If you’ve been investing in precious metals then you’ve likely made a pretty decent profit on your wealth preservation investment over the last several years. With the popularity of precious metals increasing exponentially as the economic crisis and geopolitical climate heats up, investors looking for protection against inflation and instability have been pouring into precious metals ETFs, stocks, contracts, and pool accounts. For many, the physical metal has become the investment vehicle of choice, but a large portion of investors, especially large buyers, choose to store those metals with their brokers/dealers.
When all hell finally breaks loose, and it’s time to finally sell those assets and trade them in for either paper currency, real estate or other investments, how sure are you that you will be able to take physical delivery of the metals you’ve purchased?
Bill Cramer of St. Louis was pretty confident everything was on the up-and-up. He purchased 5000 ounces of silver back in 2003 for a spot price of $4.94 and stored them with an east coast broker. When he was discussing his holdings with his coin dealer, the dealer dared him to try and take delivery of the metal.
Bill took him up on that dare and contacted his broker requesting to take delivery of his supposed physical metal holdings, for which he had been paying storage fees for years. As you may have guessed, the broker advised him that physically delivering the metals was not possible:
So, I took his dare, I called them up, it was June of last year. The metal I had purchased in January of ’03. I said “I’d really like to take delivery of my metal – the five thousand ounces.” They go “well, that’s not possible.” And, I go “well, I’ve been paying storage fees since January of ’03, what do you mean I can’t take delivery.”
“Well, it’s part of the account. It’s called a pool account. And, you don’t take delivery, you just participate in the appreciation.”
So I immediately sold that 5000 ounces at $18.33 and I had my cell phone in my hand and I immediately purchased 2500 silver eagles at $18.41 and that’s how I reconciled the problem of not being able to take delivery of my physical metal from a brokerage account.
Source: CNBC
If you’re holding metals outside of your immediate possession (i.e. in a safe deposit box, with a family member, an off premises safe or a hole in your backyard), then we strongly suggest you understand what your investment is and is not. If it’s paper, understand that if and when the swindle in paper markets for precious metals is finally understood by mainstream investors, and the paper assets collapse, you will likely be left with nothing.
If you happened to recently purchase $1 billion dollars in gold and have it “safely” stored in a New York bank several thousand miles away, you may want to think twice about whether or not that metal is actually stored, in physical form, or if it’s just another paper swap. If there’s one group of people who have no scruples whatsoever when it comes to the investments and life savings of individuals for whom they manage funds, it’s New York firms and brokers.
Be forewarned and forearmed.
Reprinted from SHTF Plan.
April 25, 2011
Mac Slavo [send him mail] is a small business owner and independent investor.
Copyright © 2011 Mac Slavo
Showing posts with label gold silver price manipulation. Show all posts
Showing posts with label gold silver price manipulation. Show all posts
Monday, April 25, 2011
Friday, April 22, 2011
Sliver is about to take off like a rocket
As a result of active "demonetization" efforts by the IMF and its member central banks, gold and silver have experienced the type of volatility that has given conservative investors reasons not to perceive the metals as dependable cash alternatives. Instead gold and silver have become known as the asset class to hold as a hedge against inflation.
However, during the 1990's, when inflation was in general much higher than it has been since the turn of the millennium, gold and silver prices drifted lower and stagnated. However, since 2000, gold and silver have risen by over 400 and 700 percent respectively. Remarkably, this has occurred over a time frame during which, by most accounts, low inflation has prevailed. How can this be explained?
In 1944 when the U.S. dollar was considered 'as good as gold,' it was made the international reserve currency. This unique status is the reason that Fed Chairman Ben Bernanke was recently able to say that, "The U.S. Government has a technology, called the printing press that allows it to produce as many dollars at it wishes at essentially no cost."
Today, with the Federal Reserve treating the greenback as a never ending lottery ticket for deficit spending politicians, many investors feel the U.S. dollar is good for nothing. As a result there is an increasing international pressure to remove the U.S. dollar's reserve status. Given that there is no widely accepted alternative to the dollar (the euro has many problems of its own), this is creating fears of an international currency crisis, which has fueled interest in precious metals. So metal prices have risen even with low inflation expectations.
