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Gold Is Soaring...

edsl48

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#1
Posted without comment and do your own diligence

The Fed just went full retard (even fuller retard than it had gone two weeks ago) and along with its promise to buy pretty much anything and make all collateral money-good, it has eased an apparent resurgence in dollar liquidity stresses.



The FRA-OIS spread had been blowing out, signaling dollar tightness... well that's eased now...





And the dollar is losing ground fast...



And as the extreme policies of The Fed ripple through markets, so gold is soaring, reflecting the abuse of fiat that is occurring in real time...


And the paper-physical gold markets are decoupling once again...


As Egon von Greyerz recently reminded, remember you are not holding gold to measure the gains in debased paper money. Instead you are holding physical gold as insurance against a broken financial system that is unlikely to be repaired for a very long time.
 

edsl48

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And

THE GREATEST FINANCIAL CRISIS & HYPERINFLATION
April 8, 2020

by Egon von Greyerz

A Hyperinflationary Depression has always been the inevitable end to the biggest financial bubble in history. And this time it will be global. Hyperinflation will spread from country to country like Coronavirus. It could start anywhere but the most likely first countries are the US and the EU or ED (European Disunion). They will quickly be followed by many more like Japan and most developing countries. Like CV it will quickly jump from country to country with very few being spared.
CURRENT INTEREST RATES ARE A FALSE INDICATOR
Ever since the last interest cycle peaked in 1981, there has been a 39 year downtrend in US and global rates from almost 20% to 0%. Since in a free market interest rates are a function of the demand for credit, this long downtrend points to a severe recession in the US and the rest of the world. The simple rules of supply and demand tell us that when the price of money is zero, nobody wants it. But instead debt has grown exponentially without putting any upside pressure on rates. The reason is simple. Central and commercial banks have created limitless amounts of credit out of thin air. In a fractional banking system banks can lend the same money 10 to 50 times. And central banks can just print infinite amounts.

Global debt in 1981 was $14 trillion. One would have assumed that with interest rates crashing there would not have been a major demand for debt. High demand would have led to high interest rates. But if we look at global debt in 2020 it is a staggering $265 trillion. So debt has gone up 19X in the last 39 years and cost of debt has gone from 20% to 0% – Hmmm!
CORONAVIRUS IS THE CATALYST BUT NOT THE CAUSE
The crisis that the world is now encountering has not been caused by the Coronavirus. As I have stressed in many articles recently, CV is just the catalyst, albeit the most vicious one which could have hit the world. The real cause of the Greatest Financial Crisis in history is the Central Banks. They have been pouring fuel on the fire for 50 years by continuously reducing the cost of money until it became free in 2008 when rates were reduced to ZERO. Since then we have also seen negative rates around the world.
Negative rates are not just a total paradox but also absolute lunacy. Bankrupt sovereign nations around the world have been issuing debt at no cost or have even been paid for it. The whole purpose of interest is to be paid for the risk of lending money. As governments around the world have issued virtually unlimited debt which will never be repaid, the risk of lending to them has increased exponentially. But instead of much higher rates, to reflect the massive increase in debt plus severely elevated risk, central banks have got away with defying the laws of nature buy falsely manipulating rates..
FALSE MARKETS WITH NO REAL PRICES
Money is a commodity and the price should be a direct function of risk plus supply and demand. But since we currently have a false financial system with fake money and false markets, there are no real prices. So through constant manipulation and intervention central banks together with a few accomplices can totally rig most markets and prices.
Therefore, the cost of money today neither reflects the risk nor the demand. All it represents is malicious manipulation to serve governments and their masters the central bankers. But like all fake markets, also this one will end, not just badly but catastrophically.
THE SITUATION IS DESPERATE FOR BUSINESSES AND INDIVIDUALS
As I discussed in last week’s article, we now have the perfect storm. Virtually every government in the world is now committing billions and trillions of dollars, euros etc in fruitless attempts to save a collapsing world economy. In many countries, 50% or more of industry is shut. Most service industries are in a total lockdown and so is aviation, transport and most small businesses. Unemployment is approaching rates not seen since the 1930s depression. All businesses need assistance, from major corporations to small firms. The majority of individuals haven’t got savings for more than a couple of weeks living and for the ones who are now becoming unemployed, the situation is desperate.
Many major US corporations need assistance from the government. Very few of these have put aside profits to reserves for a rainy day. Instead management has been too generously rewarded as well as the shareholders. Since 2009, S&P 500 companies have spent $5.4 trillion in share buybacks. Instead of asking government for assistance, management should pay back their bonuses and shareholders who have received major payouts should recapitalise the companies. But this will obviously not happen. Just like in 2006-9, profits are privatised and losses are socialised.

