Here’s some commentary on a few of the major news items out this week concerning gold and silver. Including the latest on Germany’s gold, Deutsche Bank resigning from its seat at the LBMA’s London Gold Fix and more…
As we start 2014, due to gold’s 30% drop and silver’s 37% drop in 2013, sentiment regarding precious metals is still highly pessimistic while commercial investment industry analysts (BAML, Barclays, BlackRock, BNP-Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Jefferies, JP Morgan, UBS, and Morgan Stanley) are literally telling you to buy everything and anything related to global stocks (click the graphic below for a larger image).
In reality, the opposite is true. I can’t see the US stock market continuing its rise much past Q1 2014 without having a severe deflation of this current reckless Central Bank inspired stock market bubble, and the facts about gold and silver remain that they are the two-most undervalued assets in the entire investment world right now. So as I’ve always stated the key in understanding the gold/silver markets is NOT to follow the paper prices of the London AM and PM price fix, but to follow the flow of physical gold and physical silver and the increasing prices of global PHYSICAL PMs. It’s incredulous to me that people today still even argue the fact that gold and silver prices are manipulated. Anyone that argues against the fact that gold and silver prices are manipulated either (1) refuses to think for himself or herself and look at facts; and/or (2) literally understands nothing about gold and silver markets. Remember that despite the overwhelming pessimism about gold and silver to start 2014, that mainstream media continues to harp on gold’s terrible year of performance in 2013 only, and ignores gold’s 12 consecutive years of winning performance prior to 2013. Do you remember the mainstream media being so similarly pessimistic about the US stock market after the US S&P 500’s value was cut nearly in half in 2008? (and remember the US Stock Market did not have 12 years of consecutive gains prior to 2008 to offset that terrible year)
Consider the fact that the London AM and PM price fix in gold and silver are set by only 5 banking institutions in the entire world, and that this price “fix” is consistently drastically lower than the price of gold being sold in physical markets around the world. Anyone that can think for him or herself can understand that the London AM and PM price fix is indeed a “fix” or “manipulation” of prices.For example, today, two of the largest gold bullion dealers in the United States have listed the price of 1-oz of four nine fine gold bullion, for purchases of gold below 10 ozs, at $1295.89 per ounce and $1294.02 per ounce, respectively. Another large gold bullion dealer in Tokyo listed the sale price of one troy ounce of physical gold bullion at the equivalent of $1332.92 per ounce today. In India, the price of one troy ounce of gold bullion was listed at about $1,489 per troy ounce this month. So taking the average of US, Japanese, and Indian prices for REAL, physical gold, this figure amounts to $1352.96 per troy ounce.
If gold were not being manipulated or “fixed” by criminal global bankers, one would expect the price of paper gold to be very similar to $1352.96 or somewhere very close to this price right now.
Yet the 5 banking institutions that decide the gold price fix, the Bank of Nova Scotia, Barclays, HSBC, Societe Generale, and Deutsche Bank, decided that their latest price “fix” of gold would be $1250 per ounce, more than $100 less than what the price of REAL physical gold is selling for in US, Japan, and India markets at the current time. Anyone that can’t see that the price “fix” is manipulation is a complete fool.
In addition, in another classic case of rats fleeing the sinking ship of fraud, Deutsche Bank announced last week that they will be resigning from their role in fraudulently manipulating the price of gold via the London AM and PM price “fix” just last week. So there will soon be 4 price fixers for gold unless another rat steps up to take Deutsche Bank’s soon-to-be-vacated role. In any event, the London AM and PM price fix is just ONE mechanism the banks use to manipulate the price of gold and silver, as I have extensively discussed in the past how bankers invented gold and silver paper derivatives to also “fix” the price of gold and silver.
Despite this incessant price manipulation of gold by Western banking insitutions and Deustche Bankers fleeing the sinking ship, are their any other reasons to be hopeful about gold/silver price recovery in 2014?
Certainly. Besides the simple fact that if you are holding physical gold and silver right now and can sell it in India and Japan and sell it for much higher prices than the daily global spot price, if we look at the movement of physical gold, NOT PAPER GOLD, in 2013, we can ascertain that physical gold supplies continued to shrink as demand continued to increase.
