Gold & silver were hit in the thinly traded pre-market this morning. Here’s why it happened, and why the metals have already recovered…
Gold & silver had pressure applied to them after 8:00 a.m. and really had a nice dumping at exactly 8:23 a.m. EST.
Why did they apply pressure?
One word explains it: STAGFLATION.
Stagflation is what happens when prices are rising, but wages are not.
In other words, you’re making the same money, but everything you buy costs more.
And stagflation is back.
OK, “But what does that have to do with 8:23 this morning Half Dollar?”.
Because at 8:30 a.m. EST the latest Bureau of
Lies Labor Statistics released its May, 2018 Consumer Price Index (CPI), which is the government’s measure for price inflation, which are historically under-reported as ShadowStats and the Chapwood Index have shown time and time again. Check out the Chapwood Index if you have not because it’s free and it is localized. Basically, if you’re not making about 10% or more in wages each year, you’re falling behind to inflation.
The government has an incentive to under-state inflation because, if they say there is less inflation, the government doesn’t have to pay out “cost of living adjustments” to people on government entitlement programs like Social Security or Federal retirees. In other words, under-stating inflation is a way the government keeps from paying out more, ironically, even though it is devastating to Main Street who has to deal with rising prices that the government is saying are barely rising.
But today, it is getting harder and harder for government to hide inflation, and it is indeed coming back even in the massaged numbers.
In fact, for May, even when taking out “volatile” energy and food prices, inflation was still 2.2% year over year (for all good & services it was 2.8%):
Prices are only one part of stagflation, however.
The other part is wages.
And we can see what happened with real wages from the May BLS Jobs Report that was released on June 1st:
Wages are not picking up, in fact, they are slumping.
So putting two and two together – rising prices and slumping wages, we have stagflation.
OK, “But I thought this was about a hit on gold & silver Half Dollar?”.
Yet it is.
After constant pressure after 8:00 a.m. EST, the main hit came at 8:23 a.m. EST:
This was to knock gold & silver down before the release of the report. More on that later.
Here’s a look at the volume:
Now, the big question is why were they hit?
The reason is this: Gold and silver are referred to as “inflation hedges”. Meaning that while dollars in the bank, under the mattress, or wherever they find themselves, lose purchasing power as inflation kicks in, but gold and silver rise in price with inflation and gold & silver maintain their purchasing power.
Gold and silver have many roles and purposes, and “inflation hedge” is just one of them.
So with inflation, that’s good for gold & silver prices going up.
Even better for gold & silver, because that means that inflation is going up but wages aren’t.
So stagflation is worse than regular inflation because it’s a double whammy: You don’t just pay more, you also earn less.
So gold & silver prices thrive in that environment, which is why the Cartel decided to put pressure on the metals, because, in collusion with the government, and as part of the government, they knew the report today would confirm stagflation, and coupled with last week’s Jobs Report, that is exactly what we see.
So the Cartel knows gold & silver would rise in price after the report.
So they hit the metals.
And sure enough, after the release of the CPI Report:
Just yesterday, in my SD Outlook, I said (bold added for emphasis):
I’m looking for continued gains this week, and if that is the case, we will see gold & silver rebound quickly on any weakness early on.
My point isn’t to bark up my own tree, but rather, to show that this is what we want to see.
We want to see prices rebounding quickly.
That’s what should happen because these metals really want to rally.
So, what just went down? What was the cartel’s intent this morning wherein if you blinked you missed it?
Had they not hit, a rise in gold of $7 would have put the yellow metal at $1310 pre-market. That would be bullish. I get it, “that’s only seven bucks Half Dollar”.
But what is more bullish, a rise in price seven bucks pre-market from call it $1303 to $1310, or a drop down into the low $1290s?
And silver rose $.14.
Again, wouldn’t there be buzz and excitement if silver broke-out to $17.10 in the pre-market ($16.96 and the $.14 rise)?
Instead it fell into the $16.70s.
So instead of $1310 and $17.10, we get the hammer in what is called precious metals price suppression, just to kill sentiment and to show the world who is still in charge.
Yes, the cartel is still in charge.
And they go about there business now plain as day, with nary an attempt to even hide it.
But this morning, the cartel was only barely in charge.
Because the truth ultimately prevails, and the truth is, that CPI Report is bullish for gold & silver, and gold & silver rose in price accordingly.
The cartel will not be in charge forever.
Today, they were in charge for only a few minutes.
One day, they won’t be in charge at all.
And one day, they will lose all control.
– Half Dollar
About the Author
U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.