Future Gold Prices

Published here: http://goldsilverworlds.com/gold-silver-experts/future-gold-prices/

The internet is filled with predictions for the price of gold, from $500 to $50,000 per ounce. It depends on your world view.

If you are a central banker or a powerful financial player which often supplies loyal employees to serve as Secretary of the U.S. Treasury, the low gold numbers look good.

Or, if you understand the incredible $200+ Trillion of debt the world has accumulated and realize it can’t be repaid, then gold at $10,000 probably looks inevitable. Crashes occur and sovereign debt markets look like paper bubbles with disastrous potential to send gold much higher.

A better approach to estimating future gold prices, in my opinion, is to start with a world view and project relevant gold prices. I suggest three simple scenarios, as I stated in my article, “Silver Prices in Five Years?”

Scenario One – status quo: The next five years could look much like the last 20 – 40 years. Politicians spend too much money, debt expands exponentially, central banks monetize debt and desperately inflate and reflate bubbles to maintain their power and continue the transfer of wealth from the many to the few. This is “status quo” or “more of the same” and indicates that gold prices will rise substantially, but not in a hyperinflation.

Scenario Two – deflationary crash: Deflationary forces overwhelm the financial system and central bankers and politicians can’t or won’t reverse those deflationary forces. In that scenario most paper assets crash while the purchasing power of gold increases far more. Central bankers will do almost anything to avoid this scenario.

Scenario Three – deflation and hyperinflation: Deflationary forces temporarily crash the financial system (signs are visible in 2016-Q1), and eventually central bankers and governments inflate currencies, possibly to hyperinflationary levels in their heavy-handed reaction. In this scenario gold prices will go into the stratosphere – perhaps $5,000 or $50,000+ per ounce. The ultimate gold price in a hyperinflationary scenario is unpredictable since hyperinflationary forces feed upon themselves and destroy purchasing power unpredictably. Gold reached nearly 100 trillion Weimar Marks per ounce in 1923. Gold, if currently priced in 1945 (pre-devaluation) Argentina pesos would be over 10,000 trillion 1945 pesos. Hyperinflation is an ugly, destructive, and unpredictable process, even for a reserve currency.

In Scenario One – more of the same – we can reasonably expect:

Politicians and central bankers will manage the crisis of 2016-2017 as they have most other crises (such as 1987, 1998, 2000, 2008) by increasing spending, addressing an excess debt problem with even more debt, and pumping more “funny money” into the global financial system.

1. Official US national debt increases more rapidly than its typical 9% per year compounded rate. (perhaps 10 – 12% per year)
2. Dollars, euros, yen and other currencies devalue against each other and against real assets. (currency wars)
3. Stock markets collapse further, and then, buoyed by central bank “printing” and currency devaluations, will rise.
4. Depressed commodity prices will move much higher as currency devaluations are aggressively pursued by central banks.
5. People and investors eventually realize that currencies are devaluing and they must avoid over-valued bonds, negative interest rates, crashing stock markets, and paper promises to preserve their savings. Gold prices will rally much higher based on increased investor demand in a supply constrained market.

Given the above “status quo” scenario, the VALUATON model I described in my book, “Gold Value and Gold Prices From 1971 – 2021” is relevant. The model is based on three variables, the official US national debt, the price of crude oil, and the S&P 500 Index. I used prices smoothed with moving averages since 1971 to define the basic trend of gold prices. The correlation of the calculated gold (using smoothed prices) with the actual smoothed annual prices was about 0.98 since 1971.

This valuation model works well within a broad range of economic conditions, including stock and bond bull markets, bear markets, crude oil bubbles and crashes, various forms of Quantitative Easing, Democratic and Republican Presidents, wars, and occasional peace.

Using “status quo” assumptions for future increases in official national debt and crude oil, and a collapsing S&P 500 Index, I created the following graph of “calculated gold” for the next several years.

This is a model based on reasonable assumptions but there is no guarantee those assumptions will be fulfilled. Strange and unexpected events have unfolded in the past decade. Examples:

• In 2007 few expected the S&P 500 to fall below 700.
• Who expected seven years of essentially zero interest rates in the US after the 2008 crisis?
• Three years ago who would have predicted that in excess of $7 Trillion in sovereign debt in 2016 would yield “negative interest?”
• Who in 2013 would have predicted sub-$30 crude oil?

My Point is:

1. Strange and unpredictable events occur in a central banker controlled world dominated by overwhelming debt.
2. Secondary and tertiary consequences of stupidity, wars, QE, ZIRP, and negative interest rates are difficult to predict.
3. A deflationary collapse and hyperinflation are perhaps as likely as the four strange and unexpected examples above.
4. Gold prices in a deflationary collapse or hyperinflationary blow-off are difficult to imagine.
5. The more likely expectation, in my opinion, is a continuation of the “status quo” financial conditions we have experienced since 1971.

The model suggests that a reasonable “status quo” valuation for gold in 2021 is around $3,000. Prices will fall below and occasionally spike much higher than the valuation so a gold price of $5,000 in 2020 – 2022 is plausible. This is not a prediction! It is based on the observation that central banks devalue their currencies, governments spend to excess, and those actions affect the prices for crude oil, stocks, commodities, and gold. The model suggests that central bank devaluations and government actions could push gold prices to $3,000 to $5,000 in roughly five years, as central bank devaluations and government actions have pushed gold prices from about $40 in 1971 to about $1,200 in 2016.

CONCLUSIONS:

• How crazy will it get? The future price of gold is very much dependent upon the reactions of governments and central banks regarding the current deflationary forces.

• Status quo response: $3,000 – $5,000 per ounce is quite possible at some time in 2020 – 2022, if not sooner.

• Deflationary crash response: Gold will substantially increase in purchasing power, but its price in dollars, euros, yen, etc. is difficult to estimate, depending upon the economic damage that occurs.

• Hyperinflationary response: The price of gold will be unbelievably high.

I encourage you to purchase my book, “Gold Value and Gold Prices From 1971 – 2021.” It describes my empirical gold model. That book is available for $11.00 in paperback at www.gechristenson.com and Amazon. E-books are also available.

Protect your assets. Purchase physical gold and silver from Tom Cloud or Roxanne Lewis.

Gary Christenson
The Deviant Investor

Read More

Buffet’s Math Trumped by Gold

Published here: http://www.zerohedge.com/news/2016-02-29/buffet%E2%80%99s-math-trumped-gold

Buffet’s Math Trumped by Gold 

By: Roy Sebag

 

Introduction

Every year, I patiently await the release of Warren Buffet’s Annual Letter written to shareholders of Berkshire Hathaway. Though I have “evolved” when it comes to macroeconomics and my understanding of monetary history, I still consider myself first and foremost a bottom-up deep value investor and view this methodology as the only logical method to analyze, invest, or short securities traded by market participants in a free market. As far as value investors go, Buffet and his mentor Benjamin Graham are not only the best practitioners of the craft but have basically re-invented it and evangelized it. For that, every investor should have and maintain great respect for Warren Buffet, Benjamin Graham and others including Charlie Munger, Irving Khan, Walter Schloss, and David Gottesman.

Value investing is what led Buffett to become the greatest investor of all time. He has, through his initial understanding of value investing, accumulated a collection of nearly 300 businesses spanning the globe. He has also amassed a significant fortune and more importantly, power. The same goes for Charlie Munger. With that power also comes an undoubted level of hubris, patriotism, and dare I say, statism.

Anyone that has followed the two as closely as I have can point to the specific moment when both realized their position of power was far more important to their interests than their ability to deduce market and political behaviour based on logic. It was 2008 when the financial crisis hit. That was when I believe Buffett and Munger realized they had become so successful and so big while the rest of the financial sector was so indebted and insolvent that, unless they started cheerleading, everything they had built would also be lost. It was ultimately fear which led Buffet to support Hank Paulson and even the big banks in stark contrast to his public positions in the prior decade.

