Is There Any Gold Left For Central Banks To Buy?

By Jeff Nielson, Bullion Bulls Canada

Here is a conundrum for readers to unravel. Throughout 2011, 2012, and early into 2013; central banks in Eastern and Emerging Market nations went on the largest (official) in history. This occurred as the currencies of these nations were relatively stable, and thus “inflation” pressures were relatively muted.

Now flash-forward to early 2014. We have what the mainstream propaganda machine is calling “the crises in Emerging Market currencies” (versus all the currencies of the corrupt, Western bloc). Let’s put aside the fact that the of these currencies is just another mega-crime from – committed while its banker-felons are currently being investigated for serial currency-manipulation.

Forgetting about the cause of this “collapse”, the effect of this plunge in the value of these nations’ currencies is a spike in the rate of inflation. In other words; whatever was the precise motivation for these central banks to begin their gold-buying binge, those motivations would be stronger today. Yet despite a stronger motive, their gold-buying has practically screeched to a halt.

The analogy here is a simple one. As summer begins (and people get thirsty), lemonade sales increase significantly. Yet just as a heat-wave arrives (and people are presumably even thirstier), lemonade sales suddenly collapse. There are only two plausible reasons which immediately assert themselves in this hypothetical scenario. Either the lemonade customers have no more funds to purchase lemonade, or the lemonade-makers have no more lemonade to sell.

Relating this conundrum back to the real world, if there is one thing which we know for certain it is that all of these central banks have plenty of paper to use to exchange for gold, indeed, virtually infinite amounts. Absent ; the only thing restraining these governments in the creation of these paper currencies is their own (lack of) discipline.

With “competitive devaluation” still the for all these governments; this translates into no discipline at all. It’s pedal-to-the-metal with all this paper-printing, meaning that all these governments have mountains of ‘money’ to devote to their gold-buying. Clearly then, our primary suspicion must be that there is little – if any – gold left for these central banks to vacuum-up.

Before pursuing this thinking further; let me deal with a few permutations of this scenario which may have occurred to astute readers. Obviously the collapse of all these currencies means that the price of gold (denominated in these same currencies) has spiked. Thus one possibility would be that these gold-buyers are simply waiting for more-reasonable prices.

There are two reasons to reject such reasoning. First of all, as previously noted; these governments have essentially infinite amounts of paper to exchange for limited/finite quantities of gold. Playing-out such a scenario; as the price of gold begins to fall, instead of waiting for “the bottom”, queue-jumpers would leap into the market to get their gold before supplies are exhausted.

The point of logic here is that with infinite quantities of paper and (in relative terms) extremely limited amounts of gold available; the queue-jumpers would never even begin waiting for “better prices”. They would have simply continued their gold-buying at the same robust pace we saw in 2011 and 2012 – knowing that the market will run out of gold long before they run out of paper to use in purchasing gold.

More cynically; with all these governments playing their little game of Competitive Devaluation (where the is to drive one’s currency to zero), there will never be “a good time” for them to buy – i.e. when the price of gold recedes any significant amount below current prices. It makes no sense for any government deliberately driving the value of its own currency to zero to wait for “better prices” for any hard asset.

2014 Wolverine Silver Coin Ends Untamed Canada Series

A series from the Royal Canadian Mint comes to an end with the release of the 2014 Wolverine 1 oz Fine Silver Coin. The strike appears as the third and last issue of the Mint’s Untamed Canada series and offers a reverse design showcasing the wolverine. "Third and last issue in the Royal Canadian Mint’s […]

Grindex-Submersible Drainage, Sludge and Slurry Pumps

Grindex submersible drainage pumps and sludge pumps have been known to the mining and construction industries since 1960. The pumps are known for their high reliability, durability and dependability …

Read more….

COMMODITIES: ANOTHER LEG UP/GOLD SET UP FOR A FINAL TAKEDOWN

By Toby Connor, Gold Scents

Toby Connor

GoldScents

A financial blog primarily focused on the analysis of the secular gold bull market.

If you would like to be added to the email list that receives notice of new posts to GoldScents, or have questions, email Toby.

Hostage Markets: Are The Banksters The Real Hostages?

By Jeff Nielson,

In our current paradigm of in the precious metals sector, which has existed in this extreme form for three years now; appearances can be deceiving. By all appearances; it is which is in complete-and-absolute control of our fraud-ridden markets, and precious metals investors who are the helpless hostages. But in effective terms, is that really the case?

In fact; it is the One Bank itself that we see with less and less latitude for action, which is a qualitative basis for the definition of a “hostage”. As we see prices “trapped” within an absurdly limited trading range, we begin to see that this paradigm of Hostage Markets is not a strategy of choice on the part of the One Bank – but rather a strategy of lack of choice.

Ever since the One Bank’s minions in our central banks squandered most of the West’s bullion, flooding bullion markets with ridiculously excessive quantities of bullion year after year, simply because they could do so; the final chapter in this game of bullion-manipulation has already been written. The “story” ends with either an (official) bullion-default, or an (unofficial) – between the banksters’s and the real/legitimate bullion market.

