October 2, 2022

U.S. Mint Bullion Coin Sales for February 2014 Show Silver Up, Gold Down

2013-w-gold-eagleSales of bullion coins by the U.S. Mint were mixed in February with silver bullion coins showing an increase and gold bullion coins a decline.

After hitting all time record sales in 2013 sales of the American Silver Eagle bullion coins are off to a slower sales pace in 2014.  According to the U.S. Mint a total of 3,750,000 silver bullion coins were sold in February, up by 381,500 ounces or 11.3% over the comparable prior year period.  February 2014 year to date sales of silver bullion coins total 8,525,000 ounces, down by 2,341,500 ounces or 21.5% from the previous year.

Retail investors have long regarded silver bullion coins as an excellent investment.  The price pullback in silver since 2011 provided an excellent opportunity to make additional purchases at bargain prices and investor took advantage of the situation.  Silver bullion coin demand soared last year to almost 42 million ounces and the U.S. Mint could not keep up with demand.  Demand for silver coin was so great that the U.S. Mint ran out of coins and suspended sales for most of December and part of January 2014.

Sales of silver bullion coins are shown below by year.  The sales for 2014 are through February 28th.  Sales of silver bullion coins have exploded since the financial meltdown of 2008 when the Federal Reserve began printing trillions of dollars out of thin air, a program which continues to this day.

Sales of the American Eagle gold bullion coins slowed dramatically in February compared to last year.  Total sales of gold bullion coins was 31,000 ounces compared to 80,500 last February.   2014 year to date sales through February totaled 122,500 ounces compared to 230,500 ounces for the comparable prior year period.

Gold coin sales can fluctuate considerably from month to month but sales have exploded since the financial crisis in 2008 and remain very high by historical standards.  After declining for three years in a row, sales of gold bullion coins strengthened during 2013 with sales above 2012 levels.

2014 totals through February 28th.

According to Reuters the decline in gold bullion coin demand was due to large sales of coins by hedge fund speculators and other large investors.  As the sale of these coins flooded into dealer vaults they had less need to purchase coin from the U.S. Mint.

american-silver-eagle

The American Eagle silver bullion coins cannot be purchased by individuals directly from the U.S Mint.  The coins are sold only to the Mint’s network of authorized purchasers who buy the coins in bulk based on the market value of silver and a markup by the U.S. Mint.  The authorized purchasers sell the silver coins to coin dealers, other bullion dealers and the public.  The Mint’s rationale for using authorized purchasers is that this method makes the coins widely available to the public with reasonable transaction costs.

U.S. MINT BULLION COIN SALES
MONTH GOLD SILVER
2014 2013 2014 2013
JANUARY       91,500   150,000    4,775,000     7,498,000
FEBRUARY       31,000      80,500    3,750,000     3,368,500
TOTALS     122,500   230,500    8,525,000   10,866,500

With economic and political turmoil spreading across the globe and central banks standing ready to flood the world with paper currencies, gold and silver continue to remain a safe haven for many investors.  It would not be surprising to see gold and silver surge in price this year in defiance of the bearish calls of many analysts.

Yellen’s Remarks to Senate Committee Constitute an All Out Buy Signal for Gold and Silver

money printingFed Chairman Yellen’s less than sparkling performance before the Senate Banking, Housing and Urban Affairs Committee on Thursday constitutes a complete affirmation for continued purchases of gold and silver.  The Chairman’s testimony was so disjointed that two major news organizations published completely contradictory headlines of her stuttering remarks.

Tapering – will she or won’t she was the question on everyone’s mind regarding future actions of the Fed and here’s the yes and no answer to the big question based on Yellen’s testimony.
The Wall Street Journal reported that Yellen Says Rethinking Bond Pullback is Possible.

Federal Reserve Chairwoman Janet Yellen said she isn’t sure how much of the recent deterioration in U.S. economic growth is due to weather, adding the central bank might consider a pause in its reduction of bond buying if the weakness persists.

“Asset purchases are not on a preset course, so if there’s a significant change in the outlook certainly we would be open to reconsidering, but I wouldn’t want to jump to conclusions here,” Ms. Yellen told the Senate Banking Committee Thursday.

“A number of data releases have pointed to softer spending than analysts had expected,” Ms. Yellen said. “That may reflect in part adverse weather conditions, but at this point it is difficult to discern exactly how much.”

Since Feb. 13, U.S. economic data has shown signs of weakness. The softness has been broad-based, with retail sales falling 0.4% and industrial production sliding 0.3% in January. The recovery in housing, a crucial gauge for the success of Fed policies, has also shown signs of fraying. Some economists have blamed harsh winter weather for the slowdown.

Meanwhile, Yellen’s remarks were viewed in a different light by a Bloomberg headline stating that Yellen Repeats Fed Likely to Keep Trimming Asset Purchases.

Federal Reserve Chair Janet Yellen said the central bank is likely to keep trimming asset purchases, even as policy makers monitor data to determine if recent weakness in the economy is temporary.
Yellen repeated the Fed’s statements that the central bank intends to reduce asset purchases at a measured pace, and she said in response to a separate question that the bond-buying program was likely to end in the fall.

Does Yellen have a dissociative identity disorder (DID), commonly referred to as a multiple personality disorder? According to Wikepedia, DID is characterized by two identities or dissociated personalities that alternately control a person’s behavior. The disorder is a controversial subject in the field of psychiatry and there is no consensus regarding either diagnosis or treatment so we can give Yellen a pass of this one.
Here’s the facts we do know about Yellen and Fed policies and they all represent some of the best reasons for increased ownership of both gold and silver.

2013-gold-eagle
The Fed stands ready to increase its $4 trillion balance sheet at the slightest sign of weakness in the stock market or the economy despite the lack of conclusive evidence that their money printing spree has helped the real economy.

The money surging out of the Fed has created multiple asset bubbles which will eventually pop, prompting further asset purchases with printed money to contain the damage and the cycle stays on auto repeat until the entire empire of debt and printed money completely collapse.

The Fed is firmly committed to an annual inflation target of at least two per cent to combat the threat of deflation.   The Fed is terrified of deflation since it increases the value of money and decreases  the ability of borrowers to service their debt burdens relative to income.   Deflation would make it difficult and eventually impossible for governments to continue borrowing to stay current on their mountains of debt and entitlement obligations.

