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Why Gold and Silver Prices Will More than Double Again Even From Current "Expensive" Levels
Those that are familiar with my writings about gold and silver for the last six years know that I have said gold was cheap at $500, $600, $700, $800, $1000 and $1,200 a troy ounce and know that I have said silver was cheap at $11, $12, $14, $16, $25, and $30 a troy ounce. Today, I will reiterate that gold is still cheap in the $1500 to $1600 range and that silver is still cheap in the $40 range because the largest movements in gold and silver prices as well as gold and silver mining stocks have still not happened and will materialize over the next four to five years. Again, this doesn’t mean that gold and silver can’t or won’t correct or consolidate again in the future because both PMs always do. I have written publicly so much about this topic over the years (and even in much greater depth to my subscribing members) because I truly believe it is insanity not to participate in one of the best ways to invest in gold and silver today - the ownership of physical gold and physical silver.
Hundreds of millions of investors worldwide, influenced by the propaganda of Western bankers, have consciously made poor decisions not to own a single ounce of physical gold and physical silver today. One of the first realities an investor must understand about the gold and silver market is that the Economics 101 concept of price being set by physical supply and physical demand is an utter lie. In today’s world of banking and financial industry lies, the price of gold and silver are NOT set by the physical demand and physical supply of either of these metals, but rather by the artificial supply and demand of paper contracts predominantly backed by no physical metal.
By now, the following facts are very well known by seasoned physical gold and physical silver buyers but likely still unknown to the average investor worldwide. A CPM Group document released in the year 2000 stated, “With the start of the London Bullion Market Association's release of monthly trading data, the market has become aware that 100 times more gold and silver trade hands each year, just in the major markets, than is produced or used. Some market participants have wondered aloud how 10 billion ounces of gold could trade via the major markets each year, compared to 120 million ounces of total supply and demand, while roughly 100 billion ounces of silver change hands, compared to around 628 million ounces of new supply.” Thus, one can see that the fraud perpetrated by bullion banks in the silver futures market exceeds even the fraud they commit in the gold futures markets. Take the figures provided above, and a quick calculation reveals that bankers were trading nearly 160 times of paper ounces of silver every year than the annual physical supply of silver mined from the earth.
However, break down these numbers even more and the fraud becomes even more astounding. While in 2000, about 628 million ounces of new supply of physical silver came to market, in 2010, mine production of new silver supply was slightly higher at 735.9 million ounces. Net government sales accounted for another 44.8 million ounces, old silver scrap provided an additional 215 million ounces, and producer hedging accounted for the final 61.1 million ounces. Thus a total annual supply of roughly 1 billion ounces of silver existed in 2010. However, industrial usage, photography and jewelry used up nearly 78% of the one billion ounces of physical silver supply in 2010 and left less than 100 million ounces available for minting in the form of silver coins. (Source: The Silver Institute). Despite this tightness of new investment silver supply, there have been days in recent months when more than 250 million ounces of paper silver traded on the COMEX in less than one minute! During the times ridiculous volumes of paper silver were trading on the COMEX, usually the price of silver was plummeting in intra-day trading. Thus, bankers were clearly using this massive artificial supply of paper silver contracts to knock down prices. On top of this fraud, bankers have stretched the landscape of imaginary supply of gold and silver with their introduction of the gold ETF, the GLD, and the silver ETF, the SLV, both of which started trading in 2006. Both the GLD and SLV are highly suspect, likely fraudulent vehicles that probably are either (1) only partially backed by physical gold and physical silver and/or (2) respectively backed by unallocated physical gold/silver that have multiple claims upon them. Again, fraudulent derivative paper gold and paper silver products create a perception of increased supply even when there is no REAL increase in the underlying physical supply or even at times when physical supply is shrinking. Bankers have created this mechanism specifically to suppress the price of gold and silver and to keep their Ponzi fiat currency scheme alive - a scheme that they utilize every single day to silently steal wealth from every citizen on this planet.
I have heard the criticisms levied against Eric Sprott and James Turk regarding their pro-silver and pro-gold stance in that they are just selling their books as PM fund managers and bullion dealers. However, I believe these criticisms to be patently unfair. I don’t believe that either Mr. Sprott or Mr. Turk are so enthusiastic about the future prospects of gold and silver returns because they just want to “talk their books”. Rather, I believe that they are so enthusiastic due to their deeper level of understanding about PM markets than the average retail investor and the vast majority of uneducated commercial investment industry advisers. Furthermore, I’ve been one of the most passionate supporters of gold and silver for the last decade and I have never acted as a bullion dealer, have never received any commissions from any sales of mining stocks, and have never accepted a single cent from any mining company to provide coverage of their company to my subscribing members though I have been approached many times to do so over the years.
