Silver Doctors invited me on to his weekly market wrap-up show to discuss last week’s FOMC monetary policy decision, the trading action in the precious metals market and the economy.
Clearly the Fed signaled that it’s backed into a corner with its monetary policy. If it raises rates it risks crashing the economy and the stock market. Yellen even stated, stunningly, before the meeting that the Fed takes the stock market in consideration when it looks at its monetary policy decision.
The leverage in the paper gold and silver market has also backed the Fed into an untenable corner. If it were to raise rates, capital would flee equities and flood into the dollar and into physical gold and silver, causing a massive short-squeeze in the paper bullion markets. And do no think for one moment that the Fed is not fully aware of this.
But if the Fed resumes QE, which is looking more and more like a possibility, it will trigger a torrid move higher in the physical gold/silver markets. I believe its an event that would blow a big hole in the income statements and balance sheets of the bullion banks, which are also regarded at Too Big To Fail.
Silver is a much smaller market than gold and 60-70% of what is produced is used in industrial, tech and military operations. Thus, I’m wondering if the bullion banks are intentionally withholding silver from the retail market by restricting supplies to the mints in order to conserve above ground stocks for delivery obligations attached to their paper short position.
I’ll have a lot more to say on this matter in a blog post I’m writing, but there’s some initial thoughts on the topic in my conversation with “Doc:”