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Are We On The Verge Of Witnessing The Death Of The Paper Gold Scam?

Tyler Durden's picture




 

Submitted by Michael Snyder of The Economic Collapse blog,

The legal claims on physical gold far exceed the amount of physical gold that the banks actually have by a very, very wide margin.  And right now the bankers are scared out of their wits because their warehouses are being drained of physical gold at a frightening rate.  So what happens when their physical gold is gone but they still have lots and lots of people with legal claims to gold?  When that moment arrives, it will represent the end of the paper gold scam. 

Many believe that the recent takedown of the price of paper gold was a desperate attempt by the bankers to put off that day of reckoning, but it appears to have greatly backfired on them.  Instead of cooling off demand for precious metals, it has unleashed a massive "gold rush" all over the globe.  Meanwhile, word has been spreading among wealthy families in both North America and Europe that they had better grab their physical gold out of the banks while they still can. 

This is creating havoc in the financial community, and at least one major international bank has already declared that it will only be settling those accounts in cash from now on.  The paper gold scam is starting to unravel, and by the time this is all over it is going to be a complete and total nightmare for global financial markets.

For years it has been widely known that the promises that banks have made regarding their gold far exceed their actual ability to deliver, but we have never reached a moment of such crisis before.

Posted below are quotes from people that know precious metals far better than I do.  What these experts are saying is more than a little bit disturbing...

-CME President Terry Duffy: What’s interesting about gold, when we had that big break two weeks ago we saw all the gold stocks trade down significantly, we saw all the gold products trade down significantly, but one thing that did not trade down, was gold coins, tangible real gold. That’s going to show you, people don’t want certificates, they don’t want anything else. They want the real product.

-Billionaire Eric Sprott: So we see all of these paper (trading) volumes going through that bear absolutely no relationship to what’s going on in the physical markets. As you know I have always been a proponent of the fact that supply in the gold market was way less than demand, and by a very large factor. I think demand exceeds supply by at least 60%. The central banks are surreptitiously supplying that gold, and ultimately they will be running on fumes.

When we hear about the LBMA not willing to deliver gold, and JP Morgan’s inventories at the COMEX have gone from 2.4 million (ounces) down to 160,000 ounces, it just makes you realize that all of this paper trading means nothing. It’s the real physical market that you have to rely on.

-JS Kim: FACT #1: COMEX gold vaults were recently drained of 2 million ounces of physical gold in one quarter, the largest withdrawal of physical gold bullion from COMEX vaults in one quarter during this entire 12-year gold and silver bull. There has been speculation about the reasons that spurred these massive withdrawals of gold from COMEX vaults, but the most reasonable speculation is that no one trusts the bankers to hold on to their physical gold anymore, especially in light of Fact #2. Note below, that both registered AND eligible stocks of gold had heavily declined in recent months. Such an event signals a general distrust of the banking system from everyone holding gold in registered COMEX vaults.

FACT #2: One of the largest European banks, ABN Amro, defaulted on their gold contracts and informed their clients that they would only settle their gold bullion contracts in cash and not in physical. So much for the supposed legality of financial contracts as a "binding" contract. So whether Fact #1 caused Fact #2 or vice versa is irrelevant. What IS apparent is that the level of trust in bankers to safekeep physical gold and physical silver is disappearing, as it should be, and as it should have already been for years now. But truth always takes some time to catch up to banker spread lies and that is what is happening now. I have been warning people never to trust bankers in deals involving gold and silver for years now, as in this article I wrote nearly four years ago informing the public that the SLV and GLD are likely a banker invented scam as well.

FACT #3: Silver fraud whistleblower and London trader Andrew Maguire stated that the LBMA was having trouble settling gold contracts in bullion as well and stated that institutions that asked for physical settlement “were told they would be cash settled instead by a bullion bank.” In plain English, this is a default. So Andrew Maguire reported that the LBMA had already gone into default. In light of Fact #1 and Fact #2, the dominoes were starting to tumble and the house of cards that the bankers had built in gold and silver paper derivatives to deceive and hide the true fundamentals of the physical gold and physical markets from the entire world was rapidly starting to crumble. A financial earthquake of magnitude 2.5 was quickly threatening to evolve into one of the biggest financial earthquakes of all time in which the world’s confidence in all global fiat currencies would effectively have a well-deserved funeral.

