David Schectman

Quotes of the Day

I have placed most of my assets in physical gold and silver on the assumption that over any extended period of time silver and gold will retain their purchasing power.

Deflation is in the air and its chief component is oil. The chart of oil below confirms the deflationary aura of today's markets. Trend followers accept the crash of oil prices as a confirmation of the deflationary environment. In the meantime I am happy with my position in physical silver and gold. Oil companies can theoretically go broke, but gold has been around for 6,000 years, and remains the basis of every monetary system. Gold cannot go bankrupt ... Silver cannot go bankrupt ... Diamonds cannot go bankrupt ... since all of these represent eternal wealth. 

- Richard Russell, Dow Theory Letters, November 21, 2014

Today's Featured Articles

Richard Russell (At last, I consider that gold has completed a major base. I'll be surprised if we see gold descend again to test its supported at 1100)

LeMetropole Caf� (Was GLD Gold Moved To The Dutch Central Bank?) (Why silver should go ballistic WITHOUT hyperinflation)

Bloomberg (Fed May Limit Wall Street Role in Commodities, Citing Risks)

Zero Hedge ("Gold Is Money And Nothing Else" - JP Morgan's Full December 1912 Testimony To Congress) (Asian Gold Traders Suspicious Of Recent "Turbo Steroid Moves") (Gold & Silver Surge, Recover Swiss Gold Poll Losses As EURCHF Hits Lows)

Sprout Money (Column: The Asians Are Picking Up The Gold Sold By ETF's)

Lawrence Williams (Gold bounces back above $1 200 - will it jump higher?)

Bill Holter

Is COMEX Being Cornered? 

November 24, 2014

It is with a deep sense of gratitude that I have had all of you as friends and associates during what has been a long war, not a good war, but a very long "financial war."  As you know from these writings; this has been a war conducted by the Federal Reserve against the entire world, aided and abetted by major international banks via the manipulation of most every market on the planet.  The ethics and morals our country was originally built on ...be darned!

The events mentioned herein relative to the suppression of gold and silver using dollar hegemony as the tool indicate a major international monetary crisis is dead ahead, this is obvious.  Power in the hands of the few have made massive gains for those at the top of the economic ladder while the average man has become a debt slave to the few.  There are of course the laws of Mother Nature and "unintended consequences".  Those at the top who intend to "rule the world" are being challenged from the East in what I believe to be almost a winner take all "war."  It did not have to be this way but the "West" has forced this.   

I have never written "this is my most important writing ever!" but that day has now come.  So many events have all aligned at once which point to something very bad happening, very soon.  In fact, "very soon" could be as soon as the Monday following this Thanksgiving.  We saw many different events unfold over this past week which I believe are all connected in one way or another, I will try to connect them for you.  That said, please understand that we are and have been in a financial war for many years now.  This "war" is one between the East and West where the West's paper financial system which has been in control for so many years is seeing its power wane.  It is this "wane" of the West versus the rise of the East that I believe is now, finally coming to head.

If you recall, we had two Fridays in a row where gold and silver prices were smashed early in the overnight hours and into the morning, only to turn around violently and close very strongly for the day and the week.  This action is called an "outside reversal day" which over the years has been an extremely rare event in the precious metals.  It has been rare in precious metals because it was not "allowed."  When I say "allowed," please remember that COMEX is a paper exchange where possessing metal is not necessary to sell gold or silver.  All you have to have is "money" to post as margin and you are allowed to sell as many contracts as you have margin for.  There are "limits" to how many contracts one can buy or hold, these limits do not seem to have been enforced on the sell side ...JP Morgan's short position in silver as an example.

So we had two outside reversal Fridays in a row, this was followed by the action this past Wednesday.  80 tons of gold was sold over a 15 minute timespan which knocked gold down $20 in the blink of an eye.  Please see the chart below courtesy of Dave Kranzler of IRD.

80 tons!  Let me put this in perspective.  80 tons is equal to two weeks' worth of global gold production ...sold in just 15 minutes!  This is nearly 2.8 million ounces. The interesting thing is COMEX only claims to have 865,000 ounces of gold available for delivery so more than 3 times the amount of ounces were sold in 15 minutes than is even claimed as available for delivery! What followed however was the real stunner, very shortly afterward gold dug in its heels and started to recover ...recover to unchange in price!  Do you see the importance here?  Though this was not another outside reversal day, it may have been even more important.  The "paper" market absorbed two weeks' worth of production in just 15 minutes without breaking!  I'll get back to this shortly and tie it in to the rest.

