Mike Maloney: Today's Low Gold & Silver Prices Are Not Realistic

Tyler Durden's picture

Submitted by Adam Taggart of Peak Prosperity,

During this very tumultuous week for precious metals prices, Chris sat down with Mike Maloney, founder and owner of GoldSilver.com, one of the world's largest bullion dealers.

Mike is a true scholar of monetary history. His reasons for getting into the bullion business have their roots in a very predictable cycle that has happened time and again over the centuries (more accurately millennia):

  1. A new monetary system is introduced, based on sound money (most commonly, using gold and/or silver)
  2. Currency (e.g., paper bills backed by sound money) is introduced to faciliate trade and commerce
  3. Governments begin to tinker with ways to 'print' more currency than can be fully backed (e.g., coin clipping, partially-backed notes, FRNs)
  4. A false prosperity ensues. Those closest to the new money creation benefit most and debase the currency further to forward their advantage.
  5. Reality begins to catch up with this deficit spending and the purchasing power of the currency weakens dramatically.
  6. The monetary system collapses under too many claims on a limited pool of sound money.
  7. Eventually, a new monetary system backed by sound money rises from the ashes (see Step 1, above).

Mike believes that we are currently experiencing Step 6 and that we will witness the birth of a new monetary regime within the next ten years.

What makes this moment in history unique is that all past monetary regime collapses have happened regionally. This is the first time in human history in which all the world's major currencies are collapsing together. Which is why he is so passionate about owning gold and silver.

In his opinion, we will soon witness the greatest transfer of wealth ever seen, as countries worldwide realize they need to revert to monetary systems backed by sound money (i.e., the precious metals). Those acquiring gold and silver beforehand will not only preserve their wealth as existing fiat currencies are extinguished, but will see staggering increases in their purchasing power. Those interested in learning more of Mike's specific vision can watch Episode One of his new Hidden Secrets of Money video series. (Chris and I received advance screenings of the next few episodes, which are excellent in terms of explaining the processes and shortcomings of our current monetary system.)

On the Tightening Physical Market for Gold & Silver

What most people do not understand is that the price of gold and silver are not determined by how much gold and silver is being sold. It is how many gold and silver IOUs are being sold. And you can write as many IOUs, futures contracts and options, as you want. Those are unlimited. The supply, though, of physical gold and silver is quite limited, and so when people actually start asking for it and they want the physical, then there is a divergence of the paper price versus the physical price, and we are seeing that right now.


We are in a back-order situation with all of the suppliers. Spreads are going up. Silver eagles cost about fifty cents over spot more than they normally cost because all of the suppliers have had to raise their price to try and find the supply/demand equilibrium that the markets are for. The markets are there to try and find a supply/demand equilibrium, so then price is the arbitrator. Price rises; that draws more supply and reduces demand. Price falls; that reduces supply and increases demand.


So the price discovery mechanism of the markets is what is supposed to ensure that things are in equilibrium. We have this broken system where there are a few big players that manipulate the market, and it always shows up when shortages start developing in the physical market. You know that the price of gold and silver right now are too low to be realistic. And the good thing about that is that it cannot last.

On the Hidden Wealth Transfer Caused by Inflation Targeting

Everybody got in an uproar over [the Cyprus bank deposit haircuts], but nobody gets in an uproar over the central banks targeting 3% inflation. That compounds out to 34% of your wealth that they are confiscating every decade. People got mad because it happened all at once and they could see it. One day their bank account said one thing; the next day it said another thing. With this insidious confiscation known as inflation, this is the inflation tax – you do not see it because the number on your bank account might say that you could make a deposit and if there are no fees or anything on that deposit, $100,000 deposit a decade ago still stays $100,000. Except gasoline went from $1.25 to near $5.  Measured in gasoline, you lost 75% of that $100,000, but it still says $100,000.


So the central banks targeting this 3% inflation rate is a wealth transfer from the public to the financial sector.

On the Recent Price Weakness in the Precious Metals

You do not want to stay in just one investment class your whole lifetime. But it is a very powerful tool to be able to measure these classes against each other and then jump from an over-valued asset class to an under-valued asset class at the appropriate time for the road to true wealth. And it only requires a few big decisions during your lifetime.


