As the precious metals have languished in the past 7 years despite continued increases in the money supply, many including myself have commented on the manipulation in the markets. And at this point there is plenty of evidence supporting that the bankers have indeed been up to their usual shenanigans. Although more importantly, the key question remains, will the manipulation end?
A decade of analysis and thinking has led me to the belief that the most likely primary outcome is that eventually someone shows up for their physical metal and the shortsellers are unable to deliver it. Primarily because I continue to hear reports that the leverage in the market has now grown to the point where there might be as many as 500 paper claims to each ounce of physical metal.
In other words, for each ounce of physical gold or silver, there are possibly 500 people who think they own it. So the conditions are in place for a massive short squeeze. And after writing about how Hungary asked for its gold back last month, it was interesting to see a report this week that now Turkey is doing the same. Adding to a list that already includes Germany, Austria, Belgium, and Venezuela.
There’s been little coverage of this in the mainstream financial media. But that doesn’t mean it’s not happening right in front of our eyes. And it’s worth considering the reasons why these actions are occurring. While also factoring in that it takes a lot of energy and expense to transport physical metal, and that these decisions were quite likely not made on a whim.
Consider the recent comments from Turkish President Recep Tayyip Erdogan, which is reflective of the growing international frustration towards U.S. political, financial, and monetary policy.
“Why do we make all loans in dollars? Let’s use another currency. I suggest that the loans should be made based on gold.”
Turkish President Recep Tayyip Erdogan
It’s unlikely to be a complete mystery to the foreign central banks that the west has been manipulating the markets. As a simple google search of gold manipulation, GATA, silver manipulation, or Ted Butler leaves plenty to investigate. Now the evidence being uncovered in this recent court case (where several banks were once again caught red-handed manipulating the market) offers evidence of the true reason why gold reached $1,900 per ounce in 2011, and then was pummeled the same night the Swiss announced a de facto devaluation of the franc.
That the price of gold and silver have languished and remain slightly above the cost of production, in the face of all that’s going on in the world, continues to represent what I feel will in time be known as one of the greatest market anomalies and opportunities in financial history. My own guess is that many of the United States’ largest creditors such as China have also realized this. Which explains why so many nations are investing great resources into acquiring and safely securing their precious metals holdings.
The signs are there for those who chose to look. And responding with physical ownership of gold and silver, especially at current levels, remains one of the best ways of preparing for what’s about to come.
April 30, 2018