If you recall, I wrote a piece back in August entitled "Kill Switch" where I put forth a hypothesis that the high and rising open interest in silver was actually the Chinese via proxies cornering the silver market.  The huge open interest in the nearby contract rolled out to the December contract.  At that point, the open interest in gold was at multi year lows as one would expect with prices down.  This has changed, just over the last 4-6 weeks, the open interest has steadily built in gold ...while continuous pressure still on the price.  Before going any further, I have never seen the open interest rise to multiyear highs while the price was pushed to multi year lows in ANY commodity.  This is truly an anomaly and one that looks like it could be resolved very shortly.

This coming Friday is the 1st notice day for both Dec. COMEX gold and silver contracts.  COMEX in my opinion has a potentially huge problem where a default in both contracts is a distinct possibility!  As of this past Friday, 61,763 contracts still open, this represents 308 million ounces of silver.  The COMEX claims a registered (deliverable) inventory of just under 65 million ounces.  With only four days left there are roughly 5 silver ounces contracted for every one ounce available! 

The situation in gold has quietly become much worse than silver, there were 162,509 Dec. gold contracts open which represent over 16 million ounces of gold.  The "registered" (deliverable) category at the COMEX inventory shows only 868,910 available to deliver!  Do you see the problem here?  There are only 4 days left until this contract goes into the delivery process, yet there are 20 ounces contracted for each ounce available!  I have one other amusing thought for you, remember the 80 tons sold in 15 minutes last Wednesday?  This was almost 2.8 million ounces compared to a deliverable inventory of just 869,000 ounces, in my opinion, "FRAUDULENT" in capital letters!

Yes I understand, there are still four days left for the open interest to bleed down and roll out to the next contract month but we now stand in totally uncharted territory.  Never in the past has this much open interest been still outstanding with deliverable inventory as low as it is.  It is also astounding that total open interest could have risen to these levels while the price dropped.  For open interest to increase and the price to drop, the "initiation" to the opening of contracts has obviously been done by sellers.  This is exactly what I have been saying all along, the dropping price has been dictated by paper sales of COMEX contracts ...but now there is a problem.  So much paper has been sold to dictate the price that the contracts outstanding simply dwarf the available metal to deliver.  Put another way, COMEX gold and silver look like they have been cornered!  Let me rephrase this, COMEX gold and silver are now "very cornerable."  We will know shortly if this is true and "who" did the cornering.  I suspect we will find out that this has been a Chinese/Russian hand holding consortium and one that was carefully planned and done within legal bounds.  I think we will find out they in fact did play by the West's rules and it was the "sellers" of nonexistent metal who fell into their own price fixing trap.  It has been a financial war, one that was declared by the West and looks to have been possibly won by the East.

Another huge event this past week was the surprise announcement by Holland of their repatriation of 122.5 tons of gold from the FRBNY. 

I have many questions about this transaction and very few answers.  We may or may not ever get some of the answers but here is what I'd like to know.  Was the gold which was delivered the "original" gold that was deposited?  Same serial numbers and hallmarks?  If not, where did it come from, who refined and processed it?  And when?  One must also wonder why the Germans did not get their promised gold.  Did Holland work out a deal prior to the German request?  Or is this a case of the Dutch "smelling smoke" and quietly exiting the theatre before anyone else?  Other questions might include whether or not any of this gold was of Ukrainian origin and now what might happen in the derivatives markets?   Remember, derivatives outstanding are probably in the range of 100-1 versus the real metal, taking 122 tons of "collateral" away could affect 12,200 "tons" of paper derivatives.  With the leverage factor, this is equal to better than 4 years' worth of global production and could affect close to $1/2 trillion worth of paper contracts!  While on this subject, prior to the Dutch news, GOFO rates were at almost record backward levels.  Has this come about because 122 tons of "collateral" was withdrawn from the pool?  Just thinking out loud here...

