The leverage in the economic system has become so extreme; investors have no idea of the disaster that is going to take place during the next stock market crash. The collapse of the U.S. Housing and Investment Banking Industry in 2008 and ensuing economic turmoil was a mere WARM-UP for STAGE 2 of the continued disintegration of the global financial and economic system.
While the U.S. and the global economy have seemingly continued business as usual since the Fed and Central Banks stepped in and propped up the collapsing markets in 2008, this was only a one-time GET OUT OF JAIL free card that can’t be used again. What the Fed and Central Banks did to keep the system from falling off the cliff in 2008 was quite similar to a scene in a science fiction movie where the commander of the spaceship uses the last bit of rocket-fuel propulsion in just the nick of time to get them back to earth on the correct orbit.
Thus, the only way forward, according to the Central banks, was to increase the amount of money printing, leverage, asset values, and debt. While this policy can work for a while, it doesn’t last forever. And unfortunately, forever is now, here….or soon to be here. So, it might be a good time to look around and see how good things are now because the future won’t be pretty.
To give you an idea the amount of leverage in the markets, let’s take a look at a chart posted in the article, A Market Valuation That Defies Comparison. The article was written by Michael Lebowitz of RealInvestmentAdvice.com. I like to give credit when credit is due, especially when someone puts out excellent analysis. In the article, Lebowitz stated the following:
The graph above highlights that valuations using this measure dwarf any prior valuation peak since at least the 1950’s. At over 350% above the mean, stock investors are currently paying significantly more for a unit of economic growth than at any time in the last 70 years. To extend the analysis, we estimated the adjusted CAPE level of 1929, as shown on the graph, and come to the same conclusion.
Most astute investors know that stock valuations are at or near historical highs. Even these investors, however, may be unaware that today’s valuations, when adjusted for the level of economic growth and heightened profit margins, defy comparison with any prior period since the Great Depression. The simple fact is that investors are paying over three times the average and almost twice as much as the prior peak for a dollar of economic growth. Furthermore, it is happening at a time when we are clearly late in the economic cycle and the outlook for growth, even if one is optimistic, is well below that required to justify such a level.
The ratio in the chart comes from companies’ profit margins and the GDP (Gross Domestic Product) adjusting CAPE (cyclical average price to earnings). The important takeaway in the chart is that this ratio today (3.63) is much higher than in 1999 (1.91) or right before the 1929 Great Depression (2.68). Thus, the author is suggesting that investors are paying over three times the average for a dollar of economic growth. While this can continue a bit longer, the higher it goes, the bigger correction and return back to normal levels.
When the markets correct, I believe they will correct violently…. or most likely crash at some point. Thus, the next market crash will cause the largest panic gold buying in history.
Setting Up The Foundation For Coming Gold Panic Buying Market
To understand the staggering amount of investor gold buying during the next market crash, we need to take a look at past trends in the gold market. For example, there are three different volumes of global gold investment. Actually, there is a fourth, Central Bank gold demand, but I am going to exclude it to focus only on private investment.
First, we have total global gold coin and bar demand. As we can see in the chart below, global gold coin and bar demand increased significantly during the 2008 U.S. Housing and Investment Banking Collapse. Gold coin and bar demand nearly doubled to 875 mt (mt) in 2008 from 442 mt in 2007:
As the gold price reached a peak of nearly $1,900 in 2011, gold coin and bar demand shot up to 1,498 mt. However, as the price of gold fell by $500 in the first half of 2013, investors seeing an excellent bargain, purchased a record 1,716 mt of physical gold investment. But as the gold price continued to fall and remain weak in 2014, 2015 and 2016, gold coin and bar demand stayed flat at a little more than 1,000 mt.
Furthermore, as the stock market took off after the election of President Trump to the Whitehouse and as Bitcoin and the Cryptocurrencies experienced nosebleed percentage gains, demand for physical gold investment fell even lower in 2017.
Even though physical gold investment demand over the past four years is less than during the 2010-2013 period, it is still more than double than what it was in 2007, before STAGE 1 of the Collapse… the infamous Subprime Housing Meltdown.
Global Gold ETF Demand… The Nasty Wild Card
While many investors in the alternative media community don’t believe that the Gold ETF’s hold all the gold they report, I look at this market as one of the most important indicators, or better yet, the critical Wild Card. I really don’t care if these Gold ETFs hold all the metal they claim. If you are a prudent precious metals investor, you will hold most (if not all) of your gold physically. However, the Gold ETFs provide us with the most important indicator in the gold market.
Why, because a large percentage of Gold ETF demand comes from retail investors. Most precious metals diehard investors only believe in purchasing real physical metal. So, when we see significant changes in the Gold ETF market, then it means the 99% of retail investors in the market are waking up. The two largest increases in Gold ETF demand (and their inventories) were during two fearful market events… Q1 2009 and Q1 2016:
Of the total 624 mt of Gold ETF demand in 2009, 465 mt of that amount took place during the first quarter when the Dow Jones Index was falling to its gut-wrenching lows of 6,600. Retail investors were in panic mode, so they were moving into Gold ETFs in a big way. Thus, 75% of total Gold ETF demand in 2009 took place during the first three months of the year.
The next highest amount of Gold ETF demand was in 545 mt in 2016. However, 350 mt or 64% of total Gold ETF demand that year also took place during the first quarter when the Dow Jones Index fell 2,000 points. Something seriously spoked retail investors to plow back into gold during that period. Moreover, as the Dow Jones was falling 2,000 points, the gold price was shooting higher by $200. So, individuals who believe gold will selloff down to $750 with the next market crash, need to REREAD the sentence above.
Okay, getting back to the Gold ETF chart. As the stock markets recovered in 2010, even as the price of gold surged to $1,900, Gold ETF demand continued to fall to a 306 mt in 2012. However, as the gold price lost $500 in 2013, retail investors sold off their Gold ETF investments in record numbers. As we can see, Gold ETF inventory liquidations were a stunning 912 mt in 2013. As retail investors were selling their Gold ETF investments, precious metals investors around the world were buying physical gold, HAND OVER FIST. It was in 2013 that global gold coin and bar demand surged to 1,716 mt.
