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The Cannibalization Of The Financial System Will Force Investors Into Silver

The Cannibalization Of The Financial System Will Force Investors Into Silver

Day in and day out, the global financial system continues to cannibalize itself.  Clear evidence of this points to the massive “Artificial” liquidity and asset purchase policy instituted by the Federal Reserve.  While financial analysts provided several theories why the Fed was forced to inject liquidity via the Repo Market and also purchase $60 billion a month in U.S. Treasuries, the real reason has to do with the falling quality of oil and its impact on the value of assets and collateral.

It’s really that simple.  However, there is no mention of it (energy) by any of the leading financial or precious metals analysts.  For example, in Alasdair Macleod’s recent Goldmoney.com article titled, How To Return To Sound Money, he states the following:

This article provides a template for an enduring sound money solution that will deliver economic progress while eliminating destructive credit cycles. It posits that a properly constructed gold and gold substitute monetary system, which also includes the removal of bank credit inflation as a means of providing investment capital, is the only way that lasting stability and prosperity can be achieved.

Alasdair Macleod, who I have a great deal of respect, doesn’t mention “Energy” once in his entire article suggesting that returning to sound money, through gold, is the only way for lasting stability and prosperity can be achieved. The majority of economic prosperity has come from the burning of oil, natural gas, and coal, not from gold or silver. The precious metals act as money, a store of value, or economic energy, but are not the ENERGY SOURCES themselves.  While this is self-evident, it is very important to understand.

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

China’s Gold Hoarding: Will It Cause the Price of Gold to Rise?

China’s Gold Hoarding: Will It Cause the Price of Gold to Rise?

There are reasons to think that the gold price will rise faster than expected.

<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >China’s Gold Hoarding: Will It Cause the Price of Gold to Rise?</span>

Since 2009 China has withdrawn 12,000 tonnes of gold from the rest of the world, where the short and medium-term gold price is set. For reasons I will explain, a tighter market outside of China can make the price of gold price rise faster than many expect. I believe the gold price will rise, because of excessive debt levels around the world, and incessant money printing by central banks. Central banks will try and resolve the debt burden through currency depreciation (inflation). China has been preparing for this scenario by buying gold.

One of the key drivers in recent decades for the US dollar gold price is real interest rates. It is thought that when interest rates on long-term sovereign bonds, minus inflation, are falling, it becomes more attractive to own gold as it is a less risky asset than sovereign bonds (gold has no counterparty risk). However, gold doesn’t yield a return (unless you lend it). So, when real rates rise, it becomes more attractive to own bonds.

Real Interest Rates and US Dollar Gold Price

Although the correlation is clear, it might change in the future. Possibly, when real rates fall, the gold price will rise faster than before. Let me explain why.

In my previous post, we have seen that the gold price in the short and medium-term is mainly set in the West by institutional supply of and demand for above-ground stocks. For the gold price, what matters is how much above-ground stock is in strong hands, i.e., owners of gold that will not be easily persuaded to sell.

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

Central Banks Continue “Remarkable” Gold-Buying Spree

Central Banks Continue “Remarkable” Gold-Buying Spree

Central banks continued their remarkable gold-buying spree in November and remain on pace to eclipse 2018’s near-record purchases.

According to the latest numbers from the World Gold Council, central banks added 27.9 tons on a net-basis to official gold reserves in November. That brings the yearly total for 2018 with one month left to calculate to 570.2 tons, 11% higher than the same period in the previous year.

In 2018, central banks purchased just over 650 tons. According to the WGC, that was the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second-highest annual total on record

The World Gold Council bases its data on information submitted to the International Monetary Fund.

Turkey led the pack for the third straight month, adding another 17 tons of gold to its reserves in November. The Turks have leapfrogged the Russians as the number-one gold-buyer in 2019 with over 181 tons added to their hoard. Turkish consumers are also flocking to the yellow metal. According to Bloomberg, gold demand was up 3.7% in the first nine months of 2019. The country’s government has loosened rules governing gold imports to meet the growing demand.

Russia added another 9.7 tons of gold to its reserves in November. That brings its total gold purchases to nearly 149 tons so far in 2019. Russia’s quest for gold has paid off in a big way. The Russian Central Bank’s gold reserves topped $100 billion in September thanks to continued buying and surging prices.

