Collapse Of The Paper Gold & Silver Market May Be Close At Hand

Sprott Money's picture

 

 

 

Hold your real assets outside of the banking system in a private international facility  -->  http://www.321gold.com/info/053015_sprott.html 

 


Collapse Of The Paper Gold & Silver Market May Be Close At Hand

Posted with permission and written by Steve St. Angelo, SRSrocco (CLICK FOR ORIGINAL)

 

 

 

Collapse Of The Paper Gold & Silver Market May Be Close At Hand - Steve St. Angelo

 

 

 

There is something seriously wrong taking place in the markets today. This is also true in the paper gold and silver markets as well. For a paper precious metals futures market to function properly, there has to be ample supplies of physical metal. However, the ongoing trend of falling precious metal inventories points to big trouble in the paper gold and silver markets.

We must remember, a collapse does not happen overnight, but the endgame does. This can be clearly seen in the collapse of the Roman Monetary System:

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As we can see from the chart above, the devaluation of the Roman coin, the Silver Denarius, started slowly about 50 AD. This continued until the silver value of the Denarius plummeted in 241. This had a profound impact on the population of Rome, shown in the chart below:

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You will notice the population of Rome peaked at approximately 1.6 million people about 100 AD, started to slowly decline, and fell off a cliff at the end of the 5th century. The population of Rome fell from over one million people to 12,000 in a very short period of time. Thus, the collapse of the Roman Monetary System paralleled the disintegration of Rome itself.

What took place in Ancient Rome, is also taking place in our global modern high-tech world. When Nixon dropped the convertibility of the U.S. Dollar into gold in 1971, a few years later… the gold futures markets started trading. No longer was the world’s reserve currency backed by gold, instead the Dollar was valued against the gold price traded on the futures exchanges.

Number Of Owners Per Ounce Of Registered Gold Goes Exponential

Again, to have a properly functioning futures exchange, there has to be available supply of metal. However, if we look at the long-term trend of Registered Gold inventories at the Comex, something looks painfully wrong here:

The chart shows the total amount of Registered Gold inventories on the top and the number of owners per ounce on the bottom. From 2001 to 2013, the number of owners per ounce of gold trend line was basically flat.. except for a few blips. But, something changed in 2013 when the price of gold was taken down from $1,600 to $1,150 in a short period of time.

As the amount of Registered Gold declined, the number of owners per ounce shot up over 100 by the beginning of 2014. Then the trend line fell and remained flat until the middle of 2015… when all hell broke loose. This was at the time there was a threat of a Greek Exit of the European Union and concern that the broader markets may crash by the end of the year.

The owners per ounce of gold shut up to over 500 when the Registered Gold inventories declined to only 74,000 oz recently. Since then, there have been some small deposits of gold into the Registered Category and the current owners per ounce is about 250.

Craig at TFmetals Report wrote a good piece describing what may of happened when 73% of Registered Gold inventories plummeted in one day in his article, Connecting The Comex Dots:

1. Once again, the Comex delivery process is shown to be nothing but a Bullion Bank Circle Jerk where a bank takes delivery one month, only to turn around and issue the gold back out the next. Rarely does gold ever actually leave the Comex vaulting system and, today’s action notwithstanding, rarely does it even move from vault to vault.
2. Total Comex registered gold remains at all-time lows. Though some gold has recently been re-classified from eligible to registered as Feb16 deliveries begin, the total Comex registered gold vaults still hold just 145,000 ounces with 3,687 Feb16 contracts still open and standing, representing as much as 368,700 ounces of delivery obligations.

Regardless, if we look at the owners per ounce of gold via the Registered Category, we can see how the trend line has gone exponential. Anything that heads into an exponential trend, doesn’t last for long. This was also true in the Roman Monetary System chart shown above.

Now, what has taken place in the Comex Registered Gold Market, seems to be bleeding over into the silver market.

Comex Registered Silver Owners Per Ounce… Getting Ready To Parallel Gold’s Trend?

