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Those
that are familiar with my writings about gold and silver for the last six years
know that I have said gold was cheap at $500, $600, $700, $800, $1000 and
$1,200 a troy ounce and know that I have said silver was cheap at $11, $12,
$14, $16, $25, and $30 a troy ounce. Today, I will reiterate that gold is
still cheap in the $1500 to $1600 range and that silver is still cheap in the
$40 range because the largest movements in gold and silver prices as well as
gold and silver mining stocks have still not happened and will materialize
over the next four to five years. Again, this doesn’t mean that gold
and silver can’t or won’t correct or consolidate again in the
future because both PMs always do. I have written publicly so much about this
topic over the years (and even in much greater depth to my subscribing
members) because I truly believe it is insanity not to participate in one of
the best ways to invest in gold and silver today
– the ownership of physical gold and physical silver.
Hundreds
of millions of investors worldwide, influenced by the propaganda of Western
bankers, have consciously made poor decisions not to own a single ounce of
physical gold and physical silver today. One of the first realities an
investor must understand about the gold and silver market is that the
Economics 101 concept of price being set by physical supply and physical
demand is an utter lie. In today’s world of banking and financial
industry lies, the price of gold and silver are NOT set by the physical
demand and physical supply of either of these metals, but rather by the
artificial supply and demand of paper contracts predominantly backed by no
physical metal.
By
now, the following facts are very well known by seasoned physical gold and
physical silver buyers but likely still unknown to the average investor
worldwide. A CPM Group document released in the year 2000 stated, “With the start of the London
Bullion Market Association’s release of monthly trading data, the
market has become aware that 100 times more gold and silver trade hands each
year, just in the major markets, than is produced or used. Some market
participants have wondered aloud how 10 billion ounces of gold could trade
via the major markets each year, compared to 120 million ounces of total
supply and demand, while roughly 100 billion ounces of silver change hands,
compared to around 628 million ounces of new supply.”
Thus, one can see that the fraud perpetrated by bullion banks in the silver
futures market exceeds even the fraud they commit in the gold futures
markets. Take the figures provided above, and a quick calculation
reveals that bankers were trading nearly 160 times of paper ounces of silver
every year than the annual physical supply of silver mined from the earth.
However,
break down these numbers even more and the fraud becomes even more
astounding. While in 2000, about 628 million ounces of new supply of
physical silver came to market, in 2010, mine production of new silver supply
was slightly higher at 735.9 million ounces. Net government sales accounted
for another 44.8 million ounces, old silver scrap provided an additional 215
million ounces, and producer hedging accounted for the final 61.1 million
ounces. Thus a total annual supply of roughly 1 billion ounces of silver
existed in 2010. However, industrial usage, photography and jewelry
used up nearly 78% of the one billion ounces of physical silver supply in
2010 and left less than 100 million ounces available for minting in the form
of silver coins. (Source: The Silver Institute). Despite this tightness of
new investment silver supply, there have been days in recent months when more
than 250 million ounces of paper silver traded on the COMEX in less than one minute!
During the times ridiculous volumes of paper silver were trading on the
COMEX, usually the price of silver was plummeting in intra-day trading. Thus,
bankers were clearly using this massive artificial supply of paper silver
contracts to knock down prices. On top of this fraud, bankers have
stretched the landscape of imaginary supply of gold and silver with their
introduction of the gold ETF, the GLD, and the silver ETF, the SLV, both of
which started trading in 2006. Both the GLD
and SLV are highly suspect, likely fraudulent vehicles that probably are
either (1) only partially backed by physical gold and physical silver and/or
(2) respectively backed by unallocated physical gold/silver that have
multiple claims upon them. Again,
fraudulent derivative paper gold and paper silver products create a
perception of increased supply even when there is no REAL increase in the
underlying physical supply or even at times when physical supply is
shrinking. Bankers have created this mechanism specifically
to suppress the price of gold and silver and to keep their Ponzi fiat
currency scheme alive – a scheme that they utilize every single day to
silently steal wealth from every citizen on this planet.
I
have heard the criticisms levied against Eric Sprott
and James Turk regarding their pro-silver and pro-gold stance in that they
are just selling their books as PM fund managers and bullion dealers.
However, I believe these criticisms to be patently unfair. I don’t
believe that either Mr. Sprott or Mr. Turk are so enthusiastic about the future prospects of gold and
silver returns because they just want to “talk their books”.
Rather, I believe that they are so enthusiastic due to their deeper level of
understanding about PM markets than the average retail investor and the vast
majority of uneducated commercial investment industry advisers. Furthermore,
I’ve been one of the most passionate supporters of gold and silver for
the last decade and I have never acted as a bullion dealer, have never
received any commissions from any sales of mining stocks, and have never
accepted a single cent from any mining company to provide coverage of their
company to my subscribing members though I have been approached many times to
do so over the years.
