Behold the Gold Bull!
 

The naysayers claimed it would never happen.  The Keynesian socialists claimed there was no place for gold in their brave new age of fiat paper.  The Wall Street perma-bulls claimed that gold was dead.  The lion’s share of mainstream investors didn’t even know that gold existed in the real world, believing it to be some mythical fairy-tale concoction.
 
They were all dead wrong.
 
The magnificent and exciting events unfolding in the new gold bull market in the past days have rendered the naysayers’ endless prattle completely impotent.  The radical anti-free-market crowds who continue to oppose and fear gold are now exposed naked to the world as the fools they have been. 
 
With all the subtlety of a mighty sledgehammer blow to the skull, the Ancient Metal of Kings crushed its legions of critics into dust as it burst out of its long-festering $325 shackles and screamed towards the heavens.  What a wondrous sight to behold for longsuffering gold investors!
 
Hallelujah!
 
Dear friends, gold’s spectacular breakout is a huge, huge deal.  Even as a wordsmith I find myself at a loss for words this week on how to effectively communicate just how important the events we just witnessed are in the grand scheme of the markets.  As a speculator I have learned the hard way in the trenches that I need to suppress my own lethal emotions when trading, but I have to admit that gold’s stellar breakout this week was one of the most exciting market events I have ever witnessed.  What a wonderful Christmas blessing!
 
The anticipation for this glorious week has been building for a long time amongst the vibrant international community of contrarian investors.  The $325 level has been vexing gold and gold-stock investors since 1997, seemingly a lifetime ago when considering all the market chaos through which we have sojourned since those days.
 
Last year less than a month after the new gold bull was born we published an essay called “Gold Prepares to Erupt” on May 25th, 2001.  In this essay I wrote, “With these recent historical technical precedents, we believe $325 gold is the current mega-critical level, the nexus of the struggle to liberate gold from its oppressors.”

While gold proved hopelessly unable to rise to the occasion to challenge the $325 line in the sand in 2001, several valiant assaults on these fabled levels were launched this year.  Unfortunately they all failed, demoralizing countless gold investors as is quite evident in gold-stock prices since June.  Yet, just one month ago a new glimmer of hope emerged from the ever-enigmatic markets.
 
As any freshman economics student can tell you, manipulating markets always turns out badly.  The free markets are naturally designed to perfectly match supply and demand of everything through the mechanism of price.  As long as the price of anything trades freely, it will have no surplus or deficit and scarce resources will be allocated efficiently to their best possible use.  No, I am not talking about physical gold here, but the mighty US dollar.
 
Since 1913 the hideous unconstitutional abomination that haughtily calls itself the Federal Reserve, even though it is neither federal nor a reserve, has utterly destroyed the very US dollar it was supposed to protect.  Over 95% of the original value of the US currency has been destroyed by the Fed’s disastrous ever-inflationary policies.  The Fed has shamelessly raped and pillaged the savings of the American middle class like a demonic vulture straight out of the abyssal pits of Hell.
 
The Fed is just like the worthless old Communist Russian Central Planning Committees as it doesn’t produce any valuable goods and services.  All it can do is manipulate the quantity of US dollars outstanding and the price of the US dollar, commonly known as interest rates.  Manipulation of markets is always ultimately futile and inevitably creates far bigger problems than it initially sought to solve. Last month the Fed finally pushed the limits too far and manipulated real interest rates negative for the first time in over two decades.
 
As far as I know, there is no more powerful and incendiary rocket fuel for a gold bull market than negative real interest rates.  Negative real rates are an artificial and inherently unstable environment that occurs when a government decides to rob its savers through an immoral stealth tax on their savings, inflation.  If you are interested in more detail on real interest rates, I have written three essays on them in the last 18 months.
 
In the most recent, “Real Rates and Gold 3” just published a month ago, it was growing increasingly obvious that the next stage in the gold bull couldn’t be delayed much longer with negative real rates rearing their ugly heads again for the first time since October 1980.  I said…
 
“Even though many gold investors grow pretty forlorn when gold is repelled from $325 under heavy fire, the new negative real rates today change the whole ballgame.  Historically negative real interest-rate environments have been one of the ultimate indicators that a massive gold bull market is underway, and today this signal flare has been shot up into the heavens again.  I believe the $325 Maginot Line will fall, with gold surging through to the upside, if the real interest-rate environment remains negative. ... Gold will not remain shackled under $325 if real rates remain negative!”
 
And so it was, praise God!
 
The magnificent fall of the mighty gold-short fortresses hulking along the seemingly impregnable “Gold’s $325 Maginot Line” in recent days was every bit as spectacular as I had long hoped.  The steadfast contrarians are once again vindicated!