“The important thing which every investor needs to understand here is that the Fear based buying potential of the Gold space today is the sum of all the previous expansions, which is [now] potentially the greatest Bull market in human history attempting to fit into one of the smallest and [potentially] explosive markets in human history…physical Gold is now quite rare, it is under constant buying pressure globally, it has circumstances surrounding it where excessive leverage and duplication of contracts (rehypothecation) can add explosive pressure to the upside, and it sits surrounded by a market which is either completely oblivious to its merits, or has been utterly brainwashed to believe otherwise.
It is actually staggeringly difficult to picture all these aspects at one time; the capacity to buy and the potential force of the buying. This is why I have repeatedly stated that, sequel to a Bull Run on the physical Gold space, a Gold price of $134,000 per ounce, in today’s Dollar terms, is more than just possible, it is highly likely.”
-“TwoShortPlanks”, TwoShortPlanksUnPlugged.blogspot.com.au, May 21 2013
I came across this quote and believe that you should read it several times and break it down into its parts. I wrote something similar for the first time back in 2007 or 08 though not as eloquently or expansively. I wrote back then, “All of the fiat monies, debt and derivatives that have been cumulatively created since going off of the gold standard…will in the end accrue back into the valuation of gold (and silver).”
Let me explain, since going off of the gold standard (whether you choose unofficially 1933 or officially 1971 does not rally matter) “money” has been created out of thin air. Debt and derivatives have also been created in the same manner. NONE of this newly created “capital” had…or has any “backing” to it. To the extent that this capital was created over and above the stocks of above ground bullion…eventually when the system is collapsing will seek its way BACK INTO BULLION.
In layman’s terms, “money” has been over created and it is fake to boot. Once the panic starts, ALL of this “money” will seek refuge in REAL money. The massive “value” of fake money that has been printed and conjured up over time will try to fit itself inside the very finite and relatively miniscule market capitalizations of the gold and silver markets. At today’s prices, this cannot be done. There is simply not enough metal that can be bought to accommodate the buying.
“TwoShortPlanks” wrote “where excessive leverage and duplication of contracts (rehypothecation) can add explosive pressure to the upside, and it sits surrounded by a market which is either completely oblivious to its merits, or has been utterly brainwashed to believe otherwise.” He is talking about “fake” (paper futures contracts, ETF’s and warehouse receipts for non-existent) gold and silver that investors only “think” that they have. This of course is/will be future demand for the real product and in my opinion be the second “major thrust” to the bull market. We are right now witnessing unprecedented current physical demand, call this “thrust #1.”
The next thrust will be from those who believed that they owned metal but in fact do not. This second thrust is being readied right now as firms like ABN AMRO, various major Swiss banks and even exchanges like the HKMEX (Hong Kong Metals) discourage, back pedal, renege and default on the delivery of metal. The third and final thrust will occur when the common man comes to the realization that his fiat holdings will have no future value. THIS is where Niagara Falls will not nor can possibly fit through a garden hose. In other words, to accommodate the global wave of purchases, gold and silver must be priced at MUCH higher. Currently we are watching as the COMEX, LBMA and GLD are being raided along with shortages in India, Asia and Europe. Mints and refineries are also being overwhelmed into 24/7 work.
The amount of “time” between the frantic end days of “thrust #2” and the beginnings of “thrust #3” may possibly (probably) blur and become coincident or become “one in the same.” What I am saying is this, ALL of the makings of an outright buying panic are in place currently. This buying will occur at the same time that sellers (and probably even including miners themselves) decide “I’m not selling” which will add further stress to the supply and demand situation.
All of the above in “street lingo?” The bright guys are buying hard right now and taking delivery. When the “scamsters” are finally found out that they don’t (and probably never did) have the metal, all hell will break loose. Once this happens, everyone including the biggest dummies around will want to get rid of their cash before it won’t spend anymore. All of this will happen at the same time that people who already own gold won’t sell it for any price. …and the $134,000 per ounce part? I’m not buying it, maybe someone will let go of an ounce at this price to extinguish a past debt but there is far more debt, derivatives and cumulative money supply sloshing around than $134,000 for the ounces that will be available for sale…in my opinion.
Miles Franklin in general, and Bill Holter in particular, are one of the few places one can go to get the, “facts-of-the-matter.” Everywhere one reads, “horse manure” reports about the, “recovery,” the improving houseing market, the rising value of stocks, improving employment figures, and low inflation stats. All, “smoke and mirrors” to keep up the deception that all is well. All is not well! Those in the driver’s seat at this point are motivated by, “kick the can down the road” and “not on my watch.” They are more concerned with their image than the well being of their country.
God bless America, and please hurry!
thanks Don
Read your column most days. find it insightful. but have a question. what percentage of your assets do you have in physical? any in mining?
thanks for what you do.
Regards
Bruce
50/50
Yeah, and I predict $1 million per oz of gold….
Come on Bill, let’s remain serious.
