Upon further consideration, it is now clear that my previous descriptions of the phony price action in precious metals markets as "a fake rally" has been a misnomer. For those of us living in the real world; there has been no "rally" in this sector, at all.

In fact, so much additional data and factors need to be considered that it will require another, full commentary (or perhaps two) just to incorporate all of it into an analytical framework. For the moment, however; let's focus on two points: the propagandists in the mainstream media continuing to call this "a rally", and a little thing called (price) "inflation".

In the absence of the gold standard, there is no way to protect savings from confiscation by inflation.

- Alan Greenspan, 1966

The Dean of these central bank criminals has already confessed that it is impossible to PREVENT inflation in the absence of the gold standard. But how perverse are these shameless liars? They tell us that (no matter how hard they try) they are unable to CREATE inflation.

The allegory here is a simple one. It's like an arsonist claiming that no matter how much gasoline and how many matches he uses, he can't create a fire.

 

The only thing more absurd and perverse than the lies of these central bankers are the "statistics" they produce to supposedly back-up their lies. But for people (such as readers here) who live in the real world, price inflation is a harsh and cruel reality. Food and housing costs are spiraling higher at the most rapid rate in more than 100 years.

The precise rate of (price) inflation is a function of two factors: the particular currency one uses for their consumption, and their income level. Outside of food and housing costs, price inflation is much more moderate. Thus the lower one is on the economic totem-pole (and the more they spend on food/shelter), the higher the REAL rate of inflation.

As a best "rough number", I still use the figure 10+ %. Now let's look at a couple of charts.

In two years; the prices of gold and silver have gone precisely NOWHERE. After our supposed "rally" we're back where we started at this time in 2014. And where is that?

In the middle of 2014; we were at ridiculously low price levels. In the case of gold; we were (are) more than 30% below the previous high. In silver we were (are) 60% below the previous high. And those "previous highs" were only a tiny fraction of the real value of gold and silver.

To summarize: in the gold market, we are currently more than 30% below a ridiculously low price for gold. In the silver market; we are currently roughly 60% below a ridiculously low price for silver. And all of this is still merely characterizing this farce in NOMINAL terms.

Now let's move to the REAL world, and use REAL dollars -- i.e. factor in price inflation, starting with the two-year charts above. In 2014 dollars; the price of gold is little more than $1,000/oz. In 2014 dollars; the price of silver is roughly $16/oz.

To simply return to price levels at this time in 2014 (in real dollars); the price of gold would have to rise to over $1,600/oz. The price of silver would have to be around $24/oz. In real dollars; the gentle, upward slope we see in the moving averages (the green lines) would be virtually flat -- i.e. NO RALLY.

And what happens if we factor in the Demon of Inflation into the 8-year charts above? If we take the price of gold at its ABSOLUTE BOTTOM following the Crash of '08, and we factor in a realistic rate of inflation we get the current price.

Today's price of gold is, in real dollars, is equal to the lowest-of-lows following the Crash of '08. Yet other commentators, and the mainstream Shills continue to call this "a rally".

My apologies to readers for all these months of calling the recent (nominal)) price action in gold/silver markets a "fake rally". Of course, in actual fact, there has never been any rally at all.