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As the latest headlines from the FTX implosion remind us yet again of a politicized and rigged market riddled with deception, gold’s climb becomes easier to foresee.

But first, a little philosophical musing…

Modern Policy: High Office, Low Wisdom

I have often referred to La Rochefoucauld’s maxim asserting the highest offices are rarely, if ever, held by the highest minds.

Nowhere has this been more apparent than among the halls of the physically impressive yet intellectually vacant Eccles Building on Constitution Ave in Washington DC, where a long string of Fed Chairs have been un-constitutionally distorting free market price discovery for over a century.

The media-ignored levels of open fraud and inflationary currency debasement which passes daily for monetary policy (namely monetizing trillions of sovereign debt with trillions of mouse-clicked Dollars) within the FOMC would be comical if not otherwise so tragic in its crippling ripple effect to the Main Street citizen.

From Greenspan to Powell, we have witnessed example after example of error after error and gaffe after gaffeon everything from mis-defining inflation narratives as “transitory” to re-defining a “recession” as non-recessionary.

And all this while the Fed (and its creative writing team at the BLS) simultaneously and deliberately fudges the math on everything from misreported CPI data to artificial U6 employment statistics.

Pondering the Philosophically Nobel Amidst the Administratively Dishonest

To any who have pondered the philosophical pathways (as well as elusive definition) of wisdom (from the ancient Greeks to the pre- and post-modern Europeans, romantic Emersonians, tortured Russians or enlightened Confucians), one common trait of wisdom through time, culture and language is the ability to admit, and then learn from, error–as any man’s journey is one riddled with countless opportunities for teachable error.

…click on the above link to read the rest…

Gold Establishment Supports Central Bank Secrecy instead of Exposing it

November 9, 2022

Gold Establishment Supports Central Bank Secrecy instead of Exposing it

This week, the World Gold Council (WGC), which is a gold market development organization representing 32 of the world’s gold mining companies, published the latest quarterly edition of it’s well-known “Gold Demand Trends” research publication.

In the latest edition, which is titled “Gold Demand Trends Q3 2022”, the World Gold Council claims that during Q3 2022, “central banks continued to accumulate gold, with purchases estimated at a quarterly record of nearly 400 tonnes.”

And for my Next Trick

According to the WGC:

“Global central bank purchases leapt to almost 400 tonnes in Q3 (+115% q-o-q). This is the largest single quarter of demand from this sector in our records back to 2000 and almost double the previous record of 241t in Q3 2018.

It also marks the eighth consecutive quarter of net purchases and lifts the y-t-d total to 673 tonnes, higher than any other full year total since 1967.”

Specifically, the World Gold Council claims that Q3 2022 central bank gold demand was 399.3 tonnes, which is a massive 340% higher than Q3 2021.

**The infamous 399.3 tonnes of gold in question – Source WGC GDT Q3 2022**

Sounding impressive enough, the world’s financial media not surprisingly ran with the soundbite, publishing articles with headlines such as “Record central bank buying lifts global gold demand, WGC says” and “Central bank gold purchases set an all-time high” and “Central banks are buying gold at the fastest pace in 55 years”.

Until that is, you read a bit further and see that the World Gold Council added a caveat for Q 3 2022 central bank gold demand, saying that for “Q3 net demand includes a substantial estimate for unreported purchases”.

**Rabbit out of a Hat – Central bank gold demand data?**

Wait, what was that? The Q3 gold buying from central banks includes “a substantial estimate for unreported purchases”?…

…click on the above link to read the rest…

A surprising benefit to owning gold– especially now

May 25, 2022

A surprising benefit to owning gold– especially now

By the year 41 BC, just a few years after the assassination of Julius Caesar, Rome was under the strict rule of a three-person dictatorship known as the Tresviri rei publicae constituendae.

Historians today refer to this committee as the Triumvirate, and it included a general named Aemilius Lepidus, as well as Gaius Octavius– who would eventually become Emperor Augustus.

But the leader of the group, at least at first, was Marcus Antonius, also known as Mark Antony.

Mark Antony was not especially popular. Many Romans rightfully suspected that Mark Antony had been involved in Caesar’s assassination. Plus he was sleeping with Caesar’s widow, Cleopatra.

But Antony’s power through the Triumvirate’s was absolute. He could raise taxes, establish new social and religious traditions, regulate daily life, seize private property, and even condemn people to death… all without any oversight or due process.

And he wasn’t shy about using this power to squash his opposition.

