Gold and Silver Continue Their Ascent 18 comments
Tim Iacono
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A week removed from the blockbuster announcement that the Reserve Bank of India had purchased 200 tonnes of gold from the IMF, precious metals continued their ascent, gold making fresh all-time highs last week at just over $1,120 before ending the week with a gain of about $20 at $1,118 an ounce. Silver posted a modest gain, up from $17.39 an ounce to $17.42 an ounce.
The view that central banks will continue to be net buyers of gold rather than net sellers (as has been the case for about the last twenty years) has many calling the Indian purchase at $1,045 an ounce the "new floor" for the gold price.
That would certainly seem to make sense at least for the near-term as market analysts speculate on which central bank might be next to buy IMF gold while hearing the U.S. Federal Reserve and international G20 representatives stress that it is far too early to begin removing the massive liquidity and stimulus that have seemingly rescued the world from another Great Depression.
The recent rise in the gold price has obviously been aided by a weakening U.S. dollar but, with unemployment set to go even higher over the next six months, there is little reason to think that the Fed will do anything to bolster the currency during that time.
Rumors swirled last week that the Reserve Bank of India may have sold U.S. Treasuries to fund its recent gold purchase and there is growing unease amongst countries that maintain dollar "pegs" for their currencies as they have to print more of their own currency to buy dollars and maintain that peg.
As for silver, it is interesting to note that inventory at the iShares Silver Trust ETF (NYSEArca:SLV) continues to rise, surging in recent days to a new all-time high with the addition of 200+ tonnes as shown below.
Meanwhile, inventory at the world's most popular gold ETF, SPDR Gold Shares ETF (NYSEArca:GLD), remains below levels seen at mid-year.
It should be an interesting period ahead for both gold and silver since, going back to very early in the decade, there has been a repeating two-year pattern for the metals that can been seen in the gold chart below. Since 2002, prices have peaked at new highs early in the even numbered years - in 2004 at $425, in 2006 at $725, and, most recently, in 2008 at $1,035.
In many ways, recent events are shaping up to be a repeat of this pattern which, based on the previous peak-to-peak gains would imply a gold price somewhere north of $1,300 early next year.
Of course, any sharp rebound in the dollar (which some are still loudly predicting) would reverse this trend very quickly.
There were some truly odd goings on in Vietnam over the last week or so that, for those who pay attention to this sort of thing, really adds to the case for a much higher gold price, perhaps sooner rather than later. After seeing a surge in buying in gold bullion in recent years, particularly after inflation soared to nearly 20 percent in early-2008 and investors looked to preserve their wealth, the government banned imports of the metal.
Gold continues to be traded in the country, however, due to the limited supply, it has developed its own local market that, last week, saw bullion trading at about $60 higher than in global markets. After markets went "crazy" (see this account in Vietnam.net), the government announced that it would resume imports of the metal and premiums are now reverting quickly to more normal levels.
[Note #1: I just got off the phone with my mother and for the second straight week she asked me about the price of gold. To my knowledge, she doesn't own any (though I've done my best to convince her to do so over the years), but, I can't help but wonder if this is a sign of a near-term top or a sign that there are many more interested buyers out there now that gold has surpassed the $1,000 mark with little indication of turning back. She even knew about the purchase by the Reserve Bank of India.]
[Note #2: Subscriber RN just notified me that, by his calculation, the referenced story about gold in Vietnam had the price at almost US$1,300 an ounce.]
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This article has 18 comments:
Silver coins like Silver American Eagles, Maple Leafs, etc, actually have a higher percentage mark up, due to the lower cost of silver. Depending on quantity, the best prices I've found for silver coins is about $1.80 over spot, or about a 10% mark up.
The least expensive way to hold some gold or silver yourself would appear to be bullion bars. If you're wealthy the standard seems to be that you buy the bullion and have someone else store it for you. But you can and perhaps should take delivery yourself and hide it away for a rainy day.
Silver is challenging though. I calculate $250,000 would buy about a half ton of silver. So your average safe deposit box or wall safe would not quite do it.
If you're interested in going off the beaten path, palladium has been on a tear.
But when the US economy growth accelerates and the dollar strengthens, gold upside will be capped, and in fact itg may be time to sell it.
test213
admin at invetrics.com
The dollar is now worse than a fiat currency ; it is a proliferating and corrupting lie. The lie is being exposed and as the lie inflates so will ,in time, all real assets in most parts of the world.
