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The Global Physical Gold & Silver Reserves Race is the New Nuclear Arms Race
The old Cold War USA-USSR nuclear arms race has been replaced by the
new East-West Central Bank battle to accumulate physical gold and physical silver reserves.
While Western Central Banks and their puppet bullion banks have distracted and
goaded private citizens with the invention of fraudulent bogus paper gold and
paper silver derivative products, including ETFs more recently, and paper
futures contracts for a much longer period of time, they themselves have been
making sure to avoid the very fraudulent paper products they have invented and have
been diving headfirst into real physical precious metals.
As Central Banks continue to significantly devalue all major
global currencies through excessive creation of new supply out of thin air in a
digital world where “new money” is never even printed into paper/cotton form
but only is created as digital bytes that are sent across international borders,
the private families that are the majority shareholders in the world’s most
powerful Central Banks have engaged in heavy buying of physical gold in
particular, and to a lesser degree, physical silver. In 2010, Central Banks as a group, became net buyers of
physical gold after two decades as net sellers. EU Central Bankers became net
buyers of physical gold for the first time during the 1st Quarter 2011 since
their introduction of the heavily flawed Euro into circulation in January of
2002.
As of April 2011, China was, according to “officially
reported” statistics, the sixth-largest official holder of gold, with 1,054.1
tonness, according to World Gold Council estimates. The U.S. was still reported
to possess the largest gold reserves at 8,133.5 tonnes. However, all of you know by now that I
believe all “officially reported” statistics, whether the statistic is GDP,
unemployment, inflation, or gold reserves, to be a charade and mockery of the
truth. To this day I am highly
skeptical of the US reported reserves of 8,133.5 tonnes, especially since these
reserves have neither been independently audited nor independently tested to
ensure that they meet good-for-delivery bar status since Dwight D. Eisenhower
was the US President in the 1950s. As for China’s “officially reported”
holdings of only 1,054.1 tonnes, anyone that takes these reported stats at face
value as the truth is a fool for any number of logical reasons. One, China
reported that its “official” gold holdings were a constant 600 tonnes from 2003
to 2009 and then reported that it had increased its holdings to more than 1,000
tonnes overnight in 2009. Since China lied about its gold reserve holdings for
more than 6 years, one cannot and should not assume that their “officially”
announced 1,054.1 tonne level was truthful. Since China made that announcement in 2009, their “official”
gold reserve level has not increased at all.
Anyone that believes that China has not accumulated more
gold, and lots of it, since that time, does not understand the Chinese
government and Chinese bankers. Chinese bankers have been studying the best
ways to invest in gold and silver for many years now in preparation for this
global monetary war and they realize that one of the best ways to invest in PMs
is to own the real thing. Furthermore, there are multiple mechanisms by which
China could be secretly increasing their gold reserves out of the scrutiny of
the public eye. In 2008, China replaced South Africa as the largest gold
producer in the world, but nobody really knows exactly how much gold China
produces or how many proven/ probable reserves or how much measured/indicated
resources they own. Thus, China could be increasing gold reserves significantly
on in-house production alone. Certainly we know that China is increasing its
silver reserves through a policy of decreasing its domestic silver exports and
increasing its foreign silver imports.
For example, last month, China’s General Administration of
Customs reported that its net imports of silver nearly quadrupled
year-over-year in 2010 to more than 3,500 metric tons. Also of important note is the fact that
in 2010, China exported 1,575 metric tons of silver, 58% less than in 2009, and
imported 5,159 metric tons of the metal, 15% more than in 2009. This is a huge change if one realizes
that from 2005 to 2010 China transitioned from a net exporter of 2,900 metric
tonnes of silver to a net importer of 3,500 metric tonnes.
From 2005 to 2010, China increased its gold holdings in its
State Administration of Foreign Exchange (SAFE) more than tenfold from a very
small starting point of USD $4.2 billion to USD $48.1 billion. However, China could be increasing gold
(and silver) reserves significantly through purchases in its Sovereign Wealth
Fund - purchases that are not made available for public inspection or
consumption. For China to publicly announce their buildup of gold and silver
reserves that would drive up the price of the very commodity they wished to
accumulate more of would be akin to then-Chancellor of the Exchequer Gordon
Brown’s foolish decision to pre-announce in 1999 that the UK would be selling
half of its gold reserves.
