Saturday, July 20, 2019

While The Fed Continues To Destroy The Dollar, Kansas Looks To Acknowledge Constitutional Money

by Tim Brown, Freedom OutPost:

This is always going to be a problem as long as the federal government continues to not follow the Constitution regarding constitutional money and print fiat money.  Still, while the Federal Reserve continues to go against President Donald Trump, even though he nominated the Fed chairman, the state of Kansas has chosen to do what the Constitution demands and other states have done and that is to recognize gold and silver as actual money.

Is Gold Worth More Or Less Than Its $1900 High In 2011

by Chris Marcus, Miles Franklin:

One of the challenges with investing in precious metals is that there is so much distortion in the market that figuring out a true fair value is not always the easiest thing to do. Yet there are clues investors can look at that indicate that when the price starts to move, it won’t be by a small amount.

Back in 2011 I was still working as an equity options trader on the New York Stock Exchange, and was about two years into my studies of the precious metals market. Following the collapse of the subprime housing bubble, I was stunned by how despite having a decade of experience on Wall Street and an MBA from Wharton, I hadn’t seen any of it coming.

However I found it interesting how many of the Austrian economists had seen the situation clear as day in advance, and as soon as I started to understand their perspective the underlying case for precious metals always made a lot of sense.

So in 2011 following Ben Bernanke’s second quantitative easing program, a widely publicized debt ceiling debacle, and the downgrade of the U.S. credit rating by Standard & Poors, it seemed like there was every reason to believe the dollar was on the ropes. Which as the years have gone by and put things in perspective, I personally believe was actually the case.

Yet that all changed in the early morning hours of September 6, 2011.

First, there was an announcement that the Swiss Franc, which at the time was being viewed as the last remaining safe haven currency, was being pegged to the euro. Seemingly clearing the path for gold and silver. Yet within the next couple of hours, rather than seeing gold move from the $1900 range to near or above $2000 per ounce, the price was hammered in the early morning hours in New York time.

Which always struck me as extremely odd.

Perhaps it was because after years of training as a trader, there was just so much about the situation that didn’t feel right. The fact that it seemed rather counter-intuitive to see gold drop at the exact same time one would have naturally expected it to rise.

Also odd was the manner in which the order was executed. Put in other words, if the owner of my trading firm found out that I placed a massive block sell order at the time when the liquidity was the thinnest, I likely would’ve been escorted out the door that same day. As many others have reported on since then, it just isn’t the way anyone looking for best price would execute the trade.

Fast-forward back to today, and the investing environment is much different. However the underlying fundamentals are not. The debt is significantly larger than ever. And while we have been told that the Fed’s balance sheet has not increased significantly since then, it’s become more evident that nobody really knows for sure how much money these guys are printing. And even according to the Fed’s own numbers, the amount of money in existence has in the very least not decreased since then.

So if the premise that the main force dictating the precious metals pricing is indeed the manipulation, as GATATed Butler, and others have so thoroughly documented the evidence of, it would seem as if $1900 per ounce would be the floor. With the true value being somewhere north of that.

How far north?

Since so much of the data released by the government, the Fed, and other gold agencies comes with a degree of skepticism, no one really knows for sure. Yet I often find myself thinking back to the calculations Jim Rickards laid out in his book Currency Wars, that showed based on the M2 money supply and a 40% gold backing, the number would be over $12,000 per ounce. Use a 100% backing and the price is even greater.

Of course the M2 data is produced by the Fed, and one can only wonder how accurately that actually reflects the true money growth. After all, if the government has $21 trillion of undocumented adjustments, it at least raises serious debate as to how much money actually exists.

Even leaving aside how much money will be created going forward from today, I find it hard to see how the current $1300 price isn’t miles away from gold’s true value. Especially in the current environment where the largest U.S. creditors like China continue to give every indication that they’re simply walking away from the system while simultaneously loading up on gold.

Which perhaps might not leave you with a clear picture of exactly what gold is worth, but at least explains why so many in the precious metals community continue to advocate holding gold. Even despite the distortions in the market.

One could make the argument that if nothing changed in the world, but simply the free market was able to determine the gold price, that it would be well north of $1900 per ounce. Now factor in what is going on in the world, just how fragile the dollar-based economic system is at this point, and the likelihood of more quantitative easing, and owning a gold makes more sense than ever.

