Martin Armstrong stated in his blog Post that the reason for the “flash crash” in silver Sunday night, May 19, was due to the lack of bids. He goes on further to say “Despite the gold/silver promoters, there is no expansion of buyers for the precious metals. It has been the same choir over and over again.”
While I have a lot of respect for Martin Armstrong’s work on his pi-cycles, it amazes me when he makes a comment such as this. Of course there were a lack of bids during one of the most thinly traded times of the day — it goes without saying.
According to the ZeroHedge article:
Not a moment after someone was slammed with a massive margin call following the hit of 102 USDJPY stops as we noted moments ago, was that same someone(s) forced to dump a whole lot of silver in thin, no volume trading taking out the entire bid stack on what can only be described as “get me the hell out and pay me anything” liquidation, sending the precious metal to just over $20, before yet another round of buying programs kicked in..
The important thing to note here is the “REASON WHY” there was a flash crash to begin with. Supposedly, it was due to someone receiving a huge margin call when the USD-JPY exchange rate hit a high of 102. The flash crash wasn’t due to silver fundamentals, rather it was due to garbage trading of fiat currencies taking place in the Forex markets.
We have to remember, these fiat currencies are backed by their respective Treasuries & Bonds. I find it ironic that Armstrong takes the time to point out that the crash in the price of silver was due to a lack of bids, while the FED makes sure there is always a BID in the U.S. Treasury Market.
How on earth can an analyst make a bearish statement about precious metals, when they know that the Fed & Central Banks are manipulating the market-making ability to price gold and silver fairly? The Forex Market is being kept alive by the actions of these Central Banks. To blame the crash of the price of silver due to a lack of bids in a totally rigged market is like blaming someone for getting a black-eye because the person stood in the way of a huge fist.
Regardless, if an investor bought gold back in 2008, you are outperforming the Dow Jones Average by 50% while silver is actually up nearly 20% and is in a dead heat with the Dow:
Even though the prices of the precious metals have seen a large decline over the past 6 months, they are currently finding a bottom, whereas the DOW is in bubble territory.
Lastly, a great deal of the analysts out there (including Armstrong) are making statements and forecasts without factoring energy into the equation. Thus, the majority of these forecasts will turn out to be terribly wrong.
I will be writing a great deal on how energy and the EROI – (Energy Returned On Invested) will impact precious metals, mining and the economy going forward.
You will only find this sort of analysis at the SRSrocco REPORT.
(I would like to thank Sinuhe for his comment in another post on this subject. It motivated me to write this post)