The price of gold is down about 11 per cent in 2015 and nearly 45 per cent from its September 2011 nominal peak. Commodity prices are collapsing around the globe amid an economic slowdown. By the Federal Reserve raising rates, it may or may not strike another blow against the gold trade. But, don't tell the gold bugs. The US Mint said it sold 97,000 ounces of American Eagle gold coins in November, marking a 185 per cent monthly jump and a 62 per cent gain from the same period in 2014, Reuters reported. Silver coin demand also surged and already has broken the record it set last year.
Peter Schiff said “The demand is there. It's growing. It's even greater outside the US than domestically … The reality is that there's never been a better time where people should be buying gold than now. Currencies are being intentionally and deliberately debased around the globe, interest rates are at absurdly low levels and likely to stay there for the indefinite future.” He also thinks buying gold and silver is a great way to profit from the coming crises, and he explained that silver whilst having more volatility than gold there is more upside potential in silver relative to gold, given the ratio is very extreme in gold's favor against silver. He also said “I would look in this bull market, when the new bull market resumes, and if gold is $2,000, $3,000, $5,000, wherever it ends up maybe higher than that. I think the appreciation of silver on a percentage basis will be even higher…”
Rob Kirby, a macroeconomic analyst and expert in gold helps his ultra-wealthy clients attain gold by the ton. He says “They can't get enough of precious metals. They scour the earth looking for large amounts of metal … People that I work with represent money so large that they know they're going to end up in the very end game, that they are going to end up with a whole lot of dollars that are going to be worth nothing. They accept that, but in the meantime, they are going to convert as many of those dollars as they can into things that are tangible and are going to maintain value once the world gets it and realizes the US dollar is tapioca and is worth nothing.” Kirby also said “… Gold has a derivative complex, futures and options connected to it where price discovery is nonexistent. People who have an interest in making the dollar look strong can sell paper contracts and keep the real price of gold suppressed.” Can the “powers that be” do this indefinitely? Kirby says, “Not a chance in a finite world. You see, to keep the game running, they need an endless supply of physical precious metal which they don't have. When they run out of physical metal to back up the fraudulent paper exchange, the game runs out.”
Egon Von Greyerz, founder and managing partner of Matterhorn Asset Management AG (MAM) says this about the tight supply of gold and silver “As I have discussed many times, the physical market for gold and silver is very tight. Bullion banks have low stock levels and central banks have leased or sold a major part of their gold. But since they refuse to be properly audited, they are desperately trying to hide the real position. China and India are continuing to buy more than the annual production of gold by the miners. And the supply situation from the refiners is tight with delivery delays for bigger orders.” He also says this about the strength of the US dollar “Gold seems very weak, but that is only in US dollars. In virtually every other currency gold is holding well. That includes the Euro, the Pound, the Canadian dollar, the Australian dollar, the Yen, even the Swiss Franc and of course weaker currencies like the Ruble as well as most others. The dollar is on its last swansong. The strength could last a bit longer but the reserve currency of the world is living on borrowed time. The technical picture for gold is indicating misplaced optimism for the dollar bulls. And fundamentally the most indebted country in the world will soon realize that the road to prosperity cannot be built with printed pieces of paper. No economy that runs budget deficits for over 50 years and current accounts deficits for over 40 years can survive. Retail sales are declining and the major retailers trading is under real pressure. Industrial production is weak and so is housing. Freight and trade is declining fast and these are important advance indicators of economic activity.” On the intrinsic value of paper gold he says “But just like the paper money printing will fail so will the creation of paper gold. It makes absolutely no sense that unlimited supply of paper gold should have any value. I don’t believe that we are far from the point when the paper gold holders will realise that the intrinsic value of their paper is ZERO. The geopolitical situation in the world is also looking very grim. Sadly the war industry is likely to prosper greatly in coming years. And investors in the bubble assets of stocks, bonds and property will see a wealth destruction that they could never have imagined whilst holders of physical gold and silver (held outside the banking system) will maintain their purchasing power and preserve wealth.”
Von Greyerz also said “Gold should not be bought for speculation or for a short term investment. Instead, for the privileged few that have savings, gold should be bought as insurance against a rotten financial system and in order to preserve wealth. But remember it must be held in physical form and stored outside the banking system. When we advised investors in 2002 to put an important percentage of financial assets into gold at $300, our target was $10,000 in today’s money. We still stand by that target as a minimum. The problem for the world is that we are unlikely to have today’s money for very much longer because soon all central banks will print unlimited amounts of money to try save the world financial system from collapsing. But sadly, solving a problem using the same method that caused it will not work and eventually we will see a deflationary implosion of the financial system. But before that we will have a brief period of hyperinflation that in nominal terms could take gold to $100,000 or $100 million.”
38% of all gold in Hong Kong Comex warehouse left on November 13. Roughly 21 tonnes, or 685,652 troy ounces of gold in .999 fine kilo bars, was withdrawn, net of a small deposit of 27,328 ounces, from the Brinks warehouse in Hong Kong. To put that into some perspective, that is the same amount of all gold in the entire JPM warehouse in the US. And that is a potentially dangerous development, especially with respect to a commodity that is being traded at a leverage in excess of 300:1. And in the face of shrinking inventories of gold available for delivery at current prices in both New York and London. And if people should choose to stand for physical delivery given the relative scarcity, how much of a price adjustment might be required if they could even find any to be had without an onerous delay and in sufficient numbers?
