What a week to write the blog for David, and we’re not halfway through. The global financial system is under the greatest strain in HISTORY, and sadly will only get worse. The world ceded unlimited financial power to America following World War II, trusting its “benevolence” would assure responsible handling of its mandate to print the “world’s reserve currency.”
Unfortunately, U.S. politicians took advantage of this trust, turning a blessing to a curse when it abandoned the gold standard in 1971. Subsequently, the Banking Cartel and Military-Industrial Complex took control of the political system, yielding the repeal of Glass-Steagall and a seemingly endless stream of meaningless, destructive wars.
The only MATHEMATICAL solution is repudiation of debt on a MASSIVE, GLOBAL scale. When this inevitably occurs, it will be the final nail in the ill-begotten dollar- based monetary system, created at Bretton Woods, New Hampshire in 1944 and soon to be ended, circa 2012.
Per the pie chart posted in Monday’s newsletter, just 1% of GLOBAL assets are currently held in Precious Metals. Three generations of Americans, and Europeans alike, have been brainwashed to believe FIAT CURRENCIES are money, so despite the ongoing depreciation of paper currencies, Westerners still save in dollars, Euros, pounds, and francs. To the overwhelming majority, gold and silver are still viewed as “barbaric relics,” the dogma of the failed monetarist movement.
After an eleven year PM bull market, we are FINALLY seeing hints of broad recognition that gold and silver are, in fact, the “Once and Future Kings” of the monetary world.
It didn’t take much convincing for Chinese and Indians, whom have thousands of years of experience with REAL MONEY, and cumulatively comprise more than half of ALL global gold consumption. But for the rest of the brainwashed fiat-money world, the transition has been much slower, and much more skeptical.
In America, where “King Dollar” and “King Treasury” still prevail (but not for long), just 5% of the world’s gold is consumed. Its media, politicians, and “leaders” (the bankers and Military) attack gold like the plague. For some, this irrational hatred emanates from KNOWLEDGE of the threat it poses; for others, a bastardized strain of misguided “patriotism”; and lastly, like the Jews of World War II Germany, gold provides a great scapegoat for America’s problems.
Despite these attacks, gold is still understood to be MONEY by enough wealthy individuals and sovereign nations to prevent substantial corrections, even amidst 24/7 attacks from the omnipresent Gold Cartel. At the height of the Cartel-induced attack during GLOBAL MELTDOWN I in late 2008, gold only declined 30% while the Dow plummeted 60% and the financial sector 90%. Gold actually regained ALL its losses by February 2009, long before the Dow even BOTTOMED a month later, which should tell you, LOUD and CLEAR, that the entire late 2008 decline was a Cartel-induced farce.
As for silver, it has ALL of gold’s history as MONEY, and meets ALL its defining parameters, but is far less understood by the public. It has been some time since a silver standard has been used, although such monetary systems have recurred throughout history, including the early days of the United States. In fact, America was born under a silver standard, repudiated under similar circumstances of Nixon’s abandoning the gold standard in 1971, per below:
Because of the huge debt taken on by the US Federal Government to finance the Revolutionary War, silver coins struck by the government left circulation, and in 1806 President Jeffersonsuspended the minting of silver coins.
The U.S. actually RETURNED to a silver standard after passage of the Bland-Allison Act in 1878, but yet again repealed it 15 years later due to political expediency, the tried and true Washington way of avoiding what’s right for the country. So trust me, America has as much a history with silver as money as anyone else, a history likely to repeat itself in the coming years.
Gold gets all the Precious Metals headlines, but silver has outperformed gold for the past eleven years, rising roughly 700% compared to 580% for gold, and closer to 1,150% at its high of $49.81/oz earlier this year.
Silver coin sales have exploded since the financial crisis commenced in 2008 (safe haven, anyone?), which can be viewed back to 1986 via the link below…
…and 2007 via the following table. As you can see, U.S. Mint Silver Eagle sales passed 2010’s RECORD level in early October, as we head into perhaps the worst period of sustained financial crisis in recorded history.
U.S. Mint Sales, American Silver Eagles, 2007-2011
|2011 (as of October 7)||
The below table depicts monthly sales in 2011. Based on my first-hand contact with the Miles Franklin brokers, I want to give readers a bit more commentary so they understand just how quickly a slow period can turn to one of ravenous, insatiable demand.
2011 Monthly Sales of American Silver Eagle Bullion Coins
|October (as of October 7)||
The 6.4 million ounces sold in January resulted from a very strong end of 2010 (silver rose from $17 to $30 in the fourth quarter), and likely would have extended such strength if not for the typical Cartel mob hit we have now seen three years running in early January.
In April, when PAPER silver prices reached $49.81/oz, PHYSICAL silver sales approached RECORD levels. I remember well, writing numerous RANTS about the shortages, extended delivery times, and premiums rivaling those seen at the artificial, Cartel-induced bottom in December 2008.
The only reason the published March-April sales figures are not higher is due to the aforementioned shortages, which forced many February and March sales into April, and many April sales into May and June. Following the SUNDAY NIGHT PAPER SILVER MASSACRE on May 1st, new order volume declined, creating the smoothed out figures shown above.
Business slowed throughout the summer, picking up in August when Precious Metals soared anew, with gold hitting $1,931/oz on August 22nd and silver roughly $45/oz.. However, unlike in May, when silver demand declined following the SUNDAY NIGHT PAPER SILVER MASSACRE, PHYSICAL demand EXPLODED in late September following the Cartel attack that took silver from $45 to $26 in three days. Those sales manifested themselves in the September and early October figures on the table above, and as you can see, the first week of October was on pace to exceed January as the strongest month of an already RECORD year.
Since early October, physical silver sales have again slowed down, a function of digestion of the latest Cartel hit, much as we saw following the January 2011 and May 2011 Cartel attacks. However, we have already had THREE major buying spurts this year, and look to be headed into a CAT 5 economic hurricane. Incidentally, sales again picked up today, amidst the accelerating European banking crisis.
I liken investor attitudes toward silver to the scene in Jurassic Park when Dr. Grant and the children are in the field watching dinosaurs run in a pack, when all of a sudden the herd SHARPLY changes direction and comes right at them. Silver is MONEY, not to mention “poor man’s gold” as few people can afford significant positions at $1,700/oz. Even fractional gold coins are more expensive than silver, carrying extremely high premiums to boot.
Silver is DESTINED to recapture its GLOBAL role as MONEY, ruling at the side of its king, gold. It will move with a higher degree of volatility, but nonetheless will protect the value of your net worth just as well.