On this week’s SD Weekly Metals & Markets we cover:

*This week’s historic smash in the metals which saw gold complete it’s worse quarter in decades and fall to $1186, and silver drop another $3 to $18.20 in what can only be described as panic driven capitulation
*Doc’s Physical Market Re-cap:  Silver supply issues re-emerge as spot price smashed under $20
*Smart Money:  Asian demand greater than 2-to-1 Western “paper” dishoarding
*1970s Cyclical Bear vs. Current Metals Correction: Is history repeating or is the bull market over?

Picking a bottom is virtually impossible with the cartel gang lurking around.  We never can be certain when their “managed retreat” strategy is flipping over into “retreat” mode.  But there are hints that we might be setting up for a bottom.  Previous strong support levels of $26 and $22 silver obviously didn’t hold, but falling below $18 would have erased nearly 3 years worth of bull market action, leaving silver well below the cost of production.  As with gold, declining prices has boosted physical demand.  Silver’s strong fundamentals remain, and Friday’s leap higher prior to the London PM Fix isn’t just short covering.  It tells the story of the need to source physical silver out of the LBMA, which was only possible going into the fix at a much higher price.
SD Weekly Metals & Markets with The Doc & Eric Dubin is below:

house-of-cardsDid you know that you are involved in the most massive Ponzi scheme that has ever existed?  To illustrate my point, allow me to tell you a little story.  Once upon a time, there was a man named Sam.  When he was younger, he had been a very principled young man that had worked incredibly hard and that had built a large number of tremendously successful businesses.  He became fabulously wealthy and he accumulated far more gold than anyone else on the planet.  But when he started to get a little older he forgot the values of his youth.  He started making really bad decisions and some of his relatives started to take advantage of him.  One particularly devious relative was a nephew named Fred.  One day Fred approached his uncle Sam with a scheme that his friends the bankers had come up with.  What happened next would change the course of Sam’s life forever.

Zeal062813ASubmitted by Adam Hamilton, Zeal:

There’s not much arguing against gold stocks being the most hated sector in the markets these days.  And with such a loathing, you can only imagine the visceral disdain towards the more risky juniors.
Provocatively it wasn’t too long ago that the junior subsector was a speculators’ paradise that offered legendary gains.  These small companies are of course a vital component of the gold ecosystem.  And the quality ones that made solid discoveries while skillfully advancing their projects towards development would righteously see their stocks soar.
Unfortunately with gold selling off hard and the larger mining stocks getting crushed, the juniors don’t stand a chance.  And indeed junior gold stocks have been annihilated amidst a sentiment superstorm that has left no prisoners.  The carnage in this subsector has made it the vilest of pariahs.

end badlyAt the last FOMC meeting, by prematurely announcing the timeline and the specifics of an exit from QE, Bernanke might have lost control of rates and volatility. The current US economic growth is still feeble and hinges on housing, which would be slowed down by raising rates. Banks, while better capitalized than pre-crisis, are still not lending to most borrowers and would be dearly affected by too fast increases in rates. Moreover, European woes still threaten the stability of the international financial system and the recent rush to the exit might further exacerbate funding pressures for weak European banks. Finally, the US government (amongst others) debt load, while already unsustainable, would keep on climbing if rates were to increase only by 100bps.
The chaotic reaction by market participants and the corresponding increase in yields now risks destabilizing this very fragile equilibrium.   It is yet unclear whether or not the damage control from the other Fed Presidents will put a lid on yields and market volatility, or if the damage to the Fed’s (poorly executed) exit strategy is permanent.

haircut bail-inDid you actually believe that they were not going to use the precedent that they set in Cyprus?  On Thursday, EU finance ministers agreed to a shocking new plan that will make every bank account in Europe vulnerable to Cyprus-style bail-ins.  In other words, the wealth confiscation that we just witnessed in Cyprus will now be used as a template for future bank failures all over Europe.  That means that if you have a bank account in Europe, you could wake up some morning and every penny in that account over 100,000 euros could be gone.  That is exactly what happened in Cyprus, and now EU officials plan to do the same thing all over Europe.  For quite a while EU officials insisted that Cyprus was a “special case”, but now we see that was a lie.  International outrage over what happened in Cyprus has died down, and now they are pushing forward with what they probably had planned all along.  But why have they chosen this specific moment to implement such a plan?  Are they anticipating that we will see a wave of bank failures soon?  Do the banksters know something that they aren’t telling us?