Other notable events this past week were many.  First, Congress began questioning the banks on "manipulating the commodities markets," and the Federal Reserve leaking inside information to Goldman Sachs, is the timing of this a coincidence?  Also, President Obama unilaterally has now thrown our borders open, is it possible that the long spoken of "Amero" is really in the works?  One necessity to a North American currency unit would be open borders right?  Again, just thinking out loud.  We also heard Russia announce a decline to import ANY GMO food products from the West for at least 10 years.  They also announced the import of another 55 tons of gold for the quarter for good measure while ISIS announced their intent to use gold and silver as money.

To tie all of this up, let me say that I believe the very long anticipated "market corner" of precious metals may possibly and finally be at hand.  Contrary to what happened back in the late 1970's with the Hunt brothers in silver, the current "corner" was actually facilitated by the sellers.  The Hunt's in fact did set out to corner silver, I don't believe the Chinese/Russian/Indian alliance initially set out to do this ...they were "forced to."

You see, we have been in a "financial war" for years, the U.S. has trod heavily on the rest of the world financially.  We settled our grotesque annual trade deficits by sending freely created dollars as payment.  In order to support the dollar and keep interest rates low, we have suppressed the prices of gold and silver.  Without low metals prices, none of the other markets could ever make any sense.  PE ratios could never be at the current levels without low interest rates, interest rates could never be at these low levels if gold and silver were shooting upward ...so the rest of the world has played the only card they could to prevent a World War, a financial card.

They "carried" us and let the game go on and on as they accumulated bigger and bigger stacks of gold.  Much of this gold "was once" Western gold.  They have legally purchased it and in many cases sent our own dollars back to us as payment.  Now, we will sit with lots and lots of dollars while they have lots and lots of gold.  I believe they have now cornered both COMEX gold and silver if they choose to stand for delivery.  They will say "hey, we did not make up the rules, you did.  You sold us contracts, we bought and paid for them.  Now we would like the contract settled, please send us our metal".  This was all legal and they did not step up with the intent of busting the market, they simply "bought what we were selling."  If they do stand for delivery, can they be faulted if they ask for the contract they paid for to perform?

Let me finish by saying this, we very well may wake up after Thanksgiving "fat and happy" only to find out the entire financial system was a fraud.  The East, by asking for delivery may in a "polite" way expose the entire game.  This would accomplish much, first and most importantly, this will go almost all the way in ending the dollar as the world's reserve currency.  The U.S. will no longer be able to trade "something for nothing."  It will also hamper our ability to financially and militarily put our thumb on the rest of the world.  If we became hampered financially, this would also make military operation much more difficult to fund or pay for.  In essence, if I am correct and we do see failure to deliver and a COMEX default ...the world may be a safer place!  This past week for example, President Obama secretly extended our stay in Afghanistan, how will this operation be funded by a bankrupt Treasury and a central bank that issues unwanted currency?  The Chinese/Russians in my opinion may be on the verge of winning a war without ever firing a shot and playing the game by our own rules!  We clearly have been the aggressors in both Syria and then in funding a coup in Ukraine.  Could crashing our financial markets be a way to put us on a financial leash and thus lessen our abilities at aggression?  I am sure this thought process has already been discussed.

Please do not call or write me Monday morning and say "see, nothing happened ...again."  All I am saying here it that the COMEX is now "cornerable" and in a very vulnerable position.  Maybe it will not be now, maybe it will?  All I can say is history is rife with "bank runs," sooner or later the longs will stand for the delivery of an inventory too small to satisfy them, this will be nothing different than a bank run when it happens. 

The Lie to End All Lies

November 21, 2014

On Thursday morning, whilst taping this week's Audioblog, I discussed how overnight, the PMI Manufacturing reports in China, Japan and essentially all of Europe were not only miserable but well below expectations. Heck, even the PMI report in the United States of Economic Lies came in at just 54.7, down from 56.2 last month and well below expectations of an increase to 56.5. In fact, it was the lowest print in ten months, validating with this week's slew of 4Q GDP estimate downgrades. Which, by the way, were predicated on myriad factors from weak exports, to declining capital investment and even "Polar Vortex 2.0." In other words, a broad mosaic of data suggesting America is succumbing to its terminal debt addiction, amidst global economic weakness not inappropriately compared to the Depression.

Consequently, the 10-year Treasury yield was on the verge of breaching the Fed's current "line in the sand" at 2.30% yet again, whilst stocks were in danger of actually declining; and, for the third time this week, gold was about to take out $1,200/oz. (after having been turned back by "Cartel Herald" algorithms the prior two days, at exactly 6:00 AM EST).