Also of important note are the following facts. China only recently deregulated gold in 2003 to allow gold prices in China to mirror international prices. The Shanghai Gold Exchange only opened in October of 2002. In late 2009, the Chinese started making gold and silver bullion easily accessible to its citizens through introducing physical sales of multiple size bars at its banks and China finally legalized ownership of 99.999% pure silver bullion. The Chinese typically have a tendency to buy PHYSICAL gold and PHYSICAL silver, not the fraudulent paper gold and paper silver derivatives invented by bankers to suppress the price of gold and silver. For the first time ever, Chinese citizens will be able to buy silver futures in Hong Kong this week and later in Shanghai; however, since the Chinese are fond of owning Physical metals, perhaps the majority of Chinese may settle these contracts with physical delivery. Furthermore, even when the option to buy gold and silver ETFs in China becomes a reality, the average Chinese citizen may shy away from these products due to his or her propensity for owning real gold and real silver.
For Asians in general, gold and silver have always been money. In Thailand, the word for money “ngen” is also the word for silver. In China, the word for bank combines the characters for “silver” and “movement”. In China not only is private demand strong AND relatively young, but even in India, private ownership of gold bullion bars was not legalized until 1990. Thus, the war between East and West over gold and silver will intensify in coming months and coming years. The objective of the East will be to release the gold and silver price from the clutches of Western price suppression schemes while the objective of the West will be to hoard gold in an attempt to prevent citizens of Western nations from owning the asset that will protect them the most from their currency devaluation schemes.
The current talk in the mainstream financial media about
gold being a bubble at $1,600 an ounce and of silver having already reached its
top of its long-term peak at $50 an ounce is simply rubbish. A bubble is never
defined by high prices, the perception of high prices or even a decade long
rise in prices. What defines a bubble is a meteoric rise in price that is not
supported by fundamental reasons. For example, the US NASDAQ dot.com stock
market was a bubble because dot.com stocks that had zero earnings were trading
at impossible valuations and sometimes double and triple digit dollar values
per share. However, the fundamental reasons that have driven gold from $250 to
$1,600 and silver from $4 to its current $39-$40 range are even stronger today than
they were at the beginning of this precious metals bull. Therefore, it is
impossible for a bubble in gold and silver to exist at their current prices and
at this current time.
And for this reason, this is precisely why the global
nuclear arms race has been replaced by a global physical gold race. Welcome to
the new global war in precious metals.
About the author: JS Kim is the Managing Director of
SmartKnowledgeU. SmartKnowledgeU now offers monthly subscriptions to our
premium investment newsletter, the Crisis Investment Opportunities newsletter,
an investment newsletter that has returned well over a cumulative 200% (on all
opened and closed positions) since its launch in June 2007 to present day. Follow
us on Twitter here.
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Thousands of years of Chinese knowledge right there folks.... NO SHIT SHERLOCK!
Doesn't owning gold make you a terrorist now?
There's an old saying from my Dad who's lived through the Depression of 1929-38.
"From shirtsleeves to shirtsleeves in 3 generations"
In essence meaning, what he learned through the grind of the depression, with hard work and rolled-up shirtsleeves, would be lost over the coming 3 additional generations in the family, and that then again the lessons would need to be "re-learned" by my children's kids. Or that, all of us would return to owning only the clothes on our back, every 3 generations.
Does anyone else know what else that may mean? Have you heard that expression?
That expression was used when refering to the lazy, spendthrift ways of the second generation. Daddy's money will be gone when his grandchildren need it.-9
His is the real world knowledge of what is explained in the book, "The Fourth Turning" by Strauss & Howe
We have a very circuitous way of perceiving Gold 'premiums'.
Talk about nominal thinking!
The only way we should be thinking is in terms of discount. When we begin to speak of "AU" paper trading at a discount to "AU" physical, then the populace of the West will have arrived at the point of proper perspective.
