You are beautiful to me… man : )
Thanks for the interview. There seems to be a general expectation that some time the tiny public interest in precious metals today will increase substantially in the future when faith in our fiat currency is lost, perhaps sending gold prices soaring (in terms of dollars). But can there be a scenario where that doesn't happen? If there just isnt' close to enough gold for everyone, wouldn't that discourage interest? Or what if no one has extra money to put into gold, due to needing all ones income to pay for immediate necessities?
Something occurred to me - more along the lines of "what caused the gold crash" - and I'm thinking now that this is a normal thing that happens in cycles. This is not something I can prove, just an idle thought I had when reading through the comments.
In product adoption cycles, people are broken into groups:
http://en.wikipedia.org/wiki/Technology_adoption_lifecycle
Innovators
Early Adopters
Early Majority
and so on.
Gold currently is held by a small fraction of the US public - even ETF gold is relatively rare in portfolios. Perhaps 2001-2007, buyers of gold were the equivalent of tech "innovators", and the next phase of "early adopters" came in after the crash and were motivated by money printing, etc - and that wave rose during 2009, crested 2011, and broke 2013.
In other words, simply repeating the words "money printing" and the introduction of QE55 may not move us to the next level of adoption. It might have to be something new.
As my only evidence - in the interview with Robert Mish, he said that the vast majority of people buying gold at his shop had already bought gold before. I've heard that from the KWN group as well.
But from another perspective, once the next group starts joining, it should be quite the party.
In my anecdotal world, the latest PM metals price smash has brought about a viral doubling of new, first time Gold and Silver buyers. Before the smash, I had two friends who were buyers. I now have four. I didn't convince these folks to buy Gold, though they certainly had been hearing about the entire argument from me for years. No… .there were different straws that broke the camel's back in each case; One friend is on Wall Street in a regulatory capacity… he also has a relative that is ex-investment banker, dedicated prepper. The smash helped this guy finally get off his butt and buy Gold. Second friend had his final epiphany some weeks before the smash when a friend of his who is a police officer unloaded on him about his disgust over being trained to shoot citizens. Yes, you read that right… and this is not a conspiracy website.
There are things that no one can confiscate, that is the love in your heart and the knowledge in your head. The most powerful thing that you can do is share your love and knowledge with your community by producing something useful, beautiful and prodcutive. Do it in a way that no financial entity is involved, unless it is a small local community bank.
If we are talking about the abstract and evil "they", the one thing that "they" want, it is you in their system. "They" want a cut of your daily activity to support their lifestyle. They want to monetize you. If you are playing in the "financial" world you are playing in their game. Gold and silver (beyond their industrial uses) are money, and the money game is what they play at best. We know that the rules are for us, not for "them". If working the price of gold through the paper markets doesn't work to serve "their" ends and confiscation is the last thing that will work, then confiscation is what it will be. FreeNL said it well:
Profit is their religion, but control is their god.I don't think the dystopian game is part of anybodies plan, though some may be preparing for it. To many uncertaintes, not very profitable. The most important thing is to maintain a belief in the "system" so that the majority will participate willingly. Totalitarian states use force to maintain control, capitalist states use propaganda (although happy to use force outside their boarders). Propaganda is so much more efficient than force, hence our success.
Propoganda has the unintended advantage of evolving with society because the propaganda needs to stay with evolution of cultural thought to be effective. Change always comes from the edge to center as davefairtex observed to some degree is his mention of early adopters. Hence the .0001% have less control than we (some of us) and they believe, we are all being dragged along by forces larger than all of us.
I live near an area where many of the .01% live (many work on wall street). Many are starting or buying local organic farms, dining at locally focused organic restaurants, hey they know what and where the good stuff is. Someone I knew babysat for the president of Coca Cola (this was some time ago), he would never let his own kids drink the stuff.
Things are always more complicated and messy than we would sometimes like to believe. My crystal ball doesn't work any better than anybody else's, maybe holding physical PM's will help to bring back the rule of law and sanity to the system, I don't know for sure. But I am cautioned by "where your treasure is, there the desires of your heart will also be". For now I am investing in other things.
