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Gold Advances On Week, Silver Retreats As Financial Crisis II Looms

June 3, 2011 by admin Leave a Comment

Gold, platinum and palladium all advanced on the week while silver gave up most of the previous week’s gains.

As measured by the London PM Fix Price, gold gained $7 on the week to $1,540.00 while silver pulled back by $2.50 to $35.19. Platinum moved up by $21 to $1,807.00 and palladium gained $13 to $770.00. After the London close, prices of precious metals moved up strongly in New York trading, especially silver, which last traded at $36.39, up $1.20 from the earlier London closing price.

Financial markets worldwide pulled back sharply as the stock traders finally began to acknowledge the fragility of the world’s paper back financial system. Governments that have borrowed and spent trillions of dollars to stimulate economic growth and support a fragile banking system now find themselves reaching the limits of their borrowing capacity.

It is becoming obvious that the financial crisis of 2008 was just a warm up act to the real financial nightmare that is looming ahead. Despite trillions of dollars in stimulus spending, coordinated with a money printing campaign by world central banks, the economies of the U.S. and Europe have not recovered. Unemployment continues to grow, real estate values continue to plunge, debt levels have reached unsustainable levels and real incomes for the majority of workers continue to decline.

There are numerous events that could trigger the second financial crisis There is no way of knowing which specific event will trigger the next crisis, nor does it matter. What does matter is the manner in which Financial Crisis II will be dealt with by world governments and central banks. Unable to raise taxes or take on trillions more in borrowing, monetary authorities will exercise the last resort option of money printing on a massive scale to avoid a total collapse of the world monetary system. The gold market is already reflecting this scenario as one of the few safe havens against paper currencies that have little intrinsic value. When Financial Crisis II gets under way, uninformed talk of a “gold bubble” will quickly disappear as investors will buy gold at any price to preserve their wealth.

Precious Metals Prices
	PM Fix	Since Last Recap
Gold	$1,540.00	+7.00 (+0.46%)
Silver	$35.19	-2.50(-6.63%)
Platinum	$1,807.00	+21.00 (+1.18%)
Palladium	$770.00	+13.00 (+1.72%)

Will platinum, which has lagged the price rallies in other precious metals, start to play catch up? According to the Wall Street Journal, due to rising production costs for platinum, a price of $2,100 per ounce is necessary to encourage increased mine production.

The historical price ratio of platinum to palladium also suggests that platinum prices could rally significantly. The Wall Street Journal notes that when palladium reached $860 per ounce in February, the ratio was 2.15 compared to 2.12 today. The historical average of the platinum/palladium ratio is 3.0 to 4.0, suggesting that platinum is undervalued.

PLATINUM - COURTESY STOCKCHARTS.COM

Filed Under: Featured, Gold, palladium, Platinum, Silver, Statistics Tagged With: Financial Crisis II, Gold, palladium, Platinum, Platinum/Palladium ratio, Silver

Gold And Silver ETF Holdings Show Little Change On Week

June 2, 2011 by admin 1 Comment

Holdings of the iShares Silver Trust (SLV) were unchanged on the week after dropping by 505.10 tonnes in the previous week.

After extreme price volatility at the beginning of May, silver prices were little changed over the previous week. Based on the closing London PM Fix price, silver closed at $37.17 on May 25th compared to a closing price of $37.95 on June 1st.

The price of silver has now recovered by 16.7% or $5.45 from the low of $32.50 on May 12. Silver reached a high for the year on April 28th closing at $48.70. The price correction should be viewed as a buying opportunity since the fundamentals of the silver market have grown stronger with each passing day.

The debt crisis in Europe and the U.S. appear to be on the verge of spinning out of control. The latest batch of economic reports show weak employment numbers, decline in the manufacturing sector and a continued collapse in U.S. real estate values. Economies overburdened by debt desperately require higher economic growth which is simply not happening. The prospect of continued economic weakness was finally acknowledged by previously bullish stock investors, as sellers pushed the Dow Jones down by almost 280 points for a 2.2% loss.

The latest sales figures from the U.S. Mint indicate that many investors see silver as a better store of value than paper currency. Total year to date sales through May 31st of the Silver Eagle bullion coins totaled 18.9 million ounces, the most since 1986. Comparable sales of the Silver Eagle for 2010 were 15.2 million ounces.

