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Home > Reasons to Buy Gold and Silver Bullion
Reasons to Buy Gold and Silver Bullion
Reasons to Buy Gold and Silver Bullion
Harry Richardson | Friday, June 21st
   
For a long time now I’ve been telling friends to buy gold and especially silver bullion. I haven’t really had time to explain why but I think now I should make an effort. This is a massive story but I will try to be brief. I believe that gold and silver are seriously undervalued. I also believe that there is going to be a crisis in confidence in the money we currently use which will cause a sudden and serious loss of value (very high inflation). Ownership of gold and silver are an insurance against this happening. Once it does happen it will be too late to take out that insurance policy. Precious Metals to Paper Money Gold and silver have little relevance to most of us today. Apart from the occasional jewelry purchase very few of us have much to do with them in a day to day sense. This was not always the case. For much of human history they were used as everyday money. When Judas betrayed Jesus he did so for 40 pieces of silver. When the US Constitution was written, the dollar was defined as a set weight of silver. Gold and silver possess certain qualities which make them ideal for use as money. The ancient Egyptians and the Incas had no knowledge of each other yet each used gold and silver for money, as have most human civilizations. More recently, over many years (even centuries) people have been gradually persuaded to leave their gold and silver in vaults for safe keeping. In return, they received credit notes. In the UK, people could deposit a pound of sterling silver with the Bank of England and receive a note with the words “I promise to pay the bearer, on demand the sum of one pound” signed by the Governor of the Bank of England. These notes became known as “Pounds Sterling” and for many years have been used as money.
In 1971 Richard Nixon severed the final link. The amount of gold in the world rarely increases by more than 2% per year. The Law of Supply and Demand Imagine if apples and oranges are equally valued in a society. As the Dollar is the world’s reserve currency this had the effect of ending gold’s role in all of the world’s currencies. not coincidentally. here on Planet Earth. ruling that the US dollar could no longer be redeemed for gold. gold has been mostly kept in central bank vaults and credit notes for this gold and silver (Dollars. During this process. the custodians of gold and silver have gradually eroded the rights of people to redeem these credit notes for actual precious metals (PMs). They have to be dug out of the ground in a very . Trying to circumvent this law is about as sensible (and usually just as painful) as trying to circumvent the law of gravity. Producing more gold or silver is a difficult and time consuming exercise. despite the fact that they could no longer be redeemed in PMs. in relation to the amount of gold. it is more like the law of gravity or the law of diminishing returns. there is a reason. This quality of gold and silver is related to their scarcity and the difficulty of mining them. Unfortunately. This was a period of stable prices in virtually all goods and also. gold and silver are not commonly used as money anywhere. Nobel Prize winning economist will tell you. Fortuitously. In Roman times.A similar thing has happened all around the world until today. This makes the value of gold remarkably constant over time. the amount of gold in the world increases at roughly the same rate as “stuff”. The law of supply and demand is not a law passed by government decree. Conversely higher demand or lower supply means higher prices. one of rapidly rising real incomes. When there is less gold in relation to the amount of goods for sale then its value increases. if you went to a high end tailor for a fine suit of clothes and a nice pair of shoes it would cost around one ounce of gold.When there are more goods. one ounce of gold had been worth 35 US Dollars since 1933. Yen.) have been used as money. This was somewhat ironic considering they had just defaulted on their obligations and cheated their creditors. Looked at another way. Today. If twice as many apples are produced as oranges. then oranges will be twice the price of apples. as any modern. Money without gold Prior to the 1971 Nixon gold default. When gold is used as money it is exchanged for every type of “goods” . and at most times in history. Gold and silver are commonly known as commodity money and like other commodities they obey the law of supply and demand. more supply or less demand means lower prices. Since that time. In theory of course. They had in effect. Gold and silver can be trusted to hold their value (and therefore are suitable for use as money) because they cannot be easily created. Pounds. it would cost about the same. Clearly the value of gold could not fluctuate against the dollar when one was a credit note for the other. a dollar was a credit note for one thirty fifth of an ounce of gold. the value of gold rises. As you probably realize. After the default Nixon declared that the dollar would now be backed by “the full faith and credit of the US Government”. and Euros etc. been defaulted on. there is no reason why dollar bills have to be redeemable in gold or silver. Since we’re using them as money already there is no good reason why they wouldn’t hold their value as they had before.
living the high life with your friends and neighbors and having a fine old time. Inflation Imagine coming into possession of a fantastic printing press. Amazingly. . Printing money. Finally you give in and start printing with abandon. Nature provides a barrier which cannot be easily overcome. it is so easy to blame it on someone else.expensive process. the real thief. · Lending PMs which don’t exist and charging interest on them. Rather than lending PMs (real money) they would lend out credit notes for gold or silver which would circulate as money. they now started making loans. When prices go up. Of course. The Origins of the World’s Greatest Scam So who is it printing all this money? Most people assume the Government creates money but that is only half right. blame the unions. they would simply use the credit note. How soon would you find a desperate need to print some? Sooner or later the temptation would be too great. rather than collecting the gold. “I wasn’t stealing. look at how well the local Ferrari dealer is doing. The jewelers (or bankers as they had now become) would charge interest on these loans. was of course highly profitable and as long as not too many people tried to redeem their credit notes for PMs (what we now call a “run on the bank”) then all would be fine. When they get this money they spend it on groceries and petrol and everyone is better off”. blame the shopkeepers. the people you rob don’t even know that you have done it. Lending out money they didn’t have. People would deposit an ounce of gold or silver and receive a credit note in return. this fact is indisputable and if there is such a thing as the perfect crime then this would have to be it. not to mention the fine wine shop and travel agents. these goldsmiths would offer safe storage of other people’s precious metals (PMs) for a fee. I was stimulating the economy. As a sideline. Of course no judge would accept such a ridiculous argument unless he was mentally retarded. blame greedy corporations. or an economist. here are just a few of the more obvious reasons why: · Taking a client’s precious metals (PMs) into safe storage and then lending them out to a third party without permission. When they wanted to buy something with the gold. The prosecution accuses you of stealing from all other dollar holders. fresh hundred dollar bills come out. blame anyone but yourself. As well as jewelry and vaulting services. Simply by turning the handle. After a while the jewelers realized that people were not redeeming the invoices but were simply using them as money. Eventually the police catch up with you and you find yourself in court. “No” you cry. or creating it out of thin air is stealing. This was when they hatched their scheme. Even if people do suspect they have been robbed. This scam originated centuries ago from jewelers and goldsmiths who invariably had very secure vaults as part of their businesses. this should be highly illegal. There is no such barrier to creating pieces of paper with ink on them. perfect in every way and indistinguishable from the real thing. You don’t have to break into someone’s house or hold them up at gunpoint. Maybe your wife would need an operation or perhaps you would lose your job.
Why Governments Hate Gold Essentially this scheme has been going on so long that even the people running it no longer understand properly how it works. that the bankers have been happy to cut governments in on the deal. You would expect that economists would have a clear understanding of all this but that is not the case. textbooks and information about economics today are written to make . You may be wondering then. why the government has never clamped down on this.· Inflating the money supply. Arguing against the system of money creation is professional suicide for an economics teacher and the only ones left with an understanding of the truth are what is known as the “Austrian School” (Google Ludwig von Mises institute). The banks simply extend massive loans to governments who get to spend the money and leave the taxpayers paying the interest (to the bankers) through income taxes long after the politicians have retired (on large salaries). In fact before this scheme began. pounds euros and gold. All these reasons and more. effectively robbing current holders of gold and silver. all lectures. The reason for the increase in prices is purely money printing (theft). It is quite clear that if we still used gold as money that the price of oil would be the same as in the 1950s. thereby diluting the value of existing PMs. The only entities who employ economists are financial institutions (read banks) and governments. income taxes were virtually unheard of. Banks have also (allegedly) used their money and influence to discredit and marginalize any politicians who have opposed them. mean that modern banking contravenes any number of legal principles regarding property and contracts law. This graph above shows the price of oil in dollars. The way this stolen money corrupts not only governments. The simple answer is that this scheme is so profitable and so successful. Consequently. but entire societies is too large a subject to cover here. If you or I were to operate a similar scheme we would surely be locked up.
· Bond traders always watch inflation rates. If the rate of inflation is expected to be 5% then at a 5% interest rate they will make zero profit. · For this reason (and others) governments and banks are constantly looking for ways to pretend that inflation is lower than it really is. Typically bond traders will expect a premium over the expected inflation rate to compensate for the risk of lending. try not paying yours and see what happens). If this were to happen in the current environment the resulting meltdown would likely make the GFC look like a tea party. They then jiggle the figures by such things as taking out any goods which go up in price such as food and fuel (which is fine if you don’t eat or drive) and add in things which naturally get cheaper such as flat screen televisions or computers. So now we can see why a rising gold price is an anathema to governments and banks. So although most government employees are oblivious to this situation there are those in finance and treasury departments. who clearly understand the following. or at least suspect this and look for other ways to gauge true inflation.this scam look like a benefit to society. the dollar is losing value and bond traders begin demanding higher interest rates to compensate. · In normal times the banks do not lend directly to governments. · Governments all want to freely spend other people’s money without the highly unpopular tactic of taking it off of them at gunpoint (excessive taxation is akin to armed robbery. Bond market traders are not “mums and dads” but dedicated professionals who have a thorough understanding of the market. it suggests that in reality. not to mention Central Banks. Since they . When the gold price starts going up in dollars for instance. · The bond markets are many times bigger than the largest stock markets. which is growth of the money supply. · The best way to do this is by borrowing money that your successors will have to pay back haha! · The primary mechanism for government borrowing is through the bond market. not a single mainstream economist could predict the global financial crisis one week before it began (Princeton economics professor and Fed Chairman. For highly indebted governments (today that means virtually all of them) high interest rates spell disaster (think Greece). · Bond traders know. By lending out counterfeit money however they reduce the cost of borrowing in the bond markets. they pretend that inflation is actually rising prices (which are caused by inflation) and pretend to measure these instead. Perhaps because of this. it reflects a solid rate of value against which other currencies can be measured. Rather than measuring actual inflation. One of the favorites is to watch the price of gold. The higher the expected inflation rate the higher the cost of borrowing for governments. The fake money competes with real money to reduce the rate of interest which means governments can borrow far more than they otherwise would be able to and still afford the repayments. If you don’t believe me. Ben Bernanke was denying it weeks after it had already started). Since gold is real money which cannot be created out of thin air.
is how could they be doing this? Gold and silver price suppression Legal restrictions: Governments suppress the price of PM’s through laws limiting their use as money. cash was a paper promise for gold and silver. After the default. governments force their citizens into the use of government and bank created “fiat” money. Farmers could be sure of prices before planting crops and so forth. In the US. In this case. etc. By restricting the use of gold and silver as money. Originally.openly manipulate other currencies and interest rates both overtly and covertly (the word Libor may ring a bell) it is implausible to think that they wouldn’t try to intervene in the gold and silver markets to keep this scheme going for as long as possible. PM’s became less desirable and therefore less valuable than they otherwise would have been. Since money is power. pension funds. This has been done with varying severity from country to country. but the purchase of gold still occurs and consequently has no long term impact on price. banks and government. Brutal dictators Lenin. the payment is brought forward. This gives the government and banks the power to steal from the people at any time they wish. hedge funds. the futures prices heavily influence the spot price of physical PMs. ownership of investment gold was outlawed in 1933 (until 1971) by President Roosevelt who forced Americans to hand it over in return for paper dollars. The futures market in Gold and silver wouldn’t have been possible before 1971 as the gold price in dollars (or dollar price in gold) was fixed. a futures contract is sold by someone such as a miner who is confident of having gold to sell by the time the contract expires. . When these institutions want to take a bet on a rising gold price. they don’t want to send an armored van down to the local gold dealers and take delivery. They want investments that can be purchased with the click of a mouse and stored on a hard drive or in a filing cabinet. obviously the futures contract looks more attractive. Mussolini and Hitler all banned the private ownership of gold shortly after gaining power. This means that in a normally functioning market.you guessed it. With a greatly reduced monetary role. Shortly after this promise was defaulted on. If you have the option of buying gold at $1000 or a three month futures contract for gold at $900. siphoning money from the people to the government equates to a huge increase of government power and a consequent loss of freedom for “We the people”. The next question then. Unfortunately the futures markets provided a mechanism for the powers that be to control and manipulate the price of gold and silver. a new way of owning such promises (the futures market) was invented by…. Not only do you get the gold cheaper. In theory. This was then deposited in a custom built depository called Fort Knox where some of it is still supposed to be held today.. The futures markets started as a way for commodity producers to transfer risks of future price volatility to speculators. Since the futures market is many times larger than the physical market. “Paper” Gold and Silver: Most large PM investors today are institutions such as insurance companies. the paper market tends to set the spot price of physical gold and silver. you also save on storage costs. with wildly fluctuating prices of PMs the futures market was a way for miners to guarantee a price for their product in the future allowing decisions on new mines or expansions to go ahead.
