What Smarter Minds Than Mine Think About Gold

Adam Taggart
By Adam Taggart on Fri, Apr 12, 2013 - 2:04pm

If you're long the precious metals, beatings like they're taking today (gold down 4%, silver down 6%) can seriously shake your confidence. At times of self-doubt like these, I look to learn what people smarter than I are thinking; as there's a good chance they're seeing the big picture more clearly.

Over the past week, I've had a lot of good fortune to do just that. The bottom line? More than ever, the smart minds see fewer better options than the precious metals for preserving (and likely increasing) the purchasing power of one's wealth.

Last Friday, Chris and I had the pleasure of spending the day with John Hussman, John Mauldin, Jim Chanos, Mike ""Mish" Shedlock and Michael Pettis the the Wine Country Conference in Sonoma, CA to benefit ALS Research. It was simply amazing to spend time in such rarified company and engage with each of these impressive thinkers 1on1. I'll post a more detailed write-up of my experience at the conference next week when I have more time to write (Chris and I are still on the road).

What struck me was the consistency with which nearly all of these speakers advise holding precious metals.

Some, like Hussman, see markets as dangerously out of equilibrium; with precious metals providing safe haven security during the inevitable correction to a more natural market state. Mauldin, while perhaps less pessimistic about the future, sees gold as essential insurance against central bank monetary recklessness -- and explained to me how he personally follows a disciplined process for making regular purchases, no matter what the market action is. Mish -- the deflationist among the group -- devoted much of his presentation to making the case why renewed stress in the credit markets is inevitable, and that gold will be one of the smartest/safest places to park capital during this time.

Charles Hugh Smith also attended the conference. He's been mentoring me on the basics of options investing, and as we're trading the miners, we've been watching the precious metals closely together. As Charles has written many times on PeakProsperity.com, he sees both cash and gold as prudent positions given market fundamentals and thinks both will likely rise from here. As for the recent weakness in PMs and today's bloodbath in particular, he can see no fundamental reason for it.

But most influential for me was a private meeting Chris and I had yesterday with Richard Russell, a true legend in the economic analysis business. Richard's impressively successful career has spanned over 50 years; he lived through the Great Depression, flew bombers in WWII, and followed nearly every market cycle known to modern man. Which is why I take his assessment very seriously when he refers to today's financial market conditions as "unprecedented in his lifetime". He sees today's elevated market prices as dangerously unsupported by fundamentals and primarily caused by central planner manipulation and opportunistic self-interest by the the agencies in power (big banks, politicians, corporations). "What else but gold?" should investors hold at this point, he asked us, genuinely interested if we had any good alternatives to offer.

When a legend like Russell is this concerned -- someone who has demonstrated a lifetime of balanced analysis, willing to switch between the bull and the bear sides based on the data -- we all better pay close attention.

And last night, Chris and I had dinner with Mike Maloney, of GoldSilver.com. As founder of one of the world's largest dealers of precious metals, Mike's support for owning PMs comes as little surprise. But what does surprise me is the tone his argument for ownership takes. He's frustrated by the efforts to suppress the prices of gold and silver, even though it's allowing savvy investors to accumulate metal at a cost far below what he believes fair market value to be. But the false signals that today's prices give keeps the smaller investor, who arguably would benefit most on a relative basis from protecting their wealth, from entering the market. And even though he remains confident precious metals prices will be higher -- much higher -- in the future, there's a sadness behind this prediction. Those high prices will be the result of a destruction of our monetary system and a corruption of our free markets, fundamental underpinnings that made our society great. Without them, yes, those who hold PMs will be better positioned than most (MUCH better positioned in Mike's view) -- but we all will have lost something much more valuable.

What struck me from each of these interactions was that none of these smarter minds would I describe as a PM 'cheerleader'. Their positions were arrived at through empirical, data-driven analysis; and in many cases, their endorsement of gold and silver is made with a measure of emotional reluctance. These are not people pushing gold to make a buck or advance an ideological agenda. These are concerned men looking to find options that will help their followers prosper, and finding few.

So, while the anxiety and emotions swirl powerfully on price smashes like today, I'm able to withstand them better due to the sober counsel I've received from those mentioned above. If you're playing the long game (as I am), days like today are just noise. In fact, they're good opportunities to add to your positions at lower cost, if you have the dry powder and the courage to do so.

Hopefully, the insights above help those of you holding the precious metals similarly ignore the noise. And orient on building true wealth of the kind our ReslientLife.com community focuses on. Many of the conversations Chris and I had with these smarter minds above ended in a discussion of the importance of the resiliency-building we advocate and enable here on Peak Prosperity. We are beginning to see these precious metals experts validate our position that, while important, money is not wealth. True wealth is your safety, health, relationships, work, community, knowledge, skills, etc. And advancing those are what will ensure a prosperous future.

Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.

49 Comments

Poet's picture
Poet
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Here's My Thoughts

Silver's at a good price right now, around $26. Sure, it could go lower, but you wouldn't lose much. It could go higher, and you'd be happy. It could go higher and come back down to this level again, and you'd be okay.

Just remember: all the other basics first (out of debt, resiliency in home, equipment, tools, frugality and savings, trained skills, other diversification covered) - and then a partial investment in silver. A one-ounce coin a month or a few coins every few months. Keep for the long term, prepare for high inflation times.

I think gold at $1,500 (like today) is also an somewhat acceptable entry-point, but only for those who (I'll arbitrarily set the line here) make around $150,000 or more per year and already have the basics and a lot of silver covered. And even then, only a few coins per year.

Poet

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good stuff Adam, much needed

good stuff Adam, much needed on a day like today.

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Nice post Adam

Adam,

Many technical analysists have mentioned that if we break through the 1520 level for gold, watch out below. Since we have broken though this level, what is the next level we should be watching?  And the level below that?

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thc0655
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No fear

Yo, Adam!

I'm out of town this week and unable to do anything re: my gold and silver holdings.  So I'm watching "from the sidelines."  Three years ago I started my self-education with Mike Maloney's book and the Crash Course.  I gained an understanding of gold and silver, what makes them go up and down in fiat terms, and the role they play in times like ours.  My wife and I rolled over our 401k's into gold and silver self-directed IRA's and we've been making regular small purchases as savings allow.  During this same time, we've done the same things Poet recommends above.

During these last two days, I've had not one shred of doubt or fear about PM prices dropping.  I'm not sure exactly what's causing it, but I'm sure it's NOT fundamentals.  I'm sure about what's going to happen soon, or eventually (explosive growth in prices).  I'll tell you some of the kinds of things that WOULD start to make me think about swapping some gold and silver for fiat: POTUS or the Congress proposed a balanced budget, the Fed brought QE4ever to a screaching halt and raised interest rates to 5%, the Dow/gold ratio was approaching 2:1 or had slipped below heading for 1:1, or GE started selling residential-sized cold fusion reactors that operate on seawater or sand and are priced at 6 months of average salary.

As it is, I'm just considering writing out a check from my home equity line of credit to buy some PM's when I get back in town instead of buying them out of cash savings the next 3-4 months.  But I can't even do that today so I'm cooling my heels cheering for the fiat prices to fall further or at worst stabilize here so I have a chance to seriously consider accelerating my regular purchases to take advantage of this sale.

Jim H's picture
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Thank you Adam

Amazing action to behold.  As CHS said yesterday;

The premium on truth and trust is eroding under the constant onslaught of officially manipulated data and markets, and a vast array of distortions and propaganda designed to serve the interests of ruling Elites and key constituencies.

http://www.oftwominds.com/blogapr13/truth-trust4-13.html

What we are seeing in the metals markets today is what TPTB want us to see and believe.. and 98 - 99% of people will in fact believe that Gold and Silver are a sell.  Nobody wants them... bubble popping... whatever.  

I think Kevin Wides, "bear trap" idea best explains where we are at right now in the metals story;

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/11_Th...

Stan Robertson's picture
Stan Robertson
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Is Cypress selling gold?

Who is selling out on gold? Anyone know?

Time2help's picture
Time2help
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Gravity

"The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

- Ludwig von Mises

"One can ignore reality, but one cannot ignore the consequences of ignoring reality."

- Ayn Rand

We are living through, real time, TEOTMSAWKI.  The End Of The Monetary System As We Know It.

Steady as she goes

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Thanks For The Encouragement

Great post Adam. It helps our spirits on a day like this when I felt like an early Christian in anctient Rome, steadfast in my beliefs, but dang those lions and tigers devouring my brethren sure have sharp teeth! 

rhoelker's picture
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Selling out on Gold?

That's just it...  No "one" is selling out of gold and this is just a paper action all orchestrated by the bullion banks for the benefit of themselves.  The vault is empty of gold and now full of paper gold.  Wthis CBs now huge net buyers of gold why wouldn't they want better prices to take it away from those have capitulated.

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Don't know the size of the Bitcoin market

in comparison to the gold and silver market value, but wondering if people might be selling metals to jump on that bubble?

KathyP's picture
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Who's Selling Out on Gold? "Fed Orchestrated Smash in Gold"

Linked by Jesse - http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/12_Fo...

From the interview: "They are trying to destroy gold as a (safe) haven from the dollar in order to carry on the Fed’s policy of negative real interest rates.  That is what is driving the illegal policy of selling naked shorts in order to manipulate a market.  If you and I were to do something like this without the government’s instruction or protection, we would be arrested (laughter ensues).  So the fact that it’s illegal, being done by the authorities, tells me that they are seriously worried about the dollar.”

Take comfort, fellow gold holders.

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Dow/Gold Ratio

Hi,

The current decline takes the gold price down to approximately $1,467 which is a 23.6% decline from the peak at $1,921, consistent with Fibonacci Ratios.

My question is whether going forward a high Dow is consistent with a high gold price.

Given that FED policy is unlikely to support higher bond prices anytime soon and that FED will actually allow $US to fall rather than put up interest rates. FED through its cohorts are also pushing Dow up as well.

If the natural market impediments are neutralised to printing of money what is to stop FED from continuing to print and push Dow higher.

Typically inflation and higher interest rates are the economic barometer.(currently neutralised) 

Therefore conceivably, Dow could go to 15,000 or 20,000 or 30,000 etc.

If eventually Dow/Gold ratio is 1:1 isn't this consistent with most long term gold forecasts. 

Doug's picture
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Unforeseen circumstance in Utah

A stunning landslide at Rio Tinto's Copper and silver mine in Utah.

Quote:
5 million ounces of annual silver supply and 500,000 ounces of annual gold supply have just been vaporized landslided.
Rio Tinto’s Kennecott mine in Utah- the US’ 2nd largest silver mine and world’s largest copper mine has just suffered a massive landslide which will likely shut down production at the mine for years as upwards of 1 billion tons of dirt and ore have collapsed into the basin. 

10% of US annual silver production just vanished.  Good thing there aren’t any physical supply issues in silver currently or anything…

http://silverdoctors.com/10-of-us-annual-silver-supply-just-vaporized/

Check out the article and totally stunning series of photos.

Doug

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billhopen
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whew whatta mess

gonna take alot of diesel at $4.00/gal to clean that up and restablish the pit road.  wonder what that'll do to their cost per oz production cost now that silver is under $26 .

was any one hurt? equipment/plant buildings destroyed

Doug's picture
Doug
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billhopen wrote:gonna take

billhopen wrote:

gonna take alot of diesel at $4.00/gal to clean that up and restablish the pit road.  wonder what that'll do to their cost per oz production cost now that silver is under $26 .

was any one hurt? equipment/plant buildings destroyed

No, they became aware of earth movements a few days before the collapse and had time to move people and equipment out of the area, although I imagine they lost some structures.

Doug

EarlyGirl's picture
EarlyGirl
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Timely

Thanks Aaron, for timely encouragement.

Here's what haunts my thoughts: If the current status of the market is due to manipulation, what is to prevent the manipulation from continuing for the foreseeable future and preventing any "accurate" valuation of PMs?

-Early

Boomer41's picture
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This Time It's Different

We are indeed in interesting times. Nothing similar to what is happening in the world wide financial system has ever happened before. The magnitude and global scope is unique in the history of the world. Currency meltdowns are nothing new. There are many examples of hyperinflation dating back to Roman times, but nothing which involved the whole world at the same time.

In each of history's currency meltdowns the ordinary people quickly adapted to the situation by establishing a black market. Most recently, when the Argentine Peso and the Russian Ruble crashed, the US dollar became the de facto currency of everyday life.

This time it's different. Not only do we not have any previous experience to guide us, there will not be a single currency left standing; Dollars, Euros, Yen - are all going down together.

The central bankers will almost certainly 'ride to the rescue' with a new world-wide currency which, we will be told, will solve all problems, save the planet, protect the children (and, incidentally, give bankers control of the world).

Gold and Silver should be the only viable medium of exchange. But the bankers don't want that to happen because they would lose control. So I expect them to do everything in their considerable power to prevent precious metals from becoming the basis of any new currency. What we are seeing right now is the latest thrust in their effort to destroy confidence in gold as money.

History is not on their side. Gold, the ancient relic, has withstood better people than Ben Bernanke and Mario Draghi.

Nevertheless, I'm beginning to feel a bit like a Spartan at Thermopylae: certain I am on the side of the righteous, but unsure of my ability to survive the battle. However it goes, I will never be a good serf.

thc0655's picture
thc0655
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Gold/silver plummeting at the open of Asian trading

Here it is 10pm EST and gold is down >$30 in the Asian markets already.  I was hoping for it to drop more (from Friday's close), so I could buy at these sale prices, but now I'm worried my local dealer won't sell me anything as to do so would be to take a loss.  Hmmmm....