After the initial gold price smash in 2013, Gold ETF liquidations were reduced to only 184 mt in 2014 and 125 mt in 2015. Again, it wasn’t until the stock market suffered what investors thought as a worrisome correction, did Gold ETF demand returned in a big way in 2016. And as the stock and crypto markets shot up towards the moon and stars, Gold ETF demand declined considerably in 2017.
Again, I am not going to debate whether or not the Gold ETFs hold all the gold they claim. If you are smart, you own physical gold and if you want to trade profits, then using Gold ETFs for that purpose is understandable… but not to PROTECT WEALTH, only to trade for profits.
Total Gold Investment Demand Fluctuates Due To Fickle Retail Investors
If we combine gold coin and bar demand with Gold ETF demand, we have another chart. This chart represents the NET global gold investment. As we can see, total global gold demand was the highest in 2011 when the gold price shot up to $1,900 in September of the year:
After the 2008 U.S. Housing and Investment Banking collapse, and as the gold price recovered, total global gold investment increased from 695 mt in 2007 to a peak of 1,730 mt in 2011. It wasn’t until 2013 when the gold price lost $500 did the massive global Gold ETF liquidations impact overall demand by cutting it in half to 803 mt versus 1,610 in 2012. And as I mentioned above, total global gold investment didn’t rise until FEAR in the markets reappeared at the beginning of 2016 when retail investors flocked back to Gold ETFs.
While global gold investment is forecasted to decline in 2017 to 1,155 mt, due to investors placing their bets in the rapidly rising stock and crypto markets, I believe this is the CALM before the STORM. Unfortunately, retail investors have been lured to sleep by rising asset values that they don’t realize the market is setting up for one hell of a correction-crash.
What Record Gold Investment Will Look Like When The Markets Finally Crash
By looking at previous record years of gold coin and bar investment as well as Gold ETF demand, we can estimate how much total gold investment will increase during the next market crash. For example, there was 624 mt of Gold ETF demand in 2009 and 1,716 mt of gold coin and bar investment in 2013:
If we add these two previous record years together, we end up with a total of 2,340 mt of total gold investment. Now, this figure represents what has already taken place in the gold market during both peak periods of gold investment demand. However, if we estimate the kind of demand that would take place during the next market crash, it can undoubtedly reach 3,000 mt or even 4,000 mt during a full-blown market meltdown.
Investors need to realize that the decade-long Fed and Central Bank band-aid of massive money printing and exponentially rising debt levels since the 2008 market crash has not fixed the problem, it has only made it worse. They have inflated asset values of stocks, bonds, and real estate to such high levels; a normal market correction will turn into a panic crash. The next market crash will be like nothing we have witnessed before. Thus, panicked investors will move into the safe-haven gold market in record numbers.
I believe we could easily see 1,000+ mt of global Gold ETF demand and 2,000+ mt of gold coin and bar investment during the next market meltdown. However, total global gold investment demand could approach 4,000 mt and exceed it if the Fed and Central Banks lose control of the markets. And, it’s not a matter of “IF,” it is a matter of “WHEN.”
According to the World Gold Council, total gold demand in 2016 was 4,350 mt, with total gold investment demand of only 1,587 mt. Thus, gold investment accounted for only a little more than a third of overall gold demand last year. When global gold investment demand surges to 3,000 or even 4,000 mt, where is the supply going to come from when investors around the world realize the GIG is up?
Lastly, the critical WILDCARD in the gold market is the retail investor. The retail investor accounts for 98-99% of the market. So, when the retail investor gets spooked as FEAR starts to motivate their investing decisions, we could see insane Gold ETF demand. Unfortunately, there may not be enough physical gold to go around. Thus, Gold ETFs may not be able to access the metal to increase their inventories in relationship to rising demand.
So, it makes perfect sense that the real FIREWORKS in the gold market will take place where 99% of the market makes the decisions. While the 1-2% of precious metals investors would most certainly increase the gold and silver holdings during the next market crash, it’s the retail investors that will totally overwhelm the gold market.
Keep an eye on Gold ETF demand as it will be the crazy WILDCARD.
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Is this about the come back of the retail investor?
Michael Kohlhaas,
It’s not about the comeback of the retail investor, rather it is the RECORD PANIC GOLD BUYING by retail investors that will overwhelm the market.
steve
Got it!
Debt Piled On To Pay Debt.
Since 2008 Fed intervention has been $33 trillion to give a cumulative economic growth of $2.64 trillion, or 16.7% since beginning of 2009. This equates to $12.50 of Fed inventions for every $1.00 of economic growth.
This is what is known as; ‘The Marginal Productivity of Debt’ or ‘The Debt Trap’.
As of yesterday, the Fed has injected $8 billion into the residential mortgage market, since the beginning of the year. Reducing their balance sheet? I don’t think so!
This morning Mario Draghi revealed that the ECB is to keep rates unchanged, but reaffirms the taper and may increase QE in size and/or duration. The central bankers still want their cake and eat it to! Sorry, digging a deeper black hole of debt just makes the trap all that much stronger, and ensures a horrendously higher cliff dive. Those that survive the coming calamity will have gold and silver parachutes. Have a safe landing.
Any freaking time now ! I do have a question. The fed isn’t answerable to anyone but it’s owner banks (which we aren’t allowed to know ) and can’t (really) get audited. Apparently they gave $16 Trillion to banks globally after the 08 crash, (in a c “swap”) which we don’t know if they ever got back. http://bit.ly/2uj7oxO
What if they are already buying stocks, etc ? Can’t they just print trillions, buy stocks and push the market up for decades (covertly through offshore “banks” etc) ? If need be, they can just buy treasuries, not collect the interest, and at maturity not ask for the $ back from the government ? They can just print the $ and give it to their owner banks, without ever telling us, no ? Who’ll know, and stop them ? I know about Weimar, but it wasn’t the global reserve currency, and didn’t have the military capacity to force most countries to do as it wants. If so, no important bank will ever fail , the debt is irrelevant (as Greenspan said all along). This would serve the banks, corporations, government, and only the middle/lower classes would have their standard of living gradually decrease – which wouldn’t bother the Govt (they have been militarizing the police for a reason). As for the PM’s – the Canadian govt sold ALL its gold recently, and if pushed, so will the ever subservient Germans, Brits, Aussies etc, so the notion of a physical shortage is far fetched, isn’t it ? Not trolling (I own mining shares) but I can’t be the first person to think of this, and no one ever has an answer…
Interesting thought.
My first and strongest thought is confidence. All fiat currencies currently exist because of confidence and by way of under-pinning all financial assets. Once this confidence is lost (its becoming weaker by the day as evidenced by the USD) and the bond market rolling over, then the jig is up. Stay safe.
Confidence based on false beliefs “We’ll know our disinformation program is complete when everything the American public believes is false.”? william caseycia director in 1981
Disinformation like “believing the dollar is money” and that “stock markets and property only rise”
Emil,
You make some great points. The thing is, fundamentally, you can only repay debt with more debt for so long. Central banks can only buy so many forms of debt for so long to prop up stocks, treasuries, the govt., etc. for so long. Eventually, you get to where things are now, where it takes a sitting president to talk up the dollar like what happened today (bear in mind during the campaign he was saying stocks were a bubble, etc.).
The truth is in the US that you cannot have tax revenue temporarily decreasing, infrastructure & social spending increasing, while the cost of borrowing is increasing, trying to increase US exports, saying you want a strong dollar, and meanwhile your largest suppliers pegged at a fixed exchange rate. At some point sooner than later soon something’s gonna break.
How about the government buying dividend paying stocks in order to make interest payments?!? It seems viable to me as long as they can keep it secret.
Thank you for your replies. Appreciate them – but I hear nothing tangible just “eventually”, “at some point” etc, which mean zero. We are a narcissistic species – we want to think something spectacular will happen in our lifetime (because we are so special). The leading Austrian economists at the time of Bretton woods predicted that the global economy will totally collapse by 1980 without the gold standard. If you read economic papers from the time, most of them went to the grave denying facts on the ground, and kept pushing the timeline back, over and over again (sounds familiar ?).
As a side note, Japan should have collapsed long ago, with all the $printing, monetizing their debt for well over a decade – BOJ buying everything in sight. Yet the yen just strengthens, and is a “safe haven currency” instead of toilet paper. The alt “news” community claims “Japan is a mess” but it isn’t. My employer (RBC) does a lot of business, friends/coworkers of mine have spent a lot of time there. Full employment, low inflation, good living standards despite a dearth of resources and a massive demographic bubble, and they don’t keep voting for Abe because things are bad. If they can keep it going this long, do you think a superpower w the res currency will fold in the next 3 generations ? You’ll never read any of this on the alt sites – Catastrophism sells.
Btw I love how everyone just ignored my “the US can push most countries to dump their gold (as they did to Canada), or just take it (Libya, etc), so so much for your “physical shortage” notion” comment. I guess it’s a demonstratable fact that’s not convenient 🙂
We’re not ingnorng you, we are avoiding you. We will get around to ignoring you later!
TROLL MUCH?
Emil
You are one of the few who identifies that the current status can persist for many more decades. You are exactly right with the Japan scenario – their problems have been papered over (money printing) for 20 years and all seems to just function just fine, when in fact their currency should be worthless toilet paper. And you are so right about America confiscating / stealing gold from sovereign countries without consequences. The Federal Reserve is a law unto themselves and untouchable. Along with their control of government and propaganda machine (western mainstream media)they can keep this charade going indefinitely. Nobody has explained why debt cannot continue to be printed indefinitely to settle existing debt. It has been going on for 10 years and the financial system continues to function just fine – albeit inflated asset prices, more leverage, etc. Many analysts, particularly precious metals investors have called for a major crash every year since 2009 on the basis that the money printing and low interest are not sustainable. and they continue to spew the same message today. If you had been a precious metals or mining sector investor the past decade you have been decimated waiting for the system to collapse. Its deja vu and the Fed controls the global game with their central bankers, IMF and BSIS.
Kevin,
Thanks for stopping by and leaving a comment. However, I gather you are new to this site, my work, and analysis. I disagree that BUSINESS AS USUAL with the Banks and the highly leveraged DEBT-BASED system will last decades. I see things falling apart a lot sooner because of the Falling EROI and our dire Energy Predicament.
So, please learn more about my energy analysis and why the U.S. and Global Oil Production is likely to collapse sooner than the market realizes. This will destroy the system much faster than many expect.
steve
“the notion of a physical shortage is far fetched, isn’t it ?”
There can never be a shortage of physical gold. Its a matter of price. Right now it seems to me the market is in about a state of equilibrium. All the newly mined gold is being bought up. If the price goes noticeably lower, buying exceeds supply and prices return; if prices go high, the bullion banks short the market to cool down buyer interest and return things to their former equilibrium state. But the situation for the bullion banks is different now. It appears they have little in the way of physical gold to dump into the market. Also, it seems the bullion banks have over done running their fraud. Gold production is in the process of falling hard due to the uneconomic low grade ore that so many mines must rely on. This will change the market dynamics. In 1980 world wide debt (which is actually money added to the system) was at about 50% of world GDP. Today world wide debt is about 300% of world GDP. Yes folks, that’s how much money has been pumped into the system and the reason food prices are about double from 15 years ago and why real estate and stocks are so expensive. If gold were to be priced against this metric (world wide debt), then following the ratio of 1980 implies a gold price of $20,000 to $25,000 per ounce. Had the bullion banks not perpetuated the fraud they have done, gold would likely be in the area of $5000 per ounce or higher (just to keep up with basic monetary inflation). Will there be a big rush into gold??? One has to wonder. If the system collapses and folks can’t get access to their money, how can they buy gold? That said, it could emerge as a premier form of trade, and in that way have its price rise.
I just sold some gold and wasn’t able to get a good price. Big discount to spot. This means dealers can’t move the inventory. If they were, they would buy at spot and sell higher.
I’m just reporting to you from on the ground, my experience contradicts the assertion that people are moving into gold. Sure, they may at some point, but right now they aren’t.
Bad attempt. I’m looking at https://www.coininvest.com/en/gold-coins/maple-leaf/1-oz-maple-leaf-gold-coin-2018/ which says buy back price is 1.093,26 eur while spot price according to goldprice is 1085 eur and a few cents at the moment.
But I believe you had a good time convincing yourself you’d convince others.
Here is dolph at silver doctors making a strikingly similar comment 2 days ago.
https://www.silverdoctors.com/headlines/world-news/gregory-mannarino-issues-an-alert-they-are-killing-the-dollar-because-they-cant-have-it-both-ways/
With a touch of research you can often find if anyone has an agenda.
People might want to look up “I was a paid internet shill” at a search engine and learn about how those people are assigned a few websites to visit daily and leave comments. I got my eye on you dolph. For a long time actually. I’m not buying your story.
Fully agree
dolph,
That means you sold it to the wrong dealer. Get back with me in 2-6 months when Bitcoin and the cryptos have sold off another 25-50+%.
steve
Steve,
I will remember this statement and write it down in my calendar. So by July Cryptos down 25-50% Funny how people who never saw cryptos coming are now the experts on how they will move.
GLP,
Be my guest. By the way, you have no idea the amount of LEVERAGE & FRAUD in the crypto market. So, I will excuse your bullish opinions on cryptos because it seems that you are quite ignorant of the level of fraud and leverage.
steve
You are beginning to sound like an official mouthpiece of TPTB. Leverage and fraud? Quadrillions of fiat and derivatives exist created by the whim of TPTB banksters and you call a mere 500 Billions of cryptos fraudulent? So laughable of how you paint with such a broad brush. A crypto expert? You didn’t see them coming and now somehow you know that they ALL are fraudulent. It is so sad that the PM experts who have lost Tens of thousands for their followers now constantly bash the asset class that so many of those former victims are now able to enjoy great wealth from. You are losing your credibility day by day.
@GLP
Simply pointing out that the government’s running a ponzi doesn’t make your private ponzi any better. (At this point, it’s really a semi-private ponzi, since the big banks are already involved knee deep). It just goes to show that you like this specific ponzi, because you are able to profit from it.
What Steve’s saying is that those profits can go away just as quickly as they came about. After all, it’s a super tiny speculative market which went straight up in a blow-off top and then collapsed 50% in a matter of a month.
Maybe try to be less arrogant and more accepting of different opinions. But I guess looking at a bunch of “wealth” on your computer screen is reason enough nowadays to act like the head honcho… And there’s something profoundly disturbing about that.
The last 12 days, many parties have been trying to crush bitcoin down. It has gotten as low as $9,200, but hasn’t had a single daily close below $10,600 (yet) in this new year – despite a lot of effort to short this market and keep the bear in tact. Bitcoin holders don’t help the floor price levels, traders and weak hands allow it to go low. The holders are reflected on the upside swings when despite 100-300% gains they still don’t sell and continue to hold.
Steve laments leverage, fraud & liquidity issues but this is because he looks at everything through the lens of USD profits. When I make a million in crypto, I don’t want to cash out to USD, I want to spend my crypto for goods and services directly…. to others who fdon’t want to “cash out” but take and spend their crypto…. to others who don’t want to “cash out” – see the pattern? By checking out of “their” fraudulent and rigged system we don’t need to go back, we merely need mass adoption. We aren’t there yet, but get back to me in 2025 and let’s see where we are.
@SD
As far as I understand, what your arguments on this website really boil down to is that you believe that one or more cryptos will experience mass adoption in the future.
Now here is a question — do you consider the move that has happened in the cryptos from late November 2017 to early January 2018 proof of such mass adoption? If so, I disagree with you 100%. That wasn’t adoption of the concept by the masses, that was a speculative blow-off top when cab drivers wanted to get in on the action because they’ve heard about bitcoin on CNBC.
But other than this one occurrence can you point me to any other proof regarding real-world adoption by the public? I don’t mean in your personal opinion or what pie-in-the-sky possibilities might there be in the future, but tangible proof that millions of people are now coming to the realization that the government ponzi is unsustainable and therefore they are turning to the use of cryptos? I don’t see any proof of that whatsoever.
On the other hand, should bitcoin collapse below $10k and close the month there, then the price will head much lower. And all the other cryptos will follow bitcoin’s lead. That will lead to the exact opposite of any kind of adoption. And therein lies the problem with cryptos. Nobody’s going to adopt them in the way you suggest, i.e. merchants accepting cryptos directly (not through bitpay!), taxes paid in cryptos, bonds issued in cryptos, life insurance paid out in cryptos, etc., if the price can go up hundreds of percent and then collapse 80-90% in a matter of months. But unless they get mass adopted, large speculators will make the price go up and down that way. Do you see the conundrum here?
And that’s just scratching the surface as for the many many many problems with cryptos…
@ Peter
Proof of mass adoption:
1) Number of customer accounts at exchanges has gone crazy. Many like Bittrex aren’t even accepting new accounts anymore. Binance stopped and is now opening up to new users 1-3 hours daily and then closing again. They get 200k new users in that time window EVERY day. Coinbase is the #1 downloaded app for iOS.
2) The number of crypto hardware wallet sales. Ledger planned to sell 50,000 units in 2017. They sold over a million. There is a constant months long wait for crypto hardware wallets.
3) Mining GPUs are almost always sold out as people want to construct mining rigs. Prices are going up for these specialized cards.
4) Crypto is accepted by a lot of merchants. Buy plane tickets at expedia, gold & silver at APMEX or JM Bullion, Overstock, and the big one is Craigslist – the decentralized peer-to-peer exchange. It now lets you search “crypto accepted” as a searchable feature. The wallet software and interfaces will get better and easier for big fortune 500 companies in the future. We aren’t “there yet” but we will be in a few short years.
