STAFF NEWS & ANALYSIS
The Trend Is Higher as Silver and Gold Move Up Once More
By Daily Bell Staff - July 14, 2016

Silver jumps 50 percent, but beware the devil’s metal … Silver prices have leapt nearly 50 percent so far this year, reversing three years of losses, but history shows investors hoping to hop aboard the bandwagon should be wary.  –Reuters

Silver is  back at two-year high as gold marks its first gain in five sessions, according to MarketWatch.

But you wouldn’t know about that from Reuters (see above). Silver moved up 32% from $15.94 an ounce on June 1 to $21.107 on July 4.

What other market has seen that kind of jump?

Reuters take: “[The moves] are still difficult to justify in economic terms, meaning buyers should beware of what traders call ‘the devil’s metal’.”

More from MarketWatch:

Gold extends gain in electronic trade after Fed Beige Book Shutterstock Gold edges up after four days of losses.

Silver futures returned to a nearly two-year settlement high on Wednesday, as the U.S. stock market paused their recent rally, providing a lift to gold prices, which marked their first climb in five sessions.

Reuters doesn’t believe the moves in silver (and gold) are justifiable but MarketWatch notes that “gold futures topped $1,344 after the latest Federal Reserve beige book survey released Wednesday afternoon raised questions about the broader health of the U.S. economy in the second half of the year.”

Additionally, the article notes that in a weak economic environment, interest rates are likely to stay low in the US despite Janet Yellen’s determination to inflict another hike on markets.

Overseas, statements from the Bank of England as well as from central banks in Europe and Japan inform investors that rates are not going to go up any time soon.

International tensions are complicating the picture as well, with investors more apt to buy gold and silver in anticipation of continued conflicts in Europe and even, perhaps, in Asia.

Still, Reuters, along with others in the mainstream media, will find reasons to remain negative about gold and silver.

More:

Central bank action to stimulate economies, so the argument goes, should further increase that consumption.  But moves such as silver’s 32 percent jump from $15.94 an ounce on June 1 to $21.107 on July 4 are still difficult to justify in economic terms, meaning buyers should beware of what traders call “the devil’s metal”.

“Silver tends to move erratically — it’s been between $7 and $50 an ounce in the last 10 years,” Macquarie analyst Matthew Turner said. “It was quite weak at the end of May and it’s hard to say fundamentals have changed much since then.”

“Anything that goes up 30 percent in a month looks overstretched. And insofar as it reflects not just central bank easing, but greater optimism about industrial demand, there is greater possibility of a reversal, because the global economy is still looking shaky.”

But what is driving silver these days has nothing to do with industrial demand. World economics are a mess. A catastrophic global crash is certainly not out of the question.

Jobs have not returned in the US – or around the world. What is mostly obviously manifest is a quasi-depression.

Banking elites are doing what they can to increase violence and polarization in order to generate yet more authoritarianism.

The end result is to be increased global governance. As hard as it is to understand, almost every “solution” generated by the current central banking system actually adds to the chaos.

Central banking is built on currency debasement. And removing value – and thus prosperity – cannot logically create additional wealth.

Accumulating gold and silver is an alternative to central bank madness and those who are doing so will be well-rewarded over time, as history inevitably shows.

Long-term, the prospects for gold and silver are as good as the prospects for world economies – driven by central banking – are bad.

This goes for gold and silver mining companies as well. There are always risks involved and one should be careful when evaluating an investment.

But nothing central banks have done since 2008 created any sort of recovery and there is no reason to believe that a recovery is going to take place.

Here at DB, we’ve taken on board our first sponsor, Golden Arrow, a mining firm that specializes in silver exploration. If you are interested in mining companies, you can see an interview with the CEO HERE.

Conclusion: The idea that silver and gold are headed down in the current environment seems most questionable to us, at least over the long term. The manipulations that plagued both markets are lessened now because of Deutsche Bank’s guilty plea and the economic chaos worldwide is not going to be alleviated by central banks any time soon. Instead, a good case can be made that the world’s topmost elites are desirous of that chaos to move the world toward further internationalization and global governance.

If you have questions about Golden Arrow, you can reach representative Shawn Perger here: Shawn: 1-800-901-0058 or 778-686-0135. See the website HERE. Please consult DB’s disclaimer before making investment decisions. This is not an endorsement.

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  • perger

    Call me anytime with questions.
    Shawn 778-686-0135

  • Bruce C.

    The only thing I can agree with about Reuter’s analysis is that – and they didn’t even say this, but it was implied, sort of – is that anything that goes up about 30% in a short time period will almost always have a pull back. That’s just the nature of financial markets. But that doesn’t mean an upward trend hasn’t begun.

    Secondly, low interest rates tend to support PMs because the “opportunity cost” of owning them decreases. If cash doesn’t earn much interest (never mind negative interest) then holding PMs that earn zero interest is not such a bad deal considering how fickle fiat currency is.

    Thirdly, what is the number one goal of all the central banks’ monetary policies? Answer: To devalue their respective currencies by roughly 2% per year. That is often couched in happier terms like “to increase economic growth (aka GDP) by 2% per year” but since GDP is a measure not of the exchange of physical units but currency units there necessarily will be more currency units exchanged as they become worth less (aka worthless). Therefore, the prices of real assets will necessarily rise as currencies weaken. Investors say “don’t fight the Fed”, so if the Fed wants to create price inflation it probably will eventually, hence the demand for real-assets/PMs.

  • Sven

    My only real fear is another round of QE that gets everyone in the mindset again that the Fed will back the markets “no matter what it takes”.

    When we had QE everyone thought for sure that silver and gold would rise due to inflation and debasement.

    However, it caused an asset rotation out of commodities and into the guaranteed rising of the Dow and S&P.

  • DrDean

    “Banking elites are doing what they can to increase violence and polarization in order to generate yet more authoritarianism.” Can’t argue with that one.

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