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Hoarding Of Physical Gold, Voracious Global Demand To Produce Undeliverable Gold Futures, Parabolic Move to $2700-3000/oz
As we've noted several times over the past several weeks, fundamental backdrop of precious metals market remains extremely firm with plethora of global monetary and fiscal issues producing massive tailwinds for both Gold and Silver, and we continue to believe long Precious Metals remains the best bet in all financial markets at this time...what we'd like to add to this thesis now is we believe sometime over the next 6-12 months we will in fact see gold futures become undeliverable as demand for physical gold bullion far outstrips available supply (ie long gold futures holders looking to take delivery at expiration will not be able to take delivery due to insufficient supply)...we believe this scenario will take hold due to significant hoarding of physical gold bullion by literally every type of major market participant from global central banks, hedge funds, endowment funds, investment banks, all the way down to the retail investor which will in our opinion produce a massive supply shortage relative to demand...note when central banks (biggest buyers of precious metals at this time) take delivery of hundreds of tons of physical gold, this supply will not see the light of day for years as central banks are now clearly committed to diversifying out of major fiat currencies (ie this gold investment is not a trade, but a long-term investment)...secondly, with demand for gold and silver remaining extremely high due to ongoing Eurozone sovereign debt issues, potential US credit downgrade, voracious demand out of China as it looks to up its gold allocation of foreign exchange reserves from 1.7% to likely 10% , and most importantly the threat of of continued dollar printing by the Fed (aka QE3) in order to stimulate an economy which has yet to show any signs of achieving sustainable growth, we expect demand for physical gold will significantly outpace supply sometime over the next 6-12 months and produce a major parabolic move in both gold and silver with gold likely to hit $2700-3000/oz, and Silver $60-65/oz...we really see no way around this thesis coming to fruition as we believe large amounts of physical gold continues to be taken off the market every single day by major long-term investors, and moreover we see demand for physical gold continuing to increase at an extremely rapid pace such that prices must invariably go significantly higher from even these elevated levels
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Soro's as of last article I read in 75% CASH.
If the article was true, he's an idiot, with a lot of money, or he know's something is coming like a CB DUMP.
And, he will scarf it up at several hundred less an ounce.
If cash includes currency positions, that would make sense. It's pretty much the only thing he's good (or at least lucky) at.
Soros hedge fund 75% in"cash".
"Cash" undefined.
I'd say calling physical gold "cash" is fair.
What is the George Soros version of "cash". I've pondered that koan.
I had some extra pay and split it 40% gold bullion coin, 40% FRNs and 20% "junk" silver dollars.
Let's ask Soros to clarify, shall we?
Silver is too easily manipulated. Gold is another story.
Every game comes to an end.
granted...silver is easily manipulated...by paper bullshit, right? The Crimex is going to fold, and so is all fiat eventually. They can continue manipulating the price lower all they want for all I care...that means we all can keep stacking it up at discounts while they struggle to cover their shorts.
Silver is a massive high-powered spring being held down...but it's coiled tight and once the Crimex loses it's hold on it silver is going to explode.
Hell, just adjusted for inflation from the 1980 nominal all-time high silver should be right now around 130/oz (if everything I've read is accurate)
Well, either way...they can keep criminally manipulating silver all they want for all I care. You can't argue with the fundamentals and the fundos will not and have not changed. Silver will be a huge winner for all who stack it high IMHO.
Supply vs demand is much more divergent than it is for gold. Gold is in high demand, but above ground there's tons of it around. Silver is under so much more demand both industrially and privately that I just don't see the GSR getting bigger as gold goes high...I see the Crimex losing their grip on silver and the GSR moving towards it's more natural ratio over the next few years (16:1 or so?).
But at 30:1 on down, I'll be trading silver for gold if at all possible. And if the GSR gets bigger after that back to 40:1 for whatever reason then I'll trade gold for silver and stack more silver ounces again.
Increase your ounces and stack 'em high people! BTFD always!
correct, about 140 or so. But thats Using official inflation figures, which of course are pure fiction , if you use Shadowstats numbers, which have a consistent methodology, its about 380 to 400 to match the silver high of 1980 in todays dollars.