I wrote about this in depth in an essay from 2012 which is entitled: “Respectfully Disagreeing with Buffett’s Recent Views on Gold”. I found it difficult to reconcile Buffett’s unsolicited comments about gold with the empirical historical data relating to his investment in silver, his public comments about inflation, and his father’s deep comprehension and support of the gold-standard as a congressman.  Later this year, I will also dismantle Buffet’s comment to Becky Quick on CNBC by demonstrating that gold has actually outperformed the Dow. That piece will show that there has not been any investment vehicle that would have enabled an investor to mirror the performance of the Dow index.

In short, reaching this stage has required a deep understanding of value investing, Berkshire Hathaway’s history, and gold to disprove these arguments, and I am grateful to possess this multidisciplinary approach.

Buffett’s Latest Rhetoric

In Buffett’s 2015 Annual Letter, sandwiched between a logical review of the company’s achievements, is Buffett’s latest attempt to cheerlead and obfuscate. Unfortunately for Buffett, I had nothing to do this weekend and decided to put together a point by point rebuttal to his latest rhetoric and sophistry.

On page 7 of the annual letter, Buffet writes the following:

It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve). As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do.

That view is dead wrong: The babies being born in America today are the luckiest crop in history. American GDP per capita is now about $56,000. As I mentioned last year that – in real terms – is a staggering six times the amount in 1930, the year I was born, a leap far beyond the wildest dreams of my parents or their contemporaries. U.S. citizens are not intrinsically more intelligent today, nor do they work harder than did Americans in 1930. Rather, they work far more efficiently and thereby produce far more. This all-powerful trend is certain to continue: America’s economic magic remains alive and well. [emphasis added]

Here Buffett is obviously taking a jab at politicians and other market participants that state the obvious: The US and other western economies are slowing, labor participation rates are at an all-time low, fertility rates are declining, household formation rates are declining, inflation is rising in the things we need, deflation is creeping in the things we own and most importantly, the gap in wealth inequality keeps growing to unprecedented levels.

These statements are not hypotheses; they are empirical and point toward a deviation from the historical path which made western democracies such as the US the most impressive prosperity machines in history. Buffett is once again fearful as he was in 2008 because he knows very well that the solution to recalibrating the path is the aggressive revaluation of the ratio of global assets to global debt.

Buffet’s creative solution is to leverage his deep understanding of real-inflation which forms the crux of his insurance float business model to obfuscate US data and convince readers that Americans are better off today than they were in 1930 (the year Buffett was born). He elects US GDP per Capita as the metric to convey this view and authoritatively declares that everyone else is “dead wrong”.

“Real” GDP per Capita – Many ways to Skin the Cat

Buffett arrives at a $56,000 2016 “Real” GDP per Capita for the US. He does so by saying “about $56,000”. Now, I could not reconcile this figure, the closest I came was via the St. Louis Fed’s “Real Gross Domestic Product per Capita” figure published here  which comes in at $50,993 for Q4 2015.  Nevertheless, let us take Buffett’s $56,000 figure at face value.

The Real GDP per Capita is calculated by taking the nominal GDP in US Dollars (which we have a history of dating back to 1790) and dividing that figure each year by the population figures. The result is a nominal GDP per capita figure one can trace back to 1790. A good website for perusing this type of data is: www.measuringworth.com. Here is where the monkey magic begins. Economists and now Buffet take this nominal data which is empirical and deflate it with some type of a formula to arrive at what they consider the “real” GDP per Capita figure. This, they claim provides an accurate measurement of historical GDP per Capita figures in today’s unit of account and helps to measure productivity over time.

Of course, any intelligent market participant knows the formula used by most economists (the consumer price index) is severely flawed and doesn’t reconcile with reality. Recently, I published a short piece on ZeroHedge showing how the Economist magazine uses the CPI and other useless formulas to manipulate gold’s true performance.

GDP per Capita Priced in Gold

When it comes to financial analysis, I try and focus on what I consider to be “universal truths”: wisdom or knowledge that is as close to foundational as possible. Mathematics for example, is universally true. Gravitational forces in the universe are also universally true. Buffett’s analysis and conclusion lacks rigor as it relies on a subjective variable (deflating a historical nominal GDP by a CPI index to measure productivity and quality of life) and then disregards the most important one: That 20.67 US Dollars in 1930 was equivalent to 1 Troy Ounce of .9999 or better elemental Gold (Au).

Buffett makes the argument that his $56,000 today is six times better (even after his adjustment for inflation) than the $858 of GDP per Capita each US Citizen earned in 1929 but forgets to mention that $858 in 1929 was equivalent to 41.5 Troy Ounces of Gold in 1929. Here is the math:

 

The result is unequivocal: When measuring on an apple to apples comparison, there has been little to no gain in GDP per capita over the last 86 years in the United States. There is most certainly not a six times increase in productivity nor is there an increase in the quality of life per capita as measured using the same unit of account that was used in 1929. Buffet’s manipulating of the figures without reconciling under the apple to apples gold method is trumped by math.

I have built a graph of US GDP per Capita priced in Gold from 1929 to 2015. On first glance, this graph appears to show that there were in fact times where, as measured on an apple to apples basis, the US was gaining in both productivity and quality of life on a per capita basis.

A part of me agrees with the graph and ascribes the first cycle from 1942 to 1971 as a classic post-war expansion fueled by healthy demographics, sound economic policies, normalized interest rates and the discovery and proliferation of conventional oil as a primary energy source. The second period from 1987 to 2001, in my view reflects the Greenspan era of targeting the gold price with the fed funds rate as he explains in his book “Age of Turbulence”. Though there were many unintended consequences brewing, market observers should agree that interest rates from the early 1980’s to 2001 incentivized savings and productive usage of capital.

Today, we have neither. We don’t have a market rate that incentivizes savings, nor do we have healthy demographics or sound economic policies. Most millennials prefer to remain single and defer household formation. When they do form households, their fertility rates are far lower than their parents.

GDP per Capita Priced in Gold Excluding Government Spending

There is an even more distressing analysis of the GDP per capita figures. In searching through the data, I noticed that government spending as a percentage of nominal GDP has been creeping up from 1930’s through today. If one is to extrapolate productivity or quality of life from GDP per capita as Buffet has done, shouldn’t the government component be excluded? Even the most ardent Keynesian would agree that government spending is not the arbiter of the free market but there to smoothen out the business cycle.

In 1929, government spending as a percentage of GDP was 11.16%. In 2015, it was 36%. Unsurprisingly, the adjustment of nominal GDP each year to exclude government and the subsequent adjustment of the resultant figure to Gold from 1929 to 2015 shows a completely different picture:

Though this graph resembles the prior graph, it’s important to observe carefully. The Gold adjusted Ex Gov Spending GDP per Capita figure shows less pronounced cycles than before. This is crucial as it indicates a longer-term asymptotic decline in peaks achieved by the US economy when excluding government spending. For market participants familiar with technical analysis, this resembles a “lower high” chart pattern. More importantly, the 2015 Gold adjusted Ex Gov Spending GDP per Capita figure is $35,690 down 17.3% over 86 years vs. $43,157 which was the same figure for 1929.

Conclusion

We cannot prosper as a society unless we are using the right measurement tools. In this piece I showed how Warren Buffet was able to fool most people into believing they are six times better off today than their ancestors. It’s easy to convince anyone of anything if the author is both brilliant, powerful, and has an artifice through which they can distort the past. By using a measurement tool that is totally arbitrary such as the CPI to deflate nominal GDP per Capita, Buffett attempts to show empirical and logical analysis.

In reality, he diverted the public’s attention from a critical factor: that the historical dollars were redeemable in gold.

