"History shows again and again how nature points out the folly of man" – Blue Oyster Cult, Godzilla

I would have written off the gold sector long ago in its ongoing bear market had I thought for one moment that gold's utility as insurance against the acts of monetary madmen/women in high places had been compromised in any way. On the contrary, the monetary metal is simply having its price marked down in a bear market while its value, especially given its current price and all that has gone on in the financial system over the last 3 years remains just fine.

Indeed gold, an element dug out of the ground for centuries, once as money and now as a marker to sound money systems will one day be shown to be a calm oasis from the fallout to global monetary shenanigans currently ongoing. At least it would be an oasis to those who have valued it as such. It is going to feel like a giant dinosaur (minus the kitsch value) ripping through a city built on paper to the multitudes who have taken the bait on the current too big to fail global inflationary operations. They will fail. Timing is the only question.

Despite what many are compelled to believe by aggressive (read: maniacal) global policy making that has turned down to up, right to left and symmetrical to asymmetrical, gold is and has been a lump of monetary value just sitting there, waiting out a phase where monetary policy is working seemingly as intended, to impoverish the working and saving classes and further enrich the asset ownership and investment classes.

I have gone hard on the gold "community" for a few years now because I watched in real time as the dark clouds gathered against the honest money relic and those bullish upon it. The narrative never changed for many of the most high profile gold “community” leaders and spokespeople, and in the modern financial markets that simply will not do. In the past, even during the previous bull market, I have likened being a gold investor to being at war. You are at monetary war in support of ideals and a sense of what is right vs. entities that manipulate and control markets toward desired outcomes.

And do you know what? They have won every damned battle since 2011.

The most brilliant move made by the US Fed in targeting gold (either directly or as part of the fallout) was Operation Twist, which came on the heels of gold's flirtation with the $2000/ounce level. Op/Twist very simply was designed to "sanitize" (the Fed's word, not mine) inflation signals by selling short-term T bonds while buying long-term T bonds. It was brilliant, evil and awe-inspiring all at once; genius. Simply manage paper and digital entries in the bond market so that a long relied upon macro signal (the relationship between short and long-term Treasury yields) will at once show a financial system under diminishing stress (yield curve decline) and a lack of inflationary expectations.

So the US Federal Reserve had the balls to literally paint the macro by turning the out of control 10yr-2yr yield curve (an important gold fundamental) down, sanitize inflation (a less important but sometimes very relevant gold fundamental) and best of all, keep on inflating… and inflating… and inflating… with ongoing ZIRP and QE3 as the global macro pull of deflation put Goldilocks on US markets 24/7 and 365.

Gold bugs would have none of this and why should they? The average gold bug (the real people, not the pitch men and promoters) is driven by this thing we call honesty and a sense of morality. To anyone with half a brain and not incentivized to look the other way (like probably 90% of the financial services industry), these macro parlor tricks are ephemeral and will not only not succeed, but one day be looked back upon as a scourge upon future generations.

The problem is that gold is so simple (as a monetary anchor) that eggheads feel a need to make it complex (the old 'baffle 'em with b/s') and those with agendas feel a need to pile on, for example, schooling us over and over again in the media about how gold is a poor "inflation hedge", when that is not its only utility; not by a long shot.

The post-2011 period has been a veritable Wonderland of possibilities for the printers of paper, enterers of keyboard digits and those who follow their breadcrumbs.

Further, the leadership of the gold "community" have been shown to be little more than dogma spewing robots firmly set in their ideology when maybe what was needed was a more even handed approach that could have helped legions of gold devotees avoid some very unpleasant interim situations before Goldzilla finally rises up and wrecks the cities around the globe made of paper and digits.

The gold sector is rallying as we expected it would from the 2008 lows and a capitulation of at least moderate degree but has not proven much, technically. Similarly, the fundamentals are not yet fully baked for the sector (ref. yield curves, gold vs. stock markets, gold vs. certain commodities, intact public confidence in policy making, etc.). These things will change either sooner or later, but for years now imposing our will upon the market has not worked. Sit back, relax and let Goldzilla do his thing.

I write the above in the style I used to write as a 'for free' public writer (as opposed to the more technical stuff I need to see to now with NFTRH) to hopefully add a level of perspective to the conversation going forward. The macro is going to change. It always does.

