Tag Archives: mining stocks

Are Central banks Really Net Sellers Of Gold Now?

The following commentary is from Chris Powell, the Treasurer of GATA. I fully endorse his view. In fact, when the report initially surfaced that the World Gold Council reported Central Banks to be net sellers of gold in September, I summarily dismissed it for the reasons stated below by Chris. GATA

According to the old saying, sometimes attributed to Mark Twain, there are three kinds of lies: ordinary lies, damned lies, and statistics.

Of course not all statistics are lies, but statistics always need to be challenged when the entities issuing them have an interest in spinning them a certain way, as government almost always has such an interest.

So while it is understandable, given the slovenliness and corruption of mainstream financial news organizations and market analysts, it is still disappointing that central bank gold statistics are routinely accepted without question, even as it is the longstanding policy of the primary compiler of these statistics, the International Monetary Fund, to fudge the numbers.

That is, according to the March 1999 secret report of the IMF’s executive staff, the agency’s central banks are authorized to conflate gold in their vaults with gold they are lending. The acknowledged purpose of this fudging is to prevent the world from discerning just how much central banks are manipulating the gold and currency markets – see this link: GATA.

Lately there have been many reports asserting that central banks have become net sellers of gold after many years of being net purchasers. But as that IMF report suggests, central banks are never more misleading than they are with gold.

Indeed, the location and disposition of national gold reserves are secrets more sensitive than the location and disposition of nuclear weapons. For nuclear weapons can only destroy the world while governments understand that control of gold is control of the valuation of all capital, labor, goods, and services — control of nearly everything:  GATA.

While the recent news stories and market commentaries assert that central banks are now net sellers of gold, the authors of those stories and commentaries don’t really know that. They know only what central banks report doing. And of course nobody questions this, though throughout the years central banks have both sold or leased gold and acquired gold secretly. China has gone as long as five years acquiring gold without reporting the acquisitions to the IMF.

The gold data is especially ripe for questioning now in light of the assertion a few days ago by London metals trader Andrew Maguire that China has begun bypassing the London bullion market in its acquisition of gold and has begun acquiring unrefined gold directly from mines in Africa and South America.

[Note: the report from Maguire explains the highly irregular data that has been reported by the Shanghai Gold Exchange and the paucity of imports into China from Hong Kong; gold purchased directly from mining companies in all probability is going to the PBOC and imported through Beijing and Shanghai; gold imports through those two ports are intentionally not reported per this 2014 report from the South China Morning Post]

Maguire identified no sources for his assertion, but any financial news organization that wanted to get serious with its reporting about gold and central banking could easily pursue the issue by inquiring with central bankers, gold traders, gold mining companies, and customs agencies. Of course few such sources might want to go on the record, but some might comment confidentially.

At least news organizations and market analysts could acknowledge that while government statistics may not always be damned lies, they also aren’t always necessarily the truth either, especially on a subject as sensitive as gold.

 

Why Gold, Silver And Mining Stocks Are Going Much Higher

I’m the most disconnected from politics as I’ve ever been. It’s a waste of time. Capitol Hill is one big Kabuki Theatre performance space. The country is completely screwed and the elitists know it. Everyone who is in a position to grab wealth and power is scrambling to grab what they can by any means necessary. Think about the dysfunctionality of a system that allows the head of its Central Bank to make the effort to convince the populace that price inflation is good for the economy. It’s Orwell on hallucinogenics.

Craig Hemke (TF Metals Report) invited me onto this weekly podcast to discuss the systemic corruption, precious metals market manipulation and where gold, silver and the mining stocks are headed over the next 12-18 months:

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Buying physical gold and silver – not GLD or SLV – should be your first priority in seeking shelter from the eventual fate of the dollar.  But mining stocks offer the potential wealth enhancement as well “optionality” upside to the prices of gold and silver. In the next issue I’ll be featuring a junior silver explorer with 10-20x potential upside. For more information:  Mining Stock Journal.

The Price Of Gold When The Dollar Index Hits 70

There’s been a lot of media/Wall St/blog noise about the relative strength or weakness with the U.S. dollar.  With respect to gold, the daily vicissitudes of the gold price are associated with the daily price variations of the dollar index. This is incorrect analysis.