Businesses are haemorrhaging cash and so are individuals. All that becomes a vicious circle with bills not being paid including rents, mortgages and taxes. Estimates predict a 40-50% fall in Q2 2020 GDP in the US. The problem is that this is not a temporary crisis. This means that GDP will see permanent erosion of a major magnitude in most countries.
SECULAR DOWNTURN LEADING TO HYPERINFLATIONARY DEPRESSION
So what we are experiencing is the start of a secular downturn which soon will become a hyperinflationary depression. This was always the inevitable end to this cycle as I have discussed in many articles for over 20 years.
A crisis of this magnitude is always a debt crisis. Very soon we will see debt around the world come under enormous pressure as borrowers start defaulting. This will lead to bonds crashing and rates surging. Central banks will then lose control of interest rates as long rates first go up and soon also pulling the shorter rates up. Rates can easily go to 15-20%. Many bonds will go to zero and rates to infinity. I have previously talked about paying 21% on my first mortgage in the UK in 1974. So I have personal experience of high inflation but never hyperinflation.
Since the majority of the $1.5 quadrillion derivatives market is interest related, this market will also blow up. All this will lead to unlimited money printing and currencies crashing fast to their intrinsic value of ZERO. At that point the entire financial system will be unrecognisable and parts of it nonexistent. All of this could happen very quickly, possibly within the next 6 -18 months.
2006-9 WAS A REHEARSAL
Could my Cassandra forecast be wrong. Yes, of course it could. But let’s be clear that the rehearsal of what I am predicting took place in 2006-9. Nothing was resolved at that point, just temporarily deferred. This is now the real thing and whatever money central banks print this time will have no effect. So I doubt very much that our banker “friends” can pull another trick out of the hat again. Because the only trick they know, to print more money, can never solve a debt problem.
MARKETS
Stock markets, in their first leg down of the new secular bear market, reached a 40% loss in most countries and that in less than 4 weeks. We are now seeing a typical correction that can go a bit higher. But when that is finished which could take 1-3 weeks, the next devastating downleg will start. Anyone trying to catch this falling knife will be slaughtered.
Bond markets might hold up for a bit longer with massive central bank manipulation and money printing. Junk bonds will first start crashing and constant downgrades will turn a lot of debt to junk. Much of corporate debt will go the same way and within 6-12 months also sovereign debt will come under attack.
Property markets are a major bubble and are already starting to disintegrate. Industrial, commercial, retail and residential, no sector will be spared. There will be no buyers, no financing and many forced sellers. A perfect recipe for a collapse.
Before the secular bear market has bottomed in these three markets, prices will be down 90-100% in real terms. And real terms means in constant purchasing power like gold.
We must remember that markets will bottom long before the economy. The likely development is first a hyperinflationary depression that could come and go very quickly within the next couple of years. Thereafter we will most probably see a deflationary implosion of all assets and a collapse of most of the financial system.
But we mustn’t believe that this is the end.
It is just another phase in the world economy to correct excesses of the 100 or 300 years or even 2000 years. Once debt has imploded and all asset prices have come down from current fantasy valuations, a new system will emerge built on sound values and principles. And then the cycle starts all over again.
GOLD
There are currently severe pressures in both the paper gold market and the physical market. The Comex and LBMA are making noises that everything is under control. LBMA is giving the illusion that they have plenty of gold in their vaults. But virtually all of that gold is already committed. Comex, the gold futures exchange is under tremendous pressure since they can’t deliver more than a small fraction in physical when paper holders of gold demand delivery. And that day is not far away.
The 3 biggest refiners in the world based in Ticino, Switzerland have been closed for 2 1/2 weeks, representing at least 50% of world production. The refiners have just opened this week but at a very reduced capacity of 25-33%.
If we just take the Gold ETFs as an example, they increased their holdings by 93 tonnes in the last 4 weeks. That represents a total value of $5 billion
It is today virtually impossible to get hold of physical gold so you wonder where the ETFs have bought their gold.
The answer is of course simple. It was lent to them by LBMA banks which are custodians for the biggest gold ETF GLD. These banks also hold central bank gold and all they need to do is to lend the same gold yet one more time to the ETFs. So if you hold a gold ETF, which you mustn’t, you know that it is unlikely to be backed by gold for more than a small portion of the fund total.
In a world where prices of most assets are about to implode, gold is life insurance and virtually the only asset that will maintain its value in real terms. Silver is also likely to do very well and will most probably outperform gold. But gold is safer and much less volatile.