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Gold, The Economy, Cryptocurrencies And Irrational Exuberance

by Dave Kranzler, Investment Research Dynamics:

The current tax legislation isn’t some thoughtful reform to benefit Americans. It’s a quickly planned looting through a broken window in our nation’s character. – John Hussman

John Hussman wrote a must-read essay titled:  “Three Delusions:  Paper Wealth, A Booming Economy and Bitcoin (link).”   The crypto/blockchain delusion has exceeded the absurdity of the and housing bubble eras.   I was shorting fraud stocks happily in both eras.  I’m short a company  now called Riot Blockchain.  If you look at its description in Yahoo Finance, it bills itself as a developer of technologies applied to animal (“non-human”) medicine.  It recently changed its name to Riot Blockchain from Bioptix Inc.  Prior to calling itself Bioptic Inc, it called itself Venaxis.  Just the name change to Riot “Blockchain” moved the stock from $4 to $40…insanity.

The Company changed its name in early October to Riot Blockchain.  Based on this, Canaccord was more than happy to fleece investors by raising $37 million for Riot in a private placement.  But that’s okay I guess because one has to be a “sophisticated” investor with the financial qualifications to have your money taken from you by Wall Street and Bay Street in order to invest in private placements.

Fundamentally this system is dissolving. The Government economic data, like GDP, CPI and employment  is worthless. The numbers produced by the Government are rigged to support political propaganda about the economy and the financial system. Economic reports released by the private sector generally contradict the Government’s reports.

Silver Doctors invited me to participate in their weekly Metals & Markets podcast. We chatted about gold, cryptocurrencies and the economy. Gold is currently the only asset that has not participated in this “Irrational Exuberance 2.0.” Of course, gold ran from $250 to $1900 from 2001 to 2011. We discuss why now is time to move investment funds back into gold for its next cyclical bull move in the context of a much bigger secular bull market in real money:

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Debt and Delusions – Part Two

by Gary Christenson, Deviant Investor:

The problem with debt is the creditor expects to be repaid.

Sovereign debt will be “rolled over,” never extinguished, and repaid with new debt. We delude ourselves and pretend total debt will increase forever (it can’t). That explains global debt exceeding $230 trillion today and official U.S. government debt over $21 trillion, with unfunded liabilities adding another $100 – $200 trillion. There are two choices.

Gold & Silver Bullion – Different Investment Approaches

from BullionStar:

There are a number of different ways of investing in precious metals, ranging from physical ownership of gold and silver bullion, to taking positions in derivative products which provide exposure to movements in gold prices or silver prices.

When looking at ways to invest in gold and silver, it’s important to think about which routes provide direct ownership of physical precious metals versus which routes are merely possession of ‘paper gold’ or ‘synthetic gold’ products that lack any backing of real physical metal. It’s also worth keeping in mind that while gold in physical form and silver in physical form have been universally used as money and as stores of value for thousands of years, it’s only in the last generation that gold and silver futures contracts have been traded, and even a shorter time-frame (15 years) since the first gold-backed Exchange Traded Fund (ETF) was launched.

Rob Kirby – Federal Slush Funds Working Their Magic

by Kerry Lutz, Financial Survival Network:

Rob Kirby believes that trillions of dollars have been created in a run up to the eventual demise of the dollar. Foreigners are aware of this situation and are starting to cut their losses. The reality is that the American people have been lied to on a vast scale. Rob believes it’s the source of most of the world’s geo-political problems. If nothing is done the system will collapse and the question becomes when.

Click HERE to Listen

Lightening-Fast COT Reversal: Now Fairly Bearish For Gold And Silver


by John Rubino, Dollar Collapse:

That didn’t take long at all. Just a few weeks after the Commitment of Traders (COT) Reports for gold and silver turned positive – setting off a nice rally in both metals’ prices – this indicator has flipped back to strongly negative.

In gold especially, speculators (always wrong at big turning points) have loaded up on long futures contracts while closing out their short positions. The commercials (always right at big turning points) have done the opposite, closing out long positions and going aggressively short.

In the week ended August 15, the gold speculators and commercials got about 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} more long and short, respectively. That’s a big one-week move, and brings the imbalance between good and bad positions to nearly 3-to-1 bearish. The trends in silver, while not as extreme, still point in a bearish direction.

Here’s the action presented graphically, with the silver lines on the top half of the chart representing speculator long positions and the purple bars below indicating commercial shorts. Note the leisurely pace of previous months, and contrast it with the v-shaped move that just took place. Not sure what that means, other than that speculators hoping to ride a longer upswing might be disappointed.

It’s important once again to note that the COT report is not a day-trading tool. Historically it’s been a pretty good indicator of the general trend over the following six or so months. But it has nothing to say about tomorrow or the day after. So it’s irrelevant for stackers and other long-term accumulators. But it is useful for someone who has their eye on a given gold/silver mining stock and is looking for a good entry point – which in this case might be a few months in the future.

