Financial Time Bombs Push Gold Eagles Sales To Record High

Investors worried about the coming explosions in the financial system purchased record numbers of Gold Eagles in July.  Not only are July sales of Gold Eagles the highest in 2015, they surpassed all monthly totals for the past two years…. and we still have another week remaining.

The reason for the big surge in the U.S. Mint’s Gold Eagle sales is due to the increasing number of financial time bombs that are now set to go off in the future.  Financial contagion stemming from a Greek default and possible exit from the European Union triggered increased buying of Gold Eagles in June. 

Sales of Gold Eagles were a measly 21,500 oz in May.  However, this picked up significantly towards the latter part of June as the financial situation in Greece became more dire.  Gold Eagle sales in June jumped more than three times the rate compared to the prior month reaching 76,000 oz.  But, this was just a warm-up for the further spike in demand in July.

If we look at the chart below, we can see that Gold Eagle sales for the month of July are 126,500 oz.  The U.S. Mint updated their figures yesterday adding another 8,000 oz sold in one day.

U.S. Mint Gold Eagle Sales 2015

UPDATE: another 16,500 oz of Gold Eagles sold today for a total of 143,000 oz for July.

As I mentioned in a past interview and in my recently released THE SILVER CHART REPORT, investors tend to buy more silver as the price declines, while spikes in physical gold buying occurs during financial turmoil.  The evidence is shown in the next chart:

Gold Price & Gold Eagle Sales

The price of gold fell from a high of $1,307 in January to a low of $1,148 in March, but Gold Eagle sales were only 46,500 oz in March.  As the price of gold moved higher to $1,220 and then reversed to a low of $1,171 in June, Gold Eagle sales shot up to 76,000 oz from 21,500 oz the prior month.

Thus, the increased demand for Gold Eagles in June was a reflection of the possible financial instability stemming from a Greek default and exit of the European Union.  Even though the price of gold continues to trade lower, I believe the motivation for the increased demand of Gold Eagles this month update..143,500 oz) is due more to financial turmoil than the lower price.

Financial Time Bombs Are All Around Us

The world is now sitting on top of the most Financial Time Bombs in history.  Not only do we have the Greek situation in Europe, but Americans now get do deal with the likely default of Puerto Rico’s Bonds and all the fun that brings with it.  Why is this such a big deal?  Well, according to the recent article,  UBS’s Puerto Rico Bond Funds Implode, “Collateral Value” Drops to Zero, Investors Screwed:

“We believe that the probability of default is approaching 100 percent, and that losses given default are substantial,” Moody’s wrote on Wednesday about Puerto Rico’s $72 billion in bonds that were stuffed into numerous conservative-sounding bond funds spread across America’s retirement portfolios.

Chatting with some of the folks in the industry, I found out that certain Municipal Bond Funds are heavily weighted towards Puerto Rico’s bonds as they have a higher yield than other municipal issuers.  Furthermore, American investors purchasing Puerto Rico bonds are tax-exempt compared to most other state issued bonds.  Basically, Mom and Pop Americans own the Puerto Rico’s Disaster without even knowing it.  Forget Greece, this is right in front of our faces.

So, investors and Bond Funds chasing higher yields over the past several years are now holding onto $72 billion worth of paper garbage.  And… this is just the tip of Time Bomb Iceberg.

Let’s not forget this headline, Pension Shocker: Plans Face $2 Trillion Shortfall, Moody’s Says:

Moody’s, which in 2013 began using a lower rate than governments do to calculate future liabilities, has estimated that the 25 largest U.S. public pensions alone have $2 trillion less than they need. Cincinnati and Minneapolis are among cities Moody’s has since downgraded.

In short: America is facing a fiscal crisis at the state and local government level and it appears as though at least one ratings agency is no longer willing to suspend disbelief by allowing officials to utilize profoundly unrealistic return assumptions in the calculation of liabilities. This means downgrades and as for what comes next……

Of course, the supposed $2 trillion pension shortfall will not be impacted if the U.S. and Global economies fall off a cliff at the latter part of this year…. only kidding here.  I would imagine this will turn into a huge contagion along with most of the highly leveraged debt propping up the markets.

Then we had this nice TIDBIT show up yesterday on Zerohedge, In Latest Market Rigging Scandal, Wall Street Now Sued For Treasury Market Manipulation:

In short, the banks simply conspired to keep the spread between the when issued price and the price at auction as wide as possible, thus inflating their profits at the expense of everyone else where “everyone else” includes institutional investors and hedge funds all the way down to retirees and Main Street in general….

…. And as for the Treasury market, well, it was cornered long ago by the Fed and HFT, which means it is now infintely more dangerous than it ever was when it was beholden to mortal manipulators and carbon-based conspirators.

Just another example of BANKS GONE BAD.  Do you all remember this chart from my earlier article?

Total Bank Fraud Settlements 2009-2014

Of the $128 billion in fines and settlements paid by the top banks in the world since 2009, U.S. Banks ranked in the top three.  How nice is that?  Nothing like being the best in committing financial fraud.

Futhermore, I went on to say that the $128 billion in bank fines would have paid for all global silver production since 2008.  Thus, it pays the banks dearly to commit fraud.

The world is sitting on top of the biggest financial Ponzi scheme in history.  Unfortunately, you wouldn’t know it from the recent price action in the precious metals.  However, this is will not be a long-term phenomenon.  While some precious metal investors are questioning their gold and silver investments, the fundamentals are better than ever.

The downside to the prices of gold and silver are limited, but the coming Global Financial Enema is most certainly not  It’s just getting started.