As the 20 year gold chart shows above, gold is in an extremely strong uptrend. In all currencies but US dollars, gold has surpassed the 2011 highs. The gold price in dollars has just broken out and is now likely to go to $1,700 on its way to the old high of $1,920 and thereafter much, much higher.
As I have expressed before, I have been standing on a soap box for 20 years in my attempt to inform investors of the critical importance of gold for wealth preservation purposes. Fortunately many investors have listened but they still represent less than 0.5% of world financial assets. Since we started 18 years ago, gold is up 6-7X depending on the currency. That rise is insignificant compared to what is coming next.
But remember you are not holding gold to measure the gains in debased paper money. Instead you are holding physical gold as insurance against a broken financial system that is unlikely to be repaired for a very long time.



Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management
Zurich, Switzerland
 

the_shootist

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#3

Casey Jones

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#4
The Hard Reset begins.

The beginning of The End.

We're worried about catching an incurable Chinese disease from others on the street. But in a year...maybe less...we'll be worrying about catching lead slugs from marauding gang-bangers lookin fo da FOOD.
 

the_shootist

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The Hard Reset begins.

The beginning of The End.

We're worried about catching an incurable Chinese disease from others on the street. But in a year...maybe less...we'll be worrying about catching lead slugs from marauding gang-bangers lookin fo da FOOD.
Bring them on.

People! It's what's for dinner!
 

Casey Jones

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#6
Bring them on.

People! It's what's for dinner!

No, no, you're not doing it right.

Cannibalism transmits disease. Gang-banger got da clap; you kill and eat gangbanger...and you have the clap. Without even any fun in catching it.

You have to use an intermediary.

PIGS. Pigs eat anything. Including gangbangers, stilled with a head shot.

Feed the pigs. Then, when the time comes, you're flush with BACON!
 

Unca Walt

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#7
And

THE GREATEST FINANCIAL CRISIS & HYPERINFLATION
April 8, 2020

by Egon von Greyerz

A Hyperinflationary Depression has always been the inevitable end to the biggest financial bubble in history. And this time it will be global. Hyperinflation will spread from country to country like Coronavirus. It could start anywhere but the most likely first countries are the US and the EU or ED (European Disunion). They will quickly be followed by many more like Japan and most developing countries. Like CV it will quickly jump from country to country with very few being spared.
CURRENT INTEREST RATES ARE A FALSE INDICATOR
Ever since the last interest cycle peaked in 1981, there has been a 39 year downtrend in US and global rates from almost 20% to 0%. Since in a free market interest rates are a function of the demand for credit, this long downtrend points to a severe recession in the US and the rest of the world. The simple rules of supply and demand tell us that when the price of money is zero, nobody wants it. But instead debt has grown exponentially without putting any upside pressure on rates. The reason is simple. Central and commercial banks have created limitless amounts of credit out of thin air. In a fractional banking system banks can lend the same money 10 to 50 times. And central banks can just print infinite amounts.

