July 6, 2022

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.

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

U.S. Mint Silver Bullion Coin Sales Hit Record High

proof-silver-eagleAs discussed in a previous post, sales of the American Eagle silver bullion coins were on track to post record sales volume in 2013.  It’s now official – sales of U.S. Mint silver bullion coins surged past the old record set in 2011 and are track to hit a record high of 45 million ounces in 2013.

According to the U.S. Mint year to date sales of the American Eagle silver bullion coins total 40,175,000.  The previous record was set in 2011 when sales of the silver bullion coins came in at 39,868,500.  Based on monthly sales volume, the U.S. Mint might sell an additional 5 million coins by year end.

The American public loves the American Eagle silver bullion coins and can’t seem to get enough of them.  After an exuberant rise to almost $50 per ounce during 2011 silver has corrected in price to the low $20’s.  Although the decline in silver has elicited numerous bearish commentary in the mainstream press, long term investors seem to be doubling down as the price of silver price has become irresistibly cheap.  Yearly sales of the silver bullion coins have increased by almost 500% since 2008.

Total yearly sales of the American Eagle silver bullion coins are shown in the chart below with the 2013 total as of November 12, 2013.

2013-W Proof Silver Eagle

proof-silver-eagle

In addition to the silver bullion coins the U.S. Mint produces a proof silver eagle coin.  According to the Mint News Blog the 2013-W Proof silver Eagle has already sold out and 2013 is the third year in a row that this popular product has sold out well before year end.

Sales for the 2013 Proof Silver Eagle originally began at the US Mint on January 24, 3013. Opening orders were slower compared to the prior two years, however the pace of orders remained brisk throughout the year. The coin typically represented one of the US Mint’s top sellers on the weekly sales reports.

Recently, weekly sales had spiked, with 29,613 units orders in the previous reporting period and an indication of 29,025 units ordered in the week just ahead of the sell out. Sales data shows total orders at 880,030 units. This is a bit higher than recent prior years.

In 2011, the individual proof Silver Eagle had sold out on November 22 after reaching sales of 850,000. In 2012, the sell out had occurred on November 13 when sales had reached 819,217.

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.

1881-CC-Morgan-Dollar

The U.S. Mint American Eagle silver bullion coins remain a popular method of building wealth with periodic purchases.  The American public can’t seem to get enough of the bullion coins and the desperate actions of global central banks to keep the financial system afloat with a deluge of paper money can only cause more financial anxiety and more silver purchases going forward.

American Silver Eagle Coin Sales On Verge of Record Shattering Year

american-silver-eagleThe American public’s love affair with the U.S. Mint American Eagle silver bullion coin continues unabated.   Ever since the financial meltdown of 2008 there has been an explosion in demand for the silver coins.  Average yearly sales of the silver bullion coins have increased by almost 500% since 2008 and sales for 2013 are on the verge of shattering all previous yearly sales records.

According to the U.S. Mint, sales of the American Eagle silver bullion coins totaled 3,087,000 ounces for October up slightly from September monthly sales.   Demand for the silver coins has remained robust throughout the year and total annual sales at the end of October reached 39,175,000 million ounces.

The all time yearly sales record for American silver bullion coins was 2011 when sales hit 39,868,500 ounces.  Based on current monthly sales the total number of silver coins sold in 2013 should be in the neighborhood of 45,000,000 ounces or almost 13% higher than the record hit in 2011.

Total yearly sales of the American Eagle silver bullion coins are shown in the chart below with the 2013 total through the end of October.

The market value of all silver bullion coins purchased since 2000 is $5.9 billion.  We know that silver prices will fluctuate over the years.  We also know that the “all mighty government” cannot produce silver coins by the trillions like they do with the U.S. dollar.  Based on the irresponsible financial conduct of both the Federal Reserve and the Federal government, is it any wonder that citizens are voting with their pocketbooks and moving into real stores of value such as silver?

SILVER DOLLARSThe 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.

