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The failure of Silicon Valley Bank and Signature Bank reminds us of a very important truth — if you can’t hold it in your hand, you don’t really own it.

That’s why it’s wise to hold at least some of your wealth in hard assets like gold and silver that are in your direct possession or at least stored in a secure, allocated, segregated, and insured storage facility.

The FDIC insures bank deposits up to $250,000. If you have more than that in a financial institution, you could lose everything above that limit if a bank fails.

Depositors at SVB and Signature Bank lucked out. The government has made provisions to cover uninsured deposits. But there’s no guarantee that will happen when the next bank goes under.

And even if you don’t have more than $250,000 in the bank, you could easily find yourself locked out of your account. Just last week, a computer glitch caused money in some Wells Fargo accounts to disappear.

There are also more nefarious reasons you could lose access to funds. The Nigerian central bank recently limited bank withdrawals in order to incentivize people to use its new central bank digital currency. In 2017, India faced cash shortages when the government declared that 1,000 and 500 rupee notes would no longer be valid with just a four-hour notice. And during its crisis, the Greek government shuttered banks and seized some bank deposits.

Most people assume “that can’t happen here” in the US. But as we saw over last week, the US banking system is vulnerable to collapse.

…click on the above link to read the rest…

The Paper Gold Tail Wagging the Golden Dog

July 23, 2021

THE PAPER GOLD TAIL WAGGING THE GOLDEN DOG

Investors may hope that the biggest financial experiment and debt bubble in history will last another 100 years. And they can pray that the currency system which has lost 98% of its value in the last 50 years will last another half century.

But that would be investing on a wing and a prayer with extremely poor odds of success.

Since neither the wing nor the prayer is likely to save investors from the greatest economic and financial collapse in global history, the need for protection or insurance is vital.

We are of course looking at probabilities and not certainties when we evaluate the risk of catastrophe.

With virtually all asset markets – stocks, bonds and property – at all time highs, investors are clearly judging the risk of failure to be nearer zero.

Personally I judge the risk of a collapse of markets and the economy to be between 95% and 99%.

So a risk range from 0% to 99% is quite a spread. An actuary would probably pitch it at 1 to 5 percent risk and sell catastrophe insurance on that basis.

Financial Insurance Dirt Cheap

With both investment markets and the insurance industry evaluating risk as virtually non-existent, that is the time when insurance is really underpriced or in simple terms dirt-cheap.

So what kind of insurance are we looking at here. The conventional investment market will look at hedging financial risk in all kinds of complex financial instruments in the form of derivatives.

What the so called “experts” don’t realize is that they hedge their investments with the same instruments that created the risk in the first place, such as paper gold. This would be a real financial tautology.

Or in other words: RUBBISH IN – RUBBISH OUT.

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

CIBC: Gold is still going towards $2,000 and silver to $31

June 30, 2021

Photo by Jingming Pan

CIBC: Gold is still going towards $2,000 and silver to $31

Despite the selloff that caused gold to drop by more than 5% within a week, Canadian bank CIBC is still optimistic on both gold and silver’s prospects over the next few years. While the bank downgraded their average 2021 forecast for gold to $1,925, they expect the metal to average $2,100 in 2022.

Likewise, CIBC’s analysts downgraded their average silver forecast for 2021 to $28 from $29, but said that the metal will nonetheless head onwards to $31 next year. Interestingly, the analysts emphasized that physical precious metals will dominate demand:

We expect demand for physical gold and silver will remain elevated, not only from traditional investors but also from a wider array of investors seeking a safe-haven option to hedge against market volatility.

Regarding the recent fall in prices, CIBC’s analysts explored the specific causes and concluded prices aren’t likely to stay suppressed for much longer. The Federal Reserve clearly wants to ruffle its feathers and assume a hawkish stance to subdue inflationary threats. Frankly, the Fed’s options are limited. Money printing has slowed in recent months. However, President Biden’s $6 trillion spending plan would place the annual deficit at more than $1.3 trillion over the next decade.

In general, CIBC fully expects the overall environment of monetary stimulus and loose-money policies will last for a good, long while.

