Q: It is true that coin and bullion dealers, among others, run the names of their clients on the U.S. Treasury’s Office of Foreign Asset Control’s (OFAC) via the Financial Industry Regulatory Authority (FIRNA) search tool? If so, is it all clients or some clients and any ideas on what FIRNA or OFAC does with the names?
David Schectman’s Answer:
This is the first I’ve ever heard of this. We don’t do any reporting. We do business with several wholesale accounts, but I am not aware that any of the big houses that we do business with share that information with anyone and neither do we. To discern who reports any of this information to OFAC would be a total guess on my behalf. I don’t believe there is an obligation to share this information with any federal entity. Sounds to me like these are regulations for the stock brokerages and/or commodity brokerages.
Q: HSBC has issued allerts to GLD that all seven precious metals vaults will shut down in the very near future. Those who don’t or can’t make arrangements in time will be left twisting in the wind. Since I can’t find a word of this mentioned anywhere on MSM, it is obviously a major secret. Is this the manipulators trying to sneak out the back door and heading for the hills in the stealth of the night?
Thanks for your expertise,
Bill Holter’s Answer:
I thought this was big news when I first heard it. And yes, if true there are all sorts of questions as to why they would do this. That said and as you said, there is NOTHING in the way of confirmation this is in fact true. I have even seen somewhere that there are only seven vaults in all of London, if this is true then surely HSBC does not own and operate all of them.
The more time which passes before we get some sort of confirmation, the more I am inclined to believe the story is not so. If this turn out to be false it would be a big hit to Andrew Maguire’s credibility as well as anyone who went along and wrote anything without the disclaimer “this is alleged but may not be true and is yet to be confirmed”.
Q: I have been thinking about your recommendation for 70/30 on silver and gold. Are there any signs that silver will break away from its current relationship with gold? Is silver now at its typical percentage of gold? Does platinum just follow along with gold or are there market forces at play as well?
With the overcapacity and coming slowdown in China, isn’t it likely that gold and silver will be influenced negatively by the coming deflation? I have read Andy H. several times on the current valuations of gold and silver being at or close to their production costs. However gold and silver continue to be readily available. Are there any signs that silver faces supply problems? One well known contrarian suggests that real inflation won’t begin until we get into the 2020s decade and that gold might briefly go down much further than where it is. With China poised for deflation and the US poised for inflation, are their any persuasive reasons to believe that one or the other will prevail in the influence one or the other might have for PMs?
Are their good reasons why I should get into PMs at this point instead of staying in cash and waiting for more indicators? Or is all this just a betting game?
Thanks James Russon.
Andy Hoffman’s Answer:
Only when prices tell us so, will the relationship between silver and gold be changed. That said, global demand for both are clearly at or near record levels – aside from in the States, where the “strong dollar,” and relentless market manipulation, have dramatically weakened sentiment. Conversely, plunging currencies have caused gold prices to surge to, or near, record levels in numerous countries. And as for supply, as I have written ad nauseum recently, there is no doubt “peak gold” – at least, for the foreseeable future – has arrived, with peak silver likely right behind it. And of course, with barely any global silver inventory, at any time a shortage is possible – as we saw to various degrees in 2008, 2011, 2013, and 2014.
Regarding platinum, I have always had mixed feelings; as while it clearly is valued as jewelry, it has no monetary history. Thus, I’d be loathe to take more than a small position relative to gold and silver, if your PM investing is solely for monetary reasons.
And as for the impact of “deflation,” I’m not sure I can be clearer of the fallacy that a) monetary deflation is even possible, and b) that gold and silver have traditionally been the best performing assets during “deflationary” times, as they were in 2008 (paper manipulations notwithstanding). And as for today’s “deflation,” how could the stock market be at an all-time high if we were truly “deflating?” The answer, of course, is that stocks are artificially propped and PMs suppressed; which, when “Economic Mother Nature” inevitably has her way, will be trends that are decidedly reversed.
As for market timing, remember we don’t own PMs as “investments,” but “savings” and “insurance.” And given the horrifying political, economic, and monetary trends as we speak (think Greece and the Euro, for example); it would seem a pity to not be “insured” when such insurance has been suppressed to record low prices!