J.P. Morgan Private Bank published an interesting investment-strategy note in July. It was titled “Is the dollar’s “exorbitant privilege” coming to an end?” It explored the US dollar’s longstanding status as the world’s dominant reserve currency, which is waning. The conclusion reached was “we believe the dollar could lose its status as the world’s dominant currency (which could see it depreciate over the medium term) due to structural reasons as well as cyclical impediments.” – Adam Hamilton
Silver was closed at $17.08 spot, up 65.5 cents from Tuesday. Net volume was the highest I’ve ever seen in this precious metal at just over 147,500 contracts. – Ed Steer
David’s Commentary (In Blue):
All these gains in gold and silver and the retail buyer still haven’t showed up at the party. Gold and silver sales from the U.S. Mint are at a near standstill. Our wholesalers tell us they’ve never experienced business this slow. You wouldn’t know it here at Miles Franklin. Our business has been robust. Go figure. Hats off to our loyal clients.
The retail business (especially in the U.S.) is the tail of the elephant. For now, the demand is for paper gold and silver in the futures market, and physical bars, crafted in Switzerland that are heading to the far east- to China, India, and to Russia. These are the players that are moving the price of gold.
When will the clueless Americans figure things out? Americans have too much faith in the dollar. They simply cannot conceive that our currency is facing a real threat. They will be late to the party. When the price of gold and silver rises high enough to be “noticed” – especially if the stock market is in the midst of a big correction (or collapse), the U.S. Mint will be selling all the coins that they can mint. But I must tell you, the sooner you recognize that this is a real, legitimate bull market, not just another bump up, the less you will pay for your gold and silver.
It looks like silver is finally catching a tailwind and making its long-awaited move against gold. The silver/gold ratio is heading down and is now below 88 to 1. Silver follows gold – and gold is leading the way. $17 silver is a start. $22 will be better and $30 will really open investor’s eyes. I see $50 on my radar screen and much more after that. Patience, patience my friends. That’s what it takes.
Lately, Trump has been gold’s friend. His ill-advised tariffs and currency manipulating bombs hurled at China are helping out gold – a lot. He is screwing things up just enough to shine the spotlight on gold. And should he lose in 2020 whomever the Democrats place in the White House will be even better for gold. As I see it, going forward, we can’t lose no matter who occupies the White House. Frankly, the Democrats would have been better for gold since they are less Wall Street friendly, but Trump is starting to pump up the price with his actions too.
A couple of very unusual events happened today (Tuesday). Gold exploded before the market opened in the U.S. Usually the boyz take gold DOWN in the aftermarket, but today they were overwhelmed as gold opened way up. There are some new buyers in Asia, and they most likely speak Mandarin. Second, and this is a rarity, gold closed the day at $1,500 and silver slightly above $17. This is never allowed to happen. The boyz ALWAYS “paint the tape.” I would have bet good money that they would have taken gold down BELOW the important “even number” at $1,500 and the same goes for silver and the $17 handle. Could the BULLS finally be in charge? One day is a small sample size, but so far I like what I see. At 4:30 in the morning on Wednesday, gold and silver are still holding above those key levels. That shows their strength.
HOW DO YOU CONVINCE A WEALTHY MAINSTREAM INVESTOR THAT HE NEEDS GOLD?
I want to share a few emails I exchanged with a friend from my high school days. He moved to the west coast shortly after high school and I lost touch with him. Over the years, he became very wealthy. He is a very savvy businessman and investor. He is worth a lot of money. He is also very mainstream with his money and does not see any reason to own gold or silver. He has rental properties and a lot of “cash”.
Through a third-party friend, I hooked up with him last November and we have been exchanging emails on a daily basis ever since. We share similar politics, and interest in sports. I have been gradually trying to open his eyes on gold’s value in a portfolio, predictably with no success.
A couple of days ago I sent him an article from Zero Hedge titled, “The End Of The World As We Know It” – China Going Nuclear Means There’s No Turning Back Now.
It implied that the dollar is under attack. He replied, “Dave I am sitting on a lot of cash.” His meaning was – I don’t need gold, I have “cash.”
Here was my reply.
You are a lucky man. But “cash” for you means dollars. If things play out, as it appears likely they will, the dollar will lose one third to one half of its value.
This is not an opinion. Events are taking place that make it inevitable. Trump is doing his best to speed the process up. Trade wars, currency wars, plus accommodative central banks slashing interest rates to zero, or negative, have consequences.
The difference between you and I is – your “cash” is currency. My “cash” is gold and silver.
I am not anticipating the end of the world. But I am anticipating the end of the dollar, as we know it. People with a lot of cash won’t go broke but they will lose a lot of buying power. If you are o.k. with letting that happen then fine.
