RED ALERT: Coming Currency Collapse & Bullion Banks Rush To Increase Registered Gold Inventories

The warning signs are increasing as the death of the Global Fiat Monetary System approaches.  The bullion banks lost 88% of their Comex registered gold inventories over the last year and are now rushing to build their stocks to satisfy future deliveries.

Here we can see that since April of 2013, the Comex Gold Registered Inventories declined 88% from 3 million oz to a low of 369,212 oz at the end of January:

Comex Registered Gold 20614

According to Harvey Organ’s interview, 20 Tons of Gold “Kilo Bars” Withdrawn From JPM Vaults & Headed to Hong Kong! , 1.3 million oz of gold were standing for delivery in the beginning of February.  However, Harvey believes the majority of these contracts were settled with cash.

It is no surprise that a large percentage of these contracts were cash settled, because there wasn’t enough available gold in the registered inventories.  In just the past three days, the bullion banks transferred nearly 200,000 oz of gold from their Eligible inventories to their Registered.

Comex Gold Inventories 20514

Comex Gold Inventories 20614

Comex Gold Inventories 20714

Here we can see that the bullion banks only had 439,900 oz of registered gold in the inventories on February 4th.  During the next three trading days, the bullion banks transferred 197,590 oz  from the Eligible to the Registered category.

It is quite interesting to see the bullion banks rush to add 200,000 oz while the majority of contracts standing for physical delivery in February were settled with cash.

Monetary scientist, Antal Fekete has warned about the collapse of the fiat monetary system for several years.  He stated the end will be close at hand when gold on the futures market goes into backwardation.

Backwardation basically means the present cash price of gold is higher than the futures price (the opposite is normal state in the futures market).  Thus, gold traders are concerned their physical gold will be returned in the future.

Mr. Fekete stated in his interview, Gold and The “Red Alert” For Collapse Of Fiat Currency, that the world is heading for a disaster unless gold backs the global monetary system.

Fekete Youtube

Mr. Fekete also believes there isn’t much time for the world to make this transition to a gold-backed monetary system because there is a flashing “RED WARNING LIGHT” as gold has traded in and out of backwardation on the futures markets since July of 2013.

Furthermore, Fekete believes that the leasing of gold (since the late 1990’s) also ended in July of last year as investors and institutions are no longer willing to part with their physical gold knowing they may not receive the metal back in the future.

Even though there seems to be a calm in the markets as the Dow Jones average jumped 165 points today after shrugging off lousy employment figures, the financial system continues to disintegrate as currencies throughout the world are devalued.

The fiat currency dominoes are falling.  At some point, the falling dominoes will reach the U.S. Dollar and then it will be too late to buy gold or silver.

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60 Comments on "RED ALERT: Coming Currency Collapse & Bullion Banks Rush To Increase Registered Gold Inventories"

  1. Steve, Harvey Organ is the biggest source of misinformation in the gold community. He has ZERO knowledge of the delivery process at the Comex. He knows nothing about things about exchange for physical. And I bet he has never bothered to read the Comex rulebook. His daily report is simply based on his imagination.

    Antal Fekete is another popular snakeoil charlatan in the gold community. He uses the London spot and Comex futures price to calculate his basis and co-basis. But the London spot is about the gold in London and the Comex futures price is about the gold in NY. When you calculate basis, you can only use the spot and futures prices in the SAME location!

    • Adolf,

      I understand your opinion of Harvey Organ and now of Antal Fekete. However, it does not change the fact that 88% of the Registered Gold was removed in the past year while a third of the GLD inventories were liquidated… and more than likely were shipped to the EAST.

      Honestly, I can say I am not a specialist in the Gold Futures Market, but it doesn’t take a brain surgeon to figure out the the situation in the Global Financial System continues to disintegrate.

      I have been reading Antal Fekete for years. I have read many of his past articles on THE REAL BILLS DOCTRINE, GOLD HEDGING and BACKWARDATION.

      I plan on contacting Sandeep Jaitly (Studied under Fekete) who has his Gold Basis Service, and present your opinion why Fekete is a snakeoil salesmen by incorrectly calculating the backwardation.

      Adolf, if you believe Organ & Fekete are such snakeoil salesmen, why are you not providing information or starting a website that may offer a better alternative?

      Lastly, I find it interesting that your are quick to denounce those in the gold community who are trying to SHED LIGHT on the lousy fiat monetary system, but do you ever MENTION ALL THE CRAP & MANIPULATION taking place by those who are really at fault.

      steve

      • Did I deny the existence of manipulation in precious metals market? Of course not. But the problem is that those so-called “experts” like Harvey Organ are shedding false light. Why are they often at a disadvantage in debates with contemporary Goebbels like Kid Dynamite and Bron Suchecki? That’s because they don’t even do their homework. The Goebbels at least know something about the rules and theories. Bill Holter is another example. Here is an article he wrote last year (They used to have a comment section. I don’t know when they changed the interface).
        http://blog.milesfranklin.com/the-most-well-advertised-bank-run-in-history
        He mentioned “Shanghai Metals Exchange”. I commented “There was NO Shanghai Metals Exchange. There was only Shanghai Gold Exchange”. Instead of correcting the mistake, Bill Holter deleted my comment.
        Do you think the “experts” of this kind can shed light?
        Sure you can present my opinion to Sandeep Jaitly and I’d love to see his response here.

        • Adolf,

          While it’s true there isn’t a Shanghai Metal Exchange, there is a Shanghai Futures Exchange… and it trades precious metals. I have been looking at the change in silver warehouse stocks at the Shanghai Futures exchange for the past year.

          http://www.shfe.com.cn/en/

          At one time there were 1,140 metric tons of silver at the Sinotrans Eastern Hongqiao & Zhongchu Wusong warehouses in Shanghai, but now there are only 500 mt. Could it be that Bill Holter meant to say Shanghai Future Exchange instead of Shanghai Metal Exchange?

