Tag Archives: James Turk

Physical Gold Is Money – Everything Else Is Someone Else’s Liability

When you own gold, it’s money that you own. Everything else circulating around here is currency – you don’t really own it. The cash you have in your pocket is Federal Reserve Notes [meaning you possess a liability of the Federal Reserve and your spending power is exposed to counterparty risk]. The money you have in your checking account is a liability of the bank where that money is deposited. But when you own physical gold, it’s money that you own. Your are not dependent on someone else’s ability to make good on that money when you want to spend it.   – James Turk on The Daily Coin

The U.S. populace has been methodically trained over the last 100 years, since the erection of the Federal Reserve, to believe that Federal Reserve Notes – otherwise known as U.S. dollars – represents a wealth asset.  But it’s just the opposite:  it’s a liability of the Federal Reserve backed by the “promise” of the U.S. Government.  How much value do you place in that “promise?”

Even more insidious is the notion that “money” in a checking account belongs to the person who made the deposit.  In fact, your money sitting in any bank account is no longer in your ownership.  You have ownership of an unsecured liability issued to you by the bank.  The bank takes  your money and “hypothecates” it – or lends it out.   If the bank loses that money and can’t honor its liability to you because enough loan counterparties defaulted and the bank is insolvent, you will never receive the full value of the bank’s debt obligation.  Welcome to the new world of bail-ins.

But gold in your possession does not have that problem.  Rory Hall of The Daily Coin interviewed James Turk about a new type of non-bank banking service called Bitgold.  He discusses the unmitigated advantages of using Bitgold vs. a traditional bank account.

I have moved U.S.Government electronic monopoly money from my checking account into my  Bitgold  account every day this week, including today. I don’t have the funds required to buy a 1oz. bullion coin everyday, but BitGold allows me to accumulate .9995% gold grams. This is bona fide allocated gold.  I look at this manipulated take-down of the gold price as a gift from the Fed because it enables me to purchase more Bitgold gold every day the dollar price of gold declines.  When the dollar price of gold moves back up, my Bitgold account will increase in value.  That does not happen with dollars sitting in a checking account.  They just sit there like a Pet Rock, earning no interest.  If the bank becomes insolvent, the Pet Rock has no value to me.

I want to make it clear that I’m not an affiliate or associated with Bitgold and do not get any ad revenues from Bitgold for the display link at the top (although I’m sure I could if I requested it). I just really believe in the service and I think anyone can benefit from moving their digital bank credits out of the global Central Banking system and in to Bitgold. I receive a 2% “bonus” if someone uses the links on this site to sign-up for Bitgold and everyone who opens a new account that is funded receives a 5% bonus.

I had an in-depth conversation with the CEO several weeks ago and when I find the time I am going to share my analysis of the with the subscribers of my Mining Stock and Short Seller Journals.

If you own gold, you have money – If you don’t own gold, you have a problem

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

Massive Shortages In Gold And Silver Developing – GLD Looting Continues

Renowned gold expert James Turk says prolonged gold backwardation like we are seeing now, where the spot price is higher than the future price, has never happened before. Turk contends, “No, never, and I am a student of monetary history as well, and I have never seen it happen like this in monetary history.  – James Turk on Greg Hunter’s USAWatchdog

The signs are everywhere.  We are seeing extreme “backwardation” in gold on the LBMA. Backwardation occurs when the spot price is higher than the future price for LBMA forward contracts.  It means that buyers of gold are willing to pay more for gold for immediate delivery than pay a lower price to receive delivery in the future (30-day, 60-day, etc).  It means that physical gold buyers do not trust the ability of the market to delivery physical gold in the future.

It is an unmistakable sign of physical gold shortages.

Not surprisingly, the LBMA suspended reporting the gold forward rate which was the best indicator of physical gold shortages in London, but we can still get reports on physical market conditions from London gold market participants, like James Turk.

To reinforce this information, Bill Murphy reported his latest conversation with his LBMA trader source in London (www.lemetropolecafe.com):

The essence of it is more confirmation that the BIG MONEY is buying down here at these price levels.More confirmation that silver is extremely difficult to buy in size. It takes two to four weeks for delivery. What is new is that buying gold in size is now becoming a thing … for our source says it now takes two weeks to buy in size.

Perhaps the most visible sign is the removal of gold from the GLD ETF.   The only way gold is removed from the Trust is when an Approved Participant bank redeems 100k share block in exchange for delivery of bars from the Trust. – (source:  John Titus of the “Best Evidence” Youtube channel, edits are mine) – click to enlarge:

GLD tonnage.001

Make no mistake about it, the bullion banks often can borrow GLD shares to scrape together 100k share lots in order to redeem gold. Or they can smash the gold price with paper and force weak holders of GLD to sell shares in the hands of the bullion banks.  In the last two weeks the short interest in GLD has soared 49% from 9.4 million shares to 14 million.  That represents roughly 46 tonnes.

