Gold is breaking out after forming a 6-year base.
Today, 1 oz of physical gold is at $1,627.
The soaring price is propelled by HUGE supply-deficits in London & New York of “Good Delivery” gold bullion (400-oz bars).
Buyers who prefer actual bullion to promissory pieces of paper are beginning to drive prices
THE PAPER MARKET
In the West, few investors own a single ounce of gold. Most people prefer the ease of buying and selling precious metals in the form of “derivatives.” Exchange Traded Funds (ETFs), options, and commodities futures contracts derive value from fractional reserves.
International prices are established by large flows of money into these highly-leveraged instruments. However, most of the bullion underlying their value is mere PAPER.
According to trading data from the London Bullion Market Assn. (LBMA), bullion banks predominantly trade PAPER gold (synthetic positions), rather than PHYSICAL gold. Most of the gold traded by ICBC Standard Bank (Industrial & Commercial Bank of China), HSBC (Hongkong & Shanghai Banking Corp), UBS (Union Bank Switzerland), Scotiabank, and JPMORGAN does not exist.
How is it possible?
The bullion banks have an endless, digital supply of “synthetic” bullion.
Over-the-counter markets in London and Zürich alone trade more than 940 tons of gold PER DAY. Yet, global mine production increases the gold supply by only 2,500 to 3,000 tons PER YEAR. This means more gold is traded in Europe every 3-4 days than is mined worldwide in 1 yr.
The banks’ unlimited, synthetic supply
enables unlimited “short-selling.”
There is little connection between the enormous positions held by the bullion banks and the meager (depleted) stocks of marketable (deliverable) bars vaulted in their warehouses. The exchanges rarely deliver PHYSICAL bars. The vast majority of accounts are settled with cash.
2011 Bullion Bank Run
Normally, PAPER short-sellers are able to keep a lid on prices. The last time PHYSICAL FUNDAMENTALS controlled the pricing mechanism for precious metals was in 2011.
That summer, major mints in Canada, Austria, Perth, South Africa and the U.S. completely ran out of gold. Silver supplies were just as tight. For six to eight weeks, dealers across the nation were unable to satisfy over-the-counter demands. Dealers went “Bid only” — “No offer.”
HISTORY OF THE RUN ON PHYSICAL SILVER
Silver rose from $6.40 [Jan. 2005] to $9 [Jan. 2006] to $13 [Jan. 2007] to $15 [Jan. 2008]. On April 28, 2011, silver hit $49.82/oz.
HISTORY OF THE RUN ON PHYSICAL GOLD
The year before the global credit-collapse, gold was $525/oz [Jan.5, 2006]. The day credit FROZE worldwide, gold was $662.60/oz [Aug. 9, 2007]. On March 14, 2008, gold surged past $1,000/oz for the first time ever. At year-end in 2010, gold was $1,180/oz. Acute shortages drove that run-on-gold to $1,903.30/oz [Aug. 22, 2011].
The next run on physicals will dwarf the last, worldwide run. All rare metals will take out previous highs. On the upside, there will be little resistence for a long, long way.
Due to extreme product shortages, palladium is
already going crazy. Spot price is now $2,465/oz.!
Acquire U.S. silver coins before the paper
market loses its grip on the price of silver.
PHYSICAL silver and gold will protect you from overnight currency devaluations and counter-party risk. Take delivery while coins are readily available.
Submitted by Denise Rhyne
Washington Gold Exchange LLC
Craig Rhyne offers personalized service and competitive prices. Call (206) 719-6368. See our Model Precious Metals Portfolios.
INFLATION: “An increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices. The rise in prices is caused by an increase in the volume of paper money issued.” Webster’s Twentieth Century Dictionary, George Ogilvie, USA, 1904.
Stein’s Law: If something cannot go on forever, it will end. “Cry Wolf” video by Grant Williams (this “fiat” experiment will end):
Things You Probably Didn’t Learn in School about Gold & Silver: http://www.youshouldbuygold.com/wp-content/uploads/2017/09/GOLD-SILVER-9-1.pdf
Things You Probably Didn’t Learn in School about History & Law: http://www.youshouldbuygold.com/wp-content/uploads/2017/07/HISTORY-LAW.pdf
Things You Probably Didn’t Learn in School about Education
Things You Probably Didn’t Learn in School about Theology: http://www.youshouldbuygold.com/wp-content/uploads/2017/08/2017-THEOLOGY.pdf
Things You Probably Didn’t Learn in School about Economics & Power: http://www.youshouldbuygold.com/wp-content/uploads/2017/07/ECONOMICS-POWER.pdf