One of the most important things to is the believe in our own ability to change things, this is more true than I think we know. Be the change that we all want to see.
Thanks to Bron, we can all rest assured that there is, and always will be, plenty of infinitely mineable Gold available to supply the market, no matter how insatiable the demand gets. How silly of me and others to worry that there could come a time when you can't even buy a Gold coin for anywhere near the "spot" price. That only happens to less rare metals like Silver, with about 10X the yearly mined supply as compared to Gold, right? That all makes perfect sense, right? These guys must be wrong too… just like all the other "stories" that Bron debunked in his piece linked to by Wroth5;
http://www.zerohedge.com/contributed/2013-04-29/gold-and-silver-coin-and-bar-shortages-globally Premiums for gold and silver bars have jumped higher all over the world. They have surged to multi-year highs in Asia. Reuters reports overnight that premiums are surging due to "strong demand from the physical market, which has led to a shortage in gold bars, coins, nuggets and other products." Shortages of gold and particular silver coins and bars is not confined to the small coin and bar market and there are also supply issues in the larger bar market with kilo bars being increasingly difficult to secure. Swiss refineries are struggling to meet global demand for refined gold bars. They have been cleared out of their stock of kilo gold bars – the preferred form of gold bullion amongst many store of wealth, affluent buyers in Europe and Asia. Buyers have been told that they will have to wait until late May prior to receiving delivery on paid for product. Shortages are most prevalent in the silver coin and bar market where premiums have surged. Silver coins and bars can now not be bought from the largest bullion dealers in the U.S. who have been cleared out of stock in recent days. Unlike after Lehman Brothers where there were shortages and delays of 3 to 4 weeks, there is no guidance being given as to when certain gold and silver coins and bars will be available again.
The link pointed out by wroth5 is interesting. The article was originally posted on Brons blog where there is now another equally interesting article. Erik Townsend recorded a good interview with Bron sometime last year on the mechanism for setting the spot price, but I cant remember where it was posted (maybe Financial Sense). It sort of debunked some of the more extreme market manipulation theories. Also worth checking out the post by Mish. He seems to have a different view from Chris on the recent shenanigans (take down) in the pm market. That difference was not apparent in the latest "Off the Cuff".
But the big picture doesn't change. Regardless of the real reasons for the short term volatility, I recently bought my first pm because as Mish says he likes his chances in the long run. I don't think any of them would disagree on that.
Always interesting and thought provoking posts. You said,
I want to see an end to fiat money that is controlled by bankers.. .banks should just be utilities. The power inherent in the ability to create money corrupts too much, and leads the corruption of our entire political system. I will convert my fiat currency to other forms of money and be the change I want to see.
Be the change that we all want to see.
http://detlevschlichter.com/2013/04/could-bitcoin-be-the-money-of-the-future/ The Decline and Fall of Capitalist Money The 20th century was, broadly speaking, a period of almost constant monetary decay. At around 1900 most economists, politicians and bankers would have correctly stated that global capitalism – an international market economy facilitating the free exchange of goods and services across political borders and thus allowing extensive human cooperation through trade – required an international, apolitical, and hard form of money. Such money was gold. It was the basis of the capitalist economy and it imposed strict discipline on all market participants. Crucially, that included governments and banks. Governments had to operate pretty much like private businesses. They had to balance their books, i.e. live within the means provided by taxation, and if they borrowed money in the marketplace their lenders were at full risk of default as no government could print money (gold) to repay loans or even meet interest payments on loans. Banks, of course, issued banknotes or bank-deposits that were not backed by gold but still used by the public as if they were money proper – these were and still are ‘money-derivatives’ – but again they did so at full risk of default as nobody could ‘print’ bank-reserves (gold again) to bail out the banks in case the public tired of the ‘derivatives’ and wanted to hold gold instead. Over the course of the 20th century – or to be precise, from 1914 to 1971 – the monetary system was completely changed as a consequence of a number of entirely political maneuvers, all of them undermining