Gold Fundamentals - Gold is
money because of its intrinsic characteristics -
Updated July 2011
You don't buy Gold
because price going up and you're making money
but rather because the value of the 'fools gold' Fiat Paper Money is
racing towards it real value or ZERO. Mathematically if the value of
a Fiat currency races to ZERO the value of a commodity and Gold in
particular has to race exponentially to 10³¹.
Ifwe take U.S. gold reserves at 252 million
ounces and we divide that amount into the national debt of 14
trillion that yields a staggering amount of
$53,639 per ounce. Even taking the world official gold reserves
divided into the US debt of 14 trillion we still get $15,873 per
Along with the
International Exchange and the Chicago Mercantile Exchange, JPMorgan now
also accepts gold as collateral. The European Commission for Economic and
has also decided to accept the gold reserves of its member states as
additionally lodged collateral. We also regard the most recent initiatives
in Utah and in numerous other States as well as in Malaysia, and the
planned demonetarization of silver in Mexico as a clear sign of the times.
The foundation of a return to "sound money" seems to have been laid.
A change they wanted and a change they have.
An important driver of the slow production growth for Gold is the dramatic
decline of South-Africa, which produced 1,000 Tonnes in 1970, but below
200 Tonnes in 2010. China has become the world's largest Gold producer but
most of the Gold production comes as by-products from base metal mines,
which can be volatile.
Chinese citizens turn to gold in one of greatest
booms in metal's history -
January 20, 2011 - It's not that Gold is up so
much; it's fiat paper going down and rapidly falling in a credibility
crisis for major currencies that underlie the western financial system.
Hard to understand! The public has been lied to and cheated by the Central
Banks for decennia now...and the chickens are coming home to roost!
Even today, as the gold rally has reached the 10-year mark (following a
20-year bear market), the metal represents a mere 0.6 per cent of total
global financial assets (stocks, bonds and cash). This is near the
all-time low (0.3 per cent) reached in 2001, and significantly below the
3 per cent it accounted for in 1980 and the 4.8 per cent it was in 1968
If you want to understand why gold is
rising despite few signs of price inflation, it boils down to the
understanding of how money is valued.
(March 4, 2010)
The quantity theory of money, believed by
monetarists, suggests that too much money chasing too few goods will
produce inflation in time.
The Fed, the EU and the UK are printing
money like drunken sailors, but the signs of hyperinflation are nowhere
to be seen. Yet, despite this, the price of gold continues to climb.
Why? People, on the margin, are becoming increasing skeptical of Fiat
Money (dollar, Euro, Pound) ability to preserve value over time. Gold
has not gone parabolic (yet), often result of hyperinflation, because
people have yet to believe en mass that Fiat paper money is "cooked" or
worthless. There lies the basic description of the subjective theory of
value of money as presented by the Austrian School of Economics.
Today the Authorities don’t recur to the
physical printing of Money. Instead they multiply DIGITAL MONEY by
If you have no Gold,
you have no money - but which scenario should you follow with Gold at the
today's peaks? (November 23, 2009)
Gold is making new highs almost every day
in Dollars, Euro, British Pound, Swiss Franc, Canadian Dollar, Rupee and
has now also broken out when expressed in Australian Dollar and South
African Rand. Technically it becomes very hard to forecast any corrections
and at which level these may happen (it is absolutely not sure we will see
important corrections between now and the Spring of next year and Central
Banks have put a parachute at $ 1,045 under the Gold price by buying 200
tons from the International Monetary Fund at this level). Bravo to
the idiots of the IMF for selling the tax payer's gold!
My personal feeling is that we could
well see the reverse of the 2008 deleveraging: Gold and Silver
came down and kept going down burning all support levels and staying
oversold. We now could see Gold and Silver go up and stay overbought for
some time. [Remember this is exactly what happened when the Gold pool
failed to control Gold at $ 35].
As indicated below there is ONLY so
much GOLD and Silver and the capitalization of the Gold sector is
extremely small. Once the Herd moves in, we will indeed see spectacular
To be safe you should allocate at least 35%
of your assets to Gold and Silver.
Buy more if the Gold price comes down but
don't go over your monthly limit and don't chase the price.
Make sure you allocate part of the amount
to Gold and Silver mines. As the
price of Gold and Silver goes up, their Earnings and Dividends also will.
Check our calculated technical objectives
and adjustments on a regular basis.
Don't forget and DO SELL and don't be
stubborn when the time has come.
Ask us for our advice if you are in doubt.
Invest more and/or use the balance only if
Gold corrects to $ 1,075, $ 1,045
example : 100,000 in total
buy 5,000 per week or 20,000 per
buy only NEW Gold coins with the lowest premium if Silver
is taxed in your country.
make sure you also buy Gold and
Silver equities which will generate a nice income over the next
DO IT NOW!...don't wait for $ 2,000!!!
DO NOT TRADE: buy and sit tight, ride the wave
all the way.
Total Gold Stock on Earth
the world there are currently around 140,000 Tonnes of gold ‘above
ground’. To visualize this imagine a single solid gold cube with edges of
about 19 meters (about three meters short of the length of a tennis
court). That's all that has ever been produced.
Divided amongst the population of the world there are
about 23 grams per person, about 1.2 cubic centimeters each.
The World is indeed running out of GOLD and Silver.
November 12, 2009
"There is no doubt in my mind that
we'll have a mania in Gold. And because the gold and the silver markets
are so tiny, the rush into them will be like trying to push the contents
of the Hoover Dam through a garden hose. Gold and Silver positions will go
ballistic," - Doug Casey
Gold production is also down.
October 24, 2009
From the most recent work of the
Gold Anti-Trust Action Committee there are strong indications that the
London bullion market operates on a fractional-reserve basis.
It would appear that at least 64,000
Tonnes of gold have been sold via unallocated accounts against a
maximum reserve of only 15,000 Tonnes.
The cataclysmic event in gold could be triggered by an audit or simply by
purchasers asking for delivery of their gold.
July 20, 2009
the past decade, private bankers have emptied national treasuries of gold
bullion, selling this bullion on the open market in order to keep the
price of gold low in order to mask the increasing vulnerability of their
The US claims the US Treasury still holds
approximately 7,000-8,000 tons of gold but has not allowed a public audit
of its reserves since 1954; and since 1999 the UK and Swiss have seen
their gold reserves decimated as bankers freely sold their gold in order
to cap the rise in the price of gold to keep the banker’s paper money
most investors will continue to play the banker’s game with the banker’s
paper money and continue to invest in paper assets as it is the only game
they know. What they don’t know is that the banker’s game is almost over;
and, for those who understand what is happening, this is the opportunity
of a lifetime to profit—and to survive.
Darryl Robert Schoon
January 18, 2009 - Biggest
fall in SA gold since Boer War
Posted: Thu, 15 Jan 2009
-- SOUTH Africa has dropped into third place of the world’s gold producers
after the biggest drop in bullion output since the Boer War in 1901,
London-based precious metals consultancy GFMS said on Thursday.
is a poor showing for the country that dominated gold production for a
century, but it has seen output taper off as mines became deeper and more
expensive and dangerous to operate. In 2008, South African mines had to
contend with a week-long shut down because of electricity shortages in
January and then curtail power consumption by 10%, which lowered
production at some companies.
Africa is now number three behind China and the United States, GFMS said
in its Gold Survey 2008, without giving figures. China claimed the number
one spot in 2007 when its production rose to 276 tons against South
Africa’s eight percent fall to 272 tons.
Africa faced a crushing year, with production plummeting by an estimated
14%, the sharpest percentage fall since 1901 when the country was still
embroiled in the Second Boer War,” the consultancy said.
on figures from the South African Chamber of Mines website, the largest
fall came between 1899 and 1900 when gold output fell 90% to 10.8 tons
from 113.15 tons. It then dropped to eight tons in 1901 before
rocketing back to 53.44 tons a year later.
Boer War ran from October 1899 to May 1902 between Britain and two Boer
republics, with gold, to some degree, lying at the heart of tensions.
Africa’s production is now at its lowest in 100 years, GFMs said, basing
its assessment on preliminary 2008 figures and its archives. South Africa
produced 1,000 tons of gold at its peak in 1970 and it has been
declining ever since.
has boosted its gold production because of increased foreign investment
there, while South Africa has experienced a decline because of cost
pressures and a vigorous government approach to safety, which entails
shafts being temporarily shut after fatal accidents.
Overall, gold production last year from mines around the world fell to its
lowest level since 1995 because of technical issues, skill shortages,
power constraints and a weakening global economy that made financing
however, boosted production three percent and new mines came into
production in Russia and Mexico, which should give a temporary boost to
December 19, 2008
The two most important prices in the
world of finance are the price of US government debt and the price of
gold. The two are inversely correlated, but the price of gold tends to
lead price changes in Treasuries. Gold appears to have bottomed in
November 2008, suggesting a future topping out of Treasury prices. The
gold price rise should accelerate as the Treasury bubble begins to
collapse. These are the two sides of the same coin for what will be the
most important story in finance in the coming year. Buy gold, sell
Treasuries; sooner rather than later.
