Like this from "blogger" David Edwards recent market comments:
"... the recent tone in Washington D C has been one that castigates those who work hard to earn more. Everyone understands that this is a pre-emptive claim on citizens' private assets by a greedy government. During the Roosevelt administration the tone was similar. The result was the same: anyone with money kept a low profile and cut back on consumption and investment prolonging the depression and high unemployment for years.
When you go to a gold mine during hunting season you see lots of deer and elk hanging around the property. These animals sense that they are safe in these no hunting zones. In the coming years, anyone with assets will do the same. The reports from Starbucks and other businesses that service upper income clients is telling me that the migration has begun."
People will be hanging around the Perth Mint, but can the Perth mint cope with the demand? Get it now before it is too late.
ReplyDeleteInflation will kill your paper money, taxes will kill your paper money, banks will collapse killing your dollars, Stock market will collapse killing your dollars.
HUNTING SEASON IS OPEN FOR PAPER WEALTH.
'Shhh. Be vewy vewy quiet. I'm hunting dollaws. Hahahah.' Elmer Fudd
Bron, in case you haven't seen it. From Sandeep Jaitly.
ReplyDeleteWe tend to forget in the modern day that silver and gold are money : the universally acceptable ultimate extinguishers of debt. The use of silver as the medium of exchange and unit of account dates back countless millennia. The very names of ancient currencies like the rupee or pound sterling are testament to this. Silver and gold have what is termed constant marginal utility – the personal satiation point of these two metals is so far removed as to be infinitely far away. As a consequence of this, the above ground stock of silver and gold is many multiples of the amount mined annually.
Prior to the turbulent and forced introductions of gold standards throughout various countries across the world in the 19th century, financial obligations – such as bills or bonds- were denominated in a weight of fine silver. Interest rates: that market rate which amortises the principle of a bond, were quoted with reference to silver. The universal acceptance of silver allowed the natural social interaction – or economics – to flourish. Were it not for this substance there would have been no mutually acceptable measure with which to conduct business.
What does it mean to have ‘fiat money’ as we do today? Strictly, this is a misnomer and the term should be ‘fiat credit.’ It means that credit can be extended without due respect to the mutually acceptable measure of the credit – the concept of credit only being possible a posteriori with a universally acceptable substance like silver or gold. Credit has been totally fiat on a global basis since 1971. Is there any limit to the volume of fiat credit that can be extended without due regard to silver or gold? There is indeed and it is measured by the extent of the backwardation in the bullion markets.
Backwardation in the bullion markets – where the respective metals trades at a premium to their nearest future contract – is the first warning sign that credit has been unnaturally extended beyond a certain bound. Fiat interest rates have been manipulated downwards so low, that the same cannot be achieved in the bullion lending markets. This causes a premium to be induced in the spot metals over deferred ownership. The integrity of the fiat credit is being called into question.
How have the bullion markets been faring with regards to backwardation? Silver and gold are both in elevated states of backwardation; indeed silver has been backwardated for nearly two years. Of late, the extent of the backwardations – with respect to September silver and August gold has been deepening dramatically. No one – private person or public authority – is willing to lend bullion at rates lower than fiat rates currently. Which begs the question, why not now, if it could be done in the past? The volume of lendable bullion has shrunk significantly and the principle suppliers of bullion to the lending markets is becoming more reticent. Why? Probably because there isn’t much bullion left. The government vaults have been replaced with IOUs. IOUs which do not mature into bullion at a rate quick enough for it to be lent to depress the bullion lending rates below fiat rates.
A squeeze for bullion – and especially silver – is brewing.
London, 14th August
Hi Bron,
ReplyDeleteI wish you would "chat" a bit more frequently.
Anyway, I would be grateful to hear if there is any talk among the mining community in Aus concerning Bob Moriarty's latest piece in 321 Gold.
To cite him on the potential Pilbara deposit:
"The Hamersley basin is about 60,000 square km. The deal with Mark Creasy is for a 70% interest in 1800 square km of the basin or 698 square miles for the Americans reading. That’s a giant project and should it all be mineralized I believe this is going to be the biggest gold deposit in the world."
In Australia to boot!! But he is not a booster and often is correct.
Any thoughts?
Cheers.
Justin, I've looked at the gold and silver futures and don't see any deepening backwardation. Near contracts are slightly under spot but after arbitrage costs there is no profit, so I don't consider that backwardation proper.
ReplyDeleteGordon, I don't follow the gold mining game, so haven't got any useful comments on the Pilbara but agree that Bob M is a straight shooter. Thanks for the heads up, I'll pass it on to our refinery manager, means he'll still be in a job for a while.