U.S. Mint sales of the Silver Eagles during May totaled 3.65 million ounces up from 2.82 million ounces in April. If sales for the rest of the year continue at the average month’s sales volume, U.S. Mint sales of Silver Eagles would total 45.4 million ounces, valued at over $1.7 billion based on today’s closing price of silver.

GLD and SLV Holdings (metric tonnes)

	June 1-2011	Weekly Change	YTD Change
GLD	1,212.87	-1.21	-67.85
SLV	9,941.33	00.00	-980.24

The holdings of the SPDR Gold Shares Trust (GLD) decreased by a modest 1.21 tonnes over the past week, after gaining 22.74 tonnes in the previous week. The GLD currently holds 38.99 million ounces of gold valued at $59.8 billion. The price of gold gained slightly on the week, closing at $1,533.75, up $7.50 from May 25th.

Filed Under: Featured, Gold, Silver, Statistics Tagged With: GLD, iShares Silver Trust, Silver Eagles, SLV, spdr gold trust

US Mint To Increase Production Of Silver Bullion Coins To Meet “Unprecedented” Demand

May 28, 2011 by admin Leave a Comment

The United States Mint announced that it will commence production of American Eagle Silver Bullion Coins at its San Francisco Mint. For several years now, the Eagle Silver Bullion coins had only been produced at the Mint’s West Point facility.

In a press release this week, the US Mint noted that “Demand for American Eagle Silver Bullion Coins remains at unprecedented high levels. Adding production at the United States Mint at San Francisco provides manufacturing flexibility across the bullion and numismatic product lines to meet customer needs.”

In the face of huge demand for the silver bullion coins, the US Mint has been allocating orders among its authorized purchasers. The high demand and limited production has lead to high premiums of up to $5 per coin for purchasers of the silver bullion coins.

The US Mint recently came in for criticism for its failure to meet demand for physical bullion coins. In early April, during a hearing by the House Financial Services Subcommittee, Rep. Ron Paul criticized the Mint for its failure to meet public demand for silver and gold bullion coins. Ron Paul linked the shortage of bullion coins to the “huge debasement” of the United State currency and said that it was “imperative” that the US Mint meet public demand for bullion coins.

The US Mint said that it has capacity to mint up to “several hundred thousand coins per week” at the San Francisco facility. The Mint will use the same packaging and manufacturing process at San Francisco that it uses at West Point and the coins will not have a mint mark.

Although demand for the American Eagle Silver Bullion coins remain high, the purchase of 90% silver coins is becoming a more cost effective and popular way to invest in silver. There is a very small premium or even a discount from bullion value on the purchase of 90% silver coins.

APMEX is currently selling a $1,000 face value bag of 90% silver coins which contain 715 ounces of pure silver for $27,541.80. Based on today’s closing New York price for silver of $38.16 per ounce, the silver value of the bag of coins being sold by APMEX is $27,284.

Filed Under: Featured, Silver, US Mint Tagged With: american silver eagle, Coin silver, Ron Paul, San Francisco Mint, silver bullion, Silver bullion allocation, silver bullion coins, silver demand, silver shortage

Sale Of U.S. Gold Reserves Would Accomplish Little

May 27, 2011 by admin 7 Comments

FORT KNOX

The U.S. slammed against the $14.3 trillion debt ceiling last week with a quick resolution to the problem no wheres in sight.

Congressional authorization to extend the debt limit remains mired in ideological disputes. Secretary of the Treasury Tim Geithner states that the U.S will default in early August if the debt ceiling is not raised.

As the Treasury scrambles to avoid default, a discussion has started on the merits of selling United States gold reserves to avoid default and put the U.S. back on sound financial footing.

While the sale of U.S. gold reserves may appear to be an appealing solution, it would accomplish virtually nothing from a financial standpoint.

According to the U.S. Treasury, total gold holdings of the United States as of April 2011 were 261.5 million troy ounces.

At $1,500 per ounce, the total value of U.S. gold reserves is about $393 billion. Sound like a lot of money? Enough to get the U.S. out of the debt/spending crisis that we are in? Here’s what the U.S. could do with an extra $393 billion.