"Exchequer Gordon Brown’s foolish decision to pre-announce in 1999 that the UK would be selling half of its gold reserves."
nothing foolish about it, his handlers made out like bandits and
gordo no doubt got a nice kickback.
the only morons are those who think our so called leaders are morons.
they'll even call themselves fools to cover up the swindle if it becomes necessary.
"we made some mistaken assumptions so your money vanished (into our pockets)."
have been reading up on the Greek bail out package. A giant dung heap of twisted off balance sheet instruments using mountains of colateralization. in fact,,, it look like the ECB is effectively printing money! Swap rates have not moved.
politicians now consider that they've earned a badge of honor if they've kicked the can a bit further.
The circus act contortions will continue. am convinced more than ever that one day this will unravel. Each month that passes the unravel gets more painful. It appears that investors are now only becoming convinced that this will not end well. PM +PMM will climb. It's the easiest long term trade in history.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s238082247]&disp=P
rhetorically speaking, I wonder what the bank holiday (one day) will look like?
Nice article - as a Cdn - I would be a bit better if I knew why the Cdn Central Bank is NOT increasing their gold reserves. When you see the charts of various country CB's - gets scary for some.
Greg
Probably because they are aware of how much they have in the ground. (Free Storage and no problems with theft)
Sean7k,
Yeah, and waiting to Nationalize them.
Like here, the Feds own most of all the PM land where known reserves are.......
Coincedence, I think not.
Coincidence? I think not! One of my favorite lines...lol
You must convert your PM to fiat to spend it. Better convert now while you still can !
Have not walked into a bank yet that was more that willing to trade my gold for paper. I even traded a local plumber some silver for work he did. Worked out great, tax free too.
Yes, but if you want to sell your parachute to get cash, a poor time to do so would be when you are about to hit the ground.
You are technically correct now, but by the time this is over, you will have it backwards, you will have to convert to gold to buy anything. Of course, by then, nobody will want your paper.
Especially if you use it as toilet paper.
http://www.momoneyblog.com/wp-content/uploads/2010/05/zim-dollars-toilet...
Time to leave ZH! I would not want to be a member of any club that would allow me to join. You have been warned!
About my picture - Jubilee this you bitch Bernanke!
PS - "I was told there would be no math in this debate." - Chevy Chase as Gerald Ford
I'm still waiting for the announcement where they say they foun the famous "Lost City of Gold" (buried uner Mt. Rushmore or something)...
"Look peeps, we have tens of thousands of tons of this stuff... Yours is worthless, might as well just hand it over, we'll give you a few Treasury notes for your trouble..."
I don't think we will see a tumultuous fall in prices. The smart money buying and central bank buying ensures that won't happen. The agreement between central banks that has held back panic buying is like the OPEC cartel, everybody cheats the system and pumps more than agreed upon, but they still restrain themselves for the long term benefits of a cartel. This is no different.
Central banks are all buying on the dips, but if gold were to drop too much, many of the cheaters would buy in excess of their allotment and return the price to the agreed upon level. I think the price action in July is evidence of the co-conspirators cheating each other or we wouldn't have seen such price gains. This game is nearing the end.
Thanks to the GLOBAL MARKET strength, that is only going to get much larger,if a fairy(besides B Frank) waved a Magic Wand and made it all normal,the markets for PM's will grow at a tremendous rate.
Easily outstripping supply before this debacle is over, may take 2-10yrs, but it will happen.
Basically nearly every other country in the world understands money, Americans have no clue.
Interesting. Never seen anything negative written about them on-line, never had a problem.
JSK,,
Do you believe they will return us to a gold standard, or a bastardized version of a gold standard? I've been thinking that they will leave themselves an out, so they can undermine the new "gold standard" without a political decision. For example, if the new money is backed 99% by physical gold, they can just quietly change that number over the years, slowly boiling the frog until our money is once again worthless.
Question 2: When the central banks have most of the gold, wouldn't it be in their best interests to manipulate the value of gold UP so that they can bail themselves out? They could also appear as heroes and bail out the soverign nations? Another outcome is they would buy up our debt and make us all debt slaves for the foreseeable future. What is your opinion?
