Is The Perfect Storm Coming For Gold?

Tyler Durden's picture

Due to western central bank price manipulation, the mining sector is in critical condition, the supply line is all but halted, and the physical supply is being swallowed up by Asia. The last shoe to drop is for major mining companies to start closing down production at major mines. Though this would be perceived as the end for gold, speculators will be happy to know that this would be the beginning of the biggest Fed induced bubble in history! But unlike previous Fed bubbles where they support the price increase, the gold bubble will be a result of western central planners mis-managing the gold price for the past 3 decades and finally losing control. As Peak Resources explains in the brief clip, the perfect storm is coming for gold...

 

 

Via Peak Resources,

Friday October 11th, gold trading was shut down for 10 seconds according to the CME.

Why, because someone sold 2 million ounces of gold at one time. Who does this? Who sells nearly 2 and half percent of annual gold production in a single minute? The gold valued at over $2.5 billion could not have been sold by a small trader, and certainly not the smart money, institutional investors know that you don't exit a large trade like this...

So who could it be? Try the dumb money, The Western Central Banks.

As noted by organizations like GATA, TF Metals Report, ZeroHedge, and Shtfplan, gold manipulation is out in the open. Friday October 11th is just one of the daily examples.

With the western central banks suppressing the price, the eastern central banks have been happy buyers.

However, PeakResources.org believes this gold price suppression scheme is nearing its end.

With the Federal Reserve on a fiat currency suicide mission with QE forever, and the U.S. federal government bankrupt, the days of dollar supremacy are in its last days.

For gold though, the central banks have really screwed themselves.

At a price of $1,250, gold mining companies can no longer make a profit. Recent studies show their all in cash cost anywhere from $1,400 to as high as $1,700. Liquid fuels, human energy, and new exploration are costly in the mining process, so it is unlikely these costs can be cut to accommodate the low gold price.

Since gold's peak in 2011, the TSX Venture exchange, home to the worlds gold exploration companies, is down more than 59%

The gold juniors index, the GDXJ, is down 83%

And the large cap gold companies, despite seeing a 400% increase in the price of gold over the past 12 years, are trading at lower valuations then they did even 20 years ago.

As noted in our video Peak Gold, no major gold discoveries have been found in more than 10 years! Gold production as a whole has plateaued.

Remember, all mines have a limited supply of gold, at some point in time they either deplete themselves or become uneconomical. Uneconomical meaning companies can't mine for profit, which is exactly the case for nearly all gold mines today!

Consider a very famous gold mining region, South Africa

In 1971 South Africa produced 47.5 million ounces of gold, accounting for 68% of global mine production.

In 2011, South Africa accounted for only 7% of gold production with about 8 million ounces of mine production.

Despite all the technological advances and billions in exploration and development, South African gold production is down 82%.

South Africa isn't an anomaly either, here in the U.S. production in the past 20 years is down 30%.

Current discoveries are small, in remote areas, and are lower grade deposits.

PeakResources.org recently attended a gold mining event in London, what we learned was that exploration budgets were being slashed! No development, no exploration, and a scaling back of projects.

What this all leads to is a price spike in gold, just as gold rose rose from $35 to $850 in the 70s, The Dow Jones from 2,000 to 11,000 in the 1990, and Bitcoin from a penny to $1,200 more recently, so to can gold have a parabolic spike.

The perfect storm is coming for gold...

Due to western central bank price manipulation the mining sector is in critical condition, the supply line is all but halted, and the physical supply is being swallowed up by Asia.

The last shoe to drop is for major mining companies to start closing down production at major mines. Though this would be perceived as the end for gold, speculators will be happy to know that this would be the beginning of the biggest Fed induced bubble in history! But unlike previous Fed bubbles where they support the price increase, the gold bubble will be a result of western central planners mis-managing the gold price for the past 3 decades and finally losing control.

