Hi Sinbob!

I am beginning to look at the situation in the metals differently. I used to think of it as a war, with an ultimate winner and loser. Either the cartel would crush the longs and drive gold back to obscurity, or gold will break out and establish new highs in line with other commodities. Now I am not so sure that paradigm is appropriate.

I have no doubt that various parties are working to cap gold and manage the rate of increase, and silver too. I also have no doubt that this form of manipulation cannot do more than create scary downdrafts and slow the rise. But is it a war? I dont think so. If gold could be controlled, then why has it risen from below $300 to where it is now?

What I think is going on now is that certain trading houses have been aware of what is going on and they are front-running the trade, racking up short positions ahead of the usual raids, and making huge cash profits as part of the scheme. I do not think these trading houses have an agenda to cap gold, but they are just raking in profits as part of the scam. And by their actions they are contributing to the volatility.

Over the longer term, I think the cartel knows that gold is going to regain its status as the ultimate form of money, and the USD is going to slump to new lows. Their objective is to make the transition a gradual and controlled process, which runs contrary to the typical market action for the metals.

I also think the senior producers are beneficiaries of this process. One may wonder why the management of the gold producers does not take a stand to denounce the manipulation, but why should they? These seniors are going to be able to buy up the best assets from struggling juniors at bargain prices in the months and years ahead. They are probably happy a Cartel is on hand to make it so easy for them to replace reserves.

As investors we squawk and squirm while our stocks are driven lower and the metals are held down, but this is just another interim phase before the next liftoff kicks in. I am concerned that ECU will be taken out for much lower value than its worth, and many other juniors will likely share the same fate. We do not have fair markets and I doubt there is much that we can do about that. However, I also know that the PM sector is still the safest place to deal with the economic reality the world is in, and that I still have the best chance to grow my wealth by participating in the bull market, even while it is manipulated and at the mercy of crooks to front run the whole scam.

Wars eventually end with a winner declared. This scam with the metals will probaby go on indefinately, and I think we will still be screaming and trying to put a stop to it long after gold runs past $2500. We might as well scream that the sun is not rising fast enough...

cheers!

mike