Now, when I discovered wealth cycles, I was looking at the Dow Gold ratio and thinking this thing has a cycle. I made another check of the Gold Dow ratio instead the Dow Gold ratio, and put them on top of each other. Lo and behold – there is a cycle. It has a positive side and a negative side. If you are doing a Dow Gold ratio, you jump from being invested in paper assets like stocks and then back to gold for the long investment waves. I would say it is somewhere between 8 and 20 years you spend in an asset class, and you can do this with anything. If you measure your house in how many barrels of oil it is worth over a century and you jump back and forth from being invested in oil wells to being invested in real estate, it is the same thing as being invested in gold or the Dow. It is a very powerful tool that I believe has a high degree of predictability and safety to it, if you do not let the short-term noise flush you out.


Right now we are in consolidation. Gold has been chopping sideways for 19 months now, and it has worn people out. But basically gold is up. It is not up from 19 months ago when it was nearing $2,000, but it sure is up over the last decade. So I do not let the short-term noise affect me now that I know that we have not reached the point where the price of gold equals the points on the Dow. Right now gold’s value is one-ninth of the Dow, and so I know that it needs to rise by a factor of 18 against stocks before I need to get worried and start watching gold.


So I am very comfortable in these pullbacks. It gets a little aggravating, but still it does not bother me that much and is definitely not going to flush me out.

Click the play button below to listen to Chris' interview with Mike Maloney (59m:02s):

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johnQpublic's picture

it just got even less realistic



landslide takes out 10% of US silver mining and 500k oz gold mining

NewThor's picture

Speaking of exploded super novaeo

Y'all use your prayers and pull to get me 60 seconds on BloombergTV.



I think you guys would enjoy what I'd have to say.



PS. Part 3 is not as strong as part 2 (Like any trilogy. :P) so try and start at the beginning. 


cifo's picture

So do we have an explanation for why gold went down on Friday?

Dr Paul Krugman's picture

Because it is a worthless investment and everyone is slowly learning this.

Divided States of America's picture

Because YOU are a worthless economist and everyone has ALREADY learnt this.

Dr Paul Krugman's picture

Gold is now officially in a bear market, and all you gold bugs have made a poor investment in it for two years.

EvlTheCat's picture

Glad I have been investing in it for over 10 years.  Bear market shmare market...

Transformer's picture

Now, come on.  You guys don't actually believe that is REALLY Pual Krugman, do you.  He is such a cowardly wimp that he would never post here, where people could actually reply and argue with him.

This guy is just another of the buffoons foisted upon us, to keep us on our toes, and to provide humor.  I find him really funny and give him and some of others an upvote most of the time, when they make me really laugh.

Just remember, though, when it comes to the real Paul Krugman, reading his collumn or what he has to say anywhere, is truly a waste of your time.  Time spent reading Krugman, is time lost out of your life, that can never be regained.

NewThor's picture

Did you guys know gold and silver come from exploded supernova?

Maybe Gold went down on Friday because there was a big GAMMA RAY BURST

from a close by nuetron star causing a boost near by mine-able in supply.

You know our technology is well beyond what the public knows about right?


It's ok to support me on my Bloomberg call to action, my brothers, sisters and bitchez.


Pinto Currency's picture

Shanghai Gold Exchange alone has had 420 tonnes physical purchases in less than 6 weeks.

Gold reset cannot be far away.


francis_sawyer's picture

No... listen to chindit [previous thread]


Gold prices are low because, ADMIT IT... Your trade was WRONG...

You should have been, according to chindit, investing in the SPAWN of Rockefeller, who are splitting their time between partying with Paris Hiltron & 'strategizing' on infrastructure needs [with Ellen-de-motherfucking Generes as spokesdike], to bring the goddamned JOOBUCK PAPER ECONOMY into the new millenium...

Didn't any of you people go to business school?

Rubbish's picture

Gold to $1,000, more thumbs down like a couple months ago. I'll buy a little then.


Be happy gang, it's the big one coming you have all been waiting for. Can you imagine all the scardy cats when she hits $999?

Supernova Born's picture

Aptly named (as I'm sure you've heard before).

Schmuck Raker's picture

O M F Gawd.......









