Silver & Gold: This year’s smash on prices

by Wes Bridel on September 5, 2013

in Economic Updates

What can be said about Silver & Gold prices this year?  We started a new blog series Tuesday by discussing today’s price action with that of the 1970’s and How to know when prices will start falling for good.  Today’s post is the second of three posts on gold and silver.

We’ve talked ad nauseum about the western central bank’s desire to control the price of silver and gold so that the general public is not spooked out of holding their pretty paper.  (The Federal Reserve of the US specializes in pretty green paper, but the UK & Europe like to make multicolored paper called pounds and euros.)  You see, when governments start printing too much paper, history shows that gold and silver prices in those currencies rise to balance the value.  Knowing this, the governments and central bankers have been controlling the price to the best of their abilities for decades.  (The denied manipulating the price in the 1960’s, but LBJ’s unclassified papers show the great extent they did go to in order to accomplish this.)

The problem is that they are running out of gold with which to do this. It’s all being shipped to China and other places where they are all too happy to take advantage of our idiocy.  So our politicians sell out our intermediate and long term futures to protect their short term power.  Because if the price of silver and gold were shooting through the roof, their jig would be up as people would panic out of the Dollar (or Pound, Euro, Yen, etc).  So this is why they do it.

It’s easy to prove to yourself that they do this when you consider that from time to time (especially when the market was hit very hard in the Spring) “someone” mysteriously sells an entire year’s worth of the entire world’s gold production in a matter of minutes.  They also like to do this sort of thing at a time when not many people are trading.

Now, you were trying to sell thousands of tons of real gold, would you sell it all at once at whatever price you could get no matter how low?  Or would you sell it over a period of time in order to get a higher price?  And wouldn’t you want to sell when the most people are buying?  Or would you be so desperate to raise these billions of dollars that you couldn’t wait until the next day but had to sell when most traders have gone home for the day?  Of course you would sell more carefully!  Anyone trading that much money would.  They only one who would trade in this manner is someone who was purposely trying to force the price of the market down.

But this should not bother you too much.  They have been doing this for a long time.  And the price keeps going up over the long term. The last two month’s bounce shows this.

They actually appear to be getting desperate to have pushed so hard this time.  My guess is that they were hoping that by really hammering the price, people would give up on the metals.  But what happened instead?

People lined up to buy as much as they could. When this first happened in the spring, a huge waiting list developed to get real physical gold and silver.  Premiums shot up.  Again, if the paper market price was determined by real supply and demand, the demand would not have jumped so heavily as prices plummeted.  But as the paper market price was dropping, the premium you had to pay in the real world to get real gold and silver was climbing.  This phenomenon as finally subsided in the US (at least at small amounts measured in ounces), but is still alive and well in Asia.

Many are making a living today by buying up gold/silver in the west and delivering it to China to collect this spread.

So they ship more and more of the American people’s gold to Asia (and European’s, Brit’s as well…maybe exclusively, they don’t tell us although Britain just got caught doing this)

Want some proof that they don’t really have the gold that they say they have?

1)      Why did ABN AMRO default on gold delivery to its clients this year?  Its clients had been paying storage fees for years under the agreement that ABN AMRO (biggest bank in the Netherlands) would hold their gold safely.  However, when people wanted it back, ABN AMRO pointed to a fine print clause that said they could pay them back in Euro’s.

A couple things to think about…If they actually had the gold that they claimed they had, they would never have allowed this black eye to happen. If they could get their hands on the gold that they claimed they were holding for their customers, they would have done so and delivered that gold.  But they couldn’t find it, and so they delivered pretty colored pieces of paper.  Be careful of what you think you own!

2)      Germany wanted its gold back.  The people of Germany understand that the gold is the actual reserve wealth of the country and they didn’t understand why it was held in other countries, particularly when there is so much rumor about the gold not really existing.  So they wanted it back and the government asked the US to deliver the gold that supposedly the US is safeguarding for Germany.

The US said, “No problem, we’ll deliver that to you over the next 7 years!”  Now, if the US government really held Germany’s gold as it claims to, they would simply deliver the gold.  We’re only talking about 300 tons of gold when the NY Fed claims to hold 6,720 tons of gold itself (this does not count Ft. Knox or the other depositories).  I think the US claims to hold like 20,000 tons for other countries on top of the 8,000 tons of the US’s own gold reserves, but that’s a top of the head number from something I read quite a while ago.

The point is the same, the US claims to hold lots of gold, but when an important ally like Germany asks for theirs back, the US can’t deliver.  And won’t even allow them to audit the supposed gold it holds.  The real truth is that they either plan to or hope to get the gold over the next 7 years and will deliver this gold to Germany.  Unless of course, everything breaks down before that (as it will) and the delivery is never made.

We’ll bring you a post on Monday to finish up this discussion of gold and silver.  Since the debt ceiling is in the news again, we thought we would remind you of a previous series on the US fiscal state: 1) Fiscal Cliff Intro & 2) Examples of Higher Taxes Lowering State Revenue, & 3) Fiscal Cliff Update.

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