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13 thoughts on “Goldzilla

  1. Boom and busts HAVE BEEN OCCURRING FOR CENTURIES. Weather from market forces or manipulation. This will continue as long as people buy and sell things. Jim Cramer admitted this morning that the hedge funds control the highest percentage of capital in the world by far. He said it with a kind of a chill. This gives the hedge funds tremendous power to control markets. It is my view that no system can control that amount of power forever. Those funds will be cut at some point,and I believe they will fall from market forces. The commodities are being controlled by leverage and that too will bust. That is when gold and silver will start their climb. J.M.O.

  2. Jeremy, I concur per the puny machinations of nations to cajole gold, and monetary policy in general, in the direction of their desire. Ultimately they will fail. One only needs to view the decadal oscillations of money vs gold to realize when it's time to shift positions. Of course our sample source is slight, floating gold only being a "thing" for the last 4 decades. Still, simply examining the dollar vs gold one can see that the time is upon us to transition into the metals and out of cash. Sure the USD may stumble further up, but as a whole and on the mean, it's poised for a multi-year retreat.

    1. "Jeremy" did not author that piece, NFTRH did as described on the bottom of the piece revealing it's seeking subscriptions.

  3. Dear Everyone,

    I think that the one thing that everyone forgets is that we can "make" gold through nuclear methods, and that America and other nuclear countries are making gold in their nuclear reactors, as a by-product of power generation all the time. If nuclear reactors were just used to "produce" gold, it would cost approximately $612 per ounce to produce gold. But, since they are just making the gold as a by-product of energy production, it only really costs these governments about $100 an ounce. In that way, they can "create wealth" almost out of thin air, and manipulate the price of gold at any time to suit their objectives. Why do you think that we don't want Iran to have nuclear power plants?

    Something to think about, Cherubim

      1. Mercury to Gold through slow Neutron Capture. Only the mercury isotope 196Hg, which occurs with a frequency of 0.15% in natural mercury, can be converted to gold by slow neutron capture, and following electron capture, decay into gold's only stable isotope, 197Au. Being done today at a nuclear reactor near your home. If your home is in a nuclear country.

        1. lol. And all this labor, energy, uranium and mercury only costs a 100 bucks? lol..Don`t let the greedy bankers find this out. They`ll melt the entire world down for this arbitrage, lol. They`ll sit in the stars on a stack of gold with no planet to call home, but atleast they`ll have gold, lol...Perhaps the space station will be home ?

          1. Oh yeah ! I forgot...How much does it cost to produce a 100 bucks ? mu a ha ha ha ha ha ! Trees are cheap I think...

          2. Dear Kevin,

            You are obviously a simple-minded fool, who has wasted all of his money investing in gold, a commodity whose price is manipulated constantly by major world governments all the time. LOL.

            Something to think about, Cherubim

          3. My $400 gold and $5 silver does not seem like a waste..Also $170 palladium..Since then real estate has gone no where, wages have gone no where..Perhaps manipulations as well? How could "ALL" my money be in gold when I have a house,2 cars and 2 trucks paid for? Here`s simple minded..I have many large trees, 6 feet diameter. Also apple and peach trees. They gain (grow)every year, your so called money. Dollars are not money, they are debt. It is estimated I could cut one of my trees down and print 1 trillion dollars. Or I could use the wood for heat or lumber.I could sell firewood, lumber and buy gold with that. The trees will grow back, the gold wont come back. I could sell apples for gold and apples come back every year..Seems easier than building a nuclear reactor..Some day the gold will be gone (I`m not selling real money, don`t need to sell my gold) and apples will always be around. Gold/silver is in your computer,TV,car and cell phone. Perhaps you shouldn`t call a waste that in which enables you to write anti-gold stories, watch zombie TV and drive to the store to buy apples/peaches..On a side note, I bought 20 trillion zimbabwe dollars for $1..Tell the gold buyers in zimbabwe that they were simple minded fools for dumping their "precious" cash because gold is a manipulated market.. lol..Perhaps you should be a little more simple minded...Plant some fruit trees and grow gold with that..Getting a uranium mining permit is pretty much impossible..But you can always plant a tree.

          4. Dear Kevin,

            Money is made out of cloth--not paper. So, trees have nothing to do with it. A house, 2 cars and 2 trucks--paid for? Excellent. It sounds like a good start. And, from your comments, it sounds like you are in the apple and peach business. Good Luck in all your endeavors.


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