Inflating away the debt is the Fed’s solution for keeping U.S.A. Inc. in business.  The Fed’s inflation targeting will help the U.S. government from being overwhelmed by debt but long term it guarantees that the future purchasing power of the dollar will continue its relentless decline and the downward spiral in real inflation adjusted wages will continue.

There will be a “next recession” and when it comes the Fed’s only option is money printing since short term rates are already at zero.

1881-CC-Morgan-Dollar
Yellen has acknowledged that she has a soft spot in her heart for the unemployed. The Fed’s conflicting mission of ensuring a stable value of the dollar and promoting employment has morphed into a full blown effort to create economic wealth and jobs through higher inflation and printed money.

Courtesy: zerohedge

The monetarist fools at the Fed, lead by Yellen, seem fully committed to solving every economic problem with more monetary printing. This policy may keep the wheels from falling off in the short term but guarantee disastrous long term results.  Bernanke had his critics but Yellen seems like a novice by comparison – maybe she should grow a beard.

17 Questions About Gold and Silver The Federal Reserve Needs to Answer

Yikes!  We Have to Look at This for the Next Four Years

Yikes! We Have to Look at This for the Next Four Years

By: GE Christenson

1.  Germany requested that the NY Federal Reserve return the gold that Germany shipped to the United States decades ago. If the gold were physically in the vaults, it would be relatively simple to ship the gold back to Germany. It has not been returned, which begs the question, where is Germany’s gold?

2.  If Germany’s gold is “missing,” what about other gold from other countries that is supposedly stored at the NY Fed?

3.  Does the U.S. gold supposedly stored at Fort Knox and at the NY Fed still exist in those vaults?

4.  The U.S. believes in paper dollars and an unbacked debt based currency. Such currency can be created with little more than a few keystrokes on a Federal Reserve computer. Would the Fed and the U.S. government sell gold into the world market to slow the inevitable weakening of the U.S. dollar? Would the Fed and the U.S. government ship (via intermediaries) substantial quantities of gold to China to prevent dumping of T-bonds and dollars? Are gold sales a “delaying action” to extend the reserve currency status of the U.S. dollar?

CPI INFLATION

5.  If China is converting their excess of dollars and T-bonds into gold, buildings, land, businesses, mines, and so much more, what do they believe is the real value of those dollars and T-bonds?

6.  If much of the German, Italian, French, English, and U.S. gold is “missing” and is now in very strong hands, is the price of gold too low and likely to rise?

7.  What will happen to world bond and stock markets if confidence in the financial system evaporates? Would confidence in the financial system be damaged if the world became aware that most of the gold supposedly stored in government and central bank vaults in the western world is “missing?” Is this the primary reason why the U. S. gold vaults have not been audited for over 50 years?

8.  Why are China and Russia buying large quantities of gold from the western world as well as all of their domestic production?

9.  Paper dollars were, years ago, backed by gold or silver. They are no longer backed by either. Why?

feature-300x200

10.  JP Morgan testified before congress in 1912 and stated, Gold is money. Everything else is credit.” Do you understand what this means?

11.  You have $100,000 to invest today into either gold or S&P 500 Index ETFs. Which investment do you believe will purchase more gasoline in three years?

12.  If you had $100,000 to invest into either gold or Confederate paper money and Confederate bonds in 1862, which would have been the better investment 20 years later?

13.  Voltaire stated about 3 centuries ago that “paper money eventually returns to its intrinsic value – zero.” Most paper money systems throughout history have failed. The current paper systems seem likely to fail in the future. What is the intrinsic value of 80 ounces of gold (about $100,000 at today’s prices)? What is the intrinsic value of 5,000 $20 bills ($100,000)? Which seems likely to purchase more food in three years?

14.  Mayer Rothschild supposedly stated, “Give me control of a nation’s money and I care not who makes its laws.” Was he thinking that if he can create the currency and the legislature can be “influenced” with currency, then he can buy the legislation that his banking interests needed? Was he also thinking that if he can create the currency and he can trade that currency for physical gold, he had procured real wealth for his family?

15.  Nixon closed the gold window in 1971 and assured us that it was only temporary. Since then the (official) U.S. national debt has increased from approximately $398 Billion to over $17 Trillion – up by a factor of over 40. Interest must be paid on that debt. Was the creation of $17 Trillion in debt beneficial for the majority of the people and the economy of the U.S. or only for the political and financial elite?

FEDERAL DEBT

16.  Is the current U.S. paper money experiment going to end differently from any other failed fiat currency system?

17.  In 1971 gasoline in the U.S. cost approximately $0.35 per gallon. Today it costs approximately $3.50 per gallon. The rising national debt correlates with the rising prices of gasoline, tuition, health care, postage, coffee, stocks, gold, copper, rent, food, and so much more. Some of those prices have risen faster (others slower) than the debt, but the trend is the same since 1913 and especially since 1971 – all up substantially. Do you think this is a coincidence? Do you think the ongoing increase in national debt will continue to cause consumer price inflation or that it will, somehow, miraculously, cause prices to go down, in spite of 40 + years of contrary experience?

Conclusions

Is this the end of the world? No! But it is past time to realize that a debt based financial system is largely detrimental to most of the people outside the political and financial elite. Such a debt based system has a limited lifespan and a reset seems both imminent and inevitable. Actions to consider:

  • Eliminate non-mortgage debt and reduce the amount of other debt.
  • Convert variable rate mortgage debt to fixed interest rate debt.
  • Be wary of a stock market that has risen for almost five years and seems to be based more on QE, hope, and artificially lowered interest rates than upon earnings and the health of the economy.
  • Convert paper and digital dollars to gold and silver and store them in a safe depository outside the banking system.
  • Be careful in this increasingly dangerous world.

GE Christenson, aka Deviant Investor

14 Tough Questions Gold Investors Have for the Federal Reserve

Liberty-EagleBy: GE Christenson

“Those who cannot remember the past, are condemned to repeat it.” George Santayana.

