Submitted by SD Contributor SRSrocco:
If we look at this 2008 chart of the DOW JONES, GLD & SLV we see that in the big decline, the Dow lost 35% in 6 months, the GLD dropped 14% and the SLV got clobbered in a waterfall of -45%.
If we compare this to 2012, we see a much different picture:
The Dow Jones has actually gained nearly 10% since late Nov 2011, while the GLD has fallen 8% and the SLV 11.5%. This is nothing like 2008 in regards to the fact the DOW has been manipulated higher by PPT while they have allowed commodities and the precious metals to decline.
If this was like 2008, we would be seeing a much lower Dow Jones already. Furthermore, if this was going to be like 2008, then that would mean the SLV would have to fall an additional 30% from here. That would mean the SLV would fall another $8.oo to hit a low of $18.73. Does anyone really believe it will fall this low?
If the Dow Jones does fall considerably, I would imagine the GLD & SLV will decouple as they have had serious losses already.
-SRSroco
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/live/s_silv.gif)
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Yes, manipulation has clearly played a role, but the DOW in my opinion has also gained as a result of all the additional fiat money created. It is after all no secret that the more fiat money they create, especially when not backed by healthy economic fundamentals, the more fiat money tends to lose purchase value and the more companies tend to charge for products and/or services to try in order to maintain and/or improve previous levels of paper-based wealth. This leads to higher share prices, but in real terms share prices have actually remained relatively constant. The GLD and SLV were also suppose to record gains, but have fallen out of the bus due to blatant downward manipulation via paper. This is why I avoid paper-based investment vehicles such as the GLD and SLV like the plague itself. Yes, both comes with the promise of physical gold and silver, but a promise and/or guarantee is after all just as strong as the entity that makes and/or provides it. The custodian of the SLV is after all JP Morgue, so do I need to say more. I can of course have the cat by its tail completely here, but this is what makes sense to me. lol Maybe I should just stick to stacking.
The PPT and related jackasses are terrified of the next crash of equities; the DOW, NASDAQ and S&P. That represents a 25-30 trillion dollar stockpile of wealth that could evaporate in a day. Another crash would completely gut the state pension plans, exacerbating the chronic state budgetary deficits. Whether individual equity investors get slammed is meaningless. We are just collateral damage in that event.
We, the long suffering equity investors, slammed twice in 10 years with the tech wreck and the 2008 Lehman crash, will be crushed again, insaveable We were on our own then but now the treasury is empty. We will be completely on our own The PPT and PTB could care less about the price of silver and gold but that little redoubt could be our salvation.
If anything they would love to see these metals go to hell. All the gold and silver above ground in the world is at best 5-10% of the world wide value of stock and bond equities. Wouldn’t it be an itneresting day if those ratios were reversed?
The hit the PM ETFs took in 2008 was coupled to the equities most likely due to a result of worldwide rush to liquidity, a fear factor and short contract PM manipulation. This time will very likely be different since silver is already down 50% from its 2011 high and gold is down by about 20% on average. These downticks may be reflective of the same drop shown in 2008 so the worst could be behind us. If they take another drop we will have another short lived buying opportunity.
It is a best guess but with scarcity and demand moving rapidly towards these particularly low prices (see the central bank buying PMs essay) my opinion is that we will see large increases in prices within the next 12 months or sooner.
The 2008 situation is only a small fraction of the financial troubles brewing right now. That fear factor should send people flying out of equities to buy physical assets once the reality of the SHTF comes to pass. That tipping point may come when every net work, every public voice, every babbling bobblehead in the world starts saying the same thing. “Nothing to see here, move on, move on–but buy gold, silver and food, we see shortages looming” Then we’ll see the stampede start.
“All the gold and silver above ground in the world is at best 5-10% of the world wide value of stock and bond equities. Wouldn’t it be an itneresting day if those ratios were reversed? ”
Indeed it would, AG, and something tells me that once the paper Ponzi scheme reaches the collapse stage that is at long last obvious to one and all, we could see this happen. We all need to remember that the Fed was created to give birth to inflation, the monetary fun game where the elite get the first bite at the apple while the rest of us get the core that is left. A 2012 dollar has the equivalent buying power of about 2.5 cents in 1912. Over a 97% reduction in the purchasing power of paper wealth in 100 years. Clearly,it will not take long at all for the remaining 2.5 cents worth of value in the dollar to shrink to total insignificance. As to the paper wealth game, it’s a bit like the crowded theater scenario. The best time to exit is when you get that first whiff smoke and not when the flames are visible to everyone in the theater.