Pay off 2.75% of the national debt
Pay less than one year’s interest on the national debt
Reduce the estimated 2011 budget deficit of $1.645 trillion by about 23%
Reduce this year’s U.S. budgeted spending of $3.8 trillion by about 10%
Pay for 40% of the $1 trillion dollar cost of the wars in Iraq and Afghanistan
Cover about 33% of the estimated cost of the bailing out Fannie Mae and Freddie Mac
Cover half of one percent of the estimated unfunded U.S. government liabilities for social security and medicare
Pay off about 4% of total mortgage debt held by American families

Selling the U.S. gold reserves may sound like a good idea until you take a look at the numbers. The total value of U.S. gold reserves amounts to a mere rounding error in terms of total U.S. debt, spending, deficits and future obligations. The United States has numerous valuable assets that it could sell, but the sale of U.S. gold reserves would accomplish little.

Filed Under: Featured, Gold Tagged With: Fort Knox, Gold, Sale of US gold reserves, U.S. debt, U.S. default, US gold reserves

The Federal Reserve Can’t Produce Oil, Food Or Jobs But They Will Continue To Produce Dollars

May 26, 2011 by admin Leave a Comment

Federal Reserve

No bull market goes straight up without normal price corrections along the way. The recent sharp pullback in silver prices and the more subdued correction in gold prices are likely to be viewed in hindsight as a superb buying opportunity.

Simple trend line analysis suggests that current prices for gold and silver are in a buying range. Using the SLV and GLD as proxies for the metals, we can see that the recent sell off has brought prices to trend line support. Combining the “trend is your friend” theory along with solid fundamental underpinnings for gold and silver, higher prices seem inevitable. For patient long term investors, especially in the gold market, every pullback of the last decade has simply been another opportunity to exchange depreciating paper dollars into a better store of value.

The SLV recently hit its trend line in the low 30’s.

SLV - COURTESY ETRADE.COM

The GLD’s long term trend line does not even hint of parabolic price movement, contrary to mainstream press reports warning the public of the dangers of gold investing.

GLD - COURTESY ETRADE.COM

Despite the assertions of Fed Chairman Bernanke that inflation is not a problem, any one outside of the academic inner circle of the Federal Reserve sees inflation everywhere they look. Soaring gasoline and heating costs have decimated family budgets and retail food inflation is projected to hit 4% or higher in 2011. Constantly higher inflation, as measured by the Consumer Price Index, has prevailed ever since the U.S. officially went off the gold standard in the early 1970’s. (See also Why Higher Inflation and $5,000 Gold Are Inevitable).

This week we have seen announcements of higher prices by Starbucks, Smucker Co, Nestle, McDonald’s and Whole Foods. Walmart previously warned that the debasement of the dollar was translating into higher retail prices on imported items. The upward price spiral in the cost of necessities is especially burdensome since incomes for the majority of Americans are not increasing.

In an excellent article in the Wall Street Journal this week, Ronald McKinnon persuasively suggests that the United States is entering 1970’s type stagflation, the result of high inflation, high unemployment and stagnant demand. According to Mr. McKinnon, “the U.S. economy again seems to be entering stagflation. April’s producer price index for finished goods, which excludes services and falling home prices, rose 6.8%. The Bureau of Labor Statistics reports that intermediate goods prices for April were rising at a 9.4% annual clip. Meanwhile the official nationwide unemployment rate is mired close to 9%.”

McKinnon argues that stagflation is being caused by the Fed’s zero interest rate policies (which besides robbing retirees and savers), has cause a global flood of hot money that has resulted in surging inflation in Asia and Latin America and a 40% rise in commodity prices over the past year.

The Federal Reserve’s policy options at this point seem limited to continuing their policies of cheap money and dollar debasement. The Fed cannot produce oil as Bernanke recently commented. Nor can the Fed produce food, jobs or higher housing prices. The one thing the Fed can and has done is to produce paper dollars in extraordinary quantities. Debt, when allowed to expand to levels that make repayment impossible, leaves the debtor with no good options – a point that we are rapidly approaching. (See also Why There Is No Upside Limit To Gold and Silver Prices).

