THE U.S. GOLD MARKET: Completely Insane

When it comes to investing in gold, for the most part, the U.S. Gold Market is completely insane.  I am not blaming Americans, as they have been totally brainwashed by the U.S. Treasury and Federal Reserve into believing that gold is something you wear, not invest in.

This is certainly proven by the data shown in the chart below.  These figures come from the World Gold Council Full Year Demand Trends Reports, and while it may be true that the data is manipulated or incomplete, it’s the best we can go by.  And I believe it gives us a pretty good idea of the insanity taking place in the good ole US of A.

From 1999 to 2007, Americans purchased a staggering 3,196 metric tons (mt) of gold jewelry for adornment purposes.  That translates to an amazing 103 million ounces (Moz).  The reason Americans purchased so much gold jewelry during this nine-year period was due to the low price of gold (especially 1999-2005):

U.S. Gold Jewelry & Retail Investment Demand 1999-2014

During this same time period, Americans purchased 231 mt of gold for investment.  This turns out to be a whopping 7.4 Moz.  As the chart above shows, gold investment was a lousy 7% of the pie, whereas gold jewelry stole the show by consuming 93% of these two markets.

If we look at the next bar in the middle of the chart (2008-2014), we can see a distinct change in American gold buying habits.  First, as the price of gold skyrocketed, less Americans could afford to purchase gold jewelry for adornment bragging rights.  Secondly, more Americans were starting to buy gold as an investment due to the near collapse of the U.S. financial system in 2008.

From 2008 to 2014, gold jewelry demand fell considerably to 992 mt, while gold investment more than doubled to 545 mt.  Thus, retail gold investment over this eight-year time period was 35% of these two markets, while jewelry declined to 65%.  In 2010, retail gold investment peaked at 45% of the total as jewelry fell to 55%.

Even though retail gold investment picked up in the United States after 2007, the total since 1999 was 776 mt compared to 4,188 mt of gold jewelry purchases.  Again, this translates to 25 Moz of retail gold investment versus 135 Moz of gold jewelry for adornment purposes.

Now, I say adornment because as the financial situation became rough for Americans after 2007, the market experienced a huge increase in the”Scrap Gold for Money” market.  Americans no longer enjoyed the bragging rights to wear gold, instead they pawned Billions of Dollars worth of scrap gold over the next several years.  Do you think the folks in India pawned off their gold jewelry when prices declined… LOL.

Before I end this short article with the last TIDBIT that really proves the point that the U.S. Gold Market is completely insane… I want to explain why I have cut back on publishing articles on the site recently.

I am working on my actual first soon to be published PAID REPORT on the Silver Market.  I mentioned before that I had planned to publish a U.S. GOLD MARKET REPORT, which the chart in this article was a part of, but did not do so because the information I received from the USGS on NY Fed gold withdrawals was incorrect.  I am not going to get into the details, but just to say the main assumption of the report was no longer valid.  I had planned to rewrite the report because there is a lot of valuable and interesting information, but I decided to start working on some PAID SILVER REPORTS instead.

I plan on publishing three paid reports on the Silver Industry and Market.  This is where a great deal of my time is being sucked into.  However, I believe my followers, readers and new guests to the site will find the data and information in these reports well worth the money and time to read.

I plan on publishing the first report next month as the report is currently two-thirds written.  I will update the status of the publication date as I complete the report.

Okay…let’s get back to the lunacy of the U.S. Gold Market.  As I mentioned, Americans were buying more gold as an investment after the collapse of the U.S. Investment Banking Market in 2008 and less gold jewelry as the price skyrocketed.  However, something changed in 2014.

As the rest of the world (mainly China, Asia & India) took advantage of bottom basement gold prices in 2014 by adding gold to their investment stash, what did Americans do?  LOL…. you got it.  Americans increased their gold jewelry buying once again, to a hefty 179 mt.  The last year Americans purchased more was in 2008 at 188 mt. 

And of course, if Americans are going to take advantage of low gold prices to purchase more gold jewelry, why then it makes perfect sense for U.S. citizens to also cut back on investing in that yellow barbarous relic.  Which they did.  In 2014, Americans bought a pathetic 47 mt of retail gold investment, down from 67 mt in 2013.