With fiat currency being pumped into the system daily and the gold sector in shambles, the central banks are in for a big surprise because sooner or later supply and demand economics will crush the very people who are behind the devastation we have seen in the gold mining and precious metal industry.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
DoChenRollingBearing's picture

I would guess that a Perfect Storm will come, and we may not like it!  Even those of us who have gold.

Those without gold will like the Perfect Storm even less.

knukles's picture

Sounds like the good old fashioned central planning economy management program methodology.
The price is too high
So it's held artificially low
Somebody buys up all the output
The profit on new production is naught, so no more is made
And voila!
They have the cheapest priced commodity in the world accompanied by no supply.

Economics a la neo Keynesian control freaks.
I

kliguy38's picture

Central planners all own gold themselves and many including Timma and Benna store it in Swiss storage accounts......Look for the Swiss to keep gold VERY safe for those storing it there thanks to our Central Planners........of course this is only speculation on my part......

NoDebt's picture

With any real store of wealth, it's safety depends on only two points of leverage:

1.  How well you hide it (the preferred and most logical method for your average Joe, like you and me, who hold comparatively small amounts).

2.  The power you have to fend off those who think they might steal it with impunity (how the big boys play the game).

What works for a well connected senior governmental official might not work so well for you, even if your store of wealth is located in the same place, overseen by the same people.  Ref: Cyprus bail-ins and who got advanced word to get their money out of harms way beforehand.

 

kliguy38's picture

Yes.....T and B are small fries and even some bigger players store their gold in Swiss accts......but the real power holds their gold themselves with their "own" protection for it..........silver is nice to own for small fries because your average thief doesn't want to work to carry several hundred pounds of silver even if they "get the info out of you" and of course they can if you aren't prepared......

fonestar's picture

It would be nice to see gold rally, even if only so the gold bugs can stop acting so god damned butt-hurt over other items stealing the show.

boogerbently's picture

I'll ask again.

Miners are the first step in the supply chain. If they raise their price, everyone downline falls in step, no?

Gold was being bought up all the way down to $1200.

stacking12321's picture

miners dont set the price.

sadly, the comex sets the price.

if the comex says $1250 and the miners say, our cost is $1350, we won't sell below $1350, then guess what? the miners won't sell any gold until the comex price rises back above $1350.

i have heard that miners are slowing down production and not opening new mines due to the very low PM prices right now, which makes sense - it is one way that the invisible hand communicates to the market that the price is too low, drying up supply and forcing prices to rise.

 

Manthong's picture

heh heh.. sooner or later that old "supply and demand" thing will kick in. it always does, and..

"the Swiss to keep gold VERY safe "

um, like account information and the independence of the CHF?

I'll just keep my faith in the cheese and the chocolate.

..but damn them.. a sunny spring morning on the lakeside in Montreux is worth a pile of gold.

..and WTF.. F.U. troll.

GetZeeGold's picture

 

 

 

What ever happens just don't yell......rat farts.

 

This much I know.

http://www.youtube.com/watch?v=gzYZOr8boh0

Ar-Pharazôn's picture

that would make perfectly sense

boogerbently's picture

That's the tail wagging the dog.

Miners need to say well, we won't SELL (to you) until the price is $1500.

China will buy.

CHX's picture

as long as others sell at 1200, miners won't sell anything at 1300. but they should hold back from selling at these levels (what sprott has suggested in an oppen letter 1 or 2 years ago). only few have heeded his call. miners right now are crawling thru 7 hells, and the survivors will see light again, eventually.

BlackVoid's picture

For gold, the mines are not the supply chain. Stockpiled gold is the supply chain.

tvdog's picture

Gold stored at a bank is at risk, including allocated gold, and including Swiss banks:

http://www.washingtonsblog.com/2012/07/beware-allocated-gold-may-not-rea...

Carpenter1's picture

No way in Hades the CB's will let a gold shortage just happen. They'll either start a war or try to divert it for their purposes. Don't expect this to just happen without some major event first.

jerry_theking_lawler's picture

so, what you are saying is that the .fed is going to put all of the US gold reserves on an aircraft carrier, send it to China or the Persian Gulf...and let someone use it for target practice? interesting...maybe I should use a simliar plan for my PMs....

Ar-Pharazôn's picture

if we like your gold, we will keep it

aleph0's picture

Switzerland ?
You mean the BIS probably.
AFAIK, they have a contract with Switzerland that makes the Vatican cringe with envy

NoDebt's picture

"As noted in our video Peak Gold, no major gold discoveries have been found in more than 10 years! Gold production as a whole has plateaued."

They should try fracking.  I hear it fixes everything when it comes to creating additional supply.

BLOTTO's picture

25,000 B.C. - gold is valuable...

.

2013 A.D. - nothing has changed.

Deo vindice's picture

The earliest recorded history known is about 5,000 years ago.

There is no written history from 25,000 B.C.

Demonoid's picture

You apparently haven't seen the caves at Lascaux.

jeff montanye's picture

true enough but from them one would get spears and animals valuable but not gold.

Deo vindice's picture

Written form of history is not 25,000 years old. Artistic renditions of animals and nature are not the same.

Ar-Pharazôn's picture

did he say something about written history?

Deo vindice's picture

If there is no written history, there is no verifiable way to prove that statement concerning the value of gold at that time.

Personal bias and guess-work conjecture are not evidences of fact. They are only statements of bias and conjecture.

Ar-Pharazôn's picture

what would make you think if someone already found gold artifacts aged 35k b.c?

Papasmurf's picture

Fracking will eventually make oil cheaper than clean water.

dark pools of soros's picture

the ones that drink blood do not care

BringOnTheAsteroid's picture

Of course, after all the fracking there will be no clean water left.

jeff montanye's picture

that was smurf's point, imo.  the down arrow discrepancy has a variety of interpretations.

Bangin7GramRocks's picture

Clever little trick. Fracking will pollute the drinking water so it will become quite the valuable commodity. When Exxon buys a water company, I am packing up and leaving this festering sore.

kchrisc's picture

As I told a friend recently: "Yup, you can't eat gold/silver, but you sure have a better chance of eating."

"Guillotines are not weapons, they're a solution."

rubiconsolutions's picture

It's time for a few facts:

Multiple sources say that in all of history only 174,100 tons of gold have been mined. That amounts to 5,077,916,551 troy ounces. Sure, this could be off by a bit but that's probably close. We can assume that some of that is at the bottom of the sea. Roughly 50% is used for jewelry, 40% for investments (ETF's, etc.) and 10% for industrial uses. Even if 100% of the gold ever mined was available for monetary purposes that would amount to only .71 troy ounces for every man, women and child on the planet that is currently inhabited by 7.131 billion people. In other words, gold is indeed a scarce commodity. And given the fact that the fed and uncle sam as well as every other central bank in the world have been creating fiat for decades the true value of gold should be in the tens of thousands of dollars an ounce. At some point in time the charade will end, fiat will implode and the central bankers won't be able to artificially control the price of gold. That will be an interesting time.

the tower's picture

BS

Why would anyone pay tens of thousands of dollars for an ounce of gold? An IF then it would only be because by that time the dollar is worthless. 

Gold is losing its value because it's no longer relevant. The price of an article is not determined by scarcity, but by how much people NEED it. Who needs gold, and for what?

The poor sheep in Asia are still stuck in an old world model, that's why they buy gold. Ditto the gold bugs.

Investing is about putting your money into something that people will NEED more in the future. So, gold is out, Apple is out, Facebook is out. Water is in, energy is in. Fill in the blanks.

 

Ar-Pharazôn's picture

i think you missed the part where all our little tech stuffs need gold and various precious metals to run.

the tower's picture

Nah, much better - and cheaper - alternatives are being developed. Gold has no place in future tech.

fockewulf190's picture

I´m supposed to have confidence in a dollar that is being created out of thin air to the tune of $85 billlion per month (not to mention all the currency being created by fractional reserve banking)??  Perhaps you are not aware that every single fiat currency that ever existed in the history of the human race has gone to zero. 

