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Guest Post: Physical Gold Vs Paper Gold: Waiting For The Dam To Break

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Submitted by Alasdair Macleod, via GoldMoney.com,

Introduction

In this article I will argue that the recent slide in the gold price has generated substantial demand for bullion that will likely bring forward a financial and systemic disaster for both central and bullion banks that has been brewing for a long time. To understand why, we must examine their role and motivations in precious metals markets and assess current ownership of physical gold, while putting investor emotion into its proper context.

In the West (by which in this article I broadly mean North America and Europe) the financial community treats gold as an investment. However, of the global pool of gold, which GoldMoney estimates to be about 160,000 tonnes, the amount actually held by western investors in portfolios is a very small fraction of this amount. Furthermore investor behaviour, which in itself accounts for just part of the West’s bullion demand, is sharply at odds with the hoarders’ objectives, which is behind underlying tensions in bullion markets. To compound the problem, analysts, whose focus incorporates portfolio investment theories and assumptions, have very little understanding of the economic case for precious metals, being schooled in modern neo-classical economic theories.

These economic theories, coupled with modern investment analysis when applied to bullion pricing, have failed to understand the growing human desire for protection from monetary instability. The result has for a considerable time been the suppression of bullion prices in capital markets below their natural level of balance set by supply and demand. Furthermore, the value put on precious metals by hoarders in the West has been less than the value to hoarders in other countries, particularly the growing numbers of savers in Asia.

These tensions, if they persist, are bound to contribute to the eventual destruction of paper currencies.

The ownership of gold

The amount of gold bullion that backs investor-driven markets is not statistically recorded, but we can illustrate its significance relative to total stocks by referring back to the time of the oil crisis of the mid-1970s. In 1974 the global stock of gold was estimated to be half that of today, at about 80,000 tonnes. Monetary gold was about 37,000 tonnes, leaving 43,000 tonnes in the form of non-monetary bullion, coins and jewellery. Let us arbitrarily assume, on the basis of global wealth distribution, that two thirds of this was held by the minority population in the West, amounting to about 30,000 tonnes.

This figure probably grew somewhat before the early 1980s, spurred by the bull market and growing fear of inflation, which saw investors buy mainly coins and mining shares. Demand for gold bars was driven by the rapid accumulation of dollars in the oil-exporting nations, as well as some hoarding by wealthy investors from all over the world through Switzerland and London.

The sharp rise in global interest rates in the Volcker era, the subsequent decline of the inflation threat and the resulting bear market for gold inevitably led to a reduction of bullion holdings by wealthy investors in the West. Swiss and other private banks, employing a new generation of fund managers and investment advisors trained in modern portfolio theories, started selling their customers’ bullion positions in the 1980s, leaving very little by 2000. In the latter stages of the bear market, jewellery sales in the West became a replacement source of bullion supply, but this was insufficient to compensate for massive portfolio liquidation.

So by the year 2000, Western ownership of non-monetary gold suffered the severe attrition of a twenty-year bear market and the reduction of inflation expectations. Portfolios, which routinely had 10-15% exposure to gold 40 years ago even today have virtually no exposure at all. Given that jewellery consumption in Europe and North America was only 400-750 tonnes per annum over the period, by the year 2000 overall gold ownership in the West must have declined significantly from the 1974 guesstimate of 30,000 tonnes. While the total gold stock in 2000 stood at 128,000 tonnes, the virtual elimination of portfolio holdings will have left Western holders with little more than perhaps an accumulation of jewellery, coins and not much else: bar ownership would have been at a very low ebb.

Since 2000, demand from countries such as India and more recently China is known to have increased sharply, supporting the thesis that gold has continued to accumulate at an accelerating pace in non-Western hands.

Western bullion markets have therefore been on the edge of a physical stock crisis for some time. Much of the West’s physical gold ownership since 2000 has been satisfied by recycling scrap originating in the West, suggesting that total gold ownership in the West today barely rose before the banking crisis despite a tripling of prices. Meanwhile the disparity between demand for gold in the West compared with the rest of the world has continued, while the West’s investment management community has been actively discouraging investment.

The result has been that nearly all new mine production and Western central bank supply has been absorbed by non-Western hoarders and their central banks. While post-banking crisis there has presumably been a pick-up in Western hoarding, as evidenced by ETF and coin sales and some institutional involvement, it is dwarfed by demand from other countries. So it is reasonable to conclude that of the total stock of non-monetary gold, very little of it is left in Western hands. And so long as the pressure for migration out of the West’s ownership continues, there will come a point where there is so little gold left that futures and forwards markets cease to operate effectively. That point might have actually arrived, signalled by attempts to smash the price this month.

This admittedly broad-brush assessment has important implications for the price stability essential to bullion banks operating in paper markets as well as for central banks attempting to maintain confidence in their paper currencies.

Precious metals in capital markets

In the West itself, the attitudes of the investment community are fundamentally different from even those of the majority of Western hoarders, who are looking for protection from systemic and currency risks as opposed to investment returns. Western investors are generally oblivious to the implications, the most fundamental of which is that falling prices actually stimulate physical demand. Before the recent dramatic slide in prices the investment community undervalued precious metals compared with Western hoarders, let alone those in Asia, encouraging physical bullion to migrate from financial markets both to firmer hands in the West as well as the bulk of it to non-West ownership. There is now irrefutable evidence that these flows have accelerated significantly on lower prices in recent weeks, as rational price theory would lead one to expect.

Pricing bullion is therefore not as simple as the investment community generally believes. It is being put about, mostly on grounds of technical analysis, that the bull markets in gold and silver have ended, and precious metals have entered a new downtrend. The evidence cited is that medium and longer-term moving averages have been violated and are now falling; furthermore important support levels have been breached.

These developments, which arise out of the futures and forward markets, have rattled Western investors who thought they were in for an easy ride. However, a close examination of futures trading shows the bearish case even on investment grounds is flawed, as the following two charts of official statistics provided by weakly Commitment of Traders data clearly show.

Money managers - gold

Money managers - silver

 

The Money Managers category is the clearest reflection in the official data of investor portfolio positions, representing sizeable mutual and hedge funds. In both cases, the number of long contracts is at historically low levels, and shorts, arguably the better reflection of money-manager sentiment, remain close to high extremes. On this basis, investor sentiment is clearly very bearish already, with the investment management community already committed to falling prices. Put very simplistically there are now more buyers than sellers.

Money Managers are in stark opposition to the Commercials, who seek to transfer entrepreneurial risk to Money Managers and other investor and speculator categories. The official statistics break Commercials down into two categories: Producer/Merchant/Processor/User, and Swap Dealers. Both categories include the activities of bullion banks, which in practice supply liquidity to the market. Because investors and speculators tend to run bull positions, bullion banks acting as market-makers will in aggregate always be short. A successful bullion bank trader will seek to make trading profits large enough to compensate for any losses on his net short position that arise from rising prices.

A bullion bank trader must avoid carrying large short positions if in his judgement prices are likely to rise. He will be more relaxed about maintaining a bear position in falling markets. Crucially, he must keep these opinions private, and the release of market statistics are designed to accommodate these dealers’ need for secrecy.

Bullion banks’ position details are disclosed at the beginning of every month in the Bank Participation Reports, again official statistics. They are broken down into two categories, based on the individual bank’s self-description on the CFTC’s Form 40, into US and Non-US Banks. Their positions are shown in the next two charts (note the time scale is monthly).

Gold - bank net shorts

Silver - bank net shorts

 

In both gold and silver, the bullion banks have managed to reduce their exposure from extreme net short over the last four months. The reduction of their market exposure suggests that they have been deliberately transferring this risk to other parties, and is consistent with an anticipation that bullion prices will rise. It is the other side of the high level of bearishness reflected in the Money Manager category shown in the first two charts. The bullion banks control the market; the Money Managers are merely tools of their trade.

There has been little reduction in open interest in gold and it has remained strong in silver, because risk has been transferred rather than extinguished. Daily official statistics on open interest are provided by the exchange and summarised in the next two charts (note that data is daily).