According to the data from Sharelynx.com, the Comex Registered Silver inventories and number of owners per ounce are heading in the same trajectory as gold. If we look at the one year chart, the number of owners per ounce of Registered Silver was approximately five in January 2014.

However, this steadily increased over the year and jumped to 27 owners per ounce when nearly eight million oz of Registered Silver was transferred to the Eligible Category on January 28th:

The largest transfer of Registered Silver was from the CNT Depository of 3.9 million oz (Moz). What is interesting about the CNT Depository is that it now only holds 436,500 oz in its Registered Inventories when it had nearly 30 Moz back in April 2015.

Furthermore, if we look at the long-term Comex Registered Silver inventories we can see some interesting divergent trends:

Before the collapse of the U.S. Investment Banking Industry and Housing Market in 2009, the owners per silver ounce declined from above 10 in 2005 to five in 2009. Then as the Registered Silver inventories declined from a high of 90 Moz in 2008 to a low of 26 Moz in 2011, the owners per ounce increased to over 20.

As we can see, Registered Silver inventories began to build after the price of silver hit a record $49 in May 2011 and peaked at 70 Moz at the beginning of April 2015. Then as concern in the stability of the Global and U.S. Markets increased in the summer, record physical silver investment demand pushed wait times for retail products upwards of two months.

Thus, the drain of Registered Silver inventories began in earnest. Now the number of owners per ounce of Registered (Deliverable) is heading towards the 30 figure. While this number isn’t as significant as the Registered Gold’s figure of 250… it has never been this high in more than ten years.

Moreover, there is a divergent trend taking place. When the owners per ounce of Registered Silver went above 20 in 2011, it was due to increased industrial and investment demand as traders feared that the price would continue higher. In contrast, the new record 27 owners per ounce has occurred when the price of silver is now trading 70% lower than its 2011 peak with falling industrial demand.

So, something just isn’t right in the paper gold and silver markets. I believe these charts are indicators that the coming collapse of the paper precious metals markets is close at hand. I am not saying it will happen today, next month or this year… but the trends are heading in an exponential fashion. Again… all exponential trends end in collapse… BAR NONE.

My fear is the collapse of the paper gold and silver futures markets may usher in a NEW DARK AGE. There is plenty of rumor and conspiracy on the alternative internet that the powers that be are certainly planning something to cover up the disintegration of the U.S. Dollar Fiat Monetary System.

In all likelihood, the coming collapse of the economic and financial system will happen virtually overnight. Unfortunately, investors who are still playing Russian Roulette in the broader markets may find out sooner than later, TIMING AN EXIT is folly.

Owning physical gold and silver out of the banking system is the best alternative to the madness that is coming.

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

 

Collapse Of The Paper Gold & Silver Market May Be Close At Hand

Posted with permission and written by Steve St. Angelo, SRSrocco (CLICK FOR ORIGINAL)

 

 

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adanata's picture

Dude.. the global central banking system owns/controls all the fake fiat "money" and the real money; gold and silver, which they hold in their bullion banks. They have moved all the gold to eastern banks leaving the west high and dry. When a fiat fails, as it must, people realize it's worthless so the banksters must go back to real money for a time. When the Sheeple become complacent once again, the banksters slowly withdraw the real money leaving the Sheeple with worthless IOUs.... again.  It's a cycle that has played out over and over. The folks alive today got caught in this section of the cycle. The SHTF in the west when the gold backed currencies and letters of trade show up in the east. When the U.S./west try to get in the game they will be told; show us your gold... and the west won't be able to do it. Unless there's some gigantic hoard hidden off the books and charts, that will be ... shall we say, a "tipping point"...

NoBillsOfCredit's picture

You should stop calling FEDERAL RESERVE NOTES "dollars". You are continuing to perpetuate the fraud. "dollars" have not been produced since the 1930's. Please stop promoting the lie.

toncuz's picture

Does the gold hype ever end on Zerohedge? Still waiting for that broken clock to be right ONCE.

gmak's picture

Same message for the last decade. You're chasing the carrot on a string.