The Russians have been buying gold for the last several years in an effort to diversify away from the US dollar.  Russian gold reserves increased 274.3 tons in 2018, marking the fourth consecutive year of plus-200 ton growth. Meanwhile, the Russians sold off nearly all of its US Treasury holdings. According to Bank of America analysts,  the amount of US dollars in Russian reserves fell from 46% to 22% in 2018.

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

Gold Just Broke Through A Key Level

Gold Just Broke Through A Key Level

For the first time in more than six years, gold broke through a key level.  Gold surged on Friday due to the geopolitical tensions stemming from the Middle East after the U.S. took out Iran’s top military leader.  During early trading in the early Asian markets, the gold price continued even higher, reaching $1,579.

This morning, gold is trading at the $1,575 level.  It will be interesting to see if gold closes at the end of the day near its high or a low. The key resistance level is $1,550, which gold surpassed by $25.  Here is gold’s monthly chart below (each candlestick represents one month of trading).

If you look at the “Larger View” insert, I have superimposed the candlestick breaking through the Key level.  Unfortunately, Stockcharts.com does not provide a live chart for the metals or commodities.  We have to wait until the close of trading to see the new candlestick price level.  I find this quite odd because they recently added “Live” Crypto Trading charts for Bitcoin and several others.

Regardless, the Gold price finally broke through this level, and for it to remain in a bullish trend in the monthly chart below, it will have to close above the $1,550 (actually $1,560) level by the end of January. If we look at the next chart, the gold price surpassed the high of $1,566 in September:

According to Kitco.com, as of 9:43 am EST, the gold price reached a high of $1,577 and is currently trading at $1,573.  And, if we look at the weekly gold chart, we can clearly see gold breaking through the $1,550 level:

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

2020 Begins With A Bang (Literally)

2020 Begins With A Bang (Literally)

A heck of a lot happened this week

It sure didn’t take long for 2020 to get interesting.

Iran

The biggest development of the new year happened Thursday when the US military assassinated Qassem Soleimani, Iran’s most powerful figure after its Supreme Leader, in a surgical drone strike.

This is an extremely serious action; one that Iran is highly likely to respond forcefully against. As the world anxiously awaits what will happen next, #wwwiii suddenly is a top twitter trend.[Update: since this original publication of this article, the US has conducted further airstrikes on Iranian targets located in Iraq, Bagdad’s ‘Green Zone’ which contains the US Embassy has come under attack, and there are unconfirmed reports that US aircraft have hit Iranian targest in Syria.]

Chris has been furiously processing the news flow on this on an hour-by-hour basis in his latest post on the topic here.

If you want to better understand the context behind the current US-Iran tension as well as breaking developments from last night’s bombing and the likely repercussions, read the post and follow Chris’ updatesin its Comments section.

Gold

On Sunday, Chris released this prediction that gold was poised for a big price move. Sure enough, gold closed the week up $40/ounce, certainly helped today by the geopolitical worries escalating between the US and Iran.

The yellow metal is now up nearly $100/oz from a month ago, and over $200/oz from a year ago.

It seems to be finally emerging from its 7-year slumber. Even the long-beaten mining shares are up nicely over the past year.

The start of a new bull market in the precious metals may indeed be upon us.

WTF?! (What The Fed?!)

The first trading day of the year saw the S&P 500 close at an all-time high, suggesting that Fed liquidity was still driving the show as it did for the entirety of 2019.

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

Peter Schiff: The 20’s Will Be An Explosive Decade for Gold

Peter Schiff: The 20’s Will Be An Explosive Decade for Gold

In 2019, gold had its best year since 2010. Peter Schiff appeared on the RT Dec. 31 and said he thinks the yellow metal should have done even better. And given the current economic conditions, he believes the 20’s will be an explosive decade for gold.

You know, the reason the US stock market went up this year is because the Fed surprised everybody by doing exactly what I had been predicting they would do. They aborted their feigned attempt to normalize their interest rates and shrink their balance sheet. They went back to rate cuts and quantitative easing. This is extremely bullish for gold.”

Peter emphasized that gold should have been up a lot more in 2019, but he thinks it will catch up over the next several years — probably next year in particular.

Gold is going to be one of the best-performing assets classes, if not the best-performing asset class on the planet.”

Peter noted that gold made significant gains in 2019 despite a dollar that was relatively flat.

But the dollar is going to fall through the floor. That means gold prices are going to go through the roof.”

