What a difference a few days makes! I was away for the bulk of this week and had no internet access for 2 days, it looks like the world changed (it did not, only the perception) in the blink of an eye. 2 weeks ago was day 1 of the “2 day smash” in gold and silver, here we are 2 weeks later and even the most asleep at the wheel and uninformed can see and knows that the “price” just ain’t the price.
U.S. Mint sales have exploded, premiums of close to and above 10% exist in gold while silver has been cleaned off the streets. The latest from the Mint is that they have suspended the sales of 1/10th ounce Gold Eagles. I have long been an advocate of these even with their higher premiums because at some point they will “spend” and it appears that the public now agrees. Across the pond, the Royal Mint has seen their sales triple which mirrors the rest of Europe, Japan and Asia proper. Silver has just evaporated and reports of “none to be had” and up to 8 week waits with 25-30% premiums are now the norm. How can this be since supposedly 2 weeks ago MASSIVE amounts of metal were puked up and hit the streets? Dealers should be swamped with metal since so much was sold… right? Well, it was not metal… it was paper as we now have proof that what we told you then is in fact what happened. It was a paper attack on price and not only was the metal itself not sold, it has been BOUGHT in unprecedented quantities… and globally!
We also now have evidence that the COMEX inventories have been drawn down. Maybe this was done to meet physical demand or maybe it has been done by owners who no longer “trust” its location. It does not matter. It is evaporating. We also see that JP Morgan saw a 65% drop in their “eligible” inventory in a 24 hour time frame. They now hold just 141,000 ounces of gold. How does this work when you match this versus paper obligations? It doesn’t, that’s how!
On the macro front we were told that the U.S. will “adjust” its future GDP figure by 3% to account for “intangibles.” Really? So does this mean that we will never again have an official recession because they will just change the numbers to compensate for reality? And speaking of “reality,” here is a good one, pension plans have found a new rabbit to pull out of their hats (arses). They now have a new way to plug the “underfunded holes” that have opened up. Pension plans are buying things like land (where trees will grow), and wine (where more time makes a finer wine), whiskey, and yes even cheese. They are doing this in an effort to put $1 to work now and “waiting” out the current problem which is the fact that they don’t have enough “current dollars.” They are buying wine and cheese in the “aging process” for say 40 cents on the Dollar and immediately booking the “1 dollar” to make their financial situation look better NOW. Make no mistake people, this is bogus accounting and lying because there is no free lunch and the “risk” of time still exists on their books though it is not being accounted for. Father Time and Mother Nature will not be fooled nor messed with, I might add that neither will actual supply and demand of anything and everything real no matter how much wallpaper is printed to hide the reality.
I will finish with commentary that should have been written last week but still pertains to those who still don’t get it and are “scared” because “Oh my God I lost money in Gold and Silver!” If you were afraid of needles and stepped on a rusty nail or were bitten by a snake, would you “take the shot” to allow you to live? Would you say that you were so afraid of needles that you were willing to die just to not have to go through the pain of the shot? Or would you just look away, suck it up and take the shot that saves your life? Yes you would take the shot. I thought so.
And so this is gold (and silver). We live in a world of credit and credit alone. Credit is everywhere you look, everything you touch and more importantly everything you “spend.” You personally may think that you do not have any credit… but you do. “Credit” is what you have as a bank balance, credit is what those pretty little pieces of paper that you call dollars, Euros, Yen, Pounds etc are . Credit is a funny animal and history has shown us time after time that it can build and grow and expand for many many years… but when it breaks and collapses it happens virtually overnight. This is where you need to “look away from the needle” and “take your shot.” If you can truly understand that the credit system is the equivalent of a rusty nail or a snake bite that will “kill” the system itself then you understand that you must own gold, silver and everything related in order to “live.”
Don’t worry about what “they” are telling you your metal or shares are worth, look away and know that you absolutely must have them to survive. We now have proof that the paper markets are mispricing the metals badly so even if the last month was “painful,” you know that the price is not real. You also know that real supply is being eaten up and disappearing rapidly so “look away,” endure the pain (if you are one who feels it) and know that it will be short lived because the end result is that you will LIVE and the alternative is that you will die financially. The physical markets have already turned the paper markets higher as I write this, it is only a matter of time before supply is completely wiped out and “price” will not matter. As I wrote last week, “price” will not matter. The only thing of importance is whether or not you have any.