300 paper contracts that never result in physical deliver. If the paper contracts were all considered fraudulent, gold would jump in value. $315,000 an ounce?
One of the world's top gold producers says market dynamics may well lead to shrinking gold supplies in the future. Randgold Resources Ltd. CEO Mark Bristow told Bloomberg that half the gold mined today is not viable at current prices. In other words, many mines aren't even hitting their break-even point on half of the gold they dig out of the ground. That means new supplies of gold could begin to dry up in the near future. Amplifying this problem is the fact that many companies have already mined the easily accessible ore on their claims, leaving only gold that will prove much more difficult and expensive to dig out of the ground, according to Bloomberg:
“Gold miners buffeted by the drop in prices are shortening the life of mines by focusing only on the best quality ore, a practice known as high grading, which will restrict future output and support higher prices, according to Bristow. He said in a presentation to bankers in Toronto that the industry life span is down to about five years because companies have been aggressively high grading at the expense of future production.”
The latest World Gold Council Report hints at the coming supply squeeze. Year-over-year quarterly mine production shrank by 1% to 828 tons in the third quarter of 2015.
“The long term indication is that supply will remain constrained as the mining industry continues to proactively manage costs and optimize its operational performance. The reductions in expenditure on activities such as exploration and development will likely have a detrimental effect on production levels in the future.”
Some experts even predict the world will soon reach what is known as peak gold. This means that the amount of gold being pulled out of the earth will begin to shrink every year, rather than increase, which has been the case since the 1970s.
Chuck Jeannes announced in September that he believes the world will reach “peak gold” either this year or next. Jeannes serves as the chief executive of the world's largest gold mining company, Goldcorp, so he certainly understands the dynamics of gold supply. And last April, Goldman Sachs analysts predicted gold production would peak in 2015, saying there are “only 20 years of known mineable reserves of gold and diamonds.”
Meanwhile, gold demand continues to surge. Global gold demand in the third quarter of this year grew a healthy 8%.
Given all the data, it appears the gold industry will soon enter a long-term and potentially irreversible period of tight supply, even as demand remains robust. Investors would be wise to take note of the fundamental dynamics on both supply and demand side of the gold market, and not just focus on the current economic data or most recent Federal Reserve pronouncements.
Asian countries are not only buying up gold, they also have a huge appetite for silver. Chinese imports for silver are on record-breaking pace this year, driven partly by strong demand for jewelry and industrial applications such as solar panels. According to the Wall Street Journal, based on the current trend, Chinese silver imports will top 3,000 tons in 2016, making it the best year since 2011.
“China which accounts for around one-fifth of global silver demand imported 282 tons of the precious metal in October, up 36% year-over-year. Its total imports of 2,678 tons in the first 10 months of the year are already around the same level as achieved in the whole of 2014.”
The Chinese aren't alone in their silver binge. Silver demand in India has remained robust after a record-breaking 2014. India accounts for another 10% of global silver demand.
The bottom line is Chinese and Indians value gold and silver. And once they get it, they are reluctant to let it go.
Right now it takes over 77 ounces of silver to buy one ounce of gold, the so-called gold/silver ratio. So far this century, on average, it has taken less than 60 ounces of silver to buy one ounce of gold. Just get back to that level silver would have to jump 30% higher than today's price. For all of the 20th century it took just 47 ounces of silver to buy one ounce of gold and historically that is 65% higher than today's prices. In 2011, when precious metals prices peaked, the ratio got down to 30/1. To be able to buy one ounce of gold would be 30 ounces of silver. That is 158% higher than it trades today. In 1980 it took just 17 ounces of silver to get one ounce of gold. It makes sense to hold a portion of your investments in physical silver.
China continued adding to its gold reserves and accelerated its pace in November. According to Bloomberg, the Chinese upped their stash of gold an estimated 21 tons in November, the largest increase in at least five months. China announced its gold holdings for the first time in six years in July. Since then, it has continued to buy gold, adding 14 tons in October, 15 tons in September, 16 tons in August, and 19 tons in July. Many analysts say the gold buying spree was part of China's strategy to stabilize the yuan as it pushed for inclusion in the IMF's benchmark currency basket. China isn't the only country growing its reserves of gold. Russia and Kazakhstan are also buying up gold. Central banks and other institutions boosted gold purchases to the second-highest level on record in the quarter to September, according to the World Gold Council. Central bankers recognize the value of gold as a stabilizing force and a traditional store of wealth. Wise investors will follow their lead and buy gold
Axel Merk from Newsmax says in his 2016 outlook to take an alternative look at your investments and diversify your portfolio with underlying assets that aren't highly correlated with one another. He says specifically to embrace gold since gold has been a profitable diversifier in each bear market since 1971, except for the one induced by Paul Volcker in 1980.
