Seasoned and long term investors are familiar with the effects of price suppression. Very few traders can manage the complex positioning required to profit from egregious interference. And the consensus is that it will go on forever, because it has. This very consensus is perhaps the most bullish reason that it simply will not.
Because it's gone on for so long, it will therefore continue.
In reality, emergency measures are still in effect. The Fed’s recent tapering was mainly symbolical when the intervention is viewed en masse.
The problem is that no one really learned from the past few crisis events. In the minds of most, central banks saved the day; and it is expected that they will again if the time arises, which looks more and more likely.
Ignoring the risk associated with fiscal deficit and debt has not changed. If anything, Congress has usurped even more power to print money for its collective constituency which, not surprisingly, represents less and less of the productive class of citizens.
Make no mistake; this is the direct (unintended) path toward conflict and hyperinflation. The more of the deficit that is conjured, the less likely foreigners will buy bonds. This will put more pressure on the Fed to print in order to keep the government alive.
The Metals Parallel the Universe
It will arise as no coincidence that, in parallel, the metals will be set free.
Currently, the biggest four commercial traders on the most important exchange (in terms of price discovery) hold a concentrated long in gold and a short corner in silver that would make the Hunt brothers blush.
One key completion of financial repression is the tactic employed to grow the U.S. out of the debt incurred after World War II. This tactic depends on capturing domestic banks as bond buyers – they've been willing to comply. But political pressure to prosecute these very banks, such as levying symbolic fines while tarnishing reputation and potentially share value, could lead to a mutiny in the ranks.
If JPMorgan (in particular) decided not to participate in the next rally, the silver pits could be the Achilles that breaks, sending the entire system into financial tizzy.
The financial reasons to hold the metals outweigh the economic.
No adult alive today can remember when the metals traded freely.
It seems the Fed will prevail because it has so far. The meme that housing prices have always gone up is still alive today. Price performance always trumps underlying value continues to be the prevailing mantra.
Just because it has gone on does not prove that it will go on - any more than just because we haven't seen a black swan yet doesn't mean we will not.
We have countless example of societies collapsing because of resource depletion. Price controls never end well in the long run.
The precious metals have been manipulated to what amounts to an eternity when compared with other asset classes. The end will come and while the move may be ridiculed, it will certainly not go unnoticed. The metals, silver especially, remain cheap options against the inevitable collapse – well underway.