In order to paper over the effects of the financial collapse, central banks around the world are printing as fast as their presses can manage. But unlike prior periods of monetary inflation (like the 1970's), some major powers (China) are withdrawing liquidity. In addition, emerging market manufacturers are holding down prices even as currencies lose value. This may explain the strong performance of metals despite seemingly manageable inflation. But if higher prices emerge into the light of day (as they already have in commodities), currency uncertainty combined with high inflation should intensify the market for precious metals. The question then becomes how to play the market.
Gold has always been the reserve asset of choice for central banks and major private investors. But now, as smaller investors become aware that paper dollars are under threat, many are looking towards silver. Taken in aggregate, these smaller investors have enormous buying power. Through ETF's and mining stocks they are not bound by government restrictions on holding precious metals in retirement funds. In contrast to gold, central banks do not hold much silver. They are therefore less able to push down the price of silver by dumping inventory when rising metal prices undermine currency confidence.
Indeed, so far this year, silver is up nearly 50% while gold is up only about 6%. Given these figures, investors may be forgiven if they feel that the big move in silver may be over. Technical analysis may provide comfort.
According to the U.S. geological survey silver is about 17.5 times more abundant than gold in the earth's crust. This ratio has long been appreciated by civilizations throughout history. Thus, in 1792 the newly formed U.S. Congress passed the First Coinage Act, which legally set the valuation ratio of gold/silver at 15 (it was raised to 16 in 1834). In the early 1990's, with silver out of favor with investors, the ratio approached 100. At the beginning of this century gold stood at some $250 an ounce and silver at $4, putting the ratio at about 62. Today, with gold at around $1,500 an ounce and silver at $45, the ratio has closed to around 33. But this is still far higher than the ratio seen in the late 1980's (silver's last mega spike), and if far higher than the natural proportions of gold and silver would suggest.
The demand for physical silver also remains strong, which supports the market for spot silver. Smaller investors may find gold too expensive at $1,461 an ounce, but may be nevertheless prepared to buy several ounces of silver for much less. Potentially, this 'poor man's gold' market may help drive silver prices far faster than gold.
April 22, 2011
John Browne is senior market strategist for Euro Pacific Capital.
However, during the 1990's, when inflation was in general much higher than it has been since the turn of the millennium, gold and silver prices drifted lower and stagnated. However, since 2000, gold and silver have risen by over 400 and 700 percent respectively. Remarkably, this has occurred over a time frame during which, by most accounts, low inflation has prevailed. How can this be explained?
In 1944 when the U.S. dollar was considered 'as good as gold,' it was made the international reserve currency. This unique status is the reason that Fed Chairman Ben Bernanke was recently able to say that, "The U.S. Government has a technology, called the printing press that allows it to produce as many dollars at it wishes at essentially no cost."
Today, with the Federal Reserve treating the greenback as a never ending lottery ticket for deficit spending politicians, many investors feel the U.S. dollar is good for nothing. As a result there is an increasing international pressure to remove the U.S. dollar's reserve status. Given that there is no widely accepted alternative to the dollar (the euro has many problems of its own), this is creating fears of an international currency crisis, which has fueled interest in precious metals. So metal prices have risen even with low inflation expectations.
In order to paper over the effects of the financial collapse, central banks around the world are printing as fast as their presses can manage. But unlike prior periods of monetary inflation (like the 1970's), some major powers (China) are withdrawing liquidity. In addition, emerging market manufacturers are holding down prices even as currencies lose value. This may explain the strong performance of metals despite seemingly manageable inflation. But if higher prices emerge into the light of day (as they already have in commodities), currency uncertainty combined with high inflation should intensify the market for precious metals. The question then becomes how to play the market.