The ongoing raid of GLD gold is perhaps the most direct evidence that the Central Banks and their bullion bank agents are struggling to find gold in which to deliver into Asia.  But speaking of which, something interesting is occurring on the Shanghai gold exchange.  In the last three days, 298 tonnes of gold have been delivered into the SGE.  While everyone monitors the amount of gold withdrawn from the SGE, the amount of gold flowing in to the SGE is just as important.   This is by far the most amount of gold that has been delivered into the SGE that I can recall.

I get my data from John Brimelow’s “Gold Jottings” report, which is invaluable for tracking the physical gold market outside of London.  He had this to say about the stunning flow of gold into China over the last three days:

Delivery Volume was 90.444 tonnes (Wednesday 112.454 tonnes) and open interest surged 48.374 tonnes (11.26%) to 477.920 tonnes. Since last Friday Shanghai open interest has risen 18.68%. Something is happening in gold in China. What is not immediately apparent.

Finally, to further reinforce the evidence of physical market shortages, we can monitor the gold lease rates, published by Kitco everyday.  I sourced this graph from Jesse’s Cafe Americain, who sourced it from Sharelynx – click to enlarge:

JessesCafeGold lease rates spike up like this when there is heavy demand from bullion banks to borrow physical gold from Central Banks in order to sell the gold into the market or deliver gold that can’t be readily procured in adequate quantities in the spot market.  It is one of the most visible signs that there is a shortage of physical gold on the market.

To be sure, the unprecedented degree manipulation of the gold price in the paper gold market reflects a serious desperation by the Central Banks and western Governments to cover up an enormous disaster fomenting beneath the heavily applied of veneer of “things are so good we need to raise interest rates in September” mantra.  In fact, the specific reason to keep a lid on the price of is to enable the Central Banks to maintain a zero interest rate policy.

The truth is, the Fed can’t afford to raise interest rates and anyone with two brain cells to rub together and a willingness to look at the truth knows that the Fed is trapped – unless it wants to crash the system for some reason.

We note that physical off-take of gold is spiking higher, with Reuters reporting yesterday that the South Koreans are buying gold in record sums while the US Mint reports that sales of gold coins in July were nearly 5 times what they were a year ago.  – John Brimelow, “Gold Jottings” report

 

SoT Ep 16 – JamesTurk: The Gold In London Is Pretty Much Gone

I think London has been pretty much emptied out – I don’t think there’s a lot gold left in London that’s available for shipment elsewhere.  – James Turk, Shadow of Truth podcast – LINK

The rate of the flow of gold from western bank and investment vaults into Asia accelerated in the first quarter of 2015.   India just announced that it imported 125 tonnes of gold in March, more than double the amount imported in March 2014.  And 625 tonnes of gold was withdrawn from the Shanghai Gold Exchange during Q1, up 10.8% from Q1 2014.   In that all gold purchased in China – other than the gold purchased by the PBOC – must pass through the SGE, withdrawals from the SGE represent the China’s gold demand (not including the PBOC).   China only produces 400 tonnes per year, or 100 tonnes per quarter.  This means recycled gold plus imports must account for balance of demand.

Just from combined demand from India and China, there is a supply deficit of gold.  In fact, the global gold market has been functioning with a supply deficit since at least the mid-1990’s.  Frank Veneroso was the first analyst/consultant to figure this out based on conversations in his meetings as a consultant with the world’s Central Banks.   Veneroso predicted that eventually the price of gold would have to explode higher once the demand completely overwhelmed the supply.

GATA picked up on Veneroso’s work and began a campaign to educate the world about the western Central Bank schemes being used to keep the price of gold suppressed in order to prop up the legitimacy of paper fiat currencies.

James Turk has been a long time consultant to GATA and, in my opinion, knows as much about the global gold market as anyone.   Turk was the first analyst to look at the original GLD prospectus in 2004 and conclude that it was little more than paper gold:

The GLD prospectus is quite clear that the shares are not backed by gold.  It says the structure was designed to track the price of gold.

Rory Hall (The Daily Coin) and I hosted James Turk on our Shadow of Truth project.  We cover the latest developments in the Greece/EU saga, the condition of “backwardation” in the London gold market and the catastrophic level of debt globally.  We also discuss in-depth why GLD likely has very little physical gold sitting in its vault that is legally owned by the Trust and the reasons why the supply/demand deficit will lead, eventually, to much higher prices for gold.

I try to read/listen anytime Turk is willing to share his knowledge with the public.  This is an incredible interview with someone who I consider to be as knowledgeable about the gold market as anyone in the world (other than maybe BIS insiders).  We think you’ll find it time well-spent to listen to the entire podcast: