Precious Metals

Where Are All The Young People?

“If the powers-that-be weren’t propping up everything paper that wanted to crash and burn — and suppressing the prices of everything physical that wanted to blast to the moon and the stars, the world’s economic, financial and monetary system would be a smouldering ruin within five business days. The longer they keep this Frankenstein situation afloat, the worse the crash will be when it finally does manifest itself, either by accident…or design. – Ed Steer

The gold standard is coming, and no global war will occur. The MSM is not to be trusted. They will spin all. – Jim Willie

David’s Commentary:

Where are all the young people?

Our clients are, by and large, in their 60s, 70s and 80s. Where are the young people? They’re on social media and buy stocks. The gold and silver buyer pre-1975 were almost exclusively coin collectors. The precious metals dealers were strip mall coin dealers.

My early experiences with precious metals were the circulated silver dollars that were used in slot machines in Las Vegas that my uncle Irv brought back and gave to all the kids as holiday gifts. No one but a coin collector knew anything about gold. It wasn’t legal to own gold (unless you were a coin collector) until 1975.

When the U.S. government removed silver from our coinage in 1965, a few people started collecting silver dollars and dimes and quarters (pre-65) at face value and sold them to coin dealers for a profit – since the silver value by weight was greater than the face value of the coins. That was the industry, period!

Our industry, as you know it, came into being in the late 70s with the arrival of Blanchard and Investment Raraties, national telemarketing companies selling silver dollars, junk silver, Kruggerrands, Mexican 50 Pesos and pre-1933 gold double eagles.

For the first time, people started writing about the history of monetary metals, and the reasons to own them. Jerome Smith wrote a couple of books on silver, Gary North, Doug Casey, Richard Russell, James Dale Davidson, and others published precious metals newsletters and a new industry came into being – the financial seminars and offshore conferences. The message was getting out.

Because of the inflation of the 1970s and the rise in gold from $35 to $850 and silver’s rise from a dollar or two an ounce to $50 there was great interest in precious metals. Both the massive bull market that peaked in 1980 and the new telemarketers and newsletter writers (the king being Howard Ruff and his Ruff Times) and the conferences and seminars, a market base came into being.

Now we have financial news channels and gurus like Mad Money’s Jim Cramer, who pitch paper assets. Gold gets no love from Wall Street or money managers and financial advisors. Young people know little about the reasons to own gold and silver and on top of that, they have been in a bear market for the last seven years while stocks have gathered all the headlines.

College econ courses do not discuss the causes of inflation (money creation), and do not speak positively about gold and silver. If the younger generation isn’t getting educated in school, or by Wall Street WHY gold and silver are important financial assets, then who will we will our metals to? My generation, our readers, are not the buyers of tomorrow.
The young people will eventually figure it out – why we need gold and silver, but not until the prices explode and paper assets crash. That’s coming. The 2020s will resemble the 1970s and history will repeat, right on down to a new generation of buyers discovering gold and silver.

But meanwhile, we hear from our older clients that their kids are mad at them for buying all that worthless gold and silver – when they could have put the money into stocks.
I want to gloat! I want to tell these kids, “See, we told you so, this is why gold and silver are necessary. Aren’t you sorry you don’t own any (yet?)

2018 is winding down. You still have time to consider a tax-loss trade

If I am correct, gold and silver have already moved up off of their low. I do not believe that their price will be this low one year from now, so this is the time to take the tax loss, if it applies to you. But there is another aspect to the trade. If you are planning to sell gold, we strongly recommend that you use the dollars from the sale and apply the funds to a silver purchase. I have discussed how cheap silver is relative to gold, with the silver to gold ratio now at a nose-bleed level of 84.39 to 1. We have been busy this month executing this type of trade for many of our long-time clients. Many of you have sold a portion of your common stock portfolio and can use the off-setting tax loss. If you haven’t, you probably should consider taking some of your profits off the table and then a tax-loss strategy makes perfect sense. Remember, there are two benefits here, the tax loss and moving from gold into silver which we believe will eventually yield double or triple the gains once the bull market commences.

