‘Tapering’ may be put off indefinitely due to the very fragile state of the massively indebted U.S. economy. This means that interest rates must be kept low for as long as possible, leading to money printing and electronic money creation on a scale never before seen in history.
This will inevitably lead to higher gold prices - the question is when rather than if.
Silver’s fundamentals remain very sound, with a very small finite supply of above ground, investment grade silver coins and bars and robust and increasing industrial and store of value demand - particularly in Asia.
We continue to believe silver will rise to its real record high or inflation adjusted high of $140/oz in the coming years.
Two hours prior to the Federal Open Market Committee (FOMC) release, gold was trading below $1,300/oz but started to gradually tick higher prior to surging higher on heavy volume, minutes prior to the release of the FOMC statement.
FX markets, stock, bond and commodity markets did not see similar large moves.
Singapore is already the fastest growing wealth center in the world with $550 billion in assets under management and now aims to become a gold trading and storage hub.
"If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That's the fiscal gap," he says. "That's our true indebtedness."
David Asman: What happens now? If it’s Yellin she'll be like Bernanke on steroids. What does that mean for our economy?
Dr Paul: Prepare for the destruction of the dollar and the crash of the bond market one day. The bond bubble is weakening although the interest rates have doubled in the last year.
The Federal Reserve decision to refrain from and put off indefinitely a QE taper is very bullish.
The Fed is struggling to keep interest rates low for as long as possible in a desperate attempt to prolong a very fragile U.S. recovery or non recovery in our opinion.
Money printing and debt monetisation on this scale has led to higher gold prices throughout history and will do so again.
The Federal Reserve is effectively insolvent and investors and savers should prepare for falls in the U.S. dollar, a dollar crisis and an international monetary crisis.
Compared with Japan, the United States national debt is a mere $17 trillion or so. But if you convert that number into yen, it comes to about 1.6 quadrillion.
We laugh at children when they talk about bazillions and gazillions but a quadrillion is no laughing matter. Measuring any currency in quadrillions brings to mind the many hyperinflations seen in the 20th and 21st centuries. For example, the powerful and very wealthy Germany in the early 1920s and wealthy Zimbabwe, the breadbasket of Africa in 2008.
Japan's soaring national debt is already more than twice the size of its economy.
The U.S. Federal Reserve is insolvent and has liabilities of over $3.2 trillion and yet has capital of just $60 billion. Therefore, it is leveraged by fifty to one, akin to a highly leveraged hedge fund.
Gold and silver futures surged 2.1% and 3.6% respectively and the dollar fell on the open in Asia prior to determined selling which again capped precious metal prices. Analysts and media attributed the price gains on the withdrawal of Larry Summers from the race to be the new Fed Chairman, leaving Janet Yellen as the new frontrunner.
The collapse of Lehman Brothers, the risk of other large important banks failing in the coming months and the still significant systemic, macroeconomic, monetary and geopolitical risk of today shows the vital importance of real diversification and an allocation to physical gold.
Gold prices fell sharply again just prior to European markets opening, in aggressive selling which saw gold quickly fall from $1,355/oz to $1,343/oz at 0754 GMT. Support at $1,360/oz was breached overnight and gold should now test support at $1,320/oz.
The decline in gold coin sales and robust silver coin demand was seen in other mints including the United States Mint, the Royal Canadian Mint and other mints during the month.
The Royal Canadian Mint last week reported a surge in revenue and profitability for the second quarter of 2013. Revenue increased by 93.8% to $1.05 billion and this represented the first time in the Mint's history that quarterly revenue exceeded $1 billion.
A COMEX default on delivery of precious metals and specifically of gold bullion bars remains a risk. It is of significant importance and that is why we have covered its possibility since 2011. A COMEX default would have serious ramifications not just for precious metals markets but for the wider commodity markets, for the U.S. dollar and all fiat currencies and our modern monetary system.
