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In Part I, readers had revealed to them the latest chapter in Western bankers’ newfound love-affair with gold. Indeed, as central banks around the world swap their own paper for gold at the fastest pace in history, it’s quite clear which monetary asset these charlatans really believe is a “barbarous relic.” After bad-mouthing gold for decades (and continuing to get their media trolls to attempt to frighten people away from gold today), we are currently witnessing history’s greatest “bash and buy”.

Both European banking authorities and those in the U.S. are now proposing reclassifying gold as a “Tier 1” financial asset. As was previously noted, this would have the effect of instantly making gold twice as attractive and twice as valuable to all of these large, Western financial institutions. What makes these developments especially interesting at the present time is that they are occurring at the end of another long period of sideways trading in the gold and silver markets.

Throughout this 10+ year bull market, these temporary periods of sideways price-action where the bankers are able to trap gold and silver within trading ranges have preceded the largest/longest rallies over the past decade – where gold and silver prices smash through all previous (nominal) highs. While the bankers are typically the last to notice and understand the consequences of their relentless manipulation, if you hit a dog over the nose with a rolled-up newspaper enough times, eventually the dog will get the message.

Thus the bankers themselves know their “fun” has nearly come an end (at least for an extended period of time), and they will have to once again sound the retreat on gold and silver prices. Being greedy (above all else), these banksters manage to be quite pragmatic: when they know that gold and silver are set to blast-off once again, many of them like to come along for the ride.

So, with a long period of sideways trading in the precious metals sector nearly at an end; with the bankers themselves in the process of reclassifying gold to make it much more valuable (for themselves); and with the bankers having a known tendency to switch sides and jump on the bandwagon (for short stretches); now is the time for all savvy precious metals investors to empty-out their bank accounts and sink every last dollar into silver and gold. Right? Not so fast.

There is, in fact, only one thing that the banksters like to do more than make money, and that’s to be able to make money while simultaneously whipsawing other investors (and hopefully totally destroying them). As a result, the banksters have come up with a particularly fun game that they like to play called Bait the Chumps.

It’s actually a really easy game to play when you are given complete and utter freedom by both government and “regulators” to rig/manipulate markets. First you target a sector with especially bullish long-term fundamentals – meaning that precious metals is the banksters’ favorite playground for this game.

Then, at a time when investors are already sensing that a rally is imminent you send out some really obvious “bullish signals”. Then you simply wait for the mice to take the cheese. Once the rodents have all latched onto their fromage, you spring your ambush. All the greedy, new “longs” who went out and leveraged themselves to the hilt on margin because they “knew” the sector was about to take off are instantly obliterated.

The downward momentum this creates then makes it possible to blow even moderately leveraged traders out of the water, and so the dominoes fall. With the whole market expecting a sector to “zig”, the bankers simply rig a “zag”. This is a classic win/win for these Vampires: not only do they get the tactile pleasure of destroying other investors, but the downward price action generated in the process then allows the bankers to do their own buying even cheaper.

“Aha!” thinks the Crafty Gold Investor to himself. With the bankers getting ready to play their old “zig/zag” game again, CGI decides to short the market. Then CGI will also get his own win/win, and can brag to all his friends about his ability to “trade with the Big Boys.” Sadly, most of the CGI’s in the world end up quickly becoming exposed to another acronym: RIP.

Putting aside convoluted scenarios where there is some feint-within-a-feint, there is one very good reason why we should never attempt to anticipate the bankers’ shorting escapades in the bullion market and attempt to mimic/join them: because they often fail.

When the bankers manipulated gold below $300/oz and silver to under $4/oz, they did not do so with the long-term objective of marching gold to $2,000/oz (and eventually much, much higher) and marching silver to $50/oz (and eventually much, much higher). Rather, the reason why gold prices are six times higher than their absolute low today and silver prices are eight times higher than their absolute low today is because the bankers have repeatedly failed to contain prices – despite their best efforts.

There is only one thing more idiotic than being part of the gigantic flock of Lambs being led to the Economic Slaughterhouse: being a gold/silver investor who is smart/savvy enough to position themselves in this sector prior to the slaughter, but still managing to lose money on their gold/silver investing. Hopefully astute readers have already deduced the “moral of the story” here, however for those still not clear on this point I’ll connect the dots: never try to anticipate the next move in a rigged game – when you are not the one doing the “rigging”.

Simply by converting much/most of our wealth from “leaky” paper to (eternal) silver and gold, we will do much better for ourselves than the vast majority of the Lambs. We have no need to attempt to aggressively out-guess the next move in these markets, and then gamble accordingly.

That is not “playing defense”. There is nothing more foolhardy than to adopt a strategy which is totally inappropriate for the game that one is playing. We neither created this game (of theft-by-currency-dilution), nor do we have any input at all in the (crooked) rules. Given these realities we must adapt to the parameters of the game, or perish.

Knowing that the precious metals sector is ripe for another major rally; knowing that the bankers are currently sending out some very “bullish signals” on their own plans for this market; what do we know about the direction for gold and silver prices over the short term? They will either go up, or they will go down.