-Jim Sinclair: I think the reality is the supply situation is extremely volatile at this point, and even discussing it is like rubbing a raw nerve to the people who are in charge. The amount of discussion on the subject of warehouse supply, supply that is represented by the gold leases, indicated to the central planners that the demand for physical was going to continue to effect the exchanges.

Although they did not expect any grandstand delivery, the mere continued draining of physical inventories was threatening the very functioning of the paper exchange. That threatening of the paper exchange and its ability to continue functioning is really taking off the blinders and revealing the truth behind the critical question, ‘Where is the gold?’

The question now is, ‘Where has the gold gone?’ Who has all of this gold? Because of the nature of gold leasing, all of this gold has been purchased and it has gone somewhere. The reality of the empty vaults reveal that the gold has gone missing.

-Ronald Stoeferle: We’re seeing this rush to physical gold not only in the retail market, but also for the institutional players...[it's] just overwhelming…I [estimate] a 130-to-1 [ratio of paper to physical gold]…and I think in the last week we were really close to [triggering] a default of the paper market.

-Gerhard Schubert, head of Precious Metals at Emirates NBD: I have not seen in my 35 years in precious metals such a determined and strong global physical demand for gold. The UAE physical markets have been cleared out by buyers from all walks of life. The premiums, which have been asked for and which have been paid have been the cornerstone of the gold price recovery. It is very rare that physical markets can have a serious impact on market prices, which are normally driven solely by derivatives and futures contracts…

I did speak during the week with several refineries in the world, of course including the UAE refineries, and the waiting period for 995 kilo bars is easily 2-3 weeks and goes into June in some cases. A large portion of the 995 kilo bars in the UAE goes normally into the Indian market, but a lot of the available 995 kilo bars are destined for Turkey, at this time. We heard that premiums paid in Turkey have reached anything between US $ 20 and US $ 35 per ounce.

-James Turk: Another indication of the demand for large bars is the huge drawdown in the gold stock in COMEX warehouses. It is noteworthy that COMEX reports show the drawdown is largely the result of dealers removing their inventory, their working stock. When that happens, you know the availability of supply is constrained.

What all of this means, Eric, is one thing. If the central planners want to keep the precious metals at these low prices, to meet the demand for physical metal they will need to empty more metal from central bank vaults, or borrow metal from the ETFs as some have suggested is happening. Otherwise, the central planners will have to step back and stop their intervention, thereby letting the price of gold and silver rise so that demand tapers off, bringing demand and supply of physical metal back toward some kind of balance.

We've seen this same situation several times over the last twelve years. It is what I have been calling a “managed retreat.” Despite the current weakness, I firmly believe we have again entered a critical period where the central planners will need to retreat once again in order to let the gold and silver prices climb higher.

-The Golden Truth: And then I get a call from a close friend in NYC last Friday.   His career has been in private wealth management in the private bank department of the Too Big To Fail banks.  He's been looking for work and chats with old colleagues all the time.  He called my Friday and told me he just got off the phone with a very high level private banker from a big Euro-based TBTF bullion bank, but who was at JP Morgan until about six months ago.

This guy told my friend that there is a scramble by many very wealthy European families/entities to get their 400 oz bars out of the big bank vaults. He knows this personally, for a fact.  He said the private banker community is small over there and the big wealthy families all talk to each other and act on the same rumors/sentiment.  The Bundesbank/Fed and the ABN/Amro situations triggered this move.  He knows for a fact JPM tried to calm fears about 3 months ago by sending a letter to it's very wealthy clients assuring them their bars were safe, in allocated accounts.  He said right now those same families are walking into the big banks like JPM and demanding delivery of their bars or threatening to take their $100's of millions in investment portfolios to competitors.  His wording was "these people are putting a gun to the heads of private banks and demanding their gold."

I know this information is good because I know my friend's background and when he tells me his source is plugged in, the guy is plugged in. Not only that, my friend's source said that there's no doubt that someone like a John Paulson, not necessarily specifically him, but entities like him or it may include him, have held a gun to GLD and demanded delivery of physical in exchange for their shares.