 

relax. If you buy phyz, stop worrying about when the price will reflect 'reality'. I may never get there. Just take comfort that you own a bunch of value batteries, same as China (hint: the lng game. Like me, just hope you have grand-kids to give it to).

JIMSJOE2's picture

I have been hearing the COMEX will go under for years now. Comparing it to a physical market is one of the ploys used by promoters of PMs. Most trades are settled in cash because traders don't want the associated delivery and storage costs but want to trade the market. It is the same in the oil futures market. No trader wants a tanker parked in his back yard. No large purchasers of metals use the COMEX as it basically used by miners to hedge and traders to make cash profits. The ratios are meaningless. I think t was Holder who stated in 2014 that the COMEX would go under in 2 weeks. It didn't and it won't but these promoters still attempt to equate the COMEX as it were a physical market. It is not!

Jungle Jim's picture

When I say "close at hand," I mean *soon*. And by soon, I mean, "within days or at most weeks." I do NOT mean in six to twelve to eighteen to twenty-four months. I do NOT mean in the three to five to seven *years*.

How soon is now? That's when I need it to happen.

Rock On Roger's picture

Sometime in the future.

 

Shouldn't have put all the eggs in one basket, eh?

nathan1234's picture

There are many who think they can trade and make profits and keep the profits.

My only advise to them is

a) you cannot play against a system run by HFT's

b) you do not have the funds to back you like they do. They also have the Government to do their work/ take action to suit them, at their bidding

c) getting your funds out, both your profits and principal my be next to impossible. You will be Corzined.

Greed knows no bounds

If you still wish to go ahead , you will need God's and Lady Luck's help to come out ahead

 

 

detached.amusement's picture

sounds like you forgot what "God's work" is

Pogo5187's picture

THE Enemy of ALL investors – today as never before – is COUNTERPARTY RISK. If all you have is paper for your $$$ I hope it is soft paper, because soon you will be using it to wipe your butt.

GOT PHYZZ?

kenny500c's picture

CBs have now determined that the best way to achieve their goals of devalued currencies and higher inflation is to allow for a much higher gold price. They have concluded that fighting a higher gold price has only led to deflation and slow growth. Just my opinion, of course.

Socratic Dog's picture

Hmm.  Interesting thought.

One-Eyed-Thong's picture
One-Eyed-Thong (not verified) Feb 18, 2016 5:13 PM

AND NO WHITE PERSON WILL GO TO JAIL FOR THIS !

Nutsack's picture
Nutsack (not verified) One-Eyed-Thong Feb 19, 2016 8:08 AM

You low IQ  lesser primates crack me up. jews and white people are not the same, just ask some jews.

SubjectivObject's picture

Bong!     Bong!     Bong!

I love it when you hit the bong[er] like that.

Oldwood's picture

Only two positive scenarios for PMs that I see,

One is the same as all speculators see, a chance at making money from nothing, buy low and sell high.

The second is complete collapse of government, where there is no standard currency and metals are used as substitute.

Any real financial failure that would pretend to benefit gold holders, will be immediately crushed by government in an effort to prevent any subversion of their currency dominance. Gold is a threat, just as right wing conservatives are seen as a threat. Not because they present any imminent danger to personal lives, but because they offer a rational alternative to the existing force structure. And because of that they will feel the boot of tyranny firmly pressed into their necks. Banks will be allowed to hold their gold and keep it on the books for whatever market value the believe it is worth, as long as they don't trade it as an alternative to the dollar. Individuals looking to trade gold for real goods or short term trade for dollars to facilitate trade will be taxed for the privilege...to the point of making it unprofitable to do so. What we need to remember is that it is not the economy we are struggling with but our government and its enabled financial facilitators. Until the government is dead and gone, gold will only be a short term trading tool for speculators...exactly where paper gold is today.

fiatmadness's picture

It's that kind of defeatism that has brought us to the point where these people are running our lives, stealing our wealth and getting away with it. Grow a pair and take a stance!

