The Markets Are Crazy

Posted: Dec 17, 2012 12:01 AM

Gold closed down for the third week in a row and that after news which should have sent the shiny metal on a rocket ride. 

The week ended for gold at $1,696.00, down $0.59 and silver stopped at $32.25, down $0.29 for a silver/gold ratio of 52.5. 

I’d like to be able to tell you that I’m optimistic about gold prices next week but, if there’s no good reason for the selling that’s been going on the last three weeks, how can I honestly try to tell you next week will be better?  The fact is even analysts at the big trading houses are stumped and grasping at straws to try and explain the softness in gold prices. 

I’ve finally reached the conclusion that we are wandering into uncharted market territory where the things we “know” about how markets work may no longer apply.  We’ve reached a place in market history where the traditional metrics are not reliable indicators of what the market is going to do. 

The recent Federal Reserve decision to boost its current program of quantitative easing, which the rest of us call “printing money”, to a combined total of $85 billion a month should have sent the stock market soaring and boosted gold prices to a higher new level.  That’s what I would have predicted a few years ago and the scary part is that back then I might have been right. 

When central banks start making money out of thin air that should put upward pressure on commodities hard assets in general.  We should be seeing gold prices continue higher, along with industrial metals like platinum, palladium and copper.  Instead the stock market closed lower, gold prices have sagged and industrial metals are sideways to down and that is definitely not good.

Markets are no longer behaving predictably, leading people like Chris Martenson at Peak Prosperity to suggest the markets are broken.  Most of you know I take that one step farther to suggest that the markets are not merely broken, they are rigged in favor of a few big players at the top. 

Rigged or not, the markets cannot defy gravity indefinitely; there will be a day of accounting.  Sooner or later the currency bubble will pop and inflation will slap us upside our economic head.  That’s why I’m maintaining my strategy of small purchases of gold and silver on the price dips. 

When the day of inflation reckoning finally arrives, I want at least part of my assets in something solid. 

Chris Poindexter, Senior Writer, National Gold Group, Inc