18 May 2012

Gold Daily and Silver Weekly Charts - Something Wicked This Way Comes

“Something has to be done because it’s totally out of control these days. I mean you can’t have bank runs like we’re seeing. The one thing the powers that be, the central banks and the governments, have tried to do is to avoid what I call a ‘Liquidation Event.’

Ever since we saw what happened when Lehman was liquidated, they realized we can’t go there. Fannie was taken over as well as AIG and GM to prevent this liquidity event. But I think the market is just liquidating, irrespective of whether the powers that be want it or not.

I just think that process is picking up into a tsunami and the world will start focusing back again on precious metals."

Eric Sprott, interview at King World News

I tend to agree with Eric.   If the markets see Greece slip out of the Euro and fold its debts up and toss them away, the consequences for the banks and debt in some of the other Euro countries are going to be enormous. 

They are deathly afraid of uncontrolled runs on the banks.   And even moreso, they are concerned of contagion to US and UK banks, and a run on the currencies. At the end of the day, when the fundamentals are shot to hell, its all down to running a confidence game.

That is why I think that they will fight the inclusion of gold and silver in the world currency systems tooth and nail.  Once you open the door to alternatives, you erode the span of your control.  And that is fatal to an overextended control fraud, which is what the paper financial markets look like today.

And that is why the price of gold and silver have to be controlled.  They have an objective, but they need to avoid panics and sudden uncontrolled movements from the chose path to reach it.

The key word is 'orderly.'  

Make no mistake and have no illusions.  For all their bravado, I think these guys are scared shitless.  You can have faith in your free market gurus I'm sure. Faith that they will drop you a postcard of gratitude and encouragement from Paraguay and Switzerland, Abu Dhabi and Singapore.

And when they inevitably lose control it could go quite a few ways, but no matter which way it goes, it is likely to be memorable.