Wednesday, February 20, 2019

WILL PRINTING HALF A QUADRILLION DOLLARS SAVE US?

by Egon von Greyerz, Gold Switzerland:

Stock investors are rejoicing about stock markets making new highs in many countries, totally oblivious of the risks or the reasons. It seems that this is an unstoppable rally in a “new normal” market paradigm. No major increase is expected in the inflation rate or the historically low interest rates. The present rally has lasted 8 years since the 2009 low. There is virtually no fear in markets so investors see no reason why this favourable climate would not continue for another 8 years at least.

Yes, of course it could. All that is needed is that governments worldwide print another $20-50 trillion at least and that global debt goes up by another $200-500 trillion.

“IF YOU TELL A BIG LIE OFTEN ENOUGH ….”

The gullibility of people today is exacerbated by the power of the internet and social media. Anything we read is accepted as fact or truth whilst a major part of it is just fake news. This is of course nothing new as it has been used by governments for centuries. Goebbels, the Nazi Propaganda Minister, who was an expert at manipulating the German people, said: “If you tell a big lie often enough and keep repeating it, people will eventually believe it.” The power of the internet and other media has facilitated spreading news and propaganda to billions of people and very few can distinguish if they hear or read “real” news or “fake” news.

Anyone in government is in capable of telling the truth. Automatically when someone assumes an elected position his Pinocchio nose grows extremely long since his entire purpose is then to be all things to all men in order to be re-elected. This is why virtually no elected official has a backbone nor any morals or principles. Because if they had, telling the truth would make them unelectable.

THE OLD STYLE HONEST BANKING IS A THING OF THE PAST

During my early professional years as a banker at the end of the 1960s and early 1970s, I spent some time with a prominent UK Merchant Bank. This is what the old-style Investment Banks used to be called before the Americans came to dominate the sector. The senior bankers used to arrive at work around 10am and then go to lunch at 1pm. The lunch would consist of at least one gin and tonic to start with and then a good three course meal with a bottle of wine or two. Afterwards some Port with cheese and maybe a beer or two at the pub to finish off. Then back to the office at around 3pm for 4-5 hours of work. And this is how the City of London would operate when it was the financial centre of the world.

Any transaction was based on a handshake and a brief contract. Lawyers played a very small role in this process. Banking was based on trust, personal relationships and high moral standards.Banks displayed total loyalty to their staff and employees did not fear for their jobs. Major deals were concluded with a minimum of legal interference and compliance hardly existed. And still there was very little deception or fraud.

Today the financial world in London and major parts of the world is dominated by the US investment banks, the US legal system and the US government. Trust and loyalty are gone. Handshakes are worth nothing. Lawyers and compliance officers dominate everything and contracts are now running to hundreds of pages. Staff fear for their jobs since the banks have no loyalty to them. The only thing that counts is short term performance. This makes staff totally disloyal too as they know they can be fired on a whim.

Investment bankers are now Masters of the Universe and as the former Goldman Sachs CEO said, “Doing god’s work”. Well, one thing is certain there is certainly no humility in the financial world today or as Michael Lewis said in his book “Liar’s Poker”, major parts of US investment banks are dominated by “Big swinging di–s”. (Bankers with very big egos.)

Read More @ GoldSwitzerland.com

The First Pillar to Fall in the Coming Debt Crisis

by Justin Splitter, Casey Research

Americans are falling behind on their car loans at the fastest pace since the global financial crisis.

You can see what I mean below. This chart shows the percentage of auto loans that are “seriously delinquent.” These are loans that haven’t been paid in 90 days or longer.

This key ratio has been surging since late 2014. It’s now at the highest level since the 2008–2009 financial crisis.

• This is a big problem…

You see, more than one out of every three Americans has a car loan right now. Not only that, the average U.S. household owes nearly $29,000 in auto debt.

Americans have borrowed so much money that the auto loan industry is now a $1.2 trillion market. That’s 58{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} bigger than it was in 2009.

For years, investors ignored this explosion in auto loan debt. But they won’t be able to for much longer.

That’s because the auto industry is cracking before our eyes. If this continues, carmakers and auto lenders will be in serious trouble.

But you can’t ignore this just because you don’t own any car stocks. That’s because Americans don’t just have too much auto debt…

• They have too much debt, period…

And the Federal Reserve is a big reason for that.

Since 2009, the Fed has held its key interest rate near zero.

This has made it cheaper than ever to borrow money. So, naturally, Americans loaded up on debt.

During the first quarter, U.S. household borrowings hit $12.73 trillion. That’s a record high, and 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} more debt than Americans had at the peak of the last housing bubble.

