So many different signs that something huge is coming for the metals have lined up all at once and in an almost cosmic manner! Let me list what I’m seeing and there are more that I’ve either forgotten or don’t even know about but just over the last month these have come to light:
1. 12 US States are considering making gold and silver “legal tender” and recognized to pay taxes and debt.
2. The State of Texas is considering building and opening its own depository for gold which they plan to repatriate from the N.Y. Fed.
3. The Cyprus “bail in” where depositors lose balances.
4. This “bail in” has been discussed, planned and apparently already “penned” by various G-7 countries as the template. (doing it in Cyprus was apparently a mistake as this was planned to be “sprung” at a later date and most probably on a FAR more reaching scale).
5. Japan announced their own QE of over $2 trillion for the next 2 years.
6. Chinese imports of gold more than doubled last month to 97 tons.
7. Governments (Spain and Italy) stuffing their retirement plans with their own sovereign bonds because no one else will buy them.
8. Central banks (the Fed, BOJ, ECB and BOE) purchasing significant percentages of sovereign debt issuances because there are no other buyers.
9. Sprott Asset management uncovered the fact that the U.S. has exported over 4,500 tons of fold since 2001. Where did this come from? The supposed 8,300 tons we are told is “held?”
10. Let’s not forget that China is running around the world cutting deal after deal WITHOUT using dollars to settle trade…
…and here is the good part:
1. The US Mint has ceased shipments of Silver Eagles for the 3rd time already this year.
2. So far for the 1st quarter the US Mint has sold over 14 million Silver Eagles (over 15 million if you include April 1) which is MORE silver than was produced by ALL US mines combined. (anything left over for jewelry? No. production of electronics or industrial applications? No. Solar panels etc.? No.)
3. The COMEX just saw a drop of roughly 2 million ounces of gold held in inventory (nearly 20% of total). Why would this be?
4. Hedge funds are now more net short silver than any time previously. (Which when net short 5 times previously led to outsized gains 4 times following).
5. Silver for retail has become very scarce with at least 10% premiums on junk, Eagles and Maples AND delivery times (to your dealer BEFORE they can ship) of 3-5 weeks.
6. Several large dealers are not even taking orders for silver as they will not take orders for metal that they do not know whether they can procure or not.
7. Oh yes, I forgot this one, ABN Amro has told their clients that they will no longer “ship” customer metals to them… but don’t worry… it’s ALL there!
So there is a list of what we found out just over the last month. Add these to what we already knew. Foreign sovereigns purchased over 500 tons of gold in 2012 “officially.” I say “officially” because we don’t know how much was purchased “unofficially” but you can bet it was more than few ounces. Added together we know that India and China are purchasing well over 50% of global gold production and their imports are rising. The “math” provided to us by the WGC does not add up nor has it for 20 years or more. Where has (and is) the metal coming from? Oh, and I forgot the best of all… central banks don’t even trust each other as evidenced by Germany requesting their Gold back from NY. …and were told it would take over 7 years to ship (mine)! Not to mention the various other repatriations started by none other than Hugo Chavez.
We also know (knew) that the U.S., Europe, Japan, Britain (and anyone who is anybody) have existing debt and future promises that cannot ever be repaid. The banking systems are alive only through government largesse, central bank printings and “mark to fantasy” of assets (even AFTER off loading trillions of dollars of non performing assets to their central bank’s portfolio holdings). We know that the US has no budget and has not had one for 4 years… (because that would spell out in black and white that…we are broke). Oh… and did I mention that the financial system is sitting on a $1.4 QUADRILLION (with a capital Q!) derivatives time-bomb supported by a $60 trillion economy that is “sputtering” on 5 out of 8 cylinders?
In a nutshell, we have never had a setup such as this. Where it is so obvious from a macro, micro, common sense and logic or technical and fundamental standpoint that the ONLY thing to be is bullish on metals. We knew much of this before, it is only now that physical supplies are running down at the same time the leverage lunatics have decided to bet on falling prices. Will these shorts add just a little “fuel” to the upside fire? Like I said at the beginning of this piece, “What more do you need to know?”