Gold has always been the reserve asset of choice for central banks and major private investors. But now, as smaller investors become aware that paper dollars are under threat, many are looking towards silver. Taken in aggregate, these smaller investors have enormous buying power. Through ETF's and mining stocks they are not bound by government restrictions on holding precious metals in retirement funds. In contrast to gold, central banks do not hold much silver. They are therefore less able to push down the price of silver by dumping inventory when rising metal prices undermine currency confidence.
Indeed, so far this year, silver is up nearly 50% while gold is up only about 6%. Given these figures, investors may be forgiven if they feel that the big move in silver may be over. Technical analysis may provide comfort.
According to the U.S. geological survey silver is about 17.5 times more abundant than gold in the earth's crust. This ratio has long been appreciated by civilizations throughout history. Thus, in 1792 the newly formed U.S. Congress passed the First Coinage Act, which legally set the valuation ratio of gold/silver at 15 (it was raised to 16 in 1834). In the early 1990's, with silver out of favor with investors, the ratio approached 100. At the beginning of this century gold stood at some $250 an ounce and silver at $4, putting the ratio at about 62. Today, with gold at around $1,500 an ounce and silver at $45, the ratio has closed to around 33. But this is still far higher than the ratio seen in the late 1980's (silver's last mega spike), and if far higher than the natural proportions of gold and silver would suggest.
The demand for physical silver also remains strong, which supports the market for spot silver. Smaller investors may find gold too expensive at $1,461 an ounce, but may be nevertheless prepared to buy several ounces of silver for much less. Potentially, this 'poor man's gold' market may help drive silver prices far faster than gold.
April 22, 2011
John Browne is senior market strategist for Euro Pacific Capital.
Monday, April 18, 2011
UT Takes in 1 Billion in Gold to Hedge Against Inflation
Dallas hedge-fund manager J. Kyle Bass helped advise the University of Texas Investment Management Co. on taking delivery of 6,643 gold bars, worth $987 million on April 15, now stored in a bank warehouse in New York. Bass, who made $500 million with 2006 bets on a U.S. subprime-mortgage market collapse, said managers of the endowment, known as UTIMCO, sought board approval to convert its gold investments into bullion this year. A board member, Bass, 41, said he was asked to help with that process. While Bass, a managing partner at Hayman Capital Management LP, said in an April 16 e-mail that “the decision to purchase and take delivery of the physical gold” was made by endowment staff members, “I helped where I could.” Gold futures touched a record $1,489.10 an ounce April 15 in New York before closing at $1,486. The Texas fund’s $19.9 billion in assets ranked it behind only Harvard University’s endowment as of August, according to the National Association of College and University Business Officers. Last year, UTIMCO added about $500 million in gold investments to an existing stake, said Bruce Zimmerman, the endowment’s chief executive officer. The fund’s managers sought to take delivery of bullion to protect against demand for the metal overwhelming supply, according to Bass. Open interest in gold futures and options traded on the Comex typically exceeds supplies held in its warehouses. If the holders of just 5 percent of those contracts opted to take delivery of the metal, there wouldn’t be enough to cover the demand, Bass said. Printing Money “If you own a paper contract where they can only deliver you 10 cents on the dollar or less, you should probably convert it to physical,” said Bass, who isn’t related to Fort Worth’s billionaire Bass family. He said holding cash wasn’t a better choice because the rate of inflation exceeds money-market rates by 2.5 percent to 3 percent, eroding the value of cash. “Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said April 15 in a telephone interview. “I look at gold as just another currency that they can’t print any more of.” Sovereign-debt concerns also boosted demand for the metal on April 15, driving Comex futures to an all-time high. The price has climbed 28 percent in the past year. Gold’s 10-year rally has attracted billionaire investors such as George Soros and John Paulson, who seek a store of value as record-low interest rates erode returns on currencies. Wealthy Buyers Few investors take physical delivery of bullion. As of April 14, 2,860 contracts this month, about 0.5 percent of total open interest, had been converted to metal, exchange data show. Physical deliveries have slowed as gold topped records this year, said Blake Robben, a senior market strategist who handles deliveries of Comex metals for clients at Chicago-based broker Lind-Waldock. “It’s usually wealthy individuals with net worths over $1 million who want to take delivery to diversify away from the dollar,” Robben said. “Generally, it’s a big hassle and not worth it to take delivery.” Investors can own 100 ounces of gold futures with Lind- Waldock by paying a $100 fee and putting up $6,571 in a margin account to purchase one contract. To take delivery of a 100- ounce bar, investors have to pay the full price of the contract. Bass, a Texas Christian University graduate who was named to the endowment’s board in August, is a former salesman with Bear Stearns Cos. and Legg Mason Inc. He said about 5 percent of his hedge fund is invested in gold. The endowment, which oversees funds held by the University of Texas System and Texas A&M University, has 664,300 ounces of bullion in a Comex-registered vault in New York owned by HSBC Holdings Plc, the London-based bank, according to a report distributed at a meeting in Austin. “I simply voted as a board member to approve the storage facility and concurred with their decisions,” Bass said.
