Why do gold and silver prices top overnight and come into New York cash market down significantly off the highs almost every day? Answer: The futures market that trades 24-hours a day, populated by the big gamblers and hedge funds that have the most profound effect in driving prices of all factors. These people place their bets and takes their chances and all physical market investors are taken along for the ride – good or bad. Unfortunately since 2011 it’s been all bad for the most part because the consensus of this group is always bullish, removing any kind of ‘worry wall’ (think short squeeze) to climb. And the same thing can be said about the ETF and share markets as well. Instead of buying bullion or shares, the gamblers prefer calls on leveraged ETF’s or the shares because they think they can ‘make more’ by doing so, sabotaging both their own outcome and that of conservative long-term investors who must suffer such volatile markets because of these greedy idiots.
And the thing is, this will not change until this negative behavior that’s repeated every day changes, which will not happen easily, with collapsing prices likely the only cure. In the meantime, the totality of the buffoonery has turned the precious metal markets into the biggest clusterf*ck of all times, becoming increasingly detached from fundamentals as credit markets were allowed to grow (because precious metals are still traded against as barometers by status quo opportunities), increasingly becoming ‘doomsday’ in nature. (i.e. because when the next credit contraction arrives it will collapse the economy.) So again, this is why Wall Street machines are able to slap down precious metals overnight and keep them down during the day via ETF gamblers, because the machines grind the greedy bastards up time and time again, as documented on these pages for some 10-years now, beginning back in 2007 when I warned how this phenomenon would tank the broad markets at the time.
But people don’t want to hear (and especially not read about it because that’s work) about this kind of warning because it doesn’t fit with their little self-centered view of the world, so they ignore them. And it’s this dynamic that keeps the gambling knuckleheads in precious metal derivatives markets coming back for more, this, and the fact most of the gamblers aren’t even exercising their addictions with their own money, but yours, if you are dumb enough to be a voluntary structured money investor of any kind. (i.e. because all markets are tied together these days via derivatives / debt exposures.) And it’s this dynamic (stupidity, greed, and laziness) that keep people listening to pod casters who talk ‘pie in the sky’ about precious metals, and that Chinese goat traders (what’s a goat trader?) will be going on the internet some time later this year to buy Bitcoin even though they don’t even own a computer.
This post was published at GoldSeek on 23 January 2017.