James Turk: Central Banks Are Losing The War to Suppress Gold & Silver Prices

Tyler Durden's picture

Submitted by Adam Taggart of PeakProsperity

James Turk: Central Banks Are Losing The War to Suppress Gold & Silver Prices

My guess is that 2013 and 2014 are going to be big up year for the precious metals, but we still have to contend with the central planners and the various government policies, which have been actively trying to keep the gold and silver prices from reaching fair value. The central planners are losing the war. They may win an occasional battle or two, but they’re losing the war, and eventually gold and silver are going to go higher.

So predicts James Turk, founder and Chairman of GoldMoney.com.

From James’ perspective, gold is not an investment. It’s a sterile asset, meaning it does not generate income. What it is, is money. Its function is to store wealth.

But money, like investments, can be overvalued or undervalued. And what we’re witnessing on the world stage is a gross mispricing of money as central banks engage in depreciation of their fiat currencies via inflation (i.e. money printing).

The process causes a transfer of wealth from those holding overvalued money to those who hold undervalued money. That’s what’s been going on for the past decade as the price of gold has steadily marched upwards versus fiat currencies.

But this process is not efficient. Mass awareness of this wealth transfer is low, so confidence in paper currencies is still high, supporting their perceived value. Market intervention by central banks and other parties conspires to keep the prices of precious metals artificially low and suspect.

This maintains an arbitrage for individuals to buy gold and silver at a discount to true value, which James believes will be slowly realized in full over the next several years as the bull market in precious metals approaches its third and final phase.

A factor in this rise will be the increasing fragmentation of coordination among the central banks. Increasingly, central banks outside the influence of the US’ Federal Reserve are treating the precious metals as true money, and becoming net buyers of bullion for their reserves.

Ultimately, Turk predicts the price of gold will move to somewhere between $8,000-10,000/oz, and that we'll see even higher price appreciation in silver.

The way markets normally work is, after you do have a big move, you get a correction. Even over the past 12 years, if you look at gold, you had big moves in 2005, 2006, and 2007 where you were in some years generating over 20% appreciation in gold. Then you had the correction in 2008. Even though that was a correction, gold was still up that year. Then, in 2009 and 2010 and the earlier part of 2011, you had again big moves. Then you had the correction where basically they moved sideways. My guess is that 2013 and 2014 are going to be big moves on the upside, because what’s important here is not so much the price of gold, but whether it’s a good value.


The proper way to manage a portfolio is, you move assets that are overvalued out of your portfolio and you concentrate on assets that are undervalued. That’s true regardless of whether you’re talking about investments or money. You want undervalued forms of money. You want undervalued investments. I use a couple of mathematical formulas which I’ve written a lot about, one being the Fear index and the other being the Gold money index; by both of those measures, gold is still very, very undervalued, as is silver, for that matter. Silver is even more undervalued than gold. My expectation is that these undervalued assets will continue to rise in price, because the market doesn’t like levels of overvaluation or undervaluation. The market is always constantly changing, moving money out of overvalued assets and moving into undervalued ones. And that’s what we’re basically seeing in the precious metals: people are moving out of overvalued fiat currencies and moving into undervalued gold and silver.


My guess is that 2013 and 2014 are going to be big up years, but we still have to contend with the central planners and the various government policies, which have been actively trying to keep the gold and silver prices from reaching fair value. The central planners are losing the war. They may win an occasional battle or two, but they’re losing the war, and eventually gold and silver are going to go higher – assuming that governments and central planners and central banks still continue to follow these same policies that they’ve been doing, which is defacing fiat currencies.


An interesting thing is that when we saw the price drop in gold and silver at the end of 2012, the demand for physical metal rose tremendously because people recognized that these assets are undervalued, and if they’re going to be sold down to such cheap prices, they may as well just pick them up and continue to accumulate them. So it certainly has a perverse affect when the central banks intervene. In fact, as we’ve noted, gold has risen 12 years in a row against the U.S. dollar – double-digit rates of appreciation. But I guess the best way is using an analogy. If you've got a pot of water boiling on the stove and it’s bubbling away, every once in a while you have to release or pull off the lid to let a little bit of steam out, and then you put the lid back on.