I have been into crypto since 2013. I’ve watched adoption go from internet geeks to early adopters. Late 2017 to now isn’t the mass adoption, it is the start of the parabolic S-curve. Whether that adoption is through 1) philosophical ideals, 2) desire for profit, 3) ease of use, 4) a vote against the current system, 5) desire to fit in with the cool crowd, 6) tech nerds….. I do not care. People have their own reasons for getting into crypto. Once there, people discover other upsides they hadn’t thought of previously. When I see people using the term fiat to describe USD on blogs, facebook, etc you know there is a consciousness rising. PMs are great but they aren’t exciting, they don’t inspire people to action. Try getting anyone under 30 to buy PMs when crypto offers a similar hedge against fiat, with profit potential and easy adoption and many new use cases across numerous industries. Nobody from the PM world is yet to answer my question about how they envision us using PMs as a day to day currency in a modern digital online world. It is always about the whole system collapsing and us going back to a near barter system. Ok, well that sucks. What if that doesn’t happen though? Why not have some crypto just in case? I hold both.
When you say if BTC goes under $10k that will hurt mass adoption, I disagree. It will allow people who are waiting on the sidelines a good entry price. And there is a lot of money on the sidelines waiting for it.
Bonds will be paid out in crypto, and I actually love the idea of buying life insurance in crypto and paying out in crypto – thanks for that idea. You just aren’t close enough to the crypto world to see it yet. It is happening, and will happen soon.
In the early phases of most adopted technologies there were many problems and doubters who said “that can never happen because x” and the same is happening with crypto today. Luckily we didn’t give up on electricity, the internal combustion engine, the dream of flight, the telephone, the internet, and on and on because there were early doubters or objections. Bitcoin gave us triple-entry accounting and it is going to change the world.
@SD
Rising numbers of exchange accounts, GPUs, and hardware wallets are a proof of the mania I described in my post. That’s not mass adoption. As the prices fall, so will the number of new accounts and the sales of these specialized gizmos.
None of the merchants you listed accept bitcoin for their services. They ALL redirect you to a third party which gets rid of the bitcoin and gives them CASH. Expedia and Overstock redirects you to Coinbase. Apmex and JM Bullion redirects you to Bitpay.
Yes, I see that your narrative has now shifted to the “we’ll see in 2025 who’s right” kind. I presume that once 2025 arrives, you will stretch out the timeline to 2050. Some parts of the crypto technology may become useful in time but most of it is worthless fluff (such as blockchain). However, people invest money in it not because of what possibilities the future holds, but because of the price action. That’s pure speculation and is fully in line with the fiat system. People entering the crypto space today are definitely not against the dollar, they are all for it and they want more of it.
People who purchased bitcoin at $19k, $18k, $17k… and will see their investment fall by 60-70-80%, will sell and never touch cryptos again. Wild volatility is not a friend to small investors, only to large speculators who manipulate the markets.
None of the things I mentioned in my first post (bonds, life insurance etc. paid out in cryptos) will ever happen using the cryptos currently in existence. Future crypto tech will make current crypto tech obsolete. If there’s ever to be a world where cryptos will replace the dollar, it’ll be because the government will be in charge of that crypto. It will be a fully digital dollar and the rest of it will be simply banned.
The technologies you list (electricity, telephone, etc.) have nothing to do with cryptos. I highly dislike this kind of disingenuous fluff. The added value in cryptos is nowhere near the level of those technologies. You are trying so hard to fit a square peg into a circle opening. It just won’t fit, man. The mania will die off, people will lose a bunch of money, a legal tornado will ensue, the big bosses in the crypto space will go to jail, and the rest will run for the hills.
So you wait for 2025 or whatever number makes you happy and HODL all of it. That’s on you. But, please, have some integrity and don’t recruit for the ponzi. Let the prices drop to $1000 for bitcoin or $10 for ethereum and let people decide for themselves whether they want to play with them then.
@ Peter
Step 1: Demand evidence for mass adoption. Step 2: Receive said evidence. Step 3: Claim it isn’t mass adoption, just speculation. Nice movement of the goalposts. For some reason using BitPay or Coinbase doesn’t count as crypto usage? Interesting. This is the first step. Bitcoin isn’t even a decade old. Second generation crypto are 2-3 years old, yet your complaints that crypto hasn’t taken over yet means it has failed and will never work – and then get upset at me saying give it 7 more years for mass adoption? Whatever guy. For somebody who hasn’t owned any crypto you sure seem to know a lot about future adoption, and price predictions. And I’m the one being disingenuous? I’ve actually put my money where my mouth is. You’ve done nothing but bash crypto. Critics are a dime a dozen.
So who is going to jail? Satoshi? I find it so odd that PM bulls lick their lips with glee about a possible government crackdown on crypto. You’d be next in line when a fascist government decides two parties can’t freely trade digital items between each other. I’m not forcing anyone’s hand to buy anything. People are responsible for their own decisions. God forbid they should hear an alternative opinion than simply to buy gold.
Fraud Steve? It’s everywhere! the trick is to be at the right place and time to make massive profits.
Sadly for you and me, Bullion fraud needs the right place and time to disband. Till then Wish..
@SD
I have laid out my arguments very clearly. You failed to present meaningful counter-arguments. All you are doing at this point is personally attacking me internet troll style.
You say that people are responsible for their own actions. I 100% agree. This also includes you.
So, please, refrain from hijacking each and every discussion about anything on this website to your pet ponzi scheme. People here have already heard you and GLP repeat the same story ad nauseam. This is clearly not the place to recruit new converts to the crypto bubble.
“It is so sad that the PM experts who have lost Tens of thousands for their followers”
These losses are limited to the West – primarily the USA. Everyone else around the world is buying and hoarding physical. Why have Americans become so disinterested in gold? Because the price failed to rise as expected. Why didn’t the price rise? A number of factors. But the main one probably is that the majority of Americans (plus many others) continue to trust in the fraudulent system despite all the news and evidence about it. The majority only buy through the LBMA which only sells non-existent paper gold. How do they do this? By buying into a gold mutual fund which buys from the LBMA which gives a piece of paper saying the fund has so much gold. But in reality only has a piece of paper. So none of the buying by these funds has any bearing on the price of gold. It would be interesting to know just how much paper gold the LBMA has sold. Something tells me the number is shocking.
SD said:
“Bitcoin gave us triple-entry accounting and it is going to change the world.”