establishment figure Geoffrey Christian admitted that there were perhaps 100 times as many contracts of various stripes as there is physical metal to cover them. The resulting short squeeze would be the worst nightmare of the banks and governments. whilst the regulators turn a blind eye. By driving down prices with a wave of paper selling.In reality. real gold and silver would begin trading at a premium to the contracts. These banks have traditionally been the largest short sellers of gold and silver on the futures exchange. That is to say they plan to sell their futures contracts if the price drops below a certain level to limit risk. announcements such as additional money printing or bank and sovereign failures which should be wildly bullish for gold have been followed by price declines caused by massive selling of futures. who are largely beholden to big banks for advertising revenue. the price would have to be much higher. If these ETF’s have issued shares not backed by real PMs. It means that the banks wind up carrying a huge short position more or less permanently. Many of the big institutions investing in PMs use stop loss strategies to limit downside risk. Throughout the 12 year bull market they have done everything possible to steer people away from owning PMs as a safe haven. Morgan respectively. The financial press. With so little metal backing these contracts up.P. In this case there would be a powerful incentive to take delivery of PMs rather than rolling the contracts over. If people were to lose faith in the system. For years now Theodore Butler has been alleging that they have been doing just that. Big institutions have little or no incentive to take delivery at the expiry of a contract. Apart from being totally immoral and highly illegal. Exchange Traded Funds The largest PM ETF’s (GLD in gold and SLV in silver) are run by HSBC and J. the Bullion Banks have the ability to “set” prices pretty well where they want them. A bail out . the banks allegedly trigger these stop losses and use the ensuing panic selling to buy back their “shorts” at much lower prices. If all the money spent on futures (and other derivatives) had instead been spent on actual PMs. Only around 1% of PM contracts stand for delivery on expiry with most simply being rolled over into a new contract. then this would represent more money which should have gone into silver and gold and driven up the price (anyone thinking of buying an ETF should consider Eric Sprott’s PSLV or PGLD). In other words they have sold huge amounts of PM’s which they don’t actually own. a default would be highly likely. This price volatility makes investment in PMs unpopular with investors especially as it is often so counterintuitive. The only entities allowed to withdraw PMs from these funds are “authorized participants” (read big banks). have acted as cheerleaders for lower PM prices. If true. This has damaged gold’s traditional status as a safe haven asset which appreciates in times of turmoil. this highly profitable scheme has an Achilles heel. making big profits in the process. spelling a very unpleasant end to the gravy train of free money and multimillion dollar bonuses. many of these contracts are sold by big “bullion banks” who have a fraction of the gold they are selling contracts for. In recent times. Psychology and propaganda With the ability to sell “paper gold and silver” in lieu of real metal. Now I’m no contract lawyer but after a cursory look through the prospectus of SLV I would think getting blood from the proverbial stone would be easier for a shareholder of this ETF than it would be to get your hands on any metals. the amount of PM’s that actually exist is far less than most traders believe. At a hearing on precious metal prices.