Obviously this is not what readers are wanting to hear. However, I’m not here to pander to people, I’m here to inform them. We can never “know” where gold/silver prices are heading over the short term. Period. Placing large bets on mere probabilities is not investing, it is simply gambling. That’s the bankers’ game.

We must never use margin. We must never try to out-guess this (rigged) market. We must never place large bets (all at one time).  We must react to trends, not make guesses based on hunches. The former strategy is our path to Financial Salvation, while the latter gambit is nothing more than playing a game of Russian Roulette with one’s financial future.

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written by Jeff Nielson, July 30, 2012

...I highly doubt if any of the mainstream media puppets will ever read this.

Skypilot I just wanted to take a second to address this remark, even though I know your derision is aimed at THEM instead of me. You would actually be surprised at what the mainstream talking-heads are reading these days...

"Treasuries Sham Can’t Be Explained By ‘Voodoo Economics’"
http://www.bullionbullscanada.com/us-commentary/25578-treasuries-sham-cant-be-explained-by-voodoo-economics

...it seems that us "conspiracy nuts" are becoming a lot harder to ignore these days.

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written by skypilot1974, July 30, 2012

I tried that once. Trying to outguess the markets with margin. Ouuuuuch! If someone has the skill necessary to play that game and big balls and some spare change kicking around that they can afford to lose, Hell, why not? At least, you have a certain amount of probability of making the odd "killing". lol. It's just paper trash anyway, except that the irony is that we still have to work to get that paper trash to begin with, so in that sense, it has value to me at least. The ultimate insult is paying taxes to earn it and invest it. Despite it's status as worthless paper trash, I am thankful that I can still exchange something worthless into something of far greater and enduring value, which will one day reward all of us with faith in precious metals and make us rich. Of course, I know I am just preaching to the converted but it still feels great! I highly doubt if any of the mainstream media puppets will ever read this. Keep up the great work. Your articles are not only very well written and informative but are quite entertaining as well.

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written by Jeff Nielson, July 28, 2012

Might I suggest a sound strategy which I employ?
1) Buy a little physical every week or two.
2) Put it away, securely in YOUR possession.
3) Ignore the price.
Repeat as often as possible, and wait for the 100%, historically proven to be correct, collapse of fiat.

Bobbby, whether we want to call this "dollar-cost averaging" or simply "saving in bullion" (rather than paper); it's impossible to go wrong swapping depreciating/dying paper for appreciating/eternal gold and silver.

The fact that market manipulation may temporarily distort this basic truth from time to time should not discourage any thinking investor from continuing this essential strategy.

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written by bobbbny, July 27, 2012

Might I suggest a sound strategy which I employ?
1) Buy a little physical every week or two.
2) Put it away, securely in YOUR possession.
3) Ignore the price.
Repeat as often as possible, and wait for the 100%, historically proven to be correct, collapse of fiat.

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written by Jeff Nielson, July 27, 2012

There can be no certainty about anything in the future, of course. However, it seems to me that if you consider that just about every government in the world is utterly corrupt and operates from the philosophy of might makes right then it becomes pretty clear that they will steal what can be stolen and pretend "it's for the children" or something to that effect. Perhaps a logical approach is to hope (if hoping can be logical) for the Tier 1 reclassification and then sell a good portion of one's holdings if there is a good pop. My governments as thieves outlook certainly implies that those of us who bet against these psychopaths and criminals by investing in the PMs will not be allowed to fully benefit from having bet correctly.

Sneed Hearn, as you probably know from reading previous commentaries, I'm fully with you when it comes to the worry of "government stealing" coming from potentially any angle. However, I'm slightly less pessimistic with respect to our ability to protect ourselves. This is why I write about "diversifying within the sector":

1) Hold both gold and silver
2) Hold shares in the miners, as the "paper component" of one's investment portfolio
3) (Most importantly) hold physical bullion instead of bullion in the form of "funds" or "accounts".

Even if one is invested in a legitimate (i.e. un-leveraged) gold or silver fund, or allocated account; this is all "point-and-click bullion". By that I mean that our government(s) need only point-and-click with their mouse and every ounce of that bullion can be painlessly confiscated within a matter of minutes.

My HOPE is that with most people (recklessly?) holding their bullion in this form that even if confiscation takes place that our governments will consider it too "messy" (and inefficient) to start smashing-down doors on an individual basis - looking for one tiny stash of bullion.

For one thing, how does the government PROVE we still own our physical bullion? There is no legal requirement to keep a permanent record if we SPEND our bullion as money -- since no "capital gain" can be produced in such a situation. This is why I prefer (legal tender) gold and silver coins: they are ALREADY "money".

The fact that we cannot eliminate 100% of all risks in holding bullion should not deter us at all, because living in an era of Criminal Governments we cannot have 100% security with ANY asset we own. Thus we must continue to choose our best strategy (protecting our wealth with precious metals) -- and then seek to ANTICIPATE and MITIGATE (potential) risks to the best of our ability.