Peter said we are about to enter a new decade of stagflation  – low economic growth and increasing inflation. He said it’s going to be even worse than the stagflation we saw in the 1970s.

This is going to be more like an inflationary depression. So, this century, the depression is going to come a decade early. It’s not going to be the roaring 20s. It’s going to be a decade of inflationary depression in the United States.”

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

The Ethics of a Gold Standard

The Ethics of a Gold Standard

goldstandard

The efficacy of a metallic monetary system is beyond dispute at least among real economists which eliminates just about 95% of whom are now engaged in the “profession.”  Money, which gold is, allows for specialization, the division of labor, and provides the means for mankind to escape from barter and, thus, a primitive existence.  Like free trade, money naturally integrates mankind both among and between peoples.

A system of central banking with an unbacked paper currency is the antithesis of a gold standard.  Manipulation of currencies by central banks, mostly through debasement, hinders trade, creates distortions, and ultimately leads to the dreaded business cycle.  Murray Rothbard aptly describes the baneful results of state intervention in the monetary system:

. . . government meddling with money has

not only brought untold tyranny into the world;

it has also brought chaos and not order.  It has

fragmented the peaceful, productive world

market and shattered it into a thousand pieces,

with trade and investment hobbled and hampered

by myriad restrictions, controls, artificial rates,

currency breakdowns, etc.  It has helped bring

about wars by transforming a world of peaceful

intercourse into a jungle of warring currency blocs.*

Rothbard Money

While the economic efficiency of a gold standard is important, the ethical case for it is more compelling and was the reason why gold, as money, lasted as a medium of exchange for so long.  Gold/money has to be created through honest-to-goodness production and exchange.  The often dangerous mining of gold takes labor, capital goods, and land.  Turning raw gold into coinage is another process which requires a high level of specialization and production techniques.  Both are honest and morally sound activities which make for the betterment of life all around.

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

A Trend Worth Considering – The Price of Gold Since 1971

A Trend Worth Considering – The Price of Gold Since 1971

As we approach the end of 2019, gold is on track for a healthy yearly gain. To date, the yellow metal is up over 16% on the year.

It’s always interesting talking about gains in the price of gold because when you get down to it, it all depends on when you got into the market. If you bought an ounce of gold on Jan. 1 of this year and sold it this morning, you’d have pocketed around $208 (less any taxes and fees). But if you bought your gold at the peak price this year and sold it this morning, you’d be out about $68.

So, when we say gold is up or down, you always have to ask a second question: since when? The price can be simultaneously up and down at the same moment depending on the answer to that question.

I occasionally get comments on articles posted on the SchiffGold Facebook page by people complaining that they’ve lost a lot of money in gold because they bought when the market was at its absolute peak in 2011 and the yellow metal nearly hit $1,900. I can certainly understand their frustration, but I don’t buy their argument that their experience proves gold is a bad investment. While eight years seems like a long time, it’s not in the big scheme of things.

As I said, where you begin when you talk about a trend is key. Plucking an arbitrary date out of thin air doesn’t necessarily tell us a whole lot. It’s important to begin at a key moment in history.

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

THE GLOBAL DEBT TICKING TIME-BOMB: The Reason To Own Gold & Silver

THE GLOBAL DEBT TICKING TIME-BOMB: The Reason To Own Gold & Silver

As Global Debt reached a new record high of $250 trillion this year, gold and silver came briefly back on the radar for investors.  After five long years, the precious metals finally broke through key technical levels this summer.  However, after the Fed started the Repo Operations in September and the $60 billion a month of “Not-QE” in October, the focus returned once again to the Bloated Stock and Bond markets.

What a drastic change from the Fed’s policy last year when it was reducing the size of its balance sheet until the stock market crashed in December 2018.  Since then, the huge stock market reversal and all the additional gains have been Fed liquidity induced.  Sven Heinrich continues to write and talk about this on his website, the Northmantrader.com.  Here is a recent chart from his article, System Failure:

At the bottom left hand of the chart corresponds to the bottom of the stock market in January 2019 when Fed Chairman Powell caved in by ending the reduction of the Fed’s balance sheet.  Since then, there have been three rate cuts, Repo Magic and $60 billion a month of U.S. Treasury purchases because there aren’t enough suckers to absorb all the new U.S. Govt issued debt.