1. What mistakes from the past are we condemned to repeat?

2. Since unbacked paper currency systems have always failed in the past, why have bankers and economists promoted an unbacked paper currency system since 1971?

3. Would the Federal Reserve, which is owned by private banks, seek to enrich its member banks and the financial elite by implementing monetary policies such as QE that purchase distressed bank assets and boost the stock and bond markets?

4. Janet Yellen is the new leader of the Fed and new leaders are almost always confronted with a financial crisis early in their term. What should we expect during the next 18 months?

economic collapse

5. ALL paper money systems have eventually failed due to excessive “printing” of the paper currency. How many years of “printing” $85 Billion per month qualifies as excessive “printing”?

6. Human nature changes very slowly if at all. Politicians have lied to most of the people most of the time during the past several thousand years to serve their own self-interest. Are politicians currently lying about ObamaCare, strength of the economy, employment, the NSA, big banks, the IRS, Syria, and so much more?

7. Why does gasoline currently sell for approximately $3.50 per gallon even though it cost only $0.15 per gallon about 50 years ago? Why does a cup of restaurant coffee no longer sell for $0.10? Why do $20 gold coins containing nearly an ounce of gold now sell for over $1,250?

8. The S&P 500 Index is trading near an all-time high and is by most measures and sentiment severely over-bought on a weekly and monthly basis. Is it ready to correct downward?

9. Why is the official unemployment rate falling even though fewer Americans are working and the labor participation rate is at 30 year lows?

10. The Federal Reserve has been levitating the stock market and bailing out banks. Is it possible the Fed policies will backfire and those policies will eventually accomplish the opposite of what the Fed wants?

11. If the national debt of $17 Trillion can never be repaid, and if the U.S. government must borrow to pay the interest every year, and if the Federal Reserve must “print” those dollars, what is the real value of that debt? Is it $17 Trillion or perhaps a great deal less? The economist Hyman Minsky called this “Ponzi Finance” – the final stage of a debt based economic system when payments on the debt must be made from additional borrowing.

money printing

12. If a soaring gold price encouraged people to question the value of the U.S. dollar, and if the U.S. government had the means to suppress the price of gold, would the U.S. government manipulate the price of gold lower?

13. Germany requested their gold be returned from the NY Federal Reserve vaults about a year ago. It has NOT been returned. What happened to the German gold? Further, how much, if any, of the gold supposedly stored in Fort Knox is physically there and not “leased” or otherwise encumbered?

14. Gold has been money – a store of value, divisible, a medium of exchange, a unit of accounting, and intrinsically valuable – for 5,000 years. Paper money has usually been little more than a politician’s promise of integrity and responsibility. Which do you trust – gold or a politician’s promise?

These questions and their answers suggest that:

Drastic restructuring of the current monetary system seems inevitable, whether or not it is imminent.

Before the system resets it seems likely that governments around the world will scramble to locate and nationalize assets in order to maintain their power for a while longer. Capital controls and financial repression via artificially lowered interest rates are already in place. Pension plans, savings accounts, and IRA and 401(k) plans seem vulnerable to partial confiscation, bail-ins, or mandatory investment in government bonds. Such confiscations and bail-ins have already occurred in other parts of the world and could easily happen in the United States.

toned-morgan-dollar

Gold and silver have protected purchasing power and assets for 5,000 years. In this twilight period of the current debt based monetary system it seems likely gold and silver will increasingly be necessary for protection of purchasing power and assets. Are you prepared?

GE Christenson

aka Deviant Investor

Is a Monster Rally Brewing in Gold and Silver?

herbert-hooverBy: GE Christenson

The year 2013 was a great year for the S&P and a terrible year for silver and gold investors. There are many indications that it is time for a reversal.

If a market moves too far (up or down), too fast, or for too long, expect a reversal. Examples:

  • The S&P 500 index has moved MUCH higher during the past 57 months – a very long time. Expect a reversal soon.
  • Silver prices rose from $8.53 in October of 2008 to almost $50 in April of 2011, and then crashed (with help from JP Morgan and others) to under $19 in June and December of 2013. More currently, silver was priced about $34 just 13 months ago and is now down over 40% in that short time. Expect a reversal soon.
  • The NASDAQ 100 Index rose from under 1,100 in October of 1998 to nearly 5,000 in March of 2000 and then collapsed to under 800 in October of 2002. This was a mania and crash reversal.
  • Crude Oil rose from $51 in January of 2007 to $147 in July of 2008, and then collapsed to $36 that same year. What happened here? It was NOT a change in fundamentals!

The fundamentals for these markets did not change from normal to fantastic to terrible in a short time. It is clear that High Frequency Trading (HFT) algorithms, speculators, momentum players, the Fed, and others pushed the markets higher or lower to unsustainable levels and then reversed those markets.
How do Silver Prices Compare to the S&P?

Examine the data back to 1975 and calculate the ratio of the price of silver to the S&P 500 index. We see that:
1. SI / SP Ratio 38 year average: 0.029
2. SI / SP Ratio 38 year low: 0.003 November 2001
3. SI / SP Ratio 38 year high: 0.365 January 1980
4. Last 8 years average: 0.016
5. Last 8 years low: 0.007
6. Last 8 years high: 0.038 About 1/10th of 1980 high
7. Current ratio: 0.010 December 2013
8. The ratio declined from 1980 until 2001 during the silver bear market and the bull market in stocks.
9. Since 2001 the ratio has been rising along with the renewed bull market in silver.
10. Excel calculated a linear trend line for the ratio during the last eight years so that the deviation of the ratio, above or below, averages to zero. See the SI / SP Ratio and Linear Trend graph.

11. Plot that deviation, above or below the linear trend line, and it is easily seen that the ratio was very high in April of 2011 (silver too high) and is currently quite low – yes, silver is deeply oversold. See the Silver vs. Ratio Deviation From Linear Trend graph.

12. When the silver to S&P ratio increases to the average ratio since 2006 then the ratio of silver prices to the S&P should nearly triple – silver prices should rise substantially while the S&P is likely to fall.
Silver Prices are Too Low Compared to the S&P 500 Index

What else supports that analysis?