Regarding the Bundesbank/Fed situation, recall that the Bundesbank asked to have some portion of its gold sitting - supposedly - in the NY Fed vault in NYC sent back Germany. The total amount is 1800 tonnes.  After behind the scenes negotiations, the Fed agreed to ship 300 tonnes back over seven years.  To this day, the time required for that shipment has never been explained.  Venezuela demanded the return of its 200 tonnes held in London, NYC and Switzerland and received it all within about four months.

And regarding the ABN/Amro situation.  ABN/Amro offered a gold investment account product that offered physical delivery of the gold in the investment account when the investor cashes out.  About a week before the gold price smash, ABN sent a letter to its clients informing that the physical delivery of the bullion was no longer available and that all accounts would be settled with cash at redemption.

I believe it was these two events that triggered the big scramble for physical gold by wealthy families/entities who were suspicious of the integrity of their bank vault custodial arrangement anyway.

*****

So what does all of this mean?

It means that we are entering a period when there will be unprecedented volatility for precious metals.  There will be tremendous ups and downs as this crisis plays out and the bankers try to keep the paper gold scam from completely unraveling.

Meanwhile, nations such as China continue to stockpile gold as if the end of the world was coming.

According to Zero Hedge, Chinese gold imports set a brand new all-time record high in March...

Quite the contrary: as export data released by the Hong Kong Census and Statistics Department overnight showed, Chinese gold imports in March exploded to an all time record high of 223.5 tons.

And the number for April is expected to be even higher.

Does China know something that the rest of us do not?

We are also seeing a rapid decoupling between spot prices and physical prices.  In fact, it is quickly getting to the point where the spot price of gold and the spot price of silver are becoming irrelevant.

For example, demand for silver coins has become so intense that some dealers are charging premiums of up to 30 percent over spot price for silver eagles.

That would have been regarded as insane a few years ago, but people are now willing to pay these kinds of premiums.  People are recognizing the importance of actually having physical gold and silver in their possession and they are willing to pay a significant premium in order to get it.

We are moving into uncharted territory.  The paper gold scam is rapidly coming to an end.  In the long-term, this will greatly benefit those that are holding significant amounts of physical gold and silver.

 

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Thu, 05/09/2013 - 19:08 | 3546495 bill1102inf
bill1102inf's picture

Looks like the price of gold is about to fall another 200-300 fiats.

Thu, 05/09/2013 - 20:40 | 3546685 Manipuflation
Manipuflation's picture

Perhaps not though... Some of us have been here and done this before.

http://www.kitcometals.com/charts/copper_historical.html

Conversely however...

"Also weighing on copper, China's imports of the metal fell 7.4 percent in April from a month before to hit a 22-month low, data showed on Wednesday."

http://www.reuters.com/article/2013/05/09/markets-metals-idUSL6N0DQ1GK20130509

The best course of action is to stack and forget about the ETFs. If you want to buy an ounce of phyzz gold from me you can forget about paying only $1450. The price for an AGE at my online store is currently $69,000 and I am thinking that I need to raise the price by an exponential factor. I also have new merchandise to offer.

 

Thu, 05/09/2013 - 19:14 | 3546513 FilbertH
FilbertH's picture

This could be another reason why they are so vigorusly jucing up STAWX. Get people out of crappy, underpreforming rocks and into money making tree pulp. The good old sell low, buy high technique. What could possibly go wrong?

Thu, 05/09/2013 - 19:35 | 3546551 Coldfire
Coldfire's picture

It's interesting when Big Lies die.

Thu, 05/09/2013 - 19:38 | 3546554 Jeepers Creepers
Jeepers Creepers's picture

Serious question:  is there a reputable source for the actual amount of physical gold available?  I would think there would be a way to show the discrepancies with the paper vs physical market.

Thu, 05/09/2013 - 19:46 | 3546571 q99x2
q99x2's picture

HAA those M'Fers. Throw Blythe Masters to the Persian dogs.

Thu, 05/09/2013 - 19:54 | 3546583 sandiegoman
sandiegoman's picture

This report is pure rubbish. These stories of COMEX exploding and going down have been around for over 15 years now. It is just wishful thinking and pure BS. All of this is anecdotal heresay and I truly love the "I have a friend who is a very knowledgeable insider". Isn't that what they always say?

Thu, 05/09/2013 - 22:09 | 3546892 Vooter
Vooter's picture

"Isn't that what they always say?"