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written by Sneed Hearn, July 27, 2012

There can be no certainty about anything in the future, of course. However, it seems to me that if you consider that just about every government in the world is utterly corrupt and operates from the philosophy of might makes right then it becomes pretty clear that they will steal what can be stolen and pretend "it's for the children" or something to that effect. Perhaps a logical approach is to hope (if hoping can be logical) for the Tier 1 reclassification and then sell a good portion of one's holdings if there is a good pop. My governments as thieves outlook certainly implies that those of us who bet against these psychopaths and criminals by investing in the PMs will not be allowed to fully benefit from having bet correctly.

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written by Jeff Nielson, July 27, 2012

Jeff: one of the few times I disagree with you. You mention the Tier 1 asset push. Yes, it is a game changer, but more, IMO, for positioning than anything else. We have a global sovereign debt crisis. Should gold, once again, be considered equal, or (shockingly! greater than the worth of any fiat, there will be no incentive for sovereigns NOT to nationalize or expropriate all resources within their borders. The canary is already on life support in South America (Argentina, Bolivia, and probably Peru). And then you have to ask yourself about the coincidental Obama dictat of the NDAA, giving him sole discretion over all US resources and assets. Although I will admit to a certain degree of paranoia, I can certainly see the incrementalism of the continuing power grab by the banking cartel and its political puppets.

Apberusdisvet, perhaps we're not as far apart here as you might have thought at first glance. Indeed, I seriously considered CONTINUING my discussion as to how this reclassification also increases the incentive for CONFISCATION.

Certainly I don't view that as "paranoia" myself. However, one of the limitations of attempting to cover events in "real time", and in commentary-form is that it's only practical to look ahead a limited number of "moves".

So while the chess-player in me would like to take these themes and play them out right to some "end game", as a practical matter I'm constrained to only look ahead "one or two moves". Certainly BEFORE this new Tier 1 reclassification becomes an impetus for confiscation I would expect it to be a positive driver of higher bullion prices.

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written by apberusdisvet, July 27, 2012

Jeff: one of the few times I disagree with you. You mention the Tier 1 asset push. Yes, it is a game changer, but more, IMO, for positioning than anything else. We have a global sovereign debt crisis. Should gold, once again, be considered equal, or (shockingly! greater than the worth of any fiat, there will be no incentive for sovereigns NOT to nationalize or expropriate all resources within their borders. The canary is already on life support in South America (Argentina, Bolivia, and probably Peru). And then you have to ask yourself about the coincidental Obama dictat of the NDAA, giving him sole discretion over all US resources and assets. Although I will admit to a certain degree of paranoia, I can certainly see the incrementalism of the continuing power grab by the banking cartel and its political puppets.

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written by Jeff Nielson, July 27, 2012

Andy Hoffman of MilesFranklin, "Ranting Andy," had this to say recently about the mining stocks:

"What I have maintained all along, is that the senior shares will likely have a nice move up when the Cartel is broken. However, “breaking the Cartel” – which WILL happen – will usher in an ugly world of fear, poverty, inflation, war, and draconian government – let alone, bank failures and tax increases. Thus, if I am right – and at this point, it is pure speculation – immediately thereafter, we will start to see nationalization and windfall profits tax rumors (and acts), which will DESTROY the shares permanently.

As for the juniors, they are but shells of themselves, capital starved with essentially zero hope of that changing before most are bankrupt. I’d avoid juniors like the plague . . . ."

As the owner of a large number of mining shares in both seniors and juniors their fate is of more than casual interest to me. Do you think Andy has it more or less right - or wrong.

Many thanks in advance.

Sneed Hearn, while I have considerable respect for the economic analysis of Ranting Andy, I would suggest that here he is speaking on a subject of which he does not have the same level of expertise.

Indeed, all you have to do is to take a look at a post I did on the miners on our forum today:

"Goldcorp, Barrick Stumble on Costs and Production"
http://www.bullionbullscanada.com/bulletin-boards/10-mining-companies--stocks/19232-goldcorp-barrick-stumble-on-costs-and-production#19232

In fact it is the LARGE CAPS who are becoming starved for capital - as costs explode and their profit margins collapse. Meanwhile the much better-managed junior miners are STILL reporting many success stories.

It's the junior EXPLORATION companies who are truly wilting and dying...at the moment. However that is the nature of the beast. The moment the sector takes off it will be like 2009 all over again.

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written by Sneed Hearn, July 26, 2012

Andy Hoffman of MilesFranklin, "Ranting Andy," had this to say recently about the mining stocks:

"What I have maintained all along, is that the senior shares will likely have a nice move up when the Cartel is broken. However, “breaking the Cartel” – which WILL happen – will usher in an ugly world of fear, poverty, inflation, war, and draconian government – let alone, bank failures and tax increases. Thus, if I am right – and at this point, it is pure speculation – immediately thereafter, we will start to see nationalization and windfall profits tax rumors (and acts), which will DESTROY the shares permanently.

As for the juniors, they are but shells of themselves, capital starved with essentially zero hope of that changing before most are bankrupt. I’d avoid juniors like the plague . . . ."

As the owner of a large number of mining shares in both seniors and juniors their fate is of more than casual interest to me. Do you think Andy has it more or less right - or wrong.

Many thanks in advance.

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