There are many reasons why silver looks so attractive right now. Most of the silver mines are losing money, on average, they spend $2.50 per ounce more than what they sell it for. Only Fortuna and Pan American are making money at the current price. Generally speaking, corporations do not sell their products at a loss. Some operations will probably shut down and others will cut back on their (losing) production. This should result in less supply and that usually means higher prices.

Our clients are long-term holders, not buy and sell traders. The day-to-day price is nothing but “noise.” What will it take for the price of silver and gold to break free of the price suppression? Jim Willie says,

At some point, investors are going to rotate out of falling stocks and real estate, with fear building, and into the precious metals and the miners. However, fear has not yet made its way into the investor psyche, but it will and a panic will result like in 2008.

Bear in mind that Shanghai is the world’s physical largest market, followed by Mumbai, Dubai and Singapore. The corrupt crooked COMEX, which has almost no gold yet sets the global price, is permitted to continue the suppression and charade. The reason is somewhat simple: because China permits it. For now. The buyers in the East enjoy the price discount.

David’s Commentary:

The interesting point that Willie makes is that the suppression is “allowed” by the Chinese, because it allows them to buy silver and gold at lower prices. And they are buying all the physicals that they can get their hands on now.

It is true that silver prices are down nearly 70% for their high, nearly eight years ago, but prior to that high, silver was UP ten-fold. That’s that way it is with silver. Big moves up and down. With the current price of silver below production cost, the next meaningful move will be UP.

With the price of silver this low, there is little if any new mine development. With all the silver that is mined each year, it’s necessary to replace the mined silver in order to keep the price down. It just isn’t happening. This is another reason we are so bullish on silver.

Recently, Ted Butler had this to say about the price of silver.

The truth is that silver prices are not only cheap, they’ve been cheap for years running; having traded down to $15 four year ago and only once having traded above $20 since then. We’ve been down for so long that the chance of significant risk to the downside has been, effectively, removed. After all, the cure for low prices is low prices – particularly in the long term. Simply stated, for a wide variety of reasons, silver is a better long term investment today that it has been in a very long while, not the least of which is that the dismal price performance has discouraged investment and, therefore, also removed risk.

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In the December 3 issue of Barron’s, James Grant states the bull case for gold.

Barrons

Time To Buy Gold?

Steve Garmhausen

With market volatility spiking and inflation threatening a comeback, gold should be shining right about now.

Instead it is down about 6% on the year at $1,245 an ounce, far below its 2011 peak of $1,900. Believers see gold as a bulwark against the ravages of inflation; and Barron’s recently made the case for gold. Doubters, a group that seems to include most Barron’s-ranked advisors, say it’s little more than a pretty lump of rock.

James Grant sees it different. According to Grant, Gold is an investment in disorder, not a hedge against inflation. Gold is scarce, malleable, ductile, beautiful and indestructible.

Gold is a monetary asset, not a credit instrument. It is cash,k not a promise to pay. It is final payment itself. Gold competes with currency and promises to pay currency.

Gold, which has probably never traded at zero – not in millennia – is a store of value.

Gold explains itself. One look tells you it’s valuable. You don’t need a computer server, electrical outlet, or instruction manuel.

Gold is out of favor. While gold yields nothing, it nonetheless out-yields $7 trillion of notes and bonds worldwide (a decade after Lehman) that still yield less thanb nothing.

Gold is mute: You don’t have to listen to the earings call.

Gold’s price is the reciprocal of the world’s faith in central banks.

If you approve of a decadelong suppressio0n of market interest rates and trillion-dollar budget deficits in a time of supposed bounding prosperity, by all means, don’t exchange your paper money (or digital representations of paper money) for gold.

But if you harbor the well-founded suspicion that something’s not quite right in this overleveraged world, do. Yourself a favor. Lay in some real money.

