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

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:

Collapse Of Roman Silver Monetary System

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:

Population-Of-Rome

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:

COMEX-LongTerm-Gold-Chart

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.

COMEX-1-Year-Silver-Chart

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:

COMEX-Silver-Inventories-012916

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:

COMEX-LongTerm-Silver-Chart

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.

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41 Comments on "INDICATORS SHOW: Collapse Of The Paper Gold & Silver Market May Be Close At Hand"

  1. I believe Martin Armstrong would argue that the collapse of Rome’s population occurred with rising property taxes, not the collapsing monetary system.

    • alex,

      While Martin Armstrong may state the collapse of Rome was due to rising taxes, I would say that it was predominantly due to the falling EROI- Energy Returned On Invested of the Roman Empire. The debasement of the Roman Monetary System was just a symptom of the falling EROI. This is also true for rising taxes.

      Whenever a society goes down the path of ADVANCED CIVILIZATION, the energy to maintain the system becomes greater than the energy available… over time.

      Rising taxes, moral decay, lead poisoning, and the collapse of the Roman Monetary System were just symptoms of the FALLING EROI. Martin has no clue about the EROI.

      steve

      • Interesting. I read Armstrong amongst many others and he seems to be on the money, more often than not (not him… he has no ‘personal opinion’ it’s his computer, as he repeatedly states).

        Steve appears to believe the low in PM’s is in.. while Martin thinks the recent bounce is just that – a bounce before the final low. So we may not have long to wait to see who is correct.

        At that point (2017?) confidence in gubermint will evaporate and we get our moon shot.

        But what else will be going on in society, in the World when gold is $5,000?

        • i think its a real line ball call whether they have the ammunition to do another rehypothecated paper smackdown of the PM price with the registered gold scraping 2-4 tonnes . See how the $1.2billion dumped in half an hour was quickly regained today. Paper dumping is at the end of its rope. If armstrong turns out to be right and they have a few more inches of rope, its just an arbitrary call, subject to the whims of a few big players deciding whether to grab a seat now of keep dancing another week or three.

          • Carlos – agreed. The CoT had the cartel back to their shorting games – that dump might show up in next week’s numbers.

        • “Interesting. I read Armstrong amongst many others and he seems to be on the money, more often than not (not him… he has no ‘personal opinion’ it’s his computer, as he repeatedly states).”

          What I have read from him contains opinion, and computers don’t have opinions.

        • ian,

          First, I never said the lows in the precious metals were in. I said we are CLOSER TO A BOTTOM than the broader stock markets that are CLOSER TO A TOP. I said that in previous articles and interviews. Sure, the metals could go down a bit more, but so what?

          Second, Martin is very clever with his Pi-cycle theory. However, Martin does not believe in Peak oil or does he understand the Falling EROI. So, in that vein, he is truly ignorant.

          Martin’s pi-cycles will continue to work (sort of) until we see a collapse like the Roman Empire. Then pi-cycles will be the least of one’s troubles.

          steve

        • Do not be afraid, all the capitalists through the world will do naything they can, and that’s a lot when you have central banks and power of the states in your pockets.
          They will ultimately fail but it can last many more decades even if the next few years could be shaky.

      • But Steve – Lead is a precious metal too when combined with Blued Steel. 🙂

        (BTW I have read accounts that the lead argument about Rome’s decline have been overblown due to calcification of the piping and due to a lack of empirical evidence from lead found in bones remains.

        Having said that – it is cool to see the lead plumbing dating back to Roman times in places like the Roman baths in Bath England.)

        • It also seems the Romans were well aware of the problem of lead…

          Vitruvius, who wrote during the time of Augustus, explains.

          “Water conducted through earthen pipes is more wholesome than that through lead; indeed that conveyed in lead must be injurious, because from it white lead [ceruse or lead carbonate, PbCO3] is obtained, and this is said to be injurious to the human system. Hence, if what is generated from it is pernicious, there can be no doubt that itself cannot be a wholesome body. This may be verified by observing the workers in lead, who are of a pallid colour; for in casting lead, the fumes from it fixing on the different members, and daily burning them, destroy the vigour of the blood; water should therefore on no account be conducted in leaden pipes if we are desirous that it should be wholesome. That the flavour of that conveyed in earthen pipes is better, is shewn at our daily meals, for all those whose tables are furnished with silver vessels, nevertheless use those made of earth, from the purity of the flavour being preserved in them” (VIII.6.10-11).