  • Silver prices have been going down, on average, for 32 months while the S&P has been rallying, on average, for 57 months – a very long time for both trends. A reversal is due.
  • In the shorter term, silver is oversold and the S&P is overbought, based on their 200 day moving averages. Silver is about 10% BELOW its 200 day moving average and the S&P is 10% ABOVE its 200 day moving average. Prices will regress to their means – higher for silver and lower for the S&P.
  • MANY other oscillators confirm that silver is oversold and the S&P is overbought. Expect reversals.
  • The U.S. national debt is huge – over $17 Trillion and doubling approximately every 7 years. Over the past three decades the smoothed prices of silver and gold have correlated with the national debt. We KNOW the national debt will continue increasing so we can be assured that, ON AVERAGE, the prices of silver and gold will continue to rise.
  • The S&P has been levitated by QE money printing, continual hype about the “recovery” and High Frequency Trading. Margin debt is at an all-time high, similar to just before the 1987 and 2000 stock market crashes. A trend change is due. An S&P crash is certainly possible.
  • Paper gold and silver prices have collapsed in the past year while demand for physical gold has risen to multi-year highs. Normal and honest markets do not operate this way for long. We can plan on continuing or increasing demand for gold in China, India and Russia as they trade dollars and T-bonds for hard assets. Expect gold prices to accelerate higher in 2014. Silver will follow.
  • Compare the price of silver to its 40 week moving average over the past eight years. See the Silver vs. Deviation From 40 wk MA graph. The deviation above/below the 40 week MA indicates that silver is oversold and due to rally.

Confidence in the silver market is low and only “die-hard” silver investors in the U.S. seem interested. Market sentiment is terrible and that suggests a trend change is likely.
Silver cycles: I understand that in our current environment (HFT, currency wars, manipulation of paper prices by JP Morgan and others, and QE) the prices of gold and silver can be easily pushed higher and lower. Consequently I trust cycles only a little, but consider:

Silver Long Cycles

Date Comment Time since last low
Feb. 1993 Important low
July 1997 Low 4.4 years
Nov. 2001 Important low 4.3 years
Aug. 2005 Low 3.7 years
Oct. 2008 Important low 3.2 years
June 2013 Important low 4.7 years
(Average 4.1 years)

It seems likely that the June 2013 will not be broken, or if it is, only briefly.

Silver Shorter Cycles

Date Comment Time since last low
June 2006 Intermediate low
Aug. 2007 Intermediate low 14 months
Oct. 2008 Intermediate low 14 months
Feb. 2010 Intermediate low 16 months
May 2011 Intermediate low 15 months
June 2012 Intermediate low 13 months
June 2013 Important low 12 months
(Average 14 months)
Conclusions

Silver and gold prices have been forced lower in the paper markets while the S&P has been levitated with zero-interest rates, HFT and QE. The financial powers-that-be, the political and financial elite, Wall Street, China, India, Russia, and the U.S. Treasury have all benefitted from the suppression of gold and silver prices. Most have also benefitted from QE and the S&P levitation. The surprise is not that gold and silver prices have been pushed lower after their 2011 blow-off rallies, but that the “smack down” has lasted so long in the face of such strong physical demand.

Regardless, regression to the mean is relevant, even in manipulated markets. Expect a trend change in 2014 and much higher gold and silver prices as they rally above their 200 day moving averages.

The ratio of silver prices to the S&P is back to 2008 levels and substantially below the linear trend since 2006. Expect the ratio to regress (rise) to its mean while silver prices rally substantially from here.

Both long and short term time cycles indicate that an important bottom occurred in June of 2013. It appears that a double-bottom occurred in December of 2013. If this double-bottom holds, time cycles suggest that silver will rally strongly in 2014.

GE Christenson aka Deviant Investor

Gold and Silver Can Defeat Government Taxes, Corruption and Theft

gold-buffaloBy: Vin Maru, TDV Golden Trader

As everyone rings in the New Year with a toast and a cheer for a prosperous 2014, Wall Street started celebrating many months ago and is ringing in the New Year with a glass of Dom Pérignon. They surely have a reason to celebrate as 2013 brought them good fortune and financial prosperity, having rung in the New Year with new all time highs on many of the US-based major indexes.

While there are many ways to measure prosperity, for Wall Street it’s all about profits and the bottom line. They only know one thing, how much wealth they can steal from others by “gaming” the system. I say “steal” because today’s markets are no longer about valuations and true price discovery. It’s more about computer algorithms, access to unlimited funds, having insider knowledge on buy and sell orders, front running the average investor and the ability to extract risk free profits by gaming the system. Of course this is nothing new for big Wall Street investment houses; over the last decade they have mastered the art of investing by gaming the system and extracting wealth from others.

Financial prosperity in today’s world means having the Federal Reserve central bank in your corner ready to bail you out in case any of your bets go bad. Becoming “Too Big to Fail” is a necessity to financial survival and having the regulators in your pocket also helps. Of course, we can’t forget about using extreme leverage, derivatives, credit default swaps and futures to squeeze some additional profits from the system.

With all these tools and means to game the system, investment banking for profit becomes a game of how much wealth you can steal from others before you get caught with your hand in the cookie jar. Of course when you do get caught, all you get is a slap on the wrist in terms of fines and penalties. If you get caught laundering money, rigging interest and foreign exchange rates — no problem, there is a fine for that, as long as you are one of the “Too Big to Fail” banks.

Today’s financial system is setup to steal your wealth. The bankers steal from you by rigging the system for their gain, and then the government fines the bankers for stealing. In order to maintain banking control and growth, the bankers have to resort to rigging the game even more so they maintain profit growth. This corrupt system of theft is definitely a win win situation, a win for the bankers and a win for the government, it’s only the average person who loses by having their pockets picked.

We can’t blame all of this on the bankers, the corruption in the Western financial world runs right to the root of the problem, government. By allowing central banking to exist, governments can ensure their own financial safety net and survival from having a system which continuously prints money to fund deficit spending. To remain in power, Government’s control only exists and grows because of taxation and the rules and regulations they impose on their citizens. Take France for example, their constitutional council and highest court just gave the green light to Hollande to introduce a top tax rate of 75 percent on earnings over one million Euros.