Global debt in 1981 was $14 trillion. One would have assumed that with interest rates crashing there would not have been a major demand for debt. High demand would have led to high interest rates. But if we look at global debt in 2020 it is a staggering $265 trillion. So debt has gone up 19X in the last 39 years and cost of debt has gone from 20% to 0% – Hmmm!
CORONAVIRUS IS THE CATALYST BUT NOT THE CAUSE
The crisis that the world is now encountering has not been caused by the Coronavirus. As I have stressed in many articles recently, CV is just the catalyst, albeit the most vicious one which could have hit the world. The real cause of the Greatest Financial Crisis in history is the Central Banks. They have been pouring fuel on the fire for 50 years by continuously reducing the cost of money until it became free in 2008 when rates were reduced to ZERO. Since then we have also seen negative rates around the world.
Negative rates are not just a total paradox but also absolute lunacy. Bankrupt sovereign nations around the world have been issuing debt at no cost or have even been paid for it. The whole purpose of interest is to be paid for the risk of lending money. As governments around the world have issued virtually unlimited debt which will never be repaid, the risk of lending to them has increased exponentially. But instead of much higher rates, to reflect the massive increase in debt plus severely elevated risk, central banks have got away with defying the laws of nature buy falsely manipulating rates..
FALSE MARKETS WITH NO REAL PRICES
Money is a commodity and the price should be a direct function of risk plus supply and demand. But since we currently have a false financial system with fake money and false markets, there are no real prices. So through constant manipulation and intervention central banks together with a few accomplices can totally rig most markets and prices.
Therefore, the cost of money today neither reflects the risk nor the demand. All it represents is malicious manipulation to serve governments and their masters the central bankers. But like all fake markets, also this one will end, not just badly but catastrophically.
THE SITUATION IS DESPERATE FOR BUSINESSES AND INDIVIDUALS
As I discussed in last week’s article, we now have the perfect storm. Virtually every government in the world is now committing billions and trillions of dollars, euros etc in fruitless attempts to save a collapsing world economy. In many countries, 50% or more of industry is shut. Most service industries are in a total lockdown and so is aviation, transport and most small businesses. Unemployment is approaching rates not seen since the 1930s depression. All businesses need assistance, from major corporations to small firms. The majority of individuals haven’t got savings for more than a couple of weeks living and for the ones who are now becoming unemployed, the situation is desperate.
Many major US corporations need assistance from the government. Very few of these have put aside profits to reserves for a rainy day. Instead management has been too generously rewarded as well as the shareholders. Since 2009, S&P 500 companies have spent $5.4 trillion in share buybacks. Instead of asking government for assistance, management should pay back their bonuses and shareholders who have received major payouts should recapitalise the companies. But this will obviously not happen. Just like in 2006-9, profits are privatised and losses are socialised.