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SIlver Chart Cover Graphic 3D shadowMost analysts focus on a certain area or sector of the silver market. However, the information in this report illuminates a holistic view of many sectors of the silver industry, capturing the relationships that connect many parts of the market.

One of the important aspects of my work is to look at many industries and markets from a bird’s-eye view.  From this perspective, we can see how industries and markets impact each other to a much larger degree than by just focusing on individual sectors.

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13 Comments on "Financial Time Bombs Push Gold Eagles Sales To Record High"

  1. OutLookingIn | July 24, 2015 at 2:11 pm |

    The global CAPEX boom which has resuled in massive overcapacity, is now dead. It has gone from asset accumulation and inflation to asset liquidation and deflation. As can be seen in the recent commodity sector crash, as is evidenced by both the CRB and DBC indices.

    Liquidity is very tight and getting tighter by the day. Asset valuations are much too high and this forced liquidation in order to cover, will bring valuations down adding to deflation in a self feeding spiral. This feeds into a ‘knock on’ effect in other sectors as contagion spreads.

    One out layer is the BDI and it’s higher index. This can be explained by the lower price of oil. The shipping sector is not only suffering from increased inventory but when you add in cheap energy, more uneconomically older units come online to grab a piece of the pie, before going to the breakers yards. This increased dry bulk shipping is mainly going to China. Just this year alone China has imported 2.4 million metric tons of corn. The majority from the Ukraine which is hungry for foreign exchange and is forced to sell at these low price points.

    Corn is not the only thing making its way to Chinese shores in quantity. Physical gold bullion and silver imports are setting new record highs, as the Chinese increase their dumping of US Treasuries. It seems with all the dots connected, time is being compressed as events unfold at a quicker pace.

    • it hasnt been CAPEX causing overproduction. Capex implies capital. The overproduction has been from debt, partially, and the continued production of entities that should have gone under had mark to fantasy accounting not been implemented

      • Also due to sustained low interest rates, which in my mind is a form of capital. And to some industries their have been massive loans, which is capital. The fracking industry wouldn’t have gotten going without large low interest loans.

      • OutLookingIn | July 25, 2015 at 9:40 am |

        Where do you think the “capital” came from for the “expenditure”?
        DEBT @ ZIRP and fraudulent accounting practices.

        • OutLookingIn | July 25, 2015 at 3:34 pm |

          The worst part?
          A major portion of the debt was contracted out on margin by the creditor, from capital investors. Who have taken those contracts and bundled them into credit default swap derivatives. These FWMD’s (financial weapons of mass destruction) have then been sold to hedge funds, pension plans, small investors, etc.
          These buyers for the most part have purchased on margin.
          Now you have George owing Bill, who owes Harry, who owes Tom, who owes Dick. who owes ETC. ETC.

          Now you see the problem with the global inter-dependency of debt on margin. When the margin calls come (and come they will) the entire house of paper burns to the ground!

  2. Seems like others also have figured that -when nothing else works, raise the value of what u have- and what do the Central Banks have? It is like 1933 or 1972 all over again. All it takes is political will and when things get bad enough.., everybody wants to be re-elected.., and the wealth/debt today is equal to.., how high gold?

  3. I assume a bond buyback scheme will be implemented through the FED? Municipal PR bonds is just another high yield scam going down. Until there’s no yield. Then what? Well artificial yield of course, like the S&P. Soon the world wide circle jerk will become obvious to the masses. Question is, when is soon?

    Better 3 years early than one day too late. Soil depletion, disruptions in food or energy hubs are more of a concern to me. Stack; gold, silver, knowledge, neighborhood, water, food security. My guess is another worldwide coordinated printfest. Pre consumption is a bitch.

  4. silverfreaky | July 25, 2015 at 3:01 pm |

    In the moment we have an downwards spiral.This speaks not for PM.We need inflation.
    As long as the central banks support the stock market there is no need to go out of stocks.

    Inflation is only possible when energy is increasing or the wages going up.I don’t see that in the moment.

    The other reason is panic to loose money.But therefore the central banks do everythings to avoid that.
    In total the world economy is in the modus decling.

    • “As long as the central banks support the stock market there is no need to go out of stocks.”

      I strongly disagree. One would have to assume the centrals banks have everything under control ad infinitum to believe stocks are a safe haven. They have never in their history been able to stop or even predict a major stock market correction or crash; they are even less able to do so now. If fact their economic manipulations have lead to stock and economic market calamities. This is fact not opinion.

      If one gets digital currency units from the sale of their stock[s] and want to park it somewhere, at current prices PM’s will be great for the medium to long run. In the shorter term having cash in one’s possession makes sense. An article on that topic is below.

  5. Good roundtable discussion on the latest bear raid on PM’s, etc. Enjoy fellow stackers!

  6. Silver Alert | July 28, 2015 at 12:36 am |

    1 month a trend does not make. But if it keeps up, Steve may have to revisit his gold vs. silver sales articles.

  7. silverfreaky | July 28, 2015 at 12:01 pm |

    The great money burning goes on and on.The miner stock holder lost nearly everything.
    My prediction was right.PM are pump and dumb.

  8. Lots of physical gold being gobbled up with the cheap prices. The Shanghai Gold Exchange withdrawals for the week ending July 24th was 73.29 tonnes — third largest week ever.

    The much anticipated American Liberty HR gold coin went on sale yesterday and sold out available supplies at the mint in less than 4 hours and is now only available on back order. First day’s sales: 36,686 oz. In other words, another 1,141 kilos of gold transferred from the US Mint to the public. There must be something to this pet rock thing, ya think?

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