If you understand basic science and elementary physics, you will quickly grasp why only gold should be used as a measuring system for our productivity and prosperity. Most people who own gold don’t fully understand why they do. In my encounters with leading gold investors and market participants, the smartest own it because they understand it to be antithetical to everything else in financial markets. Another popular axiom is: It’s an “asset” without counterparty risk or an “insurance policy”. These are reasons for owning gold that miss the critical reason for why gold ascended as money in the first place. For those interested, I recommend these two pieces. The answer has little to do with economics and lots to do with physics:

Why Gold – BitGold.com by Roy Sebag and Josh Crumb

Gold Price Framework Vol. 1: Price Model by Stefan Wieler and Josh Crumb

At GoldMoney Inc. (TSX: XAU.V), we continue to build the world’s first full-reserve and gold-based financial services company offering savings, payments, wealth services, custody, execution, and research for nearly 750,000 clients in 200 countries. By doing so, we empower people around the world to measure their prosperity with something remarkable and timeless.

 

Read More

Gold-Silver Ratio Breakout Report, 28 Feb, 2016

Published here: http://www.zerohedge.com/news/2016-02-28/gold-silver-ratio-breakout-report-28-feb-2016

The gold to silver ratio moved up very sharply this week, +4.2%. How did this happen? It was not because of a move in the price of gold, which barely budged this week. It was due entirely to silver being repriced 66 cents lower.

This ratio is now 83.2. It takes 83.2 ounces of silver to buy an ounce of gold. Conversely, it takes 1/83.2oz (about 0.37 grams) of gold to buy an ounce of silver.

This ratio is now within a hair’s breadth of breaking out past the high set on Oct 17, 2008. See the historical graph (based on LBMA silver fix and PM gold fix data, provided by Quandl).

The Historical Ratio of the Gold Price to the Silver Price

Monetary Metals has been predicting a ratio well over 80 for a long time. And for two months, we have been calling for it to go much higher still. Could there be a correction? Absolutely. Could the fundamentals change? We expect they will—at some point. We will call that when we see it.

Speaking of the fundamentals, read on for the only true picture of the gold and silver supply and demand fundamentals…

But first, here’s the graph of the metals’ prices.

        The Prices of Gold and Silver

We are interested in the changing equilibrium created when some market participants are accumulating hoards and others are dishoarding. Of course, what makes it exciting is that speculators can (temporarily) exaggerate or fight against the trend. The speculators are often acting on rumors, technical analysis, or partial data about flows into or out of one corner of the market. That kind of information can’t tell them whether the globe, on net, is hoarding or dishoarding.

One could point out that gold does not, on net, go into or out of anything. Yes, that is true. But it can come out of hoards and into carry trades. That is what we study. The gold basis tells us about this dynamic.

Conventional techniques for analyzing supply and demand are inapplicable to gold and silver, because the monetary metals have such high inventories. In normal commodities,
inventories divided by annual production (stocks to flows) can be measured in months. The world just does not keep much inventory in wheat or oil.

With gold and silver, stocks to flows is measured in decades. Every ounce of those massive stockpiles is potential supply. Everyone on the planet is potential demand. At the right price, and under the right conditions. Looking at incremental changes in mine output or electronic manufacturing is not helpful to predict the future prices of the metals. For an introduction and guide to our concepts and theory, click here.

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. The ratio was up substantially. 

The Ratio of the Gold Price to the Silver Price

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide
brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

        The Gold Basis and Cobasis and the Dollar Price

The price was basically unchanged. The cobasis (i.e. scarcity) was also just about unchanged. This, by the way, was also true for farther-out contracts although we only show April in this free Report.

We calculate a fundamental gold price of over $1,440. This is the price we would have if the price effect of speculation was subtracted out of the market. Who would be shorting gold at this point? We have an idea of one group that may appear sacrilegious to the gold community.

Let’s get it out of the way. No, it’s not the Powers That Be, the commercial banks, the central banks, or the Illuminati. It’s the silver bugs. Consider the widespread belief—at least outside of readers of this Report—in silver outperformance. Who doesn’t think the ratio should be far lower—50 for starters, on the way to 16 as in Ye Times of Olde?

How would you trade this thesis? You would short gold futures and go long silver futures in equal dollar amounts. This would of course push up the price of silver, and push down the price of gold

We would say to anyone in this trade to be careful, but obviously they don’t read this Report. If you must trade this trend, you should do the opposite: long gold, short silver (and be wary of violent corrections).

How do we explain that the price of gold is 15% below its fundamental, while the price of silver is only at a 2% premium? The silver market is less liquid than the gold market, so equal dollar values of this trade would push the silver price up more than it would push the gold price down.

We have two thoughts on this. One, if most traders think of the metals as commodities—we saw yet another article on this theme today—and if commodities are in a bear market, then the metals are hated. Perhaps silver would be 30% under its fundamental—i.e. about $10—if it weren’t for this trade that alters the relationship of silver to gold.

Maybe. Our other thought is that if this is a new bull market in gold—i.e. a bear market in the dollar—it’s in stealth mode at the moment. Mainstream traders are not excited about gold speculation. They’re not buying gold futures, and may even be short. We are aware of the Commitment of Traders report (COT), showing that non-commercials (i.e. speculators) have a net long position. It’s the commercials (i.e. miners and jewelers) who have the short position. Perhaps it’s the miners putting on more hedges—i.e. selling more of their production forward. Maybe it’s the reduced forward buying of the gold users.

Whatever the factors, one thing’s for sure. The price of gold in the futures market is sagging relative to the price of gold in the spot market.

Our approach is not based on aggregate quantities. That’s why we don’t stop at the COT data. We look at spreads. Spreads inform us in a way that strict quantity analysis cannot. If you doubt this, ask how many COT analysts predicted the price action in silver or the ratio.

This graph shows the rates we observe to carry gold for contracts in 2016 (i.e. basis).

        The Gold Bases for 2016 and LIBOR

These yields are hardly worth anyone’s while to buy gold and sell a future against it, not to mention that the cost of funding this trade is about twice the return on the trade. Carrying gold does not pay, because gold is not abundant enough in the market to be available to carry.

Now let’s look at silver.

The Silver Basis and Cobasis and the Dollar Price

In May silver, we see the scarcity (i.e. cobasis) drops on Tuesday when the price of the dollar falls (i.e. the price of silver rises), and a rising scarcity as silver is becoming cheaper. It’s no surprise that the big rise in scarcity occurred on Friday, with the big drop in price. No question, futures sold off.

Another glance confirms it. Look at the epic drop in the basis. It’s down almost to match the gold basis (though the cobasis is nowhere near what is in gold). To review, here are our definitions:

Basis = Future(bid) – Spot(ask)

Cobasis = Spot(bid) – Future(ask)

The basis is down because the bid on the May contract is being pressed down. Silver—at this price—is no longer so abundant. The basis is well below LIBOR. However, it’s not particularly scarce. The ask on the May contract is still strong, still being lifted by buying pressure.

Last week, we showed a picture of “icicles” dripping on the chart of spot silver.

This is in contrast to the futures chart. First, thanks to several folks who wrote to say that these are usually called “shadows”. We used the term icicle because of its connotation of dripping down. We believe that the cause is that metal is being sold, pushing the price down. But then that creates an actionable arbitrage to carry silver. So the market makers buy spot and sell the future. This does two things. One, obviously, it records a trade in the spot market at ask price and lifts the ask. Two, it presses the bid price in the futures market.

If this is correct, then silver is intermittently abundant. At times when there’s selling of metal in the spot market, it’s abundant enough to go into the warehouse. At other times, and we’ll see more of this if the price falls further, it’s not so abundant.

The fundamental price of silver fell about a nickel this week. The market price is much closer to the fundamental now.

This brings us to the ratio. The fundamental on the ratio hit over 100 this week.

What does it mean that the market ratio is just about to break out past its 2008 high, while the fundamental is predicting we could hit the record set in 1991? Ironically, the gold-silver ratio is showing something that most mainstream signals cannot.

The seasonally adjusted unemployment number looks brilliant at under 5%. The S&P 500 index of stocks is only about 10% off its highs from the first half of last year. Sure, there’s that epic collapse in the price of crude oil and other commodities, but pay no heed. Cheap oil means cheap gas which gives money back to consumer who can spend spend spend our way to prosperity.