the quality of money. Today, hard, international and apolitical money has everywhere been replaced with entirely elastic, national and politicized money, with money that central banks issue under a territorial monopoly at no cost and with no meaningful constraints on issuance, and that the central bankers use to ‘manage’ the ‘national’ economy (itself increasingly an out-of-date-concept), and to fund the state and grow the domestic banks (which, under the protection of a lender-of-last-and-first-resort, now issue unprecedented amounts of money derivatives). Today the global monetary map resembles a patchwork of local, “nationalistic” paper monies, each of which is a political tool, often openly manipulated in an attempt to benefit the local export industry at the expense of foreign competitors or to ‘stimulate’ the ethereal concept of ‘aggregate demand’. Not surprisingly, the global economy is drowning in debt (increasingly public sector debt), suffers from a bloated financial sector and international trade tensions, and stumbles from one crisis to another, each one worse than its predecessor. Bizarrely – but not entirely surprisingly – politicians, bankers and modern ‘enlightened’ economists now tell us that this unhinged financial system is to our benefit, really, just trust us. Truth be told, the present monetary system is a hindrance to free trade, properly functioning markets and human cooperation across borders, and it might already be on its last leg. Yet a powerful but entirely misguided, consensus seems to have taken hold of public opinion, namely that ‘elastic’ money could be beneficial if money’s supply was only managed astutely by some clever monetary central planners. I wrote Paper Money Collapse – The Folly of Elastic Money and the Coming Monetary Breakdown to challenge that consensus, to show that ‘elasticity’ of supply is always a negative for money. Elastic money is not needed. It is entirely superfluous. Moreover, elastic money is always disruptive. A monetary system based on an inherently elastic and constantly expanding supply of money is unstable and ultimately unsustainable. The reason why gold made such good money for thousands of years is precisely its essentially inelastic supply.
Maybe Bron can help us understand what is happening to the inventory of the GLD Gold ETF… where is it going, and why? From Turd this morning;
The only other item I have time to discuss this morning is the continued draining of the GLD. It shed another 7.22 metric tonnes on Friday. This brings the total gold in "inventory" down to 1,083.05 metric tonnes, down from 1,349.92 back on January 2. This is a drop of 19.77%. So, for all intents and purposes, the GLD now "holds" 4 bars for every 5 it had back at the first of the year. Friday's withdrawal alone is almost exactly three of these pallets.
In stark contrast, the SLV held 10,084.96 metric tonnes of silver in "inventory" on 1/2/13. As of Friday, it held 10,349.42. UP 2.5%.
Hmmmm.....So were supposed to believe that "investors" are "liquidating precious metal investments" and "re-allocating elsewhere". OK. Well, then, let me ask you this, Bob Pissonme: Why are "investors" only liquidating gold and not silver? Got an answer for that one, big boy?
When this is all said and done, one of the things we'll look back at is this extraordinary draining of the GLD...happening right before our eyes...and so many pundits will express amazement at how they could have missed such a clear warning sign.
Here is my interpretation.. my "story"... hopefully Bron can step in and debunk it so as to calm down my incessent Gold buying; Remember how after the fact, it became apparent that the smart money had come in and out of the Cyprus prior to the officially announced banking haircut crisis?
http://www.zerohedge.com/news/2013-04-10/cyprus-suspends-probe-who-withdrew-money-early
http://www.zerohedge.com/news/2013-03-31/cyprus-presidents-family-transferred-tens-millions-london-days-deposit-haircuts
http://www.zerohedge.com/news/2013-03-28/so-who-knew-february-cyprus-deposit-outflows-soared-three-year-high
and who could forget this great piece, with a little help from Davefairtex;
http://www.zerohedge.com/news/2013-04-08/guest-post-real-cyprus-template-one-youre-not-supposed-notice
Well.. that is what is happening right now, in front of your eyes, with the GLD. The big, smart money knows that GLD is fractionally reserved.. and they know that if they wait until the end of this game.. the point at which fractionally reserved Gold breaks down and the emperor is exposed as having no clothes... why, then they will only get pennies on the dollar in the form of cash settlements, in an environment where real, physical Gold in hand suddendly becomes worth many times more. Smart money is pulling their physical out of GLD by cashing in their shares.. leaving the smaller, dumb money shareholders holding the "paper" bag. Anyone else care to take a stab at why the GLD has been bleeding physical metal so heavily, while SLV has not? Bron? Anybody?
