empire revoltThe world is now passing out of the EYE OF THE STORM and back into the FINANCIAL TYPHOON.
Even though the Fed and Central Banks have been able to manipulate, control and divert interest away from the precious metals presently, the rear of the PRECIOUS METAL HURRICANE is still approaching.

buff sale(1)

 

From the SRSRocco Report:

The financial hurricane hit the world in 2008 destroying huge swaths of assets, real estate valuations, numerous banks and financial institutions.  As the storm cleared, the Fed and central banks stepped in by flooding the world with money to supposedly assist in dealing with the damage while providing special programs to rid the banks of debris and garbage clogging up their businesses.

After trillions of dollars of so-called monetary assistance, the financial damage appears to be repaired giving the public a false sense of security that the storm has finally passed.  Unfortunately, the world has only dealt with the first part of the storm and is now sitting in the eye of the financial cyclone.

Even though we now have the additional drama from the U.S. Government shutdown, up until recently, the economy has been plugging right along.  However, this was a much different story back in 2008 when the public and investors thought the world was coming to an end.

This can clearly be seen by the huge increased buying of Gold Eagles during 2008 & 2009:

U.S. Gold Eagle Sales Selected Years1

Notice in 2007, total Gold Eagle sales were only 198,500 oz, but after the banking and housing collapse in 2008, buying more than quadrupled to 865,500 oz.  Furthermore, when the broader stock markets continued to tank in 2009, Gold Eagle sales reached 1.4 million oz.

As the Fed and central banks continued to print, prop-up and backstop their respective fiat currencies and broader stock markets, the demand for gold continued to decline.  In 2011, Gold Eagle sales slipped to 1 million oz. and down to only 753,000 oz. in 2012.

This is typical market psychology.  A similar but more volatile trend took place during the millennium.  Americans worried about Y2K purchased record amounts of Gold Eagles in 1998 (1,839,500 oz) and in 1999 (2,055,500 oz), but as the 2000 came and went without any major disruptions, demand nearly dried up to a pathetic 164,500 oz.

After the world escaped the collapse of the financial system with the help of the Fed & Central Bank Global QE, economic conditions in the U.S. started to wane in 2012.  This can be seen by the decline of energy consumption in the country:

U.S. Energy Consumption vs Annual GDP2

Here we can see that as energy consumption fell, so did the GDP.  However, there was a disconnect that started in 2011 and increased significantly in 2012 as energy consumption declined, the GDP increased — nothing like manipulated economic data to give the illusion of growth

This is part of the reason why the Fed announced QE3 in Sept of 2012… it had to add additional stimulus to keep the economy from imploding further.  Unfortunately for the Fed, this huge increase in monetary printing would have had a direct impact on the precious metals pushing their prices to new record highs.

To keep the precious metals from exploding higher, price action was capped at the end of 2012 and then after several huge raids in 2013, market sentiment in gold and silver was severely eroded as demand in the West dried up.

In the chart below, we can see how orchestrated manipulation of the precious metals can impact market psychology.

2013 U.S. Gold Eagle Sales

During the first take-down in the price of gold, investors bought record Gold Eagles in April.  However, as gold was hit again in June, buying slowed considerably and has been falling ever since.

The one thing that fiat monetary authorities understand, is market psychology.  To destroy market sentiment in gold, a broad-based approach had to be implemented.  With the help of its member banks and financial networks, investors now question if gold really is a safe haven anymore.

Of course this does not apply to the “1% Educated” precious metal investors as they realize you can’t manipulate fundamentals forever, but it does impact the psychology of the 99% — and this is the group that would ultimately push gold to highs never seen before.

This next chart shows just how desperate the Fed has become in taming the Wild Monetary Golden Beast:

FED QE & Price of Gold

The price of gold presently ($1,310) is actually lower than it was before the Fed started QE2 back at the end of 2010.  Now, some analysts are saying that the reason why gold is under-performing is due to the fact that inflation is not as much of a threat as previously forecasted.

That is an interesting notion if we consider that the price of a barrel of West Texas Oil increased from $85 in Nov. 2012 to a high of $110 recently (quite an inflationary trend) as gold declined from $1,750 to below $1,300 during the same time period.  I find it simply ironic that the price of oil in the United States has risen nearly 30% in the past year as domestic production has increased to levels not seen for over 20 years.

The reason for the big increase in domestic oil production has to do with the so-called success of shale oil in the states.  The hype by the oil industry is that shale oil will provide cheap and an abundant supply in the future.  The United States is banking on shale oil to make the country…. energy independent.

Furthermore, I have stated that an increasing energy supply is vital in keeping a fiat monetary system alive.  However, it doesn’t look as if shale oil will be the savior for the country or the Dollar for that matter.  U.S. oil production increased steadily since 1920.  From 1930 to 1970, oil production increased an average of 1.87 million barrels a day (mbd) each decade.

U.S field Production vs Shale

However, shale oil has pushed domestic oil production up 2 mbd from July 2011 to July 2013, which is five times faster than its historic rate.  Shale oil production is increasing at an exponential rate.  The problem with any trends that increase exponentially, is that they decline is the same fashion.  With all BOOMS… comes the inevitable BUST.

Shale oil should be used to assist the United States into transitioning to a more smaller, local and sustaining economy.  Unfortunately, it is being utilized today just to keep the illusion of perpetual growth forever.

Many analysts including those from the Austrian School of Economics believe the U S. has trillions of barrels of oil resources, so there is no need to worry about energy shortages in the future.  A large part of these supposed oil resources are found in geology called OIL SHALE.  This should not be confused with shale oil (tight oil) that is being extracted from the Bakken and Eagle Ford in the U.S.

Oil shale is not even oil, but rather a form of kerogen shale that needs a great deal of energy to heat, extract and then refine.  Several large oil companies have been working on making this resource commercial in the states.  But, bad news just came out recently when Shell announced they were going to abandon their oil shale project:

Shell Abandons 800 Billion Barrel Deposit, Beaten By the Regions Geology:

The belief that technology can always overcome natural limits just took a big hit this week when Royal Dutch Shell PLC decided to shut down its pilot oil shale project in western Colorado after 31 years of experimentation. The ostensible reason is that the company has opportunities elsewhere. Shell says it wants to shift resources away from the intransigent rock and move it to profitable opportunities.

…Proponents of oil shale claimed in 1981 that it would be economical to process if oil were to reach $38 per barrel and stay there. The threshold price kept escalating along with the price of oil all the way up to $80 in a 2008 study by the U.S. Bureau of Land Management.

And, yet here we are. Brent Crude, the de facto world benchmark, hovers around $108 dollars. The average daily price for the past three years has remained above $100. In the face of these consistent record high prices, Shell is abandoning oil shale development. And, Shell isn’t the only one. Another international major, Chevron Corp., pulled out of its project last year.

Large oil companies are getting out of the oil shale business at time when the world is experiencing the highest average oil prices.  As the article stated, not only is Shell abandoning its oil shale project, Chevron pulled out if its project last year.

The reason why I include ENERGY-OIL in a precious metal article is that it is directly related to the future valuations of gold & silver even though investors don’t see it that way.  They rather focus on short-term information that reinforces their belief in the metals than longer term fundamentals that will guarantee much higher rewards.

The future energy situation is more important to the precious metal investors than are Comex inventory levels or sensational articles based on superficial information.  The world is now passing out of the EYE OF THE STORM and back into the FINANCIAL TYPHOON.

Energy is the blood that allows the fiat monetary system to survive.  Shale oil has been hyped by the industry and broadcasted by the media because it is the only thing left to keep the illusion of growth.  Without energy growth the Dollar would surely die.

Even though the Fed and Central Banks have been able to manipulate, control and divert interest away from the precious metals presently, the rear of the PRECIOUS METAL HURRICANE is still approaching.

2013 Gold Eagles As Low As $51.49 Over Spot at SDBullion!

Gold Eagle 2

    • Depends on where you are, Chief.  If in the Atlantic, it is a hurricane.  If in the Pacific, it is a typhoon.  Same storm, different name.
       

    • @Ed_B   … hey Ed, just being grouchy in the afternoon :) Hard to remember which is which – strange system of naming. Btw, did you get those youtube links to the music? I posted them under the Panama Bank article … I think you will like them.

    • @Chief

      Not a problem, Chief.  Some of us on here have EARNED the right to be grouchy from time to time.  :-)
       
      Yeah, I got the links and I saved them so I could use the SaveTube program to keep them as mp3 files.  Thanks for that, Chief.  Good music and I don’t have anything like it, so… nice addition to my small music library.  :-)
       

    • @Ed_B   … very kind, but I am afraid ‘Groucho’ is my middle name, around here anyway. As my Dad used to say, ‘if the cap fits, wear it!’

