VANCOUVER ( Bullion Bulls Canada ) -- For obvious reasons, there is no metaphor more applicable to investing in the precious metals sector than riding a bull. With gold and silver prices having risen relentlessly for a decade, the stature and stamina of this "bull" are beyond question. Equally, remaining atop this "bull" has been an activity to challenge the perseverance and staying power of the most dedicated rider.
Helping us to improve our prowess as bull-riders have been two groups of "trainers." However, to state that these two groups have opposite intentions is clearly an understatement. On the one side are long-established websites like Jim Sinclair's site , GATA , and LeMetropole Café. These fine sites have performed several valuable functions. They provided novice bull-riders with guidance on the precious metals sector. Of equal importance, they have continuously shone a spotlight on the manipulative activities of the bullion-banks. In other words, they have taught us about the tactics and motives of the "bull" we have sought to ride. Lastly, they have supported those whose "grip" was weakening to help them stay atop the bull, while encouraging those who have been "thrown" to get back on the beast. The value of this last service cannot be overstated. My own "moment of weakness" occurred in the summer of 2007, after a very long stretch of sideways trading in the sector. From an intellectual standpoint, I never lost my conviction about where gold and silver must be headed over the longer-term. The "arithmetic" of the fiat money-printing of the bankers leads to only one possible outcome. However, emotionally I had begun to question whether the bankers could still exert such control over this market that the "long term" would be a test of endurance which would exhaust the patience of most investors. It was the unwavering conviction of the principals of these sites who helped me conquer those doubts. A major "break-out" took place in the fall of 2007, and my own doubts have never returned. In subsequently founding Bullion Bulls Canada, we have endeavored to follow in the fine tradition established by these sites: keeping those already in the sector well-informed, educating those new to the sector, and reassuring both "veteran" and "novice" alike -- when the inevitable banker-generated "volatility" tests their faith.
Our site (and others) swell the ranks of the "old guard" who came before us, just in time to meet the rising tide of precious metals investors flowing into the sector. At the same time, we cannot overlook the contribution of the other group of "trainers," without whom we could have never become the fearless, veteran "bull riders" that we are today: the bullion bankers. As with learning any other skill, there is only so much expertise we can acquire through being "taught" and "told" what to do. At some early point in skill development we need to be able to put into practice what we have learned, as part of the trial-and-error method of learning which epitomizes our species. In this respect the bullion-bankers have been invaluable: they have supplied the "training bull" which all novices to this sector have been forced to ride, in order to earn their own status as bull-riders. As a general principle in our teaching model, it's considered optimal if "practice" is not too rigorous. If we want to learn to become boxers, we won't want to "work out" with a world-champion. Rather, we would want to get our practice with a "sparring partner" -- so that in our practicing, we experience not only "failure" (i.e. getting punched in the face), but also success (landing some blows ourselves). The downside to extreme forms of practice is that the ratio of failure to success often proves to be too daunting to the less-dedicated (or less-skilled), and instead of being taught to succeed, they are discouraged into accepting defeat. The converse to this is that those who do manage to endure extreme forms of practice soon become acclimated to this high stress level, and will tend to acquire even greater expertise and "toughness" than those who have graduated from more benign teaching programs. Naturally, the bullion-banks didn't want to "train" bull-riders, they only wanted to break bull-riders. However, in supplying the most vicious "training bull" they could muster for the novices who sought to become bull-riders, they must now live with the consequences. While many were broken, those who managed to hold on have gained enormous savvy, while losing all fear of the once-intimidating bullion banks.
The evidence of this new attitude is all around us. In prior years on our own site it was common to receive comments and questions wondering aloud if the bullion banks were "invincible," if the sector had reached a "top." or even a "bubble." Such doubts have simply vanished. Instead of asking "if" the choke-hold in which the bankers have held this sector for decades can be broken, all that our (impatient) readers want to know now is when their "final defeat" will occur? More specifically, we need only review the events of the past few months to see how all the veteran, banker-trained bull-riders now behave when confronted with the best efforts of the bankers to attempt to regain control over this sector. In early November, the bankers launched their most-orchestrated, most-aggressive campaign to take-down the sector since they manufactured the Crash of '08. Unlike their take-down of gold and silver in 2008, this time the bankers managed to completely "ambush" the sector. Bullish sentiment was at a peak, having been recently (and deliberately) stoked to a new high through having an insincere piece planted in the Financial Times by World Bank head Robert Zoellick that he had suddenly "seen the light," repented on the evils of fiat currency, and was ready to embrace a new gold standard. Making it absolutely clear that this was an "ambush," the operator of the fraud-fest known as the "Comex" couldn't even wait until the end of the trading session to spring its "trap" on unsuspecting longs, but literally pounced on them with new "margin requirements" part way through a trading session. No "emergency" was ever cited to justify the unprecedented action of changing the rules while live trading was taking place, since no pretext could possibly be manufactured. Rather, this was nothing but a blatant, ruthless "attack" on all bull-riders. It was combined with not only a deluge of anti-gold rhetoric from the Western propaganda-machine, but also several orchestrated moves by China's government to knee-cap the commodities sectors. Apart from breaking for a couple of weeks to gorge themselves over the Christmas season (and count the $billions in their annual "bonuses"), the attack on the precious metals sector by the bankers has been maintained relentlessly right up to the present day. Margin requirements for silver-trading at the Comex have now been hiked four times (five times?) just in these last several weeks.
Illustrating yet again that this is just heavy-handed manipulation, rather than any kind of legitimate "regulatory action," the last two times that silver margin requirements have been raised occurred when silver prices were already falling. No pretext was even offered by the CME Group for jacking-up margin requirements on these occasions, as no possible pretext can exist for raising margin requirements in a falling market. All that is missing is a "formal declaration of war" against precious metals investors. What has been the reaction of precious metals bull-riders to this extreme, protracted assault on the part of the bullion-banks (and the corrupt institutions who serve them)? The initial reaction was clearly "surprise." With bullish sentiment so strong, the banksters were at least successful in that one aspect of their scheme. However since that initial surprise, those feelings have evolved into annoyance, irritation, and now boredom. What is totally absent is the once unquestioned ability of these predators to create fear in the sector. Instead, the only reaction which the bankers can elicit from the steely-eyed bull-riders whom they helped to create are yawns. We've seen this "movie" before, and we already know how it ends: the bankers retreat from yet another price-level, and gold and silver move higher. Backing the new-found courage of precious metals bull-riders is "strength in numbers." Not only does this strength take the form of new precious metals bulls greatly outnumbering the "bears" who still foolishly stand in front of this juggernaut, but (more importantly), the vast numbers of dollars which new big-buyers bring to the sector are now sufficient to defeat even the most extreme leverage (and fraud) of the bullion banks. As the impotence of Western bankers becomes more apparent by the day (along with the inevitability of their own demise), the specter of another threat rises to take their place: bullion confiscation. If the bankers can no longer scare away the sheep from acquiring precious metals, and they have squandered virtually all of their own bullion, what option is left for them other than taking our bullion (by force)? However, that is a subject which I'll leave for another day.