Filed Under: Featured, Gold, Silver Tagged With: bernanke, CPI, Fed, Federal Reserve, Gold, inflation, Silver, Stagflation, ZIRP

How Wall Street Pros Made Huge Profits On Silver ETF Crash As Small Investors Sold

May 25, 2011 by admin Leave a Comment

The holdings of the iShares Silver Trust (SLV) declined by a substantial 505.10 tonnes from the previous week. The decline in SLV silver holdings from the all time high of 11,390.06 tonnes reached on April 25th comes in at a hefty 1,448.73 tonnes or 12.7%. Silver, meanwhile, has declined in price by $8.31 per ounce or 18.3% since April 25th.

Although the price per share of the SLV tracks the price per ounce of silver very closely, the actual bullion holdings of the SLV can fluctuate, sometimes dramatically, from the underlying price movements of silver. This same situation applies to the SPDR Gold Shares (GLD).

The reason why the physical holdings of the SLV and GLD do not closely track the price of gold and silver is due to the complex mechanism by which Authorized Participants can “create or redeem” shares in the SLV and GLD. The silver and gold trusts are structured to allow large Wall Street investment firms to act as Authorized Participants to arbitrage against a premium or discount of the SLV or GLD share prices to the underlying net asset value of the Trusts.

Premiums or discounts to the net asset value of the Trusts occur based on normal supply and demand by investors during the course of trading in SLV and GLD shares. The Authorized Participants routinely reap profits from their arbitrage activities based on the prevailing discounts or premiums . According to the prospectuses of the GLD and SLV, the Trusts were structured in this manner to allow the price of the GLD and SLV shares to closely correspond to the underlying value of gold and silver bullion.

The Trusts do not directly buy or sell bullion based on investor buy or sell orders for the SLV and GLD. The Trusts are not structured like a typical mutual fund which liquidates its holdings if there is a surge of investor redemptions. Changes in the number of Trust shares outstanding and changes in holdings of gold and silver occur only based on the creation or redemption of shares through Authorized Participants.

Premiums or discounts of the SLV and GLD shares to net asset values are normally less than 1% but can expand dramatically when trading is volatile. For example, on May 2nd, when silver prices were plunging, the shares of the SLV reached a huge discount of 9.87% from the net asset value of silver held by the SLV Trust. Investors desperately seeking to liquidate their SLV shares caused the value of the SLV to trade at a steep discount to the underlying net asset value of the Trust.

At this point the lucky Wall Street pros who act as Authorized Participants were gladly buying the SLV shares and simultaneously shorting silver bullion, locking in huge profits. Authorized Participants who arbitraged during this volatile trading profited greatly at the expense of panicky SLV sellers who sold shares of the SLV at $42.79 that were worth $47.51 based on the net asset value of the SLV. (Pricing data on the SLV share discount was obtained from the iShares Silver Trust web site).

The Authorized Participants who bought SLV shares during the panic sell off then delivered their SLV shares to the iShare Trust and requested that they be redeemed for silver bullion which was then used to close out short positions in silver bullion. Under this situation, the silver bullion holdings of the SLV decreased since they delivered silver bullion to the Authorized Participants in exchange for redeemed SLV shares. This is exactly the situation that has occurred during the May silver sell off and it is therefore no surprise that the holdings of the SLV have plunged.

The average investor in the iShares Silver Trust would be hard pressed to understand the “creation and redemption” features of the SLV shares. Although the SLV can be an easy way for an investor to participate in silver bullion ownership, my investment thesis is to avoid investments that cannot be fully or easily understood.

For investors seeking to establish investments in gold and silver without having to hold the physical metal, the Sprott Physical Gold Trust (PHYS) or the Sprott Physical Silver Trust (PSLV) offer better opportunities. Both of these Trust hold specific amounts of physical gold or silver which do not change. Each share holder has an unallocated interest in the precious metals held by the Trust.

All precious metal holdings of the Sprott Trusts are secured not by a bank, as with the GLD, but by the Royal Canadian Mint of the Canadian Government which is responsible for any loss or damage . The gold or silver backing the Sprott Trusts are specifically allocated by the Mint to the Sprott Trusts.

