Never make predictions, especially about the future.
Last year on September 6, 2011, gold
reached a high of $1920; but when
bullion banks intervened by pushing gold lease rates deep into negative territory in early September, they made sure enough leased gold would reach the markets to drive the price of
By late September, gold had fallen back to $1600; and when gold began to again rise, gold lease rates were pushed even lower
forcing gold this time below
$1600. The bullion banks
one-two punch took the momentum out of gold’s 27
% summer rally and by year’s end gold would still be at
In 2012, between March and August, gold traded between $1550 and $1650 until late August. This tight trading range persisted even as global economic conditions deteriorated;
and, gold, a barometer of economic
distress, should have risen higher. It didn’t.
WATCHING THE BASIS
I read Sandeep Jaitly’s Gold Basis monthly
newsletter with interest
and, as gold’s trading
range remained intact for much
of the year, Jaitly’s
advice remained remarkably consistent; his study of the basis indicating
gold and silver were moving into increasing
backwardation and accumulation of both metals was
On July 25, 2012 with spot gold at $1602, Jaitly advised: …The
message from 4th July’s
missive is reiterated.
August gold has now moved
into actionable backwardation (positive co-basis)
– which is progressing higher. September silver is also in an acute backwardation that is progressing higher as well. Both of the metals will be volatile going forward and advantage should be taken on any
mine] Both of the metals
are being taken off the market – or equivalently
– people’s intention to sell either metal
in size is diminishing rapidly. This is what the bases are saying.
What is memorable,
however, is Jaitly’s mid- August advice which still recommended buying gold and silver; but, this time, Jaitly wrote the opportunity to buy on dips had
observation was remarkably
prescient. The next week
gold rose $50 to $1670—and there had been no intervening dip to take advantage
of a lower price.
Whether the latest rise
of gold is the beginning
of gold’s long awaited
ascent is unknown. What is known is
that gold has broken out
of a protracted trading
range, that supplies of physical
gold and silver are increasingly
tight, that the willingness to sell is diminishing and macro-economic factors, e.g. more Fed bond-buying, rising food and fuel costs and falling global demand, will all contribute to gold’s
explosive rise when it does happen.
RISE WILL EASILY EXCEED GOLD’S INFLATION ADJUSTED 1980 HIGH
In inflation-adjusted dollars, today’s
equivalent of 1980’s then
record price of gold, $850, is
$2,466. But when gold does
make its explosive ascent, it will
take out $2466 like frenzied shoppers overrunning Walmart security guards during Thanksgiving’s
Black Thursday shopping event.
When the price of gold explodes
upwards, this time there won’t be a ‘Paul Volker’ at
the helm of the Fed to raise
interest rates to draconian
levels to bring inflation
expectations back into line.
This time the panic
to exchange dollars for gold will be so great
Fed interest-rate hikes will be ignored
and dismissed with the same disdain that today’s officials view individual rights and constitutional limits.
SEEN NUTHIN’ YET
In writing Time of the Vulture:
How to Survive the Crisis and Prosper in the Process (1st ed. 2007), I predicted the price of gold, then $600, would double and
triple. Today, I am unsure how high gold will now go, especially when valued in inflationary and/or hyperinflationary
In 2007, I predicted that
the coming collapse would
be even more catastrophic than the Great Depression. That in addition to a deflationary
collapse in demand, there
would be a concurrent
global currency crisis that would end with paper currencies
being worth far less than today’s
That process has begun. Today’s unraveling of the
euro is but the first step
in the global monetary rendering.
The collapse of the bankers’ paper currencies is in motion and although the
collapse started with the
euro, it will end with the dollar; and when the
dollar collapses, the bankers’ global house
of credit and debt will collapse as well.
Economists expected an economic
rebound in the 2nd half
of 2012. That unfounded expectation reflects just how wrong economists continue to be about the continuing economic crisis. We are witness to the collapse
of a 300 year-old economic paradigm and because most economists cannot imagine it happening will in no way prevent it
It’s going to get
better; but, first, it’s
going to get worse
Time of the Vulture: How to Survive the Crisis and Prosper in the
Process (2012, 3rd ed.)
Buckminster Fuller predicted humanity
would encounter a crisis of unprecedented
proportions designed to transform
humanity into an interdependent, harmonious, cooperative whole.
One can only wonder
at how great that crisis will
have to be. We do not
have long to wait. The crisis
has already begun.
Buy gold, buy silver,
Darryl Robert Schoon