I don't know...is it? You're the one who seems worried...

Fri, 05/10/2013 - 05:51 | 3547512 Room 101
Room 101's picture

I think you've got it hald right.  There is a fair to middling chance in my view that Crimex is going down for the count when it can't deliver.  Heck, I even picked a date: June 24th.  The kicker though in my view is that it won't make all that much of a difference.  These "historic premiums" that the PM shills are getting all excited about are nothing much.  You can go out right now and get phyzz gold for about 4% over spot.  Silver is 6-7%.  And you can buy all you want.  How the PM shills get PM prices going to the moon out of that when/if Crimex can't deliver is beyond me.  Crimex will settle in fiat, which is what the paper PM owners generally want anyway.     

Thu, 05/09/2013 - 19:54 | 3546585 NOTfromSanFrancisco
NOTfromSanFrancisco's picture

 

Bullion Bank... Hello, China? I was just wondering if you had any spare gold you wanted to sell... Not that we need it or anything, but I was just wondering if you, maybe, you wanted to sell us some?

China... No probrem round eye. How much of what you don't need do you want?

BB... We were thinking about 300 tons or so, if that's alright?

China... No probrem. We got that in local WalMart around corner.

BB... Great! How much you want for it and when can we get it?

China... How you gonna pay?

BB... With good ol' fashion U.S. dollars of course.

China... No probrem. We sell to you for $5,000.00/ounce. You got prane big enough to bring that much cash over?

BB... Are you friggin' kidding me!!!... Where do you get off trying to sell us gold for $5,000.00/ounce?

China... Why?... You think is too cheap? Ok, $10,000.00/ounce, and we throw in free shipping just like NWT Mint. That better round eye?

BB... You guys are out of your rice pickin' minds if you think we're gonna pay you that much for your stinkin' gold!

China... Gold no stink. Gold shine. Rearry pretty when light hit it, but that beside the point. I think we change mind. We no sell to you. You buy from someone else. Or maybe you dig more out of ground. We read your articles and think you better off digging out of ground since price per ounce to dig out of ground rearry cheap.

BB... Come on man, I was just kidding. We'll take it for $10,000.00/ounce, okay?

China... You maybe kidding, we not. Bye bye.

 

 

Thu, 05/09/2013 - 19:58 | 3546593 tony bonn
tony bonn's picture

he who owns the gold makes the rules.....i haven't said it in ages but it is worth repeating.....

the paper spot price is totally irrelevant....jim willie's plugged in source tells him quantities of assayed gold trade at around 2000 per oz....almost a 40% premium over the fake spot price.

jpm is the next abn/amro - criminals every last one of them.....and that london whale trade is NOT done....the losses are well above the reported 5bn. quickly approaching triple billion digits....

gold is in severe and permanent backwardation.....

Thu, 05/09/2013 - 20:42 | 3546601 Youri Carma
Youri Carma's picture

"Buyers in mainland China purchased 223,519 kilograms (223.52 tons) of gold in March, including scrap, compared with 97,106 kilograms in February, Hong Kong government data showed.

Separate figures yesterday showed China’s gold usage rose 26% in the first quarter as prices fell. "

FROM: Gold Futures Gain Amid Signs of Physical Demand in India, China
8 May 2013, by Debarati Roy & Whitney McFerron (Bloomberg)
http://www.bloomberg.com/news/2013-05-08/gold-drops-for-third-day-as-spdr-assets-shrink-to-four-year-low.html

Thu, 05/09/2013 - 20:05 | 3546605 Chippewa Partners
Chippewa Partners's picture

Does Sprott own gold or paper?  Just asking............

Thu, 05/09/2013 - 20:12 | 3546620 besnook
besnook's picture

2 things. where is all this redeemed gold bullion beiong kept? in a bank? or is there a market for super secure fire proofed hardened precious metal bunkers?

the other thing is what is happenoing is the reason why .govs will not only take your bank deposits but also your precious metal stash when the time comes.

