Declining above ground inventories of physical silver and the ratio paper claims against those stocks is going parabolic. When the music stops, do you want to be holding real silver in your hand or a fraudulently-issued paper claim on silver?
I happened to notice yesterday that premiums for silver eagles have been creeping higher recently. The mint is on allocation for 1 mm coins per week, I believe it is, and I’ve been told from a few sources that the mint could easily sell a lot more.
Silver Doctors invited me on to his weekly market wrap-up show to discuss last week’s FOMC monetary policy decision, the trading action in the precious metals market and the economy.
Clearly the Fed signaled that it’s backed into a corner with its monetary policy. If it raises rates it risks crashing the economy and the stock market. Yellen even stated, stunningly, before the meeting that the Fed takes the stock market in consideration when it looks at its monetary policy decision.
The leverage in the paper gold and silver market has also backed the Fed into an untenable corner. If it were to raise rates, capital would flee equities and flood into the dollar and into physical gold and silver, causing a massive short-squeeze in the paper bullion markets. And do no think for one moment that the Fed is not fully aware of this.
But if the Fed resumes QE, which is looking more and more like a possibility, it will trigger a torrid move higher in the physical gold/silver markets. I believe its an event that would blow a big hole in the income statements and balance sheets of the bullion banks, which are also regarded at Too Big To Fail.
Silver is a much smaller market than gold and 60-70% of what is produced is used in industrial, tech and military operations. Thus, I’m wondering if the bullion banks are intentionally withholding silver from the retail market by restricting supplies to the mints in order to conserve above ground stocks for delivery obligations attached to their paper short position.
I’ll have a lot more to say on this matter in a blog post I’m writing, but there’s some initial thoughts on the topic in my conversation with “Doc:”
The last day of September, the U.S. mint reported silver eagle sales of 750,000 coins. One day later, they reported another 1.65 million. Both were one day records. The two-day total – 2.35 million – was more than the entire months of August and July:
This is what happens when the Fed/Govt push the price of silver down using fraudulent paper gold and silver (Comex futures). The Royal Canadian mint put 1 oz. silver maples on allocation. 90% of the silver on the Shanghai Futures Exchange has been removed this year.
William Kaye, a prominent hedge fund manager in Hong Kong:
This demand is what is now underpinning the precious metals markets. I can’t stress enough that there is very significant physical demand for gold as it trades near the $1,200 level. The physical market is what stands in the way of the manipulative trading algorithms from crushing the gold price.
The gold and silver being made available at bargain prices is having to be supplied to the ready buyers. And unlike the people in the West who are becoming bold in their short paper positions in gold, the Asians are becoming more aggressive in their buying in the physical market.
But we are now reaching levels where it will become increasingly difficult for this Western central bank manipulation to continue. It’s going to be very difficult for the bullion banks, which have calls for $1,050 gold, to push prices much lower in their attempt to achieve that kind of target because they are going to have to come up with the physical gold and silver.