A Shortage of Physical Gold & Silver

Below is an interview with James Turk on KWN. The links and emphasis were added by me.

Turk: “It is not too surprising that the metals traded lower yesterday Eric, given that London was closed for a holiday.  Therefore, a major part of the physical market for the precious metals was not participating yesterday.  So the paper shorts in New York pretty much had a free hand to run the market lower, which they did, and they are continuing the push lower today as well.

Nevertheless, there are telltale signs of stress clearly showing in the physical markets.  By stress I mean that supply is exceptionally tight.

Ron Paul: "This Is A House Of Cards"

From Ron Paul's The Free Foundation:

(Emphasis in bold and italics are mine)

Last week at its regular policy-setting meeting, the Federal Reserve announced it would double down on the policies that have failed to produce anything but a stagnant economy. It was a disappointing, but not surprising, move.

The Fed affirmed that it is prepared to increase its monthly purchases of Treasuries and mortgage-backed securities if things don’t start looking up. But actually the Fed has already been buying more than the announced $85 billion per month. Between February and March, the Fed’s securities holdings increased $95 billion. From March to April, they increased $100 billion. In all, the Fed has pumped more than a half trillion dollars into the economy since announcing its latest round of “quantitative easing” (QE3) in September 2012.

The Gold Massacre of 2013

I've been busy the last several weeks and so have not posted since the April 12th & 15th historic sell off in gold. Today I can look back with a little perspective. It inspired me to reread a post from February of 2012 when I wrote The Gold Leap Year Massacre. In that event gold sold off 5% in one day. It was a huge move but not unprecedented by historical standards. I wrote back then:

Presidential Insider Information?

Last Thursday, the heads of the biggest banks in the US met with President Obama and White House representatives. As far as I can tell this type of meeting is unprecedented. Even during the peak of the financial crisis in 2008 there was never any meeting I'm aware of between the commander in chief and the heads of the largest banks. True, there were meetings with the same banks and the head of the Federal Reserve, Ben Bernanke. Meetings with the Fed make some sense during times of economic crisis when the risk is systemic to the entire banking system. But the President? That would to me imply a political component that was being coordinated with economic policy and the largest banks.

Zerohedge points out this:

Correlation is not causation; but coincidence means you're on the right path. Looking at the charts of Stocks, Commodities, and Precious Metals, we wonder just what it was that President Obama said at his 11am ET White House meeting last Thursday...

Equity markets soared out of the gate on the 11th. Jobless claims beat expectations handily (shaking off the previous week's concerns) and all was well in the world... until just after 11am ET (when the CEOs of Wall Street's big banks - for no apparent reason - met with President Obama)... and this happened...

as did Crude oil...

 So what did Obama tell them?

In addition, I saw a brief story today about all the big banks. It was being pointed out how they all had HUGE capital reserves even in excess of the coming Basel III requirements. Theses are the same banks that usually love to be levered 30 to 1 and use midnight Repo to meet capital requirements for just a few moments at midnight to be in compliance.

So why are they suddenly so conservative? Perhaps Obama gave them a heads up that some "political decisions" have been made. My guess, and its pure speculation, is that its about a Euro member that's about to be given the boot out of the EU. Or perhaps there is finally a recognition that we are in a recession/continued depression and they want to coordinate what's to come.  Either way,the Gold sell off was a pre-emptive attack to push the price down before its taken much higher on central bank fear trades.

Has anyone else EVER heard of this type of meeting taking place before? In any administration?

As the Gold Smash Continues, This is all You Need to Know

As I write this Sunday night, PST, the Asian market has opened and gold is at $1,441 continuing its decline from Friday. As I mentioned in the previous post, this was to be expected. Margin calls are going out all over the world, and people and banks will be selling to raise cash and playing into the hands of the Western central banks who do not want you to own gold.

Of course the Chinese are probably laughing their asses off as they wait just a little longer to hit the BUY button.

All you, my readers, truly need to know is the graph above. Gold is highly correlated to both the US debt and the global supply of currency. With most all Western central banks printing like crazy (Almost $1 Trillion this year in the US alone) there can be no doubt which direction gold should go.

When the market price deviates from its instrinsic value by this much, you've got to take notice. There's an old trader saying that you buy when there is blood in the streets.

And by the way, stocks may go a similar direction very soon.

Gold Smash, Desperation & Goldman's Muppets

Friday was an amazing smash in Gold orchestrated by Western central banks and help from Goldman Sachs who encouraged their client's (who they derisively refer to as "muppets") to go short gold even as they're own traders were likely accumulating.

I've discussed for the passed two years that I was anticipating a "bifurcation" between gold and silver's paper price vs. its physical price as a result of price manipulation by central banks and bullion banks to artificially keep the price low. Readers may recall this is directly related to the quantitative easing that is now prevalent around the world. Central banks do not want people to see gold and silver as a viable alternative to fiat money as they, in effect, devalue money through ongoing printing. A rising gold price is a clear message to even unsophisticated investors that their savings are declining in value.

Bad Employment Numbers are a Shock?

For some time now we've had a mainstream financial media that touted an "economic recovery" and a stock market that had been hitting new all time highs without any real evidence that the underlying economic fundamentals supported the claim. Just two weeks ago the discussion was centered around when the Fed would stop its $85 billion per month quantitative easing program now that things were going so well.

Turns out, they're not.