Gold - open interest

Silver - open interest

 

From these charts it can be seen that recent declines in the gold price are failing to reduce open interest further, and in silver open interest remains stubbornly high. Therefore, attempts by bullion banks to reduce their net short exposure by marking prices down are showing signs of failure.

We can therefore conclude that investor sentiment is at bearish extremes and the bullion banks have reduced their net short exposure to levels where it risks rising again. Therefore the downside for precious metals prices appears to be severely limited, contrary to sentiments expressed by technical analysts and in the media.

This market position is against a background of a growing shortage of physical bullion, which is our next topic.

Physical markets

Casual observers of precious metal prices are generally unaware that the headline writers focus on activity in the futures markets and generally ignore developments in physical bullion. This is consistent with the fact that market data is available in the former, while dealing in the latter is secretive. However, as with icebergs, it is not what you see above the water that matters so much as that which is out of sight below.

It is not often understood in investment circles that gold and silver are commodities for which the laws of supply and demand are not overridden by investor psychology. Therefore, if the price falls, demand increases. Indeed, the increase in demand has far outweighed selling by nervous investors; even before the price-drop, demand for both silver and gold significantly exceeded supply. Evidence ranges from readily available statistics on record demand for newly-minted gold and silver coins and the net accumulation of gold by non-Western central banks, to trade-based information such as imports and exports of non-monetary gold as well as reports from trade associations reporting demand in diverse countries such as India, China, the UK, US, Japan and even Australia.

All this evidence points in the same direction: that physical demand is increasing on every price drop. There is therefore a growing pricing conflict between futures and forward markets, which do not generally involve settlement but the rolling-over of speculative positions, and of the underlying physical metal. Furthermore, analysts make the mistake of looking at gold purely in terms of mining and scrap supply, when nearly all gold ever mined is theoretically available to the market, in the right conditions and at the right price. The other side of this larger coin is that if the price of gold is suppressed by activity in paper markets to below what it would otherwise be, the stimulus for physical demand, being based on a 160,000 tonne market, is likely to be considerably greater on a given price drop than analysts who are myopic beyond 2,750 tonnes of annual mine production might expect. The numbers that are available confirm this to have been the case, particularly over the last few weeks, with reports from all over the world of an unprecedented surge in demand.

This is at the root of a developing crisis of which few commentators are as yet aware. Demand for physical has accelerated the transfer of bullion from capital markets to hoarders everywhere and from the West’s capital markets to other countries, which has been the trend since the oil crisis in the mid-Seventies. This is what’s behind an acute shortage of physical gold in capital markets, explaining perhaps why bullion banks feel the need to reduce their short positions.

While we can detail their exposure in futures markets, meaningful statistics are not available in over-the-counter forward markets, particularly for London, which dominates this form of trading. Forwards are considerably more flexible than futures as a trading medium, generating trading profits, commissions, fees and collateralised banking business. The ability to run unallocated client accounts, whereby a client’s gold is taken onto a bank’s balance sheet, is in stable market conditions an extremely profitable activity, made more profitable by high operational gearing. The result is that paper forward positions are many multiples of the physical bullion available. The extent of this relationship between physical bullion and paper is not recorded, but judging by the daily turnover in London there is an enormous synthetic short physical position. For this reason a sharply rising price would be catastrophic and any drain on bullion supplies rapidly escalates the risk.

Overseeing this market is the Bank of England co-operating with other Western central banks and the Bank for International Settlements, whose combined interest obviously favours price stability. They have been quick to supply the market if needed, confirmed by freely-admitted leasing operations in the past, and by secretive supply into the market, which has been detected by independent supply and demand analysis over the last 15 years. Furthermore, as currency-issuing banks, central banks are unlikely to take kindly to market signals that suggest gold is a better store of value than their own paper money.

We can only speculate about day-to-day interventions by Western central banks in gold markets. In this regard it seems that the slide in prices on the 12th and 15th April was triggered by a very large seller of paper gold; if this market story and the amount mentioned are correct, it can only be central bank intervention, acting to deliberately drive prices lower. Given the market position, with Money Managers in the futures markets already short and highly vulnerable to a bear squeeze, the story seems credible. The objective would be to persuade holders of physical ETFs and allocated gold accounts to sell and supply the market, on the assumption that they would behave as investors convinced the bull market is over.

Conclusions

For the last 40 years gold bullion ownership has been migrating from West to elsewhere, mostly the Middle East and Asia, where it is more valued. The buyers are not investors, but hoarders less complacent about the future for paper currencies than the West’s banking and investment community. There was a shortage of physical metal in the major centres before the recent price fall, which has only become more acute, fully absorbing ETF and other liquidation, which is small in comparison to the demand created by lower prices. If the fall was engineered with the collusion of central banks it has backfired spectacularly.

The time when central banks will be unable to continue to manage bullion markets by intervention has probably been brought closer. They will face having to rescue the bullion banks from the crisis of rising gold and silver prices by other means, if only to maintain confidence in paper currencies. Any gold held by struggling eurozone nations, theoretically available to supply markets as a stop-gap, will not last long and may have been already sold.

This will likely develop into another financial crisis at the worst possible moment, when central banks are already being forced to flood markets with paper currency to keep interest rates down, banks solvent, and to finance governments’ day-to-day spending. Its importance is that it threatens more than any other of the various crises to destabilise confidence in government-backed currencies, bringing an early end to all attempts to manage the others systemic problems.

History might judge April 2013 as the month when through precipitate action in bullion markets Western central banks and the banking community finally began to lose control over all financial markets.

 


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Sat, 04/27/2013 - 13:22 | Link to Comment LMAO
LMAO's picture

The damn thing never breaks

Sat, 04/27/2013 - 13:25 | Link to Comment Aeternus
Aeternus's picture

Alasdair MacLeod always writes the best articles in my opinion.

 

Just picked up some more Au and Ag yesterday at the LCS.

 

https://www.youtube.com/watch?v=fyklt01lN_I

Sat, 04/27/2013 - 13:48 | Link to Comment DaveyJones
DaveyJones's picture

Pride goeth before the fall - Herodotus

As Macleod points out so well, the more Western Ben and the Boyz try to control the market, the more it slips from their hands

Sat, 04/27/2013 - 14:51 | Link to Comment Deo vindice
Deo vindice's picture

If Herodotus is taking credit for that quote, he was a plagiarist.

The actual quote comes from king Solomon in the book of Proverbs and it says...

Pride goeth before destruction, and an haughty spirit before a fall. (Pro 16:18)

Sat, 04/27/2013 - 15:26 | Link to Comment DaveyJones
DaveyJones's picture

herodotus loved jazz (and was criticized for accuracy)

Thank God the Bible's factually accurate  

Sat, 04/27/2013 - 15:41 | Link to Comment noless
noless's picture

I was unaware that the Romans came before the Greeks...

Sat, 04/27/2013 - 19:06 | Link to Comment Deo vindice
Deo vindice's picture

I got a down vote for stating a verifiable fact. Wow!

(Now I know that just because folks read ZH it does not necessarily mean they love the truth.)  ;-)

Sat, 04/27/2013 - 19:14 | Link to Comment akak
akak's picture

Deo, I have gotten the same thing when pointing out the simple and abundantly documented FACT that, almost without exception, global icecaps and glaciers have been melting and retreating for the past century or more.  Somehow, this seems to threaten some posters' jealously-protected ideology or agenda, yet it is a fact as indisputable as the sky is blue.

Sat, 04/27/2013 - 21:22 | Link to Comment El Oregonian
El Oregonian's picture

Atmospheric collapse coupled with polar shift and solar activity pretty much controls whats happening with our climate. And believe me or not, the reality is it really isn't looking very good for us.

Oh well, prepare accordingly... Carry on.

Sun, 04/28/2013 - 09:15 | Link to Comment grekko
grekko's picture

That is just dumb.  Climate change has been the constant throughout the history of this planet.  Oregonian, after reading your comment, I have to agree with a good friend who once said "Just look at the silly humans".