That’s sort of what the central planners are doing. Every year they release the lid, and gold on average has risen over the last 12 years by 16.8%. Then they put the lid back on. One of these days they're not going to be able to put the lid back on, and you're going to go into the third stage of a bull market where gold just keeps rising and rising and rising because confidence will be lost in the currency. I think that’s what we have to be focusing on.


I can’t say that trust between central banks is waning, but you have to recognize that there are two categories of central banks: There are central banks that are in the U.S. circle of control and dominance, and then there are central banks outside the circle of U.S. control and dominance. The ones that are outside of the U.S. control and dominance are accumulating physical gold. The ones within the U.S. control tend not to do that, although it’s interesting that Germany, Netherlands, and now Austria, too, are talking about bringing their gold back.


It’s quite clear that a lot of promises have been made, particularly by politicians and most governments around the world, and those promises cannot possibly be fulfilled. A lot of those promises are going to be broken. Particularly when it comes to the area of gold, a lot of central banks are relying on the promises of other central banks. Oh, yeah, we’ll be good for the gold if you ever ask for it. Those promises are likely to be broken as well, as the demand for physical metal continues to grow. Whether it’s going to accelerate in 2013, 2014, I don't know. But, my guess is the demand for physical metal is indeed going to accelerate over the next couple of years, because I’m looking for serious financial problems to be hitting. 

Click the play button below to listen to Chris' interview with James Turk (34m:47s):

Click here to read the full transcript

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solgundy's picture

fade Turk...his dropping always preceed a big drop

AllWorkedUp's picture

geez, I hope you're wrong but I've followed him enough to know that you could be right and that scares the crap out of me.

AgAu_man's picture

Q:  At what point can and will local or regional small banks sprout up that have their Assets backed by PMs in their vaults?

E.g., Say that you can start your own bank (with the ppl with the right know-how & credentials), with an initial Hard-Asset base of ~ $20M FRN.  If, under your banking license, you then leveraged your fiat-FRN base on a 50% basis, then you can claim to have a $40M FRN base.  The, using FRB and a ratio of 9:1, your fiat-FRN base grows accordingly.  Right?  You then operate like a traditional bank, and using FRB, you make loans and mortages accordingly.  You do NOT engage in Derivatives or in anything that increases the leverage of your asset base beyond that already stated.  You'd also grow your PM base with your total asset base.  In essence, you'd be banking like in the pre-1971 fiat era.

I have to wonder about Pete Schiff, i.e. if he isn't doing something like this, with his gold-backed credit cards.

hairball48's picture

Just as the planets move relative to the sun...Fiat currencies move relative to gold.

And just as the ancients finally figured out that the planets revolved around the sun. Keynsians and other fiat money believers will discover that gold will ultimately prevail over their empty paper promises.


Dr. No's picture

Actually I dont think the CB care about gold and siver price.  If they did, they are more stupiud than I thought.  You mean printing $trillions is not supressing gold price??

andrewp111's picture

They care about Pt and Pd, though. The price of cars does matter to governments the world over. So if speculation in Au and Ag spills over to the industrial precious metals, governments will have a hissy fit. They might even stop minting Pt and Pd bullion coins.

oak's picture

people, some observations about the relationship between gold and currency are presented here. in old time, if one nation has so much gold, it issues so much currency in a fixed ratio. that was ancient history. now in the mordern time,  if one nation issues and also increses certain amount of its own currency progressively with a fixed amount of gold, then such nation would gradually re-value the gold price based on its own currency in a controlled manner. especially it is a reserve curreny. this is called reversed gold standard. it is as simple as that.

ForWhomTheTollBuilds's picture

I have to credit Jim Sinclair with giving some of the best advice I ever heard.  Here is my interpretation of it:


When someone is a genius or soothsayer in one area, use them for what they are good at, but dont expect them to be effective in other areas.  Stop looking for heros.