To illustrate the level of misunderstanding that still exists about gold and silver prices, here’s one piece of investment “advice” that landed in my email inbox on August 16, 2008: “The barbarous relic – gold – is another good choice, usually. But gold has already appreciated from just over $300 an ounce six years ago to almost $900 today. It could be a little late.” This adviser went on to push stocks and confidently declared that stocks would be the “big winner” once again over the next several years. From August 16, 2008 until today, the S&P 500 has lost 2.92% while gold has risen +111.33% and silver, +284.47%. Stocks, the big winner? I think not. But selling stocks is the big bread and butter money winner of most commercial investment advisers so that is the primary reason why they overwhelmingly always push their clients into purchasing stocks as opposed to the real big winner of precious metals. I recall reading a newspaper article several years ago from a financial adviser in Florida that claimed she was proud of convincing here clients NOT to buy gold at $800 an ounce because the gold price was too expensive and that it was her duty to protect her clients against their own foolish impulses. On November 8, 2007, thousands of people that subscribe to my free newsletter read the following statements from me:
“So with gold over $800 an ounce, is it still cheap? Emphatically yes, and here's why. I'm not really sure how all the ‘Gold at 27-year high’ headlines came to be, but… if we experience a correction any time soon, and gold breaks back down to the $720 level again before continuing higher, it will just be really cheap. Here's why. Anyone that's ever studied the formula that is used to calculate the Consumer Price Index(CPI) in the U.S. knows that the formula has been greatly tinkered with over the years to produce absurdly low inflation numbers that are merely an artificially manufactured number that probably fits some pre-determined number the government would like to report.”
So back then, even with gold trading at $800 an ounce, the banker-owned and controlled media in the Western world was filled with stories about an imminent “gold bubble” collapse because gold was at a “27-year high.” It’s important to review history from time to time to be reminded how easily you may have accepted patently absurd proclamations about gold and silver prices in order to avoid falling victim to the same banker-originated and banker-spread propaganda today. The reason I have been overly passionate about gold and silver for years and still am today is because it takes great passion to overcome the widespread ignorance and deceit spread by the commercial investment industry to their clients about gold and silver.
Let’s see how things have panned out in the stocks versus PM investment game over the past few years. From the launch of my Crisis Investment Opportunities newsletter on June 15, 2007 until July 25, 2010, in a little over four years, my newsletter has returned a cumulative profit of +211.49%. Over the same investment period, the S&P500, the FTSE100, the ASX200, and top 5 ETF iShares Dow Jones EPAC Select Dividend Fund have respectively returned -21.39%, -11.99%, -26.51%, and -2.69%. Furthermore, during the next four year period, from 2011 to 2015, I sincerely believe that an attainable goal for my Crisis Investment Opportunities newsletter is to double or even triple my previous four-year cumulative returns, simply due to the following three reasons:
(1) Western bankers are increasingly losing control over the price suppression schemes they have enacted against gold and silver through their creation of bogus paper derivatives;
(2) The conditions that have lead to Euro and US dollar devaluation are worse today than they were 10 years ago and no underlying fundamental problem of the 2008 financial crisis has been adequately addressed as of today; and
(3) The percentage of people that have the amount of faith I hold in gold and silver to produce superior returns around the world is still minute.
Thus, once the average Dick and Jane retail investor finally believe in the facts surrounding gold and silver versus the garbage propaganda disseminated by crooked bankers and ignorant advisers, the price of gold/silver and PM stocks will finally experience a truly parabolic rise.
Once a small percentage of retail investors worldwide, or even just a small percentage of retail investors in a densely populated country like China, finally realize that bankers have created insane massive paper supplies of artificial gold and silver backed by nothing but air and consequently are moved to purchase their first troy ounce of pure gold and/or pure silver, this very small action will exert tremendous upward pressure on the price of gold and silver. And once this happens, I hope that you will have already secured your physical reserves of gold and silver because it is then that PM prices will truly go ballistic.
About the author: In 2005, JS Kim walked away from the immorality of Wall Street to form his own fiercely independent investment research & consulting firm, SmartKnowledgeU. Freed from the deceit and massive restrictions of the commercial investment industry, JS has been guiding clients towards significant profitability ever since. Currently, JS is working on completing two short books that explain the fraud of the modern banking system in simple terms and plans to donate 100% of all profits from these books to orphanages in S. Africa, Vietnam, and Thailand. Visit us at http://www.smartknowledgeu.com to be informed of their release and follow us on Twitter.