It’s all Manipulation and it will all eventually crash and the stackers will prevail. If you have faith in PM’s Stack The Physical as the paper world is rigged.
This is a war of ideology. The big rush into physical commodities and the precious metals may never come. Rather, the transformation will continue to be slow and gradual, as it has been for the past decade or so, but with increasing momentum.
The reason that a big rush is unlikely is because the ‘big fiat-money’ (institutions, hedge funds, sovereigns, etc) know that a collapse of the debt-based fiat monetary system is not in their best interest, because nearly all of their wealth is derived from paper financial assets. A quick collapse of the paper financial system would wipe them out, in greater proportion than even the common man on the street.
Therefore, the ‘big money’ will likely never tolerate a major rush into the precious metals, but would rather move slowly (if at all). They would rather stay in the fiat system if the fiat system could be perpetuated. They will resist for as long as they can, because the day there is really a major rush into precious metals, there won’t be enough real-world supply to meet the demand, and the great majority of their wealth in paper assets will be lost.
The above is the reason people like Buffett, Gates, and Munger have to talk down gold (and never even mention silver). It’s not because they think gold is useless (that is just what they say), but rather because they realize that a collapse of the fiat money system will guarantee that they will lose nearly all of their paper asset ‘wealth’. They must be ‘team’ players within the system that no major ‘big fiat-money’ player can escape from. So, in a way, the common man on the street has it much easier, because he can continue to convert his paper currency for acutasilver (and gold) without worrying much about his other paper assets. It is individual protection that he seeks. The fall of fiat paper money has no great effect on him.
“The reason that a big rush is unlikely is because the ‘big fiat-money’ (institutions, hedge funds, sovereigns, etc) know that a collapse of the debt-based fiat monetary system is not in their best interest, because nearly all of their wealth is derived from paper financial assets. “
maybe they don’t want a collapse, but it’s NOT THEIR CHOICE any more! you give them a bit too much credit, the game has gotten out of their control, the cracks in the dam are starting to show.
there is too much government debt, and no way to continue the ponzi much longer.
it’s as santa says, QE to infinity and beyond is the only option.
Game theory says that sooner or later a player will loose nerve and go for the gold/silver. When faced with an imminent scarcity of physical (maybe not today, but soon,) somebody will decide to grab some for themselves. Perhaps it will be some small or mid-size money who realize that they will be hung out to dry in the end that panic first. Whomever, whenever, when the first crack appears you’ll know the dam is busted.
Buffett, Gates, and Munger
ARE Screwed
they cant invest in G & S like we can
without driving the price to the sky……..they can only invest in paper
stack the smack & screw a banker
If only it was 2008, the solutions would have been so easy, let the banks fail.
SRSrocco,
You missed the point regarding Volume. While the DOW rallies, there is no volume, No volume means no commitment. People are betting with pennies, not dollars. Even Pennies can push the DOW up, however without the volume these figures shown cannot quantify an assessment of the 2012 market comparison to 2008.
Gregory Mannarino and amazing chartist would shake his head and point out many factors you have missed in your chart comparisons.
Also you have not accounted for QE-1 QE-2 and the present Stealth QE-3 which are having a major effect on this Rally.
Without this previous QE and Stealth QE-3 we would not have a rally, instead the DOW would be sinking like a ship, yes just like in 2008.
FED Stops the money printing = The market sinks like the Titanic.
Great comments, very informative. It seems the stackers are regaining confidence that was getting hard to find a few weeks ago.
The pundits that will mention gold (because it is so obvious they can’t ignore it) still shy away from silver. You get the feeling they have special instructions vis a vis the shiny stuff. Oh they hate it. That’s why it has to be the best thing to hold. It is going to go nuts, sooner or later.
