Blood Flowing in the Streets: The Capitulation Bottom Has ALREADY Occurred!
Eric Dubin

We were planning on recording an abbreviated show this week, but there’s so much going on deserving coverage that the minutes racked-up and you’ll barely notice the difference. 

To the surprise of no one, the cartel did push precious metals prices down this week.  But as I noted on Sunday (GOFO Update: Physical Market Headache For Gold Cartel and My Short-term Forecast), the tight physical market as can be seen by the objective measure of GOFO rates has been giving the cartel one heck of a headache, keeping them in “managed retreat” mode.

Just as I expected, the downside blast was modest in both magnitude (well above the $1,150 worst case floor I spoke of) and duration.  I expect a similar dynamic to play out next week, with less downside action.  It will no doubt disgust the masters of MOPE to see gold eek-out a small gain for the year, but that’s probably how 2014 will end.  

The little downside party the cartel threw last Monday corresponded to a shift into deeper negative GOFO rate territory yet again.  For those of you that are skeptical about the frequency with which downside moves are associated with at least the cartel getting the ball rolling initially to the downside, please note that if it was generic/organic selling happening last Monday, that would imply greater available supply of gold coming on to the market, and GOFO moving towards positive rates, not falling deeper into negative territory.

Next week, odds are very high “managed retreat” mode will remain in effect, even if manipulation algos are able to tweak prices to the downside for limited price decline and short duration.

Doc and I talk about the goofy final revision to third quarter GDP.  Brandon Smith, founder of Alt-Market served-up a funny anecdote in reaction to those smelly numbers:  

“I once read a hilarious anecdote in which a Keynesian banker purchases a pile of excrement from another banker for $20,000, and then proudly pats himself on the back for increasing GDP by 20,000 bucks (the pile of excrement in this case happens to be Obamacare). This is how mainstream economists look at financial stats; they don’t look at the actual substance of supply and demand, or what is actually being traded, they only care that someone somewhere has created the perception of profit.“

Touche, Mr. Smith! Click here to read his astute introduction to a Zero Hedge article documenting the statistical excrement.

Speaking of statistical excrement, as you can see, we did indeed move back over 18,000 on the Dow Jones Industrial Average this week.  I warned you — and the lunacy is going to continue into the new year.   But when I first made this assessment back in October, it wasn’t at all clear that oil would crash as much as it has.  With the depth of oil’s crash now visible in the rear-view mirror, it’s clear that Wall Street economists are over-estimating 2015 US growth — and that remains the case even though analysts and economists are slashing 2015 profit estimates this very week.  They’re still behind the curve. 

Happy holidays to you and yours – Eric Dubin

www.silverdoctors.com