The gold to silver ratio is showing us that the junior money is getting cheaper relative to the senior money. It is showing us that the metal which has industrial demand as well as monetary is falling relative to the metal whose demand is entirely monetary. It is also showing us that tightening credit conditions are starting to matter. So far as silver is concerned, credit conditions today match those which existed in October 2008.

 

© 2016 Monetary Metals

Read More

Why Is The Dutch Central Bank Suddenly Moving Its Gold? And Why Is ABN Amro Becoming Bullish?

Published here: http://www.zerohedge.com/news/2016-02-28/why-dutch-central-bank-suddenly-moving-its-gold-and-why-abn-amro-becoming-bullish

An interesting fact has hit the newswires earlier this week, as the Dutch Central Bank confirmed it was looking to (temporarily?) move its gold reserves to another secure location. The DNB claims it has to renovate its vaults and thus needs to store the yellow metal elsewhere and that’s quite surprising as the central bank repatriated a large part of its gold reserves less than 18 months ago.

If this renovation has been scheduled a long time ago, why were the Netherlands so anxious to bring its gold back home? And why is the central bank using ‘renovations’ as the official reason even though some officials have indicated the DNB might be looking to permanently store the gold elsewhere?

Of course, as it’s a government institution, ‘poor planning’ always is a very valid excuse and even though it would make more sense to first think where the DNB would store the gold, politicians and commissioners appointed by the political system aren’t really known to make the best decisions. But there’s another possibility here. Officially, the Dutch central bank is no longer leasing its gold to commercial counterparties, but the possibility the central bank has been forced into a corner by the other central banks is not impossible.

Source: Vossen.info

The demand for physical gold is booming, and it’s a very big coincidence the Dutch Central Bank is considering to move its gold again during these volatile times. After all, we can’t imagine the bank will find a suitable place to store almost 200 tonnes of gold within the next few quarters or years so if the renovation of the bank is really necessary, where do you think the DNB will have to store its gold again? Yes, indeed, in the vaults of another foreign central bank.

This could indicate two things. First of all, it’s possible the DNB has been asked to do certain other market participants a favor by delivering physical gold upon their request as some parties on the futures-market might be unable to effectively deliver the gold their futures are representing. There obviously is no hard evidence to support this theory but even by looking at just the retail sales of the US Mint, the gold sales have more than doubled compared to last year. In the first 7 weeks of this year, the total amount of American Eagles minted and sold consisted of almost 200,000 ounces gold whereas the total demand for gold in January and February (full month) was less than 100,000 ounces in 2015 and just 120,000 ounces in 2014. So the demand for bullion is definitely there, both from retail and from central banks.

China still remains the largest net purchaser of gold as the country acquired 128 tonnes of the precious metal (4.1 million ounces) in just December and January so the total amount of physical gold available for other market parties is very low. In fact, we estimate China took delivery of a total amount of gold in 2015 equivalent to 40% of the annual world production and that should tell you a lot, as India also imported a total of 1,000 tonnes of the yellow metal. So, the total demand for physical gold from India and China combined is the equivalent of in excess of 70% of the total gold production in the world, and that’s massive.

Source: 24hgold.com

Throw in the fact the total amount of registered gold at the COMEX (the gold that is available for physical delivery) has reached multi-year lows (see the previous image), and the decision of the Dutch Central Bank to think about ‘relocating’ the gold again is very intriguing.

On top of that, ABN Amro, which has been extremely bearish on the gold price, predicting we would see $800-900 soon has now completely changed its mind and is now predicting to see $1300  before the end of this year.

An acute outbreak of gold fever? Time will tell!

>>> Protect Your Wealth: Download our New Gold Report

Secular Investor offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies are transformed into the Gold & Silver Report and the Commodity Report.

Follow us on Facebook @SecularInvestor [NEW] and Twitter @SecularInvest

Read More

Silver Prices: This Will Continue to Lift Silver Prices Higher

Published here: http://www.profitconfidential.com/silver/silver-prices-this-will-continue-to-lift-silver-prices-higher/

Gold and silver prices are being driven higher by global economic weakness and the growing number of central banks implementing negative interest rates. While gold and silver prices normally have a negative relationship to a strong U.S. dollar and low interest rates, that’s not the case this time around. And until the global economy registers sustainable growth, gold and silver will continue to be one of the most attractive investments out there.
Gold & Silver Rise on Growing Fears of a Global Recession
After years of unsustainable double-digit growth, the stock.

The post Silver Prices: This Will Continue to Lift Silver Prices Higher appeared first on Profit Confidential.

Read More

Silver-screen playbook

Published here: http://www.economist.com/news/business/21693594-how-make-hit-film-silver-screen-playbook?fsrc=rss

IN 1983 William Goldman, a screenwriter, coined the famous saying that in Hollywood, “Nobody knows anything” when it comes to predicting which films will succeed at the box office. To find out how true that remains, we have analysed the performance of more than 2,000 films with a budget of more than $10m, released in America and Canada since 1995, to see which factors help make a movie a hit.

Crunching information from The Numbers, a website that collects data on film releases, and Rotten Tomatoes, an aggregator of critics’ and punters’ reviews, we found that the strongest predictor of absolute box-office receipts is a film’s budget. Even if it got no boost from its cast, from favourable reviews or other factors, a movie would generate an average of 80 cents at American and Canadian cinemas for every dollar a studio promises to spend on it. A film’s budget is announced while it is in production, to create a buzz and signal its quality—though in practice its true cost may vary from the announced figure.

The more a studio commits to producing a film, the more it is likely to spend on advertising it. The budget also helps...Continue reading

Read More

“Buy Gold” As “Insurance Is Warranted” – Deutsche Bank

Published here: http://www.zerohedge.com/news/2016-02-26/%E2%80%9Cbuy-gold%E2%80%9D-%E2%80%9Cinsurance-warranted%E2%80%9D-%E2%80%93-deutsche-bank

“Buy Gold” As “Insurance Is Warranted” – Deutsche Bank

Buy gold as "insurance is warranted", Deutsche Bank have advised in a note issued today.

The embattled German bank has said that rising economic risks and market turmoil mean investors should buy gold for insurance.

Market Performance - 2016 YTD via Finviz.com 

"There are rising stresses in the global financial system; in particular the rising risk of a U.S. corporate default cycle and the risk of a sharp one-off renminbi devaluation due to the sharp increase in China's capital outflows," Deutsche Bank added." Buying some gold as 'insurance' is warranted," as reported by CNBC.

 

LBMA Gold Prices
26 Feb: USD 1,231.00, EUR 1117.58 and GBP 878.87 per ounce
25 Feb: USD 1,235.40, EUR 1,121.41 and GBP 887.10 per ounce
24 Feb: USD 1,232.25, EUR 1,122.33 and GBP 885.52 per ounce
23 Feb: USD 1,218.75, EUR 1,106.62 and GBP 863.43 per ounce 
22 Feb: USD 1,203.65, EUR 1,088.17 and GBP 849.21 per ounce

After initial falls again on Sunday night, Monday morning, gold has eked out slight gains this week in dollar and euro terms and has seen more strong gains in sterling terms as sterling continues to weaken on BREXIT and UK economy concerns.

Silver is lower in dollars and euros but has made small gains in sterling terms ($15.12/oz, €13.74, £10.80).

