I spoke yesterday with David Schectman and he told me that he had a “moment.” No not a senior moment, the type of moment where all of the noise and hype seems to go away. He told me he had a “clarity” moment. There are as you know many many signals pointing to gold and silver being way undervalued. There are also many “footprints” along with clear motive that clearly point to manipulation of price. I try to point these out on a daily basis in the hope that people will have a better understanding (and thus less fear and confusion) about why it is imperative to own gold and silver.
The meat of the conversation yesterday really was simple and to the point, when you look at the “numbers” it will be self-fulfilling. David said to me, “It really boils down to who is right. Are the Asians, Indians and Russians of the East correct or are the peoples of the West correct?” In a nutshell, the East is buying and buying BIG while the West is supplying this demand from cobwebby inventories, it is this simple. Is the West “fooling” the East into buying a barbarous relic? …Or is the East fooling the West into emptying their inventories? You know where I stand on this and I would simply ask “what happens when the Western Gold runs out? Then what? Please remember “why” the nickname “King Dollar” came about. Yes, because we were the strongest military power in the world AND…because we “had” the most gold in the world.
So, as I mentioned above, the East can and in my opinion certainly and shortly WILL make the answer to the question “Who is right?” …self-fulfilling. Notice that I used the term “self-fulfilling” and added when you look at the numbers. No, not the “fundamental” numbers like cost of production, debt or money supply growth, inflation, deflation or anything like them. I am talking about the sheer number of PEOPLE in the East! We are talking about well over 2 billion people, some rich, many poor and some in between…2 BILLION+ people!
These people rightly or wrongly truly believe that gold and silver are “savings.” Gold is not an “investment” in their view…it is purely the ultimate in savings. They have a very long history and have blown up more paper currencies over the years than the U.S. and Europe have states. They know! They know what always eventually happens to paper money, it always, sooner or later devalues and eventually is lost forever. As for the West, the U.S. has blown up 3 currencies so far but the memory has been brainwashed away and even the school history books say very little on the subject. My point is this, “we” are the newbies to the currency game.
2 billion+ people represent better than 1/3rd of the world’s population. They will ultimately “make” the reality that gold and silver “ARE” money, simply because they believe it to be so. Governments can say, do or legislate whatever they’d like, it will not change the minds of these 2 billion people. I would like to mention that currently, the East is “standing in line,” long lines to get metal. On top of the long lines, they are paying premiums on every ounce purchased.
The “premium” part is important for several reasons. First, these people have decided that the “price” in the West is too low and they are voting with their savings. Secondly, “arbitrage” between East and West is taking delivery of metal in the West (where prices are lower) and shipping, then selling it to the demand in the East for a profit (though as short sighted as it is). It is this reason that inventories are being severely bled down. By my count, when you take 100+ tons away from each the COMEX and GLD, then add in a vaporized 1,300 tons from the LBMA you get over 1,500 tons in 6 months! This is on top of and equal to 70% of normal global production.
So, who is right? It does not matter. It only matters that gold will ultimately end up in the East with Western vaults emptied. I can tell you that throughout history, gold has “flowed” (as it is now) to where economic and military “power” was being amassed. Was it “right or wrong?” That’s not for me to say, only that this is what has always happened and is happening again. The East is speaking and we are not listening! By the way, we will find out who was “right” and who was “wrong” …when the gold runs out, of this you can be assured.