To be sure, over longer periods of time, there will be a high inverse correlation between the gold price and the dollar index. But prior to the run-up over $1900 in the current period, the last time the gold price was trading above $1900 was in September 2011.  At the time the dollar index was trading in the 70’s.

The investment value of gold – My thesis for devoting the last 20 years to researching, analyzing, trading and investing in gold has been twofold. First and foremost to protect my savings from the ravages of eventual catastrophic policies implemented by the Federal Reserve and the Government. But secondarily, both gold and silver are extraordinarily undervalued relative to the quantity of fiat currency AND fiat currency derived debt circulating globally.  As such, both gold and silver have extraordinary investment value.

The graphic above compares the price path of gold and the USDX over the last 12 months. Without question there’s an inverse correlation – over an extended period of time.  But from mid-March thru June, gold and the dollar traded almost perfectly in tandem.  Since June, gold has risen as much as $400 while the dollar index in the same time is only 300 basis points lower.

In fact, between their respective lows in March and now,  gold has soared 31.7% while the dollar index is largely flat.

This latter occurrence is what I call “the investment value of gold.”  Gold (and silver) functions both as a wealth preservation asset and a wealth enhancement vehicle.  Both metals are singularly unique with these attributes.

Let’s face it. The U.S. technically is insolvent. The only factor preventing collapse, for now, is the willingness of our trade counterparties to continue accepting the dollar for trade settlement. With the continued deterioration in the economic, financial and fiscal condition of the United States and the accompanying escalation in money printing by the Fed, the global acceptance of the dollar will diminish more than it already has over the last 20 years.

At some point the dollar index will quickly revisit the 70 level it tested in 2008.  When that event occurs I expect the gold price to be at least double its current level and silver to be pushing $100 (gold/silver ratio below 40 from its current 80).

Buying physical gold and silver – not GLD or SLV – should be your first priority in seeking shelter from the eventual fate of the dollar.  But mining stocks offer the potential wealth enhancement as well “optionality” upside to the prices of gold and silver. If you would like some ideas for investing in mining stocks, take a look at my  Mining Stock Journal.

Silver: 2011 Was A Preview Of What’s Coming

The precious metals sector is getting primed for big move higher. The rally that started in March was nothing more than engine revving.  Physically deliverable gold and silver are becoming scarce.  That is making it problematic for the gold/silver market manipulators to keep a lid on the prices of gold and silver.  Rising U.S. domestic and global geopolitical tensions will help serve as rocket fuel for the precious metals sector.

All of the above factors lead me to conclude that there’s a high probability that the precious metals sector will stage a big move between now and the end of the year.

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The Mining Stock Journal is a bi-weekly mining stock newsletter that focuses primarily on the junior exploration stocks. The latest issue includes a review of a junior silver mining company with huge silver optionality. You can learn more about  this newsletter by following this link:  Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

The Stock Market Could Be In Trouble – Buy The Dip In Gold / Silver

The price take-down in gold and silver is 100% a product of the trading activity – aided and abetted by the bullion banks in NY and London, who manipulate the price in the paper derivative market. All of the trading activity dictating this sell-off is occurring in the paper derivative markets – it has nothing to do with the economics of the physical gold and silver markets.

How do I know this? Consider that 404,000 Comex December paper gold contracts contracts traded on Wednesday. That’s equivalent to 1,262.5 tonnes of gold. That’s roughly 42% of the total amount of gold that will be mined in 2020. In other words nearly half a year’s worth of physically mined gold traded in one day in just one contract month.

The ONLY physical gold and silver that is transacting is at the London price fix. And it’s dubious as to whether or not physical gold and silver is actually changing hands. Most of the “settlement” occurs digitally and gold and silver do not physically change possession. It’s a bigger scam than pet rocks.

At some point the coming market, economic and political turmoil will trigger a big bid for gold and silver which in turn will translate into a big move higher for the mining stocks.