I had a few neighbors in my building in Aventura who were from Venezuela. All the people with wealth fled the country as crime escalated and their “money” lost much of its value. Those who had gold or silver were spared. When the dollar loses it’s “reserve currency” status, and it is now moving in that direction, as country after country are coming up with ways to trade “outside the dollar,” this becomes inevitable. There is not one single paper currency that has survived. The life span of any currency rarely reaches 100-years. You can build a case that the dollar is at the end of its reign now too. Since 1913, when we foolishly gave a bunch of bankers the control of creating our money (the birth of the Federal Reserve), the dollar has lost over 95% of its buying power. (Even when I point that out to people, they don’t let the reality sink in.)
There is nothing magical about gold. Gold is simply MONEY. It has a four thousand year track record. When you see the major central banks starting to BUY lots of gold – instead of selling lots of gold, like now, then it is obvious that they see the handwriting on the wall. Say what you will about Russia and China; they are very savvy businessmen. Russia has dumped almost all of its dollar reserves and buys billions a month worth of gold with the proceeds. China is the world’s largest gold producer (miner) and they KEEP ALL THE GOLD THEY MINE. Plus, they buy billions a month more – with dollars.
Thanks to Trumps’ tariffs, we are just a small step away from a (currency) war with China. They can pull the plug any time they wish. The first phase is to completely stop buying our debt (bonds). The bonds must be sold and when the biggest buyer steps aside, who is left to sell them to? How high do we raise our interest rates to sell them? And what happens to our economy and stock market when interest rates rise? What do you think would happen if interest rates rose from 2% to just 6% like they were not that many years ago? What would happen to our yearly deficits? The rise in interest rates would bankrupt our government since a trillion dollars a year or MORE would be needed just to pay the interest on our debt, which is now 20-some trillion (and 100 times that off the books). The Fed would have to step in as the buyer of last resort, and that is very inflationary. As bad as that is, what would happen if the Chinese started DUMPING their dollar denominated bonds for other currencies, precious metals, land and other physical assets? Do you believe they won’t? If Trump is elected in 2020 all bets are off. He has picked the wrong people to threaten and bully. Those tactics may have worked for him in his business life but they will not work against Russia and China (and even Iran).
I don’t know how this will end, but it won’t be pretty and all I know is that my “cash” position (gold and silver, not dollars) will make it through whatever happens, not only intact, but worth far more in purchasing power than it is today.
I figure there is a very good chance that in a few years, or less, you will tell me – “you were right and I probably should have listened to you.” The rules that applied in your life that allowed you to become a wealthy and successful man have changed, or are rapidly changing. The name of the game now is to preserve your wealth. And I can’t see how it can be done in dollars. It will have to be in things. Physical things. Gold’s advantage is that it is portable and can be sold 24/7 anywhere in the world at a set price. Try that with a business or a building.
Nuff for now. You are a very smart guy and will do what is best for you. I am just someone you know with different views. You better hope that my views are incorrect. I hope my views are incorrect. Knowledge is a powerful thing. One of us will be wrong. If I am wrong it won’t cost me anything. Gold and silver are still too cheap (selling at or near production cost) so my “cash” will hold its buying power even if I am wrong. If I am right, well, no need to go into that scenario.
After thinking about what I had emailed to him, I decided there was more that needed to be said. I sent out a second email.
We started exchanging emails last November. At that time gold was around $1,200. Right now, gold is $1,500 and rising rapidly. It’s up over 7% in the last 30 days and up over 23% in the last one year. Up against what? Against the dollar. Gold is the standard. Gold doesn’t go up or go down. All that changes is how many dollars it takes to buy an ounce. What you are witnessing is not a rise in gold; you are witnessing a fall in the dollar. It is happening right before your eyes, yet you haven’t figured out what is going on. In the last few months gold has hit new ALL TIME HIGHS in 73 currencies. Let that sink in.
Look at this chart… what do you think wealthy Chinese are doing with their “cash”?
I have included a recent release from a Swiss economist that I follow closely. His name is Egon von Greyerz. He is one smart dude and he writes very well.
Egon von Greyerz
NEXT 5 YEARS NOT ABOUT WINNING BUT SURVIVING
The messages from the ECB and the Fed couldn’t be clearer. They are seeing major problems in the financial system and in the world economy and they will do whatever it takes to save the system. But they will fail.
The autumn of 2019 will see a major shift in sentiment as markets turn from a secular bull to a secular bear. We are likely to see major crashes in many global stock markets. Virtually no one is prepared for this so there will be both panic and despair.
Check out the following link. READ FULL ARTICLE HERE
In case you are unaware, gold is rising in all of the major currencies, not just the dollar. In fact gold is now at all-time highs in 73 currencies.
Gold’s Price Rallies to Record Highs in 73 Currencies
By Paul Ebeling
Gold marked 6-year highs Friday as investors barged into the safe-haven metal on an escalating US-China trade dispute, and the prospects of a return to ultra-loose monetary policy by the Fed.
Gold for delivery in December, the most active futures contract trading in New York touched a high of $1,461.90 oz before settling $25.10, or 1.8%, higher at $1,457.50 on the COMEX.
According to FactSet data that is the highest finish for the most-active contract since 9 May 2013.
Sharps Pixley, the Top bullion broker in London, points out that the gold price in GBPs hit an all time high Friday of £1,187.28, beating the previous record set on 11 September 2011.