Thursday, February 17, 2011
Silver making huge strides
The historical relationship between gold and silver is somewhere right around 15:1. Last year silver was down as much as 70:1. As of today we are closer to 40:1.
The artificial suppression of the silver price may be coming to an end.
Last July, silver was in the high $18 range. Today it is bringing $31.70. What changed? Well, the Fed printed a shitload of money in the meantime. What did you expect to happen to commodity prices.
Silver and gold are only the most popular examples of the loss of value of the dollar, but look around you at oil, grain, beef, pork, etc.... all commodities are kicking the dollar's ass.
Monday, September 27, 2010
Preserve and Protect
You may think that I am speaking about the Oath of Office; sworn by millions of Americans. But it's worded slightly differently. "Uphold and Defend" is the way that the Oath reads. The following should, however, carry the same weight at a personal level.
I'm talking about Preserving and Protecting your personal "wealth" and that of those you hold most dear to your heart. Be it large or small. Be what it may, is no matter. It is yours and yours alone. It does not belong to the Federal Government, or God forbid, The Federal Reserve Bank. (though both will try to wrest it from you) .
Since it's inception, the FED (Federal Reserve Bank) has been working diligently to steal every dime you earn and make you an "interest slave" to the banking industry. All the while our Federal Government (FGov't) has also been making you a "tax slave"; both nefarious schemes arrived on the scene during the Wilson administration. Odd. (Wilson, an avowed "progressive" i.e. communist, and racist doesn't quite fit the mold of today's Democrat, but I digress, or do I) . Since the inception of the FED in 1913 , the US Dollar, which had a fixed value, based on the Coinage Act of 1792, has lost 98% of it's value. How does that happen? Well, the FED pumps money into the economy by means of Fiat Creation, resulting in an inflated money supply, which is of course, actual Inflation.
The Coinage Act of 1792, set an exact rate of exchange for Dollars to Gold and Silver. If the Treasury of the USA had enough gold and silver to back all of the dollars printed on paper, then a stable currency existed. Today, that is absolutely not the case, by a ratio of nearly 45:1. There is approximately 45 times as much paper in circulation as there is gold in reserve.
Gold and silver have specific historical commodity value. In ancient Rome, a "gold coin" (which for the sake of argument we will call an ounce) would buy a fine suit of clothes or 300 loaves of bread. Today, with gold at $1300 per ounce, it still has exactly the same purchasing power or commodity value. The dollar, however is falling fast.
In 1909, when the dollar was tied to gold, that commodity and the dollar where one and the same. Gold, $21/oz. The Dollar was "worth it's weight in gold". A 1909 Ford Sedan was $850 or 40 oz of gold. Today a comparable automobile, the height of fashion, new to market, and the height of technology is relatively the same price. Take a BMW 3 series auto. Really kind of run of the mill, by comparison to the level of technology in 1909 terms, but still 40 oz of Gold.
If you want to "Preserve and Protect" there is only one way. Precious metals of historical commodity value. Gold or Silver.
But, if you buy gold and silver, you must do one thing. Take delivery. Never buy paper promises of gold and silver on demand.