JimH:  This is what it will look like as we approach that moment that you and I are both looking forward to when you won't be able to buy any amount of gold/silver with fiat paper at any price.  Maybe that day (or ONE of them) will happen this week...

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Jim H
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I think you are right thc...

This is the big washout.. I was at a coin show today buying some 90% and a few silver maples.  One guy who is a CFP and a PM dealer told me that he was on the phone Friday during the slamdown with NTR, the Silver refiner, and their backlog on bar orders was longer than he had ever experienced, by far.  the friend I went with the to show spent $10K on bullion.. getting the last 120 Silver Eagles one dealer had, among other things.  I am very, very sure that further price pressure will wipe out Silver supply completely.. some of us will be willing to buy a monster box of Silver on the credit card if this keeps up  : )

ao's picture
ao
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buy-in point

When gold drops below 1380 and silver below 21, which I think likely, I'll back up the truck and use remaining cash extracted from retirement accounts to make my second biggest buy of PMs, the first being back in 2001.  Gold will dominate over silver.  There should be plenty of PMs available despite the trashing.  Many weak hands will be forced to liquidate, more so in silver than in gold.  It'll take intestinal fortitude to weather 2013 and 2014 but by 2015, the stage should be set for a major resurgence.  Don't lose heart but don't count on any short term relief.  The screws are tightening all around ... taxes, regulations, gun control, health care control, pharmeutical pushing, food control, educational brainwashing, social re-engineering, privacy invasion, suppression of freedoms, etc. are all simultaneously being ramped up in a coordinated fashion to crush what was once the core of this country.  One must live in the world but not be of the world.  Time to move on.   

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Very Well Said

ao wrote:

When gold drops below 1380 and silver below 21, which I think likely, I'll back up the truck and use remaining cash extracted from retirement accounts to make my second biggest buy of PMs, the first being back in 2001.  Gold will dominate over silver.  There should be plenty of PMs available despite the trashing.  Many weak hands will be forced to liquidate, more so in silver than in gold.  It'll take intestinal fortitude to weather 2013 and 2014 but by 2015, the stage should be set for a major resurgence.  Don't lose heart but don't count on any short term relief.  The screws are tightening all around ... taxes, regulations, gun control, health care control, pharmeutical pushing, food control, educational brainwashing, social re-engineering, privacy invasion, suppression of freedoms, etc. are all simultaneously being ramped up in a coordinated fashion to crush what was once the core of this country.  One must live in the world but not be of the world.  Time to move on.   

The domination of 'all things real' by those that desperately want to preserve an illusion and maintain power in period where nothing can be taken for granted has become quite extreme.

We shall be told the price of everything but the value of nothing.  Of course, we are free to determine for ourselves what real value is.

I too shall be making another big purchase of physical gold and silver sometime this week.  I will wait though, at least through Monday.

Oddly, I see such blatant PM slams as signs that things are getting worse, not better, as they indicate serious desperation.

earthwise's picture
earthwise
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JP Morgan and the gold crash: How they did it.

This is one person's opinion on how they did it. My view from up in the nose bleed seats isn't quite as clear as the view all of you in the front rows have. Does this sound reasonable and if so, why would they ever stop?

http://www.theburningplatform.com/?p=52558

Grover's picture
Grover
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A way to get cheap physical

I'm not in a financial position to do this at this point, but I've been thinking this would be a low risk method of securing low cost silver. Silver was just quoted at $24.43 ask on APMEX. To me, silver at this point is low cost.

I've been watching the premium for physical silver go up as the price tumbles. APMEX is still quoting a $5.00 per ounce premium for junk silver coins ($500 face value) and they have less than $3,500 face value available on their website. Their cheapest available ASE is $3.99 above spot ask (when purchasing at least 500.) So, what can you do if there isn't any available or the premium is too high?

You can buy some SLV and ride it out until the price increases enough to entice the sellers of silver. When the price returns, premia should return back to normal. At that point, sell SLV and buy physical. You've locked in the low price now and should be able to secure metal at a later date. If no metal comes available, you still have the fiat return from selling at a price increase. Seems like a no-brainer to me. (I'm not a fan of ETFs, but I'd do this for a short time to take advantage of the steep correction.)

There is a chart in this article that shows what happens during price suppressions and how things have returned back to normal once the prices rebound. http://www.gotgoldreport.com/2013/04/dip-in-silver-prices-means-higher-premiums-for-us-silver-coins.html.

