites or commentators to follow. One suggestion would be to read the Daily Dispatches at http://www.gata.org, the website of the Gold Anti-Trust Action Committee (GATA). Their sources of information are diverse so that, over time, you can get a feel for which writers seem to do their homework and know what they are talking about. And you can also learn to avoid the writers who consistently get it wrong, such as one widely read man who has been calling for the imminent collapse of gold’s price ever since it reached $700 years ago (I don’t want to embarrass him by mentioning his name).
As you read the Daily Dispatches on the GATA website, you will find out about all sorts of other free websites to check out. Enjoy the search. Cross-check writers against each other. Even though the gold and silver markets are not that transparent, I am confident that most people have the ability to figure out for themselves where gold and silver prices are headed in the future. You don’t have to take my word for it, you can understand for yourself exactly why gold is conservatively heading to $2,000 to $3,000 and silver should surpass $50-100. Then take action.
Patrick A. Heller owns Liberty Coin Service in Lansing, Michigan and writes “Liberty’s Outlook,” a monthly newsletter covering rare coins and precious metals. Past issues can be found online at http://www.libertycoinservice.com/ Pat Heller is also the gold market commentator for Numismatic News. Past columns online at http://numismaster.com/ under “News & Articles”. His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.