Businesses are haemorrhaging cash and so are individuals. All that becomes a vicious circle with bills not being paid including rents, mortgages and taxes. Estimates predict a 40-50% fall in Q2 2020 GDP in the US. The problem is that this is not a temporary crisis. This means that GDP will see permanent erosion of a major magnitude in most countries.
SECULAR DOWNTURN LEADING TO HYPERINFLATIONARY DEPRESSION
So what we are experiencing is the start of a secular downturn which soon will become a hyperinflationary depression. This was always the inevitable end to this cycle as I have discussed in many articles for over 20 years.
A crisis of this magnitude is always a debt crisis. Very soon we will see debt around the world come under enormous pressure as borrowers start defaulting. This will lead to bonds crashing and rates surging. Central banks will then lose control of interest rates as long rates first go up and soon also pulling the shorter rates up. Rates can easily go to 15-20%. Many bonds will go to zero and rates to infinity. I have previously talked about paying 21% on my first mortgage in the UK in 1974. So I have personal experience of high inflation but never hyperinflation.
Since the majority of the $1.5 quadrillion derivatives market is interest related, this market will also blow up. All this will lead to unlimited money printing and currencies crashing fast to their intrinsic value of ZERO. At that point the entire financial system will be unrecognisable and parts of it nonexistent. All of this could happen very quickly, possibly within the next 6 -18 months.
2006-9 WAS A REHEARSAL
Could my Cassandra forecast be wrong. Yes, of course it could. But let’s be clear that the rehearsal of what I am predicting took place in 2006-9. Nothing was resolved at that point, just temporarily deferred. This is now the real thing and whatever money central banks print this time will have no effect. So I doubt very much that our banker “friends” can pull another trick out of the hat again. Because the only trick they know, to print more money, can never solve a debt problem.
MARKETS
Stock markets, in their first leg down of the new secular bear market, reached a 40% loss in most countries and that in less than 4 weeks. We are now seeing a typical correction that can go a bit higher. But when that is finished which could take 1-3 weeks, the next devastating downleg will start. Anyone trying to catch this falling knife will be slaughtered.
Bond markets might hold up for a bit longer with massive central bank manipulation and money printing. Junk bonds will first start crashing and constant downgrades will turn a lot of debt to junk. Much of corporate debt will go the same way and within 6-12 months also sovereign debt will come under attack.
Property markets are a major bubble and are already starting to disintegrate. Industrial, commercial, retail and residential, no sector will be spared. There will be no buyers, no financing and many forced sellers. A perfect recipe for a collapse.
Before the secular bear market has bottomed in these three markets, prices will be down 90-100% in real terms. And real terms means in constant purchasing power like gold.
We must remember that markets will bottom long before the economy. The likely development is first a hyperinflationary depression that could come and go very quickly within the next couple of years. Thereafter we will most probably see a deflationary implosion of all assets and a collapse of most of the financial system.
But we mustn’t believe that this is the end.
It is just another phase in the world economy to correct excesses of the 100 or 300 years or even 2000 years. Once debt has imploded and all asset prices have come down from current fantasy valuations, a new system will emerge built on sound values and principles. And then the cycle starts all over again.
GOLD
There are currently severe pressures in both the paper gold market and the physical market. The Comex and LBMA are making noises that everything is under control. LBMA is giving the illusion that they have plenty of gold in their vaults. But virtually all of that gold is already committed. Comex, the gold futures exchange is under tremendous pressure since they can’t deliver more than a small fraction in physical when paper holders of gold demand delivery. And that day is not far away.
The 3 biggest refiners in the world based in Ticino, Switzerland have been closed for 2 1/2 weeks, representing at least 50% of world production. The refiners have just opened this week but at a very reduced capacity of 25-33%.
If we just take the Gold ETFs as an example, they increased their holdings by 93 tonnes in the last 4 weeks. That represents a total value of $5 billion
It is today virtually impossible to get hold of physical gold so you wonder where the ETFs have bought their gold.
The answer is of course simple. It was lent to them by LBMA banks which are custodians for the biggest gold ETF GLD. These banks also hold central bank gold and all they need to do is to lend the same gold yet one more time to the ETFs. So if you hold a gold ETF, which you mustn’t, you know that it is unlikely to be backed by gold for more than a small portion of the fund total.
In a world where prices of most assets are about to implode, gold is life insurance and virtually the only asset that will maintain its value in real terms. Silver is also likely to do very well and will most probably outperform gold. But gold is safer and much less volatile.

As the 20 year gold chart shows above, gold is in an extremely strong uptrend. In all currencies but US dollars, gold has surpassed the 2011 highs. The gold price in dollars has just broken out and is now likely to go to $1,700 on its way to the old high of $1,920 and thereafter much, much higher.
As I have expressed before, I have been standing on a soap box for 20 years in my attempt to inform investors of the critical importance of gold for wealth preservation purposes. Fortunately many investors have listened but they still represent less than 0.5% of world financial assets. Since we started 18 years ago, gold is up 6-7X depending on the currency. That rise is insignificant compared to what is coming next.
But remember you are not holding gold to measure the gains in debased paper money. Instead you are holding physical gold as insurance against a broken financial system that is unlikely to be repaired for a very long time.



Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management
Zurich, Switzerland

This guy says everything I have always believed will happen.

We are living in interesting times.

The one thing von Greyerz does not get granular with is WHEN: "All of this could happen very quickly, possibly within the next 6 -18 months." <-- I agree, and will go really granular:

Unca's Prediction: It will happen on a weekend. Highest probability: 3-day weekend.
 

the_shootist

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#8
Unsustainable means there will be an end. I, like so many others here, think the end is just beginning now. We are living in extraordinary times indeed
 

Casey Jones

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#9
Do you think there's survival? I don't. Sure, some hominids will survive. But civilization as we know it, is in the early stages of collapse.

