Let me tell you about the very rich.  They are different from you and me.

They possess and enjoy early, and it does something to them, makes 

them soft where we are hard, and cynical where we are trustful, in 

a way that, unless you were born rich, it is very difficult to understand. 

- F. Scott Fitzgerald, Rich Boy

No one knows in an open, free market at what price a bargain becomes powerful enough to lure buyers in. (Thus the crucial component of technical analysis in the precious markets.) But there is some unraveling of fundamental forces that can always be done by observing trends.

The first thing we look for are macro-economic factors. How are the major world economies doing? What sectors are strong, which weak? Is one region doing better than another due to specific factors - innovation, a huge unexpected development in energy, a new labor pool? How are credit markets?

These all affect prices of equities, bonds, derivatives and, naturally, gold and silver. 

The worst enemy of gold and silver right now is cheap money that flows into the hands of big investment houses or generally well-to-do private investors. Let's call them collectively the 5%-ers. Banks favor asset classes that are stable, ones that if they do lose value take months and months or even years to turn down. Gold and silver do not fall into that category at the moment. 

Whereas in the 1920s stocks bought on margin were usually financed by brokerage houses themselves, today the margin is financed by banks who have borrowed from the Federal Reserve at rock-bottom interest rates. (This is paralleled in the other major economic blocs around the world.) And guess whose money, or future, allowed the borrowers to get money from the banks that got money from the Fed? 

If your answer is everyday citizens, you would be right. 

Meanwhile, the tightest lid imaginable is being kept clamped on inflation. Ask yourself "Who benefits most when inflation is low?" (Especially when credit is still tight.) First and foremost, the debt-holding class benefits. It keeps their loans in relatively constant dollars (or euros or yen). Money loaned at 5% can well afford a 1.5% inflation rate. It also allows riskier behavior on the part of powerful borrowers. 

If an entity borrows at 5 or 6%, it's obvious their return has to be more than that. But is it worthwhile taking a risk if your differential-over-interest cost is 1%? Scarcely. 2%? No... you have to get right up to 5% return above the cost of interest plus other cost of doing business expenses. Thus, the return has to be in the vicinity of 12 to 15% or more. 

That kind of return isn't found in bond yields. It isn't found in dividend yields, on average, in equities. It had been found in the precious markets until the short players barged in. Now precious metals seem volatile and world stock markets seem like a sure thing. They might rise "indefinitely" in this loan scheme that has  flowed from the oblivious Fed to banks to investors.

As we have asked many times, "If yields on stock are actually in decline, wherein lies the allure for wealthy investors and big investment houses?" Speculation, pure and simple. 

Understand that this is a club. Once you are in the club, you are privy to advantages. If you are not in the club, an asset such as gold that could hedge your position in general is desirable. However, by shunting money out of gold and into equities, playing only the upside of gold seems trickier than ever. (Although we have made quite a bit of money this year for those who strictly followed our advice.) 

The most extreme case of wringing out the average Joe or Jane by disruption of the gold market is in India, which has slapped an excise tax on all "new" gold coming into that country given cheap money. 

However, in their own ways, the Fed, ECB and BOJ have each placed a tax of sorts on gold. How? The incentive to buy stocks with their speculative momentum is almost irresistible.

Two scenarios, May 16, 2013: Client A, with excellent credit goes into bank to ask for a credit line to buy stocks. Client B, also with excellent credit, goes to bank and wants to borrow money to buy gold. Can you hear the door slamming on bank client B?

An afterthought: Just as the U.S. led the world into lower interest rates, it will also lead the way into higher rates. That's the game changer for us all. Rising interest rates. 

What will the big investors do when ready, chap money is no longer available to put into the stock markets?