          It would have been more professional if Bill corrected his error, rather than delete your comment.

          Here’s the deal. I am providing information that I believe to be true. If I am wrong, then anyone who wants to correct me… I HAVE NO PROBLEM WITH THAT AT ALL!

          JUST SEND ME THE INFORMATION… and I will publish it!

          Adolf, I sent your comment about Fekete’s calculation of the gold basis to Sandeep. If he replies, I will publish his comment.

          steve

        • Adolf,

          I received a reply from Sandeep:

          Hi Steve, interesting point but not valid. When I buy gold in Ottawa, it’s virtually at the spot quote that this man thinks is only a London quote. There’s no such thing as a “NY spot price” outside of calling all the NY dealers and getting their quotes individually.

          Essentially, the measure (value) of the basis is perfectly obtainable in NY. I’ve done it (achieving the basis as carry) through dealing in Ottawa and the co-basis likewise.

          Furthermore GOFO is negative which corroborates this ‘snakeoil stuff’

          • Adolf Hitler | February 8, 2014 at 7:03 pm |

            I bet Sandeep has NO experience in dealing in the OTC market. There isn’t one London quote. Several London quotes can exist at the same time. Because London is an OTC market not an exchange. The reason that people often think there is only one London quote is because data providers like Reuters or Bloomberg use some own methodology to combine different London quotes into one. If you have a Reuters 3000 Xtra, you can see that several quotes exist at the same time.
            He also tried to divert the topic. I’m talking about his methodology. But he tried to use negative GOFO to prove that there is backwardation so his methodology is correct? These are 2 different topics. Did I deny the existence of backwardation in London? The geocentric model can also explain why the Sun rises from the east but this doesn’t mean this model is correct.

          • Adolf,

            Sandeep replied once more to your latest comment. This is the last time I am going to ride this Merry-go-around.

            SANDEEP’S REPLY:

            Hi Steve, I’m not giving away whom I deal with, but of course I deal in the OTC market! I’m a gold/silver fund manager. Who does this so and so think he is?

            This man is trying to say that the Bloomberg/Reuters quote is an amalgamation of various different quotes. Does he not think I know that? I phone up different dealers in London before I trade.

            I’m not trying to divert the topic; this individual said that measuring carries the way we are is incorrect. This individual doesn’t realise there’s no superior way of calculating carries. This individual is a bigoted charlatan (snake oil comments…) just talking through his hat.

            Adolf…. I allow a lot of room for debate here, but I have to say your choice of a screen name has a lot to be desired. I have no idea why you would pick such a name and maybe its more due to sarcasm, but I believe there are much bigger FISH TO FRY than bickering over the nuances of the GOLD BASIS.

            You had ample time to PROVE YOUR POINT, and after reading comments on both sides, I believe your opinion of Fekete and Sandeep is unwarranted.

            Anyhow… as I stated, there are much more SERIOUS PROBLEMS coming down the pike than focusing on the GOLD BASIS.

            steve

          • Sandeep mentioned
            “There’s no such thing as a “NY spot price” outside of calling all the NY dealers and getting their quotes individually.”
            This statement in itself is self-contradictory. If you call some NY dealer and they give you some quote, then that’s NY spot. NY spot prices exist. “They don’t appear on Bloomberg/Reuters screen” doesn’t mean “There’s no such thing as a “NY spot price””. I don’t have a photo on this site doesn’t mean that I don’t exist.
            And he then boasted “I’m a gold/silver fund manager. Who does this so and so think he is?” (So he is trying to attack my personality) and “Does he not think I know that? I phone up different dealers in London before I trade.” ( So he admits that I’m correct. There are several quotes in London at the same time? There is not 1 single London spot)
            Sandeep needs to make money and acquire his fame through his basis reports. He would never admit that he was wrong. Why doesn’t he use the right methodology to calculate the basis? Call the NY dealers to get their quotes and then use the Comex futures prices to calculate the basis? That’s probably because he is lazy. Getting a Bloomberg/Reuters quote is easy and you don’t need to make phone calls. You only need to click some buttons on your Computer. And why doesn’t he tell the audience the easiest way to know if there is backwardation/contango in New York(Remember, New York)? The easiest and most accurate way is to look at the settlement price on the Comex
            http://www.cmegroup.com/trading/metals/precious/gold_quotes_settlements_futures.html

            If the front month contract settlement price is higher than the back months, then there is backwardation. If lower, then contango.
            Today, the settlement price for Feb is 1274.8 and that for Apr ( the most actively traded contract) is 1274.7. Then there is backwardation.
            But why doesn’t Sandeep tell us this simple method? That’s probably because that’s so simple that everybody can do it. Nobody would need his basis report.
            Steve, I can see that you don’t like me. However, I guess that’s in fact because I dared to attack your heroes like Harvey Organ, Bill Holter or Sandeep Jaitly. And you don’t like me also because of my nickname. But please be objective. I’m criticizing Fekete and Sandeep’s methodology. I agree that big things are coming. However, those people shouting “manipulation”, “fraud” or “economic collapse” are NOT necessarily your friends. Some probably have their own agendas and some may not even believe what they are shouting. If you want to help the average Joes to protect themselves, you should do your own homework and provide your readers with the correct information and methods instead of blindly defending your heroes.
            As for Bill Holter, if you bother to carefully read his article and look at the stocks of the SHFE, you will know that he was in fact talking about the Shanghai Gold Exchange. The Shanghai Gold Exchange has vaults all over china but the SHFE doesn’t. That’s why most physical gold delivery in China takes place at the SGE not SHFE. He was wrong and please admit that.
            I’m too lazy to make more replies so Sandeep can have the last word.

          • Adolf,

            We are beating a DEAD HORSE here. However, you brought up a few points that I would like to clarify because many people come back and read these comments.

            Let’s straighten out the so-called HERO NOTION… shall we?

