Gold and Silver Investors Take Advantage of Impending Mega-Moves
Commodities / Gold and Silver 2012 Jan 13, 2012 - 07:20 AM GMTBy: DeepCaster_LLC
“Sales are good and are continuing since last 10 days. Lucknow itself is selling about 150 kgs daily compared to 100 kgs in December,” said Lokesh Kumar Agarwal, Brijwasi Bullion and Jewellers.”
“India Gold Extends Rise From 1-Week Low”, Reuters, 1/12/12
Tom Kendall of Credit Suisse predicts Chinese 2012 Gold imports of 470-490 tonnes up from 245 in 2011. And Indian Gold demand has recently revived as the Reuters Indian Gold Report above indicates.
“Ned shared his thoughts on the new PAGE (Pan Asia Gold Exchange) launch in 2012 & the great opportunities it will provide investors, the recent pullback in gold and silver, and what may end up taking gold to much higher levels.
“The great thing about this new exchange in China and the philosophy behind it, is its harking back to the old days of gold where you pay cash and get your gold…they’re opening up a 1 to 1 fully allocated receipts market in gold. If Jeff Christian is to be believed, there is 350 to 1 leverage [in the Western paper gold markets]. That will give you a 0.3% coverage in terms of real metal behind your contract.
“I think the arbitrage opportunity will manifest fairly quickly…The chain of custody behind the [gold] price setting mechanism appears to be breaking…the CME and comex futures market mechanisms are clearly nonsense, [investors] are leaving in droves as you would expect…I’ve labeled 2012 as the year of [gold] deliverance.
“In response to the current sell-off in gold, Ned commented, “You’ve got to bear in mind, they’re just selling leveraged paper, no one is selling physical. There is just a tsunami of paper selling in order to maintain the illusion of fiat value…and it will be overcome…the physical buying will ride over the paper selling.” (emphasis added)
Ned Naylor-Leyland: “The Chain of Custody Behind Gold’s Price Setting Mechanism Appears to be Breaking”
Tekoa Da Silva, bullmarketthinking.com, 01/04/12
Note that even though the Paper Gold Prices bounced robustly last week, prices for Physical Bounced even more.
This phenomenon – the Increasing Divergence of Physical Prices from Paper Prices -- is quite important.
We can expect to see this Divergence Magnify, with Physical increasingly commanding a premium over “Paper” as the Year proceeds.
Of Course, this is Mainly due to Ongoing Cartel* Price Suppression of “Paper Gold” and shares.
And it is specifically due to the fact that it is easier for them to suppress the Price of Paper Gold and Silver (and also Paper Shares) than it is for them to suppress the Prices of the Physical Precious Metals.
“It seems to me that we are getting close, we’re not there yet, but we’re getting close to a situation where confidence is lost as it relates to currencies and global monetary systems. We have a confidence based global monetary system. They are debt based currencies and we don’t have enough money with which to repay the debts.
“We have fractional banking and there isn’t enough reserves in our banking system to cover the debt, let alone repay depositors should everyone come in at the same time for their money. Now we are starting to see this play out…
“Investors are leaving the financial marketplace.”
Paul Brodsky: “Gold, Silver, Lost Confidence & Systemic Failure”
Eric King, KingWorldNews.com, 01/06/12
The following are among the Key Causes of our forecast Mega-Moves in the Precious Metals and Equities Markets:
- As of January 6, 2012 Investors had pulled money out of U.S. Equity Mutual Funds for the Ninth Straight Week
- the recent (ostensible) pick-up in the U.S. Economy has come partly
- from a decline in the household savings rate (and this is not sustainable without strong credit growth, which is not happening).
- From a 70 cent drop in gasoline prices before Christmas – a drop which is surely temporary given increasing Crude Prices.
- At $15 Trillion plus U.S. National Debt is 100% of GDP, and cannot ever be repaid, (absent massive fiat currency depreciation) given any reasonably likely scenario, nor can the $100 trillion plus of downstream, unfunded liabilities be paid for.
- Hard landing risks in China are increasing.
- The Eurozone Banking System is nearly frozen – earlier this week Eurozone Banks had re-deposited €587 at the ECB’s over night facility. Eurobanks are not lending very much to each other. And yield on the Italian’s 10 year has risen over 7% again.
- And no Realistic and Effective Solution to the Eurozone Problem is on the Horizon, notwithstanding Eurozone leaders’ Verbal Assurances to the contrary.
The Central Bankers are responding to these Realities by ever more Money Creation and Debt Monetization.
