Metals Analysis: Out
of Touch, Out of Context and Off the Mark
By Dr. Jeffrey Lewis
On average, every
quarter we are exposed to yet another price guidance by a mainstream analyst.
Such analysts usually reside within a large investment bank. These calls become
focal points for a sector and often seem to carry with them some form of self
What makes them
directly from the big financial firms and investment houses. They are respected
because of their size and brand, which gives them credibility based solely on
too big too fail; it was rescued and given banking status.
"When the world's
most intelligent FDIC-backed hedge fund, pardon, bank says the current market
structure is no longer necessary to Goldman, people notice, and promptly
They play their
own book against their clients’ book.
They are a
liquidity conduit. They are wrong in their precious metals price predictions
both ways - up or down in prediction and, therefore, directional influence.
recent bearish view of gold is a case in point among a series of predictions.
The most recent
prediction lower was made on the grounds that Treasury Inflation Protected
Securities (TIPS) would put pressure on gold as an alternative. Watching the
TIPS would create insight on future price direction.
TIPS Yield Rates
will Weigh Heavily on Gold Prices
Inflation Protected Security is a bond which increases its principal upwards by
the same amount as the rate of inflation (as reported by the Consumer Price
Index). The average annual return on TIPS since its inception 10 years ago has
been about 5.4%.
The point is
this: The calculation method for the CPI is flawed and will always understate
the true rate of inflation. Adding such a CPI figure to the anemic nominal TIPS
yield will never allow investors to get ahead in real terms. Unlike TIPS, gold
offers no guaranteed rate of return, but a rational investor would rather have
the millennia of history validating gold as an excellent hedge against inflation
rather than a return benchmarked versus the Consumer Price Index.
We all know
markets are rigged - LIBOR, energy, FOREX, aluminum warehousing, plunge
protection and open market operations by the Fed.
We know that mega
bankers are corrupt and far above the law. We know the ratio of metals traded to
physical production is way off the scale and even the COMEX reports have
Many of you have
read the Central bank memos from GATA regarding the legally sanctioned gold
price suppression scheme. And you are by now familiar with Ted Butler's work at
uncovering the trading mechanisms and positioning employed.
It is common
knowledge that shorting at the London open and going long on metals at the close
of the Western market is a profitable trade. Yet, you still refuse to entertain
the notion of market rigging in the metals whether up or down by the powers that
be or their agents.
many remain willfully blind to intervention in the metals with the intention of
controlling price. It is as if, literally, their job tomorrow depends
on not seeing this today. That may not be a stretch.
The fact is that
the financial elite and economists closest to the center of that apocalypse
cannot address price management.
credibility of these calls all comes down to a simple precedent.
discussing derivative prices which may influence physical value - but it's an
abstraction that can disintegrate at any moment.
It is quite
astounding when one realizes the depths of madness in which we live by taking a
quick look at how the most respected economist and monetary leaders characterize
financial conditions. It is a testimony to both the youth and quasi scientific
nature of economics. It should also be a warning that things for the masses are
not much like anything close to what they appear.
For more articles like this, including thoughtful precious metals analysis
beyond the mainstream propaganda and basically everything you need to know about
silver, short of outlandish fiat price predictions, check out