I doubt anyone in the investment world believes that's even remotely true, particularly as it not only contradicted the PMI report published just 15 minutes earlier but essentially every real data point imaginable. I mean in the past two weeks alone, it was reported that durable goods orders, factory orders, construction activity and industrial production declined in October, whilst retail sales rose a scant 0.3%. Throw in the aforementioned, grisly international data and it's difficult to believe any increase occurred - let alone, of the magnitude this travesty of a report depicted.

Of course, the "Dow Jones Propaganda Average" was treated to its 20^th straight "dead ringer" algorithm - as it prepares to hyper-inflate, Venezuela-style.

However, a funny thing happened in the world of "recovery"; as not only did Treasury yields decline, but closed just three basis points from the aforementioned "line in the sand" the Fed is so terrified of. After all, it borders on comical that the Fed is pretending to consider rate hikes - even if not for a "considerable time" - when rates are plunging. Let alone, when rate declines occur as their data cookers purport the "best economic conditions" since 1993; and oh yeah, the "stock market" is trading at record highs.

Better yet, despite relentless capping and attacking - no less, with the potentially Cartel-destroying Swiss referendum just ten days away; gold and silver not only recovered yesterday's Cartel orchestrated losses, but closed at the day's highs - setting up gold for a fourth attempt to take out $1,200 in four days. Could we actually have three straight strong Friday's - which frankly, NEVER happens? Much less with the Swiss referendum next Sunday?

For some time now, we have discussed how the "propaganda leg" of the "evil tripod" of money printing, market manipulation and propaganda is permanently broken. In other words, no matter what propaganda is reported, the world is starting to realize the true state of the U.S. economy. For example, auto sales cannot be characterized as "strong" when they are either leases or subprime loan financed; let alone, amidst an environment of record "channel stuffing."  

Zero Hedge

Better yet, the "sentiment" of trade organizations like the National Association of Home Builders has as much credibility as a fox in a henhouse; particularly when it explodes to multi-year highs when both home sales and housing starts (in the latter case, principally rental units) remain at recessionary levels.

PROTECT YOURSELF, and do it NOW!

Call Miles Franklin at 800-822-8080, and talk to one of our brokers.  Through industry-leading customer service and competitive pricing, we aim to EARN your business.

Richard's Remarks - dowtheoryletters.com

November 21, 2014

Yesterday's market action was outstandingly friendly toward the precious metals. At last, I consider that gold has completed a major base. I'll be surprised if we see gold descend again to test its supported at 1100. As for myself, I have placed most of my assets in physical gold and silver on the assumption that over any extended period of time silver and gold will retain their purchasing power.

What if John Williams' prediction of hyperinflation comes true? If Williams is correct, the US dollar will crash, and silver and gold, in terms of dollars, will rocket higher. Frankly I am not interested in establishing profits in the precious metals, I simply would like to retain my purchasing power. I ask myself, what would happen to stocks in the event of hyperinflation? I'm afraid that all things denominated in dollars would likely crash with the dollar. But don't sell your house yet, this is just my opinion.

As for the dollar, it is currently seen as the only safe haven currency on the planet. Since the current fiat dollar is a fantasy created by the Fed, I have little faith in its future. Over the next few years I envision the collapse and probably the extinction of all fiat currencies. In my opinion, the creation and acceptance of fiat currencies is a great evil that has befallen the economies of the world since the first central banks were established. Example: the Federal Reserve was created in 1913, and since 1913 the purchasing power of the dollar has declined by 97%. The 1913 dollar is now worth three pennies.

.......................................

Deflation is in the air and its chief component is oil. The chart of oil below confirms the deflationary aura of today's markets. Trend followers accept the crash of oil prices as a confirmation of the deflationary environment. In the meantime I am happy with my position in physical silver and gold. Oil companies can theoretically go broke, but gold has been around for 6,000 years, and remains the basis of every monetary system. Gold cannot go bankrupt ... Silver cannot go bankrupt ... Diamonds cannot go bankrupt ... since all of these represent eternal wealth.  

To read the full article, please subscribe to Dow Theory Letters.

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11/21 Bill Cosby And GATA - www.lemetropolecafe.com

 

Dave from Denver...

 

Was GLD Gold Moved To The Dutch Central Bank?