The U.S. Mint American Eagle silver bullion coins remain a popular method of building wealth with periodic purchases.  The American public can’t seem to get enough of the bullion coins and the desperate actions of global central banks to keep the financial system afloat with a deluge of paper money can only cause more financial anxiety and more silver purchases going forward.

Gold and Silver Are the Answer to Endless Fed Printing

gold-buffaloBy: GE Christenson

THE SETUP

A century ago bankers created the plan for a U.S. central bank, bought enough votes to get it passed into law, encouraged deficit spending, government debt, and extracting the interest payments from taxpayers. The process has worked well for the bankers.

After several expensive wars and the expansion of social programs the U.S. had created considerable debt. In fact, debt and the money supply had increased so much that inflation became a serious problem in the 1960s. Further, the U.S. trading partners no longer wanted dollars but wanted gold instead since they could see that dollars were being created indiscriminately and were losing their value. Nixon (August 15, 1971) did what was good for the financial industry, severed the remaining connection between the dollar and gold, allowed the money supply and debt to increase to never-seen-before levels, and planted the seeds of self-destruction for the dollar and the US economy.

THE CRASH

The process continued until 2008 when the debt and derivatives bubbles had grown so massive that the economy could no longer sustain them. The economy and stock market crashed and financial and political leaders stared “into the abyss” of deflationary collapse, reduced Wall Street income and bonuses, loss of votes, and did what they perceived as necessary: printing money, Quantitative Easing (QE), injecting liquidity, bond monetization, extend and pretend, and so on.

Courtesy: coinupdate.com

Courtesy: coinupdate.com

THE “SOLUTION”

The choice was made to “solve” an excessive debt problem by creating more debt – Quantitative Easing (QE) and increased deficit spending. Deficits were increased to a $Trillion or so per year while the government bailed out the bankers and politicians and the public watched Reality TV. It appeared to work, somewhat, for a while.

So the economy (financial industry) and government are desperate for QE, and similar to being hooked on “meth,” they find it difficult to kick the habit and get off the “drugs” of QE, money printing, and central banking. As Gold Stock Bull says,

The economy is addicted to QE and reliant on central bank stimulus to stay afloat. The world now understands that the FED cannot end the bond-buying program and has no intention of doing so anytime soon. If anything, we are likely to see increased quantitative easing in the future, just as a drug addict must up their dosage in order to have the same impact. This monetization of debt increases the bullish outlook on gold, as the gold price has historically trended higher along with the FED balance sheet.

Marc Faber and Deepcaster:

“The question is not tapering. The question is at what point will they increase the asset purchases to say $150 [billion], $200 [billion], a trillion dollars a month…”

“The Fed has boxed itself into a position where there is no exit strategy (and created) a colossal asset bubble…”

Continue QE and you get hyperinflation…”

“Halt, or even taper, QE and the markets crash.”

The picture, sans Fed propaganda, is increasingly clear. QE is necessary to supplement the financial industry and the voracious appetite of the U.S. government for more spending. Merely slowing QE will probably cause markets to crash, interest rates to rise, the government’s expense for interest on past debt will increase while tax revenues decline, and consequently the government needs more, not less, QE.

US debt to gdp

Of course there is always a way out – the “nuclear” option – let it crash and burn! But no one wants a crash as everyone will be hurt by that choice. Consequently the Fed and the U.S. government (the powers that be – TPTB) scramble desperately. What are the options?

  • More QE buys time. Less QE might well cause a crash. So TPTB choose more QE.
  • More spending keeps the big corporations (who make LARGE donations to congress) happy. If the government spends less, “everyone” complains. So TPTB choose more spending, more deficits, and more QE.
  • Higher interest rates mean that the interest expense for the U.S. government increases. More interest expense means larger deficits and so TPTB are forced to choose more QE.
  • Foreign purchases (China, Japan, Russia, etc.) of newly issued U.S. treasury debt are decreasing while some countries are actually reducing their current holdings of treasury debt. This forces the Fed to be the “buyer of last resort” and purchase, via more QE, the debt that normally would have been purchased by China, Japan, Russia and others. Fewer foreign purchases necessitate more QE.
  • A weaker economy and fewer people employed means less economic activity, diminished tax receipts and larger deficits. Those larger deficits guarantee more borrowing and more QE.
  • Obamacare will create more government expenses and less disposable income for average Americans, which means less consumer spending and therefore less tax revenue for federal, state, and local governments. There is no choice here – it is already law and we are going DOWN that road to much higher consumer costs, lower government revenue, and more government control. The result will be a government desperate for more revenue and more QE.

It does indeed look like a “QE trap.” So ask yourself:

  • More QE will weaken the dollar, on average, because more supply indicates less value for each dollar. What will that do to consumer prices for food and energy when the inevitable inflation works its way into the consumer economy?
  • What will happen to the prices for gold and silver when the realization finally hits the populace that interest rates are rising, QE is here forever, congress will never balance the budget, and the dollar will continue to weaken. (Hint: There is no fever like gold fever.)
  • It is clear that other countries increasingly dislike the U.S. dollar, U.S. treasury debt, and the current policies of the U.S. administration. How much will the prices for imported oil, gold, and silver increase as a consequence of the above?
  • What will a dollar collapse do to the prices of gold and silver?
  • Knowing the policies of the Fed, the congress, the administration, and the inevitability of QE, do you own enough gold, silver, platinum, land, diamonds, collectible art and other non-paper assets such that you can sleep well at night?

CONCLUSIONS

The U.S. government has spent itself into the “no-win” position whereby more QE is both necessary and dangerous. Most current policies, such as congressional gridlock, inability to pass a budget for five years, Obamacare, weakening economy and tax receipts, declining relations with foreign nations, massive deficits, declining total employment, inability to reduce spending, ongoing wars, probability of future wars, and more, suggest that QE must continue and probably increase.

Stocks may protect you  but gold and silver are the safer choice given the inevitability of more QE and a potential dollar collapse.

You decide!

GE Christenson
aka Deviant Investor (see full article here)

Selling Climax in Gold and Silver Stocks Is a Classic Buy Signal

chartThe bear case for gold and silver stocks is well known and investors have reacted by dumping mining stocks indiscriminately.  The staggering decline in gold and silver stocks over the past two years now exceeds the decline that occurred during the crash of 2008 when the financial system was at the brink of collapse.

The Philadelphia Gold and Silver Index (XAU) is an index comprised of sixteen major precious metal mining companies. During the crash of 2008 the XAU declined by 58.5%.  From the peak of 226.58 in December 2010 to the low of 90.15 in June 2013, the XAU has collapsed by 60.2%.

Courtesy Yahoo Finance

Courtesy Yahoo Finance

Has the sell off of the past two years been so extreme as to constitute a selling climax which usually signals a major reversal from the lows?  According to John J. Murphy, an acknowledged technical analyst, a selling climax is “usually a dramatic turnaround at the bottom of a down move where all the discouraged longs have finally been forced out of the market on heavy volume.  The subsequent absence of selling pressure creates a vacuum over the market, which prices quickly rally to fill.”

It is too early to tell if prices have reached a capitulation bottom but investors who haven’t sold out positions in the precious metal miners after a 60% decline are probably thinking more about buying than selling.  Another factor that impedes future selling is the fact that investors are now getting paid to wait for a turnaround in the mining industry.

Historically, precious metal miners have never paid out large dividends but this metric has changed.  The stock price declines in  senior gold and silver producers have been so severe that the dividend yields on some gold mutual funds now approaches 4%.

The $2.4  billion Vanguard Precious Metals and Mining fund (VGPMX) currently yields 3.76% and holds a well diversified portfolio of seasoned mining companies.  The Vanguard fund holds investments in both domestic and foreign companies involved in activities related to gold, silver, platinum, diamonds, and rare minerals.

The chart on VGPMX looks like a reason for precious metal investors to commit suicide but if a selling climax has occurred, the losses of the past two years may be quickly recouped.  In addition, the chart of the Vanguard fund has made a triple bottom over the past six months.

VGPMX

Courtesy: Yahoo Finance

Another classic sign of a bottom in precious metal stocks was discussed by Mebane Faber who has drawn an analogy to the bottom of stock prices in early 2009 to the current chart of the Market Vectors Gold Miners (GDX).  In 2009 the S&P 500 kept hitting new lows even as the RSI and the MACD were making higher lows which is a classic bull signal.  A similar situation exists today with the GDX.

Courtesy: mebanefaber.com

Courtesy: mebanefaber.com

 

 

Global Debt Bubble Will Push Gold and Silver Prices Higher

money printingBy: GE Christenson

To paraphrase William Shakespeare, “the debt ceiling drama is a tale told by idiots, full of sound and political fury, signifying nothing.” We now have a reprieve for three months – the 11th hour deal, complete with payoffs and the usual corruption, will keep the world safe for more ineptitude, deficit spending, administrative hypocrisy and the guarantee of a sequel. All is well! Celebration! Champagne! Cut to a prime-time commercial promoting big government and Obamacare…

And back in the real world where people work and support their families, life goes on, few noticed the lack of government “services,” and in three months we will be blessed with another episode of our “Congressional Reality Show.”

Gold, Silver, and National Debt

Examine the following graph. It is a graph of smoothed* annual gold and silver prices and the official U.S. national debt since 1971 when the dollar lost all gold backing and was “temporarily” allowed to float against all other unbacked debt based currencies. All values start at 1.0 in 1971.

The legend does not show which line represents gold, silver, or the national debt. Why? Because it hardly matters! Government spends too much money to perform a few essential services and to buy votes, wars, and welfare, and thereby increases its debt almost every year, while gold and silver prices, on average, match the increases in accumulated national debt.

Our 435 representatives, 100 senators, and the administration listened to their corporate backers and chose to increase the debt ceiling, continue spending as usual, not “rock the boat,” and carry on with the serious business of politics and payoffs for another three months. It is safe to say that, on average, gold and silver will continue rising, along with the national debt, as they all have for the past 42 years. Further, like the national debt, both gold and silver (and probably most consumer prices) will increase substantially from here, until some traumatic “reset” occurs. What sort of reset?

  • A “black swan” event that is unpredictable, by definition.
  • Middle East war escalation.
  • Derivative melt-down.
  • A dollar collapse when foreigners say “enough” to the dollar debasement policies pursued by the Fed and the US government.
  • A collapse of the Euro or Yen for any number of reasons.
  • A banker admits that most of the official gold supposedly held in New York, London, and Fort Knox is gone and has been sold to China, India, and Russia.
  • You name the false flag operation.

My guess: Gold and silver prices will rise gradually for a while, and then quite rapidly after one of the above “financial icebergs” smashes into our “Titanic” world monetary system. Further, we will have difficulty locating physical gold available for sale after such an event occurs, even at much higher prices. Now would be a good time to purchase physical gold and silver for storage in a secure storage facility. Paper gold will not be safe…

Congress has acted. The President has spoken. The Federal Reserve will continue “printing” dollars to increase banker profitability, fund the government, and fight the forces of deflation. This is business as usual – as it has been for the past 42 years.

Here is the second version of the graph with gold, silver, and national debt labeled. Note how relatively undervalued silver is at the present time! Dashed lines indicate guesses for the future normalized values for gold, silver, and the national debt.

The debt ceiling drama and “Congressional Reality Show” will return to prime time in January and February, right after “Dancing with the Senators” and just before “House Wives of Salt Lake City.” Expect sound and fury signifying nothing.

Further commentary on the case for gold and silver:

The Reality of Gold and the Nightmare of Paper Silver: The Noise is Deafening
GE Christenson
aka Deviant Investor

* Gold and silver prices were smoothed by taking monthly closing prices and a 24 month simple moving average. Annual prices graphed are the average of the 12 average monthly prices per year.