[My heart felt apologees to any normal peeps encumbered unnecessarily with this hook um. Boy, the spell check reaaallllly let us down this weeeeeeeaaaaaak]

The Heart's picture

The dr went down south to a Heehaw music festival. Recognized by the locals he quickly became known as, Dr. Skrugman.

EvlTheCat's picture

No I don't believe it is the real Krugman.. This guy can type and form full sentences with proper punctuation.  All the PHD's I know are brain dead.

Supernova Born's picture

He certainly does negatively impact the flow of every thread.

ZH'ers are like dogs barking at the computer monitor.

Let it go. Let it go.

-John Rambo

IridiumRebel's picture

Not if you got in around 1200 like I did. Bet you dollars to donuts it ramps up monday.

AllThatGlitters's picture

I was thinking a ramp on Monday too.

But maybe first a headfake down tonight (Sunday), followed by a recovery / bounce into Monday open, followed by one final plunge Monday to dishearten those that bought the bounce and dissuade those that were considering a Monday purchase.

We'll see what tonight brings in a few hours. Watching the live streaming charts tonight and into tomorrow could be more fun than a good old-fashioned James Bond film.

Live Gold:  http://www.pmbull.com/gold-price/ | Live Silver: http://www.pmbull.com/silver-price/

AllThatGlitters's picture

On my prediction above, I figure I have a less than a 50/50 chance of being right.  Had I just said it goes up or it goes down, that would improve my odds of being right.

TeamDepends's picture

And we're off!  Both green out of the gates....

The Heart's picture

Big thanks for the charts.

One little thing though; the present dollar equivalent showing on Kitco is at 25.85. Why is that not reflected on this chart above for silver?


Just curious, and it is really nothing at all compared to the greater events in progress now on the geopolitical theatre front.

AllThatGlitters's picture

There are multiple sources for the diff. charts on those pages.

The streaming charts are Forex.  

The prices shown separate from the Kitco charts are from Kitco and don't update immediately like the charts do.  The one on top is the bid price (25.81) and the one on the right is the ask price ($25.92).  $25.85 sits in between that and was probably the last trade. Maybe the bid and ask shifted, before another final NY Close price could print?  

I do notice that Kitco NY Close prices often change on the Kitco charts themselves, sometimes a day later.

They are all close enough to each other while live to be useful for tracking - unless there gets to be some crazy crap going down (like around Easter, at which point all the different suppliers can get whacky).

Click through on a gold / silver product on that page and the dealer there shows spot price from another supplier altogether - but I usually notice only a penny or two diff.

The Heart's picture

Big grace and confidence.

Straight up, thank you for the time you took to express your truth so well.

One truly adores the edumacational light that flows so abundantly here on ZH. Give thanks for the sweet addictions in life...once a writer...always a writer.

Big huge ginormous Sunday evening gratitude and blessings to the ONE, and ALL that we all are here...even you...dr Skrug.



gonetogalt's picture

AllThatGlitters, thanks for the info...can you explain the differences between phyz delivery and 'paper' contracts in pricing???

Jungle Jim's picture

Bond movies are fun to watch. But I didn't want to live in one. Well, okay, all the fabulous babe parts, sure. All the machine guns and flamethrowers and industrial laser vasectomies and shark tanks and acid vats, aah, not so much.

StychoKiller's picture

So, are things that much better in the Jungle, Jim?

resurger's picture

lol, That's good news ... more discount coming?!

On the contrary, we are happy if you can pass the message to GS, JPM, the FED's and all your Central Bank friends to push the price lower for us.


Son of Loki's picture

Every Gold Bug I know is loading up more of the yellow metal. My neighbor says it has always been, and will always be the ultimate store of value.

JPMorgan's picture

PMs is not a investment Krugman, it's wealth preservation.

Do the math dickhead.


El Oregonian's picture

I'd sure like to invest my nice Silver Slipper and plant dead up your ass Mr. (O's) Glugman.

Kirk2NCC1701's picture

Doc, and it will continue to get spanked in similar manner, to a still lower level? Till ppl stop fighting the Fed and the desired economy?


Didn't you say the same gibberish when Gold went from 1000 to $680 in 2008? You're still allowed to write? Who listens to you anyway..just your wife/boyfriend?

Son of Loki's picture

Yeah, make me cry w/ regrets....$680....my neighbor ran out to buy moar...told me to do likewise but I was too smart and did not buy any at that time.....what a loss for me.....that gain could have made up for the 40% I've lost on my house value.