Furthermore, CIBC sees “real interest rates” (Treasury rates minus inflation) as an even bigger driver for gold. When real rates are negative, bond buyers lose money even after their bond matures. The analysts noted that gold has historically posted great performances regardless of headline interest rates, so long as real (inflation-adjusted) rates remain low. At the moment, the five-year real interest rate sits at -1.54% compared to an all-time low of -1.86% in May 2021. That is low.

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

Market Friday: Is This the End of COMEX Paper Gold?

August 15, 2020

Market Friday: Is This the End of COMEX Paper Gold?

There’s been a lot of speculation in the Gold community about what’s happening in the market this year. 2020 has been wracked with unprecedented gyrations in the gold market.

It’s also seen gold finally breach the $2000 level and, this week after a nasty correction, is still holding onto most of its recent gains.

This rally in gold and the persistent supply tightness which has kept gold futures in contango for most of the year are indicators that something has fundamentally shifted in the gold market.

And now, the question on a lot of people’s minds is whether we’ll see the end of the fiction of the paper gold market as epitomized by the futures market on the COMEX.

Alistair Macleod’s recent article detailed the gyrations of the gold futures market explains why he felt the so-called bullion banks who work with the central banks to keep gold control have, in fact, lost control.

His detailed the use of open interest on the COMEX to push and pull the price of gold and how the market changed after March 23rd when the futures premiums blew out to a high of $70 over the cash price in the forex markets.

Using mass liquidation to crater the price of gold and force thinly-margined, weak longs off their positions is a classic COMEX raid on the gold and silver markets.

And if you look closely at this chart you’ll see a few moments where dramatic drops in open interest didn’t result in big price drops. So, either longs ponied up the cash to stay in their positions or the buying into those ‘raids’ so intense that attempt failed to break the psychology of the gold market.

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

“The Largest Ever Physical Transfer Of Gold”

May 30, 2020

“The Largest Ever Physical Transfer Of Gold”

Two months ago, when the market was in a state of near-total chaos as a result of a sudden collapse in global supply chains due to the hasty coronavirus lockdowns, one market that saw unprecedented turmoil was that of physical gold.

As we pointed out in late March, due to a sudden breakdown in physical gold supply as the world’s top gold refiners, those located in the southern Swiss town of Ticino, namely Valcambi, Pamp and Argor-Heraeus, suddenly stopped producing gold, the result was a record divergence in the price of spot gold vs gold futures contracts…

… with gold futures decoupling and trading far above spot prices.

The resulting record divergence in gold futures vs spot (in some way analogous to what happened to the price of the prompt WTI contract in April, when the May WTI contract traded as low as ($40) as traders were willing to pay buyers to store oil in a world where there was suddenly no space for the physical commodity), unleashed a flood of physical gold into the US as a record scramble by traders rushing to take advantage of this arbitrage opportunity by shipping bullion to New York sparked what Bloomberg said “may be one of the largest ever physical transfers of the metal.“

“The flows into New York are unprecedented,” Allan Finn, the global commodities director at logistics and security provider Malca-Amit told Bloomberg as his company’s teams in New York have been working 24 hours a day to cope with unprecedented demand for physical gold while navigating lockdowns, flight disruptions and social distancing.

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

Real-World Problems: The Current State of The Gold Market In Plain Language

April 2, 2020

Real-World Problems: The Current State of The Gold Market In Plain Language

There have been recent rumors in the gold market about the availability of physical gold. Some social media personalities and news agencies have claimed that there is a shortage of physical gold on the market. However, it is not so much about a shortage of gold, but rather a sudden demand for gold in places where it cannot be quickly supplied in the desired form.

Gold Bar Shortage Deepens: Credit Suisse Tell Clients “Do Not Bother Asking”

March 30, 2020

Gold Bar Shortage Deepens: Credit Suisse Tell Clients “Do Not Bother Asking”

◆ Gold bar shortage globally prompts preppers, bankers and high net worth investors alike to try and acquire large gold bars but mints, refiners, banks and dealers globally are sold out.

◆ As the coronavirus pandemic takes hold, retail and institutional investors and banks are encountering severe shortages of gold bars and coins according to industry participants (see Wall Street Journal story below).