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Jim Willie Interview with Chuck Ochelli

by Chuck Ochelli, The Ochelli Effect:

He’s Baaaack! Jim Willie , The editor-in-cheif and founder of The Hat Trick Newsletter & un-packs the recent palace intrigues in the kingdom of oil and everything else greasy.  Saudi Arabia Buying Time ? We are privileged to get Jim’s take on many shell games being run in the grand casino of financial fun and games on a global scale. How and Why are the Saudi Royals “Buying Time”? Listen and find out. Also is there a connection to other publicly covered events in other deserts? By the Way , Is there a PhD thesis that Jim could , should , would destroy if he took his Golden Jackass Flamethrower to it ? Never bet against Willie The Jackass , He’ll beat you by at least a Hat Trick.

Click HERE to listen

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Rick Rule – The Coming Block Chain Gold Rush

by Kerry Lutz, Financial Survival Network:

Rick Rule and Sprott Global have been working on setting up a blockchain based gold platform. Now it’s finally a reality. Just Monday it was announced that the trading platform is operational. The large gold producer Goldcorp is a shareholder in the venture and has just delivered gold bars to the Royal Canadian Mint to be held for fractional sale. This seems like a natural progression of blockchain technology. It will lower the costs and inefficiencies of buying and selling gold. It is certain to take off soon. Then let’s see it spread to other commodity markets.

Click HERE to Listen

BREAKING AWAY FROM THE WEST: Gold Investment In Germany & The U.K. Surged

by Steve St. Angelo, SRSrocco:

While gold demand in the West continues to languish, something has recently motivated renewed interest in the yellow precious metal in Germany and the United Kingdom.  Now, when I say “renewed interest”, I am referring to a surge in gold investment by Germans and British that we haven’t seen for quite some time.

This big increase in gold investment in Germany and the U.K. over the past year and a half is not from the diehard physical bar and coin investors, rather it is from a source that is even more interesting… it’s coming from investors in the retail Gold ETF Market.  You see, this is a much different segment of the population who move into the Gold ETF Market versus the 1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} that buy physical bar and coins.  When there is a surge of Gold ETF buying, it means the institutional or regular mainstream investor is worried about the overall market.

And why shouldn’t Europeans be worried as the ECB – European Central Bank’s President, Mario Draghi, stated in June that they would continue its bond buying program (QE – Quantitative Easing) until 2019, even though they believe that the “regions growth” looks broadly balanced.  This is like a doctor telling his patient, “we are going to continue with broad-based Chemo-Therapy”, even though your cancer has gone into remission.

Unfortunately, most of the public in the European Union doesn’t realize something is seriously wrong if the ECB believes it has to continue printing money to buy bonds… even though the economy seems to be okay.  Come one… the economy isn’t okay, it’s a HUGE BALLOON looking for a PIN.

Regardless, something has spooked both the Germans and the British as flows into their Gold ETF’s have surged since the beginning of 2016.  In just the past five quarters, European Gold ETF flows have surged by 42{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} from 690 metric tons (mt) in Q1 2016 to 978 mt in Q2 2017 (World Gold Council Demand Trends):

This is a big increase for this region because flows into U.S. based Gold ETF’s only increased 6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} during the same period.  Thus, the percentage increase into European Gold ETF’s was 7 times greater than flows into U.S. Gold ETF’s.

This next chart shows the increase in European Gold ETF inventories since the first quarter of 2016:

While inventories in European Gold ETF’s declined a bit during Q4 2016, the overall trend continues higher.  I believe the decline of gold ETF inventories during the fourth quarter of 2016 may have been due to a decrease in the price of gold in both the Euro and British Pound… but I will get into more details about that in a minute.

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ANALYSTS TOTALLY WRONG ABOUT GOLD: Top Gold Miners Production Cost Still Provides Floor In The Market Price


by Steve St. Angelo, SRSRocco Report:

While the debate on the dynamics of the gold market continues, at least the top gold miners production cost provides us with a floor price.  Or rather, a basic minimum price level.  I get a good laugh when I read analysts suggesting that the gold price will fall back to $450-$700.  For the gold price to fall back to $450, then we would need to lose 95+% of global gold mine supply.

Due to two factors of rising energy prices and falling ore grades in the gold mining industry, COSTS WILL NEVER go back to where they were a decade ago.  Again, the only way for that to happen is if a large percentage of gold mine production was shut down.