By Peter B. Meyer - 8th of June 2013
There is still only one store of value and medium of exchange that has stood the test of time. And that is gold and sliver that will be your savior as we progress further and further into the great monetary experiment of reckless money printing, undertaken by central bankers around the world that is like peeing in the bed. It feels good at first. But as time goes on, it starts to get uncomfortable.
Contrary to popular perception, the supply of real gold is vanishing quickly – in the U.S. the gold production peaked in 1998 at 11.8 million ounces. Since then, even as the price of gold has soared over 400%, miners are producing less and less. The estimated production in 2012 was just 7.4 million ounces – down 35%. Actually over the past decade, production is down worldwide. Even in South Africa, the country with the richest gold mines on Earth, production is down 52% over the past 10 years. Big discoveries are becoming "exceedingly rare".
During this decade, the holdings of exchange traded funds, like the SPDR Gold Shares ETF, went from zero ounces to over 40 million. And so the volume of gold trading on the Comex ballooned from 1.7 million ounces to 11.6 million – an increase of 582%.
"Usually people are buying and selling gold without ever taking delivery, meaning that there is the opportunity for the bullion houses to sell gold that doesn't exist."
Where's all the gold coming from? Maybe there is no gold? As Adrian Douglas, board member for the Gold Anti-Trust Action Committee, recently pointed out: "The amount of gold that has been sold is estimated to be around 65,000 metric tons, while the maximum amount of London Good Delivery bars that exist in the world is around 15,000 metric tons. There are 50,000 metric tons of obligations that cannot be met if owners ask for delivery.”
"To put that quantity of gold into perspective, it is equal to all the gold reserves that remain to be mined in the Earth."
The point is simple: It's impossible – not just improbable, but impossible – that all the gold trading on the options market today actually exists in physical form.
Fact is, millions of people, perhaps even you, are "buying" gold investments without ever seeing, holding, or possessing this gold in any way. This enables companies to sell gold in the form of certificates and shares for which the actual bullion doesn't really exist.
Soon scandals will erupt all around the world, and it's going to send shockwaves through the industry. "Paper" gold investments like ETFs are going to get hit hard, whether they really have the gold to back up their shares or not. That's why it was no surprise that Germany's central bank, ordered nearly 700 tons of gold stored in French and American vaults to be sent back to Germany. The Germans said they want easy access. But surely they simply don't trust anyone else to hold it for them. And they wouldn't be the only ones. As, Venezuela already completed a program to repatriate 160 tons of gold reserves. Likewise gold experts in the Netherlands have advised their government it should begin reclaiming its gold from America too.
According to U.S. Geological Survey records, for every 400 ounces of gold that are traded on the American commodities exchange, only 1 ounce actually exists in Comex vaults. That's around $1,400 worth of assets covering $560,000 worth of trades - a leverage of 99,8%!
Douglas continues: "The bullion houses probably don't view this as illegal or dishonest, because they operate a fractional reserve type of system just as the banks do. "For this fraud to continue without being exposed, no requested delivery of gold... must ever be defaulted upon or else a massive 'run on the bank' would be triggered." Contracts are not the same as physical gold. And just because you own the contract doesn't mean there's a pile of gold sitting in a vault somewhere with your name on it. In fact, it's impossible that all the gold that people supposedly have the "right" to own actually exists. Today, the options market runs smoothly because many people are still willing to trade their gold for dollars.
But eventually, a tipping point will be reached, where the investment public completely loses faith in the U.S. dollar. Finally, the day will come when people realize that holding a contract for gold that doesn't exist isn't worth the paper it's printed on, as at the same time this too is the case for the dollar, euro and all the paper monies. PANIC and CHAOS will break out.
So, physical gold and silver will become more and more valuable, while paper claims and fiat money will become less and less. For now, the world is in a precarious financial position with economies shaky at best.
The enormity of debt is too absurd to comprehend. Central Banks have printed too many trillions of dollars, euros yens Swiss francs – most governments have borrowed even so many trillions more - it's impossible to pay back any of this money by traditional means.