◆ Epic gold shortage prompts those concerned about systemic collapse including preppers, bankers and high net worth alike to try and acquire gold bullion which has become ‘unobtanium’.

◆ Credit Suisse Group AG, which has minted its own bars since 1856, told clients this week “not to bother asking” for gold bars.

◆ Dealers are sold out or closed for the duration and in London, bankers are chartering private jets and trying to finagle military cargo planes to get their bullion to New York exchanges, according to the WSJ.
◆ Gold prices are consolidating after the near 8% gain last week and remain one of the best performing assets in the last twelve months and year to date.

◆ GoldCore remains open for business and when they become available we are buying coins and bars from our government mint and large refinery suppliers and from our clients. Premiums have surged and we are paying 1.5% over spot to clients for gold kilo bars and higher premiums for smaller bars and bullion coins (1 oz). We are only selling to clients who have cleared funds on account and are on our Buyers List.

NEWS and COMMENTARY

Coronavirus Sparks a Global Gold Rush – WSJ

The COMEX Issues and Stops Reports Expose Conditions Behind Physical Gold Supply Problems

March 29, 2020

The COMEX Issues and Stops Reports Expose Conditions Behind Physical Gold Supply Problems

Currently, the latest COMEX Issues and Stops reports expose conditions behind the COMEX physical gold supply problems. Though I have written about the various reasons why physical gold supply problems manifest many times in the past, this topic still remains one rarely discussed by financial journalists, and never discussed by the mass financial media. For client accounts, when bullion banks stop more notices than issued, they, will lose physical inventory. For house accounts, the opposite is true. When bullion banks issue more notices than stops, then they will lose physical inventory as well. Normally, when bullion banks manufacture waterfall declines in paper gold and silver prices, as they did earlier this month, with the complicity of the CME’s largely unreported rampage in raising initial and maintenance margins on futures contracts many times within a 2-month period in the midst of a stock market crash, they load up on physical gold and silver for their house accounts while ensuring that their clients take almost zero delivery of physical gold and silver ounces. However, if they are unable to execute this clever strategy, this is when physical gold supply problems can manifest.

In fact, I have not seen a single news site in the entire world, except for my own, mention the relentless increase in initial and maintenance margins in gold and silver futures contracts (the 100-oz gold futures contract and the 5000-oz silver futures contract) for the past two months, in a desperate attempt to knock long positions out of the game and thereby prevent an increasing amount of physical delivery requests. Just recently, the CME raised margins yet again for 100-oz gold futures contracts to $9,185/$8,350 for initial/maintenance margins, representing a massive 86% increase in margins, and for 5000-oz silver futures contracts to $9.900/$9,000 for initial/maintenance margins, representing a gigantic 73% increase in margins, in just a couple months’ time.

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

“There’s No Gold” – COMEX Report Exposes Conditions Driving Physical Crunch

March 28, 2020

“There’s No Gold” – COMEX Report Exposes Conditions Driving Physical Crunch

Early this week, we were among the first to report on the “break down” in precious metals markets.

While the demand for gold has been soaring as a safe haven asset amid the multiple global crises we are currently facing, forced paper gold liquidation (as leveraged funds scramble to cover margin calls) and unprecedented logistical disruptions created a frantic hunt for actual bars of gold.

Specifically, as Bloomberg details, at the center of it all are a small band of traders who for years had cashed in on what had always been a sure-fire bet: shorting gold futures in New York against being long physical gold in London. Usually, they’d ride the trade out till the end of the contract when they’d have a couple of options to get out without marking much, if any, loss.

But the virus, and the global economic collapse that it’s sparking, have created such extreme price distortions that those easy-exit options disappeared on them. Which means that they suddenly faced the threat of having to deliver actual gold bars to the buyers of the contract upon maturity.

It’s at this point that things get really bad for the short-sellers.

To make good on maturing contracts, they’d have to move actual gold from various locations. But with the virus shutting down air travel across the globe, procuring a flight to transport the metal became nearly impossible.

If they somehow managed to get a flight, there was another major problem. Futures contracts in New York are based on 100-ounce bullion bars. The gold that’s rushed in from abroad is almost always a different size.

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

Real Gold vs Pretend Gold

January 15, 2020

Real Gold vs Pretend Gold

The battle continued in 2019, and rarely has the disparity been this sharp.