Investors around the world continue to wake up to the fact that the collapse of the World's Greatest Financial Ponzi Scheme in history is approaching faster than ever. We are seeing the demand for Global Gold Exchange Traded Funds (ETFs) decline 2011 to 2015 compared to the previous five years, it went negative by 21.2 million ounces. This was in stark contrast to the huge increase in demand for physical gold bars and coins of 208.8 million ounces during the same time period. The same trend is happening in the silver market where investors purchased 994.1 million ounces of physical silver bars and coins during the 2011 to 2015 period compared to 18.2 million ounces in the Global Silver ETFs.
Bill Holter from JS Mineset says “The money worldwide is FAKE. Gold is, has been and always will be REAL money. Gold is God's money. That's what this is about. This is about forcing the population of the world to us FAKE money and the REAL money is being accumulated.” And in a world of increasingly worthless fiat Bill reminds us of one critical fact, “Silver is a no brainer. Silver is the cheapest ASSET on the planet.”
Hugo Salinas Price says “When push comes to shove, China, with 1.3 billion or more population, will take unorthodox measures. The pressure of the enormous population of China, made up of quite intelligent men and women, is going to force its government to stop adhering to international covenants. China will take whatever measures can offer hope to the Chinese. China will then say to the world: “We sell cheap. Very cheap. But, we sell for gold, for very little gold; and we pay with gold for what we buy – for very little gold, but we pay gold. You want our stuff, you find a way to pay us in gold. Or else, what do you have to offer us, in exchange for our stuff? You have something we want – we pay in gold. Rest of the world, do as you please.” The nations of the world are not going to flounder endlessly in the crisis that is upon us. Out of the huge crisis, China will break away and state its terms. And the terms will be: GOLD. The rest of the world will follow.”
Pastor Williams, myself and many financial analysts and reporters as well as Pastor Williams' Elite friend has suggested for some time that owning a significant amount of physical gold and silver. People across the world consider gold and silver money, including the Elite themselves. They have for thousands of years. If our governments eliminate paper currency, you won't be able to store wealth by keeping cash at home or in a vault. You'll have to store all your cash in digital form, at a bank, or another financial institution.
With gold and silver, you can store a portion of your wealth at home or in a vault, outside the banking system. And, unlike cash in a bank, reckless government printing and spending cannot destroy the value of gold and silver.
At $1050 its trading at less than cost of extraction and refinement. Therefore, not too long before gold vaults run dry. The current spot price for gold is no longer workable, we are going to start seeing some high mark-up prices going past peak gold. China is sucking up physical gold for their strategy of inclusion within the SDR and JPM and Comex Hong Kong are virtually empty. Ultimately WHEN, not IF the crash happens, there will not be enough life rafts for everyone. Its only a matter of time before the major crisis hits that will see the SDR unveiled. Those in the know are already cashing out of paper and into tangibles.
Pastor Williams pleaded with you to get prepared by September 15th, 2015. The reason was what has been said within this newsletter. Its time to get as much physical gold and silver as you possibly can. If you do not have a local dealer you already have a relationship with, I recommend GoldCo who are experts in transferring your paper into physical precious metals whether you have cash or a retirement account to convert into gold and silver. They can guarantee delivery within 7 business days. Call GoldCo NOW toll-free on 1-877-414-1385 before it is too late!
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Gold mining costs vary by company, but it is well documented under $1000/oz inefficient companies would be unprofitable. Only the most efficient companies could survive $800/oz gold, and even then they would be in trouble after a few quarters at that price. So $800/oz is as low as it could really go before miners start shutting down.
Silver below $10/oz, only the efficient miners survive. So we are close to a bottom. I fully expect gold to test under $1000/oz this spring.
Real estate is simply a function of interest rates, short term it will still keep chugging on, going up in price. But will be worthless in a collapse. Try to time it at your own risk.
Job 31:24-28New International Version (NIV)
24 “If I have put my trust in gold
or said to pure gold, ‘You are my security,’
25 if I have rejoiced over my great wealth,
the fortune my hands had gained,
26 if I have regarded the sun in its radiance
or the moon moving in splendor,
27 so that my heart was secretly enticed
and my hand offered them a kiss of homage,
28 then these also would be sins to be judged,
for I would have been unfaithful to God on high.
Massive Crash Coming, All World Markets Confirming it – Bo Polny Interview Update
https://www.youtube.com/watch?v=1sZ0tXp7F5w
Jim Willie: Ruminating 2016 With TF Metals Report
http://www.tfmetalsreport.com/podcast/7357/out-old-jackass
A huge thank you, Mr Harkin for all of these articles. Obviously a huge time and energy commitment, which is deeply appreciated. All the best to you as we face the coming new year!
It seems like the collapse had been delayed yet again, and lower gold prices are to be continued for the foreseeable future. Why else would James post all these articles if the “big one’ was imminent?
Delayed or just trying to aim the best at their target?
Geopolitics and economics are hardly perfectly timed. But, can anyone question that the debt and the ruin of the economy is not inevitable? The music will stop and we will see that there are not enough money seats left to sit on. Bank runs, closings along with a large share of people’s savings vanishing. Chaos will rein.
Bailing out the banks and letting the Fed run wild has opened up the gaping maw of the jaws of hell.