The tactic by the Fed and Central Banks is to inflate the stock markets while manipulating the price of gold and silver lower. This achieves two goals: 1) it reassures the public’s faith by pumping up stock prices while the economic indicators continue to deteriorate and 2) it elevates the dollar while it destroys market sentiment in the precious metals.
So far, the strategy has worked. Some of the toughest gold and silver bugs are becoming extremely frustrated and downright bearish. You can’t blame them as this is typical human psychology. Although, extremes and manipulations never last forever and at some point in time they reverse.
If we look at the next series of charts, we can see just how extreme the gold & silver markets have become. In typical inflation-hyperinflations, stock and commodity asset prices rise together. However, since the Fed announcement of Q3, only certain asset classes have risen — mainly stocks, real estate and to a lesser extent, bonds. [Read more...]