Of course, the most corrupt government in the world is the United States. Having the status of the world’s currency reserve empowered them to build the biggest army, thus giving them the ability to bully any other nation state by way of force or death. And if they don’t attack you directly, they surely will spy on you electronically via the NSA and they will definitely tax and fine you for non-compliance to their rules and regulations.

I always wondered if the US will ever get their deficits under control and how they will reduce their debt burden. One way for sure is that the US will tax and regulate their way out of financial debt by taking wealth that was hidden from them. After reading an article on how Swiss regulators recommended banks take provision for US tax deal, it became pretty obvious that all international bankers will be forced to comply with the US regulators or get shut out of their system.

The real irony of the situation is how this system is gamed right from the beginning to end, which then comes full circle to help governments. The bankers have been cashed up via the central banks and are making tremendous profits trading rigged markets. All this new wealth now on the banker’s balance sheet will be heavily taxed over the coming years and used to pay off fines imposed on them by governments and regulators.

proof-silver-eagle

In short, the corruption in US banking to help government finances, spending and debts goes like this:

  • The Federal Reserve central bank print money from nothing.
  • The CB then gives this newly printed money to big banks to buy US debt.
  • The “To Big to Fail” banks then sell the US debt back to the Fed (for a nice profit) and receive more money.
  • The big banks who are now cashed up, conduct proprietary trading to rig markets for even more profits.
  • All this extra ill-gotten cash sitting with the banks is then taxed, and/or regulated and fines are imposed for illegal rigging of markets.
  • This money is then given back to the US government which probably helps extinguish some debt or pays for gov’t expenses.

In this system of corrupt Western finance, the only people that lose are the people or entities who don’t see it happening or can’t take the necessary steps to avoid the theft and confiscation, and then actually profit from it happening. Anyone with savings will also get burned by either the devaluation of fiat currencies or outright theft of deposits at the banks by way of bail-ins or nationalization of retirement savings. Either way, the average person is at a disadvantage in a no win situation if they leave their assets in the western financial system.

The window to get your wealth out of the traditional western financial system is closing. Anyone who does so now will be saved from the ever growing corruption and theft that is coming down the road. Precious metals are one of many assets that should be continuously accumulated now and on any further pullback. At this point the rigged price of the metals is not as relevant as the number of ounces you own and hold outside the financial system, and that window is rapidly closing.

This is why I researched and wrote the special report for TDV called “Getting Your Gold out of Dodge”, to help you protect your precious metals assets. If you are also interested in coverage and trading opportunities in precious metals and technology, you can sign up for the TDV Golden Trader newsletter.

Silver Fundamentals Guarantee Gains For Long Term Investors

american-silver-eagleBy: GE Christenson

Ryan Jordan, Ph.D., is a professional historian, author, and college professor. He is the author of
Silver – The People’s Metal, which I highly recommend.

He sees silver fundamentals from the perspective of a historian and as an astute observer of present conditions. He studies the drivers of the silver market, supply, demand, mining, inflation, investment sentiment, central bank bond monetization policies, and politics.

What does he think?

Demand for silver is strong!

Silver Demand As Guide for Silver’s Next Price Move

“Yesterday, the US Mint confirmed a record year for sales of silver coins– and we still have six weeks in the year to go. Yes, the roughly 40 million ounces of silver only accounts for maybe 5% of overall demand, but it also represents a huge increase from a decade ago when it comes to investor interest in physical metal. In fact, globally, silver investment demand is up essentially from ZERO just 10 short years ago (take some time to allow that to sink in when thinking about the change in investor sentiment toward precious metals in recent years.)

And demand for silver isn’t just an American phenomenon. Last month, somewhat surprising news came out of India of a roughly 130 million ounces of silver imported into that country in just the first six months of the year. This was in response to the shutdown of gold imports into that country.”

Inflation will be increasingly important. As long as the world monetary systems are run by central banks, particularly the Federal Reserve, we can expect inflation in the money supply, debt, and consumer prices. The weakness in gold and silver since 2011 is, in our opinion, a temporary correction in the four decade uptrend for debt, spending, and gold and silver prices.

silver treasure

Gold and Silver: The Big Picture

“Another long term, fundamental factor in the rise of gold and silver comes from the belief of central planners that inflation is nonexistent currently and actually needs to increase. This is the view held by many among western central bankers, and is part of the reason why FED bond purchases will not decline much from the nearly 1 trillion a year mark, as made clear this week by the US central bank. FOMC statements released Wednesday continue to affirm that the deflationary threats from the 2008 crisis remain. The ultra-loose stance of the world’s largest central bank should be of concern to anyone who wonders if inflation might one day get out of hand.

And in India, known as one of the world’s leading gold markets, inflation is already making its presence felt. The Indian central bank continues to raise interest rates while attempting to curtail demand for gold among Indian citizens. Many observers note the similarity to policies once adopted by the US government in the late 1960s and 1970s, and how those policies failed to dampen demand for gold as both inflation and interest rates rose strongly.

My question for any gold or silver bear is this: if gold and silver went up nearly 7 times over the last 10 years with no meaningful inflation in western nations, how much more will the metals go up when inflation is officially recognized as a problem by those in charge?”

Precious metals have been largely ignored for over 30 years. Yes, they are occasionally mentioned in the mainstream media and on financial television, but the media’s primary focus is on stocks and bonds – paper promises and paper debt – not on something real like a gold bar or a stack of silver coins. Dr. Jordan thinks that gold and silver will become an increasingly important part of more investment plans and that this transition will accelerate.

Silver ETF

Precious Metals: The Emerging Asset Class

“Over the past year, the cult of equities has made a return, as indices roar to all-time highs, and as many look to cash in on new IPOs like they did in the last tech boom 15 years ago.”

“But I’d like to make some historical comparisons between the two periods, to explain how even with stocks catching all the attention, this hardly means that gold and silver will continue to be left out in the cold.