First, comes the abandonment of social mores. We're seeing that. Next comes economic collapse - and we've set the stages for that.

In Western Civilization's past...the seven years of famine were dealt with with stockpiles and savings. Prudential planning. And using real money, a money that would hold its value.

Storehouses. Grain and gold. Saved through discipline, and then used with discipline.

We have none of that. We have fiat currency. We have had, for 20 years now, a debt-based economy - where everyone's economic survival depends on the next payment, the credit scores, the next source of debt, the next "guarantee." From Stoodint Lones, issued by gubbermint, to antiSocial inSecurity, a Ponzi scheme...it's all debt and Financialization.

A few WEEKS without income, and it all comes crashing down.

With the Financialized economy crashing, the food-processing infrastructure fails. Now da schitt be gettin REAL. FAMINE. And maurauders. Men with guns, find men with food. Boom-sticks win.

The population numbers shrink, and not by a little. At LEAST half the world's population dies of famine or of disease because of weakened health, poor nutrition.

That's at LEAST.

Here's another thing to consider: The ones who survive will not be the nice people. They'll be the fiercest, the ones who can temper their animal instincts for combat with some intelligent choices. It will not be the Social Register types.

It will probably be those more like Idi Amin, and Pol Pot. Those who can motivate those even dumber than they; those with some cunning and some cleverness. Not those who code and not those who understand Calculus.

There's humanity's future. We do, indeed, live in Interesting Times.
 

Buck

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#10
might makes right, we all heard that phrase, we know what it means...


It's never really gone away but if i out-think you, I win!



imho, it's time...
 

Varmint Hunter

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#11

Bottom Feeder

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#13

the_shootist

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#14
I always seem to find myself a day late and an ounce short
 

Irons

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#18
So much for picking up a couple Sovereigns with my coronabux. Dammit.

Ah well, I'm thinking I'll clean the old AR-15 and make roasted chicken for dinner tonight. Cole slaw, baked beans yum!


.:2 thumbs up:
 

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#19

FlaGman

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#20
I have never played in the paper metal markets until last month. I sold all my stock and bond ETFs and bought quite a lot of SLV when it was below $11 and some GLD as well. I hoped that both would rise as those people that did not have physical tried to get on the bandwagon. So far this has worked out very well for me, will have to see what happens...

I am a firm believer in holding physical, but as someone who was buying silver from the 30s through the 20s and now into the teens, much of what I have cost me much more than current prices. So at least these paper market profits gave me a little instant gratification. My real silver stash has been serving a harsh beating-I feel like I have been saying “Thank you, Sir, may I have another!” for a long time!
 
Last edited:

FlaGman

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#22
Sovereigns are my favorite coins to play with, and pretend I am Scrooge McDuck.
 

Bman33

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#24

Irons

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#25
Buying a sovereign for $450 is tough. I am craving gold but do not feel like paying those premiums...for now. Yeah, I'm so used to buying on a monthly schedule that it's time and I am not sure what to do. Right now I am sitting in time out.
THAT is exactly it right there! I prefer them at $275-300.


.
 

Bman33

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#28
THAT is exactly it right there! I prefer them at $275-300.


.
Paid 285 for me last one and refuse to pay over 3 do you know how many oz’s Troy of the swell one that buys, a lot.
Yeah, the last two I bought were at $291. That's a 1% premium included. I'm thinking of buying a Platinum Eagle right now just because I am craving and I want to look forward to getting something in the mail. I need my fix!
 

andial

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keef

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#30
Well. We were right and we are about to witness the death of the dollar. Should be a good time for all

If you don't have one real friend or neighbor in this world and live alone on an Island.
 

Casey Jones

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#33
Just the popular sentiment of the moment. The Herd Mentality, if you will.

Just as we saw two months ago, when Uber drivers were trading stock tips.

Some things never change:

Gold is the money of kings.

Silver is the money of elites.

Copper is the money of the working class

Paper is the money of fools.

Take that to the bank. Well, all but the paper - they charge you Negative Interest on the paper.
 

edsl48

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#35
Bear in mind this is from an outfit that is a metals marketer.