And what do we mean?

Well, on one hand, you have real physical gold. This is gold that you store yourself or at a trusted vaulting company. This is gold that you can actually hold in your hands. This is the gold that is demanded at record levels by central banks around the globe.

On the other hand, we have pretend gold. This is the domain of the bullion banks. They offer futures contracts, unallocated accounts, and ETFs…all as an alternative to the real thing and as a way of increasing the total supply of “gold” in what amounts to a modern day alchemy.

What’s astonishing is that the investment world allows a physical price to be determined through the trading of the pretend alternative. More on that in a minute. But first, let’s look at two data points that stand in stark contrast to each other.

First, there’s demand for the real thing: physical gold. One great story in 2019 was how the Polish central bank purchased—and then demanded immediate delivery of—about 100 metric tonnes of physical gold. The Poles are no dummies, and they apparently wanted no part of the unallocated promises from the LBMA: https://www.bloomberg.com/news/articles/2019-11-25…

In total, it appears that reported central bank demand for gold will exceed 670 metric tonnes in 2019. This follows what was a 50-year record demand of 641 metric tonnes in 2018. This from the World Gold Council at the end of Q32019: https://www.gold.org/goldhub/research/gold-demand-…

So, as price rose by 18% in 2019, a logical conclusion would be that this was due to strong physical demand. And that conclusion would be mostly correct. This is Econ 101. Surging demand often leads to higher prices, and the central banks alone soaked up nearly 25% of global gold production in 2019.

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

Gold Prices Will Keep Rising Because Crash Conditions Are Becoming Obvious

September 8, 2019

Gold Prices Will Keep Rising Because Crash Conditions Are Becoming Obvious

The price movements of precious metals are difficult for some people to understand. In the world of equities, investors are mesmerized by tickers day in and day out, and market movements occur minute by minute. This realm of investment teaches people to shorten their memories, their attention spans and their patience. In the world of gold and silver, however, investors buy and sell according to cycles that last years – oftentimes decades. It is the complete antithesis to stocks.

This is why gold catches a lot of ignorant criticism at times. The “barbaric relic” does not behave the way day traders want it to behave. It sleeps, they ignore it or laugh at it, and then it explodes. It is not surprising that your average stock market player is usually caught completely off guard when an economic crisis hits Main Street, while the average gold investor already saw the event coming many months in advance. The gold mentality lends itself to caution, observation and historical relevance. The stock market mentality lends itself to carelessness and the denial of history.

I would acknowledge here that there is plenty of evidence of paper market manipulation of gold and silver to the downside by major banks like JP Morgan. Any investor in metals should take this into account. However, it is also important to realize that in moments of economic uncertainty, the physical market can and does overtake paper manipulation, and prices rise anyway. This is exactly what happened in the lead up to the 2008 crash, and it’s happening again today.

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

Venezuela is Painfully Reminded of the Golden Rule

November 10, 2018

Venezuela is Painfully Reminded of the Golden Rule

He who holds the gold, makes the rules.

This is a motto that you will hear espoused by gold bugs, precious metals advocates, or anyone that has studied financial history in any meaningful way.

The fact is, if you don’t hold it, then you don’t own it.

This is something that I have warned about for years, as people continue to pile into “paper” precious metals assets, most specifically, those that do not guarantee to hold the precious metals in physical reserve, accounting for every oz that they own via regularly scheduled audits.

As Central Banks around the world continue to race into gold, a trend I have been noting throughout the course of this year, some, are being painfully reminded of the golden rule and are ruing the day they ever gave up physical ownership of their most valuable, real asset.

Venezuela, who is currently led by a failing socialist government, with President Nicolas Maduro at its head, is one such country that is learning this valuable lesson.

Venezuela, for months has been attempting to repatriate their gold holdings from the Bank of England, the latter of whom “allegedly” holds a large percentage of the worlds gold reserves since the ending of World War 2.

The reasoning for this, was one of the greatest cons in history, and one that continues to unfold. Western Central Banksters convinced many of the Worlds Nations that it would be “safer” to hold their reserves within the United States and England.