So I feel the gold community owes a great debt to Me Turk.  To piece together the mountains of circumstantial evidence proving the current gold price suppression scheme requires that one man in a million with the patience to walk into a library and just start pouring over those central bank and BIS statements and go line by line, hour after hour, never getting tired, never getting giving up, never failing to question every definition and follow up on every lead.  Day after day, year after year...


That said, I see him on KWN on a weekly basis predicting an imminent moonshot for gold for about 4 years straight now.  This man is not someone who can call a near term market. 


He reminds me of a much calmer Ann Barndardt.  To hear her speak about why she shut down her brokerage, is to hear a truly moral and lucid speaker.  To look her up on google is to profile a lunatic.  Its the nature of genius I guess. 

steve from virginia's picture



It's hard to argue with someone like Turk who has spent his entire career building an analytical premise: he's not going to change his mind.


"It's my story and I'm sticking with it!" cries Turk.


It's arguable whether gold has any 'value' and if it does how much. Generally, all industrial 'goods' are waste or waste products that are the antithesis of value, that is, the making of the 'goods' destroys value ... Money does the same thing, it's another manufactured good. However, gold is an element, it is a natural resource, like the others it is in limited and diminishing supply. Like other resources, gold costs a lot in energy and externalities to obtain in usable form. Today's gold is more costly to gain than what can be earned by its sale even at an elevated price ... gold is underwater.


The externalities and associated energy costs are gold's liabilities in the monetary sense. If gold is to be 'money' these costs/liabilities must be calculated and measured against the market price ... if this is done there will be no more gold because it will cost too much, if this is not done then gold is no different from AAA-rated mortgage-backed securities and other worthless promises to repay!


Unlike other resources, gold is persistent and enduring (silver not so much). Most gold ever dug out of the ground is still in human hands, the end of 'new gold' due to energy constraints will make the gold in hand worth more ... this is simply supply and demand. On the other hand, if/when gold becomes extremely scarce it will be no different from there being no gold at all and the metal will become worthless. When will this happen? Who knows but it will be prior to gold becoming 'money' ... this being the manifestation of gold's costs being properly reckoned.


Gold as 'money' has another gigantic problem ... gold is a political token in a particular version of American no-nothing-ism, part of the generalized lurch rightward toward 'Seig Heil 2.0' and the rise of self-appointed leadership cadres who have good, solid justifications for every sort of monstrosity and excess.


There is also an element of the sanctification of money: gold is a tradable asset, it is recognizable form of collateral identical to (good) money ... however, if gold is collateral what sort of loans is it collateral for?


Whatever that 'thing' is it would be the money, gold would be the security, the same issues of trustworthiness of the borrowers and lenders would emerge with gold collateral as with the other kinds of collateralized 'borrow' money we have today. Right now, all of our money problems are really collateral problems. Our precious enterprises are really worthless pieces of shit.


Where is the value in our mechanized world? There is none values are negative and going sharply moreso. In a hundred years without significant changes there will not to be any more humans ... is gold money then?


We need to get a better handle on priorities, step back away from the maelstrom first then we can decide whether money is something other than the root of all evil and something to be done away with.


Or else ... (finger cutting gesture across throat).



mliu_01's picture

Need 2nd amendment. Need a gun to rob grocery story.

steve from virginia's picture



Only an American needs permission in the form of a Constitutional Amendment to rob a grocery store at gunpoint ...

Bicycle Repairman's picture

In order for PMs to have any value, powerful people must agree that it does.

They Tried to Steal My Gold's picture

Like with every stock and every asset class....once the they get their final amount allocated is when the pump and dump and scheme begins....

Not Sooner. 

What is encouraging is that countries and the Central Banks are acquiring metals at an increasing rate. This rate is what is published. 

Who knows what the real rate is? ............and Who knows how much China really has?

My suspician is that $2000 will be the ringing bell of the start of the pump and dump. And one that will last to $4000 plus. 