Antony put several of his political enemies to death– including the much beloved Cicero, who was trying to escape Rome when Antony’s goons killed him.

Antony also threatened to kill another Senator named Nonius. But unlike Cicero, Nonius managed to escape Rome… bring with him about $1.5 million worth of gold and jewels.

People in the ancient world knew that precious metals (and precious stones) were pretty much the only portable forms of wealth.

Human civilization at the time was completely agrarian, so most productive assets like land and crops were impossible to move. Gold was almost the singular option to move large sums of wealth, and it remained this way for centuries.

These days there are much better options. Many forms of wealth– financial securities, intellectual property, bank deposits, and cryptocurrency– are completely portable. So gold is no longer necessary as a way to move money abroad.

…click on the above link to read the rest of the article…

What You Need To Know About Physical Gold Supply And Demand

March 29, 2022

What You Need To Know About Physical Gold Supply And Demand

Much of the confusion regarding the gold price has to do with gold’s dual nature, being both a currency and a commodity. This confusion is removed when you realize that in terms of supply and demand dynamics gold trades more like a currency than a commodity.

The major difference between gold and perishable commodities is their stock-to-flow ratios, measured by the above ground stock divided by annual production. Gold has a very high stock-to-flow ratio, while commodities like wheat have a low stock-to-flow ratio.

Thousands of years ago people started using gold as money, because gold is immutable, easily divisible, and scarce. Gold is the most marketable commodity. Its long tradition as store of value means extremely little gold has been wasted over history. The vast majority of all the gold ever mined is still with us. Consequently, annual mine production adds about 1.7% to the above ground stock of gold.

Most above ground gold is held for monetary purposes. Jewelry is a store of value combined with esthetics and status.

At the time of writing the total above ground stock of gold is 205,000 tonnes and global mine output in 2021 accounted for 3,560 tonnes. The stock-to-flow ratio (STFR) is currently 58 (205,000 / 3,560). Gold’s high STFR and the fact that most above ground gold is held for monetary purposes is what makes it trade like a currency.

For a thorough understanding of gold’s price formation, let’s first have a look at supply and demand dynamics of a perishable commodity. Then we will discuss how this differs from the gold market.

Soft Commodity Supply and Demand Basics

…click on the above link to read the rest of the article…

Russia, Ukraine Prove Gold Is Still the Best Safe Haven

March 7, 2022

Russia, Ukraine Prove Gold Is Still the Best Safe Haven

Image via Reuters/Ilya Naymushin

This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Gold remains the best safe haven despite volatility, how geopolitical tensions are further compromising the bond market, and renowned money manager weighs in on new all-time highs for gold and silver.

Gold’s volatile week and why it matters little in the metal’s trajectory

Last week has been a volatility showcase that is rarely seen in the gold market. Russia’s invasion of Ukraine sent gold flying past its 2011 high and up to $1,976, the highest level in a year and a half. The very next day, gold posted considerable losses and ended Friday’s trading session around $1,890. This surge and immediate slump in prices frustrated and disappointed a lot of traders, but we should remember that, for most of us, buying gold is not a trade. It’s an investment.

Even so, there are many takeaways from these wild couple of days, and a few important reminders.

Until a few months ago, gold was rangebound between $1,750-$1,800. The difficulty of breaching the resistance was noted by many. Yet now, we are treating $1,890 as a kind of support. It reinforces the notion that gold is being pushed up by many factors, and that geopolitical tensions are just one of them (and a recent addition).

While gold can benefit from the kind of uncertainty we saw last week, it’s far from necessary. The so-called “geopolitical play” isn’t a necessary force for gold’s price to continue climbing. Wells Fargo highlighted that even central bank rate hikes probably won’t slow the metal’s move to $2,000 this year.

…click on the above link to read the rest of the article…

Central Banks Rush to Protect Themselves from Incoming Disaster

January 9, 2022

Central Banks Rush to Protect Themselves from Incoming Disaster

Image courtesy of European Central Bank

The times, they are a-changin’, as Bob Dylan tells us.

On the global economic stage, the U.S. isn’t the dominant economic superpower that it once was. This conclusion comes from the declining popularity of dollars among global central banks.

Around the world, national central banks stockpile “reserves” in order to back up the value of their own national currency. Here’s how Investopedia explains monetary reserves:

The currency, precious metals, and other assets held by a central bank or other monetary authority

Monetary reserves back up the value of national currencies by providing something of value that the currency can be exchanged or redeemed for by note holders and depositors

Reserves themselves can either be gold or denominated in a specific currency, such as the dollar or euro

In a sense, holding any asset as part of a nation’s monetary reserves is a vote of confidence in it (which is a big reason central banks own tons of gold bars).

Here’s the concern: according to International Monetary Fund (IMF) data, the U.S. dollar (USD) has been hobbling along at a 26-year low in terms of its share of global reserve currencies.

Wolf Richter explained the specifics: “The global share of US-dollar-denominated exchange reserves declined to 59.15% in the third quarter, from 59.23% in the second quarter.”

The world is losing faith in the dollar as a safe, stable store of value. Take a look at the history of the USD share of global reserve currencies since 1967 on the chart below.

Take special note of how high the share was in 1977 (85%) before inflation spiraled out of control. Then note how much of that share disappeared by 1991:

U.S. Dollar share of global reserve currencies

Source

…click on the above link to read the rest of the article…

Analyst Reveals His Gold Prediction Secret: It’s All About Oil

December 29, 2021

Analyst Reveals His Gold Prediction Secret: It’s All About Oil

Analyst Reveals His Gold Prediction Secret: It Is All About Oil

This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Gold to rise alongside oil, buying the platinum’s dip, and the tale of a unique 54-pound gold brick.

Gold should follow oil as the latter skyrockets in price

It’s well-known that when gold soars, silver invariably follows. This kind of close correlation could soon be established between gold and another commodity that has been soaring recently: oil. Many might not be familiar with the gold-to-oil ratio, which tracks how many barrels of oil are necessary to buy an ounce of gold.

Here’s the summary of this argument:

The gold to oil ratio is an important indicator of the global economy’s health. Because gold and crude oil are both denominated in US dollars, they are strongly linked. That is because as the US dollar rises, commodities priced in USD fall, and vice versa. As the dollar drops, commodities generally go up.

Since fuel prices play a huge rule in inflation calculations (the Consumer Price Index is about 1/3 energy prices), higher oil prices means more inflation. Inflation drives gold-buying, and additional demand drives gold prices higher. Further, Kitco contributor Rick Mills argues, spikes in oil prices stunt economic growth. And economic pessimism is usually very good for gold.

A little bit more about the gold to oil ratio… Its historical average is 16, but it has been on quite a ride as of late. It hit a high of 91 last April due to the shutdowns, and has since returned to a more reasonable 25. It’s still way off its average, and a proper return would have to come from either falling oil prices or rising gold prices.

…click on the above link to read the rest of the article…

Peter Schiff: There Is No Ceiling on Inflation

December 27, 2021

Peter Schiff: There Is No Ceiling on Inflation

Gold closed out the week before Christmas above $1,800 an ounce, despite rising bond yields. The $1,800 level has been viewed as a ceiling for the price of gold. In his podcast, Peter Schiff said people need to start thinking of $1,800 as a floor. And he said they will once they realize there is no ceiling on inflation.

We got the personal income and spending data for November last week. Incomes grew at a slower pace than projected — 0.4%. Meanwhile, spending was up 0.6%. Obviously, if spending is outpacing income, the difference has to come from somewhere. It appears Americans are dipping into their savings to cope with rising prices. The savings rate declined to 6.9%. That is the lowest level since December 2017.

We also know that consumers are turning to debt to make ends meet, with credit card balances growing at a fast pace.

The savings rate shot up and Americans paid down their credit cards when the government showered them with stimulus. Peter said it appears the stimulus has run out.

Obviously, Americans have now exhausted that windfall. They’ve depleted that savings war-chest that was built up with stimulus money, and now it’s gone. And so, they’re having to go into debt.”

Consumers have a double problem. They’ve run out of savings and consumer prices keep going up. That is robbing people of their purchasing power.

That robber is the government, because it’s the government that’s creating the inflation that is causing the cost of living to go up. But the cost of living is going up, yet consumers have even less savings to afford that increase in the cost of living.”

…click on the above link to read the rest of the article…

Gold and silver prospects for 2022

December 27, 2021

Gold and silver prospects for 2022

It has been a disappointing year for profit-seeking precious metal investors, but for those few of us looking to accumulate gold and silver as the ultimate insurance against runaway inflation it has been an unexpected bonus.

After reviewing the current year to gain a perspective for 2022, this article summarises the outlook for the dollar, the euro, and their financial systems. The key issue is the interest rate outlook, and how that will impact financial markets, which are wholly unprepared for the consequences of the massive expansions of currency and credit over the last two years.