Finally, the United States is heading for serious trouble.  Because we have the world’s best printing press, we have been able to postpone the inevitable for a while.  Unfortunately, there is way too much INSANITY taking place in every aspect of our society, economy and financial system that the TRUTH will not set us FREE, but rather cause the greatest collapse the world has ever seen.

I really don’t know how events are going to unfold when we finally HEAD OVER THE CLIFF, but I know enough to purchase gold as an investment rather than highly marked-up gold jewelry so I look better buying that $5 cup of coffee at Starbucks.

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38 Comments on "THE U.S. GOLD MARKET: Completely Insane"

  1. Steve,

    Good, common sense article on the typical behavior of most in the USA. PM investments are rarely talked about in the MSM and this is where most get their financial information from. The stock markets meteoric rise in 2013 & 2014 alone has created a false sense of security despite the constant warnings from economists like Marc Faber and Peter Schiff among others. As a nation the press and general talk of investments always revolves around the stock market and other paper instruments.

    The declining sales of gold in the USA doesn’t surprise me due to cost and the general welfare of many since 2008. The gold/silver ratio as of today is almost 74 to 1 which is far greater than the historical ratio of 15 to 1 ( as I have been told and read). Despite the drop in gold sales recently silver sales have been impressive. Dave Morgan stated the cost of silver in 2000 is the same price today adjusted for inflation. Silver is where I’ve focused my investing due to the widening ratio to gold and when the financial reset does occur that ratio should come much closer to the historical averages.

    I believe the pattern of gold sales in the USA before and after 2008 is a reaction to the financial crisis, but also due to the lack of people’s understanding of the history of currencies in respect to PM’s. If more people would dig deeper and give online sites a chance to gain their financial knowledge the pattern of investments would favor alternatives like gold & silver. Also, until the suppression of PM prices by central planners and bullion banks stops than many will still think it’s not a wise investment. If they could only remember the underlying premise of any investment: buy low and sell high. Get PM’s while they are affordable instead of putting money into propped up,overinflated asset classes ready to go much lower.

    • Mark,

      I agree with your reasoning. The gold silver ratio, plus irreplaceable industrial uses for silver [with few for gold], plus the greater manipulation/suppression of the silver prices means more upside when the manipulation can’t be maintained.

      I’m convinced all precious metals prices will stay in this low range for some time until the ability to maintain the charade is gone. Many seriously knowledgeable about PM’s think that will be a shorter time than I do. But I can’t see it going on for many years; maybe 3+?? Who knows.

      • the pms will stay down only until china has accumulated enough. Even the bigwigs of the SDR option are now giving up their reluctance to have gold as part of the basket
        ultimately, though, any analysis of the gold market that fails to mention first an foremost the 100:1 paper gold to physical ounces and the deliberate dumping at the most illiquid times of the market is worth no consideration. Without this manipulation gold would already be at $2000 / oz easy. and then youd have momentum chasers kicking in.
        SRSrocco is well across these dynamics. keep it up mate

    • I think this is just another stupid article. I can’t believe people still think gold is a good investment. With advanced technology we don’t need gold or silver anymore for money. Why can’t the ignorant precious metal investors get that?

      The world will soon have a cashless system. Gold is a barbarous relic.

      • Mike, you most likely failed history. Most of us have seen the results of governments trying to balance their books by devaluing their paper money. Mexico, Argentina, Costa Rica, Russia, Great Britain, Spain, Italy etc. Soon Greece will be forced to go back to the Drachma. Look at actual inflation in the US. Me, I will save as much in PMs as I can, and when the crash comes you will have a hard time buying food with your useless stocks, bonds and piles of Confederate Money.
        PMs always have lasting value, at least for the last 3-4 thousand years. There is nobody able to hack PMs from your bank when they are in your pocket, so enjoy your electronic fiat money and it’s vulnerability to theft by a 10th grade computer nerd.