From a total investment return standpoint, it is also important to note that the shareholders of the PHYS and PSLV are taxed at the capital gains rate of 15% (if held for more than one year) whereas shareholders of the GLD and SLV are taxed at 28%. For further information see Sprott Physical Gold Trust Advantages Over SPDR Gold Shares Trust.

GLD and SLV Holdings (metric tonnes)

	May 25-2011	Weekly Change	YTD Change
GLD	1,214.08	+22.74	-66.64
SLV	9,941.33	-505.10	-980.24

Holdings of the SPDR Gold Shares Trust (GLD) increased by a modest 22.74 tonnes from the prior week to 1,241.08 tonnes. The GLD held 1,280.72 tonnes at the beginning of the year. The all time record holdings were reached on June 29, 2010 at 1,320.47 tonnes. The GLD currently holds 39.0 million ounces of gold bullion valued at $59.6 billion.

Filed Under: Featured, Gold, Silver, Statistics Tagged With: GLD, Gold, iShares Silver Trust, PHYS, PSLV, Silver, SLV, SPDR Gold Shares ETF, Sprott Physical Gold Trust, SPROTT PHYSICAL SILVER TRUST

How Patient Investors Can Buy Gold At $250 Per Ounce

May 24, 2011 by admin Leave a Comment

It’s not often that you can buy something at an 83% discount from the market price. Yet that’s exactly the situation when it comes to buying certain gold stocks that are now selling at huge discounts to their intrinsic gold reserves value.

In an interview with Barron’s, value investor David Steinberg of DLS Capital Management explains how his contrarian investment strategy has lead to superior investment results. Since the inception of DLS in 2003, Steinberg has racked up returns of 18%, far outpacing the S&P which returned 8.4%.

Steinberg told Barron’s that his investment strategy is based on valuation and he is currently invested entirely in commodity ETFs and equities. Investing in securities that are currently out of favor but with strong valuation metrics generates superior returns over time. Steinberg believes that gold stocks are undervalued and that “gold mining companies give an investor the opportunity to buy gold in the ground at a significant discount to market prices.”

According to Steinberg, the value of gold reserves held by mining companies is at historical disparities to the price of gold. One gold mining company owned by Steinberg is Kinross Gold (KGC). Kinross recently sold off as investors took a dim view of the merger of Red Back Mining with Kinross. Investors expected that the costs of the merger would adversely impact earnings per share but this has not been the case.

Steinberg told Barron’s that “by owning shares of Kinross, we are buying gold probably at$250 to $275 per ounce, versus the current spot price of about $1,500. Our price target is 27 and the stock is around 15.”

Kinross recently released its first quarter results which showed revenue up by 42%, an adjusted net earnings increase of 81%, margins up 29% and adjusted operating cash flow up 67%. The company’s gold production in the first quarter was 642,857 ounces, up 18% over last year. Kinross is forecasting full year production of about 2.6 million ounces. The company’s production cost per ounce was $543 in the first quarter and production costs are forecast to remain within previous guidance despite industry wide cost pressures.

Kinross is based in Canada and has mines and projects in Brazil, Canada, Chile, Ecuador, Ghana, Mauritania, Russia and the United States. Kinross has grown its reserve base by 25% per year over the past 5 years and currently has 92 ounces of gold resources per 1,000 shares.

Kinross Gold expects its equivalent gold production to increase by 77%, growing to 4.5 – 4.9 million ounces in 2015 from 2.6 million in 2011. Of all the senior gold producers, Kinross says it has the best growth profile.

Based on the company’s operating results and forecasts, Kinross Gold stock could wind up being the big winner this year among the senior gold stocks.

Filed Under: Featured, Gold Tagged With: $250 gold, gold stocks, KGC, Kinross Gold

Gold Demand Soars As Chinese Buying Surges To Record Levels

May 20, 2011 by admin Leave a Comment

According to the World Gold Council, total global demand for gold in the first quarter of 2011 jumped by 11% to 981.3 tonnes. Gold demand was driven by increased investor purchases, especially in China where surging demand for gold reached record highs.

The World Gold Council foresees increased 2011 gold demand based on fundamental factors that include unrest in the Middle East, the sovereign debt crisis in Europe, global inflationary worries, weakness in the U.S. dollar, concern over a slowing U.S. economy and continued strong physical demand for gold by China and India. Increased purchases of gold by central banks is also likely to increase to protect reserves against paper currencies issued by over indebted sovereign nations.