Central Banks Add More Gold to Their Reserves
APRIL 13, 2020 BY SCHIFFGOLD 0 0

1586876873098.png

Central banks continued their gold-buying spree in February, although the pace of gold purchases has slowed compared to last year’s near-record purchases.

On net, central banks globally added another 36 tons of gold to their reserves in February, according to the latest data released by the World Gold Council. That was about 33% higher than January’s total.

On the year, central banks have bought 64.5 tons of gold. That compares to 116 tons through the first two months of 2019.

Central bank demand came in at 650.3 tons in 2019. That was the second-highest level of annual purchases for 50 years, just slightly below the 2018 net purchases of 656.2 tons. According to the WGC, 2018 marked the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second-highest annual total on record.

The World Gold Council bases its data on information submitted to the International Monetary Fund.

Turkey continued to be the biggest gold-buyer. The Turks added another 24.8 tons to their reserves in February.

Russia further increased its stockpile of yellow metal, adding another 10.9 tons to their hoard.

Russia’s quest for gold has paid off in a big way. The Russian Central Bank’s gold reserves topped $100 billion in September 2019 thanks to continued buying and surging prices.

The Russians have been buying gold for the last several years in an effort to diversify away from the US dollar. Russian gold reserves increased 274.3 tons in 2018, marking the fourth consecutive year of plus-200 ton growth. Meanwhile, the Russians sold off nearly all of its US Treasury holdings. According to Bank of America analysts, the amount of US dollars in Russian reserves fell from 46% to 22% in 2018.

Last month, the Central Bank of Russia announced it planned to suspend gold-purchases for the time being, effective April 1. But in the first week of April, Russian banks were already asking the central bank to restart gold purchases. They expressed concern over gold exports amid disruptions in the transportation industry due to the coronavirus pandemic. National Finance Association head Vasily Zablotsky told Reuters that banks are “facing problems” exporting gold as there are also fewer cargo flights and transportation costs have doubled.

Other buyers of gold in February included:

  • Bulgaria – 0.3 tons
  • Greece – 0.1 tons
  • Kazakhstan – 1.8 tons
  • Qatar – 1.6 tons
The only major seller was Uzbekistan at 3.1 tons.

The People’s Bank of China did not report any gold purchases for the fifth straight month It’s not uncommon for China to go silent and then suddenly announce a large increase in reserves.

Many analysts believe China holds far more gold than it officially reveals. As Jim Rickards pointed out on Mises Daily back in 2015, many people speculate that China keeps several thousand tons of gold “off the books” in a separate entity called the State Administration for Foreign Exchange (SAFE). Given the political dynamics and the ongoing trade war, it seems unlikely the Chinese suddenly stopped increasing their gold reserves in 2016.

The WGC said it expects central banks to remain net-buyers of gold in 2020, but likely at a slower pace than the record levels we’ve seen over the past two years.

“We often get asked if central bank demand will be sustained. The past two months clearly suggest gold continues to be an important component of foreign reserves despite heightened levels of demand in recent years. But like everyone else, the recent market instability and uncertainty will be at the forefront of central bankers’ mind.”​
Of course, it is difficult to tell how the economic impacts of the coronavirus pandemic will impact things down the road. It is possible that a rapid devaluation of the dollar due to Federal Reserve quantitative easing could drive central banks to dump dollars in exchange for gold.

Earlier this year, World Gold Council director of market intelligence Alistair Hewitt said there are two major factors driving central banks to buy gold – geopolitical instability and extraordinarily loose monetary policy.

Central banks are looking toward gold to balance some of that risk. We’ve also got negative rates and yields for a large number of sovereign bonds.”​
Central bank policy has become significantly looser since Hewitt made that observation.

Peter Schiff has talked about central bank gold-buying. He has noted that the US went off the gold standard in 1971, but he thinks the world is going to go back on it.

The days where the dollar is the reserve currency are numbered and we’re going back to basics. You know, everything old is new again. Gold was money in the past and it will be money again in the future, and central banks that are smart enough to read that writing on the wall are increasing their gold reserves now.”​
Ron Paul made a similar point in an episode of the Liberty report. He said foreign central banks are increasingly gravitating to sound money like gold and ripping themselves away from the Fed’s dollar.

The central banks of the world are looking at gold again.”​