        • and Mike, it is precisely BECAUSE gold has no industrial application that it is the single most suitable substance to be used as the cornerstone of a financial system: its incorruptable scarcity ensures its place as a totem or substitute for value.

      • Mike’s opinions are barbarous relics.

      • Me thinks that, perhaps, “Mike” may be a troll.

      • Anytime I see a gold basher use the term “barbarous relic”, I know he’s just parroting something he heard and can’t think for himself. Don’t be too cruel, we were all at the stage of “why gold” before we educated ourselves. If the schools educated us in money correctly we wouldn’t have nearly as much of this uninformed attacking of us goldbugs.

        The other thing I notice is that despite having gone through two severe crashes in 15 years, a lot of people have forgotten the horror and think we are almost out of the woods. They fail to see that the paper-constructed rebound each time begets the next horror, only larger and more intractable. They think that paper is the cure. I can’t understand why people aren’t more curious to read about money systems in the last 300-400 years.

    • “The stock markets meteoric rise in 2013 & 2014 alone has created a false sense of security ” : false, not at all while this Financial era is not over and it looks as nobody in the big guys team (china namely) is willing to stop this game so it can last many more years.

    • Back when the historical ratio was current, I bet it was close to the respective cost ratio. Today, cost ratio for primary miners seems to be at least 55. For price ratio to decline to 15, a silver mine will have to make profit like crazy while the gold miners can’t make a living. Hard to imagine unless someone finds and auctions the last silver bar.
      There is a couple billion ounces of modern silver bullion in private hands. Will none of it become supply before the ratio dropped that much?
      Gold market is in great deficit and has been for years. Silver is in balance and much of it falls in the relatively weak hands of stickers. Versus Asian families and central banks…

  2. Good article. If you look at the latest COT REPOTT which states that the total open interest for gold is 395,089 contracts and for silver its 177,877.
    Now if I read this right……
    395,089 x 100 = 39,508,900 ounces for gold
    And
    177,877 x 5000 = 889,385,000 ounces for silver

    Thats a gold / silver ratio of 22.51. So where the heck to they get 74 from? Totally insane

  3. Great Article!

    And yes it is insane. My theory is that the manipulators can only depress the price of Silver and Gold to the basic costs of productioin (app $1,220 for gold & $16 for silver) and try to keep it there. This makes the PMs look like terrible investments, so people put their money in the paper markets. If they push the prices too far down, producers will stop producing and the markets would go absolutely crazy when the few that take delivery of their contracts go unfilled. If that happens, then it could bring down the whole house of cards because the markets would lose all of the trust that is keeping all the paper assests afloat.

    Buy for Cash and Stash.

    SteveW

    • SteveW,

      I believe the greatest MANIPULATION in the market is the funneling of Americans’ funds into the Grand Paper Ponzi Scheme. If Americans actually invested in physical assets for retirement or as a store of value, then the prices of commodities, goods and services would be a great deal higher than they are today.

      Thus, the siphoning of funds away from REAL THINGS and into a PAPER SYSTEM, has kept inflation much lower than what it would be currently.

      steve

    • If you halve again PMs prices, production will not decrease by more than 5% from now as the big companies will continue to get loan and when they will bankrupt (see allied nevada gold) they will just be taken over by creditors/bondholders.

      I would not be surprised than lending money to gold miners is currently a tremendous deal : either it is 10% fiat yield, either/then you get all the aasets for cheap 30 cents on the dollar or so…

  4. I wonder how many misinformed people might actually believe that gold jewelry is a good way to invest in gold. In India, it’s actually not too bad due to narrower bid-ask spreads than here in the USA. All I can say for sure is that if the US$ does crash due to international lack of confidence in it as a reserve currency, owning gold jewelry will still be better than owning no PMs at all, plus the “investor” can enjoy it in the meantime.

    • Chaplain Dave,

      I agree that owning gold, even though its high marked-up gold jewelry is better than owning Federal Reserve Notes. However, Americans aren’t buying gold jewelry as a store of value as are the Indians. And, as I mentioned before, American’s pawned billions of Dollars worth gold jewelry 2008-2012. While Americans pawned gold jewelry, Indian were buying record amounts.

      steve

    • OutLookingIn | April 19, 2015 at 12:52 pm |

      Consider also;
      American gold jewelry is mostly 14 crt or less, while Indian jewelry is 22 or 24 crt gold.