The World Gold Council noted that gold hit its eight consecutive record high price during the first quarter of 2011 after a brief pullback in prices early in the year. Due to higher prices the value of gold purchased during the first quarter rose by almost 40% from $31.4 billion to $43.7 billion.

Investment demand surged by 26% during the first quarter to 310.5 tonnes and represented 31.6% of total first quarter gold demand. The investment demand category includes physical bars, official coins, medals and ETF products. Investors showed a strong preference for holding physical gold as bar demand increased by 62%, official bullion coins by 39% and medals by 3%. Bullion holdings by ETFs declined by 55.9 tonnes during the quarter as investors decided to hold more physical gold due to worries about counterparty and credit risk. Despite the reduction in first quarter ETF holdings, total global holdings of ETFs amount to 2,100 tonnes valued at approximately $95 billion.

Jewelry demand of 556.9 tonnes accounted for 56.8% of total gold demand during the first quarter. Total jewelry demand grew by 7% during the first quarter with India and China accounting for 63% of total demand. China, which has seen explosive demand for gold over the past decade, registered a 21% increase in jewelry sales to 142.9 tonnes.

Technology demand for gold, which includes electronics, industrial and dental use declined slightly to 113.8 tonnes. Gold demand by the electronics industry remains strong and during 2010, the industry consumed a record 326.8 tonnes.

Despite the surging global demand for gold, supply is not increasing and actually dropped by 39.9 tonnes or 4.4% during the 2011 first quarter compared to last year’s first quarter. The decline was primarily due to large central bank purchases which the World Gold Council deducts from available supplies. Central Banks have been rapidly increasing their purchases of gold reserves and during the 2011 first quarter purchased 129 tonnes of gold which exceeded the total amount purchased during the first nine months of 2010.

Surging gold prices should be a natural incentive for the mining industry to increase production but this has not been the case. Mine production increased by only 7% to 663.9 tonnes during the first quarter, trailing total demand of 981.3 tonnes. During 2010 gold mine production provided 62% of total supply with recycled gold accounting for the bulk of other supply.

The big picture in the gold market remains focused on China. The World Gold Council report notes that “The past 10 years have witnessed exponential growth in China investment demand for gold, which entered a new era with the opening of the Shanghai Gold Exchange. By the end of 2010, annual gold demand totalled 187.4 tonnes, an increase of 71.1% over the previous year.”

Chinese gold demand has been increasing by 14% per year since 2001 with jewelry accounted for 64% of total demand. During 2010 gold jewelry demand in China was 451.8 tonnes, up 100% since 2004. Chinese gold investors are also huge buyers and in the first quarter of this year were the largest buyers in the world of physical bullion coins and bars.

The World Gold Council expects Chinese gold demand to double within less than ten years due to gold demand based on Chinese culture, inflationary fears, buying by the Chinese Central Bank, a desire to diversify wealth holdings, advise from prominent Chinese economists to increase gold reserves, increased institutional demand and increased demand by a growing middle class.

Courtesy World Gold Council

Filed Under: Featured, Gold Tagged With: china gold demand, Gold, gold demand, gold jewelry, Gold supply, world gold council

Why Higher Inflation And $5,000 Gold Are Inevitable

May 19, 2011 by admin 1 Comment

In his press conference on April 27, 2011, Federal Reserve Chairman Bernanke dismissed inflation worries, stating that “Our expectation is that inflation will come down and towards a more normal level”. Should we believe him? Not if you want to preserve your wealth and here’s why.

Chairman Bernanke has a perfect record of making inaccurate economic forecasts.

Bernanke, March 2007, prior to the historic housing crash said, “At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.”
Bernanke, February 2008, prior to the banking crisis that almost resulted in the collapse of the entire U.S. banking system said, “I expect there will be some failures. I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.”
Bernanke, June 2008, prior to the worst recession and job losses since the 1930’s, said the danger of the economy falling into a “substantial downturn” appears to have waned.

Even if the Fed was able to keep inflation at a “benign” rate of 2% a year, the long term effects on savings are devastating. Over ten years, a 2% inflation rate reduces the value of $100,000 to $82,034, resulting in an 18% loss in purchasing power.