Gerald Celente

Corporations that have loaded up on cheap debt during the era of zero-to-low interest rates and expects a wave of indebted companies to face serious challenges as interest rates rise.

the U.S. rise in interest rates are hitting at a time when global economic growth is stalling. Economies in Emerging Markets and developed na- tions, whose massive debt is largely dollar based, will not have the GDP-generated revenue to pay down their rising debt burdens.

In China, the world’s second largest economy, GDP growth has slowed to Panic of ‘08 levels and the Shanghai Composite Index is down some 30 percent and keeps falling. Overall, the MSCI Asian-Pacific Index has plunged into bear territory, down over $5 trillion this year.

And China’s credit growth slowed significantly in October, with corporate borrowing sinking to 150 billion yuan from 677 billion yuan just the previ- ous month…. an alarming sign of sharply declining growth.

The market weakness is represented as well by powerhouse exporter Germany, whose economy shrank in the third quarter for the first time since 2015. And despite what the mainstream business says, it had nothing to do with trade wars or tariffs. It had to do with shrinking economic growth: More consumers with less money to spend and heavier debt levels to payoff.

Japan also saw its economy shrink in the third quarter despite its central bank’s buying spree to prop up their equity markets and economy. In fact, the Bank of Japan’s total holdings hit $4.9 trillion, which is bigger than the country’s annual GDP.

with total household debt now $837 billion higher than its 2008 peak, when the last recession hit, America, like the rest of world, cannot take higher interest rates.
In the history of the world, there was no such thing as negative and zero interest rate policy. There was no such thing as massive too-big-to-fail trillion dollar bailouts. There was no such thing as quantitative easing.

What I have been forecasting, is that the global financial Ponzi scheme that artificially boosted global equities will end, and the end is near.

Throughout the year, as mainstream media attrib- uted equity markets swings to tariff and trade wars fears or any number of other false flag indicators, we had long noted, it was rising U.S. interest rates that would implode economies and markets worldwide
With some $250 trillion in global debt, much of it dollar based, as the dollar grows stronger and global currencies get weaker, the cost burden of servicing that debt grows heavier. Subsequently, as forecast, economies worldwide are slowing, stagnating and/or falling into recession.

• Bridgewater Associates hedge fund magnet, Ray Dalio: “The world by and large is leveraged long … these low rates have created an incentive to borrow money and buy stocks. That’s what caused the mar- ket to go up.”

Jim Willie

According to David Robert Steele, the Federal Reserve is to be nationalized, and wrapped under the USDept Treasury. The Global Currency RESET has begun. A gold-backed currency is coming for the US Dollar, with no details yet. ( Jim Sinclair and Bill Holter have discussed the RESET recently as well.) Willie adds that the challenge is to source the gold bullion like 10,000 tonnes, possibly done via capture of certain troves, including the stolen Fort Knox hoard. The more challenging task is to reduce the $600 billion trade deficit by means of massive re-industrialization of the United States. The global economy will be rebooted upon completion of the RESET.

A major interest rate reversal lies directly ahead, which will surely be bullish for gold. Due to market instability and ballooning debt service costs, the US Fed probably will have to do a u-turn on rates. The positive effect on gold price will be immediate.

Imagine if the US Fed reverses their announced interest rate hikes. The result would be the US dollar will fall, thus pushing up interest rates. The foreign bank community accounting for 35-40% of the US funding will need a higher reward for the higher risk, simply stated. Take special note of the fact that the US Government interest payments at $500 billion in this year on their government debt exceed all tax revenues. Keith Neumeyer, CEO of First Magestic Silver, stated, “At one stage we will see a massive transformation from paper to tangible value, i.e. paper currencies (no discipline, out of control printing) to precious metals (discipline, no printing only real mining). Precious metals will be the place to be. The patience of all Gold and Silver bulls has been tested to the limit since 2011 despite all rationale for much higher prices. As I stated in 2008, when all the rescue measures of the financial system have been exhausted, the physical (not paper) Gold and Silver will be the only assets left to preserve your wealth. Ultimately only Gold and Silver have inherent value, value on their own, value not determined by the manipulations of the politicians and cabal.