        • JerseyJoe,

          Yes, the notion that Romans were poisoned from lead pipes and goblets is true, however the decline of the Roman Empire was due to its FALLING EROI- Energy Returned On Invested. While I am a broken record on this, it’s totally true. Matter-a-fact, most declines of past advanced civilizations were due to the Falling EROI. Some were due to drought or other climate changes, but most collapsed due to declining energy profits in the way of labor, war or farming.

          steve

          • The Roman Empire ran on slave power – tough to estimate EROI but I will take your word for it.

            The US has its illegals to backfill. Strange parallel. A semi-disposable workforce paid in printed fiat rather than fed and clothed by the owner.

    • Helmut Beintner | February 5, 2016 at 6:30 pm |

      Was he Present to have witnessed it?

  2. “In all likelihood, the coming collapse of the economic and financial system will happen virtually overnight.”

    Maybe, or it may be like Bill Bonner said in today’s email:

    “The cronies have gone about as far as they can, he said. He [David Stockman] expects the markets to melt down and the credit bubble to burst – soon – marking the end of the Bubble Epoch.

    We’re not so sure…

    The Deep State depends on bubble finance. It won’t give it up without a terrific fight. If the Bubble Epoch goes, it will be over the Deep State’s dead body.

    But it won’t be smooth, easy, or fast. Negative rates? A ban on cash? Helicopter money? Direct intervention in the markets?…”

    • Allways remember this: The oligarchs and the deep state are not as one. And oligarchs have no intention of going down with the ship of state. At some point they defect to where their capital is safer; they will have to stab the back of the petrodollar’s current chaperones.
      And you can bet they are sharpening their knives for this without reluctance – remember the 5 merchant banks before 2008? 3 now, fattenned on the carcassess of the 2 that stumbled

      • “Allways remember this: The oligarchs and the deep state are not as one. And oligarchs have no intention of going down with the ship of state.”

        Stated another way perhaps they may all be members of the same exclusive country club, but when push comes to shove they are out for themselves.

        • David,

          This is true. Furthermore, people need to realize the collapse of the Roman Empire was not in the best interest of the Wealthy-Oligarchs. They were making a lot of money on the million people in the city. So, this idea that the wealthy are trying to destroy the system is silly because it will destroy their wealth as well.

          steve

          • Every empire and dynasty has done this only for sure power and control.Nothing in this Geo sphere is but and is not about energy!!!

          • And oligarchs throughout history have found themselves in harm’s way when the populace at large suffered greatly, particularly during famine. The financial oligarchs can create currency but they can’t create food and drugs and distribute it easily or effectively.
            How does an entire city’s population get fed during supply chain interruptions? Or get the daily supply of drugs people can’t come off of without going nuts [e.g. SSRI’s, narcotics, prescribed or illegal, etc.].

            And who would get blamed? The financial and political oligarchs don’t want the whole system crashing. That’s why some of the very wealthy have homes and airstrips in relatively remote parts of the world.

    • I don’t have a problem with stepping over (stomping on?) the Deep State’s dead body. The current current ruling criminal body has no legitimacy whatsoever. The only power they have now is the power to put armed men on our doorsteps or a missile on our GPS-located front door.

  3. Most of the time, people underestimate the consequences of the exponential function.

    “One can ignore reality, but one cannot ignore the consequences of ignoring reality”

  4. Paper Silver | February 5, 2016 at 4:52 pm |

    Before the monetary system as we know it collapses…. the TPTB will turn on the printing presses like nothing this country has ever seen …… but we are at least couple years off from that happening, IMO.

    • What do you call the trillions printed over the last five years? And do $200 Trillion in derivate obligations not count? How do you distinguish between kinds of debt, when your unit of measure is itself nothing but a kind of debt? I ask these questions seriously, not rhetorically. We need to think about this carefully.

      • Paper Silver | February 6, 2016 at 1:43 am |

        When you go out for dinner and it costs $1,500 for 2 people – who’ll know we are in full blown hyperinflation.

    • Lawrence Lacey | February 6, 2016 at 8:05 am |

      Short of finding more than 24 hours/day to run the presses will they bring back the $500 and $1000
      bills and later go the usual route $10,000, $100,000, ad infinitum?

  5. OutLookingIn | February 5, 2016 at 5:43 pm |

    Nice turn of events this morning in the comex gold/silver market spot pricing.

    Right at 0830 AM “someone” dumped $1.8 billion of gold futures onto the market and the forced the gold price by 20 dollars.

    The market wasn’t buying it as stocks/bonds were sold and capital kept on flooding into both gold and silver, as a safe haven play. Resulting in silver closing over the $15.00 barrier and gold breaking and closing above the $1,170.00 level.