As long as people are content to hold paper claims on gold, there is no problem – but what if there's no gold to be delivered? For sure, investors eventually will flee to gold and silver in this kind of environment. What happens when everyone realizes his or her paper claims are worthless and wants to take possession of the actual bullion? This surely will happen, and when it does, it will mean the complete collapse of the gold and silver futures market. And not only that, but also the collapse of every fund, stock, and company that has a large holding in gold futures, or other forms of "paper gold." this day is coming in the not too distant future.
According to the Center for Research on Globalization, the recent actions of Germany's central bank to recall the majority of its overseas gold reserves could be just the beginning of a "chain reaction" to a modern-day bank run. The world's central banks, for years the world's biggest sellers of bullion - to the tune of 400 tons a year - are now starting to buy as much as they can.
Hopefully, you're going to understand the potential danger of this GOLDSCAM.
When the general public starts putting these pieces together – when these stories really start getting around – the price of physical gold could go to levels no one ever would have imagined. As Bill Murphy, Chairman of GATA, recently remarked: "I think we're getting to the point when gold and silver are finally going to do what we've been looking for, for some time, and that's explode."
"Once institutional and private investors realize that the supply of gold is so disarmingly, and alarmingly, insignificant – prices will go parabolic." Says Arnold Bock, of Kitco.
Imagine what could happen to the price of gold when more and more investors start demanding delivery – and can't get it. The price of physical gold and silver could surge to unprecedented highs. In fact, all it might take is a sudden panic – a blip in the financial markets, in the economy – to light the fuse. Case in point: Right after the financial markets started falling apart in 2008, delivery notices on the Comex spiked 400% for gold and 900% for silver - in a single month.
And this illustrates the most very most important point - Physical Gold and silver are irreplaceable. You can't grow more. And there are no substitutes.
Remember, the supply of real gold - as measured by actual Comex inventory - is 400 times less than what's traded every day in paper form, a shortfall of 99,8%!
If all the people who are owed gold actually demand it, the system would implode. And if that were to happen, who knows how
high the price of real gold could go - to $5,000, $10,000, or even $20,000/ounce gold? It's not only realistic, it's almost inevitable
By Peter B. Meyer – June 24, 2012
The western world economy is going to collapse, “we’re coming to the end of a certain monetary and political model that supports the over financialization of the world.” Change is due. But it is impossible to predict when the economy turns into a global disaster. It is like a broken bridge, you see the cracks, and you know the bridge isn’t safe, but it’s hard to predict when it will collapse. It could be imminent or take another couple of years, but the bridge will collapse that’s sure. And such is the case with our current economy.
In Europe, governments in 2000 collectively spent 44.8% of GDP. Today it is 49.2%, which is a huge increase. That’s not austerity, that’s stimulus. And as the phony austerity doesn’t work, new leaders want to try phony growth. Francois Hollande, France’s new president, says he will hire more government workers and spend more money to promote “growth.” He also says he’ll raise taxes on the rich to 75% of marginal income, up from 41% now, and increase the “wealth tax.” The retirement age increased by his predecessor Sarkozy to 63 will be reversed to 61. How he thinks you get real growth out of this foul mixture is an enigma. The government already directs and consumes half the nation’s output, while the economy remains flat. How will it do better with more money? Instead, the French will be wasting their resources, squeezing the most productive part of the economy, and becoming poorer. We live in a world of frauds and counterfeits.
"The financial markets... aren't relaxing their pressure on Spain. Doubts continue regarding the construction of Europe, about the present and the future of the euro," Treasury Minister Cristobal Montoro told the Spanish Senate during a budget hearing. "The ECB must respond firmly, with reliability, to these market pressures that are still trying to derail the joint euro project."
“When you look at the world’s problems in another light, literally, riots in the streets of Europe, the Middle East and elsewhere, it’s a sign that people collectively are sick and tired of traditional politicians and political models that take the road to national insolvency. The old guard hasn’t delivered on economic improvement, and in a wired world, people know it.”
In Europe, America, the Middle East, and Asia, the political and economic structures, are over due and will unfold in due course. Over the last 25 years, we've had a series of financial bubbles fueled by government spending and easy money. Governments (mis) used their power to print money to stave off financial devastation, and proclaim the economy is doing better.
Consider the 2000-2001 technology crash. The markets tanked. Investors got crushed. The economy tottered on the brink of total collapse. And what happened? In rushed the Central Banks with low interest rates, pumping money into the economy and fueling an unprecedented, and unsustainable, real estate boom. Of course, the real estate bubble burst, resulting in the credit crisis and sparking the global financial meltdown of 2008-2009.
But again, governments rushed in and saved the day, to get the picture: At least 43 countries from every corner of the globe pumped massive amounts of money into the global economy. Here are a few of the stimulus plans:
1. United States: $787 billion
2. China: $585.6 billion
3. Indonesia: $75 billion
4. Japan: $687 billion
5. Germany: $68 billion
6. Macau: $13 billion
7. Great Britain: $29 billion
8. France: $35 billion
9. Singapore: $13.6 billion
10. Australia: $26.5 billion
11. Saudi Arabia: $49.6 billion
12. Korea: $26 billion
13. Canada: $43 billion
14. India: $6.5 billion
15. Vietnam: $1 billion
16. South Africa: $7.9 billion
17. Ukraine $16 billion
18. Israel: $5.4 billion
19. Russia: $20 billion
Massive bailouts and trillions in stimulus funding prevented the global economy from collapsing. But the solutions were a band-aid that merely postponed the inevitable: a long and deep market slide that erased unprecedented levels of wealth from the global economy.
Of course, the government is portraying the bailout as successful. And sure enough, people are relaxing, even starting to feel confident again. Reports of economic strength are hitting the wires, and the market is climbing again. The party is over, and the bill is coming due. The same solution that has come to the rescue in the last 25 years is not going to work anymore. That's because world governments face an inescapable problem: They are simply out of money and no longer have the credibility to borrow! After spending billions to rescue the world in 2008-2009, there is simply nothing left. And everyone is starting to realize how dire the situation is.
The U.K. Telegraph: "China's leading credit rating agency has stripped America, Britain, Germany and France of their triple-A ratings, accusing Anglo-Saxon competitors of ideological bias in [favor] of the West."
Meanwhile Standard and Poor's cut the long-term U.S. credit rating of triple-A to double-A+ on concerns of the ongoing budget deficit and rising debt burden. And things are getting worse every day; the truth is the U.S. faces the very real possibility of a downgrade by another credit agency. In a recent statement Bank of America, Merrill Lynch said, "The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan" to cut the deficit. "Hence, we expect at least one credit downgrade in late November or early December when the super committee crashes." On the surface, the government continues to spark hope with reports of economic growth.
Back in the 1930s, Russian economist Nikolai Kondratieff produced a theory that explained that TRULY HARD TIMES come in broad cycles, or "Super-Bubbles. "These "Super-Bubbles" are typically made up of several smaller or "normal" bubbles. Kondratieff stated that economic cycles are more powerful than government. And that while the government can alter the impact of a smaller "normal" bubble, it is helpless in the wake of a true "Super-Bubble."
In other words, the government can control events for years, even decades. The government can postpone financial devastation, but it can't prevent it. According to Kondratieff, the government's act is a hopeless charade. The real economic cycle is going to run its course, no matter what the government does.
Real prosperity can't come until all the "poison" is out of the economic system. The result of underestimating these cycles is catastrophic, and a force much more powerful than any government can control. The government is helpless to stop the natural path of economic cycles. This is exactly what has been going on for the last 25 years. We've had a series of financial bubbles fueled by government spending and easy money.
The government has used its power to print money in order to stave off financial devastation. Trouble comes, when government prints money, pumps it into the economy, and the economy doesn’t get better. This is just a last-ditch attempt to prop up a private pyramid scheme in fractional-reserve money creation. Governments bailout the to too-big-to-fail banks, funded by the people. If we are funding the banks, we should own them; and our national currency – backed by a gold standard - should be issued not through banks at interest, but through our own sovereign government. But for now count with a total disaster, when the bridge finally collapses and nobody is around to save you. To save yourself, buy gold and silver to survive the coming dark days.
Peter B. Meyer – 22nd February 2012
Print up extra money ‘out of thin air.’ But if you could just print ‘money’ to make yourself better off, everyone would do it. People are not made richer just by printing up pieces of paper with ink on them. They get richer by having real purchasing power, and real resources at their command, and by being able to produce goods and services that people want.