To
illustrate the level of misunderstanding that still exists about gold and
silver prices, here’s one piece of investment “advice” that
landed in my email inbox on August 16, 2008: “The barbarous relic – gold – is another
good choice, usually. But gold has already appreciated from just over $300 an
ounce six years ago to almost $900 today. It could be a little later.”
This adviser went on to push stocks and confidently declared that stocks
would be the “big
winner” once again over the next several years. From August
16, 2008 until today, the S&P 500 has lost 2.92% while gold has risen
111.33% and silver, +284.47%. Stocks, the big winner? I think not. But
selling stocks is the big bread and butter money winner of most commercial investment
advisers so that is the primary reason why they overwhelmingly always push
their clients into purchasing stocks as opposed to the real big winner of
precious metals. I recall reading a newspaper article several years ago from
a financial adviser in Florida that claimed she was proud of convincing here
clients NOT to buy gold at $800 an ounce because the gold price was too
expensive and that it was her duty to protect her clients against their own
foolish impulses. On November 8, 2007, thousands of people that subscribe to
my free newsletter read the following statements from me:
“So with gold over $800 an ounce, is it still cheap? Emphatically yes, and here’s why. I’m not really sure how
all the ‘Gold at 27-year high’ headlines came to be, but… if
we experience a correction any time soon, and gold breaks back down to the
$720 level again before continuing higher, it will just be really cheap.
Here’s why. Anyone that’s ever studied the formula that is used
to calculate the Consumer Price Index(CPI) in the U.S. knows that the
formula has been greatly tinkered with over the years to produce absurdly low
inflation numbers that are merely an artificially manufactured number that
probably fits some pre-determined number the government would like to report.”
So
back then, even with gold trading at $800 an ounce, the banker-owned and
controlled media in the Western world was filled with stories about an
imminent “gold
bubble” collapse because gold was at a “27-year high.”
It’s important to review history from time to time to be reminded how
easily you may have accepted patently absurd proclamations about gold and
silver prices in order to avoid falling victim to the same banker-originated
and banker-spread propaganda today. The reason I have been overly passionate
about gold and silver for years and still am today is because it takes great
passion to overcome the widespread ignorance and deceit spread by the
commercial investment industry to their clients about gold and silver.
Let’s
see how things have panned out in the stocks versus PM investment game over
the past few years. From the launch of my Crisis
Investment Opportunities newsletter on June 15, 2007 until July 25, 2010,
in a little over four years, my newsletter has returned a cumulative profit
of +211.49%. Over the same investment period, the S&P500, the
FTSE100, the ASX200, and top 5 ETF iShares Dow
Jones EPAC Select Dividend Fund has respectively returned
-21.39%, -11.99%, -26.51%, and -2.69%. Furthermore, during the next
four year period, from 2011 to 2015, I truly believe that an attainable goal
for my Crisis Investment Opportunities newsletter is to double or even triple
my previous four-year cumulative returns, simply due to the following three
reasons:
(1)
Western bankers are increasingly losing control over the price suppression
schemes they have enacted against gold and silver through their creation of
bogus paper derivatives;
(2)
The conditions that have lead to Euro and US dollar
devaluation are worse today than they were 10 years ago and no underlying
fundamental problem of the 2008 financial crisis has been adequately
addressed as of today; and
(3)
The percentage of people that have the amount of faith I hold in gold and
silver to produce superior returns around the world is still minute.
Thus,
once the average Dick and Jane retail investor finally believe in the facts
surrounding gold and silver versus the garbage propaganda disseminated by
crooked bankers and ignorant advisers, the price of gold/silver and PM stocks
will finally experience a truly parabolic rise.
Once
a small percentage of retail investors worldwide, or even just a small
percentage of retail investors in a densely populated country like China, finally
realize that bankers have created insane massive paper supplies of artificial
gold and silver backed by nothing but air and are consequently moved to
purchase their first troy ounce of pure gold and/or pure silver, this very
small action will exert tremendous upward pressure on the price of gold and
silver. And once this happens, I hope that you will have already secured your
physical reserves of gold and silver because it is then that PM prices will
truly go ballistic.
J.S. Kim
SmartKnowledgeU
JS Kim is the Managing Director and
Founder of SmartKnowledgeU, a fiercely independent investment
consulting and research firm that devises investment strategies to protect
Main Street from the fraud of Wall Street.
Article originally published
on SmartknowledgeU here
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