Mind you the 50 in 1980 was the product of a very unstable corner by the Hunts, so i cut the number in half to say 200.
Finally, one other adjustment, there were ten billion ounces of silver above ground in 1980. Now its about 1, so i do another adjustment, this one upwards based on a coming supply shortage.
So, 230 to 250, assuming a constant US Dolllar, which i rather doubt. in which case its pick your number.
Paper Silver is easy to manipulate but supply demand imbalances will make paper silver irrelevant before long. There are vastly insufficient stockpiles to bridge the imbalance. China retail market coming on line. Historicall in China, silver is money. I've read that the Chinese character for bank combines "silver" and "movement."
If you want a complete view of the dynamics behind the physical silver market read Sprott.
As opposed to "fiat money", which combines the characters for "bowel" and "movement".
LOL!
The china exchange is partially owned by the red shield of our fav oligarchs. Look into it, its not hard to discover. What you are going to see is the exact same thing, but in concert with the comex.
Old slant eye joined round eye in handling the marionette!
Remember, the house has the power, they just are pulling back on the cyclical end to make damn sure a few of us with political power have none when they do the reset and issue the new currency.
Digging the delusion, Hook Line and Sphincter
That's interesting and they may divert speculative players into paper but physical silver can now be bought by the Chinese population: that is is big deal. The physcial market is tiny and if, as Kieser said, each American buying 1oz would kill the beast, the addition of a portion of the Chinese to the demand side should do the trick. Again, I like Sprott's summary of the silver market dynamics. The paper tigers can leverage a gazillion to one and it will become meaningless when the rubber hits thr road: ie. when physical delivery cannot meet physical demand.
Bingo! Give Debtless a cigar...
So let me get this straight...this author thinks gold will out-perform silver even though the GSR is 40:1? His estimates in the article put the GSR at 45:1.
I think that's odd, since silver is:
1. cheaper for most anybody to purchase
2. in less supply than gold is, 2b. Also used more industrially as well which causes less supply privately
3. in April when silver shot to 49/ounce the GSR decreased to 30:1 or so
If gold's going to nearly double in the next 6-12 months, wouldn't we then expect silver to nearly triple in the same time-frame?
Just wondering...open to all comments and opinions. Don't get me wrong...I see gold continuing to go much higher also, but at the same time I don't see silver sitting around in the 60's while gold streaks away from it. At gold 2700 and a 35:1 GSR that puts silver over 75/ounce on it's way to 90 which would be GSR 30:1
My forecast for silver is very bullish, but it is more bullish for gold. I believe one point you made for silver caps the price:
When the manipulators of PMs have all the gold they can amass, it will be in their personal interests to drive the price of gold as high as they can. They can't do that with silver without destroying a host of important industries.
Agreed. Silver only comes out of the ground in about 9 times the quantity that gold does. For five hundred years, gold's value held steady at around 12-15 times.
Most of the gold ever mined still sits in vaults. Much of it in locations that can be used to keep the price semi-controlled if absolutely need be. "They" can always load up a fresh pallet of gold on a 747 and ship it to wherever to plug a hole. Silver on the other hand is a bitch to control because of all the growing industrial uses and the limited supply above ground that would be needed to keep a cap on the price during a crisis. Hence the paper markets being so critical to the manipulation of spot. Once the COMEX/CME house of cards comes down, silver might overshoot to a GSR of 10 (or better!) and we all swap it out for.... for.... fuck - what do we do with it then? JK - I'll pay of what little debt I have with a few coins. Then use the rest to buy up some non-irradiated farm land. Wait, where do I find that?
exactly! I'm with you...I'm hoping that eventually I'll be able to just swap out some of my PM's down the line for a nice chunk of as you said "non-radiated" farm land, lol...or mountain land w/ hopefully lots of "non-radiated" fish and wildlife around to eat! haha
I agree with you. I think the author is less bullish on Silver because he sees this move in gold as being driven by institutional investors who don't play in the silver market. For non-institutional investors with a long-term view and a tolerance for volatility, silver probably offers better upside right now.