Here are three main reasons why I do not believe gold, silver, PGMs, or mining shares will behave as they did in the 1980s and 90s:

 

  1. Just last month, President Obama actually made reference to the reserve status of the U.S. dollar as being in jeopardy based on current dysfunctional behavior in Washington, D.C. I don’t ever recall Presidents Reagan through Clinton saying something similar– and for good reason. To take the case of President Reagan’s first term in office, the US Dollar rallied something like 50% at one point. While I don’t expect the dollar to crash anytime soon, too many players globally are looking to diversify away from the greenback for the dollar to re-enter a secular bull market. A big question mark remains over the US dollar’s reserve status and this represents one of the most powerful reasons to continue to own precious metals– or even to acquire more.
  2. The challenges facing mining companies these past couple of years signals a downshift in global gold and silver production. This decline won’t happen immediately, since it takes a while to shudder mine projects – but ore grades can only decline so much before it becomes uneconomical to attempt to increase overall mine output. This reality stands in marked contrast to the 1980s and 1990s, where mine output for both metals made significant increases during those decades. Supply constraints – especially if they are coupled with new industrial demand for the white precious metals – will eventually lead to higher prices.
  3. The growth in the global middle class outside of the West is a trend that began 20 years ago, but the trend has accelerated in recent years. Many commentators believe that the shift in wealth from west to east will mean that upwards of 50% of new entrants to the global middle class in future years will come from areas outside the U.S. and Western Europe. As has been seen all year, buyers in Asia and the Middle East possess an attachment to physical gold- ranging from the person buying jewelry to the central banker buying bullion bars– that is hard to break. Oftentimes these attachments speak to the cultural memory of volatile local currencies or political malfeasance in these nations.

Overall there remain some big differences between today and 20 or 30 years ago when it comes to precious metals. While faith in central planners and their ability to levitate equity markets is strong among some, there are others like myself who do feel that 2008 mattered–and not in a good way. Zero percent interest rates, a stagnant economy for upwards of 80% of people in the U.S. and Western Europe, continued discussion of unsustainable debt levels, and the existence of a black hole of derivatives and other “off balance sheet” financial sleights of hand are just a few issues facing investors currently.

It may be hard to believe it now, but I don’t think the precious metals will remain under-owned forever.”

Dr. Jordan encourages us to believe that the conventional investment perspective is not the only valid approach.

Don’t Drink Too Deeply From the Well of Conventional Thought

“The inability of people to see the world for what it is was quite apparent with the nonsensical discussion of Fed tapering over the last several months. Many in positions of power sought to convince the unwashed that somehow these extreme monetary measures can be undone, or taken back. And many still believe them. As part of this naivety we then get people believing that entire asset classes, like gold, silver and mining shares are only for crazy people- that genuine tangible asset investing need not play any role in a given portfolio. My only advice for people is to please be very careful about drinking too deeply from the well of conventional thought. It is not that the world is going to end, but by the same token the days of 4 or 5% economic growth coupled with a strong and growing middle class are gone for a long time. This new reality requires a new attitude towards investing. Don’t let the recent weakness in the precious metals sector mislead you.”

Conclusions

silver

Ignore for the moment moving averages, technical analysis, relative strength indicators, partial differential equations, econometric analysis, Federal Reserve economic models, and all the other tools of the technician and just listen to the historian. He thinks:

  • Demand for silver is strong in the United States, India and China.
  • Central banks are printing currency and attempting to create inflation.
  • The reserve status of the dollar is weakening. Many countries are bypassing the dollar in their international trade.
  • Mining companies will have reduced output because their revenues have declined while expenses have increased. Hence the supply of silver and gold will remain relatively flat while demand is increasing.
  • The global middle class will demand more gold and silver for savings. Americans may not understand gold and silver but over 2,000,000,000 Chinese and Indians do, and that demand for actual physical metals will grow.
  • The cult of equities is flying high but it may not last. There is room for a shift from equities and bonds to precious metals. Even a small shift in demand away from stocks and bonds could cause the relatively tiny gold and silver markets to rise to new highs.
  • Fundamentally and historically speaking, there are many reasons to own gold and silver.

GE Christenson
aka Deviant Investor

U.S. Mint Runs Out of Silver Bullion Coins – Gold and Silver Coin Sales Hit Record Levels in November

rooseveltLong term proponents of sound money cannot seem to get enough of U.S. Mint produced gold and silver bullion coins.  Ever since the financial crash of 2008 many Americans remain profoundly skeptical of the paper dollar system backed by the “full faith and credit” of a nation that has borrowed itself into poverty and promised more in social benefits than the economy can possible provide.

From 2000 to 2007 sales of the U.S. Mint American Eagle gold bullion coins averaged about 341,000 ounces annually.  After the crash of 2008 exposed the risk of paper assets, sales of the gold bullion coins have averaged about 1,011,300 ounces annually from 2008 to 2013.

Year to date sales of the American Eagle gold bullion coins as of the end of November totaled 800,500 ounces, surpassing total 2012 sales of 753,000 ounces.  For November the U.S. Mint sold 48,000 ounces of gold bullion coins, slightly below the sales figures of 48,500 for the previous month.  Since 2000 investors have stashed away 8.8 million gold bullion coins currently worth about $11 billion.

Gold has retained its value throughout human history and strong demand for gold over the ages has resulted in the depletion of most gold deposits on the planet.  As noted in a previous post, about 75% of all gold deposits have already been mined which forebodes a future gold shortage.

american-silver-eagleAs noted in a previous post, sales of the U.S. Mint American Eagle silver bullion coins hit record annual sales volume in  November.  The U.S. Mint sold a total of 41,475,000 silver bullion coins as of November 30th, surpassing the previous record sales year of 39,868,500 coins in 2011.

Sales of the American Eagle silver bullion coins for November came in at 2,300,000, a decline of 787,000 coins compared to 3,087,000 in the previous month.  The lower sales figures for November do not reflect a drop in demand for silver bullion coins but rather the opposite due to the fact that the U.S. Mint has run out of coins due to unprecedented demand.

This same shortage situation existed last year when the Mint ran out of silver bullion coins in mid December  with orders for the new 2013 silver bullion coins not being accepted until January 7, 2013.  This situation resulted in a three week period during which the American Eagle silver bullion coins were simply not available.

The period of time during which silver bullion coins will be unavailable from December 2013 to January 2014 will be even longer than last year.

peace dollar

According to coinupdate.com silver bullion coins will not be available for investor purchase for over a month and supplies will be rationed when available.