Sun, 04/28/2013 - 13:28 | Link to Comment DaveyJones
DaveyJones's picture

show me the ice core data shows a similar pattern in the last one hundred compared to the rest. Then we'll talk

It isn't the most bizzare scientific "theory" to suggest that if you take the densest form of energy ever compiled inside the earth over millions and millions of years, discover it, then burn half of it in an abstracted slave orgy over 100 years, something might happen to the "delicate balance of things"

No one should claim to have "all the answers" but summarily dismissing it is... the same behavior

and: just because scumbag politicians and bankers (same) are trying to scam off a "carbon tax" means little. That's what these people do, scam.

Sun, 04/28/2013 - 20:44 | Link to Comment NidStyles
NidStyles's picture

Sure, densest pile of energy is true if you ignore Physics and the Laws of Thermodynamics.

Tue, 04/30/2013 - 00:25 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

Polar shift has had no effect on the weather. It is a mild directional change for incoming cosmic radiation, which isn’t causing heating, cooling or pollution on Earth. The radiation still not hitting us would cook us if it did hit us. It bends right around the Earth and the polar shift, which is slight, has not changed this. There flat out is no “atmospheric collapse”.

Sat, 04/27/2013 - 21:25 | Link to Comment Deo vindice
Deo vindice's picture

That is because some people cannot differentiate between a fact and the interpretation(s) of what that fact represents.

it shows a serious lack of comprehension and does nothing to contribute to healthy debate.

 

Sun, 04/28/2013 - 04:05 | Link to Comment All Risk No Reward
All Risk No Reward's picture

For anyone interested, I have some thoughts on the metals thrashings relative to the stock market that I haven't heard expressed in the MSM or the major alternate media.

I think a major contributor to the metals decline are as follows:

1. Everyone assumed straight to serious inflation was the "solution" and Cyprus showed that, when the looting goes dry for the dElites, they will not print, they will simply default on the loans made by citizens to banks (deposits are actually loans made to the bank).

2. Part of that defaulting process likely includes forcing nations to divest of their gold holdings.

Over the medium to longer term, this means less many chasing more gold relative to today.  That usually means the price will drop - and it has.

I'm a little baffled why the markets haven't followed suit, though.  Sucking the money out of the economy would shrink the economy and stock multiples.  Apparently, those two synapses haven't rubbed together for the "smartest people in the room" yet.

Either that or they are proping this pig up with mad tax payer money so society will really be broke when this pig stops flying.

Anyone who thought that the people who own trillions in cash, trillions more in debt and are lending 30 year money at 3.5% were going to hyperinflate the currency in short order need to reassess their thought process.

The government is not sovereign.  The international banking cartel is sovereign over the politicians and, therefore, over the nation state. 

Napoleon put it better than I could, so I'll share Napoleon's insight:

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
? Napoleon Bonaparte

A truly sovereign nation would tell the international banking cartel to kiss off.  They don't, so they aren't.  By definition. The mega bank Federal Reserve front is financing the police state and the military (you don't pay enough taxes for it!) and they surely aren't doing so unless they are very comfortable those entities will work on their behalf against everyone else.  DHS has "no more hesitation" targets of pregnant women and children, not banker style executives.

 

Sun, 04/28/2013 - 20:47 | Link to Comment NidStyles
NidStyles's picture

Actually the problem is that you are assuming that governments and stat actors are rational. This is not the case, so your premises are off a bit.

Sat, 05/04/2013 - 02:17 | Link to Comment All Risk No Reward
All Risk No Reward's picture

Actually, I'm observing them to be very rational - just not at what they say they are doing.

A thief who tells you he's a stove repairman is not irrational when he makes excuses as to why he can't fix your stove, he just appears so until you figure out his real agenda.

By then it will be too late.

The international banking cartel is mopping up the Muppet filled chumptocracy in a route that is absolutely epic...  and that, my friend, is one of their goals.

If they weren't rational, you'd be able to come up with a plan to stop them.

But you can't.  They took the rational steps to render you, the citizen, completely powerless while the oligarchs rob you blind, in multiple ways, without ever getting charged.

Corzine steals billions, Congress passes a law that allows them to trade on insider Federal Reserve information, JP Morgan ran Madoff's Ponzi, Morgan also bribed Jefferson County officials to steal a billion (and they kept it after getting caught, too), the mega banks launder trillions in drug money (and nobody gets charges) and I could go on and on and on and on..

Sun, 04/28/2013 - 09:13 | Link to Comment grekko
grekko's picture

Climate change is the one true constant throughout history.

Sun, 04/28/2013 - 13:28 | Link to Comment DaveyJones
DaveyJones's picture

like inflation, it's not the existence, it's the rate (and the timing)

Ps. we're supposed to be entering a cooling period.

Sun, 04/28/2013 - 20:42 | Link to Comment NidStyles
NidStyles's picture

Herodotus came before the bible.

Sat, 04/27/2013 - 19:48 | Link to Comment bonderøven-farm ass
bonderøven-farm ass's picture

Nonsense....it was Princess Leia.  

 http://www.youtube.com/watch?v=-wntX-a3jSY

Sun, 04/28/2013 - 09:11 | Link to Comment grekko
grekko's picture

Dang!  That clip was the first thing that came to my mind as I was reading along here.  Good call!

Sun, 04/28/2013 - 13:29 | Link to Comment DaveyJones
DaveyJones's picture

Unfair! Herodotus had humble parents 

Sat, 04/27/2013 - 15:38 | Link to Comment Supernova Born
Supernova Born's picture

"Hoarders"? Why use that word repeatedly throughout the article?

They are clearly better know as savers or investors.

Labels matter.

"Executive Order 6102 is an Executive Order signed on April 5, 1933, by U.S. President Franklin D. Roosevelt "forbidding the Hoarding of Gold Coin...within the continental United States".

Sat, 04/27/2013 - 17:29 | Link to Comment bonin006
bonin006's picture

Thanks, I was going to say the same thing.

Sat, 04/27/2013 - 18:39 | Link to Comment Supernova Born
Supernova Born's picture

I was not the first either in this thread.

"Hoarders": crazy cat ladies, POW camp quartermasters, hurricane profiteers, corpses found mummified amidst stacks of old newspapers and garbage.

What's not to love?

Sat, 04/27/2013 - 18:55 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

The answer is/should be obvious:  The monetary and fiscal battle is foremost a battle of minds & will, and must use propaganda in its arsenal of weapons. 

It is Propaganda-101 to swap out value-words with junk-words and weasel-words.  E.g. replace "Inflation-proof Savings" with "Hoarders".  Expect more junk-words and weasel words from the ultimate perpetrators of Fraud & Theft, the ultimate perpetrators of the Monetary Ponzi.  Because...

Obama is so illiterate, ignorant and malleable when it comes to understanding money, money supply, and money suppliers.  He's surrounded by ex-GS guys and is their total sock-puppet.  He lets them have free reign -- as long as he & Michelle get their social and environmental issues implemented.  Obviously these social "progressives" are equally ignorant of monetary issues, policies and games by TPTB.

Like a journey of a thousand miles, we must move forward one step at a time, by first educating the ignorant, malleable and shearable masses of sheep-like people.  There can be no monetary Freedom, until the monetary Truth rings throughout the fiat-indebted Land.

Sun, 04/28/2013 - 00:52 | Link to Comment charliehbryan
charliehbryan's picture

I am a social progressive who minored in Econ (majored in History and English). I consider myself very well informed on matters economic and monetary. First of all, Obama is hardly 'progressive.' He is a true-blue centrist, cut from the same cloth as Clinton and, to a lesser extent, Carter. (A progressive like Liz Warren or Bernie Sanders would push to nationalize the TBTF banks, as only one example.)

And exactly what 'monetary Truth' do you hope to hear ring out? One can only imagine . . .

Sun, 04/28/2013 - 01:08 | Link to Comment abettertomorrow
abettertomorrow's picture

"Obama is so illiterate, ignorant and malleable when it comes  to understanding money, money supply, and money suppliers. He's surrounded by ex-GS guys and is their total sock-puppet."

 

Yeah, the Goldmanchurian candidate

Sun, 04/28/2013 - 09:09 | Link to Comment grekko
grekko's picture

That 1000 mile journey, one step at a time is going to take way too long.  It'll crash and burn long before you get 1/4 the way there.

