SGTbull07’s most recent micro-documentary details the recent news that the CFTC has allowed large banks like JP Morgan to make bets in the gold and silver paper markets without limits. Eventually, that paper Ponzi, like all which have come before it, will collapse quickly and without warning:
The continued manipulation of silver (and gold) has been brought to light by numerous sources, including GATA as well as independent whistle blowers. For most, gold and silver are simply another asset class. In reality, however, these precious metals are, as noted in the micro-doc, the historical ballasts that have kept currencies honest – until, that is, the gold standard was eliminated in 1971. Regardless of the manipulations and media talking points, when the SHTF it will be these precious metals (and possibly other commodities like oil) that governments will turn to as a way to value their currencies. Those who have the gold will have at least some value in their currency systems, while those without gold will become worthless.
Right now, China, Russia, India and other nations are buying up as much gold as they can get their hands on – because they know where its value is headed; and you can be assured they aren’t buying the GLD or SLV commodity exchange traded funds on the stock market – they’re buying the real thing. The U.S. Federal Reserve reportedly has about 8,000 tonnes of gold in their vaults, but we may never really know if all, or any, of that gold is still there until it’s too late, as there has reportedly not been a complete Fed gold audit since 1954.
Eventually, at some point in the (near) future the excessive leverage in the gold and silver paper markets will come crashing down, just like the excessive leverage brought down our stock and commodities markets in 2008. Reports suggest that there is nearly 100 times as much gold being traded in paper markets around the globe than has ever actually been mined in the history of the world. You can see the problem this might pose when traders of that paper gold eventually decide they want to take delivery of their metal – it simply won’t be available because there will not be enough to go around.
This will lead to an almost instant crash in the credibility of the paper markets and an equally rapid explosion in the price of the physical assets.
For now, it seems, there is still time to acquire physical precious metals at relatively fair value compared to where the prices may be several years hence. In fact, it remains a legitimate possibility that the price of precious metals will take a another significant fall, as we saw in the market panics of 2008.
We maintain, as we have before, that a stock market sell of, if it were to occur again, could mean a correction in precious metals as investors panic and sell anything and everything in their portfolios. We also believe that if such an event were to occur there would be a price floor where large buyers like China, India and Russia, as well as individual investors, would began pouring into the metals, effectively stabilizing the price. Given the instability of the global economic, financial and political systems, regardless of gold and silver’s short-term movements, the long-term bull market trend remains intact.
In addition to the possibility of falling precious metals prices in a stock market collapse, the fact that large financial institutions like JP Morgan are able to place ‘bets’ on paper, essentially without limits, means that manipulation may continue unabated for a while longer. Until, that is, global instability leads investors to request physical metals in exchange for their paper receipts. It is at this point that the entire paper gold and silver markets will be revealed as the house of cards that they actually are.
We continue to recommend to those who care to listen that holding physical gold and silver is an important wealth preservation and diversification strategy. We will, as we have done for the past several years, continue dollar-cost-averaging into precious metals regularly as a hedge against not just inflation, but government instability and a loss in public confidence. We urge our readers to give this some serious consideration and make gold and silver a part of their complete emergency and disaster preparations.