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The End of Gold & Silver Supply

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FRIDAY WRAP UP 1/27/2012

No matter how hard TPTB attempt to “LOCKDOWN” the market, they cannot forestall reality.  Perhaps the Dow and Treasury markets can be “turned off” as barometers of economic activity for some time, as well as the PAPER gold and silver markets.  However, inexorably strong demand for PHYSICAL Precious Metals – particularly in the tiny silver market – remains their Achilles Heel, and ultimately will represent the straw that breaks the Cartel’s back.

No matter how many Futures contracts the PPT buys to support the Dow  - such as the seven “anti-attacks” we saw Friday, culminating in a blatantly obvious “HAIL MARY” attempt at day’s end – the U.S. economy will NEVER improve before it CRASHES, taking the dollar and ALL the world’s fiat currencies with it.

The Federal Reserve’s motive is NOT supporting the nation, but the BANKS that own it, so don’t for think for a second that ANYTHING they do is for any purpose other than SAVING the very companies that have DESTROYED America.  They, too, KNOW the truth stated above, which is why they dramatically reduced their GDP expectations Wednesday, while simultaneously announcing their intention to hold official interest rates at ZERO for the next three years.  It doesn’t take a rocket scientist to take apart the phony GDP report from Friday – let alone the abjectly miserable home sales number – but if you want the opinion of an actual “economic rocket scientist,” this is it.

John Williams from ShadowStats.com has the latest stats you need to be aware of.

- Net of Involuntary Inventory Build-Up, GDP Growth Was 0.8% Instead of 2.8%
- Durable Goods Orders and New Home Sales Still Show Stagnation
- Fed’s New PCE Inflation Target Is Inconsistent with Plans for Ongoing Easing

And, for once, Goldman Sachs has it right as well.  Remember what I wrote about “financial analysts” several weeks ago.  Trust me, they are not pulling the strings behind the curtain.  Typically, they simply respond to the “prevailing winds,” getting things wrong FAR MORE OFTEN than they get it right, as in this rare case.

Goldman On GDP: Warns Of Q1 Weakness; Autos Added 0.3% To GDP

The U.S. economy is dead in the water, soon to sink to the ocean’s floor, and now that a potentially historic Presidential campaign is underway, with another $1.2 TRILLION to “borrow and spend” before November, you can bank on unending inflationary policy expansion, both fiscal and monetary.

Debt Ceiling 101, Santelli Sounds Off

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WEEKEND THOUGHTS

Regarding gold, the current name of the game, and ultimate Cartel nightmare, is “going mainstream.”  Following the HISTORIC Iran/India oil for gold agreement last week, not to mention recent agreements amongst major economic powers (such as China and Japan) to forego dollars in international commerce transactions, the concept of the dollar losing its reserve currency status is gaining momentum.

Russell – Gold Threatening Dollar’s Reserve Currency Status

Rickards: Gold May Super Spike as We See the End of the Dollar

The 1970s “petrodollar standard” of Middle Eastern nations selling oil exclusively for dollars has reached its twilight, and the entire world knows it.  Saddam Hussein was killed, and Iraq destroyed, for eschewing the dollar in oil export transactions, and now the war drums of inevitable conflict with Iran – a far more dangerous, powerfully connected foe –are beating LOUDER.

Celente – War, Bank Runs, Riots & Gold Going Mainstream

The big, bad bully U.S. has blackmailed its European “allies” to join the PROPAGANDA war against Iran, but it is uncertain how long this façade will last.  Europe, already suffering from rising inflation, will be severely impacted by an Iranian embargo, and confidence in American hegemony is rapidly waning worldwide.

Iran Turns Embargo Tables: To Pass Law Halting All Crude Exports To Europe

Oh wait, I guess all is well – LOL.  If there is one thing I am sure of, it’s that something BIG and BAD will occur in Iran this year.

Iran Blinks, Delays Vote On European Crude Export Halt Even As US Escalates Military Developments Against Country

Back to the U.S., “bully” is certainly the operative word, as each day America moves precariously closer to become the same type of “banana republic” it has spent decades protecting the world against.