I invest in  hard assets, which include physical gold and silver, because western governments are tens of trillions in debt and cannot pay it back, and on top of that, the banksters have created a $1 quadrillion+ derivatives nightmare that is eventually going to explode. When it does, paper will vaporize and the Great Reset begins.  Hard assets will help ease the pain during the transition to a new system....which will probably be centered on China since they will declare the yuan as the new reserve currency  backed by gold.

Good luck if you believe fiat will save you.

the tower's picture

"Perhaps you are not aware that every single fiat currency that ever existed in the history of the human race has gone to zero..."

This is the point, as the name of the game is making profit and maintaining control, so a new currency will be another fiat currency. TBTB are not interested in a stable currency.

 


All_Your_Base's picture

@the tower

You poo-poo gold as an investment. What about gold as insurance?

the tower's picture

Insurance, sure. Like art, and diamonds. Spend 1 million on a Van Gogh now, and expect to get 100.000 back later (after the dust has settled). The key is to not lose ALL, but you can forget about getting that 1 million back. 100.000 is a good deal though.

During a real breakdown of society (IF there is going to be one when the big reset comes, and IF the reset comes) gold won't be of much help. What is valuable at that point is food, practical things like tools and matches, and even toilet paper will score a nice price (price being other stuff as it will be mostly barter).

So, use gold as an insurance if you can afford to lose up to 90% of it's value (that is if you're rich). Otherwise, buy a house to live in, or improve your current house. It will be a much better insurance, and an OK investment to boot.

Have some fun with the rest of your cash, life is short.

superflex's picture

Oh really,

Do tell us what is being developed to replace the unique electrical and chemical properties of gold and silver, and what that cost of production is?  

I hear Unicorn farts will power my car in 10 years.  Does that mean crude oil prices will fall?

the tower's picture

http://news.softpedia.com/news/New-Alloy-to-Replace-Precious-Metals-in-Electronics-160909.shtml

This research has managed to improve contact resistance up to one-million-fold that of pure base metals, allowing base metal contacts to be prepared with contact properties near those of pure gold.

The research was funded by a grant from the US Army Research Office, and it appeared online in the October 12th issue of the journal Applied Physics Letters.

There's many articles to be found on the subject, lots of research taking place and some viable alternatives have been found. Juat like diamonds, industry doesn't need the real thing.

Also, very little gold is used in electronics to begin with.

Crash Overide's picture

Yeah tower and quantum computing is right around the corner too but it doesn't mean traditional computers will disappear.

Have they learned to replace the solar, medical, and healing qualities of Silver with their electron/polaron hopping or is that in another vague article?

the tower's picture

Nothing vague about that article. Do some research, there's a lot going on at the moment with respect to how our gadgets are going to be built in the very near future (the next 5 years).

Nothing justifies absurd gold prices in relation to tech - or silver for that matter - since the quantities used are very low to begin with, and being replaced with cheaper materials as we speak.

unrulian's picture

You miss the point...Gov's need a currency to function and when the $ collapses they will create a new one and it will have to be backed by something as people will not have faith in fiat after the collapse....PM's won't be much help to anyone until a gold backed currency is established; that's when the gold bugs and asia will do fine (if it isn't taken before hand)

the tower's picture

You miss the point, the name of the game is making profit and maintaining control, so a new currency will be another fiat currency. TBTB are not interested in a stable currency.

XitSam's picture

"The people" don't understand a currency backed by a commodity1. When fiat collapses they will trust the government (again!) and get a new fiat "guaranteed to be stable.  Trust us this time, those nasty speculators drove our money into the ground and they will be punished.  Also punished will be gold and silver bugs for spreading lies, there must be no competition with the new, improved, safe money."

What they will lose faith in, is the fiat that failed. They wii not understand that the lesson applies to all fiat.

1 They may have at one time, but several generations of public school have erased that.

the tower's picture

Hear hear! Glad to see there are still some people who have an open mind.