Grover

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Ted Butler's take

I just got off the phone with Ted Butler. I'm tracking down other PM analysts' opinions, too, which I'll publish as I have them.

The gist of Ted's perspective is that:

  • this is a forced takedown engineered by the commercial bullion banks
  • price action is being determined by the paper market (NYMEX/COMEX) which is clearly not based on actual fundamentals
  • today's further bloodletting is due to pressured margin selling by leveraged or othewise exposed longs
  • there's good chance this rout will burn out soon
  • don't expect the regulators (CFTC/CME) to get involved or be of any help here
  • don't sell any of your physical
  • an upswing of similar violence is a real possibility after the dust settles
  • if you have dry powder, congratulations - you're getting a chance to buy at prices we may never see again
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Robert Mish's take

Just spoke with Robert Mish. I will have another update from him by tomorrow regarding the buy/sell activity he is seeing from his clients.

His thoughts:

  • We have seen this game before (back in the '70s). Bullion prices become driven by the paper markets (without regard to fundamentals) and routinely flush out the weak hands for the benefit of the biggest players. Rememer there are different - i.e., better - rules for the shorts than the longs in this market.
  • Those manipulating prices here have won the battle, but they will lose the war
  • Fundamentals always triumph in the end - they will here, too
  • He sees the goal here are driving to full capitulation of the longs, to damage confidence in the precious metals. Why? Possibly as a prelude to an upcoming monetary announcement -- not sure what it may be, but confident "we're not going to like it"
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Paul Craig Roberts' Take

Paul Craig Roberts was the former Undersecretary of the Treasury under Ronald Reagan:

I believe that the authorities would like to drive the gold price down further and will, if they can, hit the gold market twice more next week and put gold at $1,400 per ounce or lower. The successive declines could perhaps spook individual holders of physical gold and result in actual net sales of physical gold as people reduced their holdings of the metal. 

However, bullion dealer Bill Haynes told kingworldnews.com that last Friday bullion purchasers among the public outpaced sellers by 50 to 1, and that the premiums over the spot price on gold and silver coins are the highest in decades. I myself checked with Gainesville Coins and was told that far more buyers than sellers had responded to the price drop. 

Unless the authorities have the actual metal with which to back up the short selling, they could be met with demands for deliveries. Unable to cover the shorts with real metal, the scheme would be exposed.

Do the authorities have the metal with which to cover shorts? I do not know. However, knowledgeable dealers are suspicious. Some think that US physical stocks of gold were used up in sales in efforts to disrupt the rise in the gold price from $272 in December 2000 to $1,900 in 2011. They point to Germany’s recent request that the US return the German gold stored in the US, and to the US government’s reply that it would return the gold piecemeal over seven years. If the US has the gold, why not return it to Germany?

The clear implication is that the US cannot deliver the gold.

Andrew Maguire also reports that foreign central banks, especially China, are loading up on physical gold at the low prices made possible by the short selling. If central banks are using their dollar holdings to purchase bullion at bargain prices, the likely results will be pressure on the dollar’s exchange value and a declining market supply of physical bullion. In other words, by trying to protect the dollar from its quantitative easing policy, the Fed might be hastening the dollar’s demise.

Possibly the Fed fears a dollar crisis or derivative blowup is nearing and is trying to reset the gold/dollar price prior to the outbreak of trouble. If ill winds are forecast, the Fed might feel it is better positioned to deal with crisis if the price of bullion is lower and confidence in bullion as a refuge has been shaken. 

In addition to short selling that is clearly intended to drive down the gold price, orchestration is also indicated by the advance announcements this month first from brokerage houses and then from Goldman Sachs that hedge funds and institutional investors would be selling their gold positions. The purpose of these announcements was to encourage individual investors to get out of gold before the big boys did. Does anyone believe that hedge funds and Wall Street would announce their sales in advance so the small fry can get out of gold at a higher price than they do? 

If these advanced announcements are not orchestration, what are they?

I see the orchestrated effort to suppress the price of gold and silver as a sign that the authorities are frightened that trouble is brewing that they cannot control unless there is strong confidence in the dollar. Otherwise, what is the point of the heavy short selling and orchestrated announcements of gold sales in advance of the sales? 

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Thanks (again) for updates, Chris and Adam!!

Adam wrote:
I see the orchestrated effort to suppress the price of gold and silver as a sign that the authorities are frightened that trouble is brewing that they cannot control unless there is strong confidence in the dollar. Otherwise, what is the point of the heavy short selling and orchestrated announcements of gold sales in advance of the sales?

I agree, Adam.  Unfortunately, as Chris alluded to, I find the size and strength of their move to be troubling; it means they think things are bad enough to warrant this big of a statement and effect.