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Great article. Since PMs are simply a hedge against wild flucuations in the purchasing power of fiat currencies. I firmly believe they will soar in price, in terms of FRNs and other worthless fiat paper, as more and more FRN's are pumped into the world's banking system. Most of realize the USD is destined to lose its status as the world's reserve currency. IMO a true gold standard will not be adopted. Instead, a basket of fiat paper currencies will be established, probably the strongest 5 currencies. The main advantage to holders of physical PMs will be the ability to easily convert to some other currency such as the coming introduction of the NWO currency. Or, PMs can buy other commodities that have instrinsic value.
I think we must understand we will never be free from the clutches of the global fiat ponzi system, operated by the bankers of the world, in cahoots with crooked central banks. They will NEVER allow PMs to become used as currency. Sure, people will trade it for other commodities that have instrinsic value but we will NEVER be allowed to pay our taxes, buy utilities and such things with PMs. Sure, it's a rotten, sticking deal. So, what happens if we resist buying into the NWO fiat currency? Use your good common sense to imagine to penalties. The criminal class makes the rules and unless they are removed from power we MUST/WILL OBEY. Get used to it people or do something to change the system.
Great article. Since PMs are simply a hedge against wild flucuations in the purchasing power of fiat currencies. I firmly believe they will soar in price, in terms of FRNs and other worthless fiat paper, as more and more FRN's are pumped into the world's banking system. Most of realize the USD is destined to lose its status as the world's reserve currency. IMO a true gold standard will not be adopted. Instead, a basket of fiat paper currencies will be established, probably the strongest 5 currencies. The main advantage to holders of physical PMs will be the ability to easily convert to some other currency such as the coming introduction of the NWO currency. Or, PMs can buy other commodities that have instrinsic value.
I think we must understand we will never be free from the clutches of the global fiat ponzi system, operated by the bankers of the world, in cahoots with crooked central banks. They will NEVER allow PMs to become used as currency. Sure, people will trade it for other commodities that have instrinsic value but we will NEVER be allowed to pay our taxes, buy utilities and such things with PMs. Sure, it's a rotten, sticking deal. So, what happens if we resist buying into the NWO fiat currency? Use your good common sense to imagine to penalties. The criminal class makes the rules and unless they are removed from power we MUST/WILL OBEY. Get used to it people or do something to change the system.
How ironic that silver just 'flash crashed' $2. Gosh, what could've caused that?
Silver Wheaton is having a real bad day. SLW is my tell for the silver market.
http://ghickeyblog.blogspot.com
gh
I'm going to go ahead and play devil's (or should that be J.Christian's?) advocate here SmartU:
If I have an ounce of silver and I sell it to you and then you turn around and sell it back, over the course of a day we do this 100 times, but at the end of the day one of us still holds that ounce of physical metal; do you consider this to mean that we have traded 100 times the amount of physical metal available for delivery?
IMO a fallacy exists with regard to the attribution of what a "monetary metal" is. In a dollar collapse, any metal that can be defined as "money", using the strict definition of money, is a hedge against dollar hyperinflation.
Ultimately, you would want to avoid 'hyped' metals, and avoid buying at the top, and seek out true precious metals, like Platinum.
We are reaching a point where gold/Pt will be 1/1. The gold run up is psychological, based on a group think monetary metal attribution. Pt, although volatile, is still a much rarer metal. Ultimately, SHTF... would actual rarity trump psychological attribution errors?
My first gold film effort with the xtranormal characters
http://www.xtranormal.com/watch/12344724/naked-dummiez-movie-quick-buy-some-gold
haha
.
The USD has lost 98% of it's value ever since the Fed was created in 1913. TPTB are now working on removing the last 2%. Gold has no choice but to respond exponentially.
But Gold isn't increasing in value, it's increasing in price based in USD. It's the USD that is falling in value with the expansion of fiat money supply.
Gold. Getcha sum.
Actually, I think it is doing both. Gold prices are, or soon will, reflect:
1. The price of gold in relation to its value has been suppressed, and as the methods of supression fail, it is returning to its value price.
2. As you point out, the yardstick by which gold is measured (USD) is shrinking.
3. Gold and silver are being rediscovered as legitimate mainstream assets.
4. Gold and silver will benefit from being the highest dry point on a sinking ship.
5. A lack of supply. It's hard to bribe someone to surrender their life vest when the ship is going down.
Of these five factors, number four and five are by far the most powerful. The smart money and the panicked traders are going to crowd into the same trade, PMs. When that happens, we are going to see weeks and weeks of vertical prices.
Platinum is a superior metal. It still has a monetary conotation, yet is used broadly in industry. Platinum is where the real shortages could happen, and Pt is the real precious metal. If the price drops, we will see a movement into Pt and the bullion supply could feasably run out in a crash. Not the case with gold or silver;... especially if the gold price continues to rise, even above Pt. JMVHO.
