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 sold in Europe every 3-4 days than is mined worldwide in 1 year.
How is this possible?
According to trading data from the London Bullion Market Association, bullion banks predominantly trade PAPER gold (synthetic positions), rather than PHYSICAL gold. Most of the gold sold by ICBC Standard Bank (Industrial & Commercial Bank China), HSBC (Hongkong & Shanghai Banking Corp), UBS (Union Bank Switzerland), Scotiabank, and JPMORGAN does not actually exist.
There are two precious metals markets: the physicals market and the paper market. Four billion people pay attention to the physicals market. Buyers in the Eastern Hemisphere prefer actual gold bullion to promissory pieces of paper.
Today, one ounce of gold costs about $1,600. The soaring price of gold is propelled by HUGE supply deficits of “Good Delivery” gold bullion (400-oz bars).
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.”
2011 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.
2011 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].
Gold is now breaking out after forming a 6-year base. Take delivery while coins are readily available. Extreme product shortages always end up triggering runs in gold and silver to higher highs. On the upside, there will be little resistence for a long, long way.
Submitted by Denise Rhyne
According to legendary Louise Yamada, Bloomberg News: “THE BIGGER THE BASE, THE HIGHER IN SPACE.” https://www.youtube.com/watch?v=4GnDNUxAcbY
PHYSICAL gold and silver will give you protection from third-party risk and overnight currency devaluations.
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