This wouldn’t be such a problem if the U.S. economy were doing well. But it’s not.

The U.S. economy is recovering at the slowest pace since World War II. Not only that, the average U.S. worker is making just 16{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} more than they were in 2009.

• The average American now has more debt than they’ll ever be able to pay off…

You can see what I mean below.

This chart compares the level of household debt with disposable income.

A high ratio means that Americans have a lot of debt relative to income. You can see that this key ratio has been soaring since 2009. It’s now at the highest level ever.

Read More @ CaseyResearch.com

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

SENATOR LINDSAY GRAHAM: “USA IS PREPARED TO STRIKE NORTH KOREA”/GOLD UP $4.95 BUT SILVER FLAT

by Harvey Organ, Harvey Organ Blog

GOLD AND SILVER EQUITY SHARES FALL AGAIN/CHAOS RUNS SUPREME IN VENEZUELA/USA SANCTIONS ONLY MADURO SO FAR/GENERAL MOTORS REPORTS HUGE DROP IN AUTOS/ALSO USA REPORTS BIG DROP IN CONSTRUCTION SPENDING

In silver, the total open interest surprisingly  ROSE BY 862 contracts from 206,781 up to 207,643 WITH THE GOOD RISE IN PRICE THAT SILVER TOOK WITH RESPECT TO YESTERDAY’S TRADING (UP 9 CENT(S). IT SURE LOOKS LIKE BOTH THE SPECULATOR SHORTS AND THE BANKER SHORTS ARE HAVING SEVERE PROBLEMS TRYING TO COVER THEIR SHORTFALL BUT IT IS TO NO AVAIL. THE LONGS REMAIN STOIC AND NOTHING WILL BUDGE OUR SILVER LEAVES FROM DEPARTING OUR SILVER TREE. TODAY’S TRADING IS EVIDENCE OF THAT

 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).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 71 NOTICE(S) FOR 355,000OZ OF SILVER

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

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

Bitcoin, Gold and Silver Report – Keith Weiner

by Keith Weiner, Sprott Money

That’s it. It’s the final straw. One of the alternative investing newsletters had a headline that screamed, “Bitcoin Is About to Soar, But You Must Act by August 1 to Get In”. It was missing only the call to action “call 1-800-BIT-COIN now! That number again is 800 B.I.T..C.O.I.N.”

Is it about to go up? Maybe. We don’t know. And everyone should by now be skeptical of all “rocket to take off on XYZ date” claims. Between them, surely these newsletters have predicted thousands of the past zero blastoffs of gold and silver since 2011.

We have discussed bitcoin in the past, to argue that it is not money (a video here, and articles here and here). Bitcoin is not money because it is not a good. It’s just a number in a database. Money is a kind of good (genus). The most marketable kind (differentia).

Money must be a good because we are physical beings in a physical world and final payment—which is not demanded all the time, or even often—must be a physical thing that you can hold and touch in your physical hands. Bitcoin is not a physical good, so it represents, not final payment, but intermediate payment. It is not final until you trade the bitcoin for a real good. In the language of economics, a real good has utility apart from one’s hope to exchange it for something else. Bitcoin has no utility apart from this hope of its value in exchange, its price.

There is not one price but always two prices: bid and offer. When one has a thing and relies on someone else to buy it (or accept it in exchange), it is the bid price which is relevant. The offer price may be close above the bid, or it may be much higher. Typically sellers are reluctant to sell below their cost, but that has nothing to do with buyers. Buyers make a bid based on how they value it (or not).

This fact right here is sufficient to debunk the labor theory of value. Suppose producing a painting takes you 50 hours of labor plus $100 in materials. That does not matter. If your name is Banksy, people might be happy to pay tens of thousands of dollars for the painting. If your name is Keith Weiner, not so much (Keith is not known for having any skill at painting, though he can take some mean photographs).

For all commodities, for all real goods, for all tangible products, there is always a bid. Even a junk car is worth something to the scrap dealer. Even sand is worth something to the landscape contractor.

If a commodity is useful for something, it will have a robust bid. The price may be low or high, but the bid will be set by those who have a productive purpose in mind. If you can buy something, add a little bit of value from labor (e.g. cleaning it up) and sell it for $1,000 then you are willing to pay up to, say, $900.

Take copper. Copper can be used for wiring and plumbing (and many other things). If you manufacture plumbing, and you know that with a dollar worth of labor you can turn copper into a pipe that sells for $3.75, what are you willing to pay for the copper? Perhaps you would go up to $2.50 (it’s now about $2.85). If the price of copper drops, this new buyer will come into the market (for now, plumbing is made of plastic).

