Tuesday, November 19, 2019

Gold or Silver? A 2017 Perspective – Jeff Nielson

by Jeff Nielson, Sprott Money

For both novices and experienced precious metals investors, the question “gold or silver?” still has relevance today. Experienced precious metals investors have already heard that according to almost every fundamentals metric, silver is more undervalued than gold, and thus a better value for the dollar.

But these same investors have been hearing this message for many years. They look at prices today and see the silver/gold price ratio at a ludicrous level of nearly 80:1 – a ratio that has increased, not decreased in recent years. Some readers, even ardent precious metals bulls, may now have become Skeptics concerning silver.

Back in the real world, however, for more than 4,000 years the silver/gold price ratio has averaged 15:1. This reflects the supply ratio of silver to gold in the Earth’s crust: 17:1. With silver even more precious today because of its numerous, important industrial applications, and with most of the world’s silver having been literally consumed, this price ratio should be below 15:1, not at the current, insane level.

The argument in favor of silver is fundamentals based, and thus value based. For investors with limited funds or who simply seek maximum appreciation potential, silver is the clear winner. The retort from the Skeptics is obvious: if silver is such a great value, then why are prices not already reflecting this?

Regular readers know that this question has been answered before, from different perspectives, on multiple occasions.

1) We no longer have markets. Instead, a banking crime syndicate ( the One Bank ) has hijacked our markets, and replaced them with a computerized price-rigging operation .

2) Supply/demand data going back well over a decade indicates that the silver market would havealready imploded in an inventory default – unless some Secret Stockpile existed to bleed more supply into depleted warehouses.

Skeptics will consider this to represent additional ammunition.

If all markets are rigged, all of the time, the price of silver will never be allowed to rise toward its fair market value.

If some (massive) Secret Stockpile exists, the bankers and their allies will never run out of additional supply to feed onto this market.

The rebuttal to those arguments is elementary.

a) Computers can’t manufacture silver. Industrial end-users of silver can’t use the paper-called-silverwhich the bankers trade in their fraudulent ‘markets’ to manufacture their products. When the world runs out of silver, prices must rise – to whatever multiples of the current price are necessary to bring the market into surplus and stabilize the supply chain.

b) The silver market has had a continuous supply deficit for at least 30 years. All stockpiles are finite. A previous commentary has estimated that it has already taken at least one billion ounces of stockpiled silver to prevent inventory default. The possibility of stockpiles that are greatly in excess of that amount is dubious, at best.

What is a fair price for silver, today? An older piece estimated that number to be $1,000/oz (USD). But even that number is artificial, since it presumes that our paper currencies still possess value. They don’t .

So, everyone should buy (and hold) silver. Case closed? It’s not that simple. Investors in the yellow metal can supply arguments which favor gold over silver.

i) More widely recognized as “money” (especially in the Western world)

ii) More compact (more valuable), and thus

iii) More portable

iv) Stronger demand at present

Part of the reason why the One Bank has been able to pervert the price of silver to such a ridiculous extreme in its crooked ‘markets’ is through the success of its Western propaganda campaign. Silver is the Peoples’ Money . Yet most of the people in the Western world no longer even recognize silver as money.

For holders of precious metals who anticipate some crisis where we would want or need to use our bullion as money (currency), in the early days of such a crisis gold would clearly have superior liquidity. It would likely take weeks (months?) before the need for silver as money and currency would begin to filter through the psyche of Western populations.

Some especially rabid silver bulls will argue that the price of silver will (or at least should) exceed the price of gold at some point – due to the radical depletion of silver stockpiles and supply. However, even most silver bulls (this writer included) expect the price ratio to always remain in gold’s favor.

This means that for readers who have limited storage (hiding?) space, gold’s superior intrinsic value means it could be the more practical choice. Similarly, for any reader who can imagine being forced to flee their domicile, or even their jurisdiction, gold’s superior value makes it more portable.

At present prices, precious metals investors would require a suitcase full of silver to equate to a pocket full of gold. And that suitcase better be on (strong) wheels, since very few readers would be able to carry such a suitcase.

Then there is demand, which currently favors gold. What about all of silver’s “industrial demand”? The Silver Institute (a somewhat dubious source) estimates industrial demand to represent 55{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of total, annual demand (1.03 billion ounces), or roughly 570 million ounces.