Press Freedom Index 2011/2012 – U.S. Drops 27 Places!

Even former insiders are espousing their disagreement with America’s fascist, unconstitutional foreign and domestic policies, including former Federal Reserve governor Kevin Warsh, who publicly spoke on Thursday of the catastrophic ramifications of rampant government financial market intervention.

Central bank policy is obscuring market values, Warsh tells Stanford audience

The FACT is, America’s economy is collapsing, and each day it becomes more of a “welfare society,” dependent entirely on government handouts funded by PRINTING MONEY…

16 Statistics Which Show That The Number Of Americans Dependent On The Government Is At An All-Time High

…fraught with corruption, conflict of interest, and financial profligacy…

36 Obama aides owe $833,000 in back taxes

…and some of the most moronic, bought-and-sold politicians in history, the polar opposite of the “good, smart people” I seek to ally with.

Tim Geithner Added To List Of Gold Bugs’ Best Friends

As for the rest of the world, it remains mired in a deep, expanding recession that WILL NOT turn around until it first CRASHES, a GUARANTEED event.  Not only is the Baltic Index plummeting to its late 2008 lows, but overbuilding has put roughly $500 BILLION of questionable shipping loans onto already overleveraged bank balance sheets worldwide.

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MONDAY MORNING COMMENTARY

The week has just started, and already a furious bombardment of “horrible headlines.”  The reason my job is so secure is because these news items will NEVER relent, not until the entire global financial system crashes, burns, and arises from the ashes under a new, global, unassailable gold standard under which, in today’s dollars, PHYSICAL gold prices likely reach $15,000-$20,000/ounce, at a gold/silver ratio no higher than 15:1.

Don’t believe me?  Then tell me how else a headline such as this can be interpreted.

Chinese ‘Gold Rush’ -Year of Dragon First Week Sees Record Sales– Up 49.7%

Despite a COLLAPSING real estate and construction bubble – as usual, created by relentless government MONEY PRINTING (in this case, to maintain the Yuan’s peg to the dollar), the Chinese public is manically buying gold like it’s going out of style.  And why shouldn’t they, as gold WILL go “no offer” sometime in the coming years, or, perhaps, months!  Not only that, the Chinese government is buying every ounce it can get its hands on, while publicly encouraging its citizens to do the same.  In other words, the PBOC may have a major problem with money printing, but are smart enough to use that money to buy PHYSICAL gold cheaply, before there is no more left to buy.

Shanghai New Home Prices Tumble 41% In Past Week

And don’t think for a SECOND that such economic problems are isolated.  To the contrary, they are GLOBAL in nature, spreading like a galloping cancer from the sources of the disease; Washington, Wall Street, and London.  The article below shows an astonishing chart of the Baltic Dry Index going back 25 years, revealing we have essentially plummeted to its lowest level of the era, with no hope of improvement in sight.  Gee, I wonder what the response of the world’s Central Banks will be – LOL.

I’ll give you a hint – two words, starting with “P” and “M!”

Guest Post: Baltic Dry Index Signals Renewed Market Decline

As for Iran, you can throw out the brief glimmer of hope from this weekend’s delayed oil sanction vote, as the U.S. is clearly turning up the heat in its effort to create a major conflict in time for the elections, so that Obama can appear “strong and decisive” in the same manner Bush did when he attacked the innocent Iraqis and declared “Mission Accomplished” after one month of “shock and awe” bombings.  The vision of that blatant draft dodger saluting troops on an aircraft carrier, in full military uniform, makes me SICK to this day.  Ominously, Obama’s goons trotted out Secretary of Defense Panetta on 60 Minutes to spew more propaganda about Iran…

Pentagon chief sees Iran bomb potential in year

…while, simultaneously, more warships were dispatched to Iranian waters…

Third Aircraft Carrier Group Coming To Iran

…prompting Iran, already mired in the early stages of hyperinflation, to step up its threats of an early 1970s style oil embargo to hostile Western nations.  You know, the type causing SOARING gasoline prices, lines around the block, and severe, global shortages.

