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Anytime you see PAPER PM prices plummeting – or mildly declining – ask yourself this – “WHO IS SELLING PHYSICAL GOLD?”

Years of brainwashing have taught us gold is a “speculative, volatile investment,” subject to seemingly constant sentiment changes – particularly when (manipulated) “bad news” emerges, such as a “better than expected” employment report – which, by the way, rarely occurs anymore.  Conversely, the TRUTH of the matter is thus; NO ONE IS SELLING PHYSICAL GOLD, or PHYSICAL SILVER.

Even in the 1990s and early 2000s, when Central banks were MASSIVE PHYSICAL gold sellers – overtly and covertly – they were essentially the market’s only sellers.  Sure, corrupt banks like JP Morgan hoodwinked corrupt miners like Barrick Gold to “hedge” production by flooding the market with PAPER gold; but again, that was not REAL gold, but fake, essentially naked-shorted PAPER gold (as future production is always uncertain).

As I reported this weekend, China has overtly bought more than 500 tonnes of PHYSICAL GOLD this year alone – or 6% of the America’s supposed 8,133 tonnes of gold reserves (“supposed,” as it NO LONGER EXISTS) – and China is one many Central banks buying PHYSICAL PMs, “hand over fist.”

Name The New Reserve Currency: China Imports More Gold In 2012 Than All ECB Holdings

Moreover – for the hundredth time – essentially ZERO retail selling occurs, which I know first-hand from my role as Marketing Director of one of the nation’s largest bullion dealers.  Over the entire 12-year PM bull market, I’d estimate 99% of Miles Franklin’s revenues have been generated from Product Sales, compared to just 1% from buying coins back from clients.  And – in NEARLY ALL cases – such “buybacks” relate to near-term financial requirements necessitating the sale of liquid assets.

On a day like June 3rd – when gold rose $58/oz following a horrific NFP employment report – I’d estimate 99% of the day’s total sell volume to be PAPER-based.  To that end, on days like last Friday – when gold rose $36/oz after an EQUALLY catastrophic NFP report – I scratch my head trying to figure where the PHYSICAL PMs, if any, came available to satiate PHYSICAL DEMAND.  At Miles Franklin – for instance, we sold roughly $5 million of bullion to customers last week, and bought back perhaps $50,000.

The fact remains that in today’s world, the only material source of supply is new production, which goes directly from the smelters into armies of investors’ pockets.   China is the world’s largest gold producer, but its government purchases EVERY ounce produced – keeping them off the market FOREVER – and then some.  U.S. production is in decline – forcing America to depend increasingly on imports – and scrap sales have ground to a halt, as essentially all that “Cash for Gold” was ever going to get has been sold.

Global production still hasn’t surpassed the 2001-02 peak – despite a decade-long bull market, and soaring mining capital expenditures – and I ASSURE you the road to higher production will only grow rockier in the coming years.  As production costs soar – and nationalization/taxation/environmental/operational/financing risks escalate – the world will be lucky to see higher production, as if such piddling increases can make even a dent in the expanding EXPLOSION of PHYSICAL PM demand.

The moral of this story is, NO ONE IS SELLING PHYSICAL GOLD, and NO ONE WILL until a new gold standard is inevitably  – and possibly, imminently – created, at MUCH, MUCH, higher prices.


Call Miles Franklin at 800-822-8080, and talk to one of our brokers.  Through industry-leading customer service and competitive pricing, we aim to EARN your business.