Mr. Kim,
So long as the topic is gold and silver, would you mind sharing a list of the most reputable online dealers with us.
thanks in advance - Laws
When I had a lot of my assets with UBS, I purchased 20 gold Eagle coins of 1 ounce each through UBS and it was a train wreck. My broker thought I was weird (gold was $440 per ounce by the time we got the order done) and delivery took about a month as UBS "lost" half the order for a couple weeks. Apparently, they had a sloppy operation in NYC. I kept my paperwork, especially the shipping confirmations very close and UBS finally delivered to my house (via the US Postal Service!). Sad to say I sold the last of it at $880 as I didn't think it could go much above $1000 per ounce. Am ready to try again, but with silver this time as my fiat money is really lacking now. Ironic that I spent the summer of 2009 at Fort Knox, often staring at the gold repository's aboveground structure, which is about the size of a largish, suburban home in the USA. You can play golf right up to the fence that surrounds the repository. US Highway 31 (Dixie Highway) runs along the west side of the repository, Bullion Blvd along the east side. I thought it would be more remote with more security than a typical prison, rather than less. Funny to think Uncle Sam has been sitting on a huge amount of gold since it was $250 per ounce.
When I had a lot of my assets with UBS, I purchased 20 gold Eagle coins of 1 ounce each through UBS and it was a train wreck. My broker thought I was weird (gold was $440 per ounce by the time we got the order done) and delivery took about a month as UBS "lost" half the order for a couple weeks. Apparently, they had a sloppy operation in NYC. I kept my paperwork, especially the shipping confirmations very close and UBS finally delivered to my house (via the US Postal Service!). Sad to say I sold the last of it at $880 as I didn't think it could go much above $1000 per ounce. Am ready to try again, but with silver this time as my fiat money is really lacking now. Ironic that I spent the summer of 2009 at Fort Knox, often staring at the gold repository's aboveground structure, which is about the size of a largish, suburban home in the USA. You can play golf right up to the fence that surrounds the repository. US Highway 31 (Dixie Highway) runs along the west side of the repository, Bullion Blvd along the east side. I thought it would be more remote with more security than a typical prison, rather than less. Funny to think Uncle Sam has been sitting on a huge amount of gold since it was $250 per ounce.
Tulving.com great prices, sells only what is in stock: but 500oz min silver and similar dollar value min for gold.
This say's it all for me.
http://www.la.bbb.org/business-reviews/Coin-Dealers-and-Supplies/The-Tulving-Company-in-Newport-Beach-CA-13090180
double post
I have used both APMEX and Bullion Direct with good results. My purchases have been relatively small though; a few ounces of gold here, one hundred ounces of silver there. I hear that Tulving has the best prices for big fish making large purchases (e.g. monster boxes of silver).
I'm not affiliated with any of the above dealers.
Bullion Direct for me, it has worked out well.
30+ years ago when gold was 200 and silver 5, I was sheep and knew nothing. Now I stack em.
APMEX is my dealer... Never did me wrong and ships internationally.. I buy buffalos... For a good reason ... They value them at 50 usd leaving USA ....
I use Blanchards. I don't have any affiliation with them, but I have been very satisfied with them and their prices are good. I can't say anything about their shipping policies because I work in New Orleans and go to their office for pick up when my PMs arrive. They seem very knowledgeable about what they do and I trust them.
Those of us who were close to our grandparents, who survived the great depression have known that physical gold and silver demand accountability because the material and coins can not simply be fabricated out of thin air to the extent that paper or "1" and "0"s can.
We have been collecting slowly our entire lives. Even if the world is engaged in a global gold and silver accumulation war, nothing will really change until 1) fiat is reattached to gold and silver or 2) people with things of REAL VALUE (i.e. food, water, fuel, etc.) demand gold and silver for payment. Doing #1 would be less likely to start WWIII. The financial fucknuts that got us into this mess to begin with (and who do not add real value to the economy) can deny and run from accountability all they want, but it is coming one way or another - hedge accordingly.