 

In a move that is much more significant and relevant than the Chinese interest rate cut news, it was revealed that Netherland's Central Bank repatriated 120 tonnes of gold this year. The move was accounted for as a transfer of gold from the NY Fed to De Nederlandsche Bank (DNB). I say "accounted for" because I believe it is highly likely that the physical transfer took place from the GLD custodial vaults to the DNB. Here's the article: LINK.

 

Recall that the Fed, together with Germany's Bundesbank, explained that it would take 7 years to move 300 tonnes of gold from NY to Germany because it was complicated and expensive. As we know, that was a glaringly transparent cover story for: "the Fed does not have 300 tonnes to ship back to Germany and it will take 7 years to buy and move that amount of gold without driving up the world price of gold."

 

Why do I make this assertion? This is from the link above: "In total, 120 tonnes of gold valued at €4bn has been brought back to the Netherlands by ship, Nos television said."

 

So, why was the DNB able to move 120 tonnes in a matter of months but it will take 7 years to move 300 tonnes to Germany?

 

I think we all know the answer that question, which is why I make the assertion that the bars shipped to the DNB came from GLD (click to enlarge):

 

Investment Research Dynamics

  

On March 21, GLD had 821 tonnes of gold. Currently it has 720 tonnes. Given what we know about the failure of the Fed to send Germany any gold other than 5 tonnes of miscellaneous scrap, and given that it appears as if Germany has abandoned its efforts to have any part of 300 tonnes of gold moved from NY to Germany (other than the 5 tonnes of crap), it is highly likely that the 100 tonnes removed from GLD since March has been moved to Amsterdam. I'm sure the 20 tonne balance was gold hypothecated from bullion bank vaults.

 

The ONLY way gold is removed from GLD is if one of the Approved Participant bullion banks accumulated 100,000 share "baskets" and redeems the baskets for bars. It's the only way. Even a big investor must transfer its shares to the bullion bank in order to execute the transaction. And it says right in the Prospectus that the Trustee can deny the investor's request for reasons that are not clear.

 

Whether or not my theory is accurate, I would bet my dog's life that the 120 tonnes that the DNB received this year into its vaults unequivocally did not come from the NY Fed vaults.

 

http://investmentresearchdynamics.com/was-gld-gold-moved-to-the-dutch-central-bank/

 

-END-

 

To read the full article, please subscribe to Le Metropole Cafe.com.

 

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11/22 Derek - Why silver should go ballistic WITHOUT hyperinflation - www.lemetropolecafe.com

 

Why silver should go ballistic WITHOUT hyperinflation

 

Here's some additional info on silver that might interest your readers. If this doesn't motivate folks around the world to buy physical silver NOW, then only the harsh financial realities directly ahead will do it. By then, of course, it'll be far too late...

 

In reading scores and scores of articles on silver over the past decade or more, one figure that pops up with some regularity is that there are approximately 100-million ounces of silver available for investment from each year's mine production of roughly 800-900 million ounces. The rest is consumed by industry, never to be seen again, most likely, because of the highly uneconomic possibility of recovering the minuscule amounts found in the average discarded electronic item, solar panel, etc.

 

But let's assume that the 100 million ounce estimate is way off. In fact, let's QUINTUPLE it and figure that, even in an environment of escalating geo-political tension, currency wars, cost-push inflation, etc., that some percentage of silver owners, hoarders, and investors around the world will begin selling at least some portion of their silver just to raise cash to survive, pay bills, switch investments, buy goods and property, or whatever. So, now we've got 500 million additional ounces of silver coming onto the market in 2015 through one avenue or another across the globe, despite a worldwide financial environment in which BUYING silver is a far more common - and intelligent - decision than selling it near the lows (ALL-TIME lows, actually, if you consider the spectacular relative increase in the world's currency supplies over the last few years; why on earth Japanese citizens have not already snapped up all of the available silver in the world is beyond my comprehension).