Sat, 04/27/2013 - 18:55 | Link to Comment Manthong
Manthong's picture

"Executive Order 6102 is an Executive Order signed on April 5, 1933, by U.S. President Franklin D. Roosevelt "forbidding the Hoarding of Gold Coin"

..and in December they repealed Prohibition.

Coincidence, of course.

Sun, 04/28/2013 - 09:06 | Link to Comment grekko
grekko's picture

Boy, I'm sure glad that I can't afford much gold.  My stash is in silver.  They haven't got around to confiscating that.

Sun, 04/28/2013 - 11:59 | Link to Comment WhiteNight123129
WhiteNight123129's picture

Here is an article explaining how the US buying Silver in 1933 bankrupted the Chinese banks. Now it looks like we have the opposite! Tables have turned.

http://gentlemaneconomics.wordpress.com/2013/04/28/how-the-silver-buying...

 

Sun, 04/28/2013 - 13:07 | Link to Comment WhiteNight123129
WhiteNight123129's picture

There is nothing wrong with hoarding. And neither Gold nor silver are an investment, which does not mean that you should not own it, or that there are no good reasons for owning it.

 

Sat, 04/27/2013 - 18:54 | Link to Comment Manthong
Manthong's picture

"Bullion banks’ position details are disclosed at the beginning of every month "

..in the same manner LIBOR is disclosed?

Tue, 04/30/2013 - 00:23 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

OK, now who was born first? Herodotus or Solomon? The entire bible is a work of fiction and plagiarism.

Sat, 04/27/2013 - 17:41 | Link to Comment DosZap
DosZap's picture

Pride goeth before the fall - Herodotus

-GOD, there fixed it for ya.

Sat, 04/27/2013 - 15:24 | Link to Comment Cacete de Ouro
Cacete de Ouro's picture

No one has to my knowledge posed the possibility that the futures price of gold was taken down delibrately so as to fuel physical demand, so as to accelerate the upward slingshot in the gold price, so as to dislocate the behind the scenes gold-to-oil trading deals with the Saudis so as to destabilize Saudi Arabia and then invade the Saudi peninsula and take the oil and all the huge gold reserves they've been given for the last 30 years....

Sat, 04/27/2013 - 15:38 | Link to Comment Hacked Economy
Hacked Economy's picture

This is a bit off-topic, but I was working in my yard this morning (Sat) and felt the need to post my thoughts:

Last week, when the initial rumors began about the Boston PD going around in SWAT-style teams through their residential neighborhoods, kicking in doors and pulling people out of their homes at gunpoint as they searched for the 19-year-old remaining terrorist...I requested links from those people so I could see for myself.

Well, I was provided a couple of links and viewed the videos.  Then I saw more videos (i.e., YouTube) posted soon afterward by private individuals who filmed through their own living room windows as the BPD "rescued" their neighbors by ordering them out of their homes with their hands clasped on their heads, and then FRISKING them (including elderly women and kids) as if that had anything at all to do with finding the terrorist.  Finally, a local Boston news team posted their segment in which they interviewed several of the families who were removed and frisked at gunpoint.  All of them(!) said they were scared, but they were okay because the police later verbally apologized for the inconvenience as they gave the "all clear" to go back into their home one by one.  Those stupid Boston sheeple said they were okay with the procedure, given the fact that a criminal was believed to be in their neighborhood.

I was appalled upon learning the truth, as all of you were.  But here's my point:

Yesterday, in just so happened that the Boston bombing came up in several conversations with some of my co-workers as well as some friends with whom we went out to dinner last night.  Each time someone brought it up, I mentioned the video evidence of the BPD blatantly trampling their neighbors' 4th Amendment rights for the whole world to see (and without an uproar from those people), and EVERY ONE OF MY FRIENDS - even the pro-2nd Amendment conservative ones - said they understood the BPD's position, and they wouldn't have a problem with SWAT going through their own homes in a "rare" situation of looking for a terrorist.  After all, they said, would you rather argue with a team of professionals aiming guns at you, while the terrorist gets away?

I felt sick by the end of the evening.  Maybe TPTB don't need to assault our Constitutional rights.  We seem to be giving them up on our own.  "Those that surrender liberty to obtain a little security, deserve neither".

Sat, 04/27/2013 - 16:13 | Link to Comment DaveyJones
DaveyJones's picture

was thinking about similar stuff. In a "constitutional" world, the entry is one (arguable) thing, the frisk is another. But we no longer live there. As many have said, they are preparing us for the new rules 

if you think about it, these acts are much more effective than a 911 every decade. More sinister too. Much easier to pull off, less gravity, chemistry and NORAD to deal with. Very believable - angry kids, hell that's expected. In fact, many folks I talk to think these kind of things will happen more often as things degrade. Its the pefect front. It can take a lot of forms and scales with much more frequency. As demonstrated by the debates last week, the "simplicity" makes it harder to consider an inside job.  Each time, a little pull back on the rules. Each time, a little more fear, a little more national control, a little more economic sacrifice - for the kids

Sun, 04/28/2013 - 01:44 | Link to Comment Pharming
Pharming's picture

My God...what is it going to take for the masses to awaken.

Sun, 04/28/2013 - 08:56 | Link to Comment debtandtaxes
debtandtaxes's picture

But they aren't asleep! The comment demonstrates the masses *know* the homes were illegally entered and bodies illegally searched. They are not asleep and unaware of these acts.

They are in denial of the meaning of those acts. Because admitting the significance of those acts will destroy their worldview.

They are truly slaves.

Sun, 04/28/2013 - 09:03 | Link to Comment grekko
grekko's picture

You cannot reach most people.  Their ability to perform critical thinking does not exist.  Thank the public school system for that.  I went to public school, but have always been a radical who never believed in the system, so I guess I was one of the lucky ones.  As for reaching those who couldn't think for themselves, when the big reset comes, they'll panic, and it'll be up to us to guide them to sanity.  They'll listen then. 

People, when that time comes, it'll be up to us to help those who are so dumbed down they'll be a danger to all those around them.  Don't give up on them.  There are a lot more of us than you think.  I believe our numbers are more than double.  Many are preparing and just not telling anyone so the diots of the world won't call them crazy.

Sun, 04/28/2013 - 09:57 | Link to Comment Socratic Dog
Socratic Dog's picture

If that's what you think, then you aren't the analytical thinker you think you are.  There's too damn many people for a world without the ready flow of petrochemicals.  It's that simple.  It equates to mass starvation.  Are you ready to share your stash with 100 others, who had the same information opportunity but chose to ignore it?

Tue, 04/30/2013 - 00:28 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

They won’t. They ate hopium by the ton and they will not start breathing again. They’re done like dinner. Get the fork.

Sat, 04/27/2013 - 16:30 | Link to Comment SubjectivObject
SubjectivObject's picture

We need to propagate a new meme:  Let all the terrorists get away before the power of the state is increased one iota.  Terrorist effects are "localized", and as such limited, while state power is pan-pervasive, and effectively unlimited. There is NO reason to give such power to wouldbe (hell, wannabe) state terrorists.

Feeling lucky .... punk?

Sat, 04/27/2013 - 19:41 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Statistically speaking, you are at a far greater risk of being killed by a police officer than by terrorist, in the USA.

Sun, 04/28/2013 - 08:54 | Link to Comment grekko
grekko's picture

When the paper PMs crash and burn, the entire system will follow.  Do you really believe that the local SWAT team is going to kick in your door then?  They'll all be home trying to protect their families and just find something to eat.  Same with the military.  If the citizenry is smart, they will band together with their neighbors and help each other.  This includes keeping the unwanted out of the neighborhood.  Just accumulate PMs, extra food and water, and don't forget lead, the other PM, then sit back and bide your time.

Tue, 04/30/2013 - 00:26 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

Like Katrina? No, they will go house to house to take anything of value and shoot everyone who disobeys, burning the bodies as they go.

Sat, 04/27/2013 - 17:18 | Link to Comment outofideas
outofideas's picture

Turns the Bill pf Rights is not actually perfect. 4A actually says " against unreasonable searches and seizures". That "unreasonable" is a very big word, and I think a hell of a lot of people would think what the police did was a reasonable search.

