Gold Bulls: Beware
Mark McHugh

I’m making my New Year’s resolution early this year. I’m done pretending that we have honest markets. I know most of you are already fully aware of this, but I’m gonna throw one last chart out for those who might remain unconvinced:

That’s a 10-day chart of Wachovia Bank (WB), the nation’s fourth largest bank, whose “price discovery” resembled Mr Toad’s Wild Ride, before crashing in Citigroup’s (C) lap. Just remember this, the next time the SEC bans short selling, and an insolvent bank’s market cap jumps $20B overnight, buy a put. Yes kids, financial terrorism is alive and well!

Gold and Silver bugs yawn at these prices gone wild charts, we’re used to them. We get our prices from a magical place called the COMEX, where pixies discover prices unfettered by the shackles of supply and demand.

Which brings me to the point, I think gold’s gonna get whacked again as soon as Hank and Ben are done blackmailing congress. My Ouija board says $830 is a likely buy point in the next 30 days. We need to take into account the ongoing price suppression of gold. I applaud the efforts of James Conrad, Ted Butler, Jason Hommel, and others, but I see zero chance that it’s about to stop, for now.

Paulson and Bernanke have turned capitalism into three card monte, so the US Treasury can sell low interest paper. I have no idea how long it will be until the true uber-bubble bursts (that, of course, is my beloved US Dollar), but it surely will, taking the hopes and futures of millions with it.

Precious metals are the natural enemy of all things fiat, and it should be clear to you that TPTB have no intention of running an honest card game (look at that WB chart again). Right now, we are witnessing bold-faced racketeering from our leaders (if only we had a Justice Department….).

Perhaps I am alone in this last concern, but I am really starting to question the wisdom of precious metals ETFs. State Street (STT), who runs the GLD ETF, fell more than 27% on Monday; Barclays (BCS), parent of IAU, was down 16%; Deutsche Bank (DB) parent of DBP, down 17%. History has not been kind to those who accepted paper promises for precious metals. I have been haunted by the words of fellow blogger, “deuxsous”:

If your gold position is paid-for physical gold stored safely by you, then just hold it and forget about it. That's what I did in the 1970's.

But if you are a modern paper gold trader, just burn the paper and move on to the next paper fad.

Disclosure: Author is long “pretend” gold that he can never actually touch, and is looking to swap into the shiny metal kind of gold in the very near future.
 

seekingalpha.com