However, the gold market now has an important source of demand which is lacking in the silver market:gold-hungry central banks . These are (generally) Eastern central banks who understand the paper currency Ponzi-scheme which has been created by the One Bank.

So far, 2017 is trending towards an off-year for central bank purchases, with current buying representing an annual rate of demand of only about 300 tonnes. Even then, if we factor in the supply ratio (17:1 in the Earth’s crust), this equates to just over 5,000 tonnes of annual silver demand.

Read More @ SprottMoney.com

A Quarter Trillion Dollars In US Savings Was Just “Wiped Away”


from ZeroHedge

As part of its historical revision to GDP, the BEA also had to adjust personal income and spending, with the full results released in today’s July report. What it revealed was striking: over the revised period, disposable personal income for US household was slashed cumulatively by over $120 billion to just under $14.4 trillion, while spending was revised higher by $105 billion, to just above $13.8 trillion. There were two immediate consequences of this result.

First, as the following table shows, while government pay has remained roughly flat over the past 3 years, growing in the mid-2{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to mid 3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} range, wages and salaries for private workers have been steadily declining as the blue line below shows, and after hitting a 4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} Y/Y growth in February, wage growth has slumped to just 2.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in June, the lowest since January 2014 when excluding the one-time sharp swoon observed at the end of 2016.

But a more troubling aspect of today’s revision is what the drop in income and burst in spending means for the average household’s bank account: following the latest annual revision, what until last month was a 5.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} personal saving rate was revised sharply lower as a result of the ongoing downward historical adjustment to personal income and upward adjustment to spending, to only 3.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

In dollar terms, this revision means that a quarter trillion dollars, or $226.3 billion, in savings was just “wiped away” from US households – if only in some computer deep in the bowels of the BEA buildings –  who as a result have that much less purchasing power, and following the revision the total personal saving in the US as calculated by the BEA is now down to only $546 billion, down from $791 billion before the revision.

Read More @ ZeroHedge.com


by Harvey Organ, Harvey Organ Blog



 In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.038 BILLION TO BE EXACT or 148{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of annual global silver production (ex Russia & ex China).


In gold, the open interest fell by 2,686 with the fall in price of gold to the tune of $1.60 yesterday.  The new OI for the gold complex rests at 436,962. Yesterday we had some banker short covering but it was minimal and this was accompanied by some longs entering the arena sensing danger due to the firing of that ICBM missile by North Korea. The shorts tried their best on the last day of options expiry to nullify any gains from option traders. The result a small open interest fall with that fall in price.

we had, ON second DAY NOTICE: 1309 notice(s) filed upon for 130,900 oz of gold.

Read More @ HarveyOrganBlog.com

Precious Metals And Bitcoin-Twin Destroyers Of The Fiat Regime, Part lll

by Andy Hoffman, Miles Franklin

After Whirlybird Janet’s “ding dong, the Fed is dead” speech 2½ weeks ago, I predicted the “final currency war” I first warned of 4½ years ago would be taken to Defcon 1 – as all Central banks aggressively respond to the America’s increasingly inflationary monetary policy; particularly, after its “low interest rate person” President installs Yellen’s replacement early next year.  And lo and behold, last night’s Royal Bank of Australia policy statement “warned” that a stronger Aussie dollar would “contribute to subdued price pressures”; as it was “weighing on the outlook for output and employment”; which in turn, would “result in a slower pick-up in economic activity and inflation than currently forecast.”  In other words, its GAME ON in the global race to debase; simultaneous with, care of the gold Cartel, the lowest-ever inflation adjusted Precious Metal prices; and plunging gold and silver  production, as Steve St. Angelo pointed out last night – of how Chilean silver production is down a stunning 32{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} year-over-year.

Irrespective, the dollar continues to plunge to lows last seen more than a year ago; as now that the “reserve currency” issuer has made it clear that additional rate hikes aren’t happening; and likely, any hope of a balance sheet “exit strategy”; essentially nothing the administrators of “lesser fiat toilet papers” say or do matters.  Which is why it was so irritating watching PM’s yesterday, amidst maniacal Cartel capping featuring the time-honored DLITG, or “don’t let it turn green” algorithm.  And thus, why Precious Metal holders (like myself) become increasingly angry with each passing day; not just for the financial damage done to us personally, but the political, economic, and social damage incurred on the “99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528},” for the benefit of the 1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.  Which is why, per today’s second follow-up to May 2016’s “Precious Metals and Bitcoin – Twin Destroyers of the Fiat Regime,” I am so excited about the dramatic, generational impact of crypto-currency.