This sounds exactly like 1999-2000 when all the investors in their 20s to 30s were preaching about the “new economy” – that is the dot.com bubble – which burst in 2000 and turned into a rout in 2001-2003.
@ dolph
Please call Harry Dent and tell him that I am still waiting for the gold price below 1,000 FRN no matter how many decades it will take.
BWA HA HA HA HA WHA HA WHA BAH HA HA…please stop you are killing me BWA HA HA AH AH AHCHOOOO….I must be allergic to trolls!
emil,
there are other aspects of the “limits to growth” besides just economic insolvency. there are finite resources in serious depletion like hydrocarbon fuels, and minerals needed to keep the industrial ponzi scheme going. also, every 4.5 days there is a net gain of 1,000,000 rapacious consuming and polluting human animals… and lastly, don’t forget about the 405 ppm of c02 (increasing at 3 ppm/year) and associated climate destabilization knocking at our door too.
http://www.conversationearth.org/limits-growth-dennis-meadows-116-encore/
Who cares what the Fed does. Everyone is squabbling over who is right and who is wrong in what appears to be a complex world. The bottom line is this simple fact; “Perpetual growth is unachievable in a finite world”. I don’t care what colour it is; it is unachievable.
Living through history is not easy, especially historic moments. I think we are living through one of those historic moments right now, we should recognise it for what it is; an ABSOLUTE STUFF UP.
The Dow Jones back in 1974 was in round numbers 600. In 2012 it was 12600; an increase, of 2000% in 38 years.
From 2012 to 2018 the Dow Jones increased from 12600 to 26400 in 6 years by 2300%.
So it took 38 years for the Dow Jones to increase 2000% and 6 years to increase 2300% in an aging population.
Who is fooling who? It is not rocket science and you don’t need a PhD to recognise it.
If you have your money tied up in banks or other forms of paper, good luck to you .. 🙂 Yes and that includes the Crypto’s
If you are in Canada, Dolph may be right. Dealers are having trouble with retail sales for over a year….
That’s because their central bank provided some temporary relief
https://www.fin.gc.ca/n18/18-001-eng.asp
Canadians probably think money grows from trees.
The fed can issue credit lines to member banks, but they can’t buy gold without raising eyebrows right?
Read this the other day,
“A BWC Chinese network report mentioned that the Federal Reserve had on several occasions rejected China’s request to ship back about 600 tonnes of gold reserves stored in underground vaults in the New York.
Some analysts said at the time that for China to overcome the sanctions imposed by the United States, it had no choice but to use gold as collateral. A report by People’s Daily’s “IFC” in December 2012, “How Much Gold Has Been Pocketed by the United States” has been confirmed:
It is reported that more than 60 countries have allocated some or most of their gold reserves hidden in the New York Federal Reserve Bank’s underground vault.’
https://www.bullionstar.com/blogs/ronan-manly/us-gold-reserves-immense-interest-russia-china/
So maybe the fed has already issued swaps, or derivatives on the gold they hold for other nations and if they gave it back they’d have to go back and straighten out all the swap lines. I wonder if the reason that treasury ‘books’ gold at $48 an ounce has something to do with these swaplines or lease agreements?
That’s how I see the end, they’ve just made too many promises and deals that in the end will fold up like a cheap lawnchair.
Thank you Steve for an excellent article.
What you have written compels me to purchase Gold.
But after reviewing in my mind that India FIRST demonetized the Rs 500 and Rs 1000 notes. (After over a year of denying they would) the SECOND they searched residences of citizens for Gold excess THEN confiscated what the government said was excess!
With the consumption of silver APPARENTLY equal to production and the increase of Cell Phone production with approx. 1 billion new subscribers this year which requires 1 ounce used to make 4 cell phones (Kenya has every Masai warriors family with one). The cruise missile requires 400 ounces of silver which for all intent and purpose no longer exists after exploding. While 3/4 of an ounce is used to make a solar panel of which the demand is NOT decreasing. The list is mind boggling when you include satellites, telescopes, computers, tablets, sensors, electric cars or ANYTHING THAT IS SOLDERED!
Examining The Baltic Dry Index the demand for commodities is dropping causing the demand for the metals whose byproduct for mining is silver to drop; which will decrease the supply of silver.
Soon the available silver above ground will equal or be less than that of Gold.
At that time I doubt very much the price of silver will still be at $17 an ounce.
If what happened to Puerto Rico happens here ” An ounce of silver for 5 gallons of water” I will be ready..
Though the sirens song is to buy GOLD I have bought and continue to buy silver instead.
P.S. I buy bitcoin too.
You had me until the bitcoin bit…FAIL!
Hi Steve this article at jsmineset.com makes this story even more compelling. If the chart shown is correct then available gold supply is already falling off a cliff which will make available physical supply even tighter even without a panic. I may have it wrong!
https://www.jsmineset.com/2018/01/23/mining-supply/
“Maybe try to be less arrogant and more accepting of different opinions. But I guess looking at a bunch of “wealth” on your computer screen is reason enough nowadays to act like the head honcho… And there’s something profoundly disturbing about that.”
Peter, If you knew how much Money I lost because of these PM “experts” you would understand. They make outrageous predictions and take NO responsibility for their calls. THANK GOD the cryptos have brought me back from financial oblivion. Just remember, those who can’t teach.
GLP,
I haven’t lost any money on my precious metals because I haven’t sold any… that’s including metal that was purchased higher than the current price. Regardless, the precious metals are supposed to be acquired and saved as a RETIREMENT ACCOUNT.
While we precious metals analysts have made calls that have not come true over the past 3-5 years, partial blame can be put on the Fed & Central Banks propping up the entire market. So, yes.. we can take responsibility for not knowing the INSANITY of the Fed & Central Banks monetary policy. Many of us in the precious metals community assumed that if the value of STOCKS, BONDS, & REAL ESTATE would surge since 2009, so would the precious metals… just like they did from 2002-2011.
However, I see you have sour grapes in your mouth because I gather you had to sell your metals at a loss. While that is a shame, I hold onto my metals because it is wiser to wait for gains ahead.