For example, when Germany asked the US Federal Reserve to return 300 tonnes of its gold stored with them (the other 374 tonnes of gold were to be returned from the Banque de France in Paris), the US Federal Reserve refused to return 300 tonnes of Germany’s gold in one shot as obviously could have been accomplished if they actually had it. Instead, the US Federal Reserve bankers informed Germany that they would have to wait 8 years for the return of this gold, at a return rate of 37.5 tonnes a year, starting in 2013. So did this occur in 2013? Absolutely not.
German media this week just reported that the Federal Reserve only returned 5 tonnes of their gold to them in all of 2013, versus the 37.5 tonnes the US Federal Reserve bankers promised to return to them. Now a couple more facts must be considered here. Though I don’t consider the world gold reserve data to be accurate, Germany claims to hold 3,390.6 tonnes of gold and the plan to repatriate 674 tonnes of physical gold from France and the US was so that it could approximately hold half, or about 1695 tonnes of gold, in-house in Germany. Thus, at the start of their PHYSICAL GOLD repatriation effort, simple math tells us that Germany held less than 1/3 of its own gold in house, or only about 1,021 tonnes of gold. Remember I keep stressing PHYSICAL GOLD because the US Federal Reserve and their merry band of global criminal banking crooks could return 674 tonnes of gold futures contracts to Germany overnight. But this is NOT what Germany wants. They want their physical gold returned to them.
Now the 37.5 tonnes of gold that the US Federal Reserve was supposed to return to Germany in 2013 amounts to only 1.1% of German’s entire gold reserves and 0.46%, or less than ½ of 1% of the United States’s supposed gold reserves of 8,133.5 tonnes.But the US Central Bankers said that they couldn’t even come up with less than ½ of 1% of their entire reserves to return to Germany this year, instead choosing to return only 5 tonnes, or 0.061% of their entire gold reserves.
A similar analogy, using the exact same claims of the US Federal Reserve, and the exact same mathematical percentages as what just happened in 2013 between the US Federal Reserve and Germany, is the following:
Many years ago you gave $10,000 to a friend to safekeep for you and he told you, “I will never touch that money but keep it in my safe. You can ask for it anytime you want and I will return it to you.” In 2013, you decided that you wanted it back so you went to him and asked for your $10,000 back. In return, your friend replied, “Don’t worry, I can pay your $10,000 back at any time because not only do I have your $10,000 right now but I also have an additional $271,116 in another bank account that I never touch. But I’m not going to do it and instead, need you to accept this return schedule. I am going to return to you $1,250 every year for 8 years.” Then during 2013, in which he is supposed to return $1,250 to you every year for the next 8 years, he instead only returns $166.66 to you. If this were you, would you 100% trust that your friend still has your $10,000 and in addition the other bank account with $270,000+ in it? Or would your retrieval of a paltry $166 and change from $10,000 that is legally yours convince you that your lowlife friend spent all of your money that he promised to safekeep for you, and that it is now entirely gone?
The moral of the above story and analogy is this: if you don’t follow the flow of physical gold around the world to the Middle East, Japan, Thailand, Korea, Russia and China and only track fake bogus daily spot prices of gold and silver, and if you don’t understand true physical gold supply and demand data, then you will never understand how a physical gold bull could continue in 2013 at the same time a paper gold bear was artificially manufactured by unscrupulous criminal bankers. And you will never understand how eventually the fraudulent paper gold market and the much more robust physical gold market will need to reconcile their divergences in the future, a reconciliation that will lead to rapid appreciation of gold and silver prices in terms of fiat currencies.
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About the author: JS Kim is the Founder & Chief Investment Strategist of SmartKnowledgeU, a fiercely independent investment research and consulting firm with a focus on Precious Metals that is dedicated to helping people not only fight the immoral global banking cartel, but also to formulating strategies that we can implement together to help us win. Our Mission remains to fight the corrupt, criminal banking cartel and to help usher in a new renaissance of economic freedom with the re-implementation of sound money principles worldwide.