The U.S. economy isn’t even in a recession, and the Fed is acting as if it was 2008-2009 all over again.  What happens when the U.S. economy finally rolls over??  It’s going to be terrible news, especially considering the record amount of global debt.  According to the IIF, the Institute of International Finance, global debt reached a record high of $250 trillion in the first half of the year.  However, the IIF estimates that global debt will reach $255 trillion by yearend.

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

Paul Volcker: The Man Who Vanquished Gold

Paul Volcker: The Man Who Vanquished Gold

The flood of obituaries that noted the passing of Paul Volcker (1927–2019) last week have almost all lauded his achievement as Fed chair (1979–1987) in reining in the double-digit inflation that ravaged the US economy during the 1970s. 

Volcker was referred to as the “former Fed chairman who fought inflation” (here);  “inflation tamer” and “a full-fledged inflation warrior” (here); and the “Fed chairman who waged war on inflation” and led “the Federal Reserve’s brute-force campaign to subdue inflation” (here).  Mr. Volcker certainly deserves credit for curbing the Great Inflation of the 1970s.  However, he also merits a lion’s share of the blame for unleashing the Great Inflation on the US and the world economy in the first place.  For it was Mr. Volcker who masterminded the program that President Nixon announced on August 15, 1971, which  unilaterally suspended gold convertibility of US dollars held by foreign governments and central banks, imposed a fascist wage-price freeze on the US economy, and slapped a 10 percent surcharge on foreign imports.1

Tragically, by severing the last link between the dollar and gold, Volcker’s program scuttled the last chance of restoring a genuine gold standard. 

More than two years before Nixon slammed down the “gold window,” Volcker, the recently appointed undersecretary of the treasury for monetary affairs, gave an oral presentation to Nixon and his closest advisors on US balance-of-payments problems. The presentation was based on a memo that the secret “Volcker group,” initiated by Henry Kissinger, spent five months preparing.  

Among other things, Volcker recommended a continuation of capital controls to prop up the inflated dollar’s overvalued exchange rate and a massive appreciation or “revaluation” of the currencies of less inflationary countries such as West Germany, placing the burden of adjustment to unrestrained US inflation on these countries. 

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

US Official Gold Reserves Auditor Caught Lying

US Official Gold Reserves Auditor Caught Lying

More false statements by the auditor have appeared, further eroding its credibility.

<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >US Official Gold Reserves Auditor Caught Lying</span>

In my previous post, from March 2018, on the audits of US official gold reserves, I have exposed that during the audit procedures of the US official gold reserves from 1974 through 2008, repeatedly audit staff deviated from the auditing protocol, while internal control meant to prevent this was failing. Many audits and assay reports have been destroyed. For decades a significant share of the metal was excluded from verifications for no apparent reason. And, the US government went to great lengths in withholding information and spreading false information about the audits, among other findings in documents obtained through Freedom of Information Act (FOIA) requests. All in all, these findings made me question the integrity of the auditor.

After my last publication, I have obtained more documents from the US Treasury through FOIA requests, which expose another falsehood that puts the auditor in an even more peculiar position. In conflict with the audit protocol, the permanent seals of the vault compartments have been broken, time and again. In addition, the auditor has lied about these events, and when confronted, it’s unable to explain its actions. By now, I have lost faith in the auditor fully.

Prologue 

It’s been a very long investigative journey that has led me to make bold statements, such as the ones above, about the auditor of the world’s largest gold holding. I wouldn’t claim anything of this magnitude if I didn’t thoroughly do my homework and research every single possibility that could have caused the auditor to have accidentally spread inaccurate material, including asking the auditor for an explanation.

If any of their statements appeared to be false, surely, they would be able to explain what I was missing. The head auditor said during a congressional hearing in 2011 (source video 42:50):

Transparency is our business.  

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

Quantum leap for banks as ABN AMRO questions gold price discovery

Quantum leap for banks as ABN AMRO questions gold price discovery

Earlier this week, an interesting article appeared on the website of the major Dutch bank ABN Amro, written by the bank’s currency and precious metals strategist, Georgette Boele.

The article, titled “A world with two gold prices?”, questions how, if gold is a safe haven asset, its price has not continued to reflect the ongoing crisis and stress in financial markets.

Boele then seeks an explanation of this puzzle in terms of a framework which consists of both safe haven gold demand and speculative gold demand, one of which reflects the purchase of physical gold (safe haven demand), and the other which speculates on the gold price via paper and synthetic gold products (speculative demand) which are not physically backed by gold.