            Your comment:

            Steve, I can see that you don’t like me. However, I guess that’s in fact because I dared to attack your heroes like Harvey Organ, Bill Holter or Sandeep Jaitly. And you don’t like me also because of my nickname. But please be objective.
            ————–

            That is an interesting comment coming from someone who I believe is highly educated and well versed in the Gold-Silver trading community. I don’t think I would have ever made a reply like that if I was on the other side of the debate.

            However, now that you brought it up, I am going set the record straight. I don’t really know the three gentlemen you listed above. I have spoken with Harvey on the phone and have had several email exchanges. I don’t know Bill at all, and had my first email exchange with Sandeep in response to your name calling by way of using CHARLATANS and etc.

            I go by Harvey’s figures on how many contracts stand for delivery. I don’t see that as imagination. You say that its very easy to figure out backwardation… I think figuring out how many gold contracts stand for delivery is just as easy. Why the big fuss here? If not, then send me the darn information as you see it.

            Jesse at JesseCrossroadCafe does the same damn thing.

            The idea that I put these folks up as HEROs seems quite JUVENILE. Furthermore, your assumption that “I DON’T LIKE YOU” is incorrect. While I think your screen name is a bit over the top, I go by the character, intellect and wisdom of a person.

            You say that I should be objective and stand clear of those shouting “MANIPULATION, FRAUD & ECONOMIC COLLAPSE. They may have hidden agendas.

            Well, then I gather I have to include Jim Sinclair, Peter Schiff, Eric King, Dr Paul Craig Roberts, Ron Paul, Gerald Celente… so on and so forth.

            Paul Craig Roberts who as you know was former assistant to the Secretary of the Treasury has stated that “Everything in the market is Manipulated.” Is he a CHARLATAN as well??

            I find it quite ironic that you point a finger at Sandeep or anyone else who might be making a little money on a Subscription Service or selling some gold and silver, while the Big Banks commit fraud in the HUNDREDS OF $$$BILLIONS.

            Adolf…. fer pete sakes… are you kidding me?? The folks here that you think have an agenda selling something are making FRICKEN PEANUTS (actually less than peanuts) compared to the Banking Elite.

            Bill Holter works for Miles Franklin. I would imagine the profits they make from selling Gold & Silver are embarrassingly pathetic compared to the theft, corruption and pilferage taking place on Wall Street.

            I am not here to defend these folks, but to put some objective logic were it seems to be lacking on your part.

            Lastly, if you read my comment above, I did say it would have been more “Professional” for Bill to correct his error rather than delete your comment. DID YOU NOT READ THAT?? I think that is a pretty objective way of looking at it.

            While I believe some in the industry are using HYPE so sell stuff, (I wouldn’t do it), but if that is the worst they are doing…. SO FRICKEN WHAT. At least people are buying a real store of value by purchasing gold and silver instead of the 99% of paper garbage in the world.

            Anyhow… I am not going to change your mind on anything here… I can tell. I did this for my readers.

            If you don’t believe that MANIPULATION, CORRUPTION and FRAUD is taking place on a grand scale…. I just don’t know what to say…..LOL.

            steve

          • Steve, I have been talking about Harvey Organ, Sandeep Jaitly and Bill Holter. Did I mention other names? No. Guys like Alasdair Macleod and Frank Veneroso are, in my opinion, real experts. They know what they are talking about. However, they don’t write often and their articles are often too technical for average readers to digest. I haven’t systemically read Jesse’s or Paul C Roberts’s articles. I don’t want to comment on them.
            I have been attacking charlatans in the gold community. Did I say every guy in the gold community is a charlatan? No.
            By the way, I see you are trying to divert the topic. Did I deny that MANIPULATION, CORRUPTION and FRAUD are taking place on a grand scale? No. But MANIPULATION, CORRUPTION and FRAUD are NOT the topic of this thread.
            I can see that you are quite pissed off at the moment. In order to give you some time to cool off, this will be my last comment of this thread. Have a nice dream.

    • “He knows nothing about things about exchange for physical. And I bet he has never bothered to read the Comex rulebook. His daily report is simply based on his imagination.”

      Let’s just summarize it as “He knows nothing”.

    • robertoleeadams | February 9, 2014 at 5:45 am | Reply

      Your handle gives me great faith in your unbiased opinion~!

      • Steve,

        You were gracious and kind … well done. I must say though, that I think Adolf hears voices.

        I enjoy your work, thank you.

  2. “Antal Fekete is another popular snakeoil charlatan in the gold community.”…”contemporary Goebbels like Kid Dynamite and Bron Suchecki”…

    Such a rich vein of comedic ‘gold’ cannot be allowed to go untapped.

    Were this a straight up shill site like “ZH” our man “Adolf” would surely be an inhouse creation, designed to stir up clicks via contrived controversy; such over the top vituperative condemnation of any and all in the world of gold however seems more in line with a channelling\stand-in avatar of the infamous “Precious Metals Pete” – could “Petey” be a BNP supporter or honcho having some trouble coming out of the closet?

    It’s clear however, that Steve is a native born Amerikan, and as such, is merely trying to scratch a living from his intellectual property, as opposed to the grand designs of every east-european immigrant in the mold of ZH’s Ivan the Terrible* – whose dreams of a house in the Hamptons are born n realized from the “monetization” of their readers’ gullible fantasies of ‘free market’ economics…. and whereby they can become one of the very “1%” who they built up their following from excoriating!

    In the off-chance that our Mr Schikelgruggber is indeed a real guy, with a welcome contrarian perspective to the prevailing goldbuggery consensus, then it’s clear that Steve is also too much the gentleman to challenge him on the absurd assertion that poor Antal is a ‘salesman’ of some kind; it therefore falls upon us lesser luminaries to call Mr Adolf out on the matter –

    to whit///

    just what is Prof A Fekete selling sir? To the best of my knowledge, he is more accurately to be described as a “buyer” – insofar as his decision to entrust the major part of his retirement package to the thugs at Barrick Gold led to his impoverishment, but our enrichment – via the series of insightful pieces which resulted from his precis of Barricks criminal hedging game and investor swindle…

    as it seem Steve is quite familar with the Professors’ work, I would encourage him to republish those treasured and almost forgotten missives of Antal on the subject of Barrick… which struck to the heart of the matter-and the con… long before most of the present goldbug commisars received their commissions to attack and destroy any and all who deviate from the orthodox Austrian line.

