My name is Shawn Ozbun, and our goal is to keep you up to date with what’s going on in the world of Gold and Silver by providing you with current news and precious metals pricing.
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Welcome back to the SilverTowne Vault Cast. Wow, last week was crazy. Today I’m going to read and awesome article and rant about the huge contradictions that go along with the supply and demand of gold. I’ll try to keep calm but no promises.
Before we get into all of that, let’s look at today’s precious metals pricing.
Gold - $1281.89 Down $14.29
Silver - $19.67 Down $0.42
Platinum - $1353.00 Down $19.00
Palladium - $673.00 Up $2.00
Mass Carnage: Stocks, Bonds, Gold, Silver, Europe And Japan All Get Pummeled
Can you smell that? It is the smell of panic in the air. As I have noted before, when financial markets catch up to economic reality they tend to do so very rapidly. Normally we don't see virtually all asset classes get slammed at the same time, but the bucket of cold water that Federal Reserve Chairman Ben Bernanke threw on global financial markets on Wednesday has set off an epic temper tantrum. On Thursday, U.S. stocks, European stocks, Asian stocks, gold, silver and government bonds all over the planet all got absolutely shredded. This is not normal market activity. Unfortunately, there is nothing "normal" about our financial markets anymore.
Over the past several years they have been grossly twisted and distorted by the Federal Reserve and by the other major central banks around the globe. Did the central bankers really believe that there wouldn't be a great price to pay for messing with the markets? The behavior that we have been watching this week is the kind of behavior that one would expect at the beginning of a financial panic. Dick Bove, the vice president of equity research at Rafferty Capital Markets, told CNBC that what we are witnessing right now "is not normal. It is not normal for all markets to move in the same direction at the same point in time due to the same development."
The overriding emotion in the financial world right now is fear. And fear can cause investors to do some crazy things. So will global financial markets continue to drop, or will things stabilize for now? That is a very good question. But even if there is a respite for a while, it will only be temporary. More carnage is coming at some point. Read More...
Gold Bears Ignore Supply Contradictions
Here we see yet another fundamental contradiction by the “bears” of the propaganda machine. While we have these Chicken Little’s relentlessly making absurd price-predictions for the gold market; these bashers are simultaneously spreading at least as much doom-and-gloom on their “predictions” for the mining companies which supply these metals.
Herein lies the contradiction. You can’t (rationally) be “bearish” on both the price of gold and the supply of gold. If one is low; this implies the other will be higher. More emphatically; you can’t be bearish on both the price and supply of gold at a time when there is already a 1,500+ ton per year supply deficit in this market.
Let me explain the mechanics here, for any/all readers to whom this is not obvious. Let’s start with plummeting prices; precisely what the Banksters have manufactured in bullion markets today. What is the consequence of these lower prices?
To get that answer, we need only refer to the propaganda from Basher Central; more commonly known as Kitco:
…“Everyone thought at $1,600, $1,800 and $1,900 (that) all the mining companies were making profit hand over fist, but the reality is that the capital costs of construction had escalated so significantly that the margins of production and the margin of operation were still tight,” Gray said.
“$1,300 is not a sustainable gold price…”
Let me translate that remarkable statement. When all of these very same gold-bears were writing their drivel about “a gold bubble” for the past four years; they were all lying. Gold priced toward $2,000/oz was nothing more than the minimum price needed to sustain some semblance of health in the gold-mining sector.
And having gotten that much of a mea culpa, we get the remainder of the confession: $1,300/oz is not a “sustainable” price for gold today. Thus we have a collection of Serial Liars acknowledging that informed investors should not have listened to anything they were saying about the gold market over the past four years (at least).
Now these same Serial Liars are “predicting” many dark days (and even lower prices) ahead for the gold market; because the Boy Who Cried Exit Strategy has cried “exit strategy” for the 1,000th time. And we’re supposed to be convinced by this “prediction”; from these esteemed analysts?
But let’s assume that they were correct. In fact, let’s assume that the King of the Buffoons is correct and the price of gold will be manipulated to $1,000/oz. What then?
If the gold-mining industry isn’t sustainable (at all) with gold priced at $1,300/oz; what would happen with gold at $1,000/oz? A collapse in supply…in a market which already has a greater-than-1,500 ton per year supply-deficit. A deficit already 60% greater than annual mine-supply.
Yet this is precisely what we see with all of the shrill, irrational gold bears. Out of one side of their mouths, we hear these sages “predicting” much lower sustained prices for gold. Out of the other side of their mouths; we have the bears explaining how most of the companies who produce that gold will be unable to remain in business even at current prices.
How can a market sustain low prices with a large, existing supply-deficit; and supply (supposedly) about to collapse? It can’t. Even when the gold sector was relatively robust and supply was expanding; we had the Banksters acknowledging there was $100 of paper for every dollar of actual, physical gold which existed in those markets.
Either we will have a near-term explosion higher in gold and silver prices; or we will have a near-term implosion as one or both of these markets suffers some sort of decisive default or“decoupling” event. Either way, prudent bullion-buyers will be buying their (real) bullion sooner rather than later – as “cheaper prices” are not of much good to us if there is no actual metal to be purchased at such prices. Read More...
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[Disclaimer] Shawn Ozbun is not a licensed financial adviser, there is risk associated with all investment including gold and silver. You should seek advise from a licensed financial expert before making a purchase.