Nutsack's picture
Nutsack (not verified) Feb 18, 2016 12:45 PM

10 :1 didn't matter

100 :1 didn't matter

500 :1 didn't matter

 

blah bla blah blah blah blah blah

SilverDoctors's picture

@Jeffrey Christian , i mean Nutsack...
PM Fund Manager Dave Kranzler would beg to differ with your opinion.
He's claiming the cartel has made a last gasp grab of phyzz silver and gold... 

Nutsack's picture
Nutsack (not verified) SilverDoctors Feb 19, 2016 8:19 AM

Who? But I am making the claim that it does not matter, which is backed up by the fact that it does not matter. 500:1 did not matter...did it?

Canadian Dirtlump's picture

Leverage doesn't matter until it does. IT WILL at some point, and as the hockey stick forms, we get closer to going from the theoretical to the actual. I'll be boating with my stack in the meantime.

Dragon HAwk's picture

My Coffee can of Rusty nails in the garage, is already far Outside the Normal Banking System.

  don't mind the  Bird shit on the can, that's just Camo paint

Fishhawk's picture

All drivel about the ratio of gold 'owners' at the Crimex is misinformation.  The Crimex is the manipulation of the gold market, and it is run by the One Bank.  They take the other side of whatever position the speculators take - for every short there is a long.  The concept of a 'naked' short is ridiculous; they are all naked.  However, those shorting gold (contracts) may actually hold physical, but have no intention of selling it.  All contracts on the Crimex are settled in cash: it is an electronic casino, where bets are placed on the direction that the price of gold will move next. 

Now the Chinese are buying physical gold, and it has to be supplied from somewhere, either new production, or dishoarded from Western stockpiles.  So 'default' is in fact reflected in the price required to get the current Western owners to dishoard.  That price has not moved significantly in the last three years.  So we do not have 'default' yet, regardless of how many times Sprott screams about the Crimex gold 'ownership' ratio. 

Gonzogal's picture

Both China and Russia have been buying huge amounts of phsyical gold.  Maybe that is why the US wants to invade both countries...to get the gold back! 

kenny500c's picture

Maybe sometime in the future but I can't imagine Obama or Hillary invading any country, even Grand Fenwick.

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) Feb 18, 2016 1:06 PM

"Hold your real assets outside of the banking system in a private international facility"

In other words, give your physical gold/silver to someone whom you've never met, someone possibly in another country but you don't really know, so that they can give you a piece of paper saying that they will return your physical gold/silver shortly after you ask for it back: Paper gold/silver.

Oh, and they might promise not to lend your physical gold/silver to someone or they might not.  And if they can't get your physical gold/silver back to you when you ask, you can fly to their country and sue them.  The Justice of the Village will take up the matter next year when he has time away from the rice paddies.

PirateOfBaltimore's picture

I've been redeeming cheaply bought BTC for gold via BitGold.  Plan to get physical delivery soon.

antidisestablishmentarianismishness's picture

Far out, man.  Do you have any charts from the Stone Age?

Bear's picture

It took Rome only 400 year to collapse ... Waiting for a collapse may take a few more life times.

gdpetti's picture

Didn't take that long, you can't trust the history books that survive under the guidance of 'to the victors go the spoils', this is in reference to the fact that our history is heavily manipulated by those that take over whenever the main or the little comet clusters sweep through, as happened during that 'sudden' collapse of the Roman population.... similar to the same situation in Egypt, when the main comet cluster, aka Nibiru, swept through to mark the end of the Bronze Age. There is a method to the madness, Mother Nature has to periodically reset the program, think of The Matrix. Most of the population loss inland is usually due to plagues that get a boost from the EM effects of the cometary bombardment. Should be arriving after the appearance of our 'dark star' rather soon... that's what that Mayan 2012 year was about, timing is variable as is the nature of our reality, always in flux, Past/Present/Future.... it's all one, as are we. Our civilization is next up to have that Egytian affect, one in which the 'Kings List' is made up later from among the scattered 'kinglets' in outlying areas. Then the peoples will regroup as is the usual process that takes quite some time.