We see the Backwardization of the Gold
price as the proof that the paper Gold price is clashing with the physical
Gold price. This has serious implications.
Professor Fekete recently posted his
article, Red Alert: Gold Backwardization!!!, in which he alerted
readers that for the first time in history the cash price of gold is
higher than the nearest futures price, indicating that buyers value
the present physical possession of gold more highly than future
Professor Fekete stated that when gold
recently moved into backwardization on December 2nd, a historical line had
been crossed, a line which signified whether or not the present system
could be saved. Now, according to Professor Fekete, with gold in
backwardization, it cannot.
While the war between paper money and
gold and silver is still being waged, according to Professor Fekete the
outcome is no longer in doubt as the present system is now beyond
redemption. This has profound implications for the future price of gold
and silver and for gold mining shares.
Physical gold and silver, whether in
hand or in the ground will be the last refuge for the trillions of dollars
still invested in paper assets. With an estimated $27 trillion of wealth
already lost this year, the day is coming when the last believers in paper
assets will finally look to gold and silver to preserve their dwindling
But when that day comes, those owning
monetary metals will not exchange their gold and silver for paper money at
any price, i.e. permanent backwardization; and the last believers in
paper assets will be stuck with now worthless government issued coupons
which previously had passed for money.
The recent historic backwardization of
gold is a clear indication that sometime in the future a state of
permanent backwardization will occur—and on that day, the world will
finally be free from the tyrannical slavery of central bank induced
In the last Great Depression, the shares
of Homestake Mining, the world’s largest gold mine, went
$4.19 in 1929 to $495 in 1935, paying a $56 dividend that year. In the
coming depression, gold and gold mining shares should do just as
well—and, after the onset of the depression, just imagine what they will
do during hyperinflation.
Send Gold to Surreal Price Level”
John Embry of Sprott Asset Mgmt
focuses on the extreme amount of nationalization and other bailout funding
by the USGovt, as a prelude to a potential gold futures default. He said
to watch the December COMEX futures contract. The old saying is that gold
responds to the medicine applied, but not the prescription written.
the US authorities will not hesitate to debase their
currency in an attempt to salvage the financial system. In the fullness of
time, this will be wildly inflationary and should propel gold and
silver prices that would be viewed by many in today’s context as surreal.”
“Gold doesn’t need to go to
$1,200 or $2,200, to prove itself. Gold can simply survive in an era
where all other paper assets fail."
"The entire world is
going through a generational and even a once in a hundred year cyclical
change right before our eyes and we are witness to these historical
events. All of these gold and financial sites for over 10 years have been
predicting that this financial meltdown was coming.
And don’t fool
yourself here. The most important element for survival for those who
survived the 1930s were those who were out of debt and had assets that
were paid for free and clear. "
Real Negative Interest Rates are the main
engine for Gold & Silver
2008 : The gap between the physical gold market
and paper gold market is widening.
An example bears this out. In Toronto
this week, a major off-market gold transaction took place. The price
paid was $1075 per ounce on the physical transaction. Its volume was
in the multi-million$. There was no US involvement in the transaction, and
the settlement was in euros.
Make sure accumulation of gold and silver
bullion is a monthly regimen, because mark my words, it will be next to
impossible to obtain some 18-24 months from now.
2008: The COMEX gold &
silver markets are each hurtling down a dangerous path toward default.
artificial paper price has created enormous physical demand, and hampered
supply production, if not delivery. The gap between the JPMorgan-led
corrupted phony paper price and the legitimate physical price in actual
trading markets has grown sharply, enough to force a breakdown like in any
distorted market. When December contracts in gold & silver are demanded to
be satisfied via delivery of the metal, it will be clear that the COMEX is
running a scam. A default is highly likely. Of course, they can continue
to deny contract holders the right to benefit from delivery, as they have
been doing for months to ‘Non-Economic Customers’ but soon the ‘Commercial
Customers’ will be defrauded. Arrests are warranted. We will see how this
Posted October 1st and
updated October 3rd, 2008
So why isn't the Gold price running?
Bill Murphy, the
chairman of the Gold Anti-Trust Alliance, says it proves the point the
alliance has been making for years now. It is being kept artificially in check
by central banks and bullion banks.
He also says this
control cannot be sustained for much longer and that the gold price could soon
be unleashed from artificial restraints.
He points to
Monday's gold price fluctuations as an example of the control of its movement.
The gold price was fixed at $905/oz in London’s afternoon market only to fall to
“It just doesn’t
make any sense,” Murphy said.