What a roller-coaster plummet!

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Thanks for the updates Adam!

Thanks for the updates Adam!

Time2help's picture
Time2help
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Surf's up

This is the part of the tsunami where the sea goes out before the wave hits. 

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What Happened The Last Time We Saw Gold Drop

From ZH:

http://www.zerohedge.com/news/2013-04-15/what-happened-last-time-we-saw-...

Charts from the piece:

and in 2011...

20130415_gold6_0.jpg

and now...

20130415_gold7_0.jpg

What was it that Chris was predicting about the equities market a week or so ago?

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Axel Merk's take

Spoke briefly with Axel Merk.

His quick comments:

  • We are witnessing full capitulation caused by both technical damage to the charts and cascading margin calls
  • HFT algos exacerbate these downdrafts; we're still learning how fast this market can move in the new machine age
  • Perception is likely so wounded that PM prices may not recover for some time
  • The fundamentals of owning PMs haven't changed
  • As such, it's hard to deny those claiming manipulation in the PM markets. The volumes seen in this sell-off have been staggering, which imply the involvement of big players driving the action
  • This historic sell-off, combined with other indicators, are symptoms that our markets are not in good health (in terms of operating as markets should)
  • How to tell if you're too exposed to gold: are you able to sleep at night? Gold is volatile; if the volatility hounds you, you probably have more than you should. He's not losing sleep at all over his PMs.
  • In fact, he's much more nervous (longer term) about his dollar holdings 
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grover's way to get cheap physical

Grover, I really like your suggestion.  Its a poor man's futures contract.  You effectively can "take delivery" anytime you like by selling SLV and taking the cash to buy physical, and you've hedged yourself against a rebound in price.  Of course you're naked long but - presumably that's where you want to be.

I'm not suggesting anyone make this trade at this moment in time, but if you want to buy physical right now, and you want to avoid that nasty current markup during this time of (likely) physical shortage, Grover's suggestion is really quite excellent.  By being a bit patient, you can wait out the premiums and perhaps save yourself a good 5%.  Only fly in the ointment: you'll pay taxes on your gains from SLV - assuming silver rebounds, of course.

You can also try PSLV, which is Eric Sprott's fund that isn't run by a TBTF bank.

I remember looking into buying silver last time we were at 26 and was appalled at the premiums.

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Woodman
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sit tight

Seems like the volatily of gold makes it a poor short term way to store wealth.  Longer term, if you were sleeping since this time in 2011 and just got up, you'd say the price was pretty steady!

Does the price really matter if you just sit tight and don't sell?  Or does this volatility temper the long term potential appreciation of gold?

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Jim H
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PSLV/PHYS premiums (or lack thereof)

If this comment from Davefairtax was about Sprott premiums;

You can also try PSLV, which is Eric Sprott's fund that isn't run by a TBTF bank.

I remember looking into buying silver last time we were at 26 and was appalled at the premiums.

The fact is, you can buy both Silver and Gold right now in the Sprott funds BELOW spot, i.e. negative premiums.  This has never before happened to my knowledge.  This can happen in PSLV because they are trusts, with fixed numbers of shares representing the underlying metal.  I can't see any reason for one to use the SLV when you can buy real allocated Silver via PSLV at a discount to spot. 

http://sprottphysicalbullion.com/sprott-physical-silver-trust/net-asset-...

The discount at present is 0.4 %.  Again... unprecedented   

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Denny Johnson
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Premiums at 2:59 PM via Jesse

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Time2help
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Posts: 383
Out and about

Stopped by the local coin shop for lunch today on a whim where the queue at the counter was 7 people deep.  Asked the question to the group "Buying or selling?"  Response in unison - "Buying".    

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EarlyGirl
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Out and About too

Stopped by my local coin shop (California) this morning around 11am to buy silver eagles and no luck. Said that they had had a ton of people come in this morning. The clerks looked a little shell shocked.

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Time2help
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EarlyGirl wrote: Stopped by

EarlyGirl wrote:

Stopped by my local coin shop (California) this morning around 11am to buy silver eagles and no luck. Said that they had had a ton of people come in this morning. The clerks looked a little shell shocked.

Same here, supply was gone.  No 90%, no maples, no eagles, few bars.

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Adam Taggart
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Silver premium $4.50 per ounce over spot

At a nearby coin shop, for a 100oz Englehard bar. Crazy...

LIke davefairtex, I like the idea of buying paper PM (in the short-term) to convert later once the premium on physical come down.

Jim H: thanks for the tip on PSLV/PHYS.  Worth looking into.

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LogansRun
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Why are you going to coin shops?

Other than to keep the buy "secret" (if there is such a thing), there's no reason to do so IMO.

Why not go to APMEX (Yes, I know it's financed by JPM) and pay this for that 100oz bar?

Sorry, doesn't make a lot of sense to me.

Adam Taggart wrote:

At a nearby coin shop, for a 100oz Englehard bar. Crazy...

LIke davefairtex, I like the idea of buying paper PM (in the short-term) to convert later once the premium on physical come down.

Jim H: thanks for the tip on PSLV/PHYS.  Worth looking into.

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Jim H
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Posts: 1464
Force Majeure scenario

One potential scenario being discussed is that this crash is leading up to a Force Majeure, whereby Comex contracts get closed out for cash'

http://blog.milesfranklin.com/force-majeure-was-the-end-game-all-along

http://www.tfmetalsreport.com/blog/4643/history-making

Physical stores of metal are being sold out left and right.  Two large mines are out of commission.  The current price of Silver is below the all-in cost of mining it for most big miners.  Something is going to break.  Do the exchanges know that they can't continue to make deliveries?  Maguire says that imminent LBMA failure was the reason for the smash;

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/15_Ma...

Harvey says that the OI (open interest) on Comex has remained steady though.. so maybe physical demand on the futures exchange has not been squelched?

http://harveyorgan.blogspot.com/

At the comex, the open interest in silver fell slightly to 163,331 contracts despite the massive raid on Friday. The open interest on the gold contract surprisingly rose by 13,864 contracts to 430,029.  So much for gold and silver liquidation. The total amount of gold ounces standing for April rose to 34.199 tonnes and silver also had an increase to 3.145 million oz standing.

If the OI for silver remains elevated again tomorrow despite the huge loss in price today, one must believe that only a sovereign (maybe China) could withstand that much pain.  The price of silver has declined from $35.00 to $ 23.00 with open interest rising.  The loss has to be gigantic and only a sovereign could be that stoic.

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Jim H
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comment from TF metals report

http://www.tfmetalsreport.com/comment/297296#comment-297296

*BREAKING
CNT, one of the largest wholesale suppliers in the US, who is the supplier of gold blanks to the US Mint for Gold Eagles, and is a registered COMEX depository, HAS JUST SOLD OUT OF ALL PHYSICAL SILVER!!!

In the face of an EPIC TSUNAMI of gold and silver sales today as the cartel hammered the price of silver down over 11%, and off $6 from Friday’s open, we have just been informed at SDBullion upon trying to place a large inventory order that CNT is SOLD OUT OF EVERY LAST OUNCE OF PHYSICAL SILVER!!!

Apparently the fact that one of the largest wholesale suppliers in the US is SOLD OUT, while simultaneously the 2nd largest silver mine in the US is offline perhaps permanently is of absolutely no consequence to the paper dumping cartel bullion banks. 

The alleged silver shorts are going LONG HERE AND NOW, and will be NET LONG by 9pm Thursday evening when they must have exited their short positions. 

AND……IT’S GONE!!!!!

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Jim H
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I did my part...

to show the criminal bankers that they can't scare me off real money... bought some Englehard prospector rounds from Gainesville coins at $1.99 over spot.  They are out of almost everything.  The Silver rush is on! 

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davefairtex
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premiums - PSLV, PHYS, CEF, GTU

Jim -

No when I talked about being appalled at the "premiums for buying silver" I was referring to premiums for actually buying silver, as opposed to SLV, PSLV, YI COMEX Silver mini-futures, SI COMEX silver futures, etc.

Checking a site I know, Canadian Maple Leafs are $3.25 over spot - a premium of 15%!!  That certainly appalls me.

As for premiums and discounts to NAV for the various paper vehicles, be aware they can change dramatically intraday.  You cannot rely on the official NAV at the websites to determine the premiums.  Seriously, they are very wrong sometimes, because in some cases they rely on "london fix" prices for their PM valuation, which they then compare against live market quotes for their ETF.  (This is bad because if gold drops a bunch after the london fix, their NAV premium/discount calculation will be very seriously off).   If you are serious about really knowing the NAV intraday, you really must calculate it yourself using your trading app.  I use TOS (thinkorswim from TD Ameritrade) and a script I wrote myself.  At the risk of getting even more technical:

If you have TOS, you can add a study: the code for this study follows, its quite simple.  I named it NAV_CEF.  You'll need to update it every quarter or so, when CEF takes money from the till and pays all its people.  Also if they do a secondary - which they typically only do if the premium to NAV gets too high.  Numeric values in the code come from the CEF website - ounces of silver (77M) + gold (1.7M) in the vault, cash on hand ($42M), and the total number of units outstanding (25.4M): http://www.centralfund.com/Nav%20Form.htm

Input silver = "/SI";
Input gold = "/GC";
Input cef = "CEF";
plot Data = (close(cef) / ((76964103 * close(silver) + 1694644*close(gold) + 42252566) / 254432713)) - 1;

As an example of some pretty extreme moves in the premium/discount to NAV: today, in the AM, CEF was trading at a discount of almost -4% to NAV around the market open, as well as after about 11:00-12:00.  Then it steadily improved as the day wore on, finally closing at a discount of only -1% to NAV at end of day.

That's a big move in just 5 hours!  It also doesn't happen very often, only at times of extreme pessimism like this.  You can use this as an indicator of "capitulation" too, if you like.  CEF normally trades at a premium of from 1-3% of NAV, so that -4% to NAV was really a huge discount.  Imagine, you actually get a discount rather than pay a premium for your PM!

In fact, I haven't seen CEF at -4% to NAV for a very long time.

CEF is a fund that really does have its gold and silver, as best as I can tell.  It stores its bars in a Canadian Bank.  Sheesh.  I feel like I'm a salesman - not my intent, but there you go.  You can do the same script-writing trick for PSLV, PHYS, GTU, or any of the other funds, just plug in the ounces + cash and divide by units outstanding from their website and it all works.

Full Disclosure: I'm long CEF

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Jim H
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Posts: 1464
Thanks Davef....

I thought you were referring back the times when PSLV carried a 20%, even for a few days a 30% premium to NAV.... no problem.  I was lucky enough to follow my gut early Friday and sell out all miner and PHYS positions to cash... so I am looking for a re-entry point soon myself.  The market for physical Silver is so tight that I think it will be hard for the cartel to deny the disconnect between pricing and actual supply vs demand very soon.  

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Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
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Posts: 1796
PM inventories field notes

Chris and I spoke this morning with a sourcing agent at one of the larger bullion dealers. We were curious to hear his observations on the availabilty of the metals in the wake of the takedown that started Friday. 

As we've been seeing premiums move up and see reports of dealers out of stock, is supply getting "tight" enough for concern?

Here's what we heard:

  • For gold = no. Supply seems fairly robust and there are no backorders. Premiums haven't really moved.
  • For silver = possibly. The average delivery date for coins, rounds and small bars is approximately 5 weeks. And of course, premiums have spiked higher for these products.
  • Larger silver bars (100oz on up) are not seeing this tightness. BUT, our source said he could see them quickly shoot past the unavailability of coins if demand continues at this level for much longer.
  • In fact, he thinks that if silver drops to near $20, virtually all physical supply will be gobbled up. "There's no way" folks waiting to buy physical silver in the teens will be able to. "They're dreaming," our source says. There simply won't be metal to find at those prices.
  • Despite the high volume of transactions he's seeing, "this does not feel like 2008" he reports. He doesn't see the system freezing up with panic buying.

We'll stay in touch with him to monitor any material changes in transaction flows. 

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Time2help
Status: Gold Member (Offline)
Joined: Jun 9 2011
Posts: 383
Surf's Up

Time2Help wrote:

This is the part of the tsunami where the sea goes out before the wave hits. 

Here comes that first wave.

Gold buying frenzy continues: China, Japan and Australia scramble for physical

India's response to the gold selloff: a massive buying frenzy

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plarki12001
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Joined: Apr 28 2013
Posts: 1
Are you kidding me?

Sure it is a Bear Trap.  I'm glad all you smart institutional investors realize that this is a bear trap and not a bull trap.  Do you really think we are in the awareness phase or the mania phase?  Do you think we are at the institutional level or the public level. 

How has gold done for you the past 12 months?.....Sheep to the slaughter....

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Oliveoilguy
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Posts: 352
Long CEF

davefairtex wrote:

Jim -

CEF is a fund that really does have its gold and silver, as best as I can tell.  It stores its bars in a Canadian Bank.  Sheesh.  I feel like I'm a salesman - not my intent, but there you go.  You can do the same script-writing trick for PSLV, PHYS, GTU, or any of the other funds, just plug in the ounces + cash and divide by units outstanding from their website and it all works.

Full Disclosure: I'm long CEF

Dave,

CEF is my biggest holding other than cash.  Bought some more last week. Can you help me with a hypothetical? 

If the SHTF and the system implodes or explodes or whatever it's going to do, can I drive up to Canada and load up the metal in the back of my Subaru?  I feel like I kind of own the metal, but am not sure. 

Thanks for you thoughts on this.

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