Today
James Turk spoke with King World News about Germany repatriating their
gold and the impact on the gold market. He also discussed the recent
price action in both gold and silver. Here is what Turk had to say: “By
now most people have heard that a newspaper in Germany has reported
Germany will be repatriating gold held in France and the United States.
If true, an upcoming Bundesbank announcement has the potential to send
shock-waves through the gold community.”
James Turk continues:
“We just have to wait and
see exactly what the Bundesdbank says tomorrow about their plan
regarding gold repatriation. The key here is that although the
newspaper in Germany is considered credible, the reality is that we need
to see an official statement from the Bundesbank.
The question here has
always been, how much gold has the United States leased out? In other
words, how much gold has already left the vaults and been sold into the
market?
“I will have more to say as soon as an
official announcement hits the wire. In the meantime, it is a very
important indicator of market strength to see gold again moving above
over-head resistance in the $1670s, with silver at the same time trying
to confirm its breakout through its resistance level at $31.
It was only seven days ago,
Eric, that gold was pummeled all the way down to $1625, while silver
was smashed to $29.25. So both precious metals recovered from that
one-day downdraft very quickly. We now know it was a head-fake, which
provides us with a clear example of how the central planners work.
They use the paper market
to gun for stops at critical levels. These were critical levels because
the prices were just below the December low in both gold and silver.
So they were price levels that were just loaded up with protective
sell-stops.
These sell-stops are
sitting ducks when you have essentially unlimited resources to move the
paper market. In other words, the central planners and their agents can
pull-off these raids by loading up their commitments by selling gold
and silver through various derivatives, which are off their balance
sheet and therefore hidden from view. The central planners and their
agents then cover as many of their shorts as possible and take big
profits by buying all the paper from traders getting stopped out of
their positions as their sell-stops are hit.
But here's the important
point, Eric, and it is one we have seen time and again over many years
now: There is a real limit as to how far the price of gold and silver
can be driven by these deliberate paper market interventions. Given how
quickly the precious metals have bounced, it seems to me that this
limit was reached for gold and silver at $1625 and $29.25 respectively.
These price levels represent the new floor in the precious metals
market. At those prices, the demand for physical metal simply
overpowers the selling from the central planners and their agents.
Now that we are at the
beginning of a new year, I would also like to make a point, Eric, that
looks at the big picture. I want to draw a comparison to 2005, 2006 and
2007. In those three years, gold rose 18.2%, 22.8%, and 31.4%
respectively. Together they represent a huge move upward for any
market, and big moves result in corrections. We got that in 2008 with
the selling of gold and silver surrounding the Lehman collapse, but when
all was said and done, it wasn't much of a correction. Although silver
ended the year lower, gold actually rose 5.2% in 2008. Now compare
these years to what we have just gone through.
Both gold and silver did
very well in both 2009 and 2010. We can correctly say that silver
actually soared, rising 49.3% and 83.7% respectively in those two
years. It was another big move. So again, the precious metals
corrected. Silver dropped 9.8% in 2011, but rose 8.2% in 2011. Gold
actually rose both years, 10.2% and 7.0% respectively. So looking back,
we can say that the precious metals were simply correcting the big
gains in prior years, just like they did earlier in the decade.
And when you look at this
performance unemotionally over the sweep of years, we can conclude that
the 2011-2012 correction was hardly a correction at all. The precious
metals basically moved sideways within a trading range, and here's the
important point, this type of sideways movement is a sign of strength.
After all, look what gold and silver did after what was essentially a
sideways correction in 2008.
So we need to ask
ourselves, Eric, will history repeat? Will gold and silver follow the
same pattern twice-repeated over the past decade so that we can expect
outsized price gains in the precious metals the next two years? Yes, I
think so because gold and silver remain undervalued, and the world's
monetary and financial problems have not been solved. The correction is
now over, the new floor is in place, and investors should expect to see
spectacular moves for gold and silver over the next two years.”
By: Kingworldnews