Precious Metals

Having recently pointed out the surging premiums for physical gold and silver relative to the 'paper' prices spewed forth by the mainstream media, it will likely come as no surprise that, as Reuters reports, "silver [coin] demand is absolutely through the roof," according to the Perth Mint. Confirming the demand side is the U.S. Mint sold 14.26 million ounces of American Eagle silver coins in the third quarter, the highest on records going back to 1986. Dealers and mints trace the supply squeeze to a burst of buying by mom-and-pop investors in the United States, who scrambled to scoop up coins they considered to be at bargain levels after spot silver prices in early July sank to six-year lows.

What do Big Businesses do best?.....Corporate Blackmail

Most foreign countries have similar regulations concerning the import and export of gold bullion and collectible coins. These regulations tend to track U.S. rules closely, and generally, as long as people follow them, there isn’t much friction over international travel with precious metals. Recently, however, we’ve been hearing reports that some foreign countries are starting to ask more questions, and require more searches, when someone declares that they are transporting gold or other precious-metal coins.

This is an important story and shows how China and Russia are increasingly close and strong allies who are flexing their muscles and asserting themselves as rival superpowers to the U.S.

Unlike previous gold probe cases, this one will have major consequences. How do we know? Because just like in LIBOR-gate, just like in FX-gate, it is the biggest rat of all, Swiss megabank UBS, that is about to turn on its former criminal peers.  As Bloomberg reported earlier "UBS was granted conditional leniency in Swiss antitrust probe of possible manipulation of precious metal prices." Why would UBS do this? The same reason UBS did so on at least on two prior occasions: the regulators have definitive proof it is involved, and gave it the option to turn evidence and to rat out its cartel peers, or face even more massive financial penalties. UBS, as usual, choice the former.

The U.S. dollar is looking good worldwide and, in fact, so is gold - it’s just that, at present, the dollar is in the number one spot. But, unlike gold, the dollar is at risk. U.S. debt has placed it in a precarious position from which it will most certainly fall. The dollar is not a truly strong currency; it is essentially, “the best looking horse in the glue factory.” It will be the last to go, but it will indeed go. We may have a bit of time before that happens. Whether it’s measured in months or years, we can’t be certain. A gold mania is not imminent, but we believe it is inevitable.

"...there’s an enormous and growing disconnect between the cash and physical markets for gold. This is exactly what we would expect to precede a major market-shaking event based on a physical gold shortage."

With just 3 months left on the calendar, many investors are down on the year for one simple reason: nothing is really working.  That leaves them only a short period to show a positive return, or at least a less-negative result than whatever index they track. To do that, many will have to make very specific and concentrated bets. It might be about equities generally – will they recover from the current growth scare?  Or it might be asset allocation – will bonds finally go up on the year?  For stock pickers, the key question is certainly “Play the winners, or look for laggards?” All we know is that with 69 days left to play catchup, time favors the fleet.  And the bold.

Clearly the title to this piece will be viewed as controversial, if not entirely heretical, by many readers. However, the facts (and more importantly) the economic principles here are unequivocal. “Bigger” is not better.

In many ways, the overnight market has so far been a reversal of yesterday, when a stable Asia session (with China stocks rising) gave way to a European tumble which in turn dragged the US lower.

"I do believe that markets ultimately prevail. I do believe that supply and demand will ultimately prevail. I’m confident that we will see that occur... The fact there are some very substantial new players coming into the sector and taking positions in gold and silver... I think that’s showing that things will change and I think things are in the works as we speak."

As of today you really can pay your taxes, your credit cards, your mortgage, shop at Costco, and buy your groceries without so much as a bank account while using sound money.

The incredibly strong demand for physical precious metals around the world continues to be obscured by institutional selling of futures contracts on the COMEX. The paper or electronic market continues to dominate the spot price for now. But rising premiums and delays for popular bullion products suggests that proper price discovery reflecting real world supply and demand may be at hand.

Our current monetary system is the root cause of many evils of today. Let’s take war, a topic we discussed in this article, as an example. Without a monetary system that creates currency out of thin air, most of the wars that we have had and still have would simply not be financeable. This system is controlled by a few, who change the rules to their own benefit. And as we have seen they use their privileges to finance wars and to bribe politicians. By holding your wealth in precious metals you are rejecting the current system and also protecting yourself from “financial tyranny”. This includes: capital controls, expropriation, bail-ins, bailouts, negative interest rates, market manipulation on a wide scale and massive paper currency fluctuations.

First we had “too big to fail”. Then came “too big to jail”. Now, finally, the U.S. Department of “Justice” is letting us know what it really thinks: U.S. Big Banks simply have a license to steal.