Gold and Silver News and Commentary
Gold moves revive memories of 1990s currency crisis - CNBC
Gold rises as bullish technicals, fund flows counter equity gains - Reuters
Asian Stocks Jump With Metals as Zhou Sees Easing Room - Bloomberg
Gold Tops Silver by Most Since 2008 as Investors Fret on Growth - Bloomberg
Jobless Claims in U.S. Rise in Holiday Week From Three-Month Low - Bloomberg

Gold Bulls Predict $US2,000-Plus Prices - ABC
Gold the ‘Superhero’ May Shoot Up to $1,400: Top Forecaster - Bloomberg
Aggressive Silver Capping Continues - Silver Seek
Deliverable Silver Stocks At The COMEX Reach Historic Low - Silver Seek
Why Some Think Australia's Housing Market Is Due for a 2008 Moment - Bloomberg

Click here

www.goldcore.com

Read More

Silver Prices: Last Time This Happened, Silver Prices Soared 800%

Published here: http://www.profitconfidential.com/silver/silver-prices-last-time-this-happened-silver-prices-soared-800-percent/

Here’s Why Silver Prices Could Soar 800%
This is a message to silver investors: there’s something interesting happening with silver prices and it shouldn’t be ignored. It suggests the precious metal could soar well over 800%.

Before jumping to any conclusion, please look at the chart below and pay close attention to the blue line and the circled areas..

The post Silver Prices: Last Time This Happened, Silver Prices Soared 800% appeared first on Profit Confidential.

Read More

Silver Buy Signal – 2016

Published here: http://goldsilverworlds.com/gold-silver-experts/silver-buy-signal-2016/

The gold to silver ratio has been used for years to indicate buy and sell zones in both gold and silver. Why?

• At BOTTOMS in both gold and silver, based on 40 years of history, silver prices have fallen farther and faster than gold. Hence the gold/silver ratio reaches a relative high.

• At tops in both gold and silver the ratio is often low since silver rises more rapidly than gold. As Jim Sinclair says, “silver is gold on steroids.”

Examine the following graph of the gold to silver ratio (monthly data) for the past 40 years. I have circled the six most extreme highs in the ratio with green ovals.

At 5 of 6 extremes in the ratio silver was at or near a long term bottom. The one minor exception was when silver bottomed in November of 2001 at $4.01 and the ratio peaked later in May 2003. Otherwise the ratio was quite accurate at indicating major silver lows.

For more confirmation, assume a silver buy signal occurs when an extreme in the gold to silver ratio has been reached, and the weekly silver price closes above its 5 week moving average.

Monthly Ratio Extremes Silver (weekly) closes above

(green ovals above) 5 week MA

June 1982 July 2, 1982

August 1986 September 5, 1986

February 1991 March 8, 1991

May 2003 April 11, 2003

November 2008 November 28, 2008

February 2016 January 29, 2016

The six major highs in the gold to silver ratio are marked above with green ovals, and also marked below on the log scale chart of COMEX silver. Note that 5 of 6 price lows were accurately indicated by the ratio highs, with the November 2001 price low being a minor exception.

SO WHAT?

Using the above simple analysis, silver hit a multi-year low in December 2015 and has confirmed that low by closing above its 5 week moving average AND registering a gold to silver ratio slightly above 80, the highest in about 20 years and the most extreme peak since the 2008 crash lows in gold and silver prices.

Silver hit a low on December 14, 2015 at $13.61. The price on Feb. 24, as this is written, is $15.43, nearly $2 higher. Of course the paper silver market will flop around as it is managed by High Frequency Trading but the ratio provides more evidence that a silver bottom occurred about two months ago.

Note the logarithmic lines on the silver price chart. The lines are somewhat arbitrary but roughly represent a lower bound, a middle trend-line, and an upper blow-off line. The middle trend-line passes through $25 in 2016 and the red line shows that $50 silver is one good rally away. We will see $50 silver, perhaps in 2017.

Stacking silver makes sense – silver thrives and paper dies.

For more information on silver demonetization and possible future prices for silver, read my novel “Who Killed Doctor Silver Cartwheel?”

Gary Christenson
The Deviant Investor
www.gechristenson.com

Read More

Silver Prices: This Could Send Silver Prices Soaring 32%

Published here: http://www.profitconfidential.com/gold-investments/silver-gold-investments/silver-prices-this-could-send-silver-prices-soaring-32/

One Reason to Be Bullish on Silver Prices
So far, 2016 has been good for silver prices. The gray precious metal is up more than 10%, while other assets are generating losses. Don’t be shocked if there are more gains ahead.

This maybe a bold claim—and there are not many who are saying this—but I say silver prices are severely undervalued. The basic fundamentals of supply and supply are screaming that much higher prices could be ahead.

I have talked about the demand for the gray precious metal in these pages before. (You can read more here: “.

The post Silver Prices: This Could Send Silver Prices Soaring 32% appeared first on Profit Confidential.

Read More

Marc Faber: This Is Why Everyone Needs to Own Gold and Silver

Published here: http://www.profitconfidential.com/gold/marc-faber-this-is-why-everyone-needs-to-own-gold-and-silver/

In a negative interest rate environment, zero-yielding gold and silver become a high-yield asset, according to perma-bear investor Marc Faber.

“Leave a million dollars with a bank, and in a year, you get only something like $990,000 back,” Marc Faber, publisher of The Gloom, Boom & Doom Report, told Bloomberg. “I would rather want to own some solid currency, in other words gold.” (Source: “Gold Bulls Feast as More Central Banks Drive Rates.

The post Marc Faber: This Is Why Everyone Needs to Own Gold and Silver appeared first on Profit Confidential.

Read More

Published here: http://www.zerohedge.com/news/2016-02-22/2012-2015-us-gold-supply-deficit-lot

 

 

Hold your real assets outside of the banking system in a private international facility  -->  http://www.321gold.com/info/053015_sprott.html 

 

 

2012-2015 U.S. Gold Supply Deficit: A LOT

Posted with permission and written by Steve St. Angelo, SRSrocco Report (CLICK FOR ORIGINAL)

 

 

 

The U.S. suffered another sizable gold supply deficit in 2015. Matter a fact, the deficit was 50% larger than in 2014. In 2015, total U.S.gold demand was 118 metric tons (mt) higher than total supply versus 77 mt in 2014.

According to figures put out by the USGS, World Gold Council and Thomson Reuters GFMS,the U.S. had a total of 553 mt of gold supply compared to 671 mt of total demand… leaving a 118 mt shortfall for 2015:

Here is how I arrived at the figures shown in the chart above:

U.S. Gold Supply & Demand Figures 2015

Domestic Mine Supply = 213 mt

Gold Imports = 265 mt

Estimated Scrap = 75 mt

Total Supply = 553 mt

Gold Exports = 478 mt

Domestic Consumption = 193 mt

Total Demand = 671 mt

Total Deficit = 118 mt

American gold consumption increased from 179 mt in 2014 to 193 mt in 2015. The majority of the increase was due to higher Gold Bar & Coin investment. According to the World Gold Council Full Year 2015 Report, Americans purchased 132 mt of Gold Jewelry and 47 mt of Bar & Coin in 2014 versus 120 mt of Gold Jewelry and 73 mt of Bar & Coin investment in 2015.

What was interesting was the huge spike of U.S. Gold Bar & Coin demand during the third quarter of 2015. This was at the same time when the retail silver market suffered extensive shortages with upwards of two month wait times on certain products. Americans purchased 33 mt of Gold Bar & Coin in Q3 2015, 45% of the total for the year.

While some precious metal investors do not trust any of the data that comes from the World Gold Council or Thomson Reuters GFMS, I believe the figures for the U.S. are pretty accurate. If we look at Gold Eagle sales from July-Sept 2015, they totaled 397,000 oz while Gold Buffalo sales were 74,000 oz. Thus, total sales of these two official gold coins equaled 471,000 oz or 14.6 metric tons. The remaining 18.4 mt of Gold & Bar & Coin for Q3 2015 was in from other official coins and bars (such as Gold Maples) and private bars and rounds.

U.S. Exports Every Bit Of Its Gold Supply In 2015

Now, if we were to exclude U.S. gold scrap supply and domestic consumption, this would be the result:

U.S. domestic gold mine supply of 213 mt and imports of 265 mt (478 mt) is the same total of gold exports at 478 mt. Basically, the United States exported every bit of its mine supply and imports abroad.