    *a truly ‘terrible’ thought occurred to me when writing this comment – could “Dannyboy” of ZH be Corzine himself? Truth is by far stranger than the fictions we are led to believe by the controlled “alternative press”!!!

    Careful readers will notice that only here, on this site, are such controversies even allowed to arise… perhaps someday, they will even be allowed to flourish!… such is the real way to reward, Mr St Angelo… you do not need to pander to the common herd. May a hundred “Adolfs” bloom! The cream indeed will rise as always.

    • rogue,

      Always a pleasure receiving a comment from you. I believe you’re correct… I will be highlighting some of Antal’s older works in the future on the site.

      steve

      • SRSrocco…..your fundamental observation of energy, metals, and monetary policy connected a lot of dots for me. The EROI is something i try to implement in my business as many other aspects of my life.

        Many of your readers skip over the energy as you have described….but its energy that is driving us off the cliff here. The metals (manipulated by those who run it) is the canary in the coal mine….for this they have to place a fake canary in the mines so no one figures it out.

        Your site is fantastic…i discovered it from sgtreport.com Sean and others in this realm have a great deal of respect for your work as do I.

        • Buzz,

          Thanks a trillion for the Kudos. While I am always open to comments that may go against my opinions (such as the one taking place between Adolf & I above), I really appreciate someone taking the time to share a positive one.

          I am glad that you have been able to CONNECT THE DOTS… I believe that is the most important understanding going forward as it pertains to our society and economy. It took me a long time and plenty of research to be able to connect the dots myself.

          Lastly, I really enjoy SGTReport’s work and I hope to do another interview with Sean soon to provide an update on the Energy, Metals & Mining Industry.

          steve

          • Hi,

            In this case few words of appreciation from me too. I do enjoy reading this site too, even I have not made any comment yet.

            EROI as well as Mike Maloney discussion about storing economic energy in a medium (like gold and silver) that is not possible to counterfeit is sufficient reason to use it to store energy.

            I treat physical gold and silver simply as the best way to store energy for my golden years when I will not be as productive as I am now.

            Good site, good articles, I always find time to read them.

            best regards,
            Radek

          • Steve, I always enjoy reading your peak oil blogs. I first heard about it from watching Michael Rupperts movie Collapse. Is it possible you could do an article on those like you and Ruppert who say peak oil is real and how it threatens society vs those who say it’s all BS?

  3. Steve,
    It’s hard to separate the wheat from the chaff. Esp. as the quickening, tightening, or whatever you want to call it is on, or near, the doorstep. I’m of an age that I’d like not see the applecart up righted, and would like to collect my (ten years from now) defined benefit pension and social security and spend my 20+ years of retirement in peace, but that’s not going to happen.

    Yes, I’ve hedged enough for my family if TSHTF, but I’m not rich enough for the extended family. They’ve mocked me, but I can’t turn my back on them. So that’s not a moment I look forward too. If it comes to pass, it will be hard…
    JQ

    • JQ,

      I totally understand your situation. I too have the same problem with my extended family. Furthermore, there is a good friend close by who has the same problem as well. So, some days either he calls me or I give him a ring and we discuss all the GARBAGE going on in the markets.

      That being said, I am GLAD AS HELL, my wife understands the situation and believes in what I am doing. I am able to discuss topics and updates with her from time to time.

      Also, I am lucky that I get to be in a EMAIL exchange with JIM WILLIE and his group. These email group interactions in which I am apart of many, allow for a great exchange of IDEAS, INFORMATION & DATA. However, they do not reduce the frustration that still occurs when it comes to family and friends.

      I hope the collapse will not be a SEVERE as I believe it will be… because I don’t see a much of LIGHT AT THE END OF THE TUNNEL.

      steve

      • As a CFA and 20 years in finance, the austrian perspective, ZH, Schiff, EconomicCollapseblog, brotherjohnf, DollarCollapse, etc. all resonate with me. I am a bit skeptical of everything Jim Willie says but agree he’s been right about a lot of things including the preservation of the petrodollar being a driving force in our foreign interventions. It never ceases to frustrate me how powerful normalcy bias is with my family and friends. Even those who do know something is wrong blindly base their future on things turning around without even looking at the math. You are fortunate that your wife believes you. My wife and kids want to live bigger every day and for me to pay for it, and we have arguments from time to time. Truth told, my plan B is going DB Cooper on them if the SHTF.

        • In the past year, I have given myself a crash course on the economic reality of the world. I’m not an American but I have no doubt Canada will be effected nonetheless. I don’t really understand most of the conversation that took place here but I wanted you to know that it was me, the wife, who convinced my husband that we had to prepare for whatever happens. In my family, I have 6 other siblings and they look at me like I’m crazy when I suggest they take precautions, store some food and have a store of wealth in physical silver, I know they wouldn’t pay for gold. I too worry about what to do when the time comes, I can’t feed them all nor do I have enough precious metals for them. Its heartbreaking to have to face this. My teen age daughter accuses me of making her life miserable, its hard for my husband and I to have to put up with her sometimes. Just stand your ground, focus on doing what you’re doing and get the support you need from kindred spirits…in time, your family will come around, hopefully. If they don’t, I think when they are forced to face the reality of whats to come they will appreciate how lucky they are to have you. A real man is one who stands his ground and protects his partner and offspring. God bless, we’re all going to need it. By the way, I love reading the comment sections, I learn from intelligent people like you, whether the author’s article posted has validity or he’s just trying to sell me something. I know that this is the way selling on the Internet occurs, they give you free information as a way to establish both credibility and bond with you. But the people who take time to comment, don’t have this ulterior motive. Thanks again for sharing.