Gold gets a pass because EVERYBODY knows it is money, is valuable and much sought after around the world. It’s ok if it rises, they hold quite a bit in their personal vaults (no doubt) and secretly giggle when it does. Not silver, it was too cheap for them to bother with, a waste of vault space. Plus, silver is such a small market that the big boys glancing sideways at it will have us sitting on $50 silver. They hate that, it will be fought tooth and nail.
You’re peein into the wind, fellas. Go wipe your shoes.
The DOW may be up measured in fiat currency but, if we were to measure it in in certain commodities like gold (can’t measure it in silver as silver is the most manipulated commodity in the history of the world) I would wager that it is way way down.
Actually, there are charts on-line that show the Dow 30 Industrials as measured in oz. of gold vs. time. You are absolutely right that this chart looks really sick. While the Dow 30 is up considerably in terms of rapidly inflating fiat currency, it is down considerably in terms of REAL wealth, such as gold, silver, and oil. You can find these charts by doing a search for “Dow gold chart”. There is a large scale example of this here:
http://www.gold-speculator.com/editors-picks/42716-200-year-chart-dow-gold-ratio.html
Silver got nowhere to go but up.
Keep stackin
The crash of 2008 was unusual because they had a choice to ‘save’ the system by printing, or let it crash and start over.
They will have no such luxury this time around, and they know it. When it crashes, it’s all over. Thus we get the propaganda, lies, and mis-direction at every turn.
Right now, the system is too messed up and there are too many people around to risk a panic.
Also, right now, there is already way too much money that’s been printed and given to the banks. The idea that QE3 will save the system again is ludicrous. If even a little bit of the money that’s already been printed and is currently sequestered in Central Bank accounts begins to circulate in public, it will mark the beginning of the end.
The only truths you need to know now are that the crash is coming, and that when you hold physical silver in your hands, you are not lying to yourself about anything, AND you are doing the one single thing you can to TAKE CARE OF YOURSELF by purchasing physical silver with what little fiats they are still letting us have.
The scarcity of silver and gold today is quite a bit different than 2008 when the race to liquidity and asset dump crushed prices for a period about a year. There did not seem to be a scarcity nor the frenetic desire to own something of real value at that moment in time.
Going back to the 1970′s the desire to own PMS starting racing upwards about 3-4 years before the massive spike of silver to $50 and gold to $800 respectively. People did not start waking up until about 1979 when the decade long inflation spiral started hitting home, people’s wages failed to keep up with inflation and home prices became very soft. Interest rates rates ramped to 10% and then higher. That was the tipping point for PM price explosion.
We are not there yet but will be in maybe a year or less. Low interest rates, deflationary pressures, trillions of printed dollars and a flood of currency from Europe, an upward racing stock market and a lack of REAL fear factor have people selling PMs as opposed to buying, unlike us stackers.
PMs will soon go into some real shortage as the demand of metals by the really large buyers such as the central banks and ultra wealthy Hoover up every scare ounce of phyzz. When that realization of shortage and big money buying becomes part of the common culture we will see the Rhino Horn price spike. A destroyed COMEX would help and China is doing quite well on that account.
AG… those of us who lived as young adults in the 1970s well remember those times. My wife and I bought our 1st house in 1974. We got an FHA loan at 9.25% interest and thought that a good deal at the time… because it was. Interest rates were rising weekly and many people trying to buy homes then discovered that the interest rate had increased enough while their home purchase was closing that they were disqualified from buying and locked out of the market. Fortunately, our local CU had a program for that and would lock the rate as soon as earnest money was put down on the house. We did that and had no trouble securing our loan even as rates were rising for anyone else who was not “locked in”.
As to the Europeans, I am sure that a lot of them are selling PMs now because they are so easy to sell and they need the money immediately to pay their bills. Most Europeans do not have a lot of money saved up. Living expenses in Europe are high and it is difficult to have much left over at the end of the month for either saving or buying PMs.
1929=2008
1933=2012
so, 1939 = ?
Sorry gang, I bought a powerball ticket last week but no winner. So back to my constant small stacking.
1939 Germany invaded Poland and started WWII. We started WWIII a few years ago but don’t worry, things can get worse