  5. silverfreaky | April 18, 2015 at 2:18 am |

    And still the Miners are all alive with this bad price.
    Maybe PM where in the years before to expensive?

    I read everywhere mining records.

  6. “From 1999 to 2007, Americans purchased a staggering 3,196 metric tons (mt) of gold jewelry for adornment purposes. That translates to an amazing 103 million ounces (Moz). The reason Americans purchased so much gold jewelry during this nine-year period was due to the low price of gold (especially 1999-2005):”

    Now, I say adornment because as the financial situation became rough for Americans after 2007, the market experienced a huge increase in the”Scrap Gold for Money” market. Americans no longer enjoyed the bragging rights to wear gold, instead they pawned Billions of Dollars worth of scrap gold over the next several years. Do you think the folks in India pawned off their gold jewelry when prices declined… LOL.

    Hey it supported the economy by boosting the “WE BUY GOLD” stores. I wonder how much sold during that time has been melted?? And what % of those gold atoms are now in Asia?

    • Americans were smart to dump their gold at higher prices. What if they tried to sell now? The United States will continue to be the greatest nation in the world. I am glad Americans sold their worthless gold jewelry that ended up in China. Let the Chinese be the bag holder of worthless gold when the world goes on a cashless money system.

      • Mike,

        I haven’t responded to your comments as I thought I would allow the others to do so… and they did. However, you have to be seriously misinformed or outright ignorant. I didn’t say stupid, I said ignorant. Ignorant can be cured once the person finally gets all the information, but stupid sticks with the individual until their death.

        You are more than welcome to continue with you short-sighted opinions, but I can guarantee you this… YOU WILL HAVE TO EAT THOSE WORDS shortly.

        LOL… Steve

      • I’m leaning toward Mike not really believing what he is posting; just chumming the waters.

        That is easier to believe than accepting that the drivel he writes is something he actually believes.

        • David,

          I agree with you. But, I believe Mike possibly got screwed buying gold or silver high and this is his way in dealing with his frustration.

          steve

      • Cashless society or not is not the real issue : gold is not used anywehre in the world for daily exchanges and it still not Worth 0…

      • Yes, go cashless, Greece politicians would love it if they were cashless right now, as it would make siezing cash from everyone in the society a piece of cake! As it stands, they just stopped all banking transactions from happening, they can do what they want with the idle cash credits in ALL the accounts! “A GRAND IDEA, THIS CASHLESS SOCIETY TECHNOLOGY,” desperate governments say! Argueing for the “good guys,” the politicians, who always, always, “do the right thing,” never lie, cheat, or steal, and of course, have the interests of the people at heart; what else??? Don’t invest in gold or silver. Leave those coins on the shelves for me and mine. http://www.cnbc.com/id/102601803

  7. “Finally, the United States is heading for serious trouble. Because we have the world’s best printing press, we have been able to postpone the inevitable for a while.”

    Of course many writers or those interviewed speak of printing currency when the majority of QE was digitally created. So maybe the U.S. has the best computers & software for currency creation.

  8. Adamant Eve | April 20, 2015 at 2:20 am |

    Mike is probably correct in that all the “advanced” Currency Blocs are inexorably heading towards a cashless / digital-type environment.
    All the more reason to acquire / hold real, tangible monetary equivalents (Gold and Silver) IMHO.
    A No-brainer – Yes? …and based on that, I’d agree – he is either a troll ….or severely conflicted / confused.

    • Silverwillwin | April 20, 2015 at 9:48 am |

      It is becoming obvious that the system is desperately grasping for a way to keep the masses well positioned in order to be able to transact goods and services.

      U.S. currency/cash is fast becoming a caustic instrument due to the over liquidity practices performed by its owners. This was achieved by the Fed using QE + other desperate actions.

      Physical gold and silver are NOT part of this dynamic and owe nothing to anyone person or party.