          • Thanks and good luck to you. Keep in mind that the US fed created roughly $15 TRILLION to patch over the last crisis, and we only know about it through the Freedom of Information Act. Since there is no real recovery, we are headed for another crisis. How much will be needed next time in this exponential fiat world, $30 trillion? What will that do to confidence in the dollar? Europe is into the emerging markets for $3.4 trillion and our banks are interconnected with Europe bigtime. Debt is the cancer whose problems can be seen pretty much well in advance, but derivatives are the heart attack waiting to happen. That is why it is always best to prepare in case SHTF soon, though it could still be a couple of years off. Funny you mentioned crash course. Chris Martenson’s Crash Course is an excellent introduction into the basics of our problems, if you haven’t seen it already. It is about 20 youtube chapters that total a few hours of viewing time. Good luck to you!

        • Do you agree that Jim Willie has been right about a lot of things including the preservation of the petrodollar being a driving force in our foreign interventions? Or are you skeptical of everything Jim Willie says? Pick one.

  4. I have always appreciated Prof Fekete’s work on gold and gold basis going into permanant backwardation.

    I want to run something by you guys that I was thinking about today while thinking about the strong day that the Jr. mining stocks had on Friday. There seems to be some pressure building in the mining stocks.

    There are several catalysts that are starting to move the stocks despite the cap that we have seen on the comex paper price at $1270. We all know that there is a large Asian gold demand and a significant decrease in comex inventory. The thought that came to my mind was one that I have not heard before and it has to do with LEVERAGE. We have seen the paper claims to gold ounces ratio skyrocket to over 100. We are also getting a lot of subjective evidence that other gold storage may be significantly compromised via re-hypothication. As the markets start to pick up on this fear/story we may see a multiple increase in the gold stocks that have producing mines and good assets even if the paper price of gold is suppressed.

    If the fear is that there is no gold or that the the existing gold stock have been levered up then it is a possibility that the leverage may start to be pushed onto the miners because they have the metal even if the price does not increase.

    I know that many are scared of the stocks and only want physical because of the manipulation in the paper price BUT what is some of the leverage we see in the paper markets is pushed to the miners and they start to trade at much higher multiples. If the leverage on paper contracts vs. physical is 100 to 1 then why is it not possible that we see a 50/1 multiple for some of the gold names even if the price remains manipulated lower and contracts are paper settled. The markets are not stupid and they may start to price the gold in ground well before a big paper price move.

    I have a stack but I have also moved very long into some of the better junior producing miners.

    Thoughts???

  5. Take solace in the irrefutable facts.

    1. ALL fiat currencies eventually FAIL.
    2. Gold and to a lessor extent silver, are the ONLY true money.
    3. The current global financial system (debt based) is being crushed under a massive debt load.
    4. So-called financial based “assets” are nothing more than paper backed by more paper!
    5. The global “system” is massively infected by corruption and manipulation.

    There is no “level playing field.” Safety lays in protecting your wealth with physical gold and/or silver held in your possesion, outside the system.

    We are merely spectators observing the great financial unravelling, as some argue in the bleachers over their choice of seats! Popcorn anyone?

  6. You won’t have long to wait in suspense!

    They know exactly what they’re doing & they’ve got it on a schedule (dayplanner).

    see that article recently dug out making the rounds, an op-ed by Grady Means in the oct 25 2012 Washington times paper, where he pulled the date Tues MARCH 4/2014 out of his a
    ** (or somewhere) as THE big crash date, interest rates to go to the sky on unpayable debt, etc?

    Nowhere in that article is there any reason or justification, like some kind of cycle or something, for that exact date, let alone any date.

    Means was a known Rockyfella bigwig back in the day.

  7. I think what this all boils down to is the “Real Value” of PMs. It’s easy to understand when you look at the dollar. Value is not set by EROI, for example if I make widgets and my cost is $25 and every single other competitor cost of production $25 as well, does that make my widget worth $25? Short answer is no. Like anything it is only worth what the masses are willing to pay. If that causes me to go out of business then that is the free market. The dollar is the same exact thing. Why hasn’t Hyper inflation taken hold especially with all the new money creation, trillions in derivatives etc? The answer is very easy to understand. The masses do not have their hands on it. Only a few and it is the masses that count. With real unemployment over 30% your effectively limiting currency in the hands of the everyday Joe and just adding value in the minds of most people. I do agree this system will break but as long the majority of the currency stays in the hands of a few it can go on forever. Will the PMs ultimately break the chains of manipulation? I think so at some point when the currency finally wiggles out of the hands of the few and saturates the markets. In the mean time I am willing to bet you will see sub $10 on silver and $300-$500 gold. Is this it as far as bullion banks manipulating the price when they run out of inventory? I really doubt it, I am willing to bet they will be able to pull tons out of their asses, they always have. I am willing to wait, if I had waited before I would have almost double my holding now. Of course im am not an economist or a fantastic investor, just a regular guy. I got burned hard in the Tech stuff not to mention now a victim of the PM markets. I went looking for answers and that is what I came up with….The Markets have almost never been ruled by fundamentals just physiology.. If you can convince people the king is wearing the nicest duds then he is and everyone will want a pair even people who can see he is naked.

    • Eduardo Martinez | February 9, 2014 at 8:36 am | Reply

      The money created by the Fed is not getting to Joe on the street. QE only exists to bail out insolvent banks. Banks are not lending it into existence to Joe on the street. This is why we are not seeing an increase in money suppy and/or velocity of money (which is the definition of inflation). However the prices of energy and food are going up as the net energy available to society fall (as we expend more and more energy in fracking and ultra deep oil production for a very little modest increase, for moment, in the volume of oil produced). This is a deflationary pressure which is not good for the price of pm.