of the “too big to fail” banks would require money printing on a scale which would undermine credibility in the US dollar. and ensured that each new economic crisis was “fixed” by a wave of money printing which would bail out reckless banks and boost the stock market into a huge bubble. we would expect the temptation would be for them to use this metal surreptitiously to supply the needs of those who demand physical metals.00. there is no such thing as a free lunch and the stock market bubble burst in late ’99. they a little over 8. These governments used their collective gold stocks to sell into the market whenever the price began to rise above $35. with the good times came the urge to print more money. foreign banks were becoming nervous with fears that the US printing money to pay for a war in Vietnam and ever growing welfare programs. Sadly. Most of this has been literally “burned up” by industry which uses tiny amounts of silver in thousands of products. there was no longer any risk of losing gold. Dollar Debasement Once Nixon defaulted and the dollar was no longer redeemable in gold. They began redeeming their dollars in gold. rapidly draining the US gold reserves. This caused interest rates to spike (less money printing initially means higher interest rates) causing a savage recession. The ensuing money printing intended to “fix” things didn’t help of course. After WW2 there was a stockpile of some 5 billion ounces which has all but disappeared. The London Gold Pool During this period the US collaborated with the Europeans to cap the gold price at $35. confidence in the dollar was restored.00. print and spend as they pleased. it just created another . The dollar was redeemable in gold by other central banks (not by US citizens who were forbidden from owning gold). Alan Greenspan took over the Fed at the end of the Eighties. We know this has happened with silver. Greenspan and Bernanke Unfortunately. The US started this arrangement with around 28.00. setting the US up for high growth and good economic times in the Nineties. Exchange rates to the dollar were fixed meaning that all currencies were redeemable in gold at a fixed rate. At that point. Governments and banks could now borrow.000 tons of gold but by the time the Gold Pool was overwhelmed by demand in 1971. Despite the pain. Government Stockpiles of Gold and Silver Since governments are sitting on huge stockpiles of gold (and previously silver).00 to $850. Silver has more uses than any other commodity other than crude oil. This inflation of paper money led to a catastrophic collapse in the value of the dollar which showed up as rapidly rising prices. This was done overtly using a mechanism called “The London Gold Pool”. Recent Monetary History After WW2 the world went onto the “Bretton Woods” quasi gold standard which left the US Dollar as the world’s reserve currency.000 tons left. Paul Volker took over the reins at the Fed and put a stop to the money printing. The Volker Fed The gold price naturally soared and within nine short years one ounce of gold went from $35. During the 1960’s.
In other words. Gold Stocks Sold Off? Apart from regular raids in the futures markets. They have been dismayed by the corruption of these markets and have spent years compiling evidence from such things as minutes of Fed meetings. professional bond traders are watching this signal. When this bubble burst triggering the GFC. government financial reports and the like. they advance the idea that the central banks have been surreptitiously selling off their (our?) hoards of gold for years. ready to sell bonds and drive up the cost of government borrowing exponentially. The bullion banks run the PM exchanges in London and Chicago and dominate trading there. Mr. This would extend their ability to print money and siphon wealth from producers and savers. (and former Wall St Banker) Larry Summers. For anyone who has ever leased a house or car. If GATA are correct however then there is far less gold and silver than people think. the money printing went off the scale. As head of the Treasury. this time in housing. to spend virtually unlimited amounts of cash to ensure that financial markets don’t get too unruly. In all likelihood this would realize massive losses which they would not be able to hide. Here are a few of the ways they are accused of dumping PMs into the market: · Leasing PMs to “bullion banks”. they are mandated to secretly manipulate financial asset prices to prevent excessive price volatility. the US Treasury and other Central Banks around the world have been involved in a covert scheme to rig the PM markets and keep them from exploding higher with the “Plunge Protection Team” being central to these efforts. This promotes the belief that there is plenty of gold in the market place and a whole lot more in central bank vaults. Others see it as the inevitable consequence of rapid money printing.bubble. you will probably realize that selling something you have leased is not part of the deal. This is seen by some as the beginnings of a recovery. they have mostly remained fairly stable. Summers is in charge of the “Plunge Protection Team” which has the power. GATA are not just conspiracy nuts but are professional traders and legal experts in the gold and silver markets. Due to the nature of money creation however. As previously mentioned. If the bullion banks want to close out the deal. In order to gain maximum effect this is mostly done without the knowledge of the general public. especially coming from such authentic sources. US stock and house prices have started to rise. without any congressional approval. The case they present is very compelling. Plunge Protection Team Someone who wrote an academic paper on this subject in the mid 1990’s is current US Treasury Secretary. The central banks lease out their hoards of PMs to these banks at rates of around one percent. More recently however. The “canary in the coalmine” is the price of gold and silver. depressing prices and use the proceeds to buy government bonds which (used to) pay much higher rates of interest. The Gold Anti-Trust Action Committee (GATA) believes that the Fed. What is happening instead is that rather than prices plummeting. this money inflation hasn’t shown up yet in rapidly rising prices (although they are rising a lot faster than the government will admit). they would have to buy back a huge quantity of PMs in the market at prices far higher than those they sold them at. in a savage deflation. It would also send the price of . The banks then sell this metal into the market.