But this will lead to Massive Inflation especially in Food, Energy, and the Precious Metals. (See our “Gaining from the Inflation/Deflation Conundrum” (12/15/11) in the “Articles by Deepcaster” cache at deepcaster.com.)
Further Food and Energy Price Inflation will not be Positive for Most.
But Precious Metals Price Inflation can be utilized to protect Wealth, and Profit, Notwithstanding Cartel* Precious Metals Price Suppression.
Consider the following examples of taking advantage of Mega-Bank Money Creation:
- As we earlier forecast, the U.S.D. has blasted up and over 80 basis USDX, in large part because no sustainable solution to Eurozone Debt Situation has been implemented. Nor will one be anytime soon, we forecast. As a consequence, our EUO (our leveraged short play on the Euro) play, which we earlier recommended is looking good for our DHPS Speculators.
Whether this Euro-Weakening/US$ Strengthening trend will continue will depend on the extent to which U.S. Debt Saturation and related Problems are resolved.
- Focusing on Crude Prices one should consider that the Pro-Attack-Iran voices will likely not reduce their intensity anytime soon.
Therefore, Greater CB Monetization (as in the ECB’s EQE), and Overt QE3, already being Trial-ballooned by a Fed Governor, coupled with ongoing War Tension and prospective Supply Issues should bring greater Crude Price inflation as we earlier indicated. Neither of these is likely to disappear any time soon. No surprise then that Crude is already up and bouncing over $100/bbl as we write this week.
This will dampen Activity in The Real Economy.
Result: (as earlier Forecast) another step toward Hyper Stagflation. Just consider, e.g., the figures for the U.S. with CPI already at 10.99% per shadowstats.com.
**Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported December 16, 2011
3.39% / 10.99% (annualized November, 2011 Rate)
U.S. Unemployment reported January 6, 2012
8.5% / 22.4%
U.S. GDP Annual Growth/Decline reported December 22, 2011
1.46% / -2.89%
U.S. M3 reported December 17, 2011 (Month of November, Y.O.Y.)
No Official Report / 2.84%
And Office Source Disinformation continues, consider Shadowstats comments on the January 6, 2012 release of U.S. Employment data:
“The reported seasonally-adjusted 200,000 jobs surge in December 2011 payrolls included a false, seasonally-adjusted gain of roughly 42,000 in the “Couriers and Messengers” category. That gain was an artifact of the seasonal-adjustment process and will remove itself in the January 2012 numbers.
“The problem is that this 42,000 gain is part of a seasonal pattern that fully reverses itself each January…”
“December Payroll Seasonal-Adjustment Problem”
www.shadowstats.com, John Williams, 1/6/12
- The Essential Take-Away from Real Inflation Rates which are much higher than the Bogus Official Numbers, is that to Protect Wealth and Profit, ones Total Return (Gain plus Yield) must exceed Real Inflation. For example, 10.99% Real Inflation in the U.S. underscores the Reason the Aim of our High Yield Portfolio is to do just that and why we just added a $5 stock with a recent yield of 14.9%.**
- And most important, regarding Gold and Silver, the ultimate Wealth Preservers with Profit Potential, James Turk of GoldMoney.com makes a quite sensible suggestion about how to regard the recent Takedown of Precious Metals Prices.
“Eventually that (Negative Market Action – Ed.) erodes people’s emotions and causes them to turn negative. In the early 1980s I worked with one of the top commodity traders in the world. The things that (Jesse) Livermore talked about, this guy used to put together. It was just holding those positions for the long-term bull market and that’s how you make the really big money. The reason so few people make the big money, when it comes to the markets, is they let the emotion and the noise, that comes from day to day, interfere with their long-term focus.
“You know, Eric, the main thing is the problems that have been plaguing the international monetary system for the past several years, they haven’t gone away. They haven’t been solved. In fact, they are not even being properly addressed with solutions to solve these problems. So we have to assume we are going to continue down this same road we’ve been on, which ultimately means currency debasement and consequently higher metals prices.
“As I’m fond of saying, ‘We always have to be focusing on the big picture.‘ Particularly now when emotions run wild six months after a correction in both of the precious metals prices. We cannot lose sight of the big picture. The reasons for owning gold and silver now are probably just as good as they were when gold and silver were half the price they are today. They are still very undervalued and we still have a long way to go in this bull market.”
Physical Gold and Silver and strong mining company shares are The Ultimate Advantage for 2012 and beyond.
Best regards,
By DEEPCASTER LLC
www.deepcaster.com
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