If the goal is to store wealth and fight against inflation via buying physical, you would buy gold, not silver. Gold is cheaper to store.
Central banks keep their reserves in gold, not silver. They have very deep pockets. And the can create the cash needed to buy that gold if necessary.
Yes. The central banks and the very wealthy have ALREADY made their choice: gold! We shrimps can follow in their steps. They have front-run us!
Gold buyer Bearing has followed those steps for decades. What would the cost basis be for the central banks for their gold? $35?
I do not mean to poopoo silver, in fact I own more silver oz than gold. But, my gold is WORTH much more. But, if the silver bulls are right, and we eventually see $500 silver, well, that's OK with me.
But, it is GOLD that I have been buying lately. I have BTFS. BTFS for decades...
Did I miss the discussion on flow? Gold/silver ratio is irrelevant if one or the other has no flow. The price becomes decoupled from the ratios.
Agree
I agree...but I still don't see how this guy thinks silver is just going to sit around while gold breaks 2000 and shoots towards 3000+
I buy silver now since it's still a dirt-cheap bargain and will trade it in for gold once that GSR hits 30:1 and on down to 20:1 and below. I guess I should say I believe it will do that, so that is what I'm waiting for.
I think the author is correct about gold, but not about silver. At gold 3000, I'll propse that silver will be very near 100 +/- five or ten bucks/ounce and a GSR around 3o:1
Silver will outperform gold as the world of fiat continues to self-destruct, and I hope everyone will be stacking nice big shiney stacks of whichever PM they prefer!
Hey either way, both PM's are the only way to go as the shit continues to hit the fan in the next 2 to 10 years ahead.
Oh...I almost forgot...there's one other PM everyone should keep stacking as well: LEAD!
Keep that ammo at the ready folks...lead's a precious metal too!!!
What's the rationale for a 30:1 gold to silver ratio? Since Bretton Woods, Gold to Silver Ratio average about 50:1. Even before the 70s, the ratio was around 40:1, not 30:1.
And you have to imagine that as people flock to convert money into precious metals, the conversion will be more gold focused (i.e demand for gold outweigh silver) because it's simply inefficient to store silver. You can store $5M worth of gold in a small safe, you would need a room to do the same with silver.
You are obviously basing this on current values.Lets be honest about all this when the shit properly hits the fan both Gold and Silver will be unobtainable at any price.Everyday this event moves nearer it really is very eerie and you think sometimes it ain,t gonna happen,but little by little you see more crap everyday.Silver at the moment has Lead boots on with all these margin hikes and there is probably less around than people think.Try Gold at $10,000 an Oz and Silver certainly between $6,000 - $8,000.You think this is crazy,the next big one will be global,nothing I repeat nothing in paper assets will be worth a carrot.Every default,bailout and money print makes people think it ain,t gonna happen but everyone of these events weakens the system further and it cannot take much more.
I don't mean to be disrespectful, but the argument that silver is inefficient to store wealth is not very convincing. If you study the history of these things, nobody has any money at all. Small silver coins and barter are the rule of the day. So is lawlessness, and pulling out a gold eagle is a good way to attract attention. One silver coin will get you anything you want, whereas your efficient storer of wealth, the gold eagle, will be very difficult to change. Silver is by far a more convenient currency and most people don't have $5M to store.
The average joe buying 10 silver eagles is not going to move the silver market. Large pension funds, college endowment funds, hedge funds, etc. these are the guys that are moving markets. Last time I checked, UT chose to buy gold, not silver. Try storing 100M worth of silver bullions, it's not easy.
When gasoline was 50 cents (or less) a gallon you would have problems trying to pay for a fill up with a $20 bill.
When it was below $2 a gallon it was difficult to pay for a fill up with a $100 bill. The store owner simply would not keep that much change out of the safe.
I remember spending 45 minutes waiting around in a service station because all I had was $20 bills. It took that long for the store owner to sell enough stuff
so he had enough change so I could pay with a $20 bill. In a few more years changing a 1oz Gold coin for whatever the currency will be by then is going to be a problem as well. Even a single 1oz Silver coin may be equivalent to having only $100 bills when gasoline is 10 cents a gallon. BTY; Gasoline is 10 cents a gallon today if you are paying with a 90% Silver dime for each one of them.