Spot on, once again Mr. Kim. I am amazed at the people who cite gold prices 30 years ago and claim this run in gold is over. Technical analysis or historical analysis has nothing to do with the run in gold (and silver) it's about the fiat, plain and simple, and that is getting worse, not better. Therefore, no bubble, but I don't really believe gold will continue it's long slow march, because I don't believe the depreciation of the USD can continue at a controlled rate forever. Sooner or later, the Fed will burn out the brakes. Gold is going to accelerate appreciably as the situation worsens. Then just wait for the charts to come out to convince the public, with words like "parabolic rise" that the gold bugs are going to get stomped. I've made a long study of parabolic price action, but it won't apply at all to the coming price action in gold. (hee, hee)
Another great piece by J.S. Kim
Interesting, and probably not wrong, that the author puts the ownership of gold and silver in terms of a strategic arms race.
I've often thought government PM confiscation next time around would be through declaring it a strategic asset too important for private ownership. Governments have never flinched at making forced use of their currrency compulsory by any means.
Good luck to them with confiscation next time around, people now recognize it as a criminal act. We still want our 1933 gold back.
http://bit.ly/o9qPa0, jury awards 10 double eagle coins owned by private family valued at $75MM to US gov't because of theft from Philadelphia Mint in 1930's. From this article: "It sends a strong message" that the government will pursue thefts, "no matter how many years pass," Assistant U.S. Attorney Jacqueline Romero said after the verdict.
Perhaps this case will then set a precedent for descendents of US citizens that had gold stolen from them in 1933 by the US gov't to sue the gov't and get their gold back because citizens should be allow to pursue thefts, in the words of Attorney Romero, "no matter how many years pass."
They did not steal it they simply coerced you by threats to accept payment of $20 per ounce then devalued the dollar. Its was all perfectly legal and for your benefit after all you can not eat gold.
cfos,
And do not forget, increased the price once they relieved the moral,and law abiding of real wealth.
If a confiscation/turn in order is done again, look for compliance at near ZERO.
See my comment below Mr. Kim. The moral hazard was released long ago and with fraud remaining the status quo, possession and like-minded neighbors will be the only law that is essential to survival. But then again, I am a farmer who was co-opted by biotech and I see a number of other "technical" problems that are considerable headwinds for survival in general.
read your comment and I agree. And for you, as a farmer, since food self-sufficiency will be key in this insane Central Bank race to the bottom in devaluing currencies, you are already ahead of most of us.
The End of Food is a very informative book about our unsustainable food system. It tells the story of a highly efficient, and extremely fragile, system that has reached its limits after populating the world with 7 billion people that desperately need there to be no limits. Unfortunately, technology has limits when dealing with natural resources like water, energy, and even living things like plants and animals. It's a great read.
double post
Funny how the gold/silver manipulation mirrors manipulation in the energy sector as well. Energy remains one big wildcard in this whole equation. My brother is an engineer at Exon and we both have no doubt that the world will stop using oil with lots of oil still in the ground. The recovery costs are getting ridiculous. Moreover, they have been pumping in seawater for 30+ years to maintain pressure in the wells. Unfortunately, seawater contains a lot of sulfate (SO4) and this causes the sulfate reduces (bacteria that have been asleep for millions of years) to wake up and oxidize the fatty acids in the oil and reduce the sulfate to hydrogen sulfide (H2S) and hydrogen gas. H2S is very corrosive and hydrogen gas is explosive - hence you end up getting more BP disasters. Again, self-sufficiency becomes important, we started making butanol on site using farm waste years ago. This is old but reliable technology, do a google search on the ABE process.
H2S is very bad. Just ask my good friend poisoned by H2S coming from a new sewer pump station recently completed in my town. His health is ruined.
He is sueing the sh!t out of them all, the town, the county, the engineers, the environmental authorities, everyone.
Get ready for the new 2-class system.
Haves= Owners of PM
Have Nots= Owners of paper
Don't you mean...
Haves=outside the U.S.
Have Nots=inside the U.S.
re:
Waiting for the govt trolls......waiting........waiting......
Here's one gov't employee who has started stacking, and continues to stack, since late 2007.
Gold and silver versus gov't pension?
Hahaha, no contest!
Waiting for the govt trolls......waiting........waiting......
No cetral bank is buying silver, not diamonds or platinum either.
Silver is not near as good as gold. Why buy any gold at all if we can all make more money in silver ?