 

Next, let's assume that, of the approximately 7.5 BILLION people on the planet, only 4% - i.e. just 4 people out of every 100 - have sufficient understanding and resources and are interested enough in protecting themselves from their governments' assault on their wealth (via hyper-currency-printing) to purchase physical silver. I believe this number is absurdly low and ultra-conservative, since NEARLY EVERYONE in a modern, fiat-currency-based society will soon be taking inflation seriously, despite the laughably low "official" inflation rates being reported by their governments. And please bear in mind that, when referring to inflation, we are talking about rising prices - caused by the corrupt and irresponsible policy of unlimited currency printing - of ESSENTIAL goods and services and not things like big-screen TVs, stereos or cell phones, which are indeed presently caught in the snares of deflation and can still be purchased for bargain prices because of the global economic slowdown. When warehouses are bursting with unsold inventory, especially electronics that quickly become obsolete, manufacturers naturally start slashing prices to get these items sold.

 

But the costs of ESSENTIAL goods and services, such as food, health care, college tuition, utilities, home insurance, car insurance, and other budget items are, to anyone with eyes to see, INCREASING - and such has been the case for decades, due mostly to the sinister nature of fiat-based-currency systems and the equally sinister nature of the central banks that administer them.

 

But getting back to silver... using the lowball number of 4% as stated above, we've now got 300,000,000 people around the planet with the proper financial understanding, and resources, wanting to accumulate at least some physical silver to protect their wealth from government confiscation through inflation. If this number of 300 million silver investors seems high to some readers, please remember that China and India, all by themselves, have populations of well more than a billion each, and both are countries whose citizens over the centuries have become highly attached to owning precious metals because of their nations' long histories of paper currency destruction (this is actually the case with ALL countries, including the U.S., since ALL paper currencies have inevitably gone to zero value). With the gold/silver ratio so far out of alignment from its historical norms of about 1-10 to 1-15, millions of gold investors are shifting significant portions of their investment dollars into silver, since silver always provides much greater upside leverage than gold, on a percentage basis, in precious metals-friendly environments. (If that's been true in the past, wait 'til you hear what's coming in the future!! Silver will provide FAR more bang for your blighted buck than will gold.)

 

So, protecting their wealth through gold and silver are deeply ingrained in the collective psyches of the Chinese and the Indians. At 4% of their populations, that's already 80+ million silver investors, many of who cannot afford more than a handful of gold but who can easily afford goodly amounts of silver. Eighty million silver investors. And that's just two countries! On top of that, there are still more than 190 ADDITIONAL countries containing the OTHER 5+ BILLION people on our little earth! And most of them, to one degree or another, are going to begin experiencing the accelerating and devastating effects of cost-push inflation of essential goods and services - especially if they are tied to the world's present reserve currency, the United States dollar, and connected to the SWIFT banking system. For practical purposes, then, this includes almost every developed country on earth. And let's not overlook that many nations, including some of the biggies, are now opting to circumvent use of the U.S. dollar for one reason or the other. Therefore, at the same time that the supply of greenbacks is skyrocketing, the demand for them is quickly plummeting. Is this a recipe for inflationary disaster, or what!

 

Continuing with our mathematical exercise, let's figure that, ON AVERAGE, each of these 300,000,000 folks around the world who will want to buy physical silver will purchase JUST 50 OUNCES EACH per year over ONLY the next couple of years as the inflation game really heats up (it's already starting, and I suspect it will last far more than just two years). At an average of $20 per ounce of silver, that's a paltry $1000 average expenditure per person annually. Nevertheless, we've suddenly got a worldwide silver demand of FIFTEEN BILLION OUNCES OF PER YEAR!! With only 500,000,000 ounces of silver available for investor demand (if that's even possible), WHERE WILL THE OTHER 14.5 BILLION OUNCES OF INVESTMENT SILVER PER YEAR COME FROM? To reiterate: that's 14.5 BILLION ounces of ADDITIONAL silver investment demand in a world that presently produces well less than one billion ounces annually (most of it at a loss, given current suppressed prices). And that's only considering the next 24 months!

 

Let's not forget, either, that about 85%-90% of the silver mined each year goes to industry. Nor do these companies view silver as an expendable material; for most, it's an ESSENTIAL part of business. So industry, too, will suddenly be competing with hundreds of millions of investors across the world for the limited silver available. And they'll pay whatever they must to stay in business. And just as countries such as China and Russia are refusing to export any more of their gold, so will they likely begin forbidding export of their mined silver as well, thus creating even more severe supply restrictions (I think I may have seen recently that China is already restricting exports on silver). Once they awaken to the rarity of available, above-ground silver, other countries will, no doubt, soon follow Russian and Chinese lead.