“When the price of the metal gets high enough, a market will naturally become established for the coins and that market will exploit the higher-content value, instead of the lower face value. When you go to the bank and exchange your paper bills for nickels, you are buying copper and nickel from the Government at anywhere from a 10-50% discount, with your local bank acting as the broker.”
“Saving nickels isn’t a get-rich quick scheme. It’s a risk-free way to protect your purchasing power. If you save in paper money, or in the electronic paper substitutes that comprise your bank account holdings, then you are giving the feds free rein to steal from you via inflation.” Says Gary Gibson from Whiskey & Gunpowder
"Probably none of us are going to own any paper money at all ultimately, but that's later in this decade, because paper money is becoming very suspect everywhere in the world." Says Jim Rogers an investor.
After reading my essay about the global financial scam, you might wonder what’s next? It’s very likely it will be an honest monetary system based on a kind of gold standard, and that is nearer than many of us expect.
If western countries decide to harm their own economies by financial scams and eagerness to start another war in the Middle East, by not trading with Iran, which is unfriendly to the West, but surely not committing any fraud. That would force people to pay higher prices for everything, by denying them the choice of buying oil from Iran if they wanted to.
This could backfire on the US. Since oil is paid in US Dollars and the Iranians cannot clear dollar deposits through New York, where international dollar clearance is. So the Iranians have made a very commonsense move to cut the US out of the middle and sell their oil directly to India and China, without using dollars, but accepting gold as payment. Other countries may follow, and then what? At least India and China said that this kind of payment is acceptable to them. So its highly likely more countries will follow.
Gold is the logical choice; it is on the other hand the next step in the demise of the US dollar as the world's reserve currency. Since up till now all the oil is traded in US Dollars there's a lot of demand for the dollar to buy and sell oil. If countries stop using it, demand for the dollar will fall, and that at the very time the US is greatly increasing the supply of dollars. The day is coming when trillions of dollars outside the US will only be spendable inside
the US. At that point it's game over for the US dollar as reserve currency and hyperinflation will start.
Anyhow, as a result the first step is made to put the world back onto a gold standard. People who say that gold is a barbaric relic from the past that doesn't work in a modern economy, because they can't go around with pockets full of gold coins to buy cars or boxes full of treasure to buy houses, these people are not thinking rationally and are economically ignorant. ‘Gold is a store of wealth and a medium of exchange.’ As Aristotle outlined over 2,000 years ago, gold is simply the best form of money ever adopted.
In our modern world, you don't have to physically cart the stuff around. You can, but you also can transfer ownership of physical gold electronically, through Internet services like GoldMoney.
Most of the gold ever produced in the world still exists in purified form in various vaults around the planet. Gold doesn't get used up like silver does, so there's plenty of supply. Accordingly, the physical need for gold as money influences the price of gold and related equities, and is not anymore a tool of governments to further debasing their currencies!
It's estimated that there are some six billion ounces of refined gold in human possession around the world, or, somewhat less than one ounce per person. Global gold production is said to be about 80 million ounces a year, or about a 1.3% annual increase in the supply of gold. That would be the steady, "natural" rate of inflation if we were on a gold standard.
The amount of various currency units in the world is increasing at a much, much faster pace than 1.3%. Nobody really knows, not even the FED how many printed dollars are around, but depending on how you define the money supply, it would take US$10,000 to US$50,000, or even more per ounce to back all of the dollars in existence with gold.
Whatever the correct number is, it is expected that gold's price in dollars is to increase dramatically as the world moves closer to and eventually adopts a gold standard.
The basic recipe is,
buy gold and silver for prudence and protection of purchasing power, buy gold stocks for speculative leverage. And diversify your holdings internationally, by opening deposit account in various countries and banks. You can never tell when the government of your home country will have a psychotic break. For real live experiences watch this video about Argentina to see what happened 12 years ago. http://www.uitzendinggemist.nl/afleveringen/1241064
But let's put it in another perspective. The security of your portfolio may become the least of your concerns if the US starts a war with Iran that touches off WWIII. If that happens, the US government and population will both turn hysterical, and the whole country will be locked down like a prison. What was once free America will become even more of a police state than it is now. Who knows where that would end?
Preparing for the worst at home should be a top priority. And hope for the best that it won’t be necessary after all.