      Wonderful !!   So happy you liked the music ..  my all time favorites. :)

    • @Chief
       
      “…but I am afraid ‘Groucho’ is my middle name, around here anyway.”
       
       
      Not a problem, Chief.  I once told my wife (as a joke, or so I thought) that I was planning to become a curmudgeon as an old man.  She just rolled her eyes and said, “Well, there won’t be much difference then vs. now!”.  Lol… dang women anyway.  They see right through us!  ;-)
       
      “So happy you liked the music ..  my all time favorites.”
       
      Yes, I do.  Thanks much for the intro to this.  It IS appreciated!  :-D
       

  1. Steve, regarding the Fed’s ‘take-down’ of affecting the August & September Gold American Eagle sales, it needs to be pointed out that over 50,000 of the Reverse Proof Gold Buffalos were sold during this time.  I would argue that pre-empted Gold Eagle sales during this time frame.

  2. Do you think sales have slowed also because policies are sucking even the knowledgeable dry, thus less chance to purchase real money. I haven’t been able to buy since March :(
    Probably just me.
    JC

    • No, probably not just you.  You raise a critical point.  Many people are having trouble getting the basics for living, let alone buying gold. This is getting worse with time, not better.  It could be part of the currency wars that we are seeing now, with gold a competitive currency to all fiat currencies.  What better way to limit gold sales, other than the usual propaganda routines, to slam people with lower wages and higher costs for food, fuel, and many other vital items?  Squeeze ‘em hard enough and they will not only turn loose of any gold they have but they won’t be buying any more of it either.
       

  3. silvergood1   FEMA Region III and GridX notes can be found on start page, a proxy google site,  Search location of FEMA region III   It includes DC DE MD PA VA and WV  heart of the government.  Grid X is something ranging from a big test of FEMA in this region all the way through Comet Isom, martial law, all sorts of uparmoring of Femanians, MREs, antibiotics etc.  I did a snapshot review and this GRIDX is supposed to happen mid November.  Who knows.  Something big or much ado about nothing.  The FEMA websites are not particularly due to gov shutdown.  I hope no one does anything nasty cuz’ FEMA won’t around to screw things up worse than they are.

  4. BTW  Ever since the government shut down there has been little to no gain or loss of silver or gold inventory tonnage in the GLD or SLV funds. Is that meaningful or just coincidence   Any thoughts on that?

    • Interesting to say the least but my lean is coincidence.  Obviously neither are run by the gov, so reporting is not the issue… but what about anything behind the scenes.
       
      I guess in the end I say coincidence, but an interesting observation and I won’t dismiss other opinions.

  5. Hmmm… seems like 21 tons, roughly, of Gold Eagles bought this year? GLD has lost 450 tonnes this year. I think the author would be better off focusing on the latter. Public sentiment is meaningless as it is so small in the grand scheme. The paper market (100X larger) controls the price. If twice as many Eagles were bought this year… so what? The Shale-Oil news is worthy – reaffirming that anything but Oil (and oil-producing Nations) mean anything. When Oil bids for Gold (and not paper Gold) – and the paper Gold market burns – we will see a revaluation. I still don’t see any reason why the paper Gold market will go up short term… it still has a long way to go down, IMO.But as it goes down, THAT is the sign to look for… don’t wait for the day it is so low that you can’t find any to buy…

  6. http://cnsnews.com/news/article/terence-p-jeffrey/roll-over-plan-treasury-needed-pay-record-75t-maturing-debt-fy-2013

    Roll Over Plan: Treasury Needed to Pay Off Record $7.5T in Maturing Debt in FY 2013, Issued $8.3T New Debt; Increased Net Debt $777B – See more at: http://cnsnews.com/news/article/terence-p-jeffrey/roll-over-plan-treasury-needed-pay-record-75t-maturing-debt-fy-2013#sthash.zEXHzIDF.dpuf
    As of the end of fiscal 2013, the U.S. government’s marketable debt held by the public was approximately $11,577,400,000,000. That included approximately $7,750,336,000,000 in medium-term Treasury notes, $1,527,909,000,000 in short-term Treasury bills—and only approximately $1,363,114,000,000 in 30-year Treasury bonds.
    The Treasury’s medium- and short-term low-interest notes and bills accounted for about $9,278,245,000,000—or 80 percent—of the government’s $11,577,400,000,000 debt held by the public.
    - See more at: http://cnsnews.com/news/article/terence-p-jeffrey/roll-over-plan-treasury-needed-pay-record-75t-maturing-debt-fy-2013#sthash.zEXHzIDF.dpuf