Iran vows to stop “some” oil sales as inspectors visit

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THE END OF THE GOLD & SILVER SUPPLY

Consequently, the GLOBAL DAY OF RECKONING is barreling down the track at 1,000 mph, possibly arriving sometime this year, and STILL most people have not shifted investments to a more defensive stance.  It is unlikely that I’ll ever convince “the 99%” that gold and silver are the proper way to save money, so I’ll just keep pounding away at the 1% amenable to contrary thinking.  Perhaps my message will eventually reach 2%-3%, but I doubt much more, for the simple reason that PHYSICAL GOLD AND SILVER SUPPLY WILL RUN OUT before “the 99%” consider buying in.

As an astute follower of PHYSICAL gold and silver buying trends, amplified significantly since joining Miles Franklin in October, I last year came to the conclusion that the primary enemy of fence-straddlers will be DIMINISHING SUPPLY, particularly in the tiny silver market.  We already saw essentially “no offer” scenarios in December 2008 and September 2011 when the Cartel drove the PAPER price down too sharply, as well as in April 2011 when it soared to a record price of $49.81/ounce, in the latter two scenarios during relatively benign market conditions.

I believe the latest Cartel PAPER attack, “OPERATION PM ANNIHILATION II,” which commenced December 8th following the now notorious, since retracted “gold sale headline,” may have been the straw that broke the camel’s (on in this case, the Cartel’s) back.  Twice this Fall, and five times in the past 15 months, the Cartel has failed to push silver materially below the VERY KEY ROUND NUMBER of $30/ounce, first breached on “D-DAY,” November 9, 2010, just days after Eric Sprott’s last PSLV offering.  Given the abject FAILURE of “OPERATION PM ANNIHILATION, PARTS I and II” to break that rubicon this Fall, I believe $30/ounce may have solidified itself as impenetrable support, setting the stage for a third attempt at breaking $50/ounce, likely “once and for all,” later this year.

When that occurs, the financial world will likely look dramatically different than today, replete with uncontrolled financial conflagrations, plummeting economies, and hyperinflation fears.  Gold will be well above $2,000 – perhaps $2,500-$3,000 – and in all likelihood PHYSICAL premiums will have gone berserk due to DECLINING SUPPLIES.  Silver demand surged in late 2008 and late 2011 due to FEAR, and in spring 2011 due to GREED.  I believe BOTH emotions will be in play when silver again challenges $50/ounce, even amongst die hard mining stock investors that worry about the fate of their PAPER investments.

When I was heavily invested in mining stocks from 2002 to 2010, my underlying strategy was to wait for them to soar, sell them, and use the proceeds to purchase PHYSICAL gold and silver.  I believe many in our “shadow world” still think that way, but sense they are becoming more nervous due to massive, ongoing share underperformance, rising operational and political risks, and the soaring PHYSICAL premiums and rampant shortages observed when silver approached $50/ounce last spring.

I sold ALL my mining stocks last year for these reasons, but particularly my fear that SUPPLY will not be available in the very near future.  Moreover, I am increasingly cognizant of the antagonistic forces seeking to deprive me of my “life, liberty, and pursuit of happiness,” and each day such forces become stronger and more malignant.  The most important aspect of PM “investing” is to SURVIVE the oncoming financial tsunami intact, and if it entails hyperinflation, ONLY PHYSICAL gold and silver will save you.  Aside from the myriad risks of owning mining stocks during an economic collapse – including failure of your brokerage or theft of your account – you risk selling them into a hyper-inflating dollar market with ZERO physical metal to buy.  Such a scenario would be tragically ironic for long-time PM bulls – “goldbugs,” so to speak – and maddening to the point of mental breakdown.

Do not let this happen to you!  Think long and hard of what the “worst case scenario” could be, and under it, how to prepare.  Relative to potential buying power from the world’s SEVEN BILLION citizens, PHYSICAL gold and silver are in shorter supply than at any time in history, and when the next FEAR or GREED-based buying panic ensues, “precious” little of it will be available before it is SOLD OUT, even to long-time PM proponents unfortunate enough to be stuck in PAPER mining stocks.

PROTECT YOURSELF and do it NOW!

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