RESPONSE TO: Martin Armstrong’s “Silver — the Flash Crash”

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:

GOLD-SILVER-DOW 2008 to 2013

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)

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15 Comments on "RESPONSE TO: Martin Armstrong’s “Silver — the Flash Crash”"

  1. David Philips | May 21, 2013 at 1:02 pm |

    Thank you for saying that, I read Armstrong, and his take on the metals seems corrupted anymore.

  2. Pleasure on my side, Steve.
    I would just add that one does not count in their predictions of the so-called. black swan and that is the Strait of Hormuz and specific conflict being entered Syria-Iran-Russia-China vs NATO. Maybe it happens after the climax of the dollar rally, but if it happens before, all Armostrong´s predictions will be useless. S&P and DJI is an absolute keynesian joke. The greater the waste is, the higher the price! Martin say: this is corect and this is the future of central planning, which I love so well with central banks led by…

  3. Are insiders like Soros, Rogers (Casey, /Faber/) blind?

  4. that chart of gold/silver/dow is the perfect thing to show the nay-sayers to shut them up.

    Thank you for that.

  5. Honey Boo Boo MILF | May 21, 2013 at 6:17 pm |

    Is this Martin Armstrong the same Martin Armstrong who spent several years in jail for some financial shenanigans?.

  6. my impression on armstrong is that he’s a technocrat. he relies heavily on technical analysis while ignoring the underlying physical supply/demand. he follows the short to medium term trend. so he doesn’t have any long term strategic asset allocation suggestions. his stuff suits the short to medium term traders, but won’t help mom and pops with wealth preservation.

    physical gold buying in china and india could consume the entire world production this yea. every other country just move existing gold stock around, with US exporting and other countries importing. while fiat money printing is accelerating. M2 in china doubles every 4 years. chinese housewives are not dumb!

    the western central bankers are so confident they won’t repeat the hyperinflation blunder, which i believe the best contrarian indicator out there that indicates we might as well have a global hyperinflation in the end. they are cocksure that they can print with impunity and avoid total collapse of fiat money and turn a blind eye to austrian school of economics which says otherwise. this is exactly the same cocksureness that caused hyperinflation in germany.
    a full-out bail-in is not possible. because “all” debt obligations need to be cancelled out and it will be full-blown depression and massive world-wide unemployment. plus, even if the debt can be canceled but how about the cashflow obligations that depends on the debt? what about all the OTC derivatives that are linked to the debt. a full-out bail-in is a reset! the pain would be intolerable to the ruling elites.

    bail-in, capital control and austerity will give away in the face of depression! ECB will follow japan soon!

    print, print, print, problem solved. until one day, it is too late!

  7. somewhere in armstrong’s articles, long live the dollar, interest on debt is exported, so there is no inflation in the US.

    the last two years, dollar bulls and gold bears are making fun of the gold bugs in every possible way. like since gold/silver is going down, no inflation, blah, blah.

    but if someone isn’t suggesting BTFD on silver right now, he’s not worth his salt. silver has very clearly completed its rollercoaster ride and poised to go up from here.

    the miners have very clearly completed their retracement too. some of them are trading below cash per share! one can buy them and get the ores for free!

    i like clive maund, his analysis is mostly technical but objective.

    shanghai gold exchange:
    1. no gold delivery. shorts paying penalty to longs for failing to deliver.
    2. 6.4 tons of silver delievered, shorts paying penalty to longs for failing to deliver as much as longs demanded. this is relatively rare.

    shanghai futues exchange:
    silver inventory down 2.8 tons, standing at 791 tons, that’s around 320 tons less than early april.

  8. Hello, Steve. Mr. Technocrat alias heron of central bankers response to you:

  9. This is a very interesting quote in light of the current financial situation. Thomas Jefferson said this in 1802 :
    ‘I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.
    Armstrong argues that no central bank but politicians are the cause. How funny is this dualist. The reason is both. Voters are also guilty because they have rejected the Republic and the Constitution and adopt democrtic socialism alias corporatocracy.

    Armstrong tells only part of the truth which suits him.

  10. “Now, we all are Keynesians”
    Armstrong dogma(mantra):

  11. Armstrong is still paying for his “free” get out of jail card.

  12. Sunday Night Buy bottom on a public holiday Sell or Hold there are already offers. :-))))))

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