Silver Liberties invited me on to it’s podcast to discuss the imminent stock market crash, the popping of the housing bubble 2.0 and precious metals:

A Matter Of Time Before Stocks Collapse And Gold Soars

“Look at the underlying fundamentals that are driving it [gold and silver prices]. The financial condition of the country that hosts the reserve currency deteriorates more everyday and the Central Bankers are trying to kick the can down the road on an inevitable financial system and monetary system reset by printing more money.”

The economy continues to show signs that the “sugar high” from the Fed’s and Government’s multi-trillion dollar money printing and stimulus spending is wearing off. The latest economic reports – notwithstanding the moronic homebuilders “sentiment” metric – reflect a renewed downturn in economic activity plus the numbers reported in July are being revised lower (see today’s retail sales report, for instance).

As long as the Fed continues to devalue the dollar by printing money and as long as Treasury debt continues to increase at an increasing rate, the fundamentals are in place for a monster move in gold, silver and mining stock.

Michelle Holiday of Portfolio Wealth Global invited me on to her podcast to discuss the factors that I believe will lead to a stock market avalanche and soaring values in the precious metals sector:

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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

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

New Mining Stock Journal Subscriber: “This is a lot of value for $20 a month. Thank you so much!” – Jorgen

Gold (And Silver) Are Extraordinarily Undervalued

Many subscribers ask me about taking profits on their physical gold and silver. While there’s nothing wrong with taking profits on your metal, it defeats the purpose of converting fiat currency into physical gold and silver.

The chart above from James Turk (Goldmoney.com) illustrates the power of gold’s (and silver’s) wealth preservation attributes. The chart shows the cost of oil measured in dollars (green line), euros (purple line), pounds (blue line) and goldgrams (red line). It uses 100 as the “base” price for oil.  A gram of gold buys the same amount of oil now as it did in 1950.  In contrast, takes a considerable amount more of dollars, euros or pounds to buy the same amount of oil now as each would have purchased in 1950.

If you have large profits in your physical gold/silver holdings and taking profits will make you feel more comfortable, by all means do so.  I’m holding all of my gold and silver for when the dollar collapses and there’s a monetary reset.  A reset that incorporates gold and silver into the currency system should incorporate a substantial upward revaluation of gold  (and silver) priced in all fiat currencies to a level that makes me indifferent between holding the metal or holding the new currency. Those who converted their metal into dollars before a reset occurs will be holding worthless paper.

Chris Marcus (Arcadia Economics) and I discuss several reasons why gold (and silver) is extraordinarily undervalued:

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A portion of the commentary above is from  the latest issue of the Mining Stock Journal. You can learn more about  this newsletter by following this link:  Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

Gold And Silver Are Set Up For A Huge Move

“There is a growing recognition that the much-heralded V-shaped recovery is not going to happen beyond a temporary recovery following lockdowns. That being the case, the Fed is committed to unlimited monetary inflation, which is already undermining the dollar, the trade weighted version of which continues to decline.” – Alasdair Macleod, Goldmoney.com

Institutional investors have maybe 0.5% of their assets invested in the precious metals sector. At the peak of the gold/silver in 1980 institutions had 5% invested in the precious metals sector. Since then that allocation has not been above 1%. Eventually a monster move is coming in silver and the mining stocks, though no one can say when it will occur.

The catalyst for the move will be large institutional and wealthy investors reallocating cash from the stock market in general into mining stocks. I believe Buffet was a harbinger of that even though he only bought a small amount of Barrick in relation to the size of Berkshire’s assets.

The overrbought condition that developed in July/early August is now neutral/oversold per the RSI and MACD indicators. Yesterday gold bounced off its 50 day moving average. Technically gold (and silver) is set up for a bullish move.

In addition, based on the data from India which reflects gold import activity (from John Brimelow’s Gold Jottings report), India started importing dore bars Monday and soon will be importing kilo bars. India has been absent for the last three weeks.

September through December is the seasonal period when India imports its most gold on an annual basis. This will have the  effect of exacerbating the already tight supply of gold available for delivery to buyers who demand actual physical delivery rather than leaving purchased gold in bank custodial vaults.  A groomsman in India dare not show up to a wedding with just a receipt for gold purchased to give to his bride.