Personally, I don't like what happened, but if I was sitting my house with a terrorist in my house holding knife to my wife's throat, I'm pretty sure I would think would think it my neighbor unreasonable if he had a mini-standoff with police over the meaning of the 4A.

Sat, 04/27/2013 - 20:17 | Link to Comment Target Practice
Target Practice's picture

How would you feel if in the panic of the cops breaking in to YOUR house, the terrorist slit your wifes throat all the way back to her spine?

Sun, 04/28/2013 - 02:44 | Link to Comment bunnyswanson
bunnyswanson's picture

The contempt toward the US citizens demonstrated by DHS and the NYPD is far worse than 1 terrorist in a nation of 300 million citizens.  The NDAA only enforces this thought.  Patriotic act as well.  This is also absurd considering if there were no terrorists, today, there would be no war...and considering arms sales and great wealth derived from it, the only solution was create terrorists (those who oppose any govt).

Lee Harvey Oswald..was he a terrorist.  Ted Bundy?  Murderers and terrorists are 2 different things. 

Israelization of the USA is what is happening and it has nothing to do with terrorism.  Billions of dollars are being spent.  The centralization of information gathering by  this same group of people who have blocked Facebook users when they post videos about the obvious conflicting information tells you much about who is being watched and why.

Anti gov is the new terrorist...anyone who disagrees with gun confiscation...a terrorist.

http://www.youtube.com/watch?v=wCGHPuuo894 Judge Napolitano - What if.

Sat, 04/27/2013 - 18:56 | Link to Comment CoonT
CoonT's picture

Nice to hear that there are at least a few people out there that feel the same way about what happened in Boston. 

If you've ever wondered why the German people allowed Hitler to do what he did; well, the American's have already had their "Reichstag" event, haven't they?

 

I guess it really does at least rhyme..

Sat, 04/27/2013 - 19:45 | Link to Comment markettime
markettime's picture

My local dealer had a few numismatics, a few 1 oz gold eagles, a few 1 oz silver eagles and about dozen 10 oz bars. They were selling the silver eagles at $30 each. The other local dealer only had collectibles, numismatics and a few 5 oz and 10 oz bars $2 over spot. I am sure they both will be empty after today as they had plenty of people buying. Both dealers said they were unsure when more silver eagles were coming in. They thought maybe June. And both of them had a long list of orders to fill. 

Sat, 04/27/2013 - 16:04 | Link to Comment Scro
Scro's picture

Patience grasshopper.

Sat, 04/27/2013 - 13:21 | Link to Comment markmotive
markmotive's picture

Whem the dam breaks the cradle will fall

Sat, 04/27/2013 - 13:28 | Link to Comment howenlink
howenlink's picture

The "next gold rush" will be people rushing to find gold.

Sat, 04/27/2013 - 13:28 | Link to Comment DaveyJones
DaveyJones's picture

and down will come Jamie

Ladle and all

Sat, 04/27/2013 - 13:22 | Link to Comment Cheesy Bastard
Cheesy Bastard's picture

Weimar?  Because we reich you.

Sat, 04/27/2013 - 13:26 | Link to Comment Bam_Man
Bam_Man's picture

That sounds Chinese.

Sun, 04/28/2013 - 13:27 | Link to Comment roadhazard
roadhazard's picture

heh, I reich it.

Tue, 04/30/2013 - 00:28 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

+1 clever :D I did blobbing up the raff out roud

Sat, 04/27/2013 - 13:25 | Link to Comment nestle
nestle's picture

I am shorting Gold and Silver and will short more in coming days.

Who's going to cry about it?

Sat, 04/27/2013 - 13:47 | Link to Comment TeamDepends
TeamDepends's picture

Perhaps you'll be sharting as well.

Sat, 04/27/2013 - 15:32 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

It is actually not a bad idea to short GLD by buiynig puts and buy physical based on this article you may win both ways. 1 GLD to 10 physical in dollars

Sat, 04/27/2013 - 16:37 | Link to Comment Al_Czervik
Al_Czervik's picture

How about actually shorting GLD and SLV and buying CEF?  CEF is selling at a small discount to NAV now. 

Tue, 04/30/2013 - 00:28 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

CEF is not delivery, PHYSICAL is what’s in demand beyond paper prices. CEF is a paper price.

Sat, 04/27/2013 - 16:37 | Link to Comment Al_Czervik
Al_Czervik's picture

How about actually shorting GLD and SLV and buying CEF?  CEF is selling at a small discount to NAV now. 

Sat, 04/27/2013 - 13:53 | Link to Comment DirkDiggler11
DirkDiggler11's picture

Is your money, do whatever the hell you want with it, nobody cares.

Sat, 04/27/2013 - 14:09 | Link to Comment nestle
nestle's picture

I am going to short it untill 1220 +/- 15 hit.

Bitchez!

Sat, 04/27/2013 - 16:16 | Link to Comment Oldballplayer
Oldballplayer's picture

Are you the guy who is going to pay for my mortgage next month?

If not, then I dont care what you do with your money.  And no one else does either.

So, get naked and dance around the fire telling us how you are going to make money.  Just keep it down.  I am trying to watch the game.

Sat, 04/27/2013 - 14:20 | Link to Comment Hulk
Hulk's picture

More to the point, you are shorting paper gold and paper silver, as it is impossible to short in hand physical...

Sat, 04/27/2013 - 15:36 | Link to Comment PontifexMaximus
PontifexMaximus's picture

But the "price" market is in paper......until otherwise proved, call me up, or ask 200 west.

Sun, 04/28/2013 - 08:39 | Link to Comment grekko
grekko's picture

I see a seperation in gold versus physical.  The Japaneese were just paying $500 over spot for their phys.  That puts physical over $1900/oz.

Tue, 04/30/2013 - 00:31 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

this article IS the proof. The real prices are far above the paper market and that’s what people actually pay to actually hold gold or silver.

Sat, 04/27/2013 - 19:24 | Link to Comment BeanusCountus
BeanusCountus's picture

He is. But I think he's right on the short term bet. I own the physical. And will be buying more shortly. But the paper market isnt done going down yet. Soon though. Maybe this week. Expecting one more push down. But long term, how can anyone not own some gold? For cryin out loud, a plane ticket is 1200 bucks. A cheap medical procedure is 5000 bucks. A crappy college education is 15000 bucks. And a hundred shares of Apple stock is 40000 bucks. All of them have utility value of limited duration. And people say gold is overpriced? Makes no sense to me.

Sat, 04/27/2013 - 15:44 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

said nestle:

I am shorting Gold and Silver and will short more in coming days.

It's your money. Do whatever the hell you want with it.

Who's going to cry about it?

Nobody but you.

Sun, 04/28/2013 - 08:38 | Link to Comment grekko
grekko's picture

Whatever floats your boat Nestle, and I can guarentee you, I won't cry for you.

Sat, 04/27/2013 - 13:30 | Link to Comment Calls and Putz
Calls and Putz's picture

It's important to distinguish between Western central banks and Eastern central banks. Western central banks want gold low to preserve faith in their fiat schemes. Eastern central banks want gold low so they can buy more. 

Sat, 04/27/2013 - 14:04 | Link to Comment Ham-bone
Ham-bone's picture

Another possibility:

From Bretton Woods to the closure of the gold window in '71...US gold stockpiles fell from approx 20k tons to 9k tons in a time of relative small US budget deficits - yet from that point on we are to believe that over the ensuing 42yrs of increasing profligacy that the old balance of trade gold system was no longer functioning behind the scenes?...particularly as US sold paper yielding nothing that was sure to be debased.  Seems plausible the gold system continued working behind the scenes to facilitate the illusion of US T's ponzi?

My supposition is that the gold is already in the East and middle East.   Redemptions continued out of sight to maintain the US flooding the world w/ dollars while recipients of dollars got golden insurance to keep the game going...and thus it is the Western interests who want to maintain low prices while the East simply awaits the realization via price that the West is bankrupt, the East's time has come?

