Negative GOFO rates and physical shortage of gold and silver are but a few of the manifestations of the impending beginning of the collapse of the $US. Of course, as the $US and other Fiat Currencies lose Purchasing Power, Gold and Silver gain in price. Savvy Investors are thus acquiring Physical Gold and Silver and Taking Possession Now.
The Era of The Fed’s Creating Money from “Nothing” is soon coming to an end. Even if QE were stopped today, the Central Banks’ QE already in the System will ensure that The Major Climacterics which we have been forecasting will come to pass.
Submitted by Deepcaster:
“The whole concept of creating money without toil or risk is an integral province of the Federal Reserve. I believe that one way or another, the Federal Reserve and all it stands for will be eliminated. The process by which this will occur worries me. I believe it will take a huge disruption of our current economic system in order to eliminate the Federal Reserve and its immoral process of money being created out of a computer and thin air.
“The process of creating money from “nothing” makes a mockery of real work of all kinds. Thus, by inference, I am calling the Federal Reserve an evil institution. The more so, since it denigrates gold, which is, and has always been, true wealth, wrung out of the earth through man’s sweat and toil and risk.”
Richard Russell, dowtheoryletters.com, 8/9/2013
But The Era of The Fed’s Creating Money from “Nothing” is soon coming to an end. That is because it has in the 100 years of its existence created so much Fiat Money that the Purchasing Power of the $US has been diminished by over 95% (See Deepcaster’s Free Report).
Thus, even if QE were stopped today, the Central Banks’ QE already in the System will ensure that The Major Climacterics which we have been forecasting will come to pass.
For one, we are on the Threshold of Price Hyperinflation already (with Real U.S. CPI, e.g., at 9.62% [See Note 1] contrary to Bogus Official Figures).
It is thus understandable that the private for-profit Fed and other Major Central Banks are, and have been for years, engaged in a campaign to discourage the use and holding of Real Money, Gold and Silver, by repeatedly suppressing their paper prices.
Gold and Silver are the Miners’ Canaries, as it were, signaling increasing Inflation. And a flight to Gold and Silver would increasingly devalue the Bankers’ Paper Fiat Currencies and Paper Treasury Securities.
But worldwide demand for Physical is rising, as reflected in increasing premiums for physical. This, of course, puts upward pressure on the Paper Spot and futures prices as reflected recently in the GOFO rate.
“What is unclear, is why GOFO rates continue to be negative (and are getting more negative). As we laid out over a month ago, it may be one of many things:
- An ETF-induced repricing of paper and physical gold
- Ongoing deliverable concerns and/or shortages involving one (JPM) or more Comex gold members.
- Liquidations in the paper gold market
- A shortage of physical gold for a non-bullion bank market participant
- A major fund unwinding a futures pair trade involving at least one gold leasing leg
- An ongoing bullion bank failure with or without an associated allocated gold bank “run”
- All of the above
“One thing we do know that has changed since then, is that JPM’s gold bullion holdings have slid to fresh record lows and JPM has been forced to scramble to procure gold from both HSBC and Scotia. Is there anything else going on behind the scenes? Absolutely (coughbundesbankcough), alas as usually happens in cases like this, we will learn the whole story after the fact. That’s ok: we have lots of popcorn, and unlike those who rely on the JPM vault for storage purposes, our physical holdings are always at arms length.”
“Gold Collateral Situation: ‘It’s Very Complicated’”
‘Tyler Durden,’ zerohedge.com, 8/9/2013
The foregoing points are all manifestations of the impending beginning of the collapse of the $US. Of course, as the $US and other Fiat Currencies lose Purchasing Power, Gold and Silver gain in price. Savvy Investors are thus acquiring Physical Gold and Silver and Taking Possession Now.
“Perhaps it is not terribly surprising to learn that recent silver demand numbers from India have set records.
“Indian silver imports are up a staggering 259% at 857 tonnes in the April-July time period.
“Perhaps at least some Indian investors are opting to buy silver as a temporary and cheaper alternative to gold given that their government has been attempting to thwart gold imports with tariffs. Of course, silver is easy to exchange for gold if and when necessary.
“This surge in Indian demand for silver parallels what can be observed from recent U.S. Mint data. Mint silver production surged once again in July and seems to be on pace for record annual sales…
“U.S. Mint rationing is also being reported by dealers…
“This grass roots demand for silver seems especially remarkable at a time where sentiment is at historic lows and just after one of the most brutal engineered market take downs ever witnessed has occurred.”
“Indian Gold to Silver Investment Demand”
Dr. Jeffrey Lewis, silver-coin-investor.com, 8/10/2013
And the reports that the Comex is running out of physical and is within weeks of default have a basis in the evidence. Consider this 8.14.13 headline from seekingalpha.com:
“Comex Registered Gold Cover Ratios Hit Unprecedented Levels: Over 50 Claims Per Oz.”
And another indication of an impending Climacterics is that the interest rate on the U.S. 10 Year continues to climb even though Equities have a big down day (e.g., Dow down over 200 several times on 8/14/13 but the U.S. 10 Yr. yield was up to 2.78%.
Point: Long dated U.S. Treasury Securities are increasingly not seen as a Safe Haven Asset.
“I’ve warned that if there’s to be trouble, it will show up in stocks, bonds (rates), the dollar or gold. I think we’re seeing the early signs of trouble now — in stocks and bonds and maybe, just maybe, in gold.”
Richard Russell, dowtheoryletters.com, 8/9/2013
Specific impending Climacterics: the U.S. Dollar will weaken vis à vis certain other currencies and Assets. Gold and Silver will launch up. The U.S. Treasury Securities bubble will Burst and most Equities will crash. And Hyperinflation looms.
Deepcaster has forecast the likely timing of the foregoing in his recent Letter and Alerts.
Central Bank QE has ensured that the foregoing are already baked into the Cake (as it were) of the Economy and Markets. Wise Investors are already preparing for these Climacterics.
August 15, 2013
Note 1: *Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported August 15, 2013
1.36% / 9.62%
U.S. Unemployment reported August 2, 2013
7.6% / 23.3%
U.S. GDP Annual Growth/Decline reported July 31, 2013
1.62% / -1.75%
U.S. M3 reported August 2, 2013 (Month of July, Y.O.Y.)
No Official Report / 4.48% (e) (i.e, total M3 Now at $15.293 Trillion!)