This should be interesting. Those following the metals and the dollar are certainly aware of continuous monkey hammering to the precious metals and the soaring dollar. As a rule of thumb, as the dollar gains strength, the metals tend to decline. But the devaluation of the metal prices are not just falling due to the strong dollar, to get an insight on another force pushing the metals down examine the COT reports.
Another rule of thumb is that the commercials (bank traders) are right most of the time where as the speculators (hedge fund managers) are wrong most of the time. Lately the commercials have been buying back their short positions of the metals and to some degree increasing their long positions while the speculators have been doing the exact opposite.
The hedge fund managers are not ignorant it is their strategy to invest like day traders. They are caught in a bind as they must reap as high a return but they can’t compete with the commercials. So they are heavily reliant on timing, they will attempt to play the game of the commercials and liquidate their positions somewhere between the swings. Following the trend, the commercials will dump paper contracts when the markets just open or when the market has very few traders, especially foreign traders. When the market is thin (few traders) they can move the price more easily with the dumping of large amounts of paper contracts.
Logic should make it obvious that precious metal prices should be multiples higher than where it is currently. Look at how the eastern countries, primarily Russia, China and India have been loading up on physical gold and physical silver while the western countries (US and UK) have been manipulating with paper contracts and EFPs. Additional, notice how many countries have pulled their gold from US storage and repatriated it to their own country’s storage. Another point is the massive amount of metals being amassed by JP Morgan.
Most holders of precious metals have been worn down by the continuous manipulation pushing the metal prices down to unexpected lows. I believe this is their strategy to eke out as much physical metal as possible, so to speak they are now trying to squeeze blood out of a turnip. Mathematically, this can not last forever even though it appears so. I can’t say that it will not go on for a time as I originally believed that the dollar should have collapsed by now and we would be waking up to an economic climate similar to Venezuela.
Watching what is taking place in other countries indicates that the sword of Damocles is about to fall. The BRICS have an alternative financial transfer system in place, the one belt road is close to completion, the Nordstream pipelines are close to completion, many countries have secured ties to the BRICS for trading purposes, countries have pretty much repatriated any substantial gold which was held in the US, states are moving to accept precious metals for trade, rumors are growing of how they are planning on tying cryptocurrencies to gold or silver and globally fiat currencies are failing. Another point is the corruption of the US (as well as other countries) government is becoming exposed. It sure seems that the sword is ready to fall.