U.S. Four-Year Gold Supply Deficit Equals One Hell Of A Lot Of Gold

If we add up total gold supply and subtract total demand since 2012, the United States suffered one hell of a deficit:

As we can see from the chart above, the U.S. experienced annual gold supply deficits since 2012. In 2011, the U.S. actually enjoyed a 215 mt surplus. What was interesting is that during the years when the price of gold surged (2009-2011), the U.S. reported more annual surplus. However, since the price of gold peaked (2011), it has been one annual deficit after another. I believe this is due to a significant “Trend Change” by the Eastern countries to acquire as much gold as they can get.

If we add up the annual gold supply deficits from 2012 to 2015, it totals 568 mt, or a massive 18.3 million oz (Moz). To give you an idea of how much gold that is, it equals all the Gold Eagles sold by the U.S. Mint from 1988-2015, 18.3 Moz:

So, in just the past four years, the total U.S. gold supply deficit equals all the U.S. Gold Eagle sales for the past 28 years. That’s a one hell of a lot of gold. It amounts to a $22 billion gold supply deficit, based on a $1,200 current market price multiplied by 18.3 Moz.

I will be writing more articles on the U.S. and Global gold supply-demand forces. However, the basic takeaway is this… physical gold continues to be drained from the WEST and shipped to the EAST. As we can see from the data in this article, the U.S. continues to export all of its domestic mine supply and imports abroad, while using its scrap supply for consumption purposes.

Which means, the present American Gold Ownership Strategy is to EXPORT IT ALL, JUST LET US KEEP THE SCRAPS.

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

2012-2015 U.S. Gold Supply Deficit: A LOT

Posted with permission and written by Steve St. Angelo, SRSrocco Report (CLICK FOR ORIGINAL)

 

 

 

 

 

 

Read More

Silver Prices in Five Years?

Published here: http://goldsilverworlds.com/gold-silver-experts/silver-prices-in-five-years/

What will the price of silver be in 2021? You can find articles suggesting the price of silver will be over $1,000 and under $10. Perhaps this is the wrong question.

A better approach: The global financial system is increasingly unstable and fragile, more so than in 2008. The important question is: How will governments, central banks and financial systems respond to the ongoing crisis? Future prices for silver are dependent upon the answer to that question. I suggest three possible scenarios.

Scenario One – status quo: The next five years could look much like the last 20 years. Politicians spend too much money, debt expands exponentially, central banks monetize debt and desperately inflate and reflate bubbles to maintain their power and continue the transfer of wealth from the many to the few. This is “status quo” or “more of the same” and indicates that silver prices will rise substantially, but not in a hyperinflation.

Scenario Two – deflationary crash: Deflationary forces overwhelm the financial system and central bankers and politicians can’t or won’t reverse those deflationary forces. In that scenario most paper assets crash while the purchasing power of silver increases far more. Central bankers will do almost anything to avoid this scenario.

Scenario Three – deflation and hyperinflation: Deflationary forces temporarily crash the financial system (signs are visible in 2016-Q1), and eventually central bankers and governments inflate currencies, possibly to hyperinflationary levels in their heavy-handed reaction. In this scenario silver prices will go into the stratosphere – perhaps $150, or $1,500, or $15,000 per ounce. The ultimate silver price in a hyperinflationary scenario is unpredictable since hyperinflationary forces feed upon themselves and destroy purchasing power unpredictably. Gold reached nearly 100 trillion Weimar Marks per ounce in 1923. Gold, if currently priced in 1945 (pre-devaluation) Argentina pesos would be over 10,000 trillion 1945 pesos. Hyperinflation is an ugly, destructive, and unpredictable process.

In Scenario One – more of the same – we can reasonably expect:

Politicians and central bankers will manage the crisis of 2016-2017 as they have most other crises (such as 1987, 1998, 2000, 2008) by increasing spending, addressing an excess debt problem with even more debt, and pumping more “funny money” into the global financial system.

1. Official US national debt increases more rapidly than its typical 9% per year compounded rate. (perhaps 10 – 12% per year)
2. Dollars, euros, yen and other currencies devalue against each other and against real assets. (currency wars)
3. Stock markets collapse further, and then, buoyed by central bank “printing” and currency devaluations, will rise.
4. Depressed commodity prices will move much higher as currency devaluations are aggressively pursued by central banks.
5. People and investors eventually realize that currencies are devaluing and they must avoid over-valued bonds, negative interest rates, crashing stock markets, and paper promises to preserve their savings. Silver and gold prices will rally much higher based on increased investor demand in a supply constrained market.

Given the above “status quo” scenario, the VALUATION model I developed for silver prices over the past century is relevant. The model is based on three variables, the official US national debt, the price of crude oil, and the Dow Jones Industrial Average. I used smoothed silver prices over the last century to filter out short term fluctuations to highlight the basic trend of silver prices. Note the correlation of the “calculated silver” price with the actual smoothed silver prices.

This valuation model works well within a broad range of economic conditions, including stock and bond bull markets, bear markets, crude oil bubbles and crashes, various forms of Quantitative Easing, Democratic and Republican Presidents, wars, and occasional peace. The Excel calculated statistical correlation over 100 years is 0.95.

Using “status quo” assumptions for future increases in official national debt and crude oil, and a collapsing Dow Jones Industrial Average, (similar to the collapse of 2008) I created the following graph of “calculated silver” prices for the next several years.

This is a valuation model so prices can, for months at a time, drop below the calculated value by perhaps 30% and spike higher by 100 – 200%. Given the “calculated silver” price in the year 2021 of approximately $50 per ounce, a spike higher could easily reach $100 – $150 per ounce without hyperinflation.

Regarding Scenario Three:

Hyperinflation and massive currency devaluations, which could occur, would invalidate the above “status quo” model and suggest that silver prices could reach four digits and higher. Crazier things than $1,000 silver have occurred and will happen again. Reminder: The price of gold in Argentina pesos, adjusted for devaluations since 1945, would be in the thousands of trillions of pesos per ounce.

CONCLUSIONS:

• How crazy will it get? The future price of silver is very much dependent upon the reactions of governments and central banks regarding the current deflationary collapse.

• Status quo response: $100 per ounce (or more) is plausible at some time in 2020 – 2022, if not sooner.

• Deflationary crash response: Silver will substantially increase in purchasing power, but the price in dollars, euros, yen, etc. is difficult to predict, depending upon the economic damage that occurs.

• Hyperinflationary response: The price of silver will be unbelievably high.

I encourage you to purchase my book, “Gold Value and Gold Prices From 1971 – 2021.” It describes my empirical gold model which is similar to the above described silver model. That book is available for $11.00 in paperback at www.gechristenson.com and Amazon. E-books are also available.

Protect your assets. Purchase physical gold and silver from Tom Cloud or Roxanne Lewis.

Gary Christenson
The Deviant Investor

Read More

The Escalating War on Cash and What It Means For Metals

Published here: http://goldsilverworlds.com/gold-silver-experts/the-escalating-war-on-cash-and-what-it-means-for-metals/

Government bureaucrats, central bankers, and Wall Street executives all have their own reasons for hating the cash in your wallet. So, no surprise, they are working closely together to rid you of it.

The war on cash is intensifying and bullion investors are wondering what the transition to a “cashless society” might mean. We’ll cover that, but let’s first recap why these organizations are, once again, allied together to the detriment of your ability to transact privately.

The self-interest of bureaucrats is one factor. They don’t like privacy. They dream of the day when they can access all of your spending with just a few keystrokes. The knowledge will help them more aggressively tax and regulate.

Central bankers want something a bit different. The policy du jour among these central planners is NIRP – negative interest rate policy.

Bankers in Switzerland, Sweden, Denmark, and Japan have already launched NIRP. Their counterparts elsewhere, including the U.S., are planning for it.

The challenge is to create an environment where customers must either spend their savings or pay their bank interest to hold deposits. To succeed, the government must corral citizens into purely electronic money. Otherwise many will simply withdraw cash and hide it under a mattress. When you have to pay a bank to borrow your money, holding physical cash gives you a higher yield, i.e. 0% interest is a higher yield than negative 1%!