 

Perhaps you're reading these words and thinking to yourself, "Yeah, right. I've been hearing this blue-sky silver story for years, and the price is less than seventeen bucks an ounce on the COMEX this very moment." No one could blame you for your skepticism, even though we now understand why the price has been so long suppressed and by whom. But consider the numbers above and ask yourself where all that silver supply will come from. Sure, as the price begins climbing, new mines will eventually be incentivized to open and contribute to supply. But if, as the Silver Institute claims on its website, only 819 million ounces were mined in 2013, there is simply NO WAY that increased production can overcome the panicked buying that will, sooner or later, take place in the silver market (we saw panic buying in Germany just two weeks ago and the US mint recently halted sales of Silver Eagles, again, and is now rationing supply, again). Anyhow, even if mining supply increases eventually, new mines do not open in just a few months. It generally takes YEARS. And in any case, increased mine production could never meet investor demand over the next five years of TENS OF BILLIONS of silver ounces, not to mention the ongoing industrial demand which, in most cases, is inflexible-that is, industry MUST have the silver it needs to produce its goods, and, as I said, it will pay whatever is required to obtain it.

 

I read several years ago that the U.S. Geological Survey predicted that silver could become the first item on the elemental chart to disappear in easily accessible quantities and could do so by the year 2020. That is now about 60 months away. And please realize that a commodity's inventory NEVER goes to zero before its price explodes upward - the market merely has to understand that this is the INEVITABLE RESULT given current price/supply/demand realities. So silver's price WILL begin soaring long before inventories run dry, and that day is already quickly approaching for the COMEX, the LBMA, and the Shanghai Silver Exchange. Even the next three to six months could witness each of those exchanges run dry of silver-perhaps much sooner in a buying panic. As precious metals analyst Ron Rosen told Eric King yesterday regarding the sudden and unexpected price explosion he expects from silver (he predicts $250 per ounce or even much more), "This may sound unbelievable today, but this is just how bull markets work - what seems unbelievable today becomes reality tomorrow."

 

The bottom line: predictions of a coming hyperinflation may, or may not, unfold - and let's hope they don't, because that would be a catastrophe for us all - but no such scenario is required for silver to, once again, become a truly "precious" metal. With the supply/demand equation and the global escalation of currency wars, the result is already guaranteed-with or without a $90 Big Mac. And to those who love to spout that you can't eat silver, it's time someone pointed out that you can't eat devaluing paper currency, either. The question is, which one do you trust to maintain its value-the one being created instantly in limitless quantities from thin air by computer digits, or the one that will be in a multi-year, multi-billion ounce supply deficit?

 

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Fed May Limit Wall Street Role in Commodities, Citing Risks - www.bloomberg.com

By Cheyenne Hopkins and Silla Brush Nov 21, 2014 11:40 AM CT

The Federal Reserve may curtail Wall Street commodity businesses after lawmakers said banks' role in energy, power and metals markets spurred unfair trading advantages and could threaten financial stability.

At a Senate hearing today, Fed Governor Daniel Tarullo said curbs under consideration include ownership limits, restricting how much revenue can be derived from commodities and requiring Wall Street firms to boost capital. He said the new rules, to be proposed early next year, could restrict banks from investing in oil tankers, coal mines and other businesses involved in physical commodities.

"We are focusing on the risk to safety and soundness presented by specific activities and on whether those risks can be appropriately and adequately mitigated," Tarullo said at the hearing held by the Senate Permanent Subcommittee on Investigations.

Continue reading on Bloomberg.com.

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"Gold Is Money And Nothing Else" - JP Morgan's Full December 1912 Testimony To Congress - www.zerohedge.com

Submitted by Tyler Durden

In December 1912, no lessor man than J.P.Morgan testified to Congress to "justify Wall Street," during investigations over alleged manipulation and collusion. The transcript reads like it could have been given yesterday (as nothing ever changes) but at its heart the banker laid out 33 "Morgan Epigrams" which appear - in the ensuing 102 years - have been lost to greed and arrogance... The irony is wondrous: "Securities do not always prove good", "Money is gold, and nothing else", "I think manipulation is always bad."

Continue reading on Zero Hedge.com.