Thu, 05/09/2013 - 20:14 | 3546628 CDNX fan
CDNX fan's picture

Gold bugs were ugly at U.S.$300/ounce and they were  still ugly at $1900 per ounce. They are paranoid dilusional anti-social creeps that whine and bitch whether gold is up, down, or flat. They are, however, correct in their analysis and in the spirit of their reasons for owning that barbarous relic. When we hit $2,700 per ounce in the next year, they will still be ugly, whining little creeps. They are the best entertainment in the financial arena - WAY better than Kramer.

Thu, 05/09/2013 - 22:05 | 3546878 Vooter
Vooter's picture

Zyklon-B.

Thu, 05/09/2013 - 20:14 | 3546630 bullionbaron
bullionbaron's picture

"Rumors Of My Death Have Been Greatly Exaggerated" - Paper Gold

 

http://www.bullionbaron.com/2013/05/rumors-of-my-death-have-been-greatly.html

Thu, 05/09/2013 - 20:28 | 3546664 jomama
jomama's picture

yeah, ok.  the ad on your page is selling bullion at 30% over spot price.

gtfo

Thu, 05/09/2013 - 20:42 | 3546688 fonzannoon
fonzannoon's picture

LOL you made me look.....$1740 for a gold eagle!

Fri, 05/10/2013 - 01:40 | 3547345 bullionbaron
bullionbaron's picture

jomama, thanks for the response. I assume you don't have any actual critique of the article and my points then?

Re the Gold eagle. In Australia dealers have to charge 10% GST for coins below a particular purity, for this reason most dealers don't bother offering Gold Eagles as they are only 22k, even though they contain an ounce of Gold. So the dealer (a site sponsor) probably paid a higher price for these eagles and will wait until they can sell them above cost. You will find much lower price Gold coins on their site, e.g. Perth Mint 1oz Kangaroo for $1510.

So your post is exactly the sort of ridiculous conclusion jumping rubbish I would like to see the end of.

Thu, 05/09/2013 - 20:18 | 3546638 Fail2Deliver
Fail2Deliver's picture

Okay, folks here is the explanation. The GLD takedown will continue as the time grows closer to the physical gold vaults being empty (officially). As I understand it the GLD clearly states that settlement may be made in CASH. With that in mind, why would the GLD EVER go higher? The banks can naked short the GLD to almost zero and then pay out claims in CASH....There will be NO short squeeze...how could there be? There is nothing to squeeze when you have an alternative to cover with cash and not the GLD or Gold. Just short the GLD to zero if possible and when it blows up ie: people want their gold, say oops sorry force majuer no gold but heres your $50 bucks "market GLD price" now get lost.

Buying the GLD has NEVER made sense to me

Thu, 05/09/2013 - 20:31 | 3546672 Stuck on Zero
Stuck on Zero's picture

Unflipping believable. Naked shorts against GLD cause GLD to dump metal on the market.  That causes the market to fall so the naked shorts can buy physical at low prices.  GLD is a scam.

http://beforeitsnews.com/gold-and-precious-metals/2013/05/the-cftc-25002...

 

Thu, 05/09/2013 - 20:35 | 3546678 RaceToTheBottom
RaceToTheBottom's picture

If that were going to happen, it would happen really quick before all the physical is bought up, no?  We would find out real quick if your thoughts are correct, no?

Thu, 05/09/2013 - 20:55 | 3546717 Fail2Deliver
Fail2Deliver's picture

When people realize that the GLD certs they hold have zero GOLD value, then yes, things could go south very quickly. It will begin to feed on itself, shorts shorting and GLD holders selling out to get what they can.

Bear Sterns was a $65 stock when word got out they were illiquid, two days later it was $2.00

Thu, 05/09/2013 - 20:20 | 3546641 q99x2
q99x2's picture

AMPEX immediate delivery

1oz Gold Eagles

20 or more $1,528.19
Thu, 05/09/2013 - 20:22 | 3546647 jomama
jomama's picture

the metal i ordered on 4/16/2013 from bulliondirect hasn't even shipped yet...

Thu, 05/09/2013 - 22:21 | 3546926 hootowl
hootowl's picture

Yeah, I have been waiting for nearly 3 weeks for a shipment of silver from bulliondirect, also.  I am getting concerned.

 

Anybody else?

 

STARVE THE BEAST!!!

