It’s almost as if we live in an alternate reality here in the US. Interest in precious metals, and mining shares, is simply not there. We are so brain washed by the MSM and Wall Street that when it comes to precious metals, then people are sitting on the sidelines, confused and disillusioned. Meanwhile, there is a buying spree from India and China that speaks of another reality. Check out the following from Jeff Clark (from 5 Min. Forecast)
September 24, 2013
And now a stunning visual representation of how gold is flowing from West to East, courtesy of Jeff Clark at Casey Research.
In the West, holdings of gold ETFs have dropped by 26%. But China has scooped up double the amount of gold Westerners have dumped…
I am absolutely 100% certain that Jeff is correct – The gold bull market is not over! How can it be when the Fed is locked into supporting the economy and the markets to the extent that they are afraid to even token tapering? There has never been a time in history when money could be created on an unlimited basis to buy bonds and support the economy without a tragic inflationary ending. It must follow. Why do you think the Indians and Chinese are buying as much as they can source? If the dollar were a safe store of value, their need for gold and silver would be minimal. They could all buy US Treasuries or stocks and be done with it. They not only distrust their own currencies, they have no faith in ours either.
The handwriting is on the wall and the price of gold and silver is the most attractive that it’s been in years. And yet, business is way, way off.
In fact, our industry sources tell us that many small coin shops and even larger national firms are shutting down. I can only imagine the hemorrhaging that is taking place within the industry “giants” – those firms with huge overhead and minimal business. I have been told that a couple of these firms are losing a million a month. If the prices stay locked down for another few months, there will be more shutdowns.
That is not an issue at Miles Franklin. Fortunately, we have always kept our overhead very low and manageable, which allows us to get through times when business slows down. We are not in trouble – but I would be extra careful if I were you with whom you place your orders with now. You want to be sure that your orders can be filled – and that the firm you order from is not using your money to pay for their overhead instead of ordering your metals.
This is now a “shake-out” time in our industry. Many of the small firms won’t survive. A lot of the big firms are way, way to over-extended. Many of them increased their overhead to match the robust business in 2010 and 2011 and now they are in big trouble. Any firm that is advertising nationally is losing a lot of money. The longer gold is held in check, the more firms will throw in the towel.
In our 23 years in business, we have never taken out a bank loan or sat on customer funds to keep afloat. And believe me, there were some very difficult times in this industry in the past.
It really surprises me that the paper market (headed up by the Fed and their bullion bank friends) can sit on the price as long as they have. Prices are simply too low. They are close to or below break-even for many of the miners.
I tell you once again, there is no risk in buying gold and silver at or near production cost, plus there is the “Chinese Put” that establishes a bottom on the price. As long as they are willing to buy all the physicals that are available at these prices, then the bottom is in – or anything lower than today’s prices will be very short-lived. That is the reality – not some fool talking about $1000 gold and the end of the bull market. If you read this newsletter or others like it in our industry and fall for this nonsense, shame on you. You should know better.
Larry Edelson predicted the turnaround would come the last week in September or the first week in October. We shall see. But it can’t be far off, not with the Fed in full-print mode and the Chinese in full-buy mode and the next six months being the strongest of the year. Something has to give. Reality and fundamentals for precious metals is STRONG. Some of us in our industry know this. MSM doesn’t. We will not be wrong.
Richard Russell is a bit more cautious now, but he is still bullish. That’s because he is not worried about short-term day-to-day moves. He understands gold’s utility and the Fed’s folly. He says:
Richard’s Latest Remarks
September 24, 2013
Let’s review where we are with gold and, since chances are they’ll all end up following it one way or another, silver and the mining shares. In the very long-term, gold will almost certainly move sharply higher due to the non-stop debasement of the US dollar and most other fiat currencies. But that might not happen until next year, or perhaps five years from now, or maybe even many years down the road. The “dollar is going to collapse – soon!” crowd has been selling that story for decades, and it hasn’t happened yet. So I’ll stay with “in the very long-term,” and that isn’t of much help when making investment – vs. purely defensive, financial survival type—decisions.
In the long-term, as evaluated using technical analysis, gold’s trend should be considered “probably still bullish,” although there is some question (thus, the “probably”). Silver is in much the same position, looking bullish or bearish on the long-term charts, depending on one’s perspective. The mining shares look godawful on the long-term charts, as shown last week. Overall then, one should conclude that the longer-term trend for the precious metals as an investment, is just plain unclear. In other words, with an investment time-frame of a few years, i.e. someone wants to buy today to sell for an expected profit a few years down the road, the precious metals may or may not work out.
As you can see in the following article from JSMineset, countries want their gold back. First it was Venezuela, then Germany and now Finland. The central banks don’t trust each other and they realize that gold is their most valuable asset. It has been that way forever… That’s why all over Europe, gold was sent abroad (England or the US) for safe keeping during WW2. They didn’t send over their bank notes or bonds, they sent over their gold. And now they want it back! This is the reality, not the paper-driven, COMEX fraud that allows massive shorting and manipulation, the sole purpose of which is to hold down the price.
Jim Sinclair’s Commentary
Posted September 23rd, 2013 at 7:20 PM (CST) by Jim Sinclair
More sovereign sleepers wake up.
Finland Latest to Join Gold Repatriation Movement
Sep 23 2013
Mine, said the paper, mine are the words that smother the stone with imagined birds, reams of them, flown from the mind of the shaper. —from ‘Song of the Powers’ by David Mason
Finland recently became the latest nation to initiate action to pull its physical gold reserves back within its national borders. As WealthCycles has reported over the past year or so, the gold repatriation movement is steadily growing, as country after country moves to retrieve their gold. The announcement by the Finnish repatriation movement states the rationale most succinctly:
Here are a few comments from a Zero Hedge article on gold:
Submitted by Tyler Durden on 09/23/2013
What is known is that China has and continues to important unprecedented amounts of gold. If indeed China is so intent on sequestering all the world’s physical gold, surely it is only a matter of time before it begins to purchase the very miners of production.
Here is an interesting article from Ed Steer:
September 25, 2013
Yesterday was just another day when the Commercial traders had their way with prices in all four precious metals once again. As Jim Rickards said in one of the interviews above, the Fed is manipulating every market in the world, including gold. They aren’t doing it directly, of course, but rather through their agents dealing on the Globex trading system, which includes the Comex in New York.
Interviewed by Tekoa da Silva at Bull Market Thinking, fund adviser and geopolitical strategist James G. Rickards charges that the Federal Reserve is “manipulating every market in the world,” including gold.