I have been waiting 9½ years for “The Big One” to occur, when PHYSICAL gold and silver demand swamps the PAPER manipulators of the LME, COMEX, ETFs (GLD and SLV), and unregulated OTC derivatives market.
This event is a mathematical CERTAINTY, as you can only push a beach ball so far underwater before it forces itself to the surface. However, it is extremely difficult to find people understanding the true nature of the gold and silver markets, as most refuse to admit they can be manipulated.
The stock market (President’s Working Capital Group, a/k/a PPT), the bond market (QE, EFSF), and the currency markets (OVERT manipulation by ALL Central Banks) are OFFICIALLY supported, and even the most die-hard government apologists admit it.
However, care of a decade-long campaign of information obfuscation, covert selling and leasing, and, of course, unrelenting PROPAGANDA (“gold is a barbarous relic”, etc.), the majority of the world’s populace neither understands nor believes in the nefarious forces that have held down gold and silver prices for the past decade, enabling the debt-based fiat currency system to expand wildly, yielding the financial catastrophe the world faces today.
Gold is a very small niche sector, with a global “market cap” of roughly $8 trillion, compared to $20 trillion for stocks, $30 trillion for bonds, and $50 trillion for the combined fiat currencies. Of course, the $8 trillion figure comprises ALL gold mined throughout history, a great deal of which has been lost, molded into jewelry, or is lying in sealed vaults, never to see the light of day. Thus, I’d estimate the size of the global gold market “float” is no more than half that amount, or $4 trillion or so. Heck, although the data is compromised by a combination of covert leases and unreported purchases, global central banks claim to be holding $2 trillion of gold in their vaults alone.
Compared to gold, the silver market is miniscule, as is the platinum market, as compared to silver.
To start, all the silver mined throughout HISTORY is worth no more than $1.5 trillion. However, unlike gold, silver is CONSUMED by industry, more so today than at any time EVER. In fact, the ONLY commodity with more industrial uses than silver is crude oil, which is why the worldwide “float” of investable silver is estimated to be less than 1 billion ounces, worth no more than $35 billion, or LESS THAN 1% of the size of the gold market.
Meanwhile, the platinum market is FAR SMALLER than the silver market, with all the platinum mined throughout HISTORY worth LESS THAN $300 billion, of which NEARLY ALL has been consumed by industry, principally by the automotive industry for its application in catalytic converters. Thus, I’d be shocked if the global float of investable platinum is more than $20 billion, and don’t forget that 70% of ALL platinum is mined in South Africa (and 20% in Russia), yielding an ongoing supply shortage risk.
As you can see, the amount of ACTUAL METAL available is miniscule. Even discounting fraudulent Central Bank gold accounting (such as double-counting reserves that have been swapped or leased out), gold supply and demand are EQUAL according to Gold Fields Mineral Services, or GFMS. For silver, GFMS estimates that 90% of ALL incremental silver supply (production plus scrap) is consumed by industry, leaving a measly 150-200 million ounces left for investment demand, which at $34/oz equates to just $5.2-$6.8 billion of investment.
Now I’m going to show you how I easy it is to debunk the “official silver statistics”, such as those published by GFMS, the so-called authority on the topic:
Per what I wrote yesterday, the U.S. mint alone is on pace for record- shattering silver eagle sales of roughly 45 million ounces. At this year’s average silver price of $36, that equates to $1.6 billion of investment demand alone. Thus, sales of U.S. silver eagles ALONE will account for 25%-30% of the total “estimated silver investment demand,” according to GFMS.
Moreover, silver bullion is extremely heterogeneous, in that it is sold in numerous forms aside from Eagles. Not only are vast amounts of Buffalo, Sunshine, MONEX, Pan American, Peace Dollar, Englehard, Johnson Matthey, and NWT rounds sold, but silver BARS are also popular American investments. Thus, it would conservative to assume an additional 10%-15% of silver investment demand is satiated by American purchases of alternative products, bringing the grand total of U.S. silver investment to 35%-45% of the GFMS estimate of global investment.
Next I’ll refer to yesterday’s commentary, based on data compiled by David on Friday. Just 5% of GLOBAL gold consumption occurs in America, as opposed to 52% in “Chindia” alone. I believe it would also be reasonable to assume Chindia consumes 10x more silver, and the rest of the world 19x more, cumulatively.
In other words, how can the U.S. comprise 35%-45% of GLOBAL silver investment demand, while at the same time be responsible for just 5% of GLOBAL consumption?
And the answer, of course – MANIPULATION. Yes, when Jeff Christian says the PAPER silver market is 100x larger than the PHYSICAL market, he is referring to the FRAUDULENT claims on silver that are being sold to investors via ETFs such as SLV, naked short futures by JP Morgan on the COMEX, and a litany of opaque “silver deriviatives”, which yes, JP Morgan holds the majority of.
OTC Sells Gold it does NOT have! (Video)(time stamp 4:30)
Of the few that “get it” regarding the true nature of gold and silver trading, many claim the Cartel has been successful in holding annual gains to moderate levels (since 1999, 17% for gold and 19% in silver), and thus are in “control” of the situation. However, analyses such as the one above illustrate how far from reality the fraudulent statistics utilized to maintain the fraud are expanding.
The beach ball can only be held underwater so long, before “The Big One” occurs. The PM explosion is inevitable, coming closer into view each day. Unfortunately, when it does occur, it will usher in the end of the failed U.S. dollar-based, global fiat currency expirement.