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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…

German Government Escalates its War on Gold

German Government Escalates its War on Gold

In the run up to the end of the year during December, a remarkable sight emerged across Germany – long lines of customers queuing up outside the country’s precious metals shops and gold dealer showrooms.

Was it seasonal gift buying by Germany’s citizens, a population well-known for its love of physical precious metals? Or perhaps the onset of panic about negative interest rates in Europe’s largest economy?

As it turns out, panic it was, but of a different type, with the long lines triggered by the realization that from 1 January 2020, new national legislation was to take effect that would dramatically reduce the threshold on anonymous buying of precious metals from the existing €10,000 limit to a far lower limit of €2000, all under the guise of money laundering prevention.

With a staggering 9,000 tonnes of gold held by the German population, 55% of which is in the form of physical gold bars and gold coins and the rest in gold jewelry, Germany’s citizens are savvy about gold and are active savers and investors in the yellow precious metal. Add to this the fact that the German bullion market is one of the most sophisticated and developed in the world, supporting an extensive set of industry participants from banks and gold refineries, to nationwide gold dealers and distributors, to smaller regional and local bullion retailers.

Panic buying  – We are being overrun

So when the German government throws up restrictions on such a fundamental right as anonymous buying of gold and other precious metals, Germany’s citizens were going to sit up and take notice and do what any rationale economic actor would do in the circumstances – buy as much gold as they can get their hands on before the 1 January deadline. Hence the queues and long lines outside the gold shops including some of Germany’s biggest gold dealers such as Degussa and Pro Aurum.

…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…

Gold’s outlook for 2020

Gold’s outlook for 2020 

This article is an overview of the economic conditions that will drive the gold price in 2020 and beyond. The turn of the credit cycle, the effect on government deficits and how they are to be financed are addressed.

In the absence of foreign demand for new US Treasuries and of a rise in the savings rate the US budget deficit can only be financed by monetary inflation. This is bound to lead to higher bond yields as the dollar’s falling purchasing power accelerates due to the sheer quantity of new dollars entering circulation. The relationship between rising bond yields and the gold price is also discussed.

It may turn out that the recent extraordinary events on Comex, with the expansion of open interest failing to suppress the gold price, are an early recognition in some quarters of the US Government’s debt trap. 

The strains leading to a crisis for fiat currencies are emerging into plain sight.

rum 1

Introduction

In 2019, priced in dollars gold rose 18.3% and silver by 15.1%. Or rather, and this is the more relevant way of putting it, priced in gold the dollar fell 15.5% and in silver 13%. This is because the story of 2019, as it will be in 2020, was of the re-emergence of fiat currency debasement. Particularly in the last quarter, the Fed began aggressively injecting new money into a surprisingly illiquid banking system through repurchase agreements, whereby banks’ reserves at the Fed are credited with cash loaned in return for T-bills and coupon-bearing Treasuries as collateral. Furthermore, the ECB restarted quantitative easing in November, and the Bank of Japan stands ready to ease policy further “if the momentum towards its 2% inflation target comes under threat” (Kuroda – 26 December). 

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

Taking the Hard Way Out

TAKING THE HARD WAY OUT

“You don’t make mistakes when you don’t have money. When you have too much money, you will make a lot of mistakes.”
– Jack Ma, founder of Alibaba, the Amazon of China

“My view is simple and starts with the observation that gold is a lot like religion. No one can prove that God exists…or that God doesn’t exist…Well, that’s exactly the way I think it is with gold. Either you’re a believer or you’re not.”
– Howard Marks, founder of OakMark, whose newsletter Warren Buffett reads “religiously”

“Because of Paul Volcker, our financial system is safer and stronger. I’ll remember Paul for his consummate wisdom, untethered honesty, and a level of dignity that matched his towering stature.”
– Barack Obama

“Every penny of QE undertaken by the Fed that cannot be unwound is monetized debt.”
– CNBC regular and former senior advisor to the president of the Dallas Fed, Danielle DiMartino Booth

______________________________________________________________________________________________________

SUMMARY

  • Interest rates and inflation couldn’t be more different today than they were in the 1970s.
  • One of the shocking surprises of the last decade is that despite ultra-low, zero, or, even, negative interest rates inflation has generally fallen rather than risen.
  • Yet, when it comes to asset prices (US stocks, global bonds, and real estate), it has been a completely different story.
  • One asset class that hasn’t risen as swiftly as others is gold and other precious metals.
  • This underperformance has caused most American investors—be they retail or institutional—to give up on precious metals as an essential asset class.
  • However, John Hathaway, who is considered to be the “Warren Buffett of the precious metals space,” is much more bullish given all of the macro-economic factors at play.
  • In the short-term, John and top economist David Rosenberg anticipate we could have a recession in 2020.