All Risk No Reward's picture

Hi Paul,

You might have missed this question the last 11 times I asked it, so here we go for try number 12 (and yes, I will continue to increment the numbers until you answer the question):

If growth is defined in monetary terms and money is debt (interest bearing) please explain how exponential growth of debt is sustainable into eternity. If money (debt) exponential growth is not sustainable into eternity, then WHAT HAPPENS WHEN THE EXPONENTIAL MONEY (DEBT) GROWTH FAILS? I made the question bold in case you are having vision problems and couldn't see the question. Hopefully this helps. TIA...

Consequences of Krugman's Pimped Fractional Reserve Banking 2) - Poverty - Debt is not a choice


How to be a Crook


Do you get off enslaving the proletariat to debt owed to the people who made you and can also trash you like so much garbage?

Aren't you just a modern version of a well paid house slave?  How's that reality going to resonate throughout eternity?

Where is your Youtube "How to be a Crook's Mouthpiece?"

The Heart's picture

"Where is your Youtube "How to be a Crook's Mouthpiece?"

As always, brilliant Light.

This How to be a Crook video is just over a year old. It gives any third grader a very good clue. The funny thing about truth is it is always true, and eternally carved into the Stones of History. Whereas, and surly you know sir, the lies and illusions to control and perpetuate this beast continue to change to keep the masses interested, or stuck in the cycle. What would happen if every conscious being on the planet focused their entire energy on creating truth in the words, deeds, and actions they manifested in every breath, in every day, instead of wasting so much time and energy on maintaining the illusion?

Sonday Night Pondering.

All Risk No Reward's picture

IMHO, two cases would emerge...

1. They'd be lonely as the masses would shun them - especially their family.

2. If they were eloquent and had the personality to command a big following, they'd be assassinated by someone with three names, if you know what I mean.

People can't handle the truth in my experience.  They are like small children that don't want to leave the playground.

An argument can be made that these people are to be blame when this whole house of cards collapses...  the Great Apathetic Child-like Masses.

Another excellent video, and in line with most peoples' attention span level for things that don't entertain, is Poverty - Debt is not a Choice...


I've always been a saver - and the cold blooded nature of this system is that all the money I save for my family's well being, assuming I can avoid being Corzined, which will be no easy task as this MoGo progresses, IS SOMEONE ELSE'S DEBT SLAVERY...  LITERALLY THEIR UNPAYABLE DEBT.

The demonic establishmenht prattles on about "America ending slavery" when, in REALITY, I'M FORCED INTO BEING A DEBT SLAVE MASTER just by the act of saving Federal Reserve Notes...  not to mention turnkeying the slave trade operation to wicked dictators in China.

But Americans are all but brain dead...  spending their entire life oggling the woman in the red dress, as it were...

Morpheus: The Matrix is a [debt money] system, Neo. That [debt money] system is our enemy. But when you're inside, you look around, what do you see? Business men, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that [debt money] system, and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the [debt money] system, that they will fight to protect it. [At this point, Neo's attention is drawn to a passing attractive woman wearing a red dress] Were you listening to me, Neo, or were you looking at the woman in the red dress?
Neo: I was …
Morpheus: Look again. [Neo looks again. The woman has instantly turned into Agent Smith, pointing a gun at his head]

The end of that "woman in the red dress" isn't what most people think.


The Matrix is everywhere. It is all around us. Even now, in this very room. You can see it when you look out your window or when you turn on your television. You can feel it when you go to work… when you go to church… when you pay your taxes. It is the world that has been pulled over your eyes to blind you from the truth. … That you are a slave, Neo. Like everyone else you were born into [debt money] bondage. Born into a prison that you cannot smell or taste or touch. A prison for your mind [created by a false schooling system that stole your natural birth right - to thnk critically and creatively outside the "establishment mental plantation"].

Abraxas's picture

@ All Risk...

"Do you get off enslaving the proletariat to debt..."

No one loved enslaving the proletariat more than the old Uncle Milton, and he is paradoxically one of the favorite criminals around here. Some kind of a saint or something. I so hate ideological nonsense, and none more than the idea of laissez faire. Even communism is more humane than that. Yet, many here will disagree. There are none so blind as those who will not see.