      They are spewing lies and 1/2 truths all the while trying to incorporate physical metal into their cooked up notions of ” it’s all going to become worthless !” .
      This ill conceived notion will hit them like a 2X4 upside the head in due time.

      Physical stands alone and has proven its true worth for a couple thousand years. What makes them think that they have rule over such force !

      Let the psychopaths rattle their swords . If they don’t got it , they don’t own it.

  9. Steve,
    Even if Mike got “screwed” buying silver north of 30 USD, won’t he and others make out in the end as paper assets fail?

  10. OutLookingIn | April 20, 2015 at 10:18 am |

    Steve;
    An interesting price comparison between crude oil and gold.

    In 1950 an ounce of gold would buy 19.4 barrels of WTI crude oil.
    Today, this same ounce of gold will buy 21.6 barrels of WTI crude oil.

    We know the price of gold is constantly manipulated and capped. Historically, the price of oil and gold have kept a fairly close relationship. What the above tells me, is that both items will increase in price going forward. Can the economy withstand an oil price at $122.63 per barrel? I don’t think so.

    • OutlookingIn,

      While I like to compare the price of gold and silver to oil, it will become meaningless in the future because the precious metals are competing with the $105 trillion in Global Conventional Paper Assets. If we didn’t have all these U.S. Treasurys, Bonds, Fiat Currencies and Paper assets than I would say the price of gold and silver should remain in a historic ratio to oil.

      However, oil can’t function as a store of value as does gold and silver. Once oil is burned its gone. Gold and silver live on for thousands of years. The collapse of paper assets will push the ratio of gold and silver to oil much much higher.

      steve

  11. Gold is the absolute perfect money the world has ever know … look throughout history many replacments have been attempted and ultimately failed ….sometimes you need to get to the very simplicity of things …. all paper currency will fade and turn to ash in 100 yrs , that brand new house will decay and rot in 300 years , that brand new car in the junk yard in 50 years , if its a Ferrari good luck eventually the moldings will dry up and peel off even if you leave in a climate controlled garage ….my point is GOLD is everlasting it cannot rust , decay or rot …and that trait alone makes it money ..not to mention its beauty and rarenenss ( rareness to a perfect amount not too rare but not to abundant ) tends to keep up with population …. GOLD standard cannot work in a welfare state ..the reason being the government cannot give a recipient something for nothing ..it has to be nothing for nothing ( fiat) … could you imagine if instead of food stamps the government was handing out precious irreplaceable only by energy and sweat GOLD ..it cannot happen ……..but to be truly free an honest MONEY IS GOLD …… I would believe a good scenario would be to back the USD with a gold standard again take all money supply and divide by how many ounces we have and walllah make a new gold price ! .. the interst rates can rise when when gold stock becomes low and get gold to be curbed back in as citenens would rather opt for a return than hold metal and rates can be dropped when gold stocks are high in levels …. this can al happen as the paper would be good as gold to be redeemable and then be considered honest ….

    • OutLookingIn | April 20, 2015 at 6:47 pm |

      joe – A very noble notion to fully back the USD with gold. It will never happen. Just the sheer amount of fiat dollars and fiat dollar backed assets prevent this.

      To fully back the USD with gold, would require a gold price of many hundreds of thousands of dollars per ounce! Now take that fact one more step and ask yourself, what would happen to the global financial sector? Absolute mayhem!

  12. You cant rule the world by owning cornering all the gold so the next best plan is the one to control the price is actually king.

  13. The comparison of gold and dollars is very simple. Gold is priced (in the US) in dollars. If the gov
    doubles the amount of dollars the real price of gold should double. Anything less than that shows physical gold prices are being manipulated. The failure of the SEC and other regulatory agencies
    to expose this shows rampant corruption by JPMorgan etc. is allowed. Look at any PM chart. Regular 10% price drops occur with no justifiable news or events at the same time daily. No other
    stock or commodity behaves in this irrational way.
    Since our debt continues to climb with no matching income, our economy must fail. The 1% do
    not care. They will milk their millions out of the system and let chaos destroy our country.

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