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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The old Cold War USA-USSR nuclear arms race has been replaced by the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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The U. S. has (did) had a strategic silver reserve for many years. That has been depleted but the idea was sound. Banks don't hold silver for one very good reason: It's too bulky for the value. Another reason is a secondary one for banks: Silver is an industrial metal and the stocks move more than gold. That does not make "silver not near as good as gold" in the portfolio of the average person. Volatility in silver makes for a nice vehicle to ramp up "profits" into gold. Lots of people do this. Your denigration of silver is based on a basic misunderstanding of the relationships among markets and sentiment.
I like to think of silver and gold as two somewhat different "vectors" that often move very similarly but sometimes not.
Before I expound, I own both, in fact about twice as many ounces of silver as (gold & platinum combined). So, it silver goes up big, that's GREAT!
But, the math of my holdings is that the $ value is far more in gold. FOFOA describes that there are various camps here in the "Precious Metals Tribe". I am in FOFOA's camp, I also believe that GOLD will have the BIG move as the dollar drops and as the paper gold markets are broken apart and shown as fraudulent (in that there appear to be 100 paper claims on each physical ounce of gold).
The situation for silver may be similar in that regard (more paper than silver) and we all know how volatile silver is. The fundamentals for silver are rather interesting (in that it appears that there will soon be a crunch on silver supply for industrial use), but I know relatively little about this.
THAT IS WHY THE BEARING CRIES OUT FOR A SILVER EXPERT TO WRITE "THE CASE FOR SILVER" AT MY BLOG!
Rocky, maybe you can suggest someone who might do this for me?
Anyone interested in my blog please send me a gmail at my name.
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Even with silver a possibly great speculation and with its monetary characeristics, gold is the only "pure play" on money-as-wealth preserver.
Spitzer is right that the central banks don't hold silver or diamonds, they hold gold.
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DoChenRollingBearing sez the same as FOFOA:
"Be your own central bank!" By buying physical gold.
Gold and silver are the only means of keeping governments from inflationary spending. As long as there is a linkage to gold and silver reserves, governments must justify spending. There is no better control on State Tyranny.
State Tyranny is not best held at check by gold/silver but by a smart and educated population, no amount of PMs will replace common sense and that is in real deficit not gold /silver
The education of the population is in the control of the government. The government has every reason to provide an education that enhances its' actions. For example, my daughter recently finished her government and economics courses.
We discussed her studies weekly and while she was taught all the information that was missing or erroneous from her textbook, she knew enough to give the teacher what he wanted in terms of projects and test answers.
There has to be a value received for a population to learn, for the great majority- they would rather have a budlight and football game.
Resorting to gold and silver may be philosophically a second choice, but it is the best choice recognizing the habits and actions of human beings.
Sean I agree with your sentiment, but you're talking about conditioning, not education. Two different things. One is designed to propagate specific myths, ideologies and behaviors, while the other's purpose is to promote critical thinking and problem solving; to disseminate knowledge.
The two might share methods, but the goals are night and day.
When do you know the difference? For the majority of the population, they are the same thing. For the small minority that are capable of distinguishing, it is a moot point- they have already sought knowledge from other sources.
dup
Well look at the big brain on Azannoth! Yup, having gold in their hands didn't protect the innocent from the ravages of FDR and his socialist tinkerers from the academic world.
oh i don't know. one, whether the ravages of fdr were worse than those of the capitalists he opposed to save their system or two whether all, most, some or few turned in the gold (no real prosecutions of those who tried to hide it). also, possible lesson for today, owners of gold mining shares did better than bullion holders and never had to break even an essentially unenforced law.
I also agree that a smart and educated population is the way to check State Tyranny. However, fighting a century of propaganda disseminated by bankers and institutional academia about the monetary system is inherently a difficult proposition. I've been telling people publicly since 2006 (and privately, even earlier than that) to buy physical gold and physical silver on my website blog, yet I guarantee you that the percentage of people that read my articles and actually bought physical gold and physical silver back then was miniscule. And the reason for that would be because of banking/monetary propaganda that they is now accepted as the truth.
like this government video here??
http://www.youtube.com/watch?v=K7q3bWEvl7o&feature=player_embedded
doesn't get much into the why of most of it does that video? keep those drones a-going and there'll always be someone to watch for through the venetian blinds. imo rumsfeld knew the answer to his question are we killing more of them than we are creating or he wouldn't have (publicly) asked it.
Could not have said it better myself.
View this for an Excellent description of Silver / Gold manipulation!!!
http://youtu.be/Y--jCrDOSjk
fighting a century of propaganda disseminated by bankers and institutional academia about the monetary system is inherently a difficult proposition...
Let's not forget the basis for any commercial transaction remains trust. Trust is rooted in truth which is why PMs have for centuries remained at the heart of trade. The average consumer has developed heightened sense of distrust in the truth claims of not just political personalities, news reports and commercial / sales but in their fellow citizens as well.
I personally put the blame at the feet of theologians and the (mis) education of our nations youth. Our traditional bastians of truth have abdicated their positions and have engaged in petty namecalling, turfwars and selfcentered activities while the greater calling of renewal and dedication to seeking truth have been replaced by educators with transitory "correctness". imo.
Yep, turf wars. Churches were happy to not criticize the gov't, esp. the War on Terror or the War on Drugs because they are entirely dependent on the gov'ts tax breaks! Without that, why churches might have to pay income tax and property tax! And they would actually have to espouse morals! The humanity!
That would be Protestant churches. Remember, two thirds of the worlds Christains are not Protestant, and do not support war.
"It is difficult to get a man to understand something when his salary depends on his not understanding it." Upton Sinclair
“The first thing a man will do for his ideals is lie.” Joseph Schumpeter
Me neither! I couldn't even have said it as well. Hell of a deal, a poster who makes perfect sense and is telling you something significant at the same time.
Golden Handcuffs.