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Fed Lies And Money Printing: Rocket Fuel For Gold
For central banks, monetary inflation is everywhere the solution. Bank rescues, payment chain failures, the furloughing of millions of employees, helicopter money to bail out whole populations, money to bail out governments, money to support all categories of financial assets: the list is endless in scope and infinite in quantity. The survival of the global financial system is at stake. If it survives, state-issued money will have been destroyed. But then what is the point of owning financial assets valued in valueless currency?
While this process of monetary destruction would have reasonably been expected to evolve over time, the coronavirus has accelerated it. The fate of the $640 trillion derivative mountain recorded by the Bank for International Settlements is sealed and will be settled through bank bankruptcies and state-directed elimination. – Alasdair Macleod, The Looming Derivatives Crisis
Phil/John Kennedy hosted John Titus and me to try and untangle The Big Lie that is the Federal Reserve and the real reasons behind the Fed’s massive money printing program:
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You can learn more about Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required): Short Seller’s Journal subscription information – Mining Stock Journal subscription information
A Run On Comex/LBMA Gold Bars Is Inevitable
As uncovered by Ronan Manly in a must read article, at least 50% of the “eligible” gold reported in Comex vaults actually will never be made available for delivery. On Friday the Comex vault report showed 14 million ozs in the “eligible” category. At least 7 million of this belongs to owners who the CME has determined likely have no interest in re-selling the bars.
As of Friday’s vault report, the Comex shows 18.6 million ozs of gold. Of that, 14 million was “eligible.” Roughly 4.7 million of the “eligible” gold is LBMA bars that have been supposedly allocated to Comex-approved vaults in London and made available for fake delivery under the 4GC “enhanced gold” contract.
Subtracting 4.7 million ozs from the eligible gold designation and using a 50% haircut on the remaining 9.3 million eligible ozs gives us 4.65 million eligible ozs plus 4.6 million “registered” ozs. The 9.2 million ozs of gold that is potentially available for delivery can disappear quickly if just 28.4% of the June gold contract longs decide to stand for delivery.
At some point large buyers looking for delivery of physical gold that can be removed from custodial vaults and moved to private safekeeping away from NYC or London are going to make a run on the vaults in London in NYC. The run on the LBMA vaults has been going on since well before the virus crisis. Chris Marcus of Arcadia Economics and I discuss this likelihood in our latest weekly conversation:
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You can learn more about Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required): Short Seller’s Journal subscription information – Mining Stock Journal subscription information
Virus Crisis Used To Transfer Trillion$ To Wall Street
“We have previously called Wall Street an institutionalized wealth transfer system from the 99 percent to the 1 percent. The CARES Act puts the wealth transfer system on steroids by letting the fat cats on Wall Street keep their decade-long obscene compensation which was made by hiding their risks off their balance sheets (privatizing the profits) and now forces taxpayers to pick up the tab for the losses on the toxic debt (socializing the losses). Treasury Secretary Steve Mnuchin has said this is nothing like the 2008 financial crisis – and yet, it is everything like the 2008 financial crisis except that it’s an even more brazen money grab.” – Wall St On Parade
The taxpayer squeeze is on. Shut down the economy for a few months, open up the Fed’s money fire hose and give Wall Street a good spraying of digital dollars to monetize its bad casino bets and enable the players to continue getting huge bonuses. Wall Street On Parade has the details in this must-read: How $4.5 Trillion Was Outsource To Wall Street.
Physical Gold And Silver Continue To Disappear
I was watching one of the Fed Governors who made the assertion that “low interest rates would be here for a long time” and I thought to myself this guy must be on drugs because the U.S. has had low interest rates for 12 years now, which is already a long time.
The current shortage in physical gold and silver was developing many months before anyone ever heard of “coronavirus.” In fact, what’s happening now as Central Banks print trillions of paper currency further validates Gresham Law. Bad money drives out good money – physical gold and silver will be hoarded and fiat paper Central Bank money will be used for transactions.
Rob Kreinz of GoldSilverPros invited me onto his podcast to discuss the ramifications of rampant money printing and the rush into physical gold and silver:
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You can learn more about Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required): Short Seller’s Journal subscription information – Mining Stock Journal subscription information
The Real Reason Gold Is Soaring In Price
“Fiat currency always eventually returns to its intrinsic value–zero.” – Voltaire
A Slow Motion Short Squeeze In Gold
The inexorable rise in the price of gold, despite the concerted effort among the BIS, 
western Central Banks, CME and LBMA using paper derivatives to keep a lid on the price gold reflects the likelihood that a short-squeeze in physical gold bullion is percolating.