      • Eduardo,

        I am glad you are questioning the validity of the precious metals as a store of ECONOMIC ENERGY. I think it is an excellent quality to “question everything.”

        Gold & Silver will be great stores of value and investments in the future, because they will RISE ABOVE and BEYOND any so-called deflationary pressures. We must remember, you are basing DEFLATION on a fiat monetary system.

        What happens when the value of the fiat currency goes to ZERO? The metric of deflation goes out the window… and HYPERINFLATION is replaced.

        Do you realize that Russia is putting forth measures to not allow its citizens to use the DOLLAR anymore in the country? Do you realize that Zimbabwe who replaced its hyperinfated currency with the U.S. Dollar several years ago is getting rid of the Dollar and replacing it with the Chinese Yuan?

        I use the cost of energy to produce Gold & Silver as a basic bottom-line metric. However, the real value-price of the precious metals will be realized when investors try to switch out of the hundreds of trillions of dollars of worthless paper assets and derivatives and into physical gold and silver to store ECONOMIC ENERGY.

        This is where I see the big explosion in the value to the precious metals. This would be the EXACT OPPOSITE reaction of investors when they realized their ENRON or BEAR STEARNS stock was worthless.

        steve

    • “In the mean time I am willing to bet you will see sub $10 on silver and $300-$500 gold”.

      I’m not into betting but would take bets all day against that; yes even in a ersatz paper/shares of metals market like commodities’ futures.

      If they [were able to] manipulate the spot 5 to 10% lower on gold they will break the the physical price from the spot price. There simply won’t be PM’s available in any quantity if the physical price goes down 5% or more.

      They do have the physical silver to satisfy contracts with, but when gold is emptied from the comex and other sources, investor money will try to move into silver [currently hated by over 99% of investors large or small], but there is so little compared to the mountains of fiat it will evaporate.

      I’ll bet gold won’t go below $1,200 no matter how hard they try or want it to…unless they can hols a literal or figurative gun to the heads of those demanding physical gold delivery to satisfy their contract.

  8. So should i take all the silver i have stashed and turn it into gold. I t sure would be easier to lug around. Or will it carry forward the %ege and hold onto it? Been stashing since 07

    • You can trade a percentage of one metal for the other, based on the ratio between the two, increasing the quantity of both. That said… Gold is superior at transferring value across space and silver is superior at transferring value across time.

  9. Hello to everybody,

    It was interesting to read the comments of Adolf Hitler but what there is missing is a consolidated information with certain documents and / or explanation how it really works. I understand this gentleman is frustrated but he has to give more details before he can attack other people who can not defend themselves in a proper way. All data is welcome but if have to be given in an objective and respectable method.

    Best regards

  10. Eduardo Martinez | February 9, 2014 at 6:58 am | Reply

    Didn’t understand anything from the article. Above my head. Gold and silver can never be a currency because it is impractical for the man on the street to hold and exchange it for goods and services. Money ultimately derives its value from energy production. When the world currencies get revalued it will be against energy production. Are precious metels a proxy for energy production? I am yet to be convinced which is why I visit this site.

    • EM

      Firstly, physical gold and silver are the ONLY true “money.” All the rest are currencies. Paper.

      Secondly, you are right in that “money” derives its value from the energy invested in its production. Gold and silver mines have energy invested in them on a basis that this Energy will be Returned On Investment, or EROI.

      What does it take to produce fiat currency? A few moments of time and pennies of cost.

      “Impractical for the man on the street”? Only because the present financial paradigm has brainwashed the public over these past 60 years, into believing that physical gold and silver are nothing more than commodities.

      Pre 1934 physical gold and silver were freely available as circulating money. You could redeem your paper currency dollars at any bank, for physical gold or silver money. The powers-that-be have since then, denenigrated physical gold and silver, to sway people into exclusively using the fiat paper US dollar as the only medium of economic exchange.

      Why did they do this? Physical gold and silver are a deadly threat to the thought that these pieces of fiat paper have any intangible value. This confidence in paper fiat currencies has been eroding and is now gathering ever increasing momentum, approaching a “crisis of confidence”. Wealth protection is the ownership of physical gold and silver, held outside of the system. Good luck.

  11. To anyone waiting for sub $18 silver, or sub $1,100 gold before buying again [or for the first time]….

    You should buy other tangible & useful things with your fiat; you are unlikely to get any silver or gold.

    Steve, while the future can’t be known what odds would you put on a 10% drop in spot from these prices? And if it happened how long would it take for India and China to “absorb” the phsical?

    • David,

      Anything is possible in the short-term paper moves in gold and silver. However, I believe traders out there realize that the Monetary Authorities would be INSANE to push the price of gold or silver below their COST OF PRODUCTION for an extended period.

      That is why we have seen several FAILED attempts below $1,200 gold & $19 silver.

      We all tend to live very long lives… 70-80 years or more. This is how I look at things.

      ALL FINANCIAL BUBBLES & FIAT CURRENCIES BURST…. BAR NONE.

      Once we understand that… it is just a matter of time & patience.

      steve

      • Let’s make this simple for gold

        2013

        Demand

        = 4500 tons

        Supply

        = 4500 tons

        Mining = 2200 (+ 700 tons China/Russia never brought to market)

        ETF’s, etc. = 960 tons

        COMEX = 100 tons

        SCRAP = 1400 tons

        ’13 delta between mining and demand of about 2300 tons…this was made up by ETF / COMEX outflows, scrap sales (everything phyz supplied not mined)

        If demand remains about constant in ’14…where will the 2300 ton/yr supply come from to make up for this shortfall???

