Thursday, July 22, 2010
Alternative investment guru Doug Casey stayed true to his gloomy view of a second phase of the Greater Depression that we are living through in his presentation in Vancouver this morning.He thinks markets are presently in something of a ’sweet spot’ or the ‘eye of the hurricane’ and that very shortly the volatility will return....read on
By Jim Sinclair: "Nothing will unnerve the paper gold shorts more quickly and do more to undercut their confidence than to strip them of the real metal and force them to come up with more hard gold bullion to make good on deliveries. "Stand and Deliver or Go Home" should be the rallying cry of the gold longs to the paper gold shorts." --Trader Dan Norcini
If gold market participants were all tank drivers their machine would have but one gear - reverse. The smallest book in the world is the book of confirmed gold price visionaries.
Someone says deflation and the long gold positions hit the fan. Gold banks make their short covers even though the fuel in Bernanke's Helicopter Money Drop is founded in the dreaded use of the "D" word.
People are so fixed in present time that they cannot picture a euro back towards its high and the dollar back towards its low because the financial condition of the USA dwarfs the problems of the USA.
Hyperinflation is always the product of a loss of confidence in currency resulting in a "Currency Produced Cost-Push Hyperinflation."
No one with a synapse talking to another synapse expects a "Demand-Pull Inflation."
All hyperinflation in modern history has occurred for one reason, and one reason only. That is loss of confidence in currency.
Loss of confidence in a currency can be brought about by many reasons, but there is one constant factor. When hyperinflation has occurred in modern history EVERY economy involved was decimated as and when it occurred.
It has never been caused by "Demand-Pull," but always and without exception caused by "Currency Induced Cost Push Hyperinflation."
The nonsense being spread by the F-TV taking heads is that the Fed is out of ammunition to fight deflation. That is raving BS. The Fed can and will do QE to infinity which is restricted as a tool by nothing whatsoever. The ECB will not be far behind the Fed.
Argue all you want, but this is exactly what is going to happen starting now. Stop being glib. Study hyperinflation in modern times listed below before you ask me to explain it one more time.
What is out there today QE wise is enough to result in hyperinflation as confidence falls in currencies due to two characteristics, QE and volatility.
Try meditating on the concept of "Currency Induced Cost Push Hyperinflation," rather than loading your pants over gold banks manipulation full of sound and fury, but meaningless in the great scheme of things.
Examples of hyperinflation in modern times:
Angola, Argentina, Belarus, Bolivia, Bosnia-Herzegovina, Brazil, Bulgaria, Chile, China, Congo, Free City of Danzig, Georgia, Germany, Greece, Hungary, Israel, Japan, Madagascar, Mozambique, Nicaragua, Peru, Philippines, Poland, Russia, Taiwan, Turkey, Ukraine, United States, Yugoslavia
As an investment metal, silver is gaining rapidly in popularity. Silver unlike gold has significant industrial uses, in fact more patents are issued each year for inventions using silver than all other metals combined.
Silver is the best conductor of electricity & heat and is the most reflective of all metals. Also modern medicine has recently rediscovered silver's anti-bacterial qualities, actually before antibiotics were invented silver was the treatment of choice for infections. This germ fighting property has recently lead to an explosion in products containing silver, from silver impregnated sports wear (to kill the germs which cause body odor), fabrics for public transport and airline seats to prevent the spread of infections, coatings for fridges & washing machines and even in antiperspirant sprays and band-aids!
As the best conductor of electricity silver is used in solar panels to increase efficiency and in wiring, switches and soldiering contacts Another growing use of silver is in batteries, silver oxide batteries (like the one in your watch) are increasing being used to power larger devices as they store the most power to size of any battery.
As you can see silver is used everywhere, almost every modern device you name will contain a minute amount of silver. This low use per unit means that almost all of this silver will never be recycled.
The life cycle of gold often described as being dug up, refined, poured into a bar and then reburied in a bank vault. For silver after being refined it will most likely be used in a disposable application, a mobile phone or a battery all of which tend to end up buried in a land fill. It is unfortunate fact of our disposable society, gold is horded but silver is destroyed!
The fact that silver is not often recycled, whilst a huge waste of the energy required to mine and refine it, is a huge bonus to silver investors. Whilst the world's inventory of gold tends to increase slightly over time, the inventory of silver has plunged over the last 60 years. Whilst most governments hold gold as part of their reserves, some like the US, Germany and China holding over a 1,000 tons each, no central government holds a significant amount of silver.
Psst, Do you want to know a secret that only 0.001% of the world's population knows?
Whilst silver is 18 times more plentiful in the earth's crust than gold (1), silver being lighter and more reactive makes it easier to find as it occurs closer to the surface of the ground and can be mined as byproduct of other metals.
Why is this a good feature for investors? Because anything easy to find is used to excess and silver being used by humans for money and utensils for over 6,000 years means all the “easy” silver has been found, as can be shown by the fact that only 9 times as much silver is mined each year compared to gold (2). This has in part lead to over 60 years of inventory depletion of silver.
We now have reached a situation that has never occurred in human history, there is now less silver in bullion form (coins and bars) available for investors to purchase than there is gold! – read that last sentence again. Silver for the investor is rarer than gold! This has NEVER happened before. It is estimated that there are 5 billion ounces of gold in bullion form in the world and possibly only 500 million ounces of silver in bullion form. A factor of 10 to 1 in favour of silver. Yet silver currently sells for approx. 65 times less than gold.
Note: All silver sold by ABC is the highest investment grade silver, refined to 99.9% purity (three nines) and attracts no GST in Australia.
(1) CRC Handbook of Chemistry and Physics
(2) USGS: 2008 Minerals Handbooks:
GATA board member Adrian Douglas examines the ratio between the supply of gold and the U.S. dollar and concludes that the dollar's gold backing has fallen to a mere 2.3 percent and that the real dollar value of gold now approaches $53,000 per ounce.....read on