Gold Collapse … the Bubble Is Pricked?
By Staff News & Analysis - April 05, 2012

Gold prices plunge overnight – is the rush over? … Has the gold boom come to an end? The price of gold, which has climbed for years like a blood pressure reading for anxious investors, plunged overnight to its lowest level in three months. Gold fell almost $US58 to $1,614 per ounce. It has declined 15 per cent since September, when it hit a peak of $1,907. It had more than doubled from the financial crisis three years earlier. The decline on Wednesday came on an ugly day in the stock market. The Dow Jones industrial average lost 125 points a day that last year probably would have caused fearful investors to buy gold as a protective investment. "It's difficult to forecast, but I think the gold bull market is over," said Cetin Ciner, a professor of finance at the University of North Carolina-Wilmington. He likened the surge in gold to dot-com stocks before they collapsed. – New Zealand Herald News

Dominant Social Theme: It's over. The bubble is collapsing.

Free-Market Analysis: It really gets repetitious after a while. When the stock market falls, pundits don't immediately shout, "The bubble is over!" No, there are anxious meetings and grave headlines.

We are to assume that if stocks fall something is wrong with the larger economy. But if gold and silver drop within the current context, we are supposed to feel relieved.

That's because the power elite that wants to run the world has spent the past 100 years demonizing gold and silver. The idea that people can simply dig up gold and silver and grow wealthy is anathema to the elites.

The main thrust of the elites in the 20th and now the 21st century is to control the way people make a living. The idea is to give people no choices, apparently, but those that support the onrushing globalism.

If you are a lawyer, you support the penitentiary-industrial complex. If you are a teacher, you support a curriculum that ruins your students' minds. If you are a doctor, you do little that is not approved by Big Pharma – which is, of course, an elite enterprise.

This is, in fact, why the elites hate and fear gold and silver from the perspective of mass ownership. Dig up gold and silver and you have made yourself wealthy without becoming entrapped in the larger dialectic that the elites have established.

Of course, those who are partial to government as a generally positive paradigm don't see it this way. The Greenbackers and others are convinced that the elites want a return to a universal gold standard. But these prognosticators make no differentiation between a private and state gold standard. One emerges coherently and the other is imposed.

In fact, in a purely private economy, Greenbackers and Social Creditors would likely get a chance to implement their schemes. Here at DB we favor such monetary competition. We simply believe that historically speaking gold and silver would emerge at least as a considered alternative. Bi-metallism is an ancient and successful standard. The US was founded on it, in part.

As for the top elites, the dynastic families that maintain their power and wealth by apparently controlling central banks, it is certainly possible that they want a state-mandated gold standard. But more likely they seek a global currency created out of IMF SDRs. Top men have stated this on numerous occasions.

A PRIVATE metals standard would surely NOT be to their liking. For one thing, no matter how much gold and silver they own, a private-market monopoly is impossible to sustain absent the dead hand of government.

If the elites try to drive up the price of money metals by hoarding gold, other supplies shall surely emerge from other hoarders or mines themselves. This is an ironclad rule of markets. When there is access to a good or service within a private economy, it is not possible to "corner" the market.

Also, there is plenty of gold in the hands of non-elites. To ignore the holdings of Indians and Chinese (in addition to Western holdings) is to make inaccurate and even contemptuous assumptions.

Of course … the elites will do what they can to suppress the price of gold – and silver. They will continually manipulate the price downward as they've been doing and they will use their control of the mainstream media to further cast doubt on the value and ascension of precious metals. Here's some more from the article:

Some investors buy gold as a hedge against inflation, and minutes from a Federal Reserve meeting that came out on Tuesday afternoon suggested that the central bank believes inflation is under control.

Gold's attraction as an asset of refuge during crises also seems to have diminished. The economy has picked up, and worst-case scenarios in the United States and Europe have faded.

"Fear has been gold's best friend, and so to the extent that fear is dissipating, gold should fall," said Jim Paulsen, chief investment strategist at Wells Capital Management. "We might look back at these Fed minutes as the line in the sand."

Gold has been hit in recent weeks by a strike by gold sellers in India, the world's largest buyer of physical gold. Another bearish sign was a surge on Wednesday in the US dollar, which tends to rise when gold falls.

Gold fetched only $300 to $400 an ounce during the 1990s but climbed steadily last decade. It took off in late 2008, when prices for stocks and corporate bonds plunged, wiping out years of savings and even money market funds looked suspect. Investors bid up prices for the safest of assets, like US Treasury bonds. Others turned to gold.

Such articles as these are often full of obvious misinformation. Gold and silver began going up around 2001 not 2008. And gold and silver are both worth about ten times what they were a decade ago. Meanwhile, stocks have not moved nearly so much.

Gold is not in a bubble, certainly not yet. Gold and silver constitute a bull market in money metals. Paper assets, meanwhile are in a bear market. These assets' rotations are part of the business cycle and have nothing to do at root with "bubbles."

There will likely be gold and silver bubble at some point. The precious metals business cycle bids up the physical and then the paper. Eventually, the small junior mining stocks come into play. That 's when the blow off takes place, eventually. But there is no evidence of this yet.

In fact, gold and silver, while moving up, are still tracking the larger stock market. The divergence between the two markets has not yet taken place, as it did eventually in the 1970.

We figure there are several years to go yet, though there is always the possibility that those elites trying to manage the world's larger economy will turn to outright confiscation at some point. We don't see how they tolerate US$5,000-an-ounce gold.

But the elites have no wish to explain such things in detail via the mainstream media they control. They'd rather reignite paper assets if they can. And in the meantime, they wish to keep people ignorant about the larger destructive workings of monopoly fiat money.

Updated on date of publication.

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