i've been telling ppl for quite some time now that i've been selling my bullion for btc for several months. its true, i've liquidated lots of the stuff since April that i first bought in 2005-2007. i've been an ardent suporter of btc for the longest time. i've also been warning ppl about divergences in the PM market i've been exploiting via shorts such as the divergence in silver, miners, and the gold price. i understand what gold is all about and i love the stuff but when btc came along my allegiance switched.
the basis of my thinking has been and always will be that its all about the USD. the Fed controls the issuance of the USD and its its only franchise. i don't think they want to relinquish that control of the worlds reserve currency. the USD is also how most billionaires wealth is stored in this country. most of the debt in the world is denominated in USD (60%). there was a great article someone posted about how the bankers have been complaining to Ben that they're being hurt by the weak USD. Duh.
let me list the warnings i see:
1. silver has broken down badly from $50. it continues to this am.
2. silver stocks are in an obvious decline and got hit yesterday hard.
3. gold stocks are no better. they usually lead.
4. we're at 11 yrs of the bull. some ppl say theres an extended 9 yr cycle going on.
5. asset classes don't all break down simultaneously. it took gold and miners several months to break down after the Dow in 2007 so i don't expect them to have followed the Dow down since May 2011.
6. gold is trying to or has, depending on how you look at it, entered a parabola. do you really want to buy a parabola now if we're entering a major deflationary phase when cash is King?
7. its debatable how widespread the evangelism about gold has spread but everywhere i turn, on street corner stores, tv ads, and my secretary everyone's buying gold.
ok, now for the tinfoil hat stuff. stop right here if you want to stick with the technical trading stuff above. over many years of trading i've learned to think like a criminal and this is what i see happening.
1. GS and JPM have huge short positions in the metals. do you think they will let them double, triple from here even if they represent hedges? i think thats the last thing they want to see.
2. gold has acted very strange the last coupla weeks to me ramping in the face of a severe selloff in the Dow and the clear threat of deflation.
3. altho GS & JPM probably never saw the bull in PM's they aren't stupid and know how to handle them. so how do you handle a losing situation? Buy into it. Profit as well. create a huge parabola. Build up an even greater short position. Get Ben to squelch liquidity. Then sell it off at the top when everyone's in and short the crap out of it. this is what happened in silver.
4. why is btc rallying all of a sudden? could it be that its exerting itself in the economic scene based on the virtues of what we all know? it also could be that Wall St is rotating out of stocks and soon pm's into btc.
5. when would the trap go off? i think todays FOMC meeting with lack of any further QE would be the perfect timing for a gold selloff.
so guys, just give me a few hours to see if my theory proves correct. if it doesn't work by all means buy the parabola. personally i'm going to give it a few days from today to let it work but you can all call me a tinfoiler if gold doesn't start going down after the announcement.
Disclosure: i do have a huge short position in bullion in place.