So, you may continue to come in here and BELLY-ACHE, COMPLAIN and WHINE that investing in sound, fundamental and high-integrity assets like precious metals was a mistake because you would have been better off in a multi-decade-long GLOBAL BERNIE MADOFF PONZI SCHEME…. please continue. Your comments are great for increased debate and traffic.
steve
Steve,
I have no sour grapes. Actually, I drink fine wine now. I have ALL my physical metals and haven’t sold any. I actively buy more physical silver when I can. Where I lost money was in the PM stocks and a few options. I woke up realizing that TPTB were in complete control of the PM pricing. There is no trading to speak only manipulation. So I decided to dump those pm paper derivatives and put that money to use in the cryptos where I currently have 1,500 % returns. I guess I should have just stayed in the pm stocks and chewed on “sour grapes” Where the metal experts went wrong was not alerting their followers to that. But here is the problem; many pm experts make money selling a service predicting price. If they alerted their followers to that total manipulation they would be out of business. I am simply warning the innocent of this trap. I stopped listening to the experts and found Bitcoin and Ether at prices that allowed me to build up investment capital to reclaim my losses in the PM sector. That’s it. This tiny 500 billion cap of cryptos are not the problem Steve, the MASSIVE corruption in the Fiat debt system is.
GLP,
Ahhhhhh…. the truth comes out. You lost out in precious metals stocks and options. I see now, you bet on precious metals LEVERAGE & HIGHER RISK. I am glad I wasn’t one of the analysts that gave stock recommendations. While I have stated precious metals stocks will do well on the next gold and silver price rally, I have stayed far away from precious metals stocks. I don’t see a problem with someone owning a very small percentage, but I believe it is best to own the metal.
Okay…. I get the sour grapes now. Thanks for explaining it.
steve
Why would I have sour grapes if I made 20 times the return of my losses from the precious metals in Cryptos? It seems to me that the one with the sour grapes is you Steve. You missed the tremendous rise in the cryptos so instead of congratulating those wise enough to recognize that you have to bash them.
No, GLP, the ones that loose are the ones investing in cryptos like you did in paper promises. The millions of people trying to get by, making up on losses on their real jobs.
Real people working instead of ‘investing’. Shame on you boy.
GLP – since you are not sour grapes, then why come to this site and continue to whine about precious metals? You need to take full responsibility of your previous trades and move on.
You are just another troll who lacks the skill of investing.
The troll hasn’t made any on his crypto’s either ‘IF’ he has any. Steve, as a contrarian investor I have always *swum against the tide. WHEN not IF, the sheeple start chasing silver I will gladly part w/ a small portion of my horde. Not for Fiat though, as a tangibles heavy investor. prefer value for value, not promises. Except the fiat notes aren’t even promises any more.
The best thing you can do w/ a roll of $100.00 bills is trade them for silver or $1.00 bills. That way you at least have some value, silver or 100 sheets of toilet paper! Or maybe support your work here, which is GREAT, I’m thinking about it more and more.
* And YES troll’s swum is the correct irregular verb!
“While we precious metals analysts have made calls that have not come true over the past 3-5 years, partial blame can be put on the Fed & Central Banks propping up the entire market.”
Actually the blame is on those that have given approval to the bullion banks to manipulate the market and kill the speculators. This is illegal of course, and nothing has been done about it. NOBODY expected such a fraud to have been perpetrated by these banks. Time and time again, the bullion banks would dump massive amounts of paper gold onto the markets to effectively kill all speculators who were dumb enough to trust the system. Further, it appears the bullion banks have sold virtually all their unallocated gold into the market to exacerbate their fraud even more. But this unallocated gold had already been sold to someone (perhaps multiple owners) and so its sale is essentially theft. Lastly, the bullion banks have most likely sold a massive amount of paper gold to unsuspecting buyers. All of this together is the main reason the price of gold has languished. There are a few lesser factors such as the downturn in commodity prices and the rise of the US dollar. But that is behind us now, and both the US dollar is falling while commodity prices are rising.
Anytime you have institutions that refuse to be audited and that fail to disclose the truth of how they operate, you have the potential for fraud. And this is what they chose – to “protect” the fiat currencies by forcing massive amounts of money into worthless government bonds so as to keep interest rates low. This of course has imbalanced everything now.
Good recent interview with Tainter
https://m.youtube.com/watch?v=jxM-Vexnhv8
A less complex society. Question is; with how many? Board the physical plane, gate is closing.
As interest rates rise to manage inflatory pressure this will cause asset bubbles in the stock, bond and real estate to deflate. Credit card debt will also be negatively impacted. GDP will contract but may only create for a contraction rather than a crash in equity,bonds and the credit markets. To avoid any crash central banks may revert to loosening the tightening of monetary policy in also unwinding their overleveraged balance sheets. Central banks will do everything to engineer a soft landing and markets will prefer this to precipitating a devastating crash with ensuing chaos and the increased risk for conflict and even war. As we go into years of this kind of scenario “investors” and markets will be prepared to accept it. There will be cycles of expansion and corrections and in the latter many will erroneously seek safe haven also in the USD. As the USD index faces upward momentum it will have a dampening effect on gold prices even if gold prices are being pushed up due also to increased safe haven buying. The big question is if debt keeps rising (national and consumer) how far can it go. At some point a trigger would seriously question if the USD is worth its IOU’s (mainly increasing treasury bonds) because we can no longer have the required GDP to rebalance the debt problem. When confidence in the USD seriously erodes no one knows. Can we turn this corner without a severe market crash and/or possible collapse? Markets will rather opt to avoid this (e.g.Japan) and gold may have some upward momentum but not suddenly take off dramatically. GDP also does not really show where its coming from, if its increasingly coming from a small minority (corporate/wealthy) and the middle class is loosing out, then the current “system” will fail us if this is not corrected. Having 10% invested in gold a insurance however makes sense for the long run. In the meantime watch the USD index, interest rates, GDP, and the credit markets and overall debt levels.
it is my understanding that hard assets can be expected to
preserve wealth not increase it.anybody know what an ounce of gold was worth in zimbabwe when three eggs were 100 billion dollars?if you have
to deplete your hard assets to survive you will be poorer and who knows
what it will take to get to the reset.i’m 80 but i plan on doing
something to keep up.
something else{you think about these things when your 80)in a zimbabwe level hyperinflation will your estate be subject to the
death tax?i think it is still in the new tax bill.