GBP joins 72 other currencies, including the Canadian Dollar, The Australian Dollar and perhaps most significantly, the Indian Rupee on the Top gold price.
There has been a stealth Bull Run in gold and by simply watching the USD gold price, some investors are missing out.
Like I told him, education is a powerful thing. Will he change his thinking and diversify somewhat into gold? I have no idea, but I believe I gave him reasons to consider it.
Never being one to leave well enough alone, I sent him a third email.
This is not about an investment. This is about capital preservation in a changing world.
The trade – get out of the dollar and look at gold … People are totally on the wrong side of this trade right now. People don’t own gold and silver. They’re too long the dollar. They have no idea just how much inflation the Federal Reserve is going to be unleashing. And it’s not going to be good for stock prices. Inflation is going to be in the supermarket, not in the stock market.
Up next, a few interesting articles.
The in-you-face shorting of the precious metal equities in New York trading on Wednesday certainly shows their level of desperation. On one of the biggest daily gains in gold — and certainly in silver for a very long time, some of my silver and gold equities actually closed down on the day. I didn’t think that was possible.
Both gold and silver, but especially silver, would have blow sky high in price if they had been allowed to trade freely yesterday. It was only the interventions of JPMorgan et al. at the afternoon gold fix — and later, that they were able to keep their respective prices in check.
But the most egregious act yesterday was the shorting of the precious metal equities, which would have been up an easy ten percent or more by the time trading ended at 4:00 p.m. in New York. I watched my huge portfolio gains on Wednesday morning quickly melt away as the session moved along. The only thing that allowed me to end the day with decent gains was the fact that only two of my stock portfolio are in Nick’s Silver Sentiment/Silver 7 Index. The rest are smaller juniors. But even their double-digit gains were gone by day’s end.
I have a long memory for days such as this…where gold and silver were screaming higher — and their associated equities were getting sold lower — and that is going back ten or fifteen years ago when an event like that was the forerunner of a big engineered price smash to the downside by ‘da boyz’.
Whether or not that’s what in the cards this time around, remains to be seen, especially considering the current economic, political and monetary environment that we find ourselves surrounded by today.
My head tells me that they won’t be able to pull it off but, as Ted Butler so carefully points out, never underestimate the treachery of JPMorgan et al. So we wait some more.
As bad as tomorrow’s COT Report will be in gold, it’s certainly measurably worse after yesterday’s price action. And if there was any improvement in silver during the last reporting week, that has all vanished, plus more, after Wednesday’s big run-up in price.
JPMorgan et al. are still out there going short against all comers — and Ted says that the margin call losses of the Big 7 [The Big 8 sans JPMorgan] are close to, or at record high amounts. So the guessing game is still the same…will they be able to engineer a price decline big enough to cover their losses, or will one or more of them be forced to cover as their losses become too great to bear?
That’s what it all boils down to now.
With gold rallying to all-time highs in 73 currencies (see article below), the dollar gold price began to take off last night. The buying was relentless as gold leaped to $1464 in early trading on the Comex. As we have witnessed for more than two months, one selling effort after another by the cabal forces has been rebuffed. As also commented on, the cabal is gradually running out of enough physical supply to meet growing demand. This process has taken many years but we are there.
This is not the case yet with beleaguered silver. As gold was taking off last night, silver was headed lower towards $16, beyond bizarre. All of a sudden massive buying entered the scene and silver spiked higher, but was unable to even take out $16.55. No matter how well goes does these days, JPM won’t let silver go anywhere to the upside. One wonders how much longer JPM can get away with this blatant suppression, one which has the gold/silver ratio soaring again.
Seems the perfect storm has arrived to take on cabal in the gold market
That storm picked up intensity during the day, with gold shooting up close to $1469. And just like that there was a break in the clouds, wind and rain … in what appeared like another cabal attack. Gold was pushed quickly back to $1460, while lifeless silver dropped back to $16.40, as JPM continued to drool.
Here we go again. That was only their opening salvo. Next stop $1454 and $16.15. Can it get any more obvious there is a heinous force out there deliberately suppressing the gold/silver prices? As always, it won’t be even discussed out there by most of the gold/silver world.
None of the major factors of the perfect storm mentioned above barely changed at all. Perhaps that is why gold recovered from its bombing, steadying up nicely following its hideous assault. While gold stormed back YET AGAIN, silver stumbled, as is so often the case, although it did pick up a bunch of bids going into the close.
A Gold Cartel, which continues to lose control…
Inflation at All Costs
Inflate or die. Or rather ‘and’…
PARIS has been hit by a real scorcher, writes Bill Bonner in his Diary of a Rogue Economist.
The temperature kept rising…cresting at 108 degrees, a new record.
READ FULL ARTICLE HERE
Paul Craig Roberts
America’s Collapse: An Economy Based On Plunder
Capitalists have claimed responsibility for America’s past economic success. Let’s begin by setting the record straight. American success had little to do with capitalism. This is not to say that the US would have had more success with something like Soviet central planning.