Ironically, over the last few decades, this has been just about the worst place in the world to hold your gold bullion, as these nations have rehypothecated this gold to near infinity. But don’t worry, they claim their “good” for it.

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

Greyerz – China Just Took Delivery Of A Massive Amount Of Gold From London & New York

October 30, 2018

Greyerz – China Just Took Delivery Of A Massive Amount Of Gold From London & New York

Egon von Greyerz met with a large group of individuals from China that manage money for the elite in China. They went to Switzerland to meet with Egon and this is a small portion of what they discussed:

Eric King: “Egon, they (the money managers for the elite in China) have virtually all of the high net worth clients into (physical) gold.”

The Chinese Know What Is Happening
Egon von Greyerz: “They’re all into gold. Absolutely. Yes, virtually all of them own gold. That’s what’s so interesting. The Chinese buying is continuously going up and up and up without stopping. The Chinese know what is happening. They know it and they will continue to buy gold. And one day that’s going to have a major influence on the gold price.

And when the paper market breaks, and China dominates the gold market, it’s going to be very interesting because I really look forward to the West failing in their manipulation of the gold price through the various paper markets and through the interbank market.

Again last month we saw imports of gold into Switzerland and then exports to Asia and India. Last month, over 70% of the gold import figures (into Switzerland) came from London and the United States.

We again see that Switzerland is buying the 400 ounce bars from the UK and US bullion banks and converting them into 1 kilo bars and then shipping them on to Asia. Last month there was hardly any buying from the mines. It all came out of London and New York.

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

Why Competing Currencies is the Solution to a Collapsing Dollar

October 17, 2018

Why Competing Currencies is the Solution to a Collapsing Dollar

Cooperate when you think everyone involved will benefit.

Compete when you think something needs improvement.

For too long, certain states have been cooperating with the federal government without any benefit to the state or the citizens who live there. I recently highlighted five states, in particular, that would be better off as countries, without the federal government controlling them, and leaching off them.

Instead, states should be competing against the federal government.

They should be solving problems that the federal government cannot, or will not, solve.

One of America’s biggest problems is a fiat currency which has lost 85% of its value since 1971 when Nixon eliminated the gold standard.

Yesterday I discussed one possible solution. States could create or incentivize banks that safely store deposits of gold and silver, and issue a digital representation of its value. The value would not be denominated in dollars. Instead, the precious metals themselves would be indexed to purchasing power.

The banks would make money in the same way banks currently do, by lending and charging interest.

States could incentivize the use of this real money by giving discounts to anyone who paid their taxes with this new digital metal-backed money.

And the state’s incentive to do this is to cushion an economic crisis triggered by massive debt, inflation, and loss of confidence in value the US dollar.

But one possible pitfall of this system is a shortage of physical gold or silver to deposit, thus creating excess demand, and driving the price of gold and silver up.

So here’s another alternative.

State Cryptocurrency

You know the golden rule–he who has the gold makes the rules.

If states position themselves right, they can avert financial disaster when DC’s luck finally runs out.

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

Relative Scarcity of Physical Gold Prompts Large Drawdowns From Funds and ETFs

October 15, 2018

Relative Scarcity of Physical Gold Prompts Large Drawdowns From Funds and ETFs

“It appears that there is a dwindling and overleveraged supply heading towards an unmanageable and relentless source of demand.”

It is interesting to watch the ongoing management of physical gold holdings in the West.

Physical gold has been seeing large drawdowns from inventory during this price decline, but silver does not.

This is not due to some preference or matter of taste. Physical gold for sale at these prices is in short supply, whereas silver is not.

Both are subject to speculative price manipulation in the paper markets.

The relentless demand from Asia is stressing the highly leveraged claims per physical ounce of gold in London and New York.

It appears that there is a dwindling and overleveraged supply heading towards an unmanageable and relentless source of demand.

The system will be maintained— until it cannot. Although the game can be extended by a determined effort, no commodity pricing pool can last forever in the face of a stubbornly stable supply and a steady excess of offtake out of the pool, shenanigans and antics notwithstanding.

Physical gold is flowing from West to East, into the markets and strong hands of Asia.

Bye bye gold.

The eventual resolution may be quite energetic in terms of price.

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

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