Former copper futures trader and Chairman of GATA, Bill Murphy, calls this a “commercial signal failure,” which occurs when the demand for the fulfillment of the physical commodity underlying a paper derivative overwhelms the ability of the entities short the contracts to fulfill the terms of the contract. Soon this slow motion short squeeze will transition into “fast” time.
Chris Marcus and I discuss the likelihood of this development on the Comex:
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You can learn more about Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required): Short Seller’s Journal subscription information – Mining Stock Journal subscription information
The Paper Gold Market Is Imploding
The CME/LBMA latest paper derivative product – the Accumulated Certificate of Exchange aka “4GC” – is 
failing. Badly. After its introduction last week there has been zero trade activity in the contract: 4GC Settlement data. The contract fabricates a paper claim on 25% of an LBMA 400 oz bar for Comex participants seeking delivery of the 100 oz Comex bar. It’s an attempt to transfer LBMA gold in fractional derivative form to the Comex. The contract is an absolute farce, a fact confirmed by complete lack of interest in it from the market.
The effort by the western Central Banks in conjunction with the bullion banks to keep a lid on the price of gold is failing. It’s not the first time (see The London Gold Pool collapse). This failure is reflected in the historic spread between the spot price of gold as determined twice a day on the LBMA and the Comex gold futures curve.
Chris Marcus and I discuss the causes and implications of this market signal in our weekly conversation:
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You can learn more about Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required): Short Seller’s Journal subscription information – Mining Stock Journal subscription information
The Fed – Kicking People When They’re Down
“You [the public] are the sucker. Your role in the Federal Reserve System is to absorb losses [on the crappy assets the Fed buys off of bank and hedge fund balance sheets]…The Fed is there to facilitate your absorption of those losses and that’s going on right now…the taxpayer is going to eat the losses – not the bankers who will have already been paid to help the Fed collect the bad assets.”
My good friend and colleague, John Titus of Best Evidence productions, uses source documents from the Fed to explain how the Fed and the member banks are going to shift the enormous losses on bad credit market products to the taxpayer while the banks make huge fees assisting the Fed.
The Gold Signal – Just Like 2008
In 35 years of active participation in several diverse aspects of the financial aspects, I’ve never seen a more obvious investment set-up than long gold, silver and mining stocks:
Gresham’s Law And The Gold And Silver Squeeze
“Bad money drives out good money.” When Gresham put forth this proposition, sovereigns were diluting gold and silver coins with metals of lesser value yet the diluted coins were given the same value for legal tender purposes as the more pure coins. Gresham observed that the more pure coins were hoarded and the lesser value coins were used for trade.
Sound familiar? Go find pre-1964 dimes, quarters and half-dollars and try to buy them for their legal tender value. Pre-1964 silver coinage contains 90% silver. Post-1964 silver coins are made from nickel and copper. No one who holds pre-1964 coins would use them for their face value. They have disappeared from circulation. The melt-value of the silver in a 1963 quarter currently is $2.60.
The disappearance of gold bars from the LBMA and Comex is Gresham’s Law in action. Though the virus crisis exacerbated the problem, shortages were developing on both trading venues well before anyone heard of “coronavirus.” As an example, Russia dumped its Treasury bond holdings and used the dollars to buy gold for its Central Bank. China, which holds 12x more Treasuries than Russia held, has been slowly converting its dollar reserves into gold for several years.
Chris Marcus of Arcadia Economics and I discuss the current developments on the Comex and LBMA in our latest weekly conversation:
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You can learn more about Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required): Short Seller’s Journal subscription information – Mining Stock Journal subscription information
“Wanted to send through a note of thanks and support.
I felt in my gut that something was amiss with the markets a year or so ago and started reading up on sound money/macro. At that time I had most of my money in UK stocks but wanted a way out and a way into the metals. I needed guidance thus why I signed up to your short seller and mining journals.
Today I am way down on the mining stocks and somewhat down on physical silver and gold. But I have offset 80% or so of those paper losses with paper gains on a raft of put options on indexes and sector ETFs. I had limited options experience prior to these purchases.” – Mike in the UK