Silver and gold is seeing alot of speculationa nd new buyers now. pt is a hyper thin market; no tourists here. Unmolested. It has more downside protection.. and is 30x rarer than gold. If we see a 1 to 1 with gold, it may be a good idea to diversify.
Pt does not rely of the 'psychological' factors we see with gold.. i dont trust human psychology, because it can turn on you in a heartbeat.
Marc Faber said comparing monetary base levels of the 1980s to current levels, gold is currently "cheap"... Much cheaper than it was in the year 2000 even.
Excellent Articles....Europe and Gold...
http://seenoevilspeaknoevilhearnoevil.blogspot.com/
OT: 2 min video..hilarious...
http://www.youtube.com/watch?v=W0Uju3tYS2s
The confusion of equating cash markets to futures makes some of what is said suspect. But there is the madness of crowds and the reality of something of substance in a collapsing derivative world becoming the force in the market. The operation of governments in cheapening currencies while increasing gold reserves is the current motif. A motif that does make gold almost open ended. This is a stronger force than Indian weddings.
If oil becomes cheaper, miners may come back into vogue, particularly if other metals keep value. So there MIGHT be a reason for gold to operate in different world than stocks.
There is strong movement in many countries to nationalize resources. This actually takes gold out of the market for to sell the gold inmpacts the currency.
Very interesting trade but not a good religion.
Agreed, but I wouldn't over ruminate on what could happen, and would instead focus on what always happens when a currency is destroyed. History clearly points to gold as an obvious long trade.
If we go to a gold standard, gold is good to hold. If they don't, gold is good to hold. Either way, you win. They can try to put us on another fiat currency system, but there are going to be a lot of angry people when this is said and done, and fiat only works when people will accept it as money. The only people who really know where this is going, central bankers, are buying gold. History, and the actions of people in the know point to the trade.
so gold is now the virtual standard again in the face of fiat debacle.
If the IMF decides to install a new basket of currencies in the face of probable USD decline, if QE-3 starts full blast, what effect will this have on gold as virtual reserve.
Right now the flight to safety is towards gold and CHF. Both have limited capabilities in case of outright rout of USD and/or EU starting a stampede away from fiats.
What then...? where will the fall back position be? Gold to 8000???
CHF can't move much higher as it will tank the Swiss economy, the real one!
Some smart money says to hold silver until the GSR is around 20, then convert the silver to gold. My opinion, as a long term holder for my grandchildren, is that silver will be the eventual big winner. There is ample evidence that mineable silver on the planet will run out within 20 years at current consumption demand levels for industrial use and investment. A world wide economic slowdown might affect this time frame, but IMO, not by more than another decade. Moreover, as the end game approaches for the banksters, the only savior will be war on numerous fronts to keep the sheeple at bay. The war machine uses tons of silver on an annual basis; more than enough to offset any decreased industrial demand.
To sum it up: Gold is cheap, Silver is dirt cheap. Buy the lows, celebrate the highs with a cream ale or two or seven. Pay no attention to 'experts' like Roubini. Either the Gold Standard gets re-adopted or they flood us with paper in which case you sell for land and life away from the circle-jerk that is present day economics. Questions?
A new gold high, imagine that.
Get used to this.
is this mr kim who was portrait by michael lewis?
Once again, fine work.
I would like to expand upon the parabolic price theme which most of us gold bugs expect.
It is common knowledge among traders that when prices go parabolic, and then vertical, the end is at hand. I would caution the holders of PMs not to employ this rule of thumb in this case.
As Mr. Kim points out, what is too high a price for gold or silver is hard to discern. Price manipulation over the years, stealth inflation, and the shrinking of the yard stick through the debasement of the currency, all of these factors mean that there is no price target for gold where it is wise to sell. Gold and silver have no price ceilings. Prices can go vertical, and stay vertical, longer than any historical example. They will likely do so until there is a stable currency to switch into that everyone accepts for goods. Don't succumb to rules of thumb in a once in a lifetime event.
Very true. Case in point - during golds last big move up 1979-1980, global wealth held in gold and gold assets amounted to some 20% Currently this wealth held in those same araes is less than 1%
We, who have the inside track and are stacking, or have been stacking, or are continueing to stack, know the truth. Its said that honesty is the cornerstone of character and that honesty is the truth and the truth will set you free. In our case this freedom is from the clutches of the global fiat ponzi system, operated by the bankers of the world, in cahoots with crooked central banks.
Both gold and silver will out live all. They are true money. The only money. The rest are pretenders and poor substitutes at best, known as currency. Keep stacking. Price goes down - stack. Price goes up - stack. Your wealth will be preserved, along with it's purchasing power, safe from the clutches of the dark side.
+5