Because its always a minimum of a double return.....and in this case the Algos and programs will probably take it to $6000

What happens form there is anyone's guess... Gold will be like what Real estate used to be. When our parents bought homes for like $15,000 and the market hit a high of $750,000-1,000,000. 

So even at prices at $500,000 - they are still wealthy.

Those that bought gold at $300 and Silver at $8 are in the same boat. 10 Time returns....

Inflation is the measurement of man' mistakes....

robertocarlos's picture

In the long run real estate keeps pace with wages. That is RENT keeps pace with wages. You can't squeeze blood out of a turnip.

Hook Line and Sphincter's picture

Turk consistently underestimates the power, motive, creativity and temerity of the PTB fiat pusher individuals and organizations. His overall thesis is correct, but only when the time element is stripped away. 

There is a huge amount of resources, including 401k's, sovereigns, Au and Ag that haven't been stolen or destroyed, but are on the hit list.

He doesn't understand deceit and corruption to the degree he should because HE IS A GOOD GUY. Turks pleasant demeanor, hope, and all around good nature has blinded him. 

We have a long long way to go. 

Best to all here who think they have strong hands.

Time will tell, and ZH'r better get real creative on HOW they are going to retain anything of worth in the future.

Your opponent is wily, smart, supported by the MIC, and damn good at what some would call black magic and language/reason constriction.

robertocarlos's picture

Gold at 10k dollars! Who cares. McD's double cheese burger will still be $1.69 plus tax. We'll live.

andrewp111's picture

Why would central bankers give a DC grey rat's ass whether gold is $1700/oz or $170,000/oz? The only precious metals that matter are platinum and palladium, since they are indispensible for catalytic converters, among other things. If Pt or Pd went to astronomical prices, that would make cars unaffordable, and that would matter to governments - big time. But gold or silver? They could care less.

mkkby's picture

Gold doesn't matter, eh?  Then why is the US gold being guarded by 30,000 troops with hundreds of tanks?  What a fucking douche.

Silversinner's picture

Having 100% in phys,so nothing in goldmoney.

love to listen to your golden words with a nice silver

lining.recpect and tnx to Mr Turk I learned a

lot from you,made me lot wealthier.

Keeping my gold silver ratio at 50%/50%

in dollar terms and constant buying to keep

the ratio.This made me buy a lot of silver

under 30 recently and bought only gold when

silver was topping 40-50 range.Just a little tip.

augustus caesar's picture

Gold is important. However, things are always changing. The Universe is not static. The past does not always indicate the future. Who would've guessed that the descedents of Germanic barbarians would go on to develop nuclear physics? Who would've guessed that a failed artist would end up as one of the most powerful men of the 20th century? All I ask is that people keep an open mind. Bias can end up clouding the mind until the truth can no longer be seen, or even wanted to be seen. Question all assumptions, even the very best.

joego1's picture

The bottom line is this: If  and when things get ugly you need to login to a computer or an ATM  to get your shit you are doomed. I myself do not expect a file server farm to do well when people can't get to work or have no electricity and that is exactly where your ones and zeros wealth resides these days.

dolph9's picture

If you have an account with Turk's GoldMoney, you have fractional ownership of a 400 oz. gold bar.  This makes it cheaper for you to buy and sell, but there is a storage fee and in the event of bankruptcy there would be cash settlement.

GoldMoney works as long as it stays in business and you can wire money bank and forth from a bank.  I think this will go on for awhile, and I think the costs are more than made up for by the ongoing bull market.

BullionVault is similar, but also different in some ways, and is cheaper overall than GoldMoney.

I actually think in the future we will have "good delivery" bars of much smaller sizes.  400 oz. is a relic of a time when gold was $35 an ounce.