chart of the dayAs today’s Chart of the Day (courtesy Bloomberg) demonstrates, on a year-over-year percentage change basis, gold bullion is currently exhibiting the strongest buy signal of the entire bull market, far surpassing the previous buy signals placed in 2005, 2007, and late 2008-early 2009.
Must See year-over-year percent change of gold bullion chart for the duration of the bull market is below:

paper goldWith gold down 40% on the year and on track to place the largest quarterly decline on record for the 2nd quarter, CNBC invited Peter Schiff on to its Hard Money show to ridicule the gold bug about the metal’s historic plunge.
With Schiff making the case that miners will begin shutting down operations and going out of business if the price of gold stays below $1200 long term, the fun begins at the 5:30 mark, when the CNBC host begins bashing blogs that believe in a conspiracy theory that the Fed is manipulating gold, and attempts to make the case that gold is crashing because “how about the fact that it’s darn easy to sell these days because it’s just a piece of paper and a computer transaction.
Jeffrey Christian couldn’t have said it better himself.
Full MUST WATCH piece with Peter Schiff and CNBC attempting to bash gold is below:

JP MorganWith gold breaking below $1200 , legendary gold trader Jim Sinclair has sent an email alert to subscribers advising PM investors that knowing the system is in collapse, he intends to buy gold withevery asset at my disposal today and tomorrow, and I suggest the stout of heart do the same.

Sinclair’s full alert is below:

Following this week’s stunning and repeated collapse in gold and mining equities, I had the chance to reconnect with legendary resource financier and investor, Rick Rule, Chairman of Sprott US Holdings.

Speaking toward what he’s seeing from the institutional investor community, Rick said, “This is the fourth time in my career that I’ve seen capitulation selling, and it get’s ugly and spasmodic…Last week I was on the East Coast of the United States visiting very large institutional investors, and the level of indecision I saw was absolutely classic of the period right before capitulation—and this week, right on schedule, we’re getting it. [It’s] truly ugly, but it’s the kind of cleansing the market needs.”

“I was talking with Eric (Sprott) this morning on the phone, and what he reinforced to me was that he built Sprott from a $10
million manager to a  $10 billion manager, by the aggressive deployment of capital at times like these. 
Eric has always said, ‘Don’t be afraid to be right’. That’s where we are right now…This is the time when the ’A’ players go to war.”

gold bull overSentiment is as bad as we have seen it in the gold market – worse than after the 30% fall in 2008.  However we remain confident that the recent price falls are just a mini bear market within a larger secular gold bull market that will propel prices much higher in the coming months and years.
The recent price falls were not a surprise.  When gold was near $1,900 we said that there was going to be a correction and that in a worst case scenario gold could replicate the 1970s bull market when gold fell nearly 50%.
It is always worth looking at gold’s last bull market in the 1970s when gold rose from $35/oz in 1971 to over $197/oz by January 1975.  In the next 21 months, gold fell in value by nearly 50% to $103/oz by late August 1976.  This led to many pronouncements that gold’s bull market was over and the bubble had burst.
In the next 40 months from August 1976 to January 1980, gold rose 8 fold from nearly $100/oz to $850/ozWe see think there is a real possibility of the same pattern playing out in the coming months.

lights outUnsustainable trends can survive much longer than most people anticipate, but they do end when their “time is up” – at the culmination of their time cycles. Examples of these trends include deficit spending, exponential debt increases, overpriced bond markets, and unbacked paper currencies, to name a few. For perspective on how and when these trends could change direction, we analyzed more than 20 different cycles. They nearly unanimously point to tectonic shifts in the months and years ahead. We have been warned!

At this point, we have enough confirmation to accept that the precious metals crash – starting in April of 2013 – was the first warning of what is coming globally.