    • Man oh Man Net  can you imagine what happens when the market says  No Mas!   The Chinese are really getting the willies about our debt.  They haven’t shed that $1.3 trillion left on the books and if the UST market FUBARs, those notes may be sucked into a heck of a vortex if the rates jump a lot.  75% of China’s holdings are the short term cash like UST notes that trade like cash but ‘what if’ no one else wants to buy a trillion pounds of hot potatoes.  That will be really nasty  All those refi deals etc will be another H Bomb.
      These pissing contest morons in DC may know what looms or are just so entrenched in the political sewer pipes they don’t see the dangers
      IN the next two weeks we will see. I am not overly optimistic right now.  The KLUMMAC crew seems to want a supernova

    • There is no question in my mind that the level of economic and financial understanding among our dear leaders is absolutely abysmal… lower than whale poop at the bottom of the Marianas Trench.  It is impossible for these dimwits to comprehend either the nature of the train wreck that they have set up or the way to fix it before fixing it is no longer an option.  If they had a clue, they would be reducing the size of this hugely bloated government hand over fist… and RTFN!
       
      For some unknown reason, they assume that they have all the time they want before the cars start leaving the track.  They don’t… but they are blissfully ignorant of this obvious fact.  Has anyone at all in DC asked, “What will happen when no other countries or people in those countries will loan us any more money to squander?”?  As you have often quoted, AG, “When something cannot continue, it will stop”… or something to that effect.  This is true, yet the politicians in DC seem intent on ignoring this truth.  Them ignoring it, however, will not make it any less true.  As Ayn Rand once wrote, “We can ignore reality, but we cannot ignore the consequences of ignoring reality”… and there WILL be consequences in all this… terrible ones.
       
      As to the US defaulting, well, this would not be the 1st time that has happened.  American currency has collapsed before and probably will again.  The old “continental” currency went belly up and became worthless.  The US dollar is headed that way as we speak.  Many of the wrong things are being done in the name of political and economic expediency, yet it is many of these same moves that delay and yet guarantee a collapse of the US dollar.  All of the politicians are listening to the wrong people.  They have fallen into the Keynesian BS Economics trap, without ever considering whether or not this economic philosophy actually works.  Those of us who appreciate classic or Austrian economics are well aware of this but the politicians are not.  The price of their education in this is likely to be a lot more than this nation can afford.
       

    • I agree. The big date is supposed to be Oct 17, and also on this date will be a US-wide earthquake drill, plus a few other countries aswell (shakeout.org). This is an interesting date for the following:
      539 BC – Cyrus the Great releases jews from 70 years of exile.
      It is also International Day for the Eradication of Poverty (? crash USA to ‘redistribute wealth to the poor’, except it won’t – do the poor own gold/silver??)
      It is also Loyalty Day (Argentina) – based on Peronism (which is basically corporatism) .. ie. make people poor.

      https://en.wikipedia.org/wiki/October_17

      It is also Spirit Day, which purports to stand up for minorities and prevent bullying (akin to poverty day)   http://www.glaad.org/spiritday
      Also the yield of the T-Bill dated 10/24/13 just spiked dramatically higher … http://www.zerohedge.com/news/2013-10-08/jpy-jolts-stocks-overnight-highs-t-bill-yields-explode-higher
      Mid-Oct looks a bit unstable right now.

    • Thanks for the video,  Net   There are people who think that if they have checks in their checkbook, they still have money in the account that they can spend.  Impossible but true. 
      The new name for the Washington Redskins?  The Capitol Keynesians. 
      They keep playing and if if they lose they take the score of a basketball team, add it to their score  to win. 

  7. New name for the Washington Redskins.  The DC Puffoons.  We already have the mascot–know what I mean. 
    No—not Barney Frank. 
    The Duffer with the Puffer.
    Re the chances of  a default.  When you give a child a loaded gun the kid will end up shooting something.
    When you give a immature man-child anything breakable , he will end up doing something really really stupid and venal,
    When he’s commander in chief, things could get really nasty
    Even King Canute knew his power was limited.  King KLUMMAC has yet to discover that. 
    If I was to offer a tad of advice, remove as much from your checking account as you comfortable can manage, pay bills ahead of time, just in case something happens right around mid October or early November.  That’s my plan for now

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