Thu, 05/09/2013 - 20:28 | 3546663 stant
stant's picture

last time i was at ft knox the stone work needed preasure washed and someone with a weed eater. i live about 2hrs away and have more most likely than there. but at this point a tank might be worth more.given the the gunfire i hear near me in the hills

Thu, 05/09/2013 - 20:29 | 3546667 Blano
Blano's picture

Without reading the article yet, and having waited for a period of time that is measured in years, I'm gonna say no, we're not on the verge.  This whole game is going to last a lot longer than any of us think it will.

Fri, 05/10/2013 - 05:10 | 3547471 Supernova Born
Supernova Born's picture

Until is doesn't.

Thu, 05/09/2013 - 20:30 | 3546669 tecno242
tecno242's picture

Not only paper gold, but we are beginning to approach the day in which all forms of paper with percieved value begin to be viewed for what it really is... a piece of paper.

I believe within the next 5-10 years, all assets which are less liquid yet can be obviously seen and felt will become the only stores of value.

Although, against 99% of the common perception.. I believe this will happen within the framework of a DEFLATIONARY global phenomenon as credit is destroyed as paper is shunned.

Thu, 05/09/2013 - 20:30 | 3546670 devo
devo's picture

If they were scared they'd let the price rise. They aren't scared because what is next is confiscation or some other mid-stream rule change.

Thu, 05/09/2013 - 20:49 | 3546707 besnook
besnook's picture

the price of gold really doesn't matter because if things get bad enough .gov will take it with all the people willingly giving it including almost all the present molon labe crowd because they do not want to die for gold or anything else.....so it is written.

Thu, 05/09/2013 - 20:40 | 3546686 Dr. Gonzo
Dr. Gonzo's picture

If the COMEX defaults does the dollar price of gold go to zero while it's value increases? Who the hell gets to put the price tag on gold and silver anyway? Obviously not the physical market and obviously not the supply/demand laws. It would be just as believable if if gold was at 2k and silver at $80 during QE infinity.... but the dow is 15k+ so nothing is making sense. Bought another 115 oz of silver yesterday. going to buy 100 oz of silver every month unless they bring the price above $30. Prepared to do this for years and years.

Thu, 05/09/2013 - 20:40 | 3546687 WTFUD
WTFUD's picture

Isn't it bloody marvellous. Even when these paper dog whore traders are banged to rights, trousers around their ankles, they still have the " toy dolls " to tell you that you're a dumb fuck.
Bring me the severed head of Jamie ( time is not on your side ) Dimon. Reward : 5 in your hand Kilos of Silver

Thu, 05/09/2013 - 20:44 | 3546690 beentheredonethat
beentheredonethat's picture

Listen to emirates nbd! They are at the center of physical gold. Dubai and India intersections. And they can't get it. 3 weeks for delivery now. Price and demand are out of equilibrium. It's a soviet market

Thu, 05/09/2013 - 20:47 | 3546697 rustymason
rustymason's picture

All of the reasons that gold und silber should be in the ascendency are logically reasoned and well-argued. Yet they are not and paper is king.

Thu, 05/09/2013 - 20:48 | 3546702 The Fonz...befo...
The Fonz...before shark jump's picture

Sue dtcc....they could have chilled the fraudulent Slv and gld paper...dtcc doesn't settle trades if they think fraud is involved

Oh wait the fed owns dtc....

Thu, 05/09/2013 - 21:00 | 3546728 CheapBastard
CheapBastard's picture

"If you can't hold it, you don't own it."

 

Can't be clearer then that.

Thu, 05/09/2013 - 21:04 | 3546731 lasvegaspersona
lasvegaspersona's picture

There is another perspective worth considering, the freegold perspective. This view considers that the paper market may collapse completely. Period. You wake up one morning and the gold price has been driven (or somehow found itself) at $300/oz. the markets closed. Then there is a period of time before a gold market re-opens....physical only this time, all paper markets having been settled at the low paper price.

The new physical price will be based on the flow of gold from those who actually have gold to those willing to pay the new price. We suspect it will be a higher price...a lot higher.

Whether you believe this or not it is still something you should know about. If you do wake up one morning and the price of gold is frozen at $300/oz and the market is closed....hang on to your gold.

If you have a few hundred spare hours for reading, try:http://fofoa.blogspot.com/   I suggest you start with "Debtors and Savers" but the current one is pretty funny...good luck, things are getting interesting aren't they?