What, you can't afford 400 ounce gold bars? You're just not in the real market.
I hate walking around with those Comex bars in my pockets… so I do in fact avoid them… but that's the only reason : )
Robert contacted us to clarify his response to the question Chris asked him regarding the risk of delivery default to retail gold/silver investors. Here are his further thoughts:
For the individual buyer, there is little risk presupposing they are dealing with an established "brick & mortar" store or one of the established internet / phone order bullion dealers. In the case of the latter, for additional security it is a plus if they are owned by a veteran member of the hard money community and/or have been vetted by organizations such as Peak Prosperity. It is another risk-reducer if the dealer floors his own inventory, thus gold & silver due him from the distribution chain are replacements to his own, rather than brokerage. If a dealer has no inventory, whether live or in route & paid for, he may be well meaning but he is a broker risking your money as we approach the day of reckoning. The longtime veterans of this profession are among the most honorable people I know, and they take care of their customers and obligations whether it is at a profit or at a loss to themselves. They know that their reputation is their most valuable asset.As for default, the Big Risk will come from the top, when physical delivery demand reaches critical mass. The risk will come when we reach the end game of naked shorting. In that event, the banksters and associated governments will turn on themselves. Major failures to deliver will unmask empty storage, empty treasuries, and perhaps some defaults of institutional obligatons resolvable only in part by price or penalty. It is less likely that a national mint or well managed private minter will be a victim of or perpetrator of default. The Perth Mint, for example, sources gold from their own parent Gold Corporation, a direct miner-producer. The U.S. Mint & Royal Canadian Mint will not renege on their confirmed orders. Mexico mint also sources from domestic mines. For the time being, nobody, including the short bullion banks and collaborating governments want there to be any question of confidence in the system. Confirmations of price and ounces will continue to flow down to the small investor.
One last caution: whenever an investment category becomes noticed and opportunistic, it brings into that industry the inevitable sharks and crooks who prey upon investors. In the 1970's & 1980's, we had to compete with instant but highly advertised bullion houses who were "selling", for example, 1 oz krugerrands at under market cost. Of course these boilerrooms would disappear along with their customer's money, but in the interim we legitimate dealers took some flak now and then for being "too high" or "too small to be competitive". Another maneuver to be aware of is a company establishing a relationship with you by being the best deal on bullion, but then moving you into coin collectibles (which you are not familiar with) at prices far above market. Rare coins are a great hobby and sometimes a good investment, but these outfits can get very bold in their mark-ups. If you are going to add rare coins to your bullion position, learn what you are doing and work with established numismatic dealers.
ZeroHedge is an appaling source of infomation. Some ZH contributors PAY to have their articles posted and hey presto all of them have newsletters, or coins etc. to sell. It's called advertising and preaching to the choir/gullible is very lucrative.
There may be ocassional shortages of silver coins and bars, but NO shortage of the metal itself. Mints/refineries have not invested in new plant / coin presses etc.
FreeNLYou're right. There is something missing from the goldbug community. Even decent, intelligent guys like Chris have been sucked into the hysterical nonsense of silver peddlars like Maloney and McLoed. They don't see that the next international monetary system has already been designed, and neither the Fed or BoE has been consulted.
First, 'the bankers' are not all doing the same thing. The Euro/ECB/BIS are on the opposite side of an economic war against the Dollar/FED/IMF. They are trying to allow the collapse of the dollar with the minimum of destruction.
This is what the Euro is for.
The Fed/IMF want gold far in the background (seen as a commodity). A high price of gold damages pereception of the dollar – so gold cannot be allowed to rise too quickly or will accelerate dollar collapse. Plus, Americans do not like buying things that aren't rising in value, so a little volatility helps the moronic media scare citizens away. Paper gold is the instrument used to manage the price of gold.