Sat, 04/27/2013 - 14:47 | Link to Comment cynicalskeptic
cynicalskeptic's picture

An  unaddressed factor in all this is the vast amount of gold stolen by Japan from conquered Asian territories - Yamashita's treasure.  Stashed in the Phillippines after WWII. at least parts (if not all) were recovered by Marcos and the US.  With China gone Communist and Korea split, Malaya gone independent and all the other changes in Asia, the US was not admitting they had this treasure because we didn't want to give it back.  Rumors are this vast horde was used to fund various CIA and US 'black ops' over the years - buying nations and influence.  There are rumors this treasure was laundered through certain mining ventures and was one of the reasons the porice of gold could be kept doen for so long.  Of course there are also stories about TPTB - the same recurring families- taking their cut over the years too.

GIven the amount of this treasure it is possible that the US used part of it to continue to pay  for oil 'under the table' to the Saudis - incentive to keep the 'petroodollar' for others.    If the US has managed to run through this treasure on top of the acknowledged draw downs of official supplies then the US has truly been profligae in its spending.  Makes you wonder if part of the post WWII prosperity was also due to stolen treasure as well.  History has shown that such infusions of wealth into a society can have powerful positicve short term effects - though the longer term ones are not so positive.

Sat, 04/27/2013 - 17:34 | Link to Comment gonetogalt
gonetogalt's picture

One major problem with what I've read about Yamashita's treasure is the figure of 280,000 tons. That huge figure throws suspicion on the entire story, although the rest seems more than plausable.

Long ago, I read a story (but can't link back to it), to the effect that the French Naval Fleet, ostensibly under the command of Free French (DeGualle) spent most of the war holed up at Matrinique.  With the entire French gold treasure aboard the flagship.  The story was that Britan decided to destroy the fleet at harbour, Roosevelt offered to safeguard the French gold before the fact, and so it was. The Brits did destroy the fleet. Evidently Degaulle didn't bother to ask for a receipt, and after the war Roosevelt couldn't remember anything about any of it.  The gold supposedly went completely off the books, and fits in exactly with the thesis of the Yamashita story. A ZH researcher with time on his hands could probably flesh out this story, at any rate it would explain DeGualle's behavior vis-a-vis US gold post WWII. 

Sat, 04/27/2013 - 22:37 | Link to Comment jbvtme
jbvtme's picture

test

Sat, 04/27/2013 - 23:06 | Link to Comment Nassim
Nassim's picture

Much of this gold was moved by the French to London. Churchill kept on asking de Gaule to let him use the gold "to liberate France" and de Gaule insisted that it should be kep so that France is not bankrupt on liberation. More details here:

 

http://books.google.com.au/books?id=_-mCAlo6DroC&pg=PA11&lpg=PA11&dq=hit...

Sat, 04/27/2013 - 19:22 | Link to Comment mudduck
mudduck's picture

Some of those rumors about that hoard of stolen ww2 gold also say that there is much more gold than is being admitted to or being talked about (or used in speculating in some articles on the real value of gold using fundemental analysis). I know very little about the mining biz but the author suggests that half the gold in existance was produced since 1974? I find that to be a ridiculous statement since gold has been the dominant form of money throughout history. I know technology has improved hugely this century, but I believe the buggers who built the pyramids (Egypt and South America) had a bit of earth moving/manipulating ability and also used gold. Also, the main bastards who have a lot of the gold are the same bastards who control the diamond market, and if that is any kind of a model for how they have manipulated the gold market, how much gold is there really. If I am the one who is being ridiculous I would appreciate being educated on the reason my logic is flawed. 

Sat, 04/27/2013 - 19:50 | Link to Comment akak
akak's picture

Actually, while perhaps shocking and hard to believe, it is a fact that approximately 50% of all the gold mined in human history has been mined in just the last 40 years, and even a full 20% of all the gold mined by man has been dug from the ground in just the last 13 years.

The two major reasons for the radically increased rates of mining and production of gold in the last century are due to, first, the mechanization of mining throughout the past 100 years, and just as importantly, the development and spread of heap-leach mining using cyanide since around 1980, which made the extraction of gold from previously difficult or unworkable (finely mineralized sulfide) deposits both practical and economical.

Yes, it is a given that the rates of gold mining and gold production in the past, especially in the ancient past, are to a large extent guesswork.  Nevertheless, the ancients were so limited by known methods of extraction, and the lack of mechanization, that even the necessary uncertainty and variability in the estimates of their rates of gold production are not greatly significant to the overall accumulated total world gold production figure, as we today mine and produce gold at rates that are orders of magnitude higher than anything that any ancient or even pre-industrial society could have achieved.  It is almost beyond dispute that the VAST bulk of all the aboveground gold in the world has been produced in the last 200 years, and we have a pretty good handle on annual production figures for that period.

Sat, 04/27/2013 - 22:39 | Link to Comment jbvtme
jbvtme's picture

mudduck..."monatomic gold"

Sun, 04/28/2013 - 08:33 | Link to Comment grekko
grekko's picture

Very good, you win a cookie!  The jig is almost up.  Too bad for the Crimex, LBMA, JPM and most of all, the vampire squid Goldman.

Tue, 04/30/2013 - 00:29 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

I discount this possibility: if all the gold was in the East then the East would dump all treasuries, all dollars now and collapse the USA.

Sat, 04/27/2013 - 13:32 | Link to Comment DaveyJones
DaveyJones's picture

how can the Chinese and Indians influence "our markets?"

Shit, there's only three billion of them

Sat, 04/27/2013 - 13:35 | Link to Comment BanksterSlayer
BanksterSlayer's picture

Bud Conrad @ Casey Research blogged today re:  the Gold Crash: "We don't have the name of the entity that did this. However, the way the gold was sold all at once suggests that the goal was not to get the best price.... Someone with powerful backing wanted to drive the price of gold down."

http://www.24hgold.com/english/contributor.aspx?article=4346185216G10020

Sat, 04/27/2013 - 14:39 | Link to Comment savagegoose
savagegoose's picture

i wonder if Celente got burned again?

Sat, 04/27/2013 - 13:38 | Link to Comment youngman
youngman's picture

I agree they will be bailed out somehow when it fails......

Sat, 04/27/2013 - 15:45 | Link to Comment THX 1178
THX 1178's picture

How does one get bailed out of a currency collapse/ death? Cain't print precious metals.

Sat, 04/27/2013 - 18:06 | Link to Comment auric1234
auric1234's picture

Legal tender laws allow you to settle a debt by printing paper.

 

Sat, 04/27/2013 - 13:41 | Link to Comment My Days Are Get...
My Days Are Getting Fewer's picture

As a long term bullion owner, I have two questions, which I ask for help in answering:

1.  Can you hoard bullion via any ETF; and if yes, please name those you favor; and

2.  For the personal storage of bullion, can you name a "burglar proof" safe, which is no larger than 30" x 30" x 36".

I am grateful for all feedback.

Sat, 04/27/2013 - 13:58 | Link to Comment howenlink
howenlink's picture

If you are buying ETF, it is not hoarding, in my humble opinion.

Regarding a burglar proof safe, Home Depot still sells 8-inch PVC end caps, as far as I know.

Good luck!

Sat, 04/27/2013 - 16:31 | Link to Comment filament
filament's picture

PVC

Sat, 04/27/2013 - 19:07 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

And for those who like domestic/US geographic diversification of bullion, it can be stored in numerous places at the same time:  Some in a safe, a PVC pipe here, another there, etc.  Good luck in getting them all from all the people.

Which is why they will NOT 'confiscate' it.  They will simple tax it to death at POS (Point of Sale).  Much easer and cheaper.  In which case, the more relevant argument is:  "How do you defend yourself against POS taxation of PM?"

Sun, 04/28/2013 - 08:27 | Link to Comment grekko
grekko's picture

Have faith in your local black market and avoid the POS tax.

Sun, 04/28/2013 - 08:28 | Link to Comment grekko
grekko's picture

If you don't have a local black market yet, just wait, some enterpreneur will see a market niche and then you'll have one.