Real asset dollar denominated price ascent will then translate into an inflation in the price of essential goods and services in the US, since real assets are also the foundational goods of the economy.
This inflation will , soon enough, make obvious to currently uncaring or unheeding Americans( still a majority of citizens) just how far the US Regime has disgraced the dollar and dishonored the Nation. The global flight from the dollar is a global flight from the risks, perversions and pathologies of the current US Regime. It is a global vote of no confidence.
Gold is still less than 50% BELOW the inflation adjusted price it attained in 1980.
On the supply side, we are in a global state of peak gold: visible physical gold that just lays there shining in the sun, like it used to be found in Mexico, is pretty much gone and what's left is expensive to recover and refine.
Seems bullish to me.
Therefore, even if there are corrections, the trend is up.
On Nov 16 07:01 AM Dr. O wrote:
> I've noticed dealers in the US are also marking up some forms of
> bullion as well, more so than in the past. For gold bullion coins,
> the lowest prices I've seen are about $40-50 over spot. But some
> of the outfits advertising on TV, even the well known ones, charge
> much higher than that. I'm referring to Gold American Eagles, Maple
> Leafs, Krugerrands, etc.
>
> Silver coins like Silver American Eagles, Maple Leafs, etc, actually
> have a higher percentage mark up, due to the lower cost of silver.
> Depending on quantity, the best prices I've found for silver coins
> is about $1.80 over spot, or about a 10% mark up.
>
> The least expensive way to hold some gold or silver yourself would
> appear to be bullion bars. If you're wealthy the standard seems to
> be that you buy the bullion and have someone else store it for you.
> But you can and perhaps should take delivery yourself and hide it
> away for a rainy day.
>
> Silver is challenging though. I calculate $250,000 would buy about
> a half ton of silver. So your average safe deposit box or wall safe
> would not quite do it.
>
> If you're interested in going off the beaten path, palladium has
> been on a tear.
so the rest of the world competed for the rest, about 1000 tons.
guess what the price would be when the much more affluent european, american, japanese start to buy gold.
I live in Europe and I hardly believe silver and gold coins could replace our monetary system (fiat currency, credit/debit cards... ) for buying necessities. Don´t fall into "end of the world" scenarios. It´s only seen as an hedge against currency devaluation.
On Nov 16 08:12 AM Beach Bubba wrote:
> I live in Mexico; here coins are bought and sold at special counters
> in the department stores in every town (city or village). Mexico
> has a one ounce silver coin (Libertad) in circulation. Mexico has
> a long history with silver and it's coins were used in early American
> history until the civil war (2bit, 4bits,etc were pieces of 8 reales).
> Imagine, buying your silver coins at Walmart for a pittance over
> spot.
On Nov 16 08:12 AM Beach Bubba wrote:
> I live in Mexico; here coins are bought and sold at special counters
> in the department stores in every town (city or village). Mexico
> has a one ounce silver coin (Libertad) in circulation. Mexico has
> a long history with silver and it's coins were used in early American
> history until the civil war (2bit, 4bits,etc were pieces of 8 reales).
> Imagine, buying your silver coins at Walmart for a pittance over
> spot.
cgi.ebay.com/1982-Libe...
Which specific "perversions and pathologies" are you referring to?
> "The global flight from the dollar is a global flight from the risks,
> perversions and pathologies of the current US Regime. It is a global
> vote of no confidence."
>
> Which specific "perversions and pathologies" are you referring to?
[...] reports of 400 oz. "good delivery" bricks of gold found gutted and filled with tungsten within the confines of LBMA approved vaults in Hong Kong.
Why Tungsten?
If anyone were contemplating creating "fake" gold bars, tungsten [at roughly $10 per pound] would be the metal of choice since it has the exact same density as gold making a fake bar salted with tungsten indistinguishable from a solid gold bar by simply weighing it.
Unfortunately, there are now more sordid details to report.
Roughly 15 years ago - during the Clinton Administration [think Robert Rubin, Sir Alan Greenspan and Lawrence Summers] - between 1.3 and 1.5 million 400 oz tungsten blanks were allegedly manufactured by a very high-end, sophisticated refiner in the USA [more than 16 Thousand metric tonnes]. Subsequently, 640,000 of these tungsten blanks received their gold plating and WERE shipped to Ft. Knox and remain there to this day. I know folks who have copies of the original shipping docs with dates and exact weights of "tungsten" bars shipped to Ft. Knox.
The balance of this 1.3 million - 1.5 million 400 oz tungsten cache was also plated and then allegedly "sold" into the international market.
