Nothing matters to anybody until it matters to everybody — and by then it's too late. This could easily be said for the gold and silver price manipulation.
The question is whether the end comes before or after a concurrent monetary collapse, currency crisis, or hyperinflation.
The other adage is that markets can stay irrational much longer than one can stay solvent. We should add that manipulated markets are an entirely different category.
This is not a naturally manifested irrationality. Price controls are distorting in ways that are truly unimaginable - and seemingly efficient.
Ultimately, the crowning achievement will be to split markets into two, a physical and paper, creating an official and unofficial gray market across the board for all commodities. And this split may be facilitated by alternative and electronic currencies that, sadly, turn all into enemies of the state in the end.
There is a lag between general awareness and the unevenness of monetary expansion.
It is impossible to predict where artificial money will flow initially. The hope has been toward housing and stock prices without a concurrent (dangerous) rise in consumer prices. There is a lag. How long the lag can last is anyone's guess.
Perception Managed Down the Line
Political capture of the Fed was completed years ago once the chairman became hailed by the financial markets and adorned the cover of popular magazines. The recent political game involved the exit of the most dovish of chairman. Yet, on a note of hawkishness, this chairman plowed the way and the political will for his predecessor to complete what must be done in order to maintain the current monetary system.
Inflation Continues to Steal From the Most Vulnerable
Monetary policy inflation targeting hits hard on the most vulnerable of societies, the poor and elderly. But the political elite will not be swayed until the suffering consumes them. It is human nature to feel remorse for the sufferer on the other side of the world - until one learns of his own impending pain, and thus becomes consumed by it. This is how official numbers with regard to real inflation are able to go on unquestioned.
Consider the implication of quietly reducing portion or package size for commodities, such as coffee, flour, or sugar.
If a 16 ounce package of coffee costs 20 cents, and the package is reduced by 4 ounces to 12 and the price stays the same, then you just inflated the cost of the coffee by 25%. This is a twisted triumph of modern propaganda.
Same Ole Same Ole
The fact that four or less large banks hold concentrated positions in any market makes a manipulation inevitable.
The question remains whether there is 'enough' of a lag between the key tipping point of awareness and the ultimate collapse of the monetary system. History may judge that they went hand in hand. But living thorough this moment, emotions paint a much more extended period and a cheap option before the storm.
While it is true that the typical and sophisticated mainstream observer or investor is marred in the performance paradigm, it does not require much more than a curious mind to unveil the significance of this brief moment of opportunity.
The recent Blythe Masters debacle is an example of this. The head of JP Morgan’s commodity unit was recently offered an advisory position with the CFTC. The knee jerk response to this was severe, and the position was quickly rescinded. It reveals two fascinating aspects of this historic moment. One, that so many immediately saw the absurdity and conflict and second, that the powers that be could not readily identify the potential fallout of a move like this. This says everything about the futile grasp of the larger picture.
Price controls ultimately fail, whether directly by political edict occurring in a rapidly devaluing currency (like we are witnessing in South America) or via long term and profitable fraud that parallels the support of a fiat reserve. And the harder they come, the harder they fall.
The geometric expansion of money supply and fractional reserve lending (based on the modest of ratios) ensure that once the math begins to work its way backwards, conditions go from bad to panic overnight.
The sound of precious metals returning to a semblance of normal, whether based on commodity or monetary dynamics, will be nothing like anyone alive has ever heard. It will also be one that generations going forward will not soon forget.