83_vf_1100_c's picture

  I upped you for the entertaining rant. You are wasting time here brother, should be writing a novel.

lakecity55's picture

So...you're saying a lot of meteors come down and hit people on the head and kill them.

Bear's picture

Wow! ... and I thought I was a pessimist.

the grateful unemployed's picture

i interpret that figure more owners per ounce to mean that it is retail buyers who are in the market in smaller increments. its simple enough to run a PM exchange, one buyer one seller, one pays the other in dollars when they settle. you want the gold? heres the dollars go buy it yourself.

the romans started debasing their coins, we have already done that, but we could go back to a gold backed currency, and the IMF issue of SDR scheduled for this year is based on the country's gold reserve, which is why China is buying gold. the CBs will effectively be on a gold standard, because thats what their customers want. and they are going to charge their money account holders for the privilege. there is really no other good reason for NIRP, other than this, the CBs are putting a gold standard in place. (through the iMF) the US will maintain 0 or better rates as long as the dollar is strong.

when the CBs buy gold the price goes down. there is probably another leg down before gold rallies and if the CBs are on the gold standard and gold rallies all THEIR problems will be solved. the beggar thy neighbor policy will take a bit of flip. the essence of the IMF deal to issue SDR according to gold reserves put the BRICs in bad shape, although China is trying, it wouldnt surprise me if their stock market selloff was simply a smoke screen for converting paper assets to gold.

thres a big surprise coming, they are going to sell bonds denominated in SDRs, wink wink nod nod, the pace of global reflation of dollar euro yen denominated debt is just starting, for the unwashed, SDRs are REPLACING dollar euro yen, for the connected, they will ride on top of it, while you continue to carry the old euro dollar yen, they basically rehypothecating their debt away, and they are waving a golden carrot in front of you. 

for my thought you want to be long the physical and short the paper, until such time as you see the bottom is in. i dont think were there yet.

withglee's picture

Do they have classes in double talk ... or is it just your special gift?

the grateful unemployed's picture

comment from an NFL Giants games, announcer says "Eli Manning throws too many interceptions, because he throws into triple coverage.." comment from Phil Sims ,  former Giant QB, "if you cant throw into coverage you cant play in this league.."

RaceToTheBottom's picture

Why yes they do.  Those courses are called "Economics" and the more Ivy the better.

the grateful unemployed's picture

i like gold but for none of the usual reasons. one i think central banks will corner the available supply, and that leaves only new supply coming to market (the miners) and two i thinkwe're all going to be a lot poorer and poor people care more about gold. and three the consumer product bubble (what is the iphone does, its allows you do something you didnt really want to do, talk to your family all the time) will collapse (because we are all a lot poorer) and then a gold medallion will give off the same glow as having the latest consumer gadget. gold is the new iphone.

thanks for linking me to IVY, wish i was i would be in the bahamas right now spending money i made off my hedge fund

withglee's picture

With luck the phone technology will advance to where every device is also a network node and part of a mesh. When we get there, the carrier's backbone will no longer be needed ... nor will the carriers. We have that capability now but the carriers successfully squashed two necessary technologies in the last 10 years. They are ATM (Async Transfer Method) and UWB (Ultra Wide Band). They need to be rediscovered and applied.

detached.amusement's picture

ditto that, and the miniscule amount I have, I use almost daily....or at least I did until I tried boating with it...

cpnscarlet's picture

Despite the date on the article, this is a complete rehash from amonth ago. The only thingworse than the  action in gold and silver since 2011 has been the droning from men like Sprott who  haven't made a good prediction in 20 quarters. Good financial analysis - NOT.

 

Bear's picture

According to the time line on the charts it may take a few hundred more years for the collapse ... so don't hold your breath.

Vendetta's picture

silver coins in Rome were not fiat dollars ... that is the only reason it took as long as it did in Rome.

Proofreder's picture

Ahhhhh, dude - perhaps you haven't noticed;

We are in the first stage of collapse now, today, as we write.  Reality is Now.

d2thdr's picture

They need to be correct only once. That should be enough. Do you want to play the game where you could be wrong?