Cartel Update

On a day when – not surprisingly – the “Dow Jones Propaganda Average” is surging amidst the year’s largest “POMO,” or Permanent Open Market Operation (i.e., the Fed injecting money into the markets at 10:00 AM EST),  the day’s only major news is a lower than expected 4Q GDP growth report from Germany – coming in at a measly 0.25%.  On the Precious Metals front, it was reported that the Chinese government issued its first two gold importation licenses to foreign banks; which in our view, is yet another reminder to “beware the dragon” acquiring the world’s gold, as it prepares to take the mantle of global economic superpower.

Under such circumstances, we wanted to show you just how terrified TPTB are of losing gold and silver to the inevitable short squeezes that will ultimately doom their ill-fated scheme.  Below, you can see that on each of the past three days, nearly identical chart patterns highlight the Cartel’s typical “key attack times”; in each case, met by fierce buying that took prices back up mid-morning.

In fact, in the paper gold market, the only difference between the three days is yesterday’s “flash crash” attack at 11:20 AM EST; yet again, orchestrated just as prices dared cross the Cartel’s two month “line in the sand” at $1,250/oz.

Even more encouraging is the silver market; which for the second time this week, withstood intense naked shorting to hold above its own, seven-month “line in the sand” at the very key round number of $20/oz.

Only time will tell if this is indeed the bottom.  However, as we discussed in last week’s “Most lopsided trade in financial history,” it would be difficult to imagine significant downside from the current levels – certainly when compared to the nearly unlimited upside.  Remember, it’s all about “financial defense” in today’s treacherous economic environment; and thus, collecting ounces is what is most important – particularly when afforded the opportunity to do so below the cost of production.

When pondering such a decision, take a good look at the chart below; and determine for yourself if American investors’ cumulative gold allocation should be just one-fifth of what it was during the Great Depression and the early 1980s inflation scare.