        Mining = +100 tons/yr

        production will peak in ’14 before beginning to decline in ’15 (due to defunded exploration and cap-ex, shut downs/slow downs of marginal mines)…if price falls further, mining output is likely to go negative

        ETF’s, etc. = +0 tons/yr

        if prices remain @ current, no further disgorgement is likely after ’13’s 30% gold price decline and 1350 tons to 790 tons (40% drawdown of GLD, largest holder of bullion)

        COMEX = 100 ton outflow in ’13 was a 90% decline in deliverable and overall decline of 35% total holdings…

        Scrap = 1400 tons in ’13 likely to continue falling by 100 tons/yr @ these prices…(scrap supply has been falling since ’09 @ peak of 1750 tons/yr)

        Net Net – ’14 @ current prices w/ continued demand faces a shortfall in supply of 2300 tons (50% of total demand)…if prices fall further, mining/scrap supply will fall in line with ETF / COMEX disgorgements…

        Ummm, anyone realize the game as we’ve known it is over…get ready for something shocking to happen soon.

        • Options are:

          1- prices rise to increase supply…but this cannot work as ETF’s will be large buyers as well…mining incented, scrap sales rise but ETF / COMEX would likely need be large buyers of new supply…delta remains.

          2- cut demand in half. this seems most likely??? Otherwise gold market breaks to new highs, previously only the stuff of gold bug letters.

          Other options???

          • ooops – should have said the ’14 deficit will be 1000 tons @ current demand, current supply…(20% supply deficit)…but there really is no additional supply from ETF’s or mining or scrap to make up the deficit…only chance they have will be demand destruction (ala India) coming in 3…2…1…

  12. Eduardo Martinez | February 9, 2014 at 5:02 pm | Reply

    The multinational banks and governments they control are not going to allow the fiat money to die without a fight. So what can they do? One thing they will want to do stamp out any alternative currencies.

    Nationalising the pm exchanges and pegging the prices to the cost of production plus 5% wouldn’t work of course, unless they outlawed pm as a form of currency and even then it wouldn’t work unless it was enforceable. They would probably have to agree that gold couldn’t be used as payment trans nationally. Then you have the issue of what to do about crypto currencies.

    What I’m getting at is, the banks will fight back to keep control, and you’re got to anticipate all eventualities.

    • Eduardo,

      Again…. “ALL” fiat currencies and financial bubbles burst. The only thing we are debating here is what happens afterwards. Now you say that the Monetary Authorities are not going to allow fiat money to die without a fight.

      FYI…. THE FIGHT HAS BEEN GOING ON & CONTINUES TO TAKE PLACE PRESENTLY.

      The 1960’s London Gold Pool came and went….. it was a complete failure. The U.S. Investment Banking Industry died in 2008. The Western Establishment leased gold from the late 1990’s until last July to depress the paper price of gold. Gold Leasing is now DEAD. Do you see a TREND HERE???

      Eduardo.. THE FIGHT IT TAKING PLACE NOW… not sometime in the future.

      Anyhow, there are no guarantees in life. All you can do is the best you can. I believe in gold and silver as they are the best alternatives TO EVERYTHING ELSE. If an individual wants to play Devil’s Advocate and remain invested in the BIGGEST PONZI SCHEME in the history of Mankind….

      …. I don’t have a problem with it.

      steve

      • I don’t disagree with you a single bit, but how do we know for sure gold is no longer leased? Is it by inference because now the ETF stockpiles are being drawn down so the central bank stockpiles must be gone?

  13. Eduardo Martinez | February 9, 2014 at 5:11 pm | Reply

    What I wanted to add was, if you hold gold you are banking on a fiat money getting devalued relative to it AND the ‘powers that be’ not doing or being able to do anything about it.

    • I just want to say that gold and silver are established within the very psyche of man as something of immense value. Recently, an ancient civilization, that predates the Sumerians, pegs the beginning of civilization at 200,000 years ago and guess what they mined gold! Silver has been the lesser sibling of gold but our modern world uses silver for thousands of applications, which means silver is not only useful as money but it is an essential raw material. My understanding has been that gold does have some applications, outside of making jewellery, but it does not approach the status of silver as a raw material. Exchanging gold or silver for goods and services will be tricky however, not sure how that one will work in practical terms. But we will be compelled to carry on commerce. Just try to give up shopping for any length of time, its damn near impossible. We are addicted to it! Even if we don’t have money to spend we walk around in shopping malls- even zombies end up en masse in shopping malls. Hollywood knows our human needs and wants- they prey on them. Zombie movies and TV series are popular because the 99% identify with them at a much deeper psychological level. Those who understand what is going on and are able to open their minds to it, are not being controlled by some force, we are not zombies, we are alive, conscious and willing to face whats right before our eyes. That is infinitely better than being blinded and then blindsided by events when they happen. My hope is that when economic strife is apparent to all, I can walk up to someone desperate to sell their house or a bank has foreclosed on and offer them enough precious metal to buy it outright. I believe stocking up on food and essentials for at least 6 months is wise and one can use the precious metals to buy big stuff you want like cars and homes, maybe even an office building. You have your lawyer and make it legal, its yours. I can’t remember the name of the guy but he went through the economic collapse in Chile and he says people will do all sorts of trades. His nephew was offered a condo for his crappy little car, the older couple had family in another country and just wanted to get out, but he wouldn’t give up his car. The nephew regretted it because after things settled and the economy began to rebuild, the condo building eventually became one of the most luxurious addresses in the city. Everything in life occurs in cycles.

  14. Steve,

    Do you mind sharing what the ratio of physical gold and silver you hold personally?

    Thanks.

    • Walter,

      I don’t like to give out specifics on my precious metal holdings in the public domain, but I can tell you that the majority is invested in silver. I purchased my first ounce of silver at $4.52 in 2002.

      Here are my recommendations for investing in Gold & Silver

      1) Conservative = 75% Gold, 25% Silver

      2) More Speculative = 25% Gold, 75% Silver

      I believe silver will outperform gold as the public wakes up and smells the TOILET PAPER — the U.S. Dollar. When the devaluation of the Dollar occurs, physical gold and silver will be quite difficult to obtain… but at least silver will be more affordable and easier to obtain that gold.

      steve

      • steve,

        We have seen gold stockpiles in ETFs drawn down, which also includes the LBMA which a Bloomberg representative said was piled the the rafters two years ago and is now empty, with all of it going to Switzerland for refinement and then China. Question, why have silver stockpiles not also been drawn down? The Comex appears to have plenty of supplies onhand. I am just trying to understand given the fact that the US gubment stockpile of silver is gone and most is consumed via industry and not stockpiled like gold. BTW, I have roughly 50/50 allocation.