We look briefly at geopolitical factors and conclude that Presidents Putin and Xi have assessed President Biden and his administration to be fundamentally weak. Putin is now driving a wedge between the US and the UK on one side and the pusillanimous, disorganised EU nations on the other, using energy supplies and the massing of troops on the Ukrainian border as levers to apply pressure. Either the situation escalates to an invasion of Ukraine (unlikely) or America backs off under pressure from the EU. Meanwhile, China will continue to build its presence in the South China Sea and its global influence through its silk roads. Less appreciated is that China and Russia continue to accumulate gold and are ditching the dollar.

And finally, we look at silver, which is set to become the star performer against fiat currencies, driven by a combination of poor liquidity, ESG-driven industrial demand and investor realisation that its price has much catching up to do compared with lithium, uranium, and copper. The potential for a fiat currency collapse is thrown in for nothing.
2021 — That was the year that was

This year has been disappointing for precious metals investors. Figure 1 shows how gold and silver have performed since 31 December 2020.

…click on the above link to read the rest of the article…

Inflation and Gold: What Gives?

December 23, 2021

Inflation and Gold: What Gives?

In the last Supply and Demand update, we discussed some different theories which attempt to explain what causes the gold and silver prices to move. We mentioned the:

“…attempt to hold up a famous buyer of metal, while ignoring the thousands of not-famous sellers who sold the metal to said famous buyer.”

Since then, Ireland has bought gold for the first time in over a decade. And predictably, most voices in the gold community see this as a bullish sign.

By the way, we did not see any data about the prices paid on what dates, but the articles on December 1 mention a series of buys over a few months. Assuming a few means two, it looks like Ireland may have paid more than the current price.

The Different Theories on What Moves Gold and Silver Prices

Back to the common bullish view of Ireland’s wisdom, what of the opinions of the 64,300 people who sold their gold to Ireland (assuming the average seller sold an ounce)? Surely, these people believed the price will go down?

Famous and Anonymous Price Movers

There are two competing theories for how to interpret the conflicting views when one market participant is famous and the other is a bunch of anonymous people. One is the “famous buyer” theory, and the other is the “incompetent bureaucrat” theory. The latter was used to explain the sale of half of Britain’s gold between 1999 and 2002.

How could we have known that the UK government was foolish to sell back then, and the anonymous 12,699,250 buyers were right? Whereas today, the Irish bureaucrats are right, and the 64,300 sellers are wrong?

This is just a bias towards bullishness.

…click on the above link to read the rest of the article…

Evil is the Root of All Fiat Money

December 4, 2021

EVIL IS THE ROOT OF ALL FIAT MONEY

“So you think that money is the root of all evil. Have you ever asked what is the root of all money?”
-Ayn Rand

Money used to be a stable medium of exchange and a store of value but that was in the days when there were sound monetary principles, mostly backed by gold or silver.

Since 1913 and especially 1971 there is no discipline and no morals when it comes to the issuing of money as unlimited amounts of ~~fake~~ fiat money is printed at will.

In today’s fiat money world, there is only one answer to Rand’s question “What is the root of all money?”, namely:

“Evil is the root of all fiat money.”

– Egon von Greyerz

On the IMF (International Monetary Fund) website there is an article stating that “Money is something that holds its value” – Hmmm…..

The meeting of bankers and politicians on Jekyll Island in November 1910 laid the foundations for the Federal Reserve Bank. Three years later in 1913 the Fed was founded.

From that moment on, private bankers were running the US monetary system including the printing of money. But the British pound, backed by gold until 1931, was the global currency of choice until then.

CURRENCY SYSTEMS ARE EPHEMERAL

The Bretton Woods Agreement in 1944 established a new currency system based on the dollar. From that time, all major currencies were pegged to the US dollar and the dollar itself was pegged to gold at $35 per ounce. The dollar thus became the world’s reserve currency bolstered by big gold reserves. These were accumulated gradually from the early 1900s to the late 1940s. The US received payment in gold during WWII from its sales of arms and other supplies.

…click on the above link to read the rest of the article…

Latest Treasure, Fed and BIS Reports Confirm: All Twisted Paths Lead to Gold

November 24, 2021

https://goldswitzerland.com/latest-treasury-fed-and-bis-reports-confirm-all-twisted-paths-lead-to-gold/

Gold-O-Mania is Coming

November 19, 2021

GOLD-O-MANIA IS COMING

The buoyancy of markets in recent years has lulled central bank heads into a false conviction that they had saved the world after the 2006-9 Great Financial Crisis.

But central bankers continue to navigate like drunken sailors between the evil forces of Scylla and Charybdis as in Homer’s Odyssey.