All Risk No Reward's picture

Might I suggest that you get off the predetermined "mental plantation" for a moment and consider the players and not their game in which they've immersed us?

I agree 100% that what the system calls "Free Market" will fail on its own and the mechanism is clear... 

Free Market creates people with power -> power corrupts -> corrupt people game the system and then there is no more free market.  Period.

To think otherwise is to believe in Santa Claus.

Having said that, the controlled opposition, or the Communist anti-thesis to the Free Market thesis is even worse...  and the reason is also clear...

Power structure to implement "Communism" is instantantaneously corrupted by the power and, therefore, there is no time lag between the system starting up and the citizenry being looted for all they have and enslaved, if not murdered by the 10s of millions.

Even worse, the power mad know all this, so they simply know they want a dictatorship and sell the chumps on the idea of Communism.

While you ideal view of "Communism" is "more humane" than Free Market, it has never existed at scale, so that's like discussing the humanity of Santa Claus or the Three Dwarfs - none of which has ever existed...  so what's the point?

The single most important principle, that is never discussed by the power structure, is that society needs to fully understand why big is bad and avoid big like it is the slave trader army coming to confiscate you and your children!

Yes, that includes Big Government.  Oh, but Mike, there's more! 

It also includes Corporate.

Note the higher level "good cop / bad cop" routinie that has most people mesmerized...

About half like Big Government and about half like Big Corporate.

Guess what, Bitchezzzzzz?  The "power of money," that is "gravely to be regarded" runs BOTH!

If you don't want Big Government, oh, throw the financial oligarchs into the Big Corporate briar patch, suckah!

If you don't want Big Corporate, oh, throw the financial oligarchs into the Big Government briar patch, suckah!

Capitalism, Free Market, Socialism, Communism, etc...  as simply false narratives engineered from keeping the proles from understanding REALITY.

Reality is that ever nation is run under authoritarian control and, guess what?  The only difference is the obviousness and level of the authoritarian rule.

That's it.  Capitalism doesn't exist, but a criminal debt based authoritarian societal asset stripping rulership does exist with a free market veneer.

Communism doesn't exist, but a criminal mass murder, mass enslavement authoritarian dictatorship does exist. 

Types of Government, Explained


The Financial fraud is based on debt based money weaponized through fractional reserve lending...


The criminal bubble blowing is illustrated here:


More research material... 

G. Edward Griffin at the University of Texas 4/29/2008: The Quigley Formula


The Shadows of Power: The Council on Foreign Relations and the American Decline


Research John Taylor Gatto's material and then the Trivium method of critical thinking.

The revolution is between our ears - and almost nobody gets it right because the well has been so polluted by the power of money to be gravely regarded.

No system will work so long as the population demands on being chumps and doesn't understand the revolution is in their ability and desire to think critically and literally abhor anything big.

I cringe when Lew Rockwell is out pimping Amazon when they are a front corporation for the very same people that have hijacked our government - like funding these demons through Amazon is righteous but through JP Morgan Chase is bad (and JPMC probably owns much of Amazon, I haven't looked it up, but the same crowd owns a controlling interest in everytinng BIG).

Imagine thriving communities with neighbors as local shop keepers, none of whom could get too big because they wouldn't be patronized...  and another shop would have to be opened up to cover increased demand.


razorthin's picture

Official?  Says the fuck what official asshole?

Hapa's picture

Is this guy for real? Paul Krugman hanging out at Zerohedge?  Or is this just somebody's playful alter ego?  Either way, this person seems to issue simple one liners so we can have the opportunity to trash him.

Thanks Zerohedge for the great entertainment.


Mr.Bigfoot's picture

Paul Krugman wrote in his column on the NY Times that he heard someone on Zerohedge was impersonating him. He said he's too busy to post on any blog other than his own. He didn't mention that he'd get spanked on this forum

TWSceptic's picture

Gold is now officially in a bear market


You gold haters are all so predictable. Do I really have to explain that during this BULL market of the last 13 years, a decline of 20% over 18 months is really not that unusual as bigger declines have happened, all followed by bigger rallies?


Go ahead, buy your expensive and overvalued stocks and laugh at people who buy ridiculously low priced gold & silver.