  15. “I purchased my first ounce of silver at $4.52 in 2002.”

    That’s great! Congrats! I purchased my first oz of silver in July 2013 at $19.28 spot and I’m very happy about being able to purchase at this price.

    So, do you think that the major reason is the fact that silver will be more available and the result of more people buying silver than gold will contribute to the price of silver outperforming gold? Or if not, what are the top reasons you think silver will outperform gold?

    • Walter,

      You actually did very good to purchase silver it at $19.28. I can tell you that I purchased the majority of my silver from 2002-2008. During that time, I would purchase a bunch at say $9.00 and then watch it fall to $6.00. I also purchased a several Silver Eagle Monster Boxes at $14 to watch it fall back down to $9.00.

      However, in the end the price kept on rising…. and will continue.

      Yes, I believe the reason why Silver will outperform Gold in the future will be due to the AFFORDABILITY and LEVERAGE.

      Rick Rule of Sprott Asset Management stated that Institutional investors have been CIRCLING THE RESOURCE SECTOR and are looking to come in… in a BIG WAY.

      99% of the world has invested its wealth into PAPER ASSETS that have no future… and the future is now here. Just a fraction of that wealth leaving paper assets and moving into physical gold and silver, WILL BE A GAME CHANGER.

      … and that is only a fraction.

      steve

      • Steve,

        A question: A stock broker I know communicated that partial ownership of a company [stocks/equities], or perhaps municipality [municipal bonds] will still have value in or after a currency crisis.

        I suppose that is true if the company or entity hasn’t declared bankruptcy, and the nature of the crisis doesn’t somehow negate partial ownership of the entity one has invested in.

        In the future their may be a new “dollar” that the value of things are measured in, but if a business stays viable it should have some marketable value.

        Your thoughts?

  16. I agree Steve, and I see currency for what it is – worthless paper with no intrinsic value which always comes back to its real value of zero.

    I’m more concerned about protecting my wealth by holding physical gold and silver and I see the wealth transfer that will eventually happen and thus making gold/silver more valuable in terms of any currency as a bonus.

    At the same time, I want to make sure to maximize profits as things move forward and that’s why I’m doing more research on gold vs silver investment and why one might outperform the other.

    Thanks for clarifying it for me, I’ve also read your report on peak silver production and it gave me a whole new understanding of how energy relates to precious metals and how important that relationship is.

  17. Steve,
    Just read your reply to “Adolf’s” latest self-pitying moan-fest.

    FOGO a bout it! He’s clearly just trying to goad the hell out you, and hung himself on his own petard by whining about ‘personal attacks’ when the very same tactic has been his own modus operandi.

    I had hoped to see him back up his attacks with something substantial to say about GOFO, backwardation, and so on, but your willingness to offer him a free platform to make his case has neither been utilized or appreciated by which you correctly call a juvenile mind.

    As I tried to point out to his benefit before, anywhere else he would have been thrown out the door.

    Somehow in all of this theater, your original contention about a currency collapse got lost in the shuffle. Neither you nor Antal are necessarily correct in suggesting that ‘the end is nigh’ but let’s move on to a real discussion of that assertion with another article, after der Furore retires himself to da Bunker with a couple of cyanide tablets.

  18. According to St. Louis Fed, the Monetary Base has halted it’s $100 B/mo growth and as of Jan, added just over $10 B/mo…bout to go negative??? Big change in trajectory since November…prior to taper $10B (now $20B/mo taper)??? Somebody draining the pool???

    http://research.stlouisfed.org/fred2/series/AMBNS

    click on 1yr or 5yr chart to see big change

    http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=AMBNS&s%5B1%5D%5Brange%5D=1yr

    http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=AMBNS&s%5B1%5D%5Brange%5D=5yrs

    During periods since ’09 when the monetary base was flat, equities have been down / flat and then lifted by anticipation of QE / QE execution. If this pattern holds (particularly w/ record leverage) stocks bout to get clobbered.

    Also notable is that golds big upside runs happened during the flat periods or QE runoff periods…

  19. Adolf Hitler

    “Steve, I can see that you don’t like me. However, I guess that’s in fact because I dared to attack your heroes like Harvey Organ, Bill Holter or Sandeep Jaitly.”
    So, Steve follows Organ & Co. because they are his heroes.
    You are implying that Steve is an idiot.

    “And you don’t like me …”
    Now you put it on a personal level.
    Now you are implying that Steve argues with you not because your assumptions are wrong but because he doesn’t like you. You are suggesting that Steve is an idiot.

    “But please be objective.”
    Steve is not objective. He is an idiot.

    “If you want to help the average Joes to protect themselves, you should do your own homework and provide your readers with the correct information and methods instead of blindly defending your heroes.”
    Steve is an idiot and you have to lecture him publicly, ob his blog.
    Other than you Steve is not helping the average Joe. You are a philantropist, he is an asshole (and an idiot who blindly defends his heroes)

    “I can see that you are quite pissed off at the moment.”
    Again putting it on the personal level. Steve’s arguments have no substantiality. They are just prompted by his feelings against you

    “In order to give you some time to cool off, this will be my last comment of this thread.”
    How generous of you Adolf Hitler!

    “Have a nice dream.”

    Adolf Hitler, while the Host tries to argue with you on a objective basis you attack him repeatedly on a personal level, questioning his honesty here on his blog
    You are definitely full of shit, and I wonder why – like Bill Holter apparently did – Steve didn’t deleted you

    Try not to behave like an asshole Adolf Hitler

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