Eric Sprott: Is the West Dishoarding Its Sovereign Treasure?

Last week Eric Sprott was interviewed by Chris Martenson, the interview and text can be seen in the above link to Zerohedge.  Mr. Sprott asks the question, “Where is the Gold coming from and where is it going to?”  When looking at the supply and demand equation he is absolutely correct.  The Gold HAS to be coming from somewhere.  All you need to do is follow his logic.  China and India are buying Gold at a pace somewhere near 2,000 tons per year while mines are producing just shy of 2,500 tons per year.  Refiners who purportedly used to reclaim and re-refine something like 1,500 tons per year are all of a sudden seeing a drop of 50% of their supply.  This only makes sense as “cash for gold” has been sweeping the streets clean since gold crossed the “astronomical” level of $1,000 per ounce.  How many more heirlooms and class rings can be left to melt down?

Add to the above that central banks are now buyers of gold as opposed to sellers and the supply/demand equation has been tipped upside down.  The gold is coming from somewhere for sure (as it has been for the last 20 years) but where?  The answer is obvious and all you have to do is look for where it is “supposed” to be.  Namely ETF and central bank holdings.  The flip from sellers to buyers by some 900 tons (by central banks) has occurred in a market that even the World Gold Council can only find 4,000 tons of supply.  So… China and India are buying 2,000 tons, central banks are buying 500 tons and the mines produce… 2,500 tons per year.  WHAT is left?  Where is it coming from?  Does it matter?  Well yes it does if it’s coming from your “stash” represented by a paper receipt but that’s a story for another day.

What I wanted to write about today had to be set up by the above because of the pure unadulterated logic that the numbers just don’t work and some sort of “hanky panky” is and has been taking place for so many years.  I wanted to point out that many respected, well known and some even “mainstream” people have come around to the view that GATA has held since 1999.  The Gold market is manipulated!  I know, this is not breaking news.  Slowly but surely the manipulation has become TOO obvious to ignore and people who didn’t want to be thought of as “conspiratorialist” have come out publicly to call a spade a spade.

Go back 5 years in time and virtually NO ONE called the gold market “manipulated.”  GATA did and several people who were published there along with a few other “lunatics” but metals manipulation was like the “crazy aunt in the basement;” no one wanted to talk about it.  Since then, John Embry broke the ice and wrote in pretty strong terms that gold was being suppressed.  Then Jim Sinclair publicly talked “manipulation,” (I know that he knew this far earlier but in light of his “crazy” $1,650 gold call probably figured that talk of “manipulation” would make it seem like he was from another planet).  Eric Sprott (who knew the deal but remained low key and didn’t “get up on the soap box” until maybe 3 or 4 years ago) are now writing wonderful and completely logical (and supported by facts) pieces proving the manipulation.  Gerald Celente finally came around after getting burned by John Corzine and MF Global.  Even Bill Gross, the manager of the largest pool of “debt” money in the world has spoken publicly about the value of gold in a portfolio.  He knows the deal but would probably be “heart attacked” if he ever mentioned “official gold” and manipulation in the same sentence.  CNBC has even mentioned “manipulation” and “QE to infinity” (do you think they might read  www.jsmineset.com from time to time?).  Zerohedge came around about a year and a half ago which I never really understood because they are so smart and really don’t care about political correctness.  Maybe they needed more proof and market action was all they needed?  Hell, even a couple of Fed governors have fessed up and admitted that EVERYTHING is manipulated (“everything” by the way includes gold and silver).  I do want to point out the most obvious, “Why would gold and silver be the ONLY markets not manipulated?”  They have THE most obvious “motive” TO be manipulated so mere common sense gives you the answer.

My point is this and was bought up by Mr. Sprott, it is now OBVIOUS that the metals are and have been manipulated (lower) in price that common sense tells you they are THE most manipulated markets on the planet!  So why do I write this?  It is again time to put on your 3rd grade thinking cap. If gold and silver are manipulated and “they” don’t want you to own them (well duh!), you not only SHOULD own them, for your survival alone you MUST own them!  If you believe the government will “protect and provide” for you, then, well, God bless you.  If you understand that you must provide for yourself and your family then you understand that you must also “think” for yourself.

The latest correction in silver and gold created the most “fear” amongst investors that I have seen since the year 2000.  Though a smaller correction than in 2008, the of level of “fear” was unprecedented.  The “manipulation” was THE most blatant and lasted longer time-wise than any that I can recall.  Hedge funds are now more short the metals than ever while the commercials are less short than ever.  Sentiment is the most horrific, true, and real supply and demand are the most lopsided, central bank monetization higher and fundamentals never better than they are now.  If we have not already seen the “bottom” (which I think we did last week), it is very very close and the upside will occur rapidly leaving behind forever those that panicked out.

Please understand that you must think for yourself and protect your families on your own.  You must follow your “real gut” that tells you something is wrong, REALLY wrong!  A rubber band can only be stretched so far before it breaks, the current rubber band will break when a delivery somewhere does not occur.  Once this happens the door will shut, positions frozen in time and no chance to “fix” your position will be allowed.  “Supply and demand” will be redefined as in zero supply and unlimited demand.  It will be far better to have something that everyone wants than to want something that no one is willing to part with!