On the eve of this extremely important challenge for Bitcoin – i.e., the “Bitcoin Cash” hard fork that is anticipated to occur less than an hour from now, at 8:20 AM EST (ironically, the same time as the COMEX open) – I attended the Denver Bitcoin Society meetup, where I was honored to kick off the meeting with a few words.  Which were, that in my role as Marketing Director of one of the nation’s oldest, most trusted bullion dealers, I am proud to be the biggest Bitcoin advocate in the Precious Metal community.  The reason being, that Bitcoin’s technology is so powerful, it may well serve as the “straw” that finally broke the “camel’s back” of fiat currency.  Which, as you might imagine, drew a rousing round of applause; given how, like Precious Metal advocates, the principal reason Bitcoiners “hoddle” (i.e. hold) Bitcoin is its perceived ability to serve as a gold-like store of value.

Yes, on the same day “BIP 148,” or the “User Activated Soft Fork” symbolically activated – i.e., the people’s response to “big blockers”’ attempt to commandeer the network; Bitcoin Cash’s success – or more likely, failure – will in many ways, determine the pace of adoption of the real Bitcoin.  If “BCC” fails to gain traction, as I anticipate, next week’s SegWit, or Segregated Witness protocol upgrade of the real Bitcoin will likely serve as a major positive catalyst for the sound money movement – as discussed in last week’s “Bitcoin SegWit activation – the gold Cartel’s worst nightmare.”  As whether Bitcoin becomes the world’s day-to-day, utilitarian currency of choice, the trend toward decentralization as the future of monetary value will dramatically accelerate.

As I wrote in December’s “why Bitcoin will make gold and silver go up,” I (more than ever) believe the monetary disruption Bitcoin is capable of – potentially, NOW – could be so powerful, it will cause governments to refocus their manipulative efforts – from the “barbaric relics” gold and silver, to the “newfangled technology” Bitcoin.  Which, at a time when Precious Metal supply is already historically low; whilst money printing is primed for another, potentially hyper-inflationary leg higher; may well hasten the end of an increasingly “unnecessary” gold Cartel.

As, if Precious Metals’ inevitable surge is caused NOT by a catastrophic monetary event; but instead, a diversion of the powers that be’s’ attention by Bitcoin; gold and silver holders may well get to enjoy the financial windfall they’ve been waiting so long for.  Potentially, in an environment NOT characterized by economic and/or monetary disaster.  In other words, gold and silver could potentially rise five, ten, or even 20x in the “modern monetary world” due to “repricing” in a Cartel-deficient market – without catalyzing the draconian government responses that have always loomed over the sector like a sword of Damocles.  In other words, for the first time in generations, it will be acceptable to view Precious Metals as investment opportunities” – as opposed to age-old propaganda that they are only to be considered insurance against monetary cataclysm.

Read More @ MilesFranklin.com

Letters from India: How Bad Can the Crackdown on Cash and Tax Evasion Get? What’s Next?

by Mish Shedlock, Mish Talk

Reader “IB” an India businessman, writes about the crackdown on cash and tax evasion by Prime Minister Narendra Modi.

“IB” is very concerned about recent events, as well he should be.

Background for this story started on November 8, 2016, when Modi stunned the country with an announcement that 500-rupee ($7.30) and 1,000-rupee notes, which account for more than 85 percent of the money supply, would cease to be legal tender immediately. For details, please see Cash Chaos in India, 86{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of Money in Circulation Withdrawn; Cash Still King in Japan.

The crackdown on cash has hurt the poor the most, and likely the richest the least. Nonetheless, Modi has widespread popular support.

Modi’s latest set of mandates has small businessmen caught in the crossfire. Let’s tune into to an email from “IB” (India Businessman) for some details.

Hi Mish,

I am writing from Mumbai, India. I have been running a small business for a decade now. Since the business has been profitable we have also been paying tax as applicable. But with the introduction of Goods and Services Tax (GST) in India from July 1, 2017, it looks like business might start experiencing difficulties soon due to its plethora of rules, some of which are mind-bogglingly inane.