This is because even in its least-destructive manifestation, this permanent price-suppression in bullion markets has (inevitably) created a permanent, structural deficit in supply. Regular readers are fully familiar with the dynamics here, summed-up nicely in the title of a : “shorting consumes, investing conserves.”

The supply/demand mechanics are simple, and the “chocolate bar” market makes a good hypothetical example. If we were to (under) price chocolate bars at 10 cents apiece, we know what would happen – and in a relatively short amount of time. Store shelves around the world would quickly be stripped bare, as people over-consumed this radically under-priced good.

Simultaneously, chocolate-bar manufacturers would stop making chocolate bars (and go bankrupt) because they couldn’t manage to ‘break even’ selling their product at such an artificially low price. There would be a “default” in the global chocolate-bar market, as buyers tried to buy more chocolate bars, but there was no more supply. This hypothetical example applies to any/all markets for physical goods, because the cost-of-production is significantly greater than zero.

It is long investment (in any such “physical” market) which pushes prices higher – in – until supply exceeds demand, at which point prices level off in equilibrium. But with the permanent price-perversion in our precious metals markets, such an equilibrium can never/will never be achieved; a permanent supply-deficit is the only, possible outcome.

This has reduced the One Bank’s overall strategy in bullion markets to a simple one: to delay losing the game as long as possible. Once we (correctly) identify the only, rational strategy here, it becomes equally easy to determine how successfully the One Bank is playing the game: the size of the supply-deficit. A small supply-deficit means the banksters are playing their game of price-manipulation well; a large supply-deficit means that these psychopaths are executing their strategy in a short-sighted, and ultimately suicidal manner.

Ever since the One Bank launched its first scorched-earth assault on bullion markets (one aspect of the contrived, Crash of ’08); there has been only one relatively short interval where the banksters have been playing their game of price-manipulation well, meaning that the supply-deficit was relatively small. This began in the latter half of 2010, after two, solid years of explosively higher prices.

2014 National Baseball Hall of Fame Silver Coins on Sale

Collectors can declare a home run for numismatic history with today’s noon release of the 2014 National Baseball Hall of Fame Silver Coins. Never before has the United States Mint produced curved coins with these new releases featuring a concave obverse and a convex reverse. The silver coins are issued as part of the larger […]

2014 $20 Bobcat Commemorative Silver Coin at Face Value

2014 $20 Bobcat Commemorative Silver Coins extend the Royal Canadian Mint’s "Exchange 20 for 20" program that features 99.99% pure silver coins sold at their face values. The second 2014-dated release is the 12th overall since the extremely popular series debuted in 2010. The only silver coins that have not sold are the two newest […]

The Obvious Way to Fight Food Inflation

By The Mogambo Guru

The kids are suddenly big experts on “income inequality” since it has become the issue du jour lately, and are loudly whining and wondering why I have money to spend while they do not, which they consider completely unfair.

As usual, they were not impressed with a loving father (me) taking some of his precious time to kindly explain that, around HERE anyway, it’s because I went to school, got a job, spend less than I make, and save the rest by not indulging the random, selfish whims of a bunch of free-loading, lowlife, teenage morons.

They were even LESS impressed when I told them that the national problem of inequality of income is because the evil Federal Reserve created (and still creates!) so much excess cash and credit, which naturally ended up in the hands of those able to amass it by continually borrowing money from the banks and buying a flood of government bonds, which dictates that the rich get all their money back, plus interest.

This was greeted with the usual teenage groaning and moaning, which I succinctly paraphrase as, “Oh, no! Not that Same Old Mogambo Crap (SOMC) about the Federal Reserve, and how it is evil for creating too much cash and credit so that it ends up creating price inflation, like the inflation in the wealth of rich people, and inflation in the price of food and energy, and the inflation in the misery of poor people, and blah blah blah until we are sick of it, so shut up, you horrible, stingy old man! We hate your guts so much that we can’t even begin to tell you how much we hate you!”

Obviously, they wanted more than a simple explanation. But what can I say?

Immediately recognizing an opportunity, I instantly developed the famous Mogambo Big Bucks Method (MBBM), a treasured, time-honored manual on how you, too, can become one of the rich One Percent elites, and have most of all wealth in the world.

Essentially, the only difficult part is the first step, which is to first acquire a lot of cash. Enough to impress the bank. About a million dollars ought to do it. Since Treasury bonds are considered so “safe,” and the banks are so desperate to loan money, you ought to be able to pick the bonds up for a few bucks, paying some absurdly low interest rate.

Then, next week and every week for, apparently, forever, the deficit-spending government will need to sell more oceans of bonds to both get more dollars to spend, and to pay you the interest they owe you on your bonds.

So you, ever the clever One Percenter that you are, next week and every week after that, borrow a few more million dollars from the bank, thoughtfully created by the Federal Reserve, using the spare change in your pocket to put down, and buy the new bonds. Now you have more bonds, both of them paying you interest!

And all along the way, you and your corrupt banking buddies and financial huckster friends dream up all kinds of complicated derivatives deals to leverage that pile of bonds, everybody borrowing more and more money from the banks, over and over again, swapping back and forth, leverage upon leverage, paying yourselves huge commissions and fees at each step, while the inevitable monstrous losses are dumped on the taxpayers, via the banks, necessitating huge bank bailouts and guaranteeing the evil Federal Reserve will create more cash and more credit to pump it all back up again.