The ECB marks it's gold reserves to market prices. After dollar collapse, the Euro needs people to own gold as the Euro will be strengthened by a wide dispersement of gold AND a high free market price for gold. The unusual structure of the Euro has not been noticed in the English speaking world. However the Chinese and oil states have noticed - and they support the Euro as it will allow gold to take it's rightful place as final payment in international settlement.
Global support means that the Euro will survive (and expand) despite what Shedlock, McLeod and every other English speaking news source tells you.
Silver's future role is in industry, fancy candlesticks etc. and a very low price will eventually show that. The only people who beleive in silver are Western.
Edit; if you're in NL you can thank a few of your countrymen (long dead) for their foresight in planning for the inevitable winding down of the dollar, decades ahead of time.
as opposed to what, Marketwatch? You may not like ZH, that's fair, but your accusations aren't backed by anything other then your opinion at this point. How else do you expect a free website to pay for their business, donations? They do a very good job IMO of doing research and connecting the dots in a quick, thoughtful manner.
to say that people who read ZH are "gullible" is a bit naive. Most ZH'ers have figured out the farce that our system is and made every effort to fight it. That includes buying bullion on a regualr basis and taking money out of the banking system.
You seem to be very confused about the difference between availability of coins and availability of raw gold and silver. Supply of coins is constrained by production bottlenecks. This says nothing about the underlying supply of monetary metals available.
Wroth… you are correct in saying that the refining and minting processes are bottlenecks in the supply chain that don't necessarily tell the story of the rest of the supply chain from mines – > refiners… that is not a source of confusion at all… BUT;How do you know for sure that there is not stress below in the supply as well? You are just telling us so, but you are not citing any data, sources, etc. I talked above about the drain on the GLD, and I interpret that as a sign of extreme stress in the large bar market. I also would cite Germany's failure to get their bars repatriated from NY until seven years out as another sign of stress in the stores of actual metal. Where is your data?
And, by the way… coins are metal… and while they don't tell the whole story… shortages there do place some degree of stress on the supply chain below. So while I agree with you that coin shortages don't necessarily tell the whole story on a short term supply basis… in the end, if investor demand continues at a high level for coins, this will eventually pass through down to the mines… unless of course price is allowed to solve the supply vs. demand imbalance and more Gold comes out of hiding : )
I just honestly think that the fact that people are buying as much as they are now represents the lack of faith in the "system" that currently is playing out in the world, especially in the USA.
-D
http://truthingold.blogspot.com/2013/04/the-global-fractional-paper-bullion_6103.html
The Global "Fractional" Paper Bullion Market Is Collapsing
I wrote last week that there was a scramble going on globally by entities seeking to take physical possession of the gold on which they have a legal claim, most of which is sitting either in alleged "allocated" big bank bullion vaults or in alleged "allocated" accounts in Comex custodial warehouse vaults. I also demonstrated mathematically, using the reported numbers on the CME website for precious metals futures open interest and warehouse gold/silver stocks, that the amount of gold represented by Comex futures open interest far exceeds the amount of deliverable gold on the Comex (the analysis is even more extreme for silver). In fact, if less than just 10% of the buyers of June gold contracts demand delivery, the Comex won't have enough gold to cover the legal claims. For silver (July silver) it's even more extreme. This is a global problem and not just endemic to the Comex. Globally, the legal claim of ownership on physical gold far exceeds the amount of gold represented by paper futures, LMBA forward contracts, leased gold and vault receipts. The latter - vault receipts - is where the big banks in London have the most severe problem, as gold this is supposed to be sitting in "allocated" accounts under the name of the legal owner who bought and paid for those bars has been largely leased out. I'll get to that in a minute. First, I received this comment from John Brimelow's "Gold Jottings" report, which comes from Gerhard Schubert, head of Precious Metals at Emirates NBD, the largest banking group in the Middle East. Keep in mind that Middle Eastern buyers demand physical delivery of their gold. Here's the quote from his latest weekly report:I have not seen in my 35 years in precious metals such a determined and strong global physical demand