Bank executives are licking their chops at the potential for all transactions to be done electronically. They stand to rake in processing fees every time you use your card or cell phone to make purchases rather than using cash. Plus they will gather a larger deposit base as customers no longer have the option of holding paper money outside the banking system.

People need to keep these motivations firmly in mind, because politicians and bankers aren’t going to be honest about why they want to eliminate cash. Wall Street wants you to focus instead on the convenience of electronic payments. And bureaucrats are busy stigmatizing cash as a tool for drug dealers, tax cheats, and terrorists.

Perhaps Americans will see through the propaganda and recognize just how dangerous a cashless society would be to their wealth and privacy. They might decide to punish banks such asJPMorgan Chase for no longer accepting cash payments on loans and insisting customers not put cash in their safe deposit boxes. They may ask their elected representatives to oppose any measure to eliminate paper bills.

However, most Americans aren’t paying much attention to the issue. Congress is barely accountable, and the Federal Reserve isn’t accountable at all. A restriction on cash could indeed be imminent. That’s certainly the goal of the “Better Than Cash Alliance”.

If citizens ultimately lose the War on Cash, here are some likely ramifications for precious metals investors.

Negative rates should drive significant demand for gold and silver. NIRP is a testament to the fact that central bankers will try literally anything to produce inflation. Such an extraordinary policy should set off alarm bells for anyone who isn’t concerned about inflation, or is betting on deflation. If central bankers want inflation, they have the power to create it. As always, inflation fears will drive demand for physical bullion.

The good news is that while bureaucrats can theoretically win the War on Cash because they have complete control over the issuance of paper money, they cannot win a war on bullion. Metals don’t roll off a printing press that can simply be switched off. Physical bullion is private and off-the-grid – a nightmare for regulators.

If they attempt taxes and regulation, they will fall victim to the law of unintended consequences. But that may not stop them from trying. It’s happened before – most recently in India. Indian officials dramatically hiked the tariff on imported gold in 2013 They accomplished little more than angering a gold-loving population and driving an eight-fold increase in gold smuggling.

Politicians and their friends in banking aren’t going to stamp out peoples’ desire, or their ability, to transact privately using barter instruments such as gold and silver coins. And they aren’t going to force unwilling people to stand idly by as they take shears to savers; bank accounts. The push to eliminate cash will inevitably push people into cash alternatives including physical precious metals.

Clint Siegner is a Director at Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

Read More

Published here: http://www.zerohedge.com/news/2016-02-19/david-haggith-economy-failing-all-over-world

 

 

 

Hold your real assets outside of the banking system in a private international facility  -->  http://www.321gold.com/info/053015_sprott.html 

 

 

David Haggith: The Economy is Failing All Over The World

Posted with permission and written by Rory Hall, The Daily Coin (CLICK FOR ORIGINAL)

 

 

 

I love the credit card commercials on TeeVee and how they talk about “cash back”, “cash bonus”, “cash this” and “cash that” – “what’s in your wallet?” We are being trained to believe that a piece of plastic is “money”. Gold is money and everything else is credit. Paper “dollars” is a representation of money and credit/debit cards are an illusion of money. What happens to our lives, our human rights, if cash is outlawed?

As George Carlin says, “No body seems to notice, no body seems to care.” That, unfortunately, is a fact. When you have football games, hockey games, baseball games, basketball games, endless hours of TeeVee to watch, how could a person be expected to follow some trivial item like the government banning cash?

Totalitarian creep is moving into hyperdrive. Almost on a daily basis we see another article in mainstream media about a “cashless society”. If you follow the Liberty Movement and/or alternative press then you are aware the drums for a cashless society are beating louder and louder every day.

What does it mean to the average person on the street to live in a cashless society, where all commerce is conducted electronically? One of the more horrific aspects is that if you step out of line and you have a legal issue, say a traffic ticket, then your account could be seized, drained of all it current resources and you are left with nothing until your account is replenished in a few days or a few weeks.

How often does your current employer issue a bank draft/direct deposit to pay you? If you work for a large company then you are being trained to live in a cashless society. Most of the larger companies will not issue a hard check or pay you in cash – bank draft/direct deposit only. Say you don’t have a bank account? Well, then you had better get one, otherwise, you have two choices: work for free or find somewhere else to work and since, by law, you are not allowed to work for free, you have only one option.

What about interest on your checking and savings account? What about fees for transactions that are currently being paid by the seller? In most cases those fees are passed along to the buyer but in a cashless society you no longer have a choice in paying those fees or not. Yeah, it’s only 1.5-3% of the purchase price, but if you would rather not pay that fee you are out of luck. What about freedom of choice? What if you don’t want to purchase “X” car but prefer “Y” car? What if the transaction fees were used in a way that made you think twice about the car you actually want versus the car the government wants you to buy? Now what?

You know, the government can steer what you’re going to spend your money on by saying some things we’ll charge you bigger transaction fees. It just gives endless ways to manipulate the economy down the road. Because you don’t have the option of saying “You know what, I don’t like any of this so I’m taking my money out of the bank.” You can’t because there’s no cash. – David Haggith 

As our economy continues slipping into the abyss of the unknown the central banksters around the world are becoming more desperate as the days go by. Since the Federal Reserve stopped “stimulating” the economy, which was nothing more than giving the too big to jail banks free money, the stock market is falling, the gapping wholes in the global economy are coming into view and the world wide recession/depression is becoming all too real.

Japan was the first economy to implement negative interest rates – you know, where the bank charges you for the privilege of using your money – it is not working. The Japanese economy is still in free fall. Europe is up next as is the U.S. to give this “twilight zone” monetary policy a try. It is going to fail in both Europe and the U.S., the same way it has failed in Japan. The final outcome of all this nonsense will be a cashless society and we will be forced to hand over all our cash and allow the government, in conjunction with the too big to jail banksters, to “save us”.

I penned an article, Breaking Away from the System, soon after launching The Daily Coin. In that article I pleaded with the audience to consider an alternative to the current dollar based system. I suggested small business owners begin accepting gold and silver as payment for their goods and services. I am asking again for small business owners to consider this as an option. If we don’t hang together, we will surely hang separately. – Benjamin Franklin. Benjamin Franklin is the President that adorns the $100 note and is the first note in question by Larry Summers in making this banksters dream, total control, come true.

 

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

 

David Haggith: The Economy is Failing All Over The World

Posted with permission and written by Rory Hall, The Daily Coin (CLICK FOR ORIGINAL)

 

 

 

 

 

 

 

 

Read More

Gold Costs 80oz of Silver, Report 21 Feb, 2016

Published here: http://www.zerohedge.com/news/2016-02-22/gold-costs-80oz-silver-report-21-feb-2016

The big news is that the gold-silver ratio closed at 80. This is not only a new high for the move. It’s higher than it has been since 2008.

It’s also exactly what Monetary Metals has been calling for. Last week, we said the gold fundamental was $1,450 and the silver fundamental was $14.90 (i.e. a fundamental value for the ratio over 97 last week). This week, the ratio moved up, and it’s now 1.3 points closer. In other words, silver got cheaper when measured in gold terms.

We had a soggy dollars spotting this week (our term for an article that’s misleading or based on false assumptions). A gold mining executive declared that the people are losing faith in the central banks. The take-away was clear: the gold trade is on again! buy gold now, to make big profit$.

It should be bloody obvious that he just wants you to bid up the price of the product his company sells (i.e. gold). He wants to make money (i.e. dollars).

But that aside, our larger point is that articles like this (and there are plenty of them) are quite ironic. When there is a loss of faith, there will be a great paradigm shift. No longer will people think of gold going up, but of the dollar going down (and finally, collapsing). That is not occurring today. These articles exist just to rationalize a trade. The dollar still enjoys the full faith of everyone—most especially the gold bugs who need a currency in which to measure the worth of their gold, and in which to take their profit$ when they sell.