Dollar Decay and Rejection

Growth rate of fiat money has been accelerating within the grand Ponzi scheme, which signals the end of the current regime. The king Dollar is ready to die, from excess, abuse, avoidance, disgust. Chris Martensen agrues that the accelerating upturn in US Dollar supply signals the sunset of the King Dollar as the global reserve currency. It stinks of Ponzi climax.

Iran and South Korea are ditching the Dollar. India looks to avoid US Dollar payments in bilateral trade with Russia. Pairs of Eastern nations are aligning together, in the avoidance of US Dollar settlement.

Gold Nears Day of Release

Powerful factors are accumulating for the release of the gold price after several years in correction. It will take a clear powerful gripping global crisis. It has begun.

China just took delivery of a massive amount of gold from New York and London. Case of the Anglo-American banks borrowing desperately the gold from central banks, for the purpose of shipping it to China and India, where it will never return.

Egon von Greyerz said the Chinese know what is coming, a big conflagration in the gold market and banking system. “They are all into gold, absolutely. Virtually all of them own gold. The Chinese buying is continuousy going up and up and up without stopping. The Chinese know what is happening. They know it and they will continue to buy gold. And one day that is going to have a major influence on the gold price.

The ratio of owners per ounce is a ridiculous 362:1. The leverage in the paper gold market is beyond crazy, will will urge an adjustment. It’s just a matter of time, especially with very low inventory levels. A great unwind is coming.

At some point, investors are going to rotate out of falling stocks and real estate, with fear building, and into the precious metals and the miners. However, fear has not yet made its way into the investor psyche, but it will and a panic will result like in 2008.

Bear in mind that Shanghai is the world’s physical largest market, followed by Mumbai, Dubai and Singapore. The corrupt crooked COMEX, which has almost no gold yet sets the global price, is permitted to continue the suppression and charade. The reason is somewhat simple: because China permits it. For now. The buyers in the East injoy the price discount.

Ed Steer

Nassim Taled: We Tried to Fix a Debt Problem with Debt

Legendary trader, risk analyst, and author, Nassim Taleb, recently spoke with RiskMinds International about economic and structural risks facing the world economy today. Mirroring his warnings before the 2008 financial crisis, Nassim Taleb cautions about high levels of debt and rising moral hazard.

Nassim Taleb:

“The economic risk is quite acute in that we have much more debt than we did ten years ago, and ten years ago… we had a crisis. So it’s like we cured a debt crisis with debt. So we have an accumulation of debt and it’s not very good. We also have an increase in moral hazard in the system. In other words, people gaming the system… So we have to worry about it… People are still unable to realize that there should be no risk management. You should study risk taking, not risk management, because we cannot separate the income generating technique from the risk associated with it. They’re not separable. It’s the same decision making and they should all be in the class of ‘decision making in uncertainty…’ You have to worry about an industry dominated by non-risk takers discussing risk…”

This 10-minute video interview was posted on thesoundingline.com

David’s Commentary:

The following article by Zero Hedge (click on the headline to read it) asks a logical question. What if our government decides to confiscate gold? It could happen. If a new currency replaces the dollar and gold is a component of the currency, then there would be a reason to confiscate gold, just like the government did in 1933. Whatever the price they pay for our gold, it will be revalued to a much, much higher price after the theft is complete. Best if you own your gold (or at least a portion of it) offshore so it is out of harm’s way. Just don’t store it in a bank. We use Brinks, a safe, fully insured non-bank depository. Check with one of our brokers if you want information on what is available to you.

Zero Hedge

Offshore Gold Storage “For When The US Govt Decides You Shouldn’t Own It”
“If your gold is outside the US, it gives you another degree of insulation should the United States decide that you shouldn’t own it – it’s not a reportable asset.”

Source: milesfranklin.com

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