PM Fund Manager Explains Why Kitco’s PM Prices Are NOT Spot Prices

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PM fund manager Dave Kranzer joins us this week for a power packed show discussing: 

The SD Weekly Metals & Markets With The Doc, Eric Dubin, & PM Fund Manager Dave Kranzler is below: 

 

 

 



Precious metals markets have been sending powerful signals that the cartel is being forced to back off.  Last Wednesday’s U-shaped smack-down and bounce back is a perfect example, and I wrote about as it was happening (click here).  Even though the cartel was able to smack metals back down later that day, the initial rise and subsequent snap-back speaks to the fact that money is moving into the sector, and the cartel doesn’t have the ability to act without the cost of eliciting a tsunami of physical market demand.

As we have often described, the cartel operates a “managed retreat” strategy, a term coined by GATA’s Bill Murphy.  When manipulation games push prices too low in the paper markets, it stimulates huge demand for physical metal worldwide, showing up most powerfully and early in Asia, but even Western physical demand kicks in eventually, as can be seen with the US Mint’s decision to halt silver eagle sales.

November’s trading has been highly volatile, but constructive.  The week before the  November 7th bounce my volume studies on mining shares gave me the clarity to see we were witnessing a stealth capitulation, and I called the bottom, noting that it wouldn’t come that week but the following week — Friday, November 7th saved my bacon and subsequent trading action supports that bottom call and the “managed retreat” thesis.

Remember October, 2008?  Talk about a classic example of true capitulation.  The mining shares were slaughtered on massive volume.  We saw additional waves of massive selling later that year, partly driven by tax loss selling, but October 2008 delivered a religious experience to many.  

Nearly all precious metals analysts have been looking for something on the order of a traditional capitulation to feel comfortable calling the bottom.  It’s not going to work out that way this time.  Since the launch of the Fed’s QE 2 program, we’ve been laboring under a 3 year torture driven by one of the most unusual aggressive regimes of manipulation over any given asset class in world history.  That’s not an exaggeration.  As a result, we’ve had multiple secular bull “false starts” and extended bleeding.  This is not a normal market cycle.  What we’ve already experienced in multiple stages and periods more than makes up for the lack of a “classic” capitulation.  

Don’t misunderstand.  I fully expect the cartel to push the sector down again, and as Doc noted it could happen during thinly traded holiday sessions.  The cartel might even be able to push paper prices down again and re-test recent lows.  But I’m sticking with my bottom call I made before the Nov. 7th bounce because tight physical market conditions support the “managed retreat” thesis.

dow jones - nov 21 - 2014

Last October the stock market corrected, ultimately declining by over 9% on an intraday basis.  At the time, there were renewed calls that the “big one” was upon us.  Some also concluded that the “end game” as far as an ultimate system reset or some form of day of reckoning vis-a-vis the dollar standard was imminent.  It’s important to look back at this because the subsequent doubling down by policy makers goosing asset price inflation has been nothing short of monumental.  In October, we could already see the Fed starting to backpedal on their time-frame for letting interest rates rise, and I need not remind any of you about the lunacy of Japan’s QE expansion announced this month.  

Back in early October I cautioned against all of these dire calls and in fact forecasted we’d easily surpass 18,000 on the Dow Jones Industrial Average in December.  But here’s the rub and what concerns me now.  We’re seeing what I believe is the initial phase of a blow-off top in equities that will carry us through the holiday season and into 1Q-2015 — and perhaps 2Q-2015 as well.  I’ll have more to say about this during our December broadcasts.

Amnesty?

Illegal immigration and amnesty are in the news.  Talking points flood the media.  If you want to listen to 20 some-odd minutes of some of the most articulate and spot-on analysis, I highly recommend listening to Michael Cutler’s interview with Dr. Dave Janda.  Click here. 
Michael Cutler worked for the INS as a Special Agent Criminal Investigator and his insight is profound.

Dave Kranzler’s article about GLD gold and the Dutch central bank is a great read and we talk about it on this week’s show.  If you missed the article, click here.

Have a great weekend!  — Eric Dubin