Thus, by the inescapable mathematics of exponential growth you will, in theory, one day own all the money in the world!

Of course, the hard part is getting that initial $1 million so that I can use the famous Mogambo Big Bucks Method (MBBM) to be rich, rich, rich and have all the money in the world.

Firstly, I have to budget very carefully and cut expenses for silly extravagances, like having snazzy sports cars, polo ponies and children, as I have had to patiently and gently explain to them countless times (“What part of NO don’t you understand, ya morons?”)

So I’m standing there in the checkout line at the grocery store, and I am already in a bad mood because my favorite cookies were NOT included in the “buy one, get one free” sale category, while, seemingly all around me, I see crappy cookies that I wouldn’t eat if you freaking GAVE them to me for free, are!

I am reduced to this sad, sorry state of penny-pinching parsimony because of inflation in prices, as the really good cookies are running almost 50 cents apiece these days. And for a guy who can easily sit down and eat half a bag of cookies in a disgusting display of graceless, grunting piggishness before he even gets up to get something to drink before returning, drink in hand, to resume eating most, and sometimes all, of the entire last half of the bag, this adds up to a lot of money these days.

And, I am sorry to say, it is not going to get any better, either, as from Bloomberg.com we get the distressing news that, “World food prices rose 2.6 percent in February, the biggest jump in 19 months, as prices for cooking oils, grains, dairy and sugar all rose, the United Nations’ Food & Agriculture Organization said.”

I thought at first that this was measuring price inflation from February to February, namely one year’s worth of price inflation. It was not. It was for the one month! One Freaking Month (OFM)!

This horrific news, for those of us who are not lunatic Keynesian economists or otherwise mentally ill, about inflation in consumer prices is Very Bad News (VBN), leading, as it usually does, to more creation of cash and credit by the Federal Reserve and thus to Even Worse News (EWN), before proceeding to more and more cash and credit and to worse and worse news, on and on, spiraling, spiraling, spiraling out of control, before reaching what Ludwig von Mises called “the final collapse.”

I, of course, would also call it The Final Collapse (TFC) if I could, but then I’d have to listen to everybody pointing out how I stole it from Mises because I am so stupid, and how I have never had an original thought of my own, and how everybody (including kids, see above) hates me.

So I call it, instead, The Big Mogambo Financial Supernova (TBMFS), where prices of food and energy explode outward in some huge freaking fireball, killing everything, while simultaneously debt, credit, asset prices and wealth collapse into a “black hole”, disappearing forever into a vast nameless void, which is, of course, the famous Mogambo Scary Vast Void (MSVV).

This inflation in prices should cause an absolute outrage in an educated citizenry, with the evening news full of scenes of hurt, vengeful people rising, replete with flaming torches and pitchforks, to coalesce into an angry, incoherent mob storming the evil Federal Reserve that created all the cash and credit that produced the inflation in prices that is killing them, the treacherous Congress for allowing it (and causing most of it by deficit-spending!), and the damnable Supreme Court which infamously knuckled under to the damnable Franklin Delano Roosevelt and treacherously ruled that money did NOT have to be “only of gold and silver” like the Constitution of the United States literally requires, thus allowing a suicidal, expanding fiat-money supply, which caused all of these problems in the first damned place!

And while the evening newscasts contain no shocking videos of such vast social upheavals and mass rioting, and the newspaper contains only sporadic reports (“Local Lunatic Creates Disturbance”, with the subhead “Says Federal Reserve Has Doomed Us All”), it’s just a matter of time, which is growing shorter and shorter.

And it is likewise only a matter of time, which is likewise growing shorter and shorter, before gold and silver soar in price, as history shows they have always done at the ends of long periods of expanding money-supply idiocy.

It’s THAT time. It’s ALWAYS happened. What could be more obvious than buying gold and silver?

In short, it’s the right time, it’s always happened, and it’s obvious. Perhaps, knowing that, you’ll join with me in happily exclaiming, “Whee! This investing stuff is easy!”

Regards,

The Mogambo Guru
for The Daily Reckoning

P.S. It’s a wonder more people aren’t on board with The Big Mogambo Financial Supernova (TBMFS). Because if there’s one thing I know for certain, it’s that all of this insane money and credit – created (out of thin air) by all of the damnable central banks around the world – will have a horrible, disastrous effect on all of the people who didn’t heed my Great Mobambo Warning (GMW), which can be found in a few far-reaching corners of the Internet, namely The Daily Reckoning, which provides readers with the information they so desperately need to combat this whole inflationary insanity in the first place. Best to sign up for free, right here, before things get out of hand.

Gold uptrend to resume, silver ‘to rise faster’ – Phillips

Julian Phillips says the fundamentals for gold are strong to the upside and this is without the potential boost from the Ukraine.

Read more….

South African gold miner invests in "made in Lesotho" sushi

Gold Fields hatches a trout harvesting project – from all places Lesotho – to export rainbow trout to Japan.

Read more….

« Previous Page — Next Page »