I trust GoldMoney but I certainly wouldn't keep all of my money with them.

tony bonn's picture

"...although it’s interesting that Germany, Netherlands, and now Austria, too, are talking about bringing their gold back.."

yeah it's interesting because they - especially germany  - don't have any to bring back....it is all a bunch of stage claptrap to fool people into thinking that there is gold in the german account...unfortunately the fool germans buy this horseshit but they also believed hitler was going to save them....what a joke.

mt paul's picture

the money masters have a problem now

when they minpulate the  silver paper game

the peasants have started buying physical 

on the dips ..       BTFD

curse those  dip buying peasnts 

reduce their food ration with inflation

remind them of their place


geewhiz's picture

Central banksters are keeping the body politic going with printed money. They are well aware that if they keep this up they will risk destroying thier money printing frachise. They are holding down gold prices with paper gold to keep the perceived value of thier fiat currency alive. At some appropriate point they will contract the money supply and blame the economic collapse this causes on the unresolved profligacy of the body politic. They will stop printing money and buying treasuries and shrink the fractional reserve money by calling in loans at commercial banks. This will destroy the value of all assets with the economic collapse. That includes precious metals, equities, and real estate and at the same time will revalue the dollar. They will then use thier supply of dollars to effect a massive transfer of assets to thier membership. The economic collapse will be the pretext to gut governments of thier deadwood and an economic recovery will ensue increasing the real values of equities and real estate but not PM's because they will still have and want thier fiat currency franchise. Thats my theory, but I'm not sticking to it.

deebee's picture

Yep, Gold will reach 10,000 etc. etc.

I wonder how much credit a broker would get if he/she repeatedly urged that Google will reach $250,000 per share 'someday' when they conquer the smartphone, gaming, and media industries.

Vooter's picture

Oh...has Google been a store of wealth for the last 5,000 years? I wasn't aware of that...

deebee's picture

so Gold will hit 10,000 because it has been a store of wealth for 5000 years. Thanks, i totally get it now.

silverdragon's picture

Buy physical Silver and take delivery, its 10,000 industrial uses, and having been money through out history make it a kinda safe bet.

OldTelem's picture

No one has ever claimed that American central bankers are particularly intelligent or possess any foresight.

semperfi's picture

LSL, I like your style.  +1000

Sandoz's picture

Whoop dee f*ck'n doo. A gold salesman predicts that gold will hit $8k-$10k. This site becomes more of a joke each time I visit.

The Swedish Chef's picture

Anything is positive for PM pricing to James Turk. Screwtape Files did an excellent compilation of his view of gold TA: everything is bullish. 


Perhaps that is what happens when you make a living of rising prices.

writingsonthewall's picture

From James’ perspective, gold is not an investment. It’s a sterile asset, meaning it does not generate income.


I hate to point out the obvious and destroy this myth - but fractional reserve banking is entirely based on making an income from gold (originally)


'Money' does not generate income - the lending of money does.


THis man needs a history lesson.


This current game has nothing to do with what is money - it's about TRUST - pure and simple. Which do you TRUST more - Gold or FIAT currency?


Make sure you check history before you make your decision.

pcrs's picture

They'd have to invade/liberate a lot of countries in order to steal their gold. Kadaffi's gold for Chavez and Mali's 7 year production for Germany. 

Venerability's picture

Read My Lips:

Venezuela got its London Gold back to loan to China for its new ETFs, launching right about NOW!

That is THE primary reason GLD and SLV are under such pressure and why this blitz of Anti-Gold propaganda is so loud - and lately so silly.

Gold demand in China is very shortly about to go through the roof.

Downtoolong's picture

People are willing to kill each other now over the latest hot model of tennis shoes, Victoria Secret's latest bra, or the latest release of an iPad. Imagine what they'll be willing to do when there is only one loaf of bread to split between them.

Kingkongballs827's picture

Don't Wait. Burry your Guns, Gold, Ammo, and Food Now. Can be sealed with Nitrogen to keep moisture out for life. 


And if you think you can go buy all the Stuff in Home Depot, go do it!


nastaking's picture

Full HD screens are set to become the norm on GT-N7100G in 2013 and one of the first to bring this feature to market was HTC

forrestdweller's picture

of course he says the prices go up. he makes money from people buying gold and silver. have you ever sees a gold-dealer who says prices will go down and advices you to stay away from the PM's?