More than the tax rates, it is the implementation and the draconian measures that have been taken by the Government that has made me come to this conclusion. Given that the incumbent government has been winning elections despite steps like demonetization and the opposition is in complete disarray (Modi is a great orator), they have been emboldened to introduce measures that would be viewed as draconian by normal standards. In this context, I have to mention Modi has been able to mesmerize voters to an extent that he can make even pain appear as something that is pleasurable and he has been able to conquer state after state and has an invincible aura about him now. Such acts always bring Goebbels to my mind.

I am attaching an article that highlights three steps (of the many) that have been introduced in GST that I feel would impact businesses negatively.

Thanks for your time.


New Rules

“IB” emailed a lengthy document describing new rules. What follows is a short list of three key points that I condensed from the document.

  1. The government will not allow Input Tax Credit on GST paid to vendors if the vendors do not pay their own taxes. The issue here is the Modi is forcing the role of tax-enforcement on businesses who buy goods for resale.
  2. Tax payments are required every month. For all cash businesses, there is no problem. There is a huge problem for those who have to pay taxes on receivables, in advance, when the business owners might not even get paid. Liquidity will kill many small businesses.
  3. Modi now wants three tax filings every month plus an annual tax return making it 37 overall. Currently, businesses file service tax returns twice in a year while they pay their taxes every quarter. Now with GST, small businesses have to file 3 returns every month, month on month, year on year, with fines stipulated for non-compliance.

All Hail Modi

The Economic Times reports PM Narendra Modi steps up assault on Congress, eyes Indian supremacy

Prime Minister Narendra Modi’s ruling alliance is stepping up its assault on the opposition Congress party as it looks to expand its national dominance and moves closer to securing a majority in the upper house of parliament.

How to Destroy an Economy

This is the path that populist fools take to gain control and destroy economies.

When tax collections actually go into reverse as businesses fail, Modi will come up with another set of ill-advised reforms, perhaps a total ban on cash.

All it takes is a Congressional majority and Modi can and will do what he wants.

In all likelihood, Modi’s enemies will soon be silenced for the “good of society”.

Read More @ MishTalk.com

The Scaling Debate and Hard Fork Highlight Several Key Differences Between Bitcoin and Gold

by Michael Krieger, Liberty Blitzkrieg

You know stuff’s going down when I write two posts in a row about Bitcoin, something which almost never happens anymore. In Friday’s piece, Is the Bitcoin Civil War Over? Here’s How I’m Thinking About Bitcoin Cash, I discussed a potential strategy that “big blockers” might attempt to execute should the 2x part of Segwit2x not happen later this year. Today, I want to discuss how the entire episode has actually served to highlight one of Bitcoin’s (and cryptos in general) huge competitive advantages in the realm of monetary-type assets, but also examine why gold is still important.

There’s been a lot of FUD written at length about the whole scaling debate, in addition to the fair observation that network splits cause confusion and can be bad for the Bitcoin “brand.” As I mentioned in Friday’s piece, I don’t see this being the case with Bitcoin Cash (BCC), since I don’t think there will be any real debate about which one is Bitcoin and which is an alt-coin. Interestingly enough, although the nastiness of the scaling debate has left a bad taste in a lot of people’s mouths, it’s also highlighted one of Bitcoin’s greatest strengths.

Earlier today I came across a tweet from an account I had never seen before, but it was simply genius in its poignant simplicity.

What this person is referring to is how the lack of support for BCC from several popular wallet providers/exchanges like Coinbase and Bitstamp, has led to a flood of requests from Bitcoin holders to move their coins off the exchange in order to access the BCC if desired after August 1st. This is essentially akin to a run on the bank, and any third party playing games with their customers’ assets will be exposed in due course. The fact that it’s so easy for a Bitcoin holder to initiate a withdrawal from a third party holding their asset is a huge advantage of Bitcoin versus gold and other traditional monetary safe-havens. It doesn’t take long to see why if you think things through.

Storing your own Bitcoin private keys is very much like holding actual gold or silver in your possession. One thing that hardcore gold bugs like to say over and over is “if you don’t hold it, you don’t own it.” At the end of the day, I think that’s right. It’s also what makes a gold backed digital asset less appealing than you might think at first glance.