    Looks the manipulators had their heads handed to them this morning by economic mother nature!

  6. With mines closing, silver coin demand higher every year, the Comex being replaced in Shanghai,
    why can I still buy Silver 1Oz. Buffalo coins at APMEX for $1.07 over spot with FREE freight, handling,
    packaging and insurance. Sure doesn’t look like a silver shortgage?

    • Silvrwillwin | February 5, 2016 at 6:30 pm |

      Joe , because what you are saying still rings true and there is not a shortage yet. However the under currents are boiling. When the DOW and S&P start to rupture in a huge way, causing massive panic…then you’ll see a surge for the physical like that of the Hoover Dam unloading through a garden hose. Between a couple of months to a couple of years , there will be no ample warning signs.

    • It’s a “one or the other” kind of thing. Silver is either “there” or it isn’t. There’s no in between. When silver isn’t “there”, it wont be “there” for a very long time. It looks like silver wont be “there” sooner than later. Understand?

      • Silvrwillwin | February 7, 2016 at 7:39 am |

        I completely disagree with you. I would agree with you if things with the physical silver were as they should be, namely representing itself as ONLY physical. But that’s not the case in the here and now. Being attached to the paper , hedge fund , etf , derivative , etc. markets will produce a future with unpredictable gyrations of what’s known as a price and the made up availability. All of this makes clear as you put it “It’s a “one or the other” kind of thing. Silver is either “there” or it isn’t.”that silver onto itself is NOT free to be “one or the other”.
        As far as the physical “being there” – the small guy will have a much better chance of buying physical silver for awhile longer. It’s the big purchases that will be cumbersome.
        And for the future we’ll have to wait it out for, as Steve put’s it “a collapse does not happen overnight, but the endgame does” …to be the official fait accompli.
        The funny thing about it Nick is that we are on the same side . And yes , I will be the happier when the actual will secede from the forever make believe.

        • Of course, the little guy isn’t buying bullion. He is buying retail silver. There is no shortage in industrial silver yet but retail silver may catch on quick. As Steve has stated, it will only take a few percent of the people to radically skew the spot market. When it does, the tail will wag the dog. That is the retail ask will be much higher than the bid for physical ounces. For those who can’t afford the ask, it’s as good as gone. When retail is gone, there will never be a silver shortage for those who can afford it.
          If you’re stacking, Silvrwillwin then yes, we’re on the same side.

  7. As the miner stocks are pre-running this could be a turning point.
    I will wait for 1245$ in Gold.

    HUI from 100 to 147.In this short time.This is a strong sign.But it should be proved by an absolute higher value.

    As i told you the big Producer come first.Iamgold,Barrick,Lakeshare,….Fresnillo.
    When Money is flowing in the good Explorer stocks then we get for shure the next bull market.

  8. Remember, kids; all technical analysis is worthless and bullshit until and unless the rehypothecated paper smackdowns cease. It is most unlikely this will cease through policy, so it will happen through market forces. That market force is the emptying of the comex registered category. The replacement will be the shanghai gold exchange announcing its independent price setting mechanism for physical only. This is checkmate for the West. It has to match the rising price set in the east or lose every last ounce of gold

  9. Silver Oldie | February 6, 2016 at 9:58 am |

    I agree with carlos. I have in fact wondered why Carlos Slim and a few of his buddies have not emptied the silver side of the Comex already and consigned this criminal farce to the dustbin of history. I guess though, I wouldn’t blame them if they are doing with silver what China is with gold, i.e. cornering the world’s supply on the cheap as long as the Comex is able to play it’s criminal suppression games.

  10. Hi SRSrocco, what do you think of PM stocks as opposed to paper gold etfs?

  11. Yeah, so like if you go to the Comex inventory report and glance at the numbers, it appears as if they’ve got
    trillions of ounces of silver on hand. That’s because they have their inventories broken down to the thousandth of an ounce of silver, as if that’s even possible or practical. Just another mind game, and one of many spawned from desperation.

  12. china is collapsing…. everything is fake…. data on SGE cannot be trusted.

    china’s gold reserve is not much above its stated holding.

    china is a pawn controlled by the illuminati.

    most western analysts don’t have any idea about how corrupt and incompetent china really is.

    stripped of its economic miracle facade, china is an enlarged north korea, one of the only three countries that block fb/google/youtube…

    the reset will be initiated by the west.

  13. silverfreaky | February 8, 2016 at 8:33 am |

    Mineros very strong.Look to lakeshore or Barrick.
    This looks good.After so many pain, we need salvation.

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