I'm talking about Preserving and Protecting your personal "wealth" and that of those you hold most dear to your heart. Be it large or small. Be what it may, is no matter. It is yours and yours alone. It does not belong to the Federal Government, or God forbid, The Federal Reserve Bank. (though both will try to wrest it from you) .
Since it's inception, the FED (Federal Reserve Bank) has been working diligently to steal every dime you earn and make you an "interest slave" to the banking industry. All the while our Federal Government (FGov't) has also been making you a "tax slave"; both nefarious schemes arrived on the scene during the Wilson administration. Odd. (Wilson, an avowed "progressive" i.e. communist, and racist doesn't quite fit the mold of today's Democrat, but I digress, or do I) . Since the inception of the FED in 1913 , the US Dollar, which had a fixed value, based on the Coinage Act of 1792, has lost 98% of it's value. How does that happen? Well, the FED pumps money into the economy by means of Fiat Creation, resulting in an inflated money supply, which is of course, actual Inflation.
The Coinage Act of 1792, set an exact rate of exchange for Dollars to Gold and Silver. If the Treasury of the USA had enough gold and silver to back all of the dollars printed on paper, then a stable currency existed. Today, that is absolutely not the case, by a ratio of nearly 45:1. There is approximately 45 times as much paper in circulation as there is gold in reserve.
Gold and silver have specific historical commodity value. In ancient Rome, a "gold coin" (which for the sake of argument we will call an ounce) would buy a fine suit of clothes or 300 loaves of bread. Today, with gold at $1300 per ounce, it still has exactly the same purchasing power or commodity value. The dollar, however is falling fast.
In 1909, when the dollar was tied to gold, that commodity and the dollar where one and the same. Gold, $21/oz. The Dollar was "worth it's weight in gold". A 1909 Ford Sedan was $850 or 40 oz of gold. Today a comparable automobile, the height of fashion, new to market, and the height of technology is relatively the same price. Take a BMW 3 series auto. Really kind of run of the mill, by comparison to the level of technology in 1909 terms, but still 40 oz of Gold.
If you want to "Preserve and Protect" there is only one way. Precious metals of historical commodity value. Gold or Silver.
But, if you buy gold and silver, you must do one thing. Take delivery. Never buy paper promises of gold and silver on demand.
Monday, April 12, 2010
A Simple Experiment to Disprove the Alleged Gold/Silver Price Suppression Schemes | zero hedge
A Simple Experiment to Disprove the Alleged Gold/Silver Price Suppression Schemes zero hedge
It should be a very simple experiment to disprove the price suppression theory. All you have to do is convert 10% of all of your gold and silver paper/ETF's etc... into physical gold that you take delivery of. Simple, just get everyone you know who is invested in gold and silver paper to do the same. If the physical gold and silver exists, there will be no problem. The issue at hand however is that the big bullion banks have been issuing paper and have created a fractional reserve system wherein they are not physically holding the gold and silver that the paper says they are.
Estimates are somewhere between 1 and 3% of all the paper that has been sold is actually backed by the metals that the paper guarantees.
When people finally get wise to this, there will be a run on the banks like no one could ever imagine. There is a metals bubble, but it's not going to burst, it's going to skyrocket. If you are currently in physical possession of precious metals, you will be the new wealthy class.
It should be a very simple experiment to disprove the price suppression theory. All you have to do is convert 10% of all of your gold and silver paper/ETF's etc... into physical gold that you take delivery of. Simple, just get everyone you know who is invested in gold and silver paper to do the same. If the physical gold and silver exists, there will be no problem. The issue at hand however is that the big bullion banks have been issuing paper and have created a fractional reserve system wherein they are not physically holding the gold and silver that the paper says they are.
Estimates are somewhere between 1 and 3% of all the paper that has been sold is actually backed by the metals that the paper guarantees.
When people finally get wise to this, there will be a run on the banks like no one could ever imagine. There is a metals bubble, but it's not going to burst, it's going to skyrocket. If you are currently in physical possession of precious metals, you will be the new wealthy class.
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