According to the Bureau of Labor Statistics, inflation averaged 3.4% since 1980. At the beginning of 1980, one dollar had the same purchasing power as $2.86 at the end of 2010.

The cost of living has spiraled upwards since the early 1970’s, correlating perfectly to the point at which the value of the dollar was decoupled from gold. In 1971, the United States stopped exchanging dollars for gold to foreign official holders of dollars and the dollar gold standard was officially ended in 1973.

The Fed’s policy of pushing easy credit for the past 30 years to fuel economic growth has left Americans swimming in debt. The housing collapse and declining incomes have resulted in millions of mortgage defaults and underwater homeowners. The Government’s attempt to bailout a collapsing economy and over leveraged banks and consumers has resulted in trillions of dollars in new debt and a $1.5 trillion deficit.

Government debt has exploded to the point where the solvency of the U.S. Government is now being questioned. Large tax increases to erase the deficit would spin the U.S. into a deep recession. The President and Congress lack the political will to cut spending. The U.S. has spent and borrowed itself to the eve of financial ruin and must “inflate or die” at this point (see Why There Is No Upside Limit For Gold and Silver Prices).

The Fed, with the experience of two money printing campaigns already under its belt, will have no problems extending this practice. As Bernanke noted in 2002 before he became Fed Chairman, “The U.S. Government has a technology, called a printing press, that allows it to produce as many U.S. dollars as it wishes at no cost”.

The Fed’s cheap money policies and concerted efforts to debase the value of the dollar are just beginning, and that means the biggest move up in precious metals is still in front of us. My minimum long term forecast for gold remains at $5,000 per ounce and silver at $170 per ounce.

Filed Under: Featured, Gold, Silver Tagged With: $170 silver, $5000 gold, bernanke, Gold, inflation, Silver, wealth preservation

US Mint Gold Bullion Sales Set Rapid Pace

May 17, 2011 by admin Leave a Comment

The recent declines in precious metals seem to have shifted some investors preferences. For the current month to date, US Mint sales of gold bullion sales are on pace for the highest levels of the year, while silver bullion sales remain at typical levels.

From their peak prices reached in late April, silver has declined by about 32% while gold has declined by a modest 6%.

In the past week, the US Mint has sold 15,500 troy ounces of gold bullion coins, comprised of 11,000 ounces of American Gold Eagles and 4,500 ounces of American Gold Buffaloes. Monthly totals are now 89,000 and 9,500 ounces respectively. These figures reflect sales through May 16, 2010.

US Mint Bullion Coin Sales for Week Ending 5/16/2011 (troy ounces)

Gold Eagle	11,000
Gold Buffalo	4,500
Silver Eagle	756,500
Silver ATB	15,000

Silver bullion products, which remain subject to rationing, sold a combined 771,500 troy ounces in the past week. This consisted of 756,500 ounces worth of American Silver Eagles and 15,000 ounces worth of the 5 ounce America the Beautiful Silver Bullion Coins. For the latter product, the US Mint has now sold all of the available coins for the first two designs of the year featuring Gettysburg National Military Park and Glacier National Park. An additional 126,700 coins (633,500 troy ounces) featuring the Olympic National Park design will go on sale to authorized purchasers on May 23, 2011.

US Mint Bullion Coin Sales for Year to Date (troy ounces)

	Gold Eagle	Gold Buffalo	Silver Eagle	Silver ATB
January	133,500	–	6,422,000	–
February	92,500	–	3,240,000	–
March	73,500	38,000	2,767,000	–
April	108,000	20,500	2,819,000	1,127,000
May	89,000	9,500	2,177,500	140,000
Total	496,500	68,000	17,425,500	1,267,000

For the year to date, silver bullion coin sales have reached 18,692,500 troy ounces. Last year, the US Mint had sold 35,487,500 ounces across the two available silver bullion coin programs.

Gold bullion coin sales have reached 564,500 ounces for the year to date, compared to 1,429,500 for the prior year.

Filed Under: Featured, Statistics Tagged With: gold bullion sales, Gold Eagles, silver bullion sales, Silver Eagles, united states mint