For bear markets to truly end investor sentiment has to get to a point where they would rather walk on broken glass than buy that asset or asset class.  We’re reaching that point in the precious metals market.

In conjunction with that we also have to see arrogance on the part of short-sellers convinced that all rallies will be sold, keeping a lid on prices.  It doesn’t matter if buyers come in at higher prices or above significant technical support levels, they will push because they become convinced this is a one-way trade.

We see this in the government bond markets as well.  In traderspeak it’s called the [Insert Head of Central Bank Here] Put.  The Greenspan Put begat the Bernanke Put which morphed into the Yellen Put.

Over the past few months we’ve seen sign after sign that the gold and silver markets are nearing the end of their bear markets.  These are signs of extreme distress.  The first I’ve already mentioned, record speculative short positions among futures traders.

Then there was the re-balancing of Vanguard’s $2.3 billion Gold and Precious Metals fund into the Global Capital Cycles Fund, trimming exposure to precious metals to 25% of AUM — Assets Under Management.

And now we’re seeing the M&A (Mergers and Acquisitions) phase of the bear market.  Where companies begin merging to shave costs after having already cut back on production to preserve cash flow.

It was just announced that American Barrick Corp (NYSE:ABX) and RandGold Corp (NASDAQ:GOLD) are merging into one company.  The largest mining company by market cap in the world at around $18 billion.

Primary silver producers like Endeavor Silver (NYSE:EXK) are shuttering high-cost mines in this pricing environment.  Well run companies with low debt and strong balance sheets don’t do mergers like this, they tough it out or go on a hostile raid of assets under-valued by the market.

There is always something that stands in the way of Gold’s breakout.  I’m as frustrated by it as anyone else in the space.  But, the reality is that gold at this point is the retail investor’s hedge against government instability and loss of institutional faith.

I’ve made the point before and I’ll make it again, the last gold bull market was primed to go for two years before it finally began in earnest.  Gold made a low in 1999 but it took until after 9/11 for it to finally move above the important technical levels to force short sellers and heavily-forward-hedged producers like Barrick to lift their hedges and cover.

9/11 kicked off the last one, in my view.  The history on it is clear.  The U.S. government was attacked bodily that day which tore at the world’s view of its primacy.  The response from then FOMC Chair Alan Greenspan was to radically lower interest rates and open the liquidity taps.

That fueled the first leg of the decade-long bull market.  Then when his replacement Bernanke began pulling back and raising rates, he imploded first the marginal commodity markets, resulting in Bear Stearns’ failure and then a housing market collapse as the hot money turned cold and the banking system seized up.

Gold fell from $1033 to $681 during 2008 and the only response from the Fed was “Print, Baby, Print!”

This did not engender confidence. Gold’s second and more explosive wave of its bull market nearly tripled its price in just over two years.

Eventually, the central banks coordinated policy in 2011, the Swiss pegged the Franc to the Euro, Merkel was re-elected and that commitment to stability provided enough cross-market liquidity and confidence to rein in gold.

Because retail demand took off in the wake of the Bush v. Gore debacle and then an attack on U.S. soil for the first time since Pearl Harbor.  It lasted until the central banks finally coordinated action to soothe the worst fears of the financial markets in September 2011.

So, is that happening today?  No.  The rumblings are there.  Brexit, Italeave, the bureaucratic coup against Trump, this idiocy surrounding Kavanaugh’s confirmation, Syria, the end of coordinated QE from western central banks.

All the pieces are in place.  All that’s left is the catalyst.

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But, everyday we see another headline of a major player in the space throwing in the towel is another data point that we are getting closer to that catalyst.

There is an extreme amount of leverage and misallocation of capital thanks to a decade of central bank largesse and destroying price discovery in the most important markets in the world, the sovereign bond markets.

Given that state of affairs when the catalyst occurs — Trump is impeached, Brexit fails, Merkel is overthrown in Germany, a King Leopold moment, or simply the outbreak of hostilities between the U.S. and Russia over Syria — it will be the ride of a lifetime for gold investors.

And an incredibly stressful time to be alive.

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