Few of the bankers have understood that printing unlimited and worthless paper money will not allow them a pass the strait of Messina without major, or more likely catastrophic, damage to the world economy.

As exuberance continues to dominate intoxicated stock market investors, they haven’t yet noticed that all is not well on the perilous seas.

Still, most markets continue to respond positively to the printing press rather than to the underlying fundamentals.

Printing presses don’t create real value, instead they create bubbles full of worthless air. But sadly intoxicated investors confuse air, which is free and has no value, with real, intrinsic values.

To take an example, what is the intrinsic value of Bitcoin or BTC? How should BTC be valued?

Does the $60,000 price today reflect the real value or was the 10 cent price 10 years ago more correct?

BITCOINOMANIA

Are we today seeing Bitcoinomania similar to Tulipomania in the 1630s?

If not, can someone tell me at what price Bitcoin is fully and properly valued?

The Bitcoin aficionados will tell us that BTC is modern money and superior to any other currency. Well maybe they are right, but history must prove that. The 11 year history of Bitcoin is hardly sufficient to prove that it will fare better than any other money. We must remember that so far in history no currency has ever survived in its original form except for gold.

And the 5,000 year history of gold as money certainly makes it superior to all fiat currencies as well as cryptocurrencies.

…click on the above link to read the rest of the article…

Rising Fundamentals for Gold and Silver

November 11, 2021

Rising Fundamentals for Gold and Silver

The Different Theories on What Moves Gold and Silver Prices

For example, the Quantity Theory school attempts to relate the quantity (or change in quantity) of dollars, to each commodity. Generally, this theory predicts rising prices based on the reasoning of “more dollars chasing the same or fewer ounces of gold and silver.” The problem is that the new holders of these new dollars are not necessarily bidding up gold and silver (our thorough rebuttal to this is here).

The Conspiracy School thinks that there is a shadowy cabal, a price-manipulation cartel that decides what the gold and silver prices will be (our thorough rebuttal to this is in our Thoughtful Disagreement with Ted Butler).

Other schools attempt to compare mine production with industrial and jewelry demand. Or attempt to hold up a famous buyer of metal, while ignoring the thousands of not-famous sellers who sold the metal to said famous buyer. We should not make too much ado over a move of metal from one corner of the market to another (as we’ll discuss below).

Gold and Silver Fundamental Analysis:Contango, Backwardation and the Basis

None of these schools describes the fundamentals of the gold and silver markets, much less predicts the price moves. To look at the fundamentals, one must look at the gold and silver bases. The basis, to oversimplify slightly, is futures price – spot price. This shows the fundamentals, because a market in scarcity (as oil has been recently) has a lower price for future delivery than for immediate delivery. In other words, buyers prefer their oil now rather than later. And this preference is expressed as a higher price for delivery now, vs. later…

…click on the above link to read the rest of the article…

Venezuelans Turn to Gold Nuggets as the Local Currency Implodes

October 31, 2021

Venezuelans Turn to Gold Nuggets as the Local Currency Implodes

The Venezuelan government recently lopped off six zeros from its hyperinflating currency, the bolivar. The highest denomination currency note of 1 million bolivars, worth less than $0.25, was replaced by a one-bolivar note. At the same time, a 100-bolivar note, worth about $25.00, was introduced as the new highest denomination of the bolivar. The currency conversion was designed to spare the government the embarrassment of having to issue a 100-million bolivar note to enable people to purchases everyday items without having to carry around bundles of notes, given that the price of a loaf of bread had risen to 7 million old bolivars. Of course, the arbitrary scaling down of the denomination of the currency will not slow inflation, because the new currency notes can be printed just as cheaply as the old. The bolivar has already lost 73 percent of its value in 2021 alone and the IMF estimates the annual inflation rate will reach 5,500 percent by the end of 2021.

It is not surprising, then. that all but the poorest Venezuelans have abandoned the bolivar as a medium of exchange, let alone a store of value or unit of account. US dollars are the exchange medium of choice in Caracas and other large cities, while the Colombian peso dominates along the Colombian border, particularly in the regional city of San Cristobal. The Brazilian real is current along the southern border with Brazil and the euro and cryptocurrencies have also found niche uses.

What is wonderfully surprising is the spontaneous emergence of a pure gold currency in a remote region of southeastern Venezuela around the towns of Tumeremo and El Callao. The region abounds with precious metal ores and has a long history of luring prospectors and miners seeking their fortunes…

…click on the above link to read the rest of the article…

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