“The gold cartel
goes into the derivatives market and takes the price right down again. They’ve
been doing it now for a week,” Murphy told Miningmx. “The gold price should be
well over $2,000 now.”
cartel) getting to the point where they’re going to hit the wall, where this
physical demand is going to take them out,” he said. “It’s going to be above
$900, above $900, above $900 and then the dam’s going to explode. Maybe they’re
just trying to hold it together until they get this bailout approved and over
with.”..click here for
Gold is the
ultimate currency, the only REAL MONEY, it has no liability attached to
it and is universally fungible. Gold
made a new high expressed in Euro, Pound Sterling and Australian
Dollars. Historically Gold goes up together with the
The War between paper gold and bullion
gold is a war to determine which will take command of the price of gold,
nothing more, nothing less. The more massive the paper manipulation, the
more violent the coming correction. The asylum managers are losing control
of their paper-physical arbitrage.
For Gold the price today should be
$ 2,250 to match the 1980 high of $ 840. If one were to use the
statistics maintained by John Williams at Shadowstats.com the numbers would be
$ 5,000 . We maintain a 1:1 relation to the Dow Jones Industrials hence
it should be $ 9,000 +.
We maintain a 1:1
relation to the Dow Jones Industrials hence it should be $ 8,000 +
October 23, 2008
Embry of Sprott Asset Mgmt has raised the possibility of a December gold
futures contract default.
He is not predicting it, or claiming it as certain, but rather mentions
how talk centers on the December gold contract as having extreme stress
for actual delivery. Pressure is building. The December contract not only
is end of quarter, but end of year. He suggests a possible default. He
said, “there is probably going to be such an event to change
perceptions.” He cited a possible force majeure that could act as a
“seminal event that defines the whole situation.” He explained
that the physical gold price would then dictate the paper gold price, a
return to normalcy, and with a gigantic move up in the gold price. Right
now the paper gold market is overwhelming the physical side, but the
physical side is constricted on supply. He explained that hedge funds are
being unwound on a massive scale, slaughtered by margin calls. The long
side must call for delivery on many contracts. He also expects there will
be many questions on the Exchange Traded Funds soon as well, although
those are surely not as important as the COMEX contract defaults. Watch
and listen to his interview on the Canadian Business News Network (http://watch.bnn.ca/tuesday/#clip104603), and be sure to move to the 10 to 11 minute
Posted October 3rd, 2008
Flight to Cash is the order of the day, and
Gold ultimately is a beneficiary, albeit with infuriating bouts of $100
price swings. IMPORTANT is to understand we have a DELEVERAGING of the balance
sheets of Banks and Hedge funds. This huge GARAGE sale will decrease in
intensity once the Bailout plan is operative and the freshly created liquidity
seeps into the system. However, at this point ALL VALUABLE assets are sold
(incl. Gold) and the funds repatriated (read: Euros and other Forex exchanged
for Dollars). This action has a double illogic action: it pushes down
the price of Real Money and increases the price of Fiat paper money (DOLLAR)
or debt. This also explains why the volatility of
Gold is the greatest when expressed in Dollars.
Additionally, we see a disconnect between the
physical Gold price and the paper Gold price. Non-believers can
check this out on EBay.
Posted September 27, 2009
Buy physical GOLD NOW before it is too
late! Gold sits in a bullish triangle. As it tried to break
out, the price was promptly smashed back by the PPTeam. Their power is largest
on a Friday afternoon. The shortage in the physical markets persists (US
mint suspends Buffalo) and sooner or later the paper market will have to
catch up. Again, we cannot believe the markets stay this resilient as
the biggest drama since the Great Depression of the 1930's is unfolding.
Last year, world production of
gold sank to the lowest since 1937 as reserves are depleted and few new sources
of gold have been found.
professional and institutional investors trading paper bet on the
scramble to reduce their positions, private individuals are creating a
squeeze in physical metal right across Europe and North America.
The US Mint has reportedly halted sales of American Gold Eagle
coins, and is said to be refusing new orders from gold bullion dealers.
Kitco Inc., one of the largest gold investment retailers in the USA
and Canada, warns on its website that "due to market volatility and higher
demand in the entire industry, we are anticipating delays in supply of all
"Once inventory is received there may...be delays in processing and
shipping by our vaults."
Meantime in Germany, the Pro Aurum dealership based in Munich says
that its website hit "meltdown" last week thanks to record-high traffic.
It claims the same problem hit other German gold retailers, too.
"We've seen a dramatic increase in the number of orders. We called in our
gold-dealing team to work the Assumption Day holiday [on Friday]. All our
branches saw prolonged waiting times for over-the-counter cash sales, and
this will surely continue over the coming week."
Chart top left:
term idea of Gold Supply and Demand. See how production and supply comes down each time
Gold spikes up.