The United States Mint recently provided authorized purchasers with information on year end ordering procedures and the availability of 2014-dated releases for the American Eagle and American Buffalo bullion programs. Based on the details provided, it seems that the American Silver Eagle bullion coins will experience roughly one month of unavailability between the final allocation of 2013-dated coins and the release of the first 2014-dated coins.

The situation for American Silver Eagle bullion coins differs from the prior year. Authorized purchasers will be offered the last weekly allocation of 2013-dated coins on Monday, December 9, 2013. With demand continuing to run ahead of the available supplies, the allocation will likely be quickly depleted.

The 2014-dated Silver Eagle bullion coins will not be available to order until Monday, January 13, 2014. The initial release will be subject to the US Mint’s allocation program, which rations supplies amongst the authorized purchasers.

With such a severe shortage of silver bullion coins, expect buyer premiums to increase significantly over the next two months.

Financial Repression and QE Guarantee A Bleak Future for Retirees

1986-gold-eagleBy: GE Christenson

A mid 60s woman was chatting with two friends at a Starbucks. I overheard the conversation. It went something like this…

“When my husband and I retired, our financial advisor said we had enough money to last until we were both 95 years old. Now he is concerned that our savings might not last until we are 80.”

It gets worse.

“But if either of us dies then our pension income is reduced and the survivor has to make a choice – pay the mortgage or eat.”

It gets worse.

“And we still have to worry about healthcare.” She went on about sky-high health care costs, Obamacare, and her pre-existing conditions that prevented her from changing insurance.”

She probably does not see how much worse it can become.

What is the Problem?

In simple terms the Federal Reserve has lowered short term interest rates to nearly zero (ZIRP – Zero Interest Rate Policy) and is “printing” $85 Billion per month (QE) to bail out bankers and our politicians who can’t balance the government budget or even pass a budget.

So What? Aren’t low interest rates good for the economy and for home prices?

Well, maybe in the short term they appear to be beneficial. The politicians and bankers have assured us of such. But politicians and bankers are benefitting from QE so perhaps we should question their assessment. Consider these points:

Would you loan your money for 30 years to an insolvent government that chronically spends far more than it collects in taxes? Would you consider that 30 year bond a wise investment if the government paid you less than 4% per year? Think back to what your expenses for gasoline, housing, food, and health care were in 1983 to help determine if 4% per year is enough to compensate for your guaranteed higher expenses and for the decline in the value of the dollar in the years to come. (Hint: NO!)

Retirement systems, life insurance policies, annuities, city and state government pensions and so much more depend upon the interest earned from government and corporate bonds, saving accounts, and Certificates of Deposit. If the interest earned over the past five years has been about 1% to 3.5% per year and most pension plans have assumed earnings in the (typical) 7% to 9% range, those pension plans have been underfunded by a larger amount each year. Think California public employees, Chicago public employees, New Jersey, Detroit and so on. Most pension plans for city and state employees are currently underfunded while they are optimistically assuming future interest earnings much higher than the Federal Reserve has repeatedly assured us will be possible.

mount-rushmore1

Conclusion

The ZIRP and QE are causing the retirement funds for many governments and corporations to be more underfunded each year. If your retirement comes from a government pension, it is less secure each year. It can’t remain underfunded forever. Ask the retirees from Detroit!

Corporate pension systems invest similarly. If your retirement comes from a corporate pension, it is less secure each year. Ask the retirees from a bankrupt airline or from Enron Corporation.

If your retirement is funded by your personal savings and you have been earning perhaps 1% per year for the past five years, you already know the devastation that ZIRP and QE have caused in your personal finances.

CPI INFLATION

The lady mentioned at the beginning understands that she and her husband are earning much less money in their retirement accounts than their financial advisor had projected, and so their retirement money will not last as long as originally hoped. What she probably does not realize is that her interest income will be kept low for the foreseeable future while her living expenses are very likely to substantially increase. In short, their retirement funds probably will be depleted well before she and her husband reach 80 years old. That is not a happy thought for her family and for millions of others who expected more “normal” interest earnings before the government and The Federal Reserve chose to bail out the financial industry. That bailout occurred at the direct expense of the taxpayers and at the indirect expense of savers, pension plans, and other retirement systems because of the unexpectedly low interest earnings created by the ZIRP and QE.

Karl Denninger has written a highly intelligent piece describing this process and the consequences. Read it for new insights. From that article:

“The bottom line is that QE produces what looks like a ‘benefit’ without cost at the start of the program, but that appearance is a con job.”

“In short at best QE is nothing more than pulling forward the ability to spend paid interest from tomorrow into today but for each dollar pulled forward to today it is taken from tomorrow’s spending.”

“How much harm are we talking about? Well, that’s difficult to determine, because you’d need a blended rate of interest across the entire lending continuum to figure it out. But it is certain that the $3 Trillion added to the Fed’s balance sheet is less than the actual amount pulled forward over that time.”

bernanke's paper

Summary

The Fed, through ZIRP and QE, has created $Trillions of benefits for the financial industry and much of that benefit has been created at the expense of government pension plans and individuals who depend upon interest earnings. This has a direct and negative consequence to many retirement plans, especially city and state public pensions.

It is especially destructive to those individuals who depend upon interest earnings to fund their cost of living.

Your savings are unlikely to last as long as you hoped.

Further Considerations

The Fed is “creating” $85 Billion per month for QE. This boosts the financial industry, the stock market and the bond market but the average person realizes little benefit from those markets. The average person is actually hurt by the lower than expected interest earnings in his personal accounts and in the pension accounts from which his pension is paid.

SILVER: The silver market is tiny. In very round numbers about a billion ounces are mined, worldwide, each year. This is approximately $20 Billion per year or only about one week of QE for bond monetization.

GOLD: The gold market is much larger than the silver market but still small compared to the QE process. In round numbers the worldwide annual gold mining market is 3,000 – 4,000 tons or about $ 130 – $170 Billion per year. Two months of QE “money printing” is enough to purchase all the gold mined each year in the whole world.

Does it seem “right or moral” to you that a privately owned central bank prints enough money each WEEK to buy the equivalent of all the silver mined worldwide in a year, or that TWO MONTHS of “printing” would purchase all the gold mined in a year? The politicians and bankers will not change this process but we can adapt to the consequences.

Does it seem likely that dollars, which are printed in excess every month, will retain their value against gold and silver?

Stated another way, does it seem likely that while gold and silver are limited in supply, and while the dollars used to purchase those metals are increasingly debased by both the central bank and the government, that the prices for gold and silver will remain stable or even decline?

The bullish case for gold and silver is reported in the alternate media and by numerous gold and silver “bugs” such as myself. The bearish viewpoint is easily obtained from the mainstream media, Goldman Sachs, and the Federal Reserve. Other intelligent individuals, such as Harry Dent and Robert Prechter, also promote the bearish viewpoint. I find the bearish analysis for gold and silver rather unlikely and often self-serving for those in the financial industry who make their living selling “paper.” But often it is valuable to analyze the perspective of those who disagree with you.

Decide for yourself! Your financial well-being and your retirement may depend on an intelligent assessment of the consequences of more QE, higher or lower gold and silver prices, and booms and busts in the stock and bond markets.

My vote is with gold and silver. Five thousand years of history support that viewpoint. Paper money does not retain its value or purchasing power. Hundreds of years of history support that viewpoint. Further, QE and ZIRP accelerate the decline in the value of paper dollars.

Gold and silver have been moving down, on average, for about 2.5 years. They might even be down another year, however I doubt it. In five years you might earn a total of 5 – 10% in a Certificate of Deposit. By contrast you are likely to double (quadruple or more) your savings if they are invested in gold or silver. Which will be more beneficial to your retirement?

Which sounds safer – gold or paper? Would you prefer something that has retained its value for 5,000 years or unbacked paper money – which has eventually and always declined in value to near zero?

GE Christenson
aka Deviant Investor

Gold and Silver Are in Long Term Uptrends

mount-rushmore1By: GE Christenson

The BIG Perspective: Examine the following “Point & Figure” chart from Ron Rosen. This type of chart plots price on the “y” axis while the “x” axis shows time but without uniform distance between years. The long term trend has been up since 1970 and 2001, while the intermediate trend has been down for the past 26 months.

Gold and silver will outlast hope, change, paper money, treasury debt, and political promises. Most people do not and will not understand why!

The following are logarithmic charts of the official U.S. national debt, gold, silver, and crude oil for the past three to four decades.

Clearly the long term trends are up. Why?

  • A debt based paper currency system must expand to survive!
  • The Fed needs an increasing money supply and more debt.
  • Congress and the administration aggressively spend money, borrow money, and increase the national debt. It will take a real crisis to change this – much worse than a phony debt ceiling crisis.
  • The financial industry wants to churn more paper assets, debt, derivatives, and volatility to increase their profits.

The inevitable conclusion is that, over the long term, money supply, debt, and prices will increase until there is a systemic reset or crash. What will endure throughout the inevitable inflation, deflation, and crash? Gold and silver will endure. Paper assets are only as good as the collateral backing them, and many of those assets could vaporize in a systemic reset. Gold and silver will survive and maintain their value, while the dollar and Treasury Debt may lose a good portion of their value and purchasing power.

maple-leaf-442x450

Hope & Change

Hope is not a good basis for an investment plan. Hope is not a viable foundation for a political philosophy or for the actions of a government. Hope will not pay the bills, reduce the debt, or return sanity to an out-of-control spending process.

Ask yourself how well these are working:

  • We spent the rent money on lottery tickets and booze. We hope something good happens soon.
  • We spent a few $Trillion on useless wars in the middle-east. We hope it helped.
  • We spent $17,000,000,000,000 more than our revenue. We hope it is not a problem.
  • We sold or “leased” much of our accumulated gold and sent it to China. We hope nobody noticed and that it will not matter.
  • We hope we don’t have another stock market or bond market crash.
  • We hope to increase taxes and reduce benefits while increasing consumer prices and we hope to keep the people happy and voting for the incumbents. (This is also change.)
  • We hope to actually pass a budget real soon. (Congress has not passed a budget in the past five years. Did anyone notice or care?)
  • We hope to reduce the deficit real soon.
  • We hope the Federal Reserve and the politicians will make it all better.
  • We hope that hope and change will begin to work real soon.

As for “CHANGE” – it can be positive or negative. Not all change is good. We “HOPED” for better government and we received Obamacare. Was that a positive change?

Gee, we hope that the 10 Million or so people whose insurance plans will be cancelled and who will be forced to purchase new health insurance policies at much higher rates are okay with the change, increased deductibles and the increased costs. We hope they don’t get upset or angry or think someone lied to them.

Liberty-Eagle
Gold and Silver!

Dr. Phil says that the best predictor of future behavior is relevant past behavior. Using that thought it seems clear that:

  • The official national debt will continue to exponentially increase like it has for more than four decades.
  • The dollar will continue to decline in purchasing power like it has for the past 100 years.
  • Gold and silver will continue to (erratically) increase in price like they have for the past 40 years.
  • Gold and silver will hold their value and purchasing power like they have for 5,000 years.
  • Government deficit spending and borrowing will continue.
  • There will be another budget crisis, and another, and another.
  • Politicians will talk, make promises, and become much wealthier while the middle and lower classes find their expenses increasing far more rapidly than their incomes. We will re-elect those politicians.
  • Hope and change will continue to produce what they have so far – nothing but more debt.

Gold and silver will outlast hope, change, paper money, treasury debt, and political promises. Most people do not and will not understand why!
So, place your bets!

  • Paper currency or gold and silver.
  • Debt based paper assets or real money – gold and silver.
  • Political promises or something of lasting value.
  • Futures contracts on a corrupt exchange or land.
  • Credit card debt or stacked silver in a safe.
  • Social security income in a decade or gold in hand now.
  • Obamacare or good health.
  • Nutritionally empty fast food or healthy nutritious food.
  • Artificial and phony or real and valuable.
  • Reality television or the Holy Bible.

Most people will stick with what they know – paper currency, debt based paper assets, political promises, hope and change, and reality television. The choice is yours, but you will have a better financial future and more peace of mind if you invest in something real and valuable.

GE Christenson
aka Deviant Investor