In this light, we now get to the 64 billion dollar question. What is the bid on bitcoin? What is it useful for, and who would buy it for that purpose?

Right now, bitcoin is a lot of fun. Its price is being driven up by frenzied speculators. With each new price level, proponents become bolder and more aggressive. Bitcoin will replace the dollar, bitcoin will go up to $1,000,000, the dollar is failing, get yours before August 1, etc. Many of these arguments were popular when the price of gold was rising relentlessly up through 2011.

But what’s the ultimate bid? Where is the floor, where it cannot go below because it’s just too profitable to buy it, transform it into a higher-value good to sell at a profit? Where is the floor where individuals will buy more and more because they want bitcoin in their living room, or in the tank of the car, or in their refrigerator, or in their basement?

It doesn’t exist, does it?

This is not a prediction for tomorrow morning. Indeed timing these things is impossible. However, there will come a point when the speculators turn. Perhaps their collective thumbs will move the planchette on the price-chart Ouija board to paint an ugly chart pattern (much uglier than head-and-shoulders). Whatever its initial cause, what will happen is clear in light of the above discussion.

The price of bitcoin could drop to any level. Incidentally, bitcoin could be used in exchange as it is now, whether its price is $0.01 or $1,000,000.

People often say that bitcoin is like gold, or even say it is “digital gold”. They are just trying to cash in on gold’s good name. The problem of the bid is another key difference between bitcoin and gold. Gold is an extremely useful commodity. Bitcoin is not any kind of commodity at all. It does not have a real bid at all, only the ever-changing bid of the fickle speculator.

The prices of the metals rose some more this week, with gold +$13 and silver +$0.24. However, that leads to the question: is it speculators getting ahead of the fundamentals, or is it real?

Three weeks ago, with the price of gold $56 lower and the price of silver $1.15 lower than today, we asked if that was capitulation. We cited some circumstantial evidence (plus a rising scarcity of both metals as measured by the cobasis). We did not call for a moonshot, but a “normal trading bounce within the range.”

Today it is time to ask if the bounce is down, and if now is the time for a normal correction. And if it’s the same answer for both metals.

Read More @ SprottMoney.com

The West lost at least another 1000 tonnes of large gold bars in 2015

by Ronan Manly, BullionStar

Over the last number of years, one of the most interesting trends in the physical gold world is the ongoing conversion of large 400 ounce gold bars into smaller high purity 1 kilogram gold bars to meet the insatiable demand of Asian gold markets such as China and India.

This transformation of 400 ounce bars into 1 kilogram bars is an established fact and is irrefutable given the large amount of evidence which proves it is happening, as has been documented on the BullionStar website and elsewhere.

It is also something which causes plenty of excitement in the gold world as it underscores the huge movement of physical gold from West to East, and the continual depletion of gold inventories from locations such as the London Gold Market.

The general movement is one of 995 purity 400 ounce gold bars coming out of gold-backed ETFs, central bank gold holdings and other wholesale gold holdings, and these bars making their way to the Swiss refineries where they are transformed / smelted / recast into smaller 9999 high purity gold bars. The smaller gold bars are then exported from Switzerland to India, China, Hong Kong, and the Middle East.

At the same time as the wider gold market acknowledges and publicises this trend, the establishment gold world and bullion banks (as represented by the London Bullion Market Association) tend to downplay this conversion of 400 ounce gold bars into 1 kilogram bars, presumably because it directly highlights the continual drain of real physical gold out of the London vaults into China and India, gold which has little chance of ever coming back again.

For an example of significant downplaying of conversion of 400 ounce gold bars into kilogram gold bars, see BullionStar post from September 2015 titled “Moving the goalposts….The LBMA’s shifting stance on gold refinery production statistics” which documents how a mammoth 2000 tonnes of LBMA gold refinery output attributed to the year 2013, mysteriously disappeared from the LBMA’s publications in early August 2015, after the original figure of 6,601 tonnes had been highlighted on this website, with the original figure being replaced by a far lower 4600 tonnes.

While gold refineries in countries other than Switzerland may be involved in these 400 ounce to 1 kilogram gold bar transformations, the Swiss refineries are the big players in this area, as they say so themselves. The names in question are Valcambi, PAMP, Argor Heraeus and Metalor. For a full understanding of the extent to which these large Swiss gold refineries process 400 ounce gold bars into kilobars and the importance that they attribute to this specific category of refinery activity, please see BullionStar blog from November 2015 titled “From Good Delivery bars to Kilobars – The Swiss Refineries, the GFMS data, and the LBMA“.