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Asian Gold Traders Suspicious Of Recent "Turbo Steroid Moves" - www.zerohedge.com

Submitted by Tyler Durden on 11/21/2014 21:21 -0500

It will come as no surprise to regular readers that gold (and silver) have suffered from 'odd' violent down-slams in the last few months but, as Bloomberg reports, those 'sneak-attacks' have become increasingly more prevalent during the thin illiquid hours of the Asia trading session. "It is unusual for Asia to be seeing these busy trading sessions," notes on trader, adding that "consensus seems to be that there is a big increase in algorithmic and high-frequency trading in this time zone." The trend began on Oct. 31, with gold futures falling $11 in a minute on nearly 9,000 lots (20x the norm) - all happening when the Chinese market is at lunch. As one Hong Kong precious metals trader remarked, "someone is utilizing these thin trading volumes to get a turbo steroid move."

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Gold & Silver Surge, Recover Swiss Gold Poll Losses As EURCHF Hits Lows - www.zerohedge.com

Submitted by Tyler Durden on 11/19/2014 12:26 -0500

It appears the FX and Precious Metals markets have as much faith in the pre-Swiss Gold Referendum polls as the Scots did before their referendum. The clearly leaked results sparked considerable weakness in gold and silver (and EURCHF surge), but once the data was released, markets began to creep back - perhaps questioning the plausibility of such a big swing in such a short amount of time. This surge was also helped by some unusually frank comments on Russian gold buying from the Russian Central Bank.  Gold, Silver, and EURCHF have all recovered the moves with the latter pressing towards cycle lows...

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Column: The Asians Are Picking Up The Gold Sold By ETF's - sproutmoney.com

November 12, 2014

Sprout Money

Sprout Money

Total ETF Outflows Source

So it's almost guaranteed that these two Asian countries are extremely happy with the Gold ETF dumping its position as it allows them to get their hands on even more physical gold without upsetting the normal market circumstances (Asia is now practically just absorbing the selling pressure from the Western countries, which is the smartest thing to do, because if China and India would have been as aggressive when gold isn't in a glut, it might have disrupted the normal market).

This could lead to a very interesting 'problem' when the retail investors are looking to get back in gold. Now the Asians are absorbing all the selling pressure, but the problem is that Asia obviously won't stop buying gold when (yes, 'when', not 'if') the price goes up again. This means that instead of a net compensating move, there will be two larger buyers of the yellow metal as both Asian demand and ETF demand will dramatically increase the net demand for gold. Should the investment appetite for gold increase again to the levels of 2012, the Gold Trust would have to repurchase 612 tonnes of physical (!) gold, which is roughly 20 million ounces.

So we could be gearing up to see a perfect storm. At this point the Asian demand is high enough to compensate for all the ETF outflows, but the moment those Exchange Traded Funds will once again see a net inflow, they will have to compete with the Asian demand for physical gold as both will be scrambling to get their hands on those nice shiny gold bars.

Gold bounces back above $1 200 - will it jump higher? - www.mineweb.com

Gold moved back above the psychological $1,200 level this morning. Can it retain this upwards move and perhaps extend it?

Author: Lawrence Williams

Posted: Tuesday, 18 Nov 2014

LONDON (Mineweb) -

Gold bounced back above $1 200 this morning in London, but before one can be sure that this is the start of the long-expected recovery there could yet be teeth in the bear. The big money playing the futures markets with paper gold can still exert ultimate control over where the price is headed short term and if it suits them there could yet be another sharp price drop to try and drive out any remaining weak gold holders.

But medium term it may be that options are becoming more and more limited for keeping the market depressed. Gold continues to flow from West to East with the big recovery in Indian demand coupled with continuing high levels of withdrawals from the Shanghai Gold Exchange as the key elements in this. Although whether Indian demand has recovered to overtake China's over the past two quarters as World Gold Council figures might suggest, and which has been reported as fact by much of the media, given SGE withdrawal figures have been running at such high levels of late we think is not a true picture of the real situation, but in combination India and China are taking in gold at back to peak levels.

Demand is also seen as high in a number of other countries in Europe, the Middle East and elsewhere in Asia, while Russia and some of the old FSU countries are adding to their gold reserves thus taking even more metal off the markets. It is hard to see where all this volume of gold is coming from as it certainly substantially exceeds new global gold output.

Gold in backwardation too also suggests that supplies of physical metal in the West are becoming more and more limited and the logic of shorting gold may be about to disappear. There has been the suggestion that the recent fall in the gold price down to $1 140 has been a bear trap to catch the short traders out...

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