Thu, 05/09/2013 - 21:19 | 3546768 realtick
realtick's picture

no, we're on the verge of witnessing the death of idiotic sites like TF Metals that believe Bernanke is so powerful that he can unleash a massive wave of inflation that will send precious metals to the moon

i know people are childish and like to fantasize about men with superhuman powers, but Bubbles Ben ain't one of them

anyone who can read a chart should be able to understand a basic fact - deflation is here to stay because no one needs any more credit and people are too broke to service their existing debts

all QE has succeeded in doing is kicking that can down the road for a few years so the bankers can cash out

Deflation - The Hair Of The Dog That Bit Me

Thu, 05/09/2013 - 21:25 | 3546781 kw2012
kw2012's picture

More like hyper stagflation. You can't have massive deficit spending without eventual massive dollar devaluation and inflation.

Thu, 05/09/2013 - 21:24 | 3546779 thewayitis
thewayitis's picture

 

  It means if you have the PHYSICAL in hand your GOLDEN .....Period..... Get the hell out of paper gold

 

 

Thu, 05/09/2013 - 21:27 | 3546784 TuesdayBen
TuesdayBen's picture

?
Could you - yes, you - ever conceivably be water-boarded out of your physical gold holdings?

Thu, 05/09/2013 - 21:28 | 3546794 kw2012
kw2012's picture

A few months ago, I bought a few one ounce silver eagles and paid $2 over spot.

Last week, they had one old banged up one, $6 over spot.

Fri, 05/10/2013 - 06:05 | 3547518 Room 101
Room 101's picture

That there are fools willing to pay 20% over spot for ASEs is not news in light of the fact that you can get rounds for $1.49 over spot. 

Thu, 05/09/2013 - 21:40 | 3546820 syntaxterror
syntaxterror's picture

Show me the note! And show me the physical you fucking banker slime!

Thu, 05/09/2013 - 21:48 | 3546836 WallowaMountainMan
WallowaMountainMan's picture

please please please let paper oil be next!

then, make ALLLLLL!!!! commodities F>O>B destination and ship it.

all those who think 'speculators' (those who don't have to take delivery of what ever commodity they 'bet' on) add to a free market....well buy paper gold and get back to me in a year...

:)

 

Thu, 05/09/2013 - 21:54 | 3546853 whoknoz
whoknoz's picture

hey, dont forget Industrial Art...

Thu, 05/09/2013 - 22:01 | 3546867 Herdee
Herdee's picture

The crunch will come rapidly.Timing of events is difficult but I see three events of randomness that will bring up demand for Gold.The first event might come soon as a default on U.S. debt with the Government unable to pay its' bills or interest on bonds because of political gridlock.The next event could be the unwinding of the FEDS' stimulus program and the next one would be the collapse coming in Japan as predicted by Kyle Bass.One other possibilty is the Syria-Iran situation and if the Israelis take out Irans' nuclear facilities unleashing a huge middleast war.Those events would put the price of Gold up nicely.Throw in a major European depression and collapse for good luck and add in the unregulated global trillions in derivatives that could blow up.Need I go on?

Thu, 05/09/2013 - 22:15 | 3546907 Room 101
Room 101's picture

(Yawn)  Another all too predictable article about the End of the PM Scam As We've Come To Know It.

Although I would like to see Crimex go kaboom (and I think it will as of June 24th), I really don't think the impact will be all that profound.  As this article indicates, the premium for gold in Turkey is (gasp!) $20-$30 an ounce.  OK, with gold at $1460 an ounce that translates into a whole 2% premium. We're getting excited over 2%?  

But what about silver?!!  Well, you can get silver rounds right now from a reputable dealer for $1.49 over spot.  As of right now that's about a 6% premium over spot.  

So, it would appear that the actual market price for PMs isn't that hugely different from what we're paying right now.  I'm not seeing how a Crimex collapse really changes all that much.  PM's aren't going to shoot to the moon because of it.    

Thu, 05/09/2013 - 22:18 | 3546913 honestann
honestann's picture

gold price $1460 - spot price
gold coin  $1542 - american eagle
-----------------

$80 markup... was about $40 before the smashdown.

I don't think this will unravel as quickly as some folks do... but it will unravel.