But if you thought the massive conversion of large gold bars into kilogram bars that occurred in years such as 2013 and 2014 was an anomaly or a one-off, then think again. Because it also happened in 2015, and in a very big way.

Read More @ BullionStar.com

GOLD AND SILVER HOLD DESPITE THIS BEING THE LAST DAY FOR OPTIONS EXPIRY ON LONDON OTC CONTRACTS

by Harvey Organ, Harvey Organ Blogspot

WAR OF WORDS BETWEEN USA, NORTH KOREA AND CHINA RE THE NORTH KOREA’S LAUNCHING OF THAT ICBM/SOUTH KOREAN OFFICIALS STATE THAT THEY MAVE BEEN LOOKING AT A SURGICAL STRIKE AGAINST NORTH KOREA/PUTIN RETALIATES BY REMOVING 755 USA DELEGATES IN MOSCOW/USA IN ITS FIRST STRIKE AGAINST MADURO SANCTIONS ANY PERSONAL DEALINGS WITH MADURO HIMSELF/TRUMP THREATENS TO END SUBSIDY PAYMENTS ON OBAMACARE INCLUDING CONGRESS MEMBERS/TREASURY EXPECTS TO ISSUE 1/2 TRILLION IN DEBT IN 4TH QUARTER: THEY CLAIM THAT BY SEPT 30 THEY WILL HAND ONLY 60 BILLION USA INC CASH LEFT

In silver, the total open interest surprisingly  ROSE BY ONLY 277 contracts from 206,554 UP TO 206,781 DESPITE THE GOOD RISE IN PRICE THAT SILVER TOOK WITH RESPECT TO FRIDAY’S TRADING (UP 11 CENT(S). JUDGING FROM THE COT REPORT BOTH THE SPECULATOR SHORTS AND THE BANKER SHORTS ARE HAVING SEVERE PROBLEMS TRYING TO COVER THEIR SHORTS BUT TO NO AVAIL. THE LONGS REMAIN STOIC AND NOTHING WILL BUDGE OUR SILVER LEAVES FROM DEPARTING OUR SILVER TREE.

 In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.035 BILLION TO BE EXACT or 148{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 233 NOTICE(S) FOR 1,165,000OZ OF SILVER

In gold, the open interest rose by 7,287 as new speculators entered the gold arena after the long specs in July DEPARTED with their EFP’s which entitled them to a fiat bonus plus a futures contract and these are most likely London based forwards. The new OI for the gold complex rests at 439,648.

we had, ON FIRST DAY NOTICE: 1637 notice(s) filed upon for 163,700 oz of gold.

Read More @ HarveyOrganBlog.com

SILVER INVESTMENT: Outperformed Gold In This Major Sector

by Steve St. Angelo, SRSrocco

Precious metals investors may not be aware, but silver investment has seriously outperformed gold in this major market sector.  Even though precious metals sentiment and sales are currently lower than they were over the past several years, this is only temporary pause before the market surges as the highly inflated stock market finally cracks and plunges lower.

When we start to witness a huge correction or crash in the broader stock markets, there only be a few physical assets worth owning to protect wealth.  Investors moving into the precious metals at this time, will see their asset values increase significantly.  However, silver will likely out perform gold as investors and speculators move into the more undervalued precious metal.

Actually, we have already witnessed this as physical silver investment versus jewelry demand has outperformed gold in the same market.  Let me explain.  While industrial demand is the largest consumer of silver in the market, silver jewelry demand has ranked second for quite some time.  But, this all changed after the 2008 U.S. Banking Industry and Housing Market collapse.

For example, global silver jewelry demand in 2007 was 182 million oz (Moz) versus 62 Moz in silver bar and coin demand.  Thus, physical silver bar and coin demand was only 34{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of world silver jewelry demand:

However, during the U.S. market meltdown in 2008, physical silver bar and coin investment surged more than three times to 197 Moz, while silver jewelry demand stayed flat at 178 Moz.  In just one year (2007 to 2008), physical silver investment accounted for 110{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of global silver jewelry demand.

While silver investment demand fluctuated over the next seven years, it hit a record high of 291 Moz in 2015 as investors took advantage of low prices not seen since 2009.  As physical silver bar and coin demand reached a new record in 2015, accounting for 128{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of global jewelry demand that year.

Even though physical silver demand declined in 2016, it was still neck and neck with jewelry demand of 207 Moz each.  Now, if we compare physical silver investment to jewelry demand versus gold, we can plainly see how silver has outperformed gold in this market.

Before the 2008 market meltdown, global gold physical investment of 14.4 Moz accounted for 18{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of world gold jewelry demand of 79.5 Moz:

Read More @ SRSrocco.com