Sat, 04/27/2013 - 13:57 | Link to Comment adamas
adamas's picture

1) no you cannot, absolutely CANNOT hoard inside an ETF, the etf has a clause aqllowing cash settlement and if push comes to shove the Gmen will sieze the ETF's tungsten / gold

2) try being more creative than a safe, yes I have a safe, inside of which is enough gold to satisfy any night time intruder threatening to cut off my little girls fingers with some wire cutters, however my REAL hoard is secured in plain sight , inside a wall cavity then boarded over and repainted so it is just a wall... I also considered some large diameter copper pipes fitted against a wall and going through floor and ceiling then painted over with emulsion paint to look just like any old bit of plumbing , i bought the pipes but the 1 oz coins were a fraction too wide !! i will use a better measure next time.

Sat, 04/27/2013 - 15:49 | Link to Comment iDealMeat
iDealMeat's picture

Anyone stupid enough to break into your home and threaten your family will probably have no idea what a gold coin is worth..  Have some fiat handy to flash at him..  When he's distracted, beat the life out of him..

Sun, 04/28/2013 - 13:15 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

The blocks of silver can serve as a blunt trauma inducing medium quite nicely.  100 OZ silver across the side of the head.

Sat, 04/27/2013 - 16:35 | Link to Comment filament
filament's picture

Then you should also be investing in lead.

Sun, 04/28/2013 - 08:28 | Link to Comment grekko
grekko's picture

Agreed, lead is the 5th PM.

Sat, 04/27/2013 - 17:32 | Link to Comment DosZap
DosZap's picture

I also considered some large diameter copper pipes fitted against a wall and going through floor and ceiling then painted over with emulsion paint to look just like any old bit of plumbing , i bought the pipes but the 1 oz coins were a fraction too wide !! i will use a better measure next time.

I like your idea here, but it's 20+ old tech.

As of today, the PTB if they enter your dwelling(for any reason they so shoose), the house, and ALL contents are belong to them(trumped up felony drug drop charge).When you have a safe, it is part of the take, and all contents.

They have had for years the capability of scanning walls and piping to see if there is anything hidden, PMs incl.

The best safe is a GPS marked site(and exact feet/ meters to your GPS Co-Ords) and PVC pipe, and a set of landmarks that will not be changing any time soon.

Also you should be able to access it within 20-30 mins tops.

As for a good burglar resistant safe  it is going to set you back a minimum of $25-$30k.(and notice the word resistant).Something like a TRTL 30- X6 for starters.used(approx $8-10k).

Bac

Sat, 04/27/2013 - 13:58 | Link to Comment DirkDiggler11
DirkDiggler11's picture

Look at the Sprott ETF's PHYS for Gold, and PSLV for silver which unlike the GLD and SLV do give you claim and the right to take delivery of your physical PM's. Still, you have to keep in mind it is only a piece of paper, and if the SHTF it may not be an easy maneuver to convert into physical. I get where you are going, and yes I do own both physical gold and silver and also own PHYS and PSLV in IRA/ 401K holdings.

Brown's safes which advertises on ZH makes a high quality product and can custom make a safe to meet your specs. Hope this helps.

DD

Sat, 04/27/2013 - 15:16 | Link to Comment NoTTD
NoTTD's picture

Agreed as the Sprotts funds.  Also look into GTU and CEF.  If you have to buy shares rather than phyz, which I do under my Keogh, these are the best of the bunch.

Sat, 04/27/2013 - 17:40 | Link to Comment DosZap
DosZap's picture

and also own PHYS and PSLV in IRA/ 401K holdings.

I would suggest removing them asap for your IRA.(Big Bro is coming for them,IRA's, and you will lose what you think is protected now).

Sat, 04/27/2013 - 19:07 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

If you can, do what the big boys do:  Offshore IRAs.  Good luck confiscating that! 

Tue, 04/30/2013 - 00:36 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

Cyprus was "off-shore".

Now it's vaporized. Same with many Swiss bank holdings.

All vaporizing before your eyes. A secret hole in the ground with gold and silver, and secret compartments in your clothing for the same. THAT'S what's safe. Digits in bank accounts & contents of deposit boxes are as good as donations to charity - every nation, everywhere.

Sun, 04/28/2013 - 06:56 | Link to Comment My Days Are Get...
My Days Are Getting Fewer's picture

Thank you

Sat, 04/27/2013 - 17:09 | Link to Comment Jorgen
Jorgen's picture

@3505696

GoldMoney can be a solution in your case.

Tue, 04/30/2013 - 00:34 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

4 inch thick Unobtainium cabinet with photonic lock keyed to the voice pattern of Paul Krugman requiring the pass phrase “I admit it, the gold bugs were right, I know nothing”.

Un-fucking-breakable. Not even you will get back in to that hoard...

Sat, 04/27/2013 - 13:46 | Link to Comment northerngirl
northerngirl's picture

When you start to piece all the stories in the news lately regarding gold, physical and paper there seems to be something missing?  Maybe it is just me, but something is just not right.

Sat, 04/27/2013 - 13:54 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

Are they (TPTB) losing control or is this all by design?

 

Sat, 04/27/2013 - 14:33 | Link to Comment northerngirl
northerngirl's picture

Exactly, because nothing is as it seems anymore.  This is what I find most bothersome, we see so much of this today:  Good is bad, left is right, and up is down.  The gray areas are becoming muddier and there are no longer any clear lines.  Maybe there never really was?  I don't know, I guess I've just grown tired of people telling me the way it should be when the exact opposite is true.   

Sat, 04/27/2013 - 17:33 | Link to Comment PathForward
PathForward's picture

I agree – everything seems backwards.

Here’s my best guess (a long shot) at what’s been going on lately, and what the future holds...

1. A large bank (LB) knew physical gold inventories were dwindling over time and needed an effective method to suddenly end all of its paper shorts (i.e., huge liabilities).

2. LB jammed the paper price down hard on 4/12/13 and 4/15/13, thereby purposely creating tremendous demand from small investors (who saw the price dip as a golden opportunity to buy), which has subsequently introduced the concept of “physical shortages” to the public.

3. LB currently has no physical inventory to deliver. Therefore, when longs stand for delivery of their futures contracts (because “physical shortages” have now developed and the longs want *physical* metal), the COMEX will declare force majeure, thereby causing all future contracts to be settled in cash (at the latest smash-down price).

4. LB will make out like a bandit as usual, and will end its paper shorts thereby achieving LB’s goal stated above (see 1.).

5. The spot market will take over as the primary price setting mechanism, and precious metal prices will skyrocket freely.

6. Other commodities will follow suit, and global hyperinflation will be underway.

7. Hyperinflation will effectively cause the U.S. Dollar to be devalued significantly, to the point where the U.S. Government declares that the U.S. Dollar is now backed by (and redeemable in) physical gold. Other currencies will follow suit, and global trade will begin netting daily via a new physical gold exchange system.

8. The U.S. will default on its custodial agreements and return cash to foreign entities instead of their physical metal, while politely suggesting they can purchase their gold back from the open market.

9. Severe hardship will result around the globe as typical savers (i.e., the older generation) realize their savings have effectively been *consumed* by the system over time (“system” includes individuals who have borrowed for purposes of consumption), and those savings no longer exist.

10. Mankind will rebuild and the ascent of life will continue.

Okay, okay, I know there are lots of better ideas out there than mine... Let’s hear your best guess 1-10!

Sat, 04/27/2013 - 21:00 | Link to Comment Supernova Born
Supernova Born's picture

Great post.

Mine would be much shorter and bleaker so I'll just pour some bourbon and remember the Zero Hedge tagline.

Sun, 04/28/2013 - 09:30 | Link to Comment debtandtaxes
debtandtaxes's picture

My nightmare scenario is not the "Mad Max"ish collapse of society.

My nightmare scenario is:

1. no one cares that gov'ts have no gold to back up their fiats. Instead their peasants' labour backs up the currency as expressed by our annual payment of income tax (plus consumption taxes).

2. the price of gold plummets because as its value becomes zero in a world that stores (human labour) value in paper...

Please, someone, shoot me down here.....

Sun, 04/28/2013 - 14:39 | Link to Comment northerngirl
northerngirl's picture

Your list works for me!

