Gold And Silver: Governments And Central Banks Are Losing Control

Below is a highly engaging interview with James Turk in which he discusses the key indicators to watch in order to anticipate the next big leg of the precious metals bull market. “To me the real bull market in gold began in 1913 with the creation of the Federal Reserve.”

By law the U.S. Mint is supposed to produce enough silver eagles to meet demand. Originally the law stated that the silver used in U.S. minted coins had come from U.S. mines.  The U.S. produces roughly 40 million ounces of silver per year.  About five years ago the demand for silver eagles began to outstrip the amount of silver sourced from U.S. mines that could be made available for silver eagle production.  The law was amended to enable the mint to use silver imported from Mexico.

From time to time since the summer of 2008, the U.S. mint has had to halt its silver eagle sales because of a shortage of silver.  This occurred once again in the middle of 2015 and the production halt lasted about 3-4 weeks.  Since that time, the mint has limited the amount of silver eagles to one million coins per week.   In 2015 the mint sold 47 million silver eagles, an amount which was stunted by the production halt.  It is likely that the mint would be able to sell in excess of 60 million silver eagles in 2016 in the absence of production limits.

Make no mistake, curtailing production like this is nothing more than a form of price control.  If the demand for silver eagles outstrips the supply, then the price should rise. “Price” is the ultimate mechanism by which supply and demand is equalized.  That is a law of economics.   If the demand for silver eagles is greater than supply because the mint can’t secure enough silver to meet demand for its product, then let the price of silver rise to the point at which supply and demand equalize.   That’s how free markets are supposed to function.

They can force a market into a certain price level but that has to be met with metal if people are asking for metal to be delivered at those low prices and metal is getting scarce. – James Turk

The fact that the U.S. Government has had to impose production controls on the production of silver eagles is one of the many indicators which reflect the fact that the Government is losing control over the financial and economic system.

The relative price of gold and silver is a thermometer that measures the degree of systemic health at any given point in time.  Since gold and silver hit interim bull market highs in 2011, the western Governments and Central Banks have colluded to suppress the price of gold and silver.  This was imperative to their ability to continue the massive transfer of wealth from the middle class to the ruling elite through the use of  Wall Street’s financial Ponzi schemes and the Fed’s ongoing debasement of fiat currency.

The Shadow of Truth hosted Bitgold’s and Goldmoney’s James Turk for a highly engaging discussion about the current move in the precious metals market.  Mr. Turk sees it as yet another signal to the markets that Governments are losing control:

Both gold and silver are so cheap relative to historical norms and historical valuations that it doesn’t matter if it’s overbought, it can stay overbought on a short term basis for a long time – longer than we can possibly expect. What’s important is not short term overbought or oversold indicators but what the trend is. And to me the trend is higher in both gold and silver. I’m measuring this by saying that gold is above all of its short term moving averages. – James Turk

7 thoughts on “Gold And Silver: Governments And Central Banks Are Losing Control

  1. quick question.. wouldn’t rationing the output of silver coins actually lead to higher silver prices…? seems like the logic of the theory put forward in this interview is backwards… or what am i missing here? happy to listen.

    1. No because they are controlling the price of silver with paper derivatives. Right now the premium for a roll of BU silver eagles is $3. That’s higher than it should be if the mint were not rationing silver. It’s transfer of wealth from buyers of silver eagles to the retail sellers of ASEs. Thank the Government for that.

  2. Excellent interview. James Turk really comes across as a super smart guy. His cool demeanor exudes a quite confidence. As far as the mint rationing the supply of silver eagles is concerned this should cause a supply shortage resulting in high premiums. In view of this it seems like generic rounds would be a better alternative to the retail investor. Love these Shadow of Truth interviews.

  3. This is from Mike B:

    Markets, like their lottery machines,
    Lure little people of little means.
    Digital bugs multiply by the hour,
    Eating the foundations of their ivory tower,
    Worth less than a hill of beans.

    Watch nature in control of the scenes:

  4. Back in 2010 gov’t changed the LAWs and Silver Eagle coin rationing is now the rule.

    LAW used to read…

    (e) Notwithstanding any other provision of law, the Secretary shall mint and issue, in quantities and qualities to meet public demand, coins which— (1) are 40.6 millimeters in diameter and weigh 31.103 grams; (2) contain .999 fine silver; (3) have a design— (A) symbolic of Liberty on the obverse side; and (B) of an eagle on the reverse side…

    In 2010 the LAW’s amendment (change in CAPS) reads…

    (e) Notwithstanding any other provision of law, the Secretary shall mint and issue, in quantities and qualities that the SECRETARY DETERMINES ARE SUFFICIENT to meet public demand, coins which— (1) are 40.6 millimeters in diameter and weigh 31.103 grams; (2) contain .999 fine silver; (3) have a design— (A) symbolic of Liberty on the obverse side; and (B) of an eagle on the reverse side…


    Henceforth the US MINT only has to meet American Eagle Bullion Coin demand as determined by the Treasury Secretary not by public demand (which they were previously legally bound to yet consistently failed to do in 2008 & 2009 respectively).

    -James

    http://goldandsilverblog.com/gold-and-silver-treasury-secretary-public-demand-0124/

    1. This is a huge point because now with the new wording, they don’t
      “Legally ” have to mint ANY silver Eagles if that is what the treasury sec.
      decides.

  5. No Gold!
    Blackrock has suspended the issue of any further Gold Trust (IAU) shares!
    Has seen nothing but solid inflows since the start of the year.
    So why suspend something that is so successful? They can’t find any physical gold!
    Their ETF must hold a certain amount of physical to back up the paper shares.

    How about silver? The HUI is showing some signs of life! Could it be coming off of life support and begin breathing on it’s own again? Look at Endeavour Silver Corp. (EXK)
    It traded at $12.00 mid November 2011. Suffered a death cross in July 2013 at the $7.00 level, then struggled against the $6.00 barrier until late September 2014 at which time it capitulated and fell to almost $1.00 in early January this year!

    It has now arisen from it’s death bed and sits at $2.24 A good buy? Or wait?

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