When you hold your own Bitcoin private keys, not only do you have possession, but you also have a spendable asset. Gold can never replicate this competitive advantage. If you trust someone else to hold your gold, you’re exposed to counter-party risk. You are trusting someone else to secure your asset and be honest. You don’t need to do that with Bitcoin. Likewise, if China, Russia or any other government launch a gold-backed digital currency, you’re trusting the honesty of governments to have the gold they say they do. We know governments lie constantly, so I think it’d be completely foolish to trust such a monetary regime, and we don’t have to.

Before gold bugs start turning red in the face and cursing my name, let me finish. This is not to suggest that Bitcoin is a substitute for gold, or that I think the advent of crypto-currencies makes gold irrelevant as an asset. If I really felt that way, I wouldn’t still own precious metals. In fact, whenever the next economic criss happens I think gold will do exceptionally well, particularly versus stocks and bonds, as the traditional financial world will not rush headlong into cryptos as a safe-haven asset (though some will). Most funds probably aren’t even set up to be allowed to do that, so they’ll go to what has always worked and what they’re comfortable with, and that is precious metals.

We don’t need to be binary when it comes to the question of gold and Bitcoin. Gold has advantages Bitcoin will never be able to surmount, including thousands of years of history and genuine immutability. On the flip-side, Bitcoin has advantages gold will never be able to totally overcome. Namely, it’s an easily spendable asset that you can hold in your possession with zero counter-party risk. Moving large amounts of Bitcoin around is trivial compared to gold, which is an undeniably important attribute in the world we live in. You still need someone else’s help to move gold from a vault in let’s say Zurich to one in Singapore. You have to ask permission. Such permission is unnecessary with Bitcoin.

Read More @ LibertyBlitzkrieg.com

It’s better to turn cautious too soon…


by Simon Black, Sovereign Man

One of the greatest investors in the world is getting worried…

Howard Marks is the billionaire founder of Oaktree Capital, one of the largest and most successful investment firms in the world.

A few times each year Marks write up his thoughts about financial markets– he calls them ‘investment memos’.

And he just released his latest one with a very clear message: it’s time to be cautious.

From Marks’ memo…

I think it’s better to turn cautious too soon (and thus perhaps underperform for a while) rather than too late, after the downslide has begun, making it hard to trim risk, achieve exits and cut losses.

Marks admits this bull market could continue. But he’s happy taking chips off the table in today’s particularly dangerous market.

Asset prices are high across the board – the S&P 500 is trading at 25 times trailing 12-month earnings compared to a long-term median of 15 – and prospective returns are low.

Meanwhile, we’re also seeing record-low complacency amongst investors.

Just this morning the Wall Street Journal published data from Yardeni Research showing that percentage of ‘bearish’ investors who believe that the market will fall is near its lowest level since 1987.

The Volatility Index (VIX), a statistic which measures ‘fear’ in the market place, is at its ALL-TIME lowest point in its entire 27-year existence – hitting 8.84 last week, compared to above 80 in 2008.

The VIX hit 8.89 on December 27, 1993. From Marks:

The index was last this low when Bill Clinton took office in 1993, at a time when there was peace in the world, faster economic growth and a much smaller deficit. Should people really be as complacent now as they were then?

Compare that today, where market pitfalls abound…

– North Korea is threatening to nuke the US
– Donald Trump is firing his entire cabinet
– The Federal Reserve has dropped interest rates to record lows and drowned the world in trillions of dollars of cash
– Debt levels are at record highs
– Entire banking systems, especially in Europe, are in need of massive bailouts
– The US government will run out of money in less than 90-days and hit the debt ceiling once again

Marks points out an important thing to remember about the VIX… It doesn’t say what volatility will be, only what investors think volatility will be. And the crowd is almost always wrong.

We’re eight years into the current bull market. Stocks have been rising for eight straight years– the second-longest winning streak in history behind the S&P 500’s 417{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gain between December 1990 and March 2000.

And investors seem to see nothing but clear skies ahead.

And their false sense of security is pushing them to take on greater amounts of risk.

For example, junk bonds today yield just 6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

In other words, pitiful, low quality companies that few analysts expect them to even remain in business are able to borrow money at just 6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

That’s insane.

Read More @ SovereignMan.com