Sat, 04/27/2013 - 13:57 | Link to Comment Tinky
Tinky's picture

Perhaps what you sense as not being "right" is that the manipulators could be so stupid as to keep their feet on the gas pedal while the train hurtles towards a wall. The reason is that they no longer have any choice!

It's as if they are juggling many balls, each one of which will explode if dropped. They might survive an individual fumble, but they must, at all costs, attempt to keep as many as possible in the air until the final cascade of explosions begins.

This is not about thoughtful or clever managment of the economy, it is desparation.

Sat, 04/27/2013 - 14:20 | Link to Comment DaveyJones
DaveyJones's picture

second that thought. everything is speeding up exponentially. Money does that as people perceive its "growing" irrelevance. Their control and "effect" are slipping and they're getting desperate taking more dramatic, even less intelligent risks. More and more of these are backfiring and it's a self-feeding destruction.    

enter three (male) witches

Fillet of a Benny's steak,
In the caldron boil and bake;
Eye of Newt, and toe of Gingrich,
Wool of bat, and Wall Street fog, 
Libor's fork, and blind-voters' stink,
Lizard's leg, and Obama's wink,—
For a charm of powerful trouble,
Like a hell-broth boil and bubble...

Cool it with our children's blood,
Then the charm is firm and good.

 

...

  

Sat, 04/27/2013 - 15:15 | Link to Comment NoTTD
NoTTD's picture

By the prickng of my thumbs,

something wicked this way comes...

Sat, 04/27/2013 - 13:50 | Link to Comment Tinky
Tinky's picture

Thanks for your continued, excellent work, Alasdair. 

Sat, 04/27/2013 - 13:49 | Link to Comment Smiley
Smiley's picture

Margins and taxes will be levied "for the greater good" to keep the price of physical from getting beyond the control of the banks and commodities ponzi schemers.

Sat, 04/27/2013 - 14:56 | Link to Comment SKY85hawk
SKY85hawk's picture

Look into holding private property in a TRUST. 

The Trust owns the property and YOU are the General manager or Trustee. 

Never say you 'own' a Trust, you just control it.

Teddy Kennedy's Oldsmobile was owned by a Trust with almost no assets, nothing to sue here.

Google "how a trust can protect your assets"   Lots to read & think about.

 

Sat, 04/27/2013 - 13:55 | Link to Comment williambanzai7
williambanzai7's picture

I have one clarification.

The word "hoarder" and its implications are too narrow.

Gold has a deeply cultural dimension in Asia. Gold has a mystical, superstitious and religious context in Asia. It is commonly purchased as gifts on major family events and holidays such as weddings, New Years etc. Despite this fact, many Asians were previously locked out  of purchasing it by their low economic strata. As the wealthy Asian population grows, it follows that consumption will also grow.

Asians also have a flight capital mentality and they are all focused on the negative impact of QE, so we now have a perfect storm of demand. 

Sat, 04/27/2013 - 13:59 | Link to Comment PUD
PUD's picture

They also covet tiger bones, rhino horns and elephant ivory. About time the "precious" has the same restrictions as the wildlife profiteers.

Sat, 04/27/2013 - 14:18 | Link to Comment akak
akak's picture

That is certainly something.

The eternal nature of Asian 'chinese' citizenism rare animal bits blobbing-up and consumptionalizationism is the mattering thing, the crustiest bit of it.

Alas, alas, three times alas, just have to bear with it.

Sat, 04/27/2013 - 19:46 | Link to Comment Diogenes
Diogenes's picture

Fortunately we now have Viagra and other modern drugs that actually work, and are taking over the market with the younger generations.

Sat, 04/27/2013 - 14:30 | Link to Comment williambanzai7
williambanzai7's picture

Congratulations, you're a moron

Sat, 04/27/2013 - 14:34 | Link to Comment PUD
PUD's picture

Thanks for that thorough analysis. And to think I gave you such high praise on many occasions for your clever art work.

Sat, 04/27/2013 - 14:35 | Link to Comment akak
akak's picture

You are a burden on the biosphere,  your existence is 'unnecessary'.

PUD, you are obsolete.  Obsolete.  Obsolete.

Sat, 04/27/2013 - 14:42 | Link to Comment PUD
PUD's picture

I see all the smart guys are out today. lol

Sat, 04/27/2013 - 20:45 | Link to Comment Target Practice
Target Practice's picture

Pud

Look at the downvotes for everything you write here.

Do you actually want to affect change for the better in this world? or just look at your posts blabbing on all over Zero Hedge?

I ask, because it seems that whatever good you are trying to do, it is actually having a negative effect here. IE, you are making it worse and your message is not only failing to get through and convert people, it is turning people against your view.

So if you want to just blab on and on, piss people off and turn people against your cause. Keep writting. If you REALLY want to make changes to this world, stfu for a moment and find a better way to communicate with people.

 

 

Sat, 04/27/2013 - 21:27 | Link to Comment Crisismode
Crisismode's picture

And . . .

 

You must still be at home.

Relaxing on your mom's couch in the basement.

 

 

Sat, 04/27/2013 - 15:19 | Link to Comment NoTTD
NoTTD's picture

Agreed.

Sat, 04/27/2013 - 17:17 | Link to Comment Room 101
Room 101's picture

Pudtz: you STILL haven't given us an alternative to gold.  I agree with your basic premise that gold sucks.  The problem is that bonds, stocks, derivatives, real estate, fiat, most other commodities and most collectibles suck worse.  So please enlighten us.  What is a better store of wealth than gold?

<<<crickets>>>

Sat, 04/27/2013 - 18:31 | Link to Comment SubjectivObject
SubjectivObject's picture

PUDdles?

Still crickets?

Sat, 04/27/2013 - 19:55 | Link to Comment Diogenes
Diogenes's picture

I will give you an alternative to gold. As soon as governments and central banks turn honest and we have currencies that we can depend on to retain their value, without inflation, and without risk of default, the world will rush to them and drop gold.

This has happened before. For many years American dollars were prized above gold around the world. There are still billions in circulation.Same with Swiss francs, British pounds and other sound currencies of the past.

All we need is one honest government anywhere in the world.

Sun, 04/28/2013 - 03:08 | Link to Comment tenpanhandle
tenpanhandle's picture

Gold is incapable of sucking.  It is the Noble Metal and is above that.

Sat, 04/27/2013 - 13:58 | Link to Comment Whiner
Whiner's picture

Amerikas National politicians WILL raise taxes. They will not stop their default, fiat-moar policies even in a total collapse. Congress will come hard after the minority rich with taxes on fat retirement accounts and on other forms of wealth, estate and VAT taxes. We will eat the remaining rich and lapse into real, sub-third world states. This will be some time coming, but i tell you, it will come faster than we might think as the wealth holders move their operations and investments East and South . Desperate, roving bands of road warriors will face off at the end against the armed, remaining former middle class to hollow out the scraps. Other than that, things look pretty good.

Sat, 04/27/2013 - 21:27 | Link to Comment Crisismode
Crisismode's picture

And . . .

 

That's the good news.

As for the bad . . . . well, you just don't want to know.

 

Sat, 04/27/2013 - 13:55 | Link to Comment PUD
PUD's picture

Nothing would please me more than a systemic collapse in your "precious"

The earth would breathe a sigh of relief, tons of mercury could stay safely buried in the ground where it belongs, children wouldn't be dying in the mud and the world would be a far better place.

Sat, 04/27/2013 - 14:02 | Link to Comment wee-weed up
wee-weed up's picture

Go pound your pud, PUD!

Sat, 04/27/2013 - 14:30 | Link to Comment PUD
PUD's picture

I bet you thought that up all on your own...didn't you?

Sat, 04/27/2013 - 14:42 | Link to Comment akak
akak's picture

Too bad we can't accuse you of the same regarding your shallow and misinformed cut-and-paste anti-gold posts here.

Sat, 04/27/2013 - 14:46 | Link to Comment PUD
PUD's picture

We are all parrots. None of us has any unique original einstein thoughts now do we? Cutting and pasting research is what has made zero hedge so popular hasn't it? You see, its what you do with the information others gather, how you process it and interpret it. I present the evidence much like a trial lawyer would. I don't have to be a field geologist to read the studies done by them now do I?

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