Thu, 05/09/2013 - 23:35 | 3547144 Room 101
Room 101's picture

You're paying too much.  You can get AGEs for $1520 or roughly 4% over spot.

I think it will unravel too.  I just don't think the impact is going to be as profound as PM shills are saying.  

http://comparegoldprices.com/

Fri, 05/10/2013 - 04:11 | 3547452 honestann
honestann's picture

Actually, I don't buy american eagles, or any government coins.  My point was, the gold premium is double versus a month ago.  My guess is, the premium at those lower-price places are also roughly double versus a month ago, just lower markups on both timeframes.

Fri, 05/10/2013 - 06:13 | 3547523 Room 101
Room 101's picture

Not really.  Some hot products (i.e. ASEs) are trading at stupid premiums, but your generic products are not hugely more than they were a month ago. And the spike in premiums seems to be settling down. You can get silver rounds for $1.49 over spot. You could get those for about $1.00 over spot 6 weeks ago.  That's a significant 50% hike I guess when looking at the premium alone, but as compared to the total price you would pay for the round, it's nothing much. 

Fri, 05/10/2013 - 19:11 | 3550071 honestann
honestann's picture

Sure, I agree with all that, except the notion that 50% swings in premium are irrelevant.  To be sure, for people like me (and probably you), paying 5% or 10% extra for a silver coin will be noise over our many-year or many-decade holding period.  However, not everyone holds for years or decades, and that difference can be significant.  The difference may also be significant when it comes to judging the change in availability of physical.

I certainly didn't give the example I did to suggest people buy that coin!  Personally I hate those coins, and every coin with government logos or phrases stamped into them, and every overpriced coin.  However, the fact of the matter is, the american eagle seems to be the most popular coin, so it seems the best example for purposes of seeing how the supply and demand equation is playing out.

It does appear the premiums are slowly returning towards normal, but they're still far from back to normal according to my quick survey.  It appears chinese are still buying physical like crazy, for example, jacking imports through the roof.

For my current purposes (guess at supply/demand), to choose the cheapest or highest premium chunk of metal available completely defeats my purpose.  I'm not suggesting anyone buy the example I give... I hope they don't and I hope you understand that now.  When it comes time to buy, I suggest everyone carefully look through what is available at the link you provided.  That's a smart move.

Thu, 05/09/2013 - 22:21 | 3546925 Quonk
Quonk's picture

I found out the true price of silver today...bought a silver eagle, a liberty half, and two 0.5oz. buffalo silvers.  He gave me the shineys and I gave him my fiat.  Pure price discovery for both of us.  It was a pleasure looking him in the eye and transacting...even if his premium put "spot price" to shame.  You can tell me Ag trades at whatever price you want...but today it was shamelessly, decisively...and acceptably well north of $24/oz..

Fri, 05/10/2013 - 06:17 | 3547527 Room 101
Room 101's picture

Define "well north of $24."  You can buy silver rounds as of my typing this at $25.18.  I hope you didn't pay much more than that.  

Thu, 05/09/2013 - 23:41 | 3547158 WTFUD
WTFUD's picture

Dear Agony Aunt
Having had little joy in the love department i could not believe my luck when i met this gorgeous lady at my local wine bar. We hit it off immediately and she accepted my offer of a coffee back at my place. We made love all night. However, when i woke up the next morning i realised she must have slipped me a " mickey finn " as the house was cleated out right down to the curtains and light bulbs. Tried calling her several times but the mobile she gave me remained disconnected.
Do you think i should try looking for her or is there any possibility of a long term relationship between us?

PS Thank god i had the sense to stash the gold under the floorboards.

Fri, 05/10/2013 - 01:51 | 3547352 GreatUncle
GreatUncle's picture

One rule for central bankers.

When you operate a ponzi and the punters know it any free handouts are going to be snaffled real quick to try and get something back.

Fri, 05/10/2013 - 11:42 | 3548498 Vin
Vin's picture

They can continue the gold scam for a very long time as the Fed as "unlimited" resources via the printing press. 

But there will come a point where the amount created becomes so absurd that the currency becomes monopoly money and useless.  We may be close but it's hard to say how long we'll be able to continue buying oil for dollars.

Tue, 05/14/2013 - 11:31 | 3560652 jjsilver
jjsilver's picture

 

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