Apparently, the global market is literally "stuffed full of 400 oz salted bars".
The preceding is excerpted from a story by googling “400 oz tungsten”. Have fun in these new interesting times. Personally I think an 18V DeWalt cordless drill with a ¼” drill bit could “assay” the difference, but I’ve never seen a tungsten brick.
Yet.
A. Gold has done better than silver from 2000-2009.
B. The silver peak in 1980s was an 'anomaly' due to Hunt Brothers taking physical delivery.
C. Central banks hoard gold, but they don't own or have any need for silver.
D. There is no shortage of silver.
But look at things this way:
A1. Wait until then end of the bull-run in precious metals, then see if silver or gold does better. The way most people look at it, things are just getting warmed up!
A2. Another way to look at it... Silver in the 1980s just reverted to its historical ratio of 1:16 vs. gold ($800/$50=16). So, nothing unusual about that... Also, since when was taking physical delivery unlawful? No, it was the 'regulators' who changed the rules in the middle of the game, and bankrupted multi-billionaries in the process! (Can anyone imagine that happening today?)
A3. Central banks own gold because of the after-effects of the 'gold stantard', which is what most rich countries in the world were on before 'fiat' took over (ie, 'everyone' still thinks only gold is 'money'). However, note that they needed to demonetize silver first, before ever being able to get rid of even the gold standard. Thus, silver actually has much more of a monetary history than even gold (eg, China's last monetary standard was silver). Silver is the people's money, and gold is the bankers'. In the end, people will have no use for central banks, but silver (money) will still be needed for everyday trade and commerce.
A4. Both gold and silver are finite resources taken from the Earth. Gold is always saved, while silver gets used up (to the point that some day there won't be enough of it to keep low prices around). Industry will guarantee this. There may not be any true 'shortage' of silver yet, but at some point supply will only be able to meet demand when silver prices go up (and that by definition would be considered a shortage!). If human civilization is to persist, silver can be guaranteed to become more valuable one day than gold!
Gold has done great this great especially in the past 8 weeks or so
But large cap multinationals have done the same and provide the fuel of reinvested dividends
In 1990 Gold was 400 and Coke had the same Pe it has now gold is up about 180 % in 20 years which is ok
However Coke is up about 1200% and stated witha 3% dividend yield and its now 32%
In amatter of fact you would have gotten more in the last 6 years on dividends than the entire profit gold has made in 20 years
And liek i said the stock is up almost 12 times
Just keep this is mind .Good luck im not negative on gold just history has proven that higher dividend multinationals OUTPERFORM it EXCEPT times when gold or silver is near multi year lows
Read this interesting article on rare critical metals. It was just published on Silver Bear Cafe:
www.silverbearcafe.com...
The author pitches one particular critical metal which will be doing the best in the next few years. He refused to name the metal. Unless you know palladium as much as I do, you would have to pay the author $2000 to bribe him to tell you what it is.
But I already told you: He was pitching palladium, my most favorite precious metal. The two associated mining stocks are SWC and PAL. I have discussed palladium a lot in the past, it looks like the metal is finally catching some attention:
seekingalpha.com/autho...
So after all, I am not the only palladium bug on the internet. But I am probably the only one who tell you what the metal is, without asking you to pay $2000. Andrew Snyder refused to name the metal, Byron King also refuse to name the metal. But they were talking about palladium.
On Nov 16 07:01 AM Dr. O wrote:
> If you're interested in going off the beaten path, palladium has
> been on a tear.
You know, those folks who know-about and have such docs: they might want to keep a veery low profile.. in certain circles, their lives are not worth much. The same goes for those people who know the others with said docs.
"..making a fake bar salted with tungsten indistinguishable from a solid gold bar by simply weighing it..."
gold is slightly heavier ( Au is 196.96 g/mol; W is 183.84 g/mol) Anyone who would be interested in buying such large volume bricks of gold would most certainly use a very precise scale to weigh it, thus detecting the difference. However, by the subtle addition of a few slugs of Depleted Uranium into the tungsten, then one might achieve such a fraud.
On Nov 16 05:50 PM Homer II wrote:
> Boxed Merlot said, "..I know folks who have copies of the original
> shipping docs with dates and exact weights of "tungsten" bars shipped
> to Ft. Knox."
>
> You know, those folks who know-about and have such docs: they might
> want to keep a veery low profile.. in certain circles, their lives
> are not worth much. The same goes for those people who know the others
> with said docs.