Alan Greenspan was questioned specifically about the danger of large short positions in PMs and the risk that they could endanger large banks. In the meantime they will not be allowed to audit this gold or even see it. Venezuelans were among the first to find out that their gold was stored in London. Hugo Chavez (wisely for once. as governments would have us believe. or around 300 tonnes (and I think most Germans would like 100%) of their gold back from New York. In the mid Nineties. Now you can call me a wild conspiracy theorist if you like. have found out that their gold is elsewhere (inevitably New York or London). No one knows much about them as they are intensely secretive about all gold dealings. This would allow them to sell gold without having to ever take it out of the vault.e. why would Central Banks swap gold? After all. if they had regular audits. Try that one next time the taxman wants to audit you and see how it goes down. it would just need to call the Bundesbank and ask them to sell. The reason given by the Treasury. The question is. expect a serious upward revision in price. has gone as far as asking the Americans to repatriate ten percent. Investment house QBAMCO calculates that if the US dollar was to be backed by gold in the . Central Banks don’t account for this leased gold separately in their accounts but mark it on a single line as “Gold and gold receivables”(leaving us to guess about how much is actually still in the vaults). Reserve Currency It is also possible that people might begin to rapidly lose faith in the US dollar. when pressed on this issue: “Because everyone knows the gold is there”. I believe) insisted on taking delivery of this gold. but you would expect a reasonable delivery time to be in weeks or at most months. In fact you would get nuclear secrets out of a Government easier than the truth about their gold reserves. His reply was that “Central Banks stand ready to lease gold into the market to ensure the price doesn’t rise too far” (i. under pressure from the Parliament. Repatriation Recently. The only serious alternative would be a currency backed by a large amount of gold. Since then a rash of other countries as diverse as Mexico.that is. Holland and even Germany. If it turns out that the gold really isn’t there. If the Fed wanted to sell its gold. Of course you can’t expect that the Americans would do an overnight delivery. Instead. It should be as easy as loading it onto a German naval vessel and shipping it home. The German Central Bank. Imagine if the US Fed swapped gold with Germany’s Bundesbank (Central Bank). one piece of gold is exactly the same as another (which is one of the properties which makes it useful as money). manipulate the price downwards). the Germans have been told it will take seven years to get it (just 10% their gold) back. Of course the gold in the vault would now belong to the Germans and this would soon show up in the regular audits……….PMs spiraling upwards as we are talking about very large positions. · Central Banks have swap agreements with other Central Banks. One possible explanation would be in order to hide sales of gold. The last time the US gold was audited was in the 1950’s when Eisenhower was president. but this suggests to me that perhaps the gold might not be sitting on pallets waiting to go. people around the world have been putting pressure on their governments to provide details about how much gold they have and where they store it. which is the world’s reserve currency.