This leads her to the observation that safe haven investors would not sell their physical gold in the midst of a crisis, as they “would think three times before parting ways with their gold”, and that it is speculative investors (those who are not invested in real physical gold) who are pushing the gold price around.

ABN AMRO Amsterdam – Enlightened about the gold price?

One Small Step

While the ABN AMRO strategist fails to address the reality of how the international gold price is really established, i.e. via gigantic trading volumes of fractional-reserve London unallocated gold and COMEX gold derivatives, she does take a quantum leap, at least for a prominent investment bank, when the penny drops that there are two separate things being traded. Finite tangible physical gold on the one hand, and paper gold synthetics on the other. Shouldn’t these two things have distinct prices? Boele then makes the jump:

Let’s now go a step further. Suppose there are two gold prices: one for physical gold and one for all other non-physical gold products. How would these two gold prices behave?

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

Gold & Silver Extend Gains On Lagarde’s “Inflation Is Coming” Comments

Gold & Silver Extend Gains On Lagarde’s “Inflation Is Coming” Comments

With the dollar sliding, and following yesterday’s dovish market reaction to The Fed, ECB’s Lagarde comments on inflation (increasing its expectations for 2020 and said that Q4 2022 inflation will be at 1.7%) and noting labor costs pressures have strengthened.

Over the medium term, the inflation rate will increase, Lagarde said, adding that “the direction [rising] of inflation is good.”

Additionally, she noted The ECB’s highly accommodative stance will continue for a prolonged period until inflation rises, and said thatincoming economic and survey data point to some stabilization in the slowdown of economic growth in the euro area.

Gold and silver have erased all the post-Payrolls losses…

The Wealthy Are Hoarding Physical Gold

The Wealthy Are Hoarding Physical Gold

The world’s rich are hoarding gold – this according to data buried in a recent Goldman Sachs note to clients.

In the note published over the weekend, Goldman recommended diversifying long-term bond holdings with gold, citing “fear-driven demand” for the yellow metal.

Hedge funds and other large speculators boosted their bullish bets on gold by 8.9% through the week ended Dec. 3, according to government data released last Friday. That represents the biggest gain since the end of September.

The Goldman note cited political uncertainty and recession fears as the catalyst for the move toward gold. It also mentioned worries about a wealth tax, increasing interest in Modern Monetary Theory (essentially money-printing) and the current loose central bank monetary policy.

Data buried in the note also revealed that owning physical gold appears to be the preferred method to “hedge against tail events” by the rich.

Since the end of 2016 the implied build in non-transparent gold investment has been much larger than the build in visible gold ETFs.”

Goldman said the data is consistent with reports that vault demand is surging globally.

Trade data implies that gold in storage has increased far more rapidly than is reflected by financial market instruments, indicating a widespread preference for physical gold instead of gold-linked financial assets … Political risks, in our view, help explain this because if an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault, where it is more difficult for governments to reach them, makes sense.

“Finally, this build can also reflect hedges by global high net worth individuals against tail economic and political risk scenarios in which they do not want to have any financial entity intermediating their gold positions due to the counter-party credit risk involved.”

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

Fiat’s failings, gold and blockchains

Fiat’s failings, gold and blockchains 

The world stands on the edge of a cyclical downturn, exacerbated by trade tariffs initiated by America. We know what will happen: the major central banks will attempt to inflate their way out of the consequences. And those of us with an elementary grasp of economics should know why the policy will fail.

In addition to the monetary and debt inflation since the Lehman crisis, it is highly likely the major international currencies will suffer a catastrophic loss of purchasing power from a new round of monetary expansion, calling for a replacement of today’s fiat currency system with something more stable. The ultimate solution, unlikely to be adopted, is to reinstate gold as circulating money, and how gold works as money is outlined in this article.

Instead, central banks will struggle for fiat-based solutions, which are bound to face a similar fate with or without the blockchain technology being actively considered. The Asian and BRICS blocs have an opportunity to do something with gold. But will they take it?

Introduction

Central banks around the world are praying that there won’t be a recession, and if there is that a further monetary stimulus will ensure economic recovery. Their problem is Keynesian theory says it will work, but last time it didn’t. In fact, it has never worked beyond a temporary basis. The big surprise this time was the lack of officially recorded price inflation. But this is due to the system gaming the numbers, making it appear there has been some moderate growth when a proper deflator would confirm most Western economies have been contracting in real terms for the last ten years. 

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

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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