Generally speaking, I'm not one to put
much faith in conspiracy theories. I don't think the price of gold and
silver is being suppressed by the government or the Fed. Our money
supply is no longer tied to gold so there is no logical reason for the
Fed to care what the price of gold is. No matter how high or low it goes
it's not going to affect the Fed's ability to counterfeit dollars at
will.
Oil on the other hand I can see a very
good reason to attempt manipulation. If the price of oil rises too high
it stifles economic growth and will eventually trigger the next
recession. During the last commodity bull market we have a clear history
of politicians trying to impose price controls on energy, but no
history of price control on precious metals.
Over the next month rising oil prices
might not be too kind to incumbent politicians. So I could see a logical
reason to attempt suppression of the oil markets over the next month.
It is late enough in the intermediate
cycle that yesterday should have marked a bottom for oil. If oil were to
continue down for the rest of the month moving well out of the timing
band for an intermediate bottom I could make a case for something fishy
going on, especially if the dollar continues to fall during this time.
However as most people already know
artificially depressing price always has the opposite effect by creating
too much demand. Eventually that demand overwhelms the attempts at
manipulation and the asset or commodity will resume its secular trend at
a much faster pace than would have occurred naturally.
The opportunity is that if we see oil
held artificially low over the next month, and well past the
intermediate cycle timing band, to create a favorable environment for
incumbent politicians, then we can expect an exceptionally violent snap
back rally once demand overwhelms the manipulation.
The trade would be to buy energy
stocks or oil futures right after the elections if oil continues to
remain in a downtrend into November.