for gold. The UAE physical markets have been cleared out by buyers from all walks of life. The premiums, which have been asked for and which have been paid have been the cornerstone of the gold price recovery. It is very rare that physical markets can have a serious impact on market prices, which are normally driven solely by derivatives and futures contracts… I did speak during the week with several refineries in the world, of course including the UAE refineries, and the waiting period for 995 kilo bars is easily 2-3 weeks and goes into June in some cases. A large portion of the 995 kilo bars in the UAE goes normally into the Indian market, but a lot of the available 995 kilo bars are destined for Turkey, at this time. We heard that premiums paid in Turkey have reached anything between US $ 20 and US $ 35 per ounce.The price hit of two weeks ago has triggered a serious scramble for physical gold and silver. Reports like the above comment have been flooding from Europe, the Comex has had about 30% of its gold bars literally drained from the customer accounts of the Comex bank custodian vaults and the U.S. mint is running way behind on demand for silver eagles and some weights of gold eagles. Ditto for the Canadian mint. And then I get a call from a close friend in NYC last Friday. His career has been in private wealth management in the private bank department of the Too Big To Fail banks. He's been looking for work and chats with old colleagues all the time. He called my Friday and told me he just got off the phone with a very high level private banker from a big Euro-based TBTF bullion bank, but who was at JP Morgan until about six months ago. This guy told my friend that there is a scramble by many very wealthy European families/entities to get their 400 oz bars out of the big bank vaults. He knows this personally, for a fact. He said the private banker community is small over there and the big wealthy families all talk to each other and act on the same rumors/sentiment. The Bundesbank/Fed and the ABN/Amro situations triggered this move. He knows for a fact JPM tried to calm fears about 3 months ago by sending a letter to it's very wealthy clients assuring them their bars were safe, in allocated accounts. He said right now those same families are walking into the big banks like JPM and demanding delivery of their bars or threatening to take their $100's of millions in investment portfolios to competitors. His wording was "these people are putting a gun to the heads of private banks and demanding their gold." I know this information is good because I know my friend's background and when he tells me his source is plugged in, the guy is plugged in. Not only that, my friend's source said that there's no doubt that someone like a John Paulson, not necessarily specifically him, but entities like him or it may include him, have held a gun to GLD and demanded delivery of physical in exchange for their shares. Regarding the Bundesbank/Fed situation, recall that the Bundesbank asked to have some portion of its gold sitting - supposedly - in the NY Fed vault in NYC sent back Germany. The total amount is 1800 tonnes. After behind the scenes negotiations, the Fed agreed to ship 300 tonnes back over seven years. To this day, the time required for that shipment has never been explained. Venezuela demanded the return of its 200 tonnes held in London, NYC and Switzerland and received it all within about four months. And regarding the ABN/Amro situation. ABN/Amro offered a gold investment account product that offered physical delivery of the gold in the investment account when the investor cashes out. About a week before the gold price smash, ABN sent a letter to its clients informing that the physical delivery of the bullion was no longer available and that all accounts would be settled with cash at redemption. I believe it was these two events that triggered the big scramble for physical gold by wealthy families/entities who were suspicious of the integrity of their bank vault custodial arrangement anyway. In fact, what we are now seeing is the final stages of the paper gold/silver bullion market, which has grown at a parabolic rate over that last 13 years, and includes Comex futures, LMBA forward contracts, OTC derivatives - which is an even bigger paper market than the Comex - leased gold claims/contracts and warehouse receipts. At some point there will be an even bigger "run on the bank" by those looking for delivery of the physical gold/silver that they have been "assured" is sitting in their "trusty" bank custodian vault. I know for myself that I have seen enough from the JPM's of the world to not trust anything they do or say. I think a lot more people are finally coming to that same conclusion. At some point there will be a complete collapse of trust in the paper monetary system and the price of gold/silver will really go parabolic, as the masses realize all at once - and far too late I might add - that everything that was rumored over the last 13 years about paper gold, gold leasing, etc is actually true.