Not only should you have a horde of fractional silver SECONDLY…. Firstly, you should have taken care of the three B’s.
There are four buckets to fill up for survival. Don’t put the cart before the horse! Until you have all the BEANS, BULLETS and BAND-AIDS you will need, don’t try to preserve wealth. because you won’t be around to spend it.
Redryder I spotted a video last week on-line of about 25 guys trying to run down a cow in Venezuela to kill it for food due to all the starvation in that country. What a picture it placed in my mine. I hope our country does not come to this but I won’t be completely surprised should it come to this. Should this happen you will be wishing you have water, food stored, a garden, guns and family, friendly neighbors, and OH YES, lots of silver.
I’m probably to old to worry { I think }> But I would have these items on my shopping list.
I could be wrong of course. But Cryptos are not on my list. I think the government will screw that up. Gold and silver is the old standby.
…EXACTLY…
I saw that video and more. The V.’s did not “try” to run down a caw, they surrounded it and smashed its skull in with hand-size rocks, then cut out large steaks and roasts. Fresh meat! Owner not getting paid. Most of the meat was wasted, betcha.
Cow.
This is not directly related the this topic but people should be awake to the realities of the world today and it does help one understand the agendas at work.
please watch these:
https://youtu.be/4u2Ng9tIuHQ
https://youtu.be/rk1qlKu_RJo
https://youtu.be/9VfMVqDs-WA
https://youtu.be/WwLq8xqzVDk
https://youtu.be/fS83xHVRUzY
While I dont disagree with the idea that gold/silver demand will cause prices to rise. Its hard to agree with the idea that retail demand will be the driving factor. Now understand, I’m talking about retail demand from within the US. I cant speak for other countries even though most are probably in the same situation as Joe Sixpack. It may not not be so inappropriate to apply what I am about to say to a large portion of the world.
What is the #1 economic problem? DEBT. What does that mean for the average person? Very little savings….living paycheck to paycheck. Most people I know are living the debt matrix PRESENTLY and have little to no money available to buy gold. Thats a large percentage of people. There is no demand there! And there wont be in the future. Those that have some extra money have put it into stocks and bonds and/or sits with the institutions and is in retirement accounts. Those people are not going to be so inclined to pull their money out. They will sit on it like they did in 2008 or until they are forced out of it. The market always comes back! Right?
Not until we hit the everybody understands what is happening mode will that money be released from jail, and at a much lower value. Will people buy gold with it or pay bills? And all this as gold as soars in price making it even more unavailable.
There is a report that shows a huge drop 43% in available gold next year. That alone should cause cause a rising price. It may not take much retail demand to move gold higher. What if trading is closed and reset higher?
Now silver demand is a different story. The banksters are doing Joe Sixpack a favor by suppressing the price of precious metals. It makes silver affordable to people…..until it isn’t. So the retail demand equation is a very different from gold. The other part of that is silver supply. When and how long will that begin to dry up?
There are other things that could impact the future of precious metals that have nothing to do with demand/supply…Things may happen too quickly and negate the ability to respond/protect ones financial welfare.
Mad Max will not occur. The cryptos ARE the reset. Physical metals are the insurance. PM stocks are a much higher risk than cryptos. Eventually you will get it.
GLP,
Ah… I see. So, because Cryptos are now here, our energy problems are over? That’s a new one.
steve
Place your bets Steve…lets see where it goes….since Nobody knows the future….
see you in July to check up on your forecast….cryptos down 25-50% in 3-6 months. I say 1 Trillion market cap by summer….
“Ah… I see. So, because Cryptos are now here, our energy problems are over? That’s a new one.”
I never said that and it is possible your interpretation of the “energy Problem” is incorrect.
GLP,
Well, how many empires have come and gone in the past 10,000 years? So you think this time is different with the EROI?? I gather our only chance presented by some is that Alien Technology or Aliens are going to save us. I don’t place much faith in that sort of HOPE.
steve
Steve, I don’t placed much hope in “aliens” either. You keep raising red herrings and straw men to knock down. Why? My point is simply this: No one knows the future. A person can prepare and wait in limbo for what they think will happen OR they can prepare and ALSO engage. I choose to engage. I still find it simply amazing how many crypto enthusiasts are avid PM stackers and yet the PM community treats them with such contempt. I’ve been a metals enthusiast since the 1970’s. I just got tired of not making money on the PM stocks. Make hay while the sun shines….
I am not concerned about the SPDR Gold Trust. If the Trust is not able to acquire gold at market which is pretty unlikely considering their connections they will simply stop issuing new shares and the price of existing shares will skyrocket. That’s simple economics. No present supply plus increasing demand = new market driven price. In the unlikely event that nothing is available today rest assured the market will find its price. It is that simple. They need only maintain gold equal to the number of shares outstanding. Think of it this way. You own 10 ozs of gold or gold coins. For safekeeping you open your own trust at the local Bank and Trust in the nearest city.
It sits there until you direct the Trust to do something. In the meantime the Trust Dept. collects an annual small fee for holding it “in trust”. All the rest of the nonsense about SPDR GLD is “conspiracy theories” without a shred of EVIDENCE.
I agree with everything you are saying about gold and silver. HOWEVER I do believe you are wrong about cryptos. I recommend you do more research into the crypto space. I don’t necessarily believe that bitcoin and Ether will win but they will eventually merge into a new dominating cryptocurrency. Look into ACChain.org there is some scary stuff out there. China is poising themselves to create the new world currency once this whole market crash you are talking about happens. All fiat currencies will be dead. The new crypto will take over all fiat and every asset you know of will become a digital asset. China is already doing experiments where they have digitized both tea and real estate. The new SDR from the IMF will be some type of crypto. Will this happen tomorrow, probably not, but the crypto space will not die it is unfortunately the future of currency. I encourage you to check out Lynette Zang on youtube. She does some amazing research on this stuff and has uncovered a lot of scary things that other countries are already in the process of trying to pull off.