Being cursed with the the problem of finding myself burdened with an overabundance of the future equivalent of $100 bills is a cross that I am more than willing to bear.
akak,
could not agree more..............but, the article did not say USD's........LOL
Uh, I'm supposed to have $5M in precious metals? Damn, I though I was lucky to have a measely quarter million.
I see the rationale for it since as stated earlier only manipulation is keeping the ratio higer than 30:1, 20:1 or the normal ratio of somewhere between 13 and 16:1 (many people state different ratios that are around those levels though).
I think even at 40:1 right now we're still easily seeing the Crimex lose it's grip on holding the line. We saw what happened in April right? It hit around 30:1 at the peek before they beat it back down.
But if you look at prices such as on Ebay for example you'll see that the physical spot prices are much higher than what the fake market says spot should be at. You can see the divergence of physical price compared to the Crimex price.
An American Silver Eagle for example is typically going to be 45 to 60 bucks on Ebay. That's been the case ever since the April peek. With gold at 1600 and silver at 50, that GSR ratio is then 32:1
Obviously what you choose to give for silver on Ebay is up to you, but I defy anyone these days to find any ounce of silver under 40 bucks/oz. Most likely if you find something with free shipping (meaning less premium over spot basically), the auction is going to run up well over 40...most likely around 50.
That's just for ASE's or generic rounds. If you're look for Maples, Libertads, Aussies, Pandas, or whatever you're gonig to see even higher prices to snatch up that physical.
To me that's proving that silver manipulation by the Crimex is slipping away...they don't have much longer. People are waking up and the true price of silver is emerging much higher than what the paper market is trying to dictate to the sheeple.
Hell, like I've said, I'll take any beat-downs they give silver and will BTFD. I'm not arguing against that now, because I still want more time to keep stacking.
Price is just fiat...fiat is worthless...forget about the price and just BTFD and stack away. I'll never sell my PM's for any price the Gov/Crimex tries to set it at. They're fucking criminals. I'll trade the GSR when it benefits me, or I'll trade for land or goods/supplies, whatever.
Anyways...that's my prolonged 2 cents worth I guess! lol
For a thousand fucking years it was 15 to 1. Thirty's wayyyy to hard to grasp, huh?(late Rome, 10.5 to 1 example 1.51 oz Ag=1 Solidus @4.5gr Au=3 weeks pay skilled labor/soldier)
Maybe these ratios can be taken too far.
You are undoubtably right about historical examples, and I like that methodology, but uses of the commodities change. At one time, glass beads were money, as well as tulips, and hides.
There was no silver use for photography in Roman times. The same goes for paint, and for many other uses. There were not 7 billion people in the world clamoring for these silver related products in elder times.
On the other hand, the uses for gold, except for small amounts needed for electronics, haven't changed all that much over the years.
Ratios change with the times. How much they should change is anyone's guess.
For 50 thousand fucking years, people also foraged for food, so should we expect that as well? Late Rome, really? Why don't we go back to prehistoric ages or maybe the Ice Age, when gold and silver are worth 0 and say that gold and silver should worth 0 in the current society?
Gold to silver ratio before Bretton Woods should have no bearing in this discussion, since currency is no longer linked to the amount of gold held by the central bank.
The gold/silver ratio is to reality as the dick/pussy ratio is to gays.
Diving in deep, Hook Line and Sphincter
Do take note everyone that MANY more people talk about trading in their silver for gold than gold for silver... What does that tell you?
It tells ME that what people really want is GOLD. The very wealthy and the central banks have already spoken as well: GOLD.
And those nice little 1/10 oz Gold Eagles are not THAT expensive... A little hard to find, and the premium is high, but those 1/10 oz coins are another way to diversify and avoid having to pull the big 1 oz-er to buy those groceries...
Besides, your big gold should be used to BUY BIG THINGS when the time comes (a toll bridge, an apartment building, the two gas stations in your little town, etc.).
so should we be long Fed-ex and Brown as well?
No-one can hold back the massive gains gold offers to its bitchez
+ $55,000 and a green one for you!