…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…

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…

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…

Ukraine’s IMF Gold and the Gold Carry Trade

Ukraine’s IMF Gold and the Gold Carry Trade

Important Tools for the Monetary Cartel

Let’s first consider a typical International Monetary Fund (IMF) loan to a sovereign in trouble, and then examine a typical gold carry trade transaction to support a sovereign arms deal. The intent is to demonstrate the importance of physical sovereign gold holdings in all forms of international trade.

Semi-failed and failed states can only exist by dealing in hard assets of real intrinsic value just as Syria, Venezuela, Iran, and Ukraine have done… and the most liquid of those hard assets is their physical gold.

Central Banks always work with the Security State apparatus when dealing with failed states and recall that the US Central Intelligence Agency funded al Qaeda and funded the war in Syria for example. Just about anything can be made to happen with funding when that funding is based on real resources. One of the most important of those resources is physical gold.

IMF Cartel Example: Ukraine

The IMF’s 2014 aid to Ukraine is based on a unique history however all IMF ‘aid’ packages are in some sense unique. Since we are highlighting the largely hitherto concealed importance of real physical gold in geo-political calculations and operations, Ukraine provides a relevant and timely example of how the banking Cartel operates with gold and may highlight that importance.

According to the 2018 Independent Transparency Index, Ukraine ranks as one of the most corrupt nations in the world. Ukraine ranks 120th out of 180 countries where the 180th – Somalia – is the most corrupt.  But all nations need funding whether corrupt or not, and Ukraine defaulted on its IMF debt in 2001 and then again in 2009 when distribution of an existing IMF loan to Ukraine was frozen.

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

German Central Bank: Gold Is the Bedrock of Stability for the International Monetary System

German Central Bank: Gold Is the Bedrock of Stability for the International Monetary System

European central banks are slowly preparing for plan B: gold.

<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" >German Central Bank: Gold Is the Bedrock of Stability for the International Monetary System</span>
Deutsche Bundesbank [CC BY-NC-ND 2.0 (https://creativecommons.org/licenses/by-nc-nd/2.0/)]

It was long believed in the gold space that Western central banks are against gold, but things have changed, for quite some years now. Instead of discouraging people from buying gold, or convincing them that gold is an irrelevant asset, many of these central banks are increasingly honest about the true properties of this monetary metal. Stating that gold is the ultimate store of value, that it preserves its purchasing power through time and is a global means of payment. Such statements, combined with actions that will be discussed below, reveal that more and more central banks are preparing for plan B.

The Bundesbank (the German central bank) published a book last year named Germany’s Gold. In the introduction, written by the President of the Bundesbank Jens Weidmann, the view of this bank leaves no room for interpretation. Weidmann writes (emphasis mine):

Ask anyone in Germany what they associate with gold and, more often than not, they will say that it is synonymous with enduring value and economic prosperity.

Ask us at the Bundesbank what our gold holdings mean for us and we will tell you that, first and foremost, they make up a very large share of Germany’s reserve assets … [and they] are a major anchor underpinning confidence in the intrinsic value of the Bundesbank’s balance sheet. 

The Bundesbank produced this publication to give a detailed account, the first of its kind, of how gold has grown in importance over the course of history, first as medium of payment, later as the bedrock of stability for the international monetary system.

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

GOLD & SILVER UPDATE: Setting Up For The Next Leg Higher In 2020

GOLD & SILVER UPDATE: Setting Up For The Next Leg Higher In 2020

The Day of Reckoning is coming, and it won’t be pretty for the overall markets.  While the Fed liquidity has pushed the major U.S. indexes to new highs, the underlying fundamentals in the economy continue to deteriorate.  Without the record amount of Fed QE and Repo Operations, the market and economy would have gone into a tailspin in 2019.

Now, to give credit where credit is due, the term, “The Day of Reckoning” was the title from the Northman Trader’s most recent public article.  What I like about Sven Heinrich’s work (the Northman Trader), is his ability to use technical and fundamental analysis to provide “PRICE DISCOVERY” in the markets.

Unfortunately, we don’t have price discovery anymore due to the Fed and Central bank decade-long propping up of the markets.  This chart from the Northman Trader shows how the Fed’s interventions have come in to support the markets at key technical levels:

What is quite interesting more recently (2019) is the substantial Fed’s rate cuts, QE, and Repo Operations at a time when there isn’t a downturn in the U.S. economy.  When the Fed started QE1 in 2009, the stock market had crashed to a low, and the economy was in a severe recession.  The Fed continued to support the economy and markets with QE2, TWIST, and QE3 into 2013.  Again, these Fed interventions took place during a struggling economy.

Today, the Fed is pulling out all the FIREPOWER when the markets are at new highs, and the economy is still rolling along nicely.  This is a recipe for DISASTER at some point.  Furthermore, the energy market that is one of the driving forces of the U.S. economy is in serious trouble.

