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On February 28, 2010, we published an edition titled, “The Crash of 2010.” During that time, the markets were strong and stocks were flying higher and higher. Many didn’t take the report seriously.
On May 6, 2010, the Dow plunged 998 points – in less than 5 minutes. The biggest intraday drop in stock market history. Sure there were speculations that it was a computer glitch or an error in the system and not the markets themselves.
But now they’re saying that it was money manager Waddell & Reed who executed a bunch of e-mini contracts during a 20-minute span, which then caused high frequency computer trading accounts and stop losses to get triggered.
It wiped one trillion dollars worth of wealth in the markets in a matter of minutes.
Imagine the amount of wealth that was lost. Now imagine the amount of wealth that was gained – by those who knew what was going on…
Although conspiracy theories are entertaining, we certainly do not call ourselves conspiracy theorists. But many conspiracy theories have substance backed by facts.
Conspiracy or not, we do know how the markets can work…
When you have big bucks, smart people, and a world of panic-stricken investors, market manipulation is easy.
Think about it. If Waddell & Reed collaborated with some of the major players in this world, maybe the same guys that are under investigation for manipulating the precious metals market, they could easily set off a round of sell-offs and make major profits by shorting the markets.
As Waddell & Reed pulls the trigger on the e-mini selloffs, the other players have already gone short and put stop losses around the board. This would cause other stop losses to trigger and panic-stricken investors to immediately sell. The markets go into a freefall and investors continue to dump with reckless abandon.
How many of you dumped?
When things hit rock bottom, they start buying it all back up, covering their shorts at an insane profit, thus causing a record-setting intraday swing of over 600 points on the Dow.
If a trillion dollars were lost, imagine how much was gained…
Of course, this is just a theory. This may, or may not, have happened. But what did happen was a historical one day drop of 998 points.
The point is, our markets are nowhere near the proximity of being safe – and market manipulators know this and are profiting from this every day. They know this is a trader’s market. And they know after what happened in the last few years, investors will bail at any sign of weakness. They know that fear is still the word on the Street and they’re playing this to their advantage.
And you can too.
When all hell broke loose during the market plunge, guess what went up?
That’s right. Our two favourite plays in the last year, Gold and Silver.
Gold has just recently broke out to hit a new all-time high. Silver is nearing the $20 threshold which could easily break through in the near term (see The Silver Conspiracy). This will, in turn, make many of the gold and silver junior plays that much more attractive.
In our past newsletters such as the “Crash of 2010,” “Nothing We Can Do,” “The Story Without a Happy Ending,” and “The Truth About the Bubble,” we were asked many questions about why we continue to invest and talk up precious metals plays if we believed a crash was coming.
I think the past few weeks speak for themselves. The markets are falling while precious metals prices are breaking records.
These precious metals are trying telling us something.
They’re trying to tell us that our society no longer believes in its government and its financial systems. They’re telling us they’re the only thing in this market that has any real value.
The more the government tries to shield us from risk and uncertainty, the worse things become. The more they try and help, the more risk and uncertainty they convey. Ultimately, the more they help, the more they spend and borrow – without a way to pay it all back.
So while the markets continue with uncertainty, we’ll continue to focus on precious metals plays such as our most recently featured silver junior, United Mining Group (CNSX: UMG).
United Mining Group (CNSX: UMG) is not only profitable (making over $15 million last year), but they are fully funded and permitted to go into production in one of the world’s largest and richest silver districts – exactly what we were looking for in a silver junior.
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