Read on for the only true picture of the gold and silver supply and demand fundamentals…

But first, here’s the graph of the metals’ prices.

       The Prices of Gold and Silver

We are interested in the changing equilibrium created when some market participants are accumulating hoards and others are dishoarding. Of course, what makes it exciting is that speculators can (temporarily) exaggerate or fight against the trend. The speculators are often acting on rumors, technical analysis, or partial data about flows into or out of one corner of the market. That kind of information can’t tell them whether the globe, on net, is hoarding or dishoarding.

One could point out that gold does not, on net, go into or out of anything. Yes, that is true. But it can come out of hoards and into carry trades. That is what we study. The gold basis tells us about this dynamic.

Conventional techniques for analyzing supply and demand are inapplicable to gold and silver, because the monetary metals have such high inventories. In normal commodities, inventories divided by annual production (stocks to flows) can be measured in months. The world just does not keep much inventory in wheat or oil.

With gold and silver, stocks to flows is measured in decades. Every ounce of those massive stockpiles is potential supply. Everyone on the planet is potential demand. At the right price, and under the right conditions. Looking at incremental changes in mine output or electronic manufacturing is not helpful to predict the future prices of the metals. For an introduction and guide to our concepts and theory, click here.

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. The ratio was up to a new record weekly close. 

The Ratio of the Gold Price to the Silver Price

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

       The Gold Basis and Cobasis and the Dollar Price

The dollar went up a quarter of a milligram (i.e. the price of gold fell nine bucks). And the scarcity of gold (i.e. the cobasis, shown in red) fell a little.

That said, there’s still quite a bit of scarcity in the gold market. Although our fundamental price of gold is down 13 bucks, it’s still over $1,435. And that’s over $200 over the current market price.

Our prediction of a rising gold-to-silver ratio is not based on the common pattern of both metals going down—in dollar terms—with silver going down more.

As we noted in a prior report, it becomes easier to see in gold terms. The dollar and silver are both going down now—in gold terms.

Now let’s look at silver.

The Silver Basis and Cobasis and the Dollar Price

We finally switched from looking at the March silver contract to the May. First Notice Day for March is a week from Monday and the bases are becoming very volatile. That said, and unlike in the past, the silver basis for March is still positive. We coined the term temporary backwardation, because contracts for gold and silver—and silver much more than gold—tended to tip into backwardation as they approached expiry. Not in silver now, at this price.

Unlike the trivial price move in gold, the one in silver was more substantial—40 cents. The silver cobasis (our scarcity indicator) barely budged. It’s still in the basement, rising from -1.55% to -1.51%. For reference, the gold cobasis is -0.32%.

We have been observing a pattern for several weeks. We wrote about this phenomenon a while back. I am talking about “icicles” on the price chart. They occur in the spot price, but not futures. Here is a picture of most of the trading day (times are Arizona time).

Notice the visual difference between the two. Spot has these dripping lines, where the price temporarily fell but then recovered before the close of the time period. These happen to be 15-minute candles, but the same thing occurs with other periods. If you watch it in real time, you see the price drop, then drop, then drop, then snap back. Repeatedly. This has been going on for weeks.

On the futures chart, the drooping lines are much less frequent, and appear more balanced with lines above (like what one would expect with normal market price fluctuations during any 15-minute block on any actively traded security).

What does it mean?

We think it shows in the price chart what we see in the basis. The silver basis is showing weak demand. For the May contract, the basis is 78 bps. This is the yield (quoted as an annualized percentage) that you can earn by carrying silver—buying metal and selling a future against it. It’s a spread, with no price risk, for a 3-month position. For reference, 3-month LIBOR is about 60 bps. The silver carry trade is attractive right now. Certainly, it’s much more attractive than carrying April gold, which yields 13 bps (annualized).

We think that what’s happening is that the price of silver metal is selling down, and every time the carry rises to a threshold, arbitrageurs are buying spot to sell futures and pocket that spread. If they wait for opportune moments, we’re sure they can make over 1%.

The marginal demand for silver is to go into carry trades, into the warehouse (we do not mean necessarily to be stored in a COMEX approved depository and this has nothing to do with those persistent rumors that the COMEX depositories are running out of metal, that they’ve sold the metal 100 times over, etc.) We are looking at marginal supply and marginal demand here.

The risk is that today’s marginal demand—namely the warehouse—can turn off abruptly. And it can become tomorrow’s supply.

Silver in the futures market—silver paper, you will—has more robust demand than silver metal in the spot market.

Metal, of course, is often bought unleveraged by hoarders. Paper is often bought by speculators, who could be using 10:1 leverage. We realize that this is not the Narrative that circulates in the silver bug community. Yet these icicles on the price chart offers another look, using a different data set than what Monetary Metals normally focuses on.

The fundamental price of silver fell a few pennies more than the market price this week. It’s about 80 cents below market.

The fundamental price of the ratio rose even more.

 

© 2016 Monetary Metals

Read More

While The ECB Starts A 'War On Cash', European Citizens Start Hoarding!

Published here: http://www.zerohedge.com/news/2016-02-21/while-ecb-starts-war-cash-european-citizens-start-hoarding

The European Central Bank has shed some more light on its operations in 2015, the year wherein it decided to forget about the free market economy as the bank has become one of the main market participants now.

The Central Bank’s net income from the asset purchase program increased from 2M EUR to 161M EUR, and the asset purchase program was responsible for the 9.4%  increase in the net profit of the bank. Indeed, the ECB has made a very handsome profit of almost 1.1 billion Euro, which was distributed amongst the national central banks in the Eurosystem.

Source: ECB

What’s more important is the fact the size of the balance sheet of the ECB is increasing again. At a very fast pace! The total value of the balance sheet of the Eurosystem was 2.8T EUR as of at the end of 2015 (which is approximately $3.1 trillion). That’s a substantial increase compared to just 2.4 trillion last year, and there are no signs of seeing the expansion of the balance sheet slowing down as not only will the ECB continue its asset purchases, it’s even considering to expand its monetary easing program by stimulating the markets even more.

At the same time, the war on cash has started, and several officials and market participants have claimed the bank notes of 500 EUR (and even 200 EUR) should be banned, whilst for instance in the USA, Larry Summers wants to get rid of the $100 dollar bill. It’s understandable the governments are getting nervous about the force of people drawing down cash and hoarding their cash (and other assets) outside of the traditional banking system. Perhaps the next chart explains everything in just one powerful image.

Source: yardeni.com

The total amount of bank notes has increased by 57% since the end of the global financial crisis, and this really is an indication the European citizens still don’t trust financial institutions with their assets. It’s truly remarkable to see such a sharp (and steady!) increase of the total amount of bank notes in circulation and it’s totally understandable why this makes the monetary powers ‘nervous’.

Source: Santander presentation

On top of that, the situation in for instance Portugal seems to be deteriorating once again. The country has been trying to convince the European Commission and the ECB it knows what it’s doing and that it has a plan to get the country back on the right track, but apparently that’s not what the ECB-team saw in Lisbon. The mainstream media seems to have fully ignored this report, but we feel this could be an important problem as it seems to be just a matter of time before Portugal will need a new bail-out.

While the authorities have committed to comply with European budgetary rules, the effort to reduce the underlying structural budget deficit needs to be significantly increased. […]The adjustment in the underlying structural deficit in 2016 reflects an insufficient consolidation effort. […]Banks continue to consolidate their balance sheets, albeit at a slower pace than previously observed, and have seen minor improvements in profitability. […]high levels of non-performing exposures continue to weigh negatively on profitability and capital.

This doesn’t really make us feel comfortable at all, and as the European economy still isn’t improving, Portugal might have to beg the institutions for more cash.

>>> Protect Your Wealth: Download our New Gold Report

Secular Investor offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies are transformed into the Gold & Silver Report and the Commodity Report.

Follow us on Facebook @SecularInvestor [NEW] and Twitter @SecularInvest

Read More