· The price of gold is currently 60 times higher than silver or four times its historic average. Silver Here are a few brief facts about silver: · Silver and gold occur in the earth’s crust at a ratio of around 15:1 which has been the trading ratio for much of human history. causing a cascade of selling from panicked investors. Emerging market central banks have also been loading up on gold meaning that central banks are now officially net buyers instead of net sellers. Dumping it all in one go makes no financial sense unless you were trying to manipulate the market lower. zinc and gold mining. who has this much gold to sell. This occurred during thin trading around a weekend. · Currently miners are digging around nine ounces of silver out of the ground for every ounce of gold. · This situation has been going on for decades meaning most of the silver ever mined which was previously held as money (coins and bars) is now gone. Almost all silver is extracted as a byproduct from lead. · The price of silver is so low that hardly any silver mines exist. the market for physical metals is off the scale. or some entity apparently sold the equivalent of 150-400 tonnes of gold on the Comex futures market in a matter of a few minutes in mid-April. Current Prices As of time of writing the prices of PMs have dropped significantly. It is practically irreplaceable in thousands of vital products. Huge Demand Meanwhile. the world’s best reflector (mirrors) and an awesome germ killer. That is assuming that the US has as much gold as it claims to have.same manner as it was from 1948 to 1971 the gold price would have to be around $10. · More silver is used up in non-recyclable industrial uses than is being dug out of the ground right now. · Silver is the world’s best electrical conductor. you would have to ask. · There is now estimated to be less silver above ground than gold. China and . · Sales of physical silver and gold for investment are roughly equal in dollar terms in major outlets such as the US Mint bullion coin program or the Sprott physical PM exchange traded funds. Make up your own mind on that one. As the prices have come down. Considering that the US Government is taking seven years to cough up 300 tonnes of gold for Germany. Someone.000 per ounce. If you wished to sell this much gold at the highest price possible (as any sane person would) you would sell it in small lots over a period of time so as not to “spook” the market. Sales of silver and gold coins from the US Mint have been off the charts and India and China have been buying everything they can get their hands on. buyers have been queuing up to buy and shortages are developing around the world.
however in the long term. Put another way. The US dollar has been one of the strongest world currencies over the last 100 years. no other currency has held its value for thousands of years. and there are no buyers left. When Zimbabwe destroyed its currency people could at least buy dollars or pounds to protect their wealth. If you are interested in investing in precious metals do your own research and make your own decisions. All other attempts to use unbacked paper money have ended in total loss of value. the dollar has lost around 95% to 98% of its value. This is only scratching the surface of the precious metals story. Many people around the world are seeing this as a “golden” opportunity to swap rapidly depreciating paper money for the only kind of money which has always held its value. mean that bull markets end with a glut of supply and a lack of ready buyers. Europe’s Central Bank has promised to do “whatever it takes” to prevent bond yields from spiking. Ben Bernanke. Paper Loses Value In the end there is no such thing as a “risk free” investment. in other words. Money Printing Gone Mad The bank of Japan is currently embarking on a program of money printing of historic proportions and the incoming head of the Bank of England is promising to do the same. maybe this time will be different. For those of you familiar with financial markets you would be aware that bull markets end when everyone has bought in. Since the creation of the Federal Reserve in 1913. In the short term PMs have the risk of price volatility. a dollars’ worth of bread or milk or beer today. Whilst paper promises for PMs may be suffering from this situation. the only ones likely to survive in the long term are those which can’t be printed.com [6 ] SilverSeek. physical gold and silver are experiencing the opposite. the head of the US central bank is famous for threatening to drop $100 bills from helicopters to prevent deflation and is currently printing US$85 Billion per month. This. One thing which is different is the global scale of this phenomenon. Most of this loss of value has occurred since 1971 and all of it is attributable to theft by money printing. In the past this behavior has always led to hyperinflation and the destruction of currencies but who knows. Harry Richardson harryyo [5 ]@gmail. With all these currencies in the same sinking boat. Bull Market in Physical The Western financial press has declared that the 12 year bull market in PMs is over and gold and silver are now in bear market territory. buying government debt with freshly printed money to keep governments and banks solvent.com . I hate making financial recommendations so this is intended as information only. combined with high prices which stimulate supply and destroy demand.Russia account for around one fifth of all gold produced and neither country exports any of that production. would have cost around 2 to 5 cents in 1913. The only safe thing to do with money is to spend it straight away so no one can take it off you. If you do wish to save for the future you need to weigh up the risks of any given investment.
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