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

Greed Driving Broader Markets Today, Fear To Spark Precious Metals Fireworks In The Future

Greed Driving Broader Markets Today, Fear To Spark Precious Metals Fireworks In The Future

With the Fed propping up the entire market and extreme greed driving the stock indexes to new highs, investors have lost interest in the precious metals, for the moment.  However, I am not surprised.  What is taking place in the overall markets is precisely what I forecasted back in September.

After gold and silver broke out of key resistance levels in the summer and then moved to new highs for 2019, a consolidation period would likely follow before the precious metals began the next leg up.  I mentioned this in my last Youtube precious metals update, Silver Price Update & End Of Mining Era, published on September 21st.

In that video update, I posted this daily chart on silver:

I stated that silver would probably correct back down to these price levels before setting up for the next phase higher. Today, silver fell to a low of $16.71 in the U.S. markets ($16.58 in overnight markets), so it seems to be heading down to the $16.20 level.  Here was the silver price on stockcharts as of Thursday, November 7th.

I believe silver will fall back to that $16.20 level, according to how traders are now anticipating the market.  Again, I am not saying that silver should go down to $16.20, especially with all the Fed money printing and Repo-madness, but this is how traders are viewing the silver market.  Why?  Because the Fed is now buying $60 billion a month in Treasuries, the same as the U.S. Military monthly spending budget, it has given the market another FALSE BUYING SIGNAL.  Thus, GREED in the market has gone back up to a record “Extreme Level.”

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

Precious metals round-up

Precious metals round-up 

 By October 24, 2019 

Growing evidence of an economic downturn despite unprecedented monetary inflation since Lehman means a new credit and systemic crisis is becoming increasingly certain. In an attempt to prevent a new crisis developing, this time the scale of monetary inflation by the authorities will have to be even greater. The rise in the price of gold since December 2015 and its break-out from a three-year consolidation period earlier this year confirms that the risks of a credit and systemic crisis undermining fiat currencies have been increasing for some time. 

It is now likely that in future portfolio managers will increase their investment allocations in favour of gold and actively consider investing in silver and platinum as well. It is in this context that this article looks at the price relationships between the three precious metals and their relevant monetary and investment characteristics.

Introduction

Markets are playing a dangerous game of chicken with economic reality, which every passing day tells us that trade is slowing, and credit everywhere is maxed out. Key economies are beginning to reflect this in statistics, having for much of this year screamed the message at us through business surveys. Central banks know their monetary policies have failed. The ECB has already announced deeper negative deposit rates and is reviving its asset purchase programme (printing) from next month. The Fed is injecting liquidity (more printing) through repos in far larger quantities into its monetary system which, mysteriously, is short of money despite commercial banks having combined reserves of $1.44 trillion at the Fed.

We should not be surprised at its inability to join the dots between cause and effect, but warnings from the IMF about a $19 trillion corporate debt timebomb, coming from an organisation that is the deep-state of the economic system and has been consistently advocating monetary inflation, is tantamount to an official admission of global monetary failure. Where to now? Print, and print again. 

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

The End Of Fiat In One Chart

The End Of Fiat In One Chart

For the first time in 21 years, Germany has openly bought gold into its reserve holdings.

Source: Bloomberg

German reserves climbed to 108.34m oz in September from 108.25m a month earlier.

Source: Bloomberg

With ECB mutiny and Deutsche Bank’s rapid demise, fears are rising of a looming financial crisis, and with that, Germany has shown a renewed interest in gold.

As a reminder, September’s outright purchase of the precious metal comes after Germany’s central bank, the Bundesbank, repatriated 583 tonnes, or $31 billion worth, of gold in 2017, years ahead of schedule.

Which came after Germany’s stunning announcement in January 2013 that the Bundesbank would repatriate 674 tons of gold from the NY Fed and the French Central Bank (which was initially abandoned in 2014).

Of course, while Germany is now the latest to turn to gold as a safe haven store of value in its reserves, it is not the first as the de-dollarization shift has been accelerating in recent months

Source: Bloomberg

Germany’s shift comes after China’s acceleration in gold-buying as Peter Schiff recently noted this a “global gold rush on the part of central banks” in preparation for a dollar crash.

“The days that the dollar is a reserve currency are numbered and the smart central banks are trying to buy as much gold as they can before the number is up,” Schiff said. 

Remember, nothing lasts forever

And now that the always conservative Germans are back in the market buying gold, one wonders if the end of fiat is drawing closer.

Silver & Gold as Portfolio Core…But What Else? Mike Maloney and Chris Martenson (Part 2 of 3)

Silver & Gold as Portfolio Core…But What Else? Mike Maloney and Chris Martenson (Part 2 of 3)

In the second of this three video series, Mike Maloney and Chris Martenson reveal that there is one asset apart from gold and silver that they are both looking to accumulate. What could it be? At what valuation will they trade gold or silver for this most important and often overlooked asset?

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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