Why Gold and Silver are Collapsing

Recent history proves the point that the precious metals markets, especially Silver, is very volatile.

Metals like all markets go through phases where they violate significant levels. Usually, the markets find a bottom and prices begin to rise again.

In the meanwhile, silver and gold buyers ask what is going on with these declining values?

I believe there are a number of reasons for the declining values of precious metals.

For example, parts of China are once again being shut down and strict lockdowns are in place in important regions — including financial hub Shanghai. China’s zero-COVID policy and draconian lockdowns, which are spreading to more provinces, are bound to hit manufacturing activity, consumption, and economic growth, and that includes the consumption of precious metals. China is the world’s largest consumer of gold and one of the largest silver-consuming nations.

The recent interest-rate hikes by the Federal Reserve seems to cool off investor interest in precious metals.  The price of gold typically falls when interest rates rise, as the latter makes bonds more attractive as an investment.

GATA has been exposing for years the overwhelming proof that gold and silver price suppression is going on.

In a Kitco Commentary back in 2011 titled “Deflationary Collapse Crushing Gold and Silver”, Jason Hamlin writes:

“Gold is down more than $300 or roughly 16% in the past few weeks. Silver has lost nearly 40% in the same time period and the mining companies have also been hit hard. This decline in precious metals has been driven by funds scrambling for liquidity, the CME hiking margin rates and a stronger U.S. dollar. Many also suspect that the banks helped to manipulate the price lower in order to cover as many of their underwater short positions as possible. JPMorgan and their cohorts control the paper markets and can use their leverage to manipulate the spot price to whatever level they want in the short term. This is done via “stuffing” trades and using a variety of other methods to make the markets believe that there is considerably more selling pressure than actually exists. This is particularly profitable as options expiration is this week and the current smack down will leave most options expiring worthless, in addition to providing an opportunity to exit short positions.