The gold and silver markets have fallen dramatically in the wake of the FOMC signaling an end to its controversial Quantitative Easing or QE programs. The pricing in of such Fedspeak QE taper-talk has also triggered a yield spike in southern Europe that could deepen that region’s existing debt crisis.
Furthermore, sharply rising interest rates have resulted as billions of investors exit perhaps the largest financial bubble ever seen.The end of cheap real estate refinance has finally arrived as mortgage rates are now approaching five percent.
Rising government bond rates mean more money that will increase the chances of stealth inflation.The Fed acting to crush the effects of inflation may even lead to more money printing.
Other Background Factors
In addition, rising oil prices have been cutting in to already lofty equity valuations, as fallout from the "Black Swan" in the Gulf of Mexico expands. Gasoline prices are already rising.
The public has also been caught largely off guard by embroiling social unrest in various parts of the world. This dissatisfaction is indirectly the result of exporting inflation that is collateral damage from currency depreciation wars.
A dead precious metals mining sector has been cutting off any "perceptual" idea of supply as paper metal prices are now well below the cost of production. New supply matters little for gold. For silver, by the time the sector catches up with demand, there will be no silver left.
Precious Metal Prices Suffer Despite Bullish Fundamentals
Offset by an unprecedented and record breaking surge in physical demand for silver, from silver coins to international demand. Yet, eerily, perhaps the worst precious metals market sentiment currently exists that has been observed since the early 1970's.
Bullion banks are currently long buyers by every indication, yet they are still maintaining a concentrated short position in the futures market. This could be an intentional effort to suppress physical metal prices by selling paper so that they can accumulate real metal more cheaply.
In short, it is unfathomable how low the precious metals markets are by any measure. Technically, the market could still go lower, but does this change the likelihood that investors have now been presented with what seems to be the precious metal buying opportunity of perhaps multiple lifetimes?
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