“I just think that the COMEX data is corrupted. It’s very hard to make any sense of it all. The fact that there’s no deliveries from the dealers is incredible. You’d think there’d be some change in the inventory. I don’t care whether it’s up or down, but at least you’d think there’d be some change.” -Eric Sprott [Read more...]
There is clearly no recovery…
If one looks past headline figures, things are not really getting better. Real disposable income per capita in the U.S. has increased only modestly since the Great Recession. However, all of this increase is due to Government Transfers, not from an improvement in the real economy. If we exclude those transfers from the numbers, disposable income per capita is actually lower than it was at the end of 2005 and has been painfully flat since 2011. Also, those numbers assume that the headline Consumer Price Index (CPI) accurately represents people’s purchasing power.
In this Markets at a Glance, we investigate the U.S. consumer and show that for a large portion of the population, things are not anywhere close to being better, in fact they are worse than before the recession. [Read more...]
Back in 2002, I was talking about $1,000 gold. When we hit that mark in ’05 and ’06 I began predicting that gold would rise to $2,000.
Now, I’m saying gold will probably go to $5,000 in the next move up.
“Looking at the performance of gold from 1976 to 1980, the metal went up eight times. If we repeated that performance, gold would be at over $8,000 from today by the end of the decade. I don’t know if the same thing will happen this time, but it tells you that $5,000 per ounce is not unthinkable.“
We believe that any rational investor considering the collection of facts below would consider, like us, that gold prices are long overdue for a re-rate. As we all well know, almost all markets are manipulated; and the recent Barclays settlement is one example vindicating our views.
» The global macro environment is weak,
» Supply/demand numbers in our favour,
» Ponzi finance is in full bloom.
We encourage readers to protect themselves with any/all precious metals.
I am very excited about developments in the gold and silver markets today. I have been speculating since late 2012 that Western central banks could be running out of gold. I put the sell-off in gold and silver in 2013 to the fact that the Western banks needed a way to generate physical gold supplies. As the metals prices went down, there was a lot of liquidation of gold which increased the supply by an estimated 900 tonnes last year.
Let’s look at the figures. The annual supply of gold is around 4,300 tonnes. 3,000 tonnes come from mining and the other 1,300 tonnes or so from recycled material2. In 2013, an additional 900 tonnes came onto the market from ETFs that were being liquidated – a supply increase of around 21%.
Quite frankly, I believe this was all orchestrated in order to create this supply. During the time when the price was knocked down, a tsunami of buying started. India bought 336 tonnes from April to June of 20133. I’m sure that the central bankers went to the Reserve Bank of India and said: “You’ve got to stop people from buying gold.
Ultimately, we will find out the extent of manipulation in the gold market when someone finally fails – most probably the U.S. running out of gold to supply the market. And I don’t think we are far off here.” -Eric Sprott [Read more...]
“For one, there will be more confiscation of wealth. Americans and Europeans have already made it legal to take money from private bank accounts, or at least parts of them, in order to bail out banks. They will likely help themselves to pension plans too.
Gold and silver should provide investors some protection against government confiscation. They will probably go for bank accounts and retirement funds, because they need cash. In fact, that is already happening in Argentina and Poland. Gold and silver are no longer part of the monetary system, which they were back in the 1930s’ when they last confiscated gold and silver. From the government’s point of view, gold and silver are not ideal – it is money they need.”
I don’t think that the situation that we have here is sustainable. We are going to have to create a sufficient amount of money to keep the debt load afloat. We are going to have to keep interest rates low because if those basic requirements are not met – that is lots of liquidity and maintenance of low interest rates – the system is going to collapse.
I think that’s why you own gold; because the odds favor something going badly wrong – a ‘black swan’ if you like. And to continue they will have to jam liquidity, and at some point there will be a massive recognition that the money is no good and people will want out into real things.
The fiat Ponzi Scheme will continue until it doesn’t, but the minute that it stops, people will be asking themselves what they really own through their ‘paper gold’ vehicles. I think that this will have an unbelievably large impact on the price of physical gold.
After a long and agonizing winter which was attributed to the so-called “Polar Vortex”, we thought it would be appropriate to highlight for precious metal investors the implications of what we call the “Chinese Gold Vortex”.
While it is still early, the Chinese Gold Vortex is firing on all cylinders and data so far this year suggests that demand will far outstrip supply.
Over the past year, we have been very vocal about what we consider an aberration: the complete disconnect between gold supply and demand fundamentals and the actual price of the metal.
The stars are aligned in 2014 for a significant re-rating of the gold price.
The tailwinds are twofold for gold: the Chinese Gold Vortex is putting an undeniable pressure on the physical market, while focus on price manipulation makes it progressively harder for price manipulators to operate. The reversal of this anomalous, yet explicable market dysfunction could provide astute investors with multi-hundred per cent returns.
Do not miss this Golden Opportunity!
As metals prices boomed during the last decade, small explorers and big miners spent billions of shareholder dollars seeking new deposits. Investors wanted the high rewards of a discovery as metals soared in price. At $1,900 per ounce of gold, even mediocre finds could make money.
Richard Schodde, of MinEx Consulting, has studied past exploration cycles in detail. He says we are seeing a tightening of the sector, as the availability of capital has plummeted. Costs of exploration are coming down as companies cut back on high-salaried employees and reduce operating costs.
The five biggest banks in the United States in 2008, today those banks are bigger. They have a larger percentage of the assets of the banking system. They have much larger derivatives books and if you apply what I use which is complexity theory, to understand the risk in capital markets, you know that when you increase something in scale, the risk does not go up in a linear fashion. It goes up in an exponential fashion so the risk is – the size of the system is greater than ever before and the risk gets exponentially greater than ever before.
So we have a lousy economy. We have massive risk. We have the whole thing getting propped up like money printing by the Fed. This is naturally going to happen except this time, the next time, it will be worse than 2008 because it will be bigger than the Fed.
Strikes at South African mines have caused a massive drop in platinum and palladium production. And the world’s palladium supply could decline by 41% overnight if the West imposes export sanctions on Russia. Speculators are betting that these events will reduce supply of the metals and drive up prices.
Rick Rule, Chairman and Founder of Sprott Global Resource Investments Ltd., recently weighed in. He believes platinum and palladium could go lower in the near-term, as fears of a sudden crunch dissipate.
The real reason platinum and palladium should rise over the coming years has nothing to do with geopolitics or labor issues, Rule believes.
We are now in the 5th year since the “official” end of the Great Recession. Numerous indicators of the state of the U.S. economy point to a non-recovery:
- The participation rate is low and supported by baby boomers working more or coming out of retirement.
- Students (the future labour force) are defaulting on their loans in record amounts.
- Disposable income is still below its pre-recession level.
- An ever increasing share of disposable income is being spent on health care, crippling discretionary spending.
- Higher interest rates are further depressing discretionary spending (home and auto sales).
- All of which is resulting in anemic business and economic activity.
Claims that the U.S. economy is suddenly rebounding have been made before. They are misleading at best and fallacious at worst. It would not be surprising to see further deterioration, which would force central planners to initiate additional unconventional intervention (i.e. Quantitative Easing). [Read more...]