Chris Powell (GATA.org) also pointed out several more factors that indicate the potential for a monster move in the precious metals and mining stocks:

— the smashdowns don’t work as they used to, seldom more than a couple of days;

— volatility in the metals has exploded;

— the geopolitical situation is growing more strained, not less;

— The U.S. and European economies are wrecks – the massive money printing directed at the deferral of financial and economic collapse functions as rocket fuel for gold/silver.

Furthermore, Chris points to the obvious indications that the supply of physical gold that can be delivered to entitled buyers on the Comex and the LBMA is exceptionally tight:

— The mechanics of the market: the rise and fall of EFPs, the sudden conversion of the Comex to physical off-take, the panicked dance between the LBMA and the Comex, the huge expansion of the Comex’s approved bar list, the failure of the Comex open interest to contract on falling prices, all of which suggest big underlying changes and increasingly tight supplies – whether one disagree’s or not with Andrew Maguire, he has been shouting for months that it’s impossible to get prompt delivery of metal in the LBMA system and is consistent with the unusual behavior exhibited by the CME/Comex and LBMA since April;

Finally, per the research of GATA consultant, Robert Lambourne, BIS intervention in the gold market on behalf of its member Central Banks is at its highest level in years and perhaps its highest level in history for the second month in a row (July and August).  Historically BIS gold swap activity has been suspiciously correlate with visible bullion bank efforts to prevent the price of gold from rising.

While the gold price was unable to sustain its move over $2,000 – for now – the overt price intervention efforts over the last 4 weeks has had, at best, limited success.  At some point this effort will fail.

Though it can’t be proved without access to the BIS records – and the BIS refuses to comment on its gold swap activities (as does the Fed) – it is thought by many who have evaluated the swap activity that the BIS uses this operation to make physical gold bars available to Central Banks for market interventions and delivery obligations.  Likely it is not a coincidence that for most of August both the a.m. and p.m. London price fixings have featured heavy offerings almost daily  which result in downward pricing pressure on gold.

All of the above factors lead me to conclude that there’s a high probability that the precious metals sector will stage a big move between now and the end of the year.

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A portion of the commentary above is from  the latest issue of the Mining Stock Journal. You can learn more about  this newsletter by following this link:  Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

Jerome Powell Confirms Intent To Hyperinflate The Dollar Supply

“After thinking about it all day, I’m still not quite sure this isn’t a joke; a high-brow commitment of utterly brilliant performance art, the kind of Four-D masterpiece of hilarious deception that Andy Kaufman would’ve gone nuts over. I mean, it has to be, right?” – Jeffrey Snider, Alhambra Partners

No Jeffrey,  Powell’s speech was not a cruel joke.  But it certainly was loaded with “Fed speak.”  The bottom line is that “letting inflation run above the 2% target rate” is code for: “we have to print a helluva lot more money to keep the stock market and the big banks from collapsing.”

In our latest weekly update, Chris Marcus (Arcadia Economics) and I discuss the farce delivered by Jay Powell yesterday morning:

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In the latest issue of the Mining Stock Journal I discuss profit-taking in miners, use of options to leverage returns, the Auryn/Eastmain merger and a new idea. You can learn more about the Mining Stock Journal by following this link:   MSJ Subscription Info.

New subscriber comment:  “Hi Dave, this is a lot of value $20 per month – thanks!”

Why Is Warren Buffett Buying Gold Stocks?

Who cares why Buffet bought Barrick shares?  It’s an infinitesimal percentage of Berkshire Hathaway’s market cap.  Even if Barrick triples from here, it will have no affect on the investment performance of Berkshire.

However, I believe it’s a good bet that Buffet has a lot of physical gold that he keeps in his own private storage facilities around the world.

Chris (Arcadia Economics) and I discuss the Buffet news as well as some other topics related to Buffet, gold and silver:

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In the latest issue of the Mining Stock Journal I discuss profit-taking in miners, use of options to leverage returns, the Auryn/Eastmain merger and a new idea. You can learn more about the Mining Stock Journal by following this link:   MSJ Subscription Info.

New subscriber comment:  “Hi Dave, this is a lot of value $20 per month – thanks!”