I concur to all the arguments in the article as bullish fundamentals indeed.
And I am stacking up on gold and silver as means of preserving my wealth.
But do you really think that the Criminal Cartel will let PM prices blow off all the tops??
Remember April 12-15?
And if the underlying pressures get so big that the Criminal Cartel loses control, then governments will definitely step in to contain the “damage”.
Or did I forget to mention that France’s communist/fascist president Hollande is lobbying the EU to outlow selling and buying gold for cash!!
Yes, PM’s are an insurance against the coming collapse.
And yes, all the fundamentals are very bullish.
But no, I don’t believe all the theories about $10,000 per oz etc… Let alone $134,000.
If it gets this far, either manipulation and control will contain it, or in the ultimate fase a complete reset of the financial system will be implemented worldwide (and my fear is it will be a fascist system, not a free-market one as governments and Criminal wealthy will cling to power)
I like your blogs and opinions, but this one should not have been posted under your name 🙂
Cheers
Ronny
I have written many times and maintain (my personal opinion) that no one can put a “number” on Gold. Too many unknown variables, ie. how much Gold does the US really have? how much money supply is really out there? how much new printing will be done? $134,000 may turn out to be a laughably low number and without enough zeroes. By the way, your $1 million figure may not be able to fetch 1 ounce, it depends on how this all plays out. …and no one really knows.
Thanks Bill!! @ Ronny said he believes that the criminal cartel will put a lid on prices. Well lets not forget that there was an article which stated that Bernanke told the banks to start accumulating gold. Now we see the prices being knocked down and who is doing the buying? Yep the Banksters! Also Andrew Carnegie stated( in his book ABC of Money) that Gold is their money and he had stopped buying US silver when they started to debase it from 90% to 40%. So if gold is the money of those who have real wealth, when the price goes parabolic these same people will be the ones talking up the price even higher because greed again will set in. This is another reason I believe no one knows how high it will go. I like silver and stack more in that because it is cheap and has other quality properties. But when Stuff hits the fan, just have both for I don’t think you can loose with silver or gold.
Silver will “spend” Marco. As for the “high” price on Gold, I firmly believe that no one can put a number on it because of the reasons mentioned before. I believe that it will be taken up, out and away from the ability of the average person to purchase it.
@Marco : I totally agree that the Criminals will be on the winning side when paper prices go up.
My point, however, was that when paper prices are about to go through the roof, it will mean that the worthless paper currencies will default and at that moment the Criminal Cartel and psychopath governments will jump in and reset the financial system.
Hopefully in a free-market version, but I guess that would be too naive to expect… Unfortunately.
In the mean time, keep stacking 🙂
It really is simple. Comparing gold to unbacked dollars is foolish.
Gold has been controlled to give the sheeple the perception that dollars have some sort of value. It is only by faith (and government forced down your throat fiat) that it has value. Everyone with a half a brain knows this. I say an ounce of gold will go to $100,000,000,000 and beyond. But that ounce will still only buy a nice tailored mans suit and shoes. Gold is real money and dollars are not. The missing ingredient with the dollar as money is discipline by a natural limit of supply. That is the requirement to be real money…rarity which begets discipline and true monetary stability. I think I will go look at my Zimbabwe 100 Trillion Dollar note again. Only worth collector value of a few bucks. But priceless as a lesson of monetary history. Get real folks…save in real money for your future. The dollar is dying right in front of you yet you cannot see that it has “no clothes”. Brainwashing is very hard to reverse but I got through it and so can all you folks out there. You all will see the clear picture if you study monetary history and listen to people like Bill Holter. He wants to help you all take away the lies and BS that has been pushed on you for most if not all your lives. THERE IS NO FREE LUNCH!! Now we all must pay for this sin. Protect Yourself NOW!! If you do this, it will not be so hard on you.
Do nothing??? Pure financial ruin and unnecessary pain.
The bubbles are everywhere. Jesus said once…I have come to give sight to the blind, and take away sight from them who say that they can see. I ask you all that you study and learn monetary history. Fact…no fiat currency has ever survived. This Federal Reserve Note will be no different. Love You All!!
Wow Bradley! I wish I had written this, you put it in more basic terms and more down to Earth that I ever have! Thank you so much for the write, I will try to quote this next week. You get it as I wish everyone else did but I know that they don’t, $100, 100,000, $100 million, $100(quad)trillion…what’s the difference? Only zeroes and a hamburger or an ounce of Gold will still be a hamburger or an ounce of Gold…only priced differently in “Dollars” at different points in time. Thank you, truly well written!
Thanks for the replies, guys!
Again, my intent was not to mock your article at all! I am a firm PM stacker myself, and as Bradley described marvelously and as Bill said as well: “price” does not matter, be it in dollars, euro, yen, yuan, baht whatever…
In the end it will be about how many ounces, grams, kilo of the stuff you own, ans that it will preserve purchasing power indeed.
Bill, thanks again for your valuable contributions.