Gold Prices: Grant Williams Points to the Web

Financial news bombards us daily.  Far too often it takes the form of a talking head explaining the
recent (as past 2, 5, or 12 hours) movement up (or down) in stocks, bonds, commodities, etc.  And despite the gravity given to their explanations, it's most often meaningless in the long term.  I suppose that's the cost of a 24/7 news cycle.  Someone has to say something--constantly.

Where's the Gold?
Source: Bloomberg

That's one reason I refuse to follow the news in real time.  I certainly don't read articles predicting what Ben Bernanke will say, did say, didn't say, or explaining what any of that might mean.  Life is too short.

One collection of news items I do look forward to is collected, edited, and emailed out weekly by Grant Williams of Maudlin Economics.  It's his "Things That Make You Go Hmmm..."

It's a collection of stories that he finds interesting.  Frankly, in a typical issue, a few are over my head or not in my area of interest, but I always find a few I'm really glad to have seen.

Often the most interesting part is the introduction by Grant Williams.  This was never more true for me than with his July 15th issue, titled, "What If?"  In it, he stitches together a number of recent events related to the gold market.  In capsule form, they are as follows (It's a picture, so please imagine quotes):

If you have any interest in the gold market, I STRONGLY suggest you check out the full story on the Maudlin Economics web site.  Mr. Williams ties together a broad array of recent events, which often seem contradictory, and makes sense of them.  Better still, he just a good storyteller.

Gold: Sell, Hold, or Double Down?

I'll be brief.  Recent market moves, headlines, and commentary have been unsettling to (say the very least)

for investors in precious metals.  But if we can get beyond "What's happening?" and consider "Why is it happening?" the situation can be viewed much differently.  In a recent post, Gordon Gekko dissected the "Why" issue with incredible detail, and basically threw in the "Who" as a bonus.

Spoiler alert!  The title of his post is "Buy PHYSICAL Gold. NOW: The Discount of a Lifetime: Or Why You Must Abandon the Fake Paper Gold Market

"If someone is selling anything, the rational thing to do would be to get the best price possible, right? Would you get the best price if you sell your lot in one go flooding the market? Would you want to overwhelm all the bids and crush the price? Yes, but only if exactly that was your objective – to crush the price. Nobody sells 400 tons (!) of gold in one go if they are trying to get the best possible price. So this wasn’t a case of varied market participants selling their gold holdings having considered the fundamentals for Gold and arrived at the conclusion their long position didn’t make sense anymore. This was a case of concerted selling by one single entity whose sole intention was to drive down the price. Not only that, nobody sells $20 BILLION worth of Gold in ONE GO without some sort of state/CB backing."

So how is the situation different?  Gold is on sale!  Get some now, or right after you finish Gordon's post.

Gold: No New Reasons to Buy?

Here's some good advice from Bloomberg. In consideration of gold's current slump we are told at 20 seconds in that ". . . there are no new reasons to buy."



You could have fooled me.  I thought the Fed was providing 85 billion reasons a month, the Japanese were on the same track, and Europe was burning!

I have got to learn to look at the bright side of things.

Cyprus Bank Heist for Dummies

Easy enough at first glance to consider this gent a bit off.  On closer reflection, perhaps he's the only one I've seen exhibit a rational (and aware) response.

Just two thoughts on Cyprus.  First, a "one time" event is only one time until the next time.  Second thought is really a question.  While it's Cyprus now, can any of us really believe that Spain, Ireland, France, (insert more countries here) and the USA will not face the same fate, a little sooner or a little later?

It all goes back to rule #1.  Protect the banks, the bankers, and the elites at all costs.  And that leads to rule #2.  If you don't hold it, you don't own it.

Jim Grant Channels Conway Twitty: It's Only Make Believe

Jim Grant says we are living in a central bank created fantasy world.

"Gold stocks are astoundingly...  and disconcertingly... ...and dismayingly cheap... ...cheap as businesses and as hedges."

And for the music lovers in the crowd. . .

Eric Sprott on the "Recovery" and Gold!

In a few paragraphs, Eric Sprott fillets the notion of a recovery.  U.S. housing?  No.  U.S. employment?  No.  European solvency?  Not even close.

Then he goes on to detail the incredible rising demand for physical gold (Am I the only one that feels silly needing to say 'physical' in connection to gold?) in the rest of the world.  Odd then, that gold prices seem to be an "immovable object" lately.  As I read Sprott, we may soon see an "irresistible force."

"We have written at length about the disconnect between the paper gold price and the physical gold market. If the demand changes stated above applied to any other market, the investing public would lose their minds. "

And when they lose their minds, gold can be expected to go parabolic.  THAT is when we reach bubble territory, and when it's time to consider liquidating your precious metals and converting them to. . .

Gold: Russia and Mexico are Buying

On the one hand, we've got hedge funds and some nervous investors afraid that gold and silver have had their time in the sun--and selling.  On the other hand, central banks continue to buy.  GoldCore.com reports that Russia and Mexico are buying in a big way.

"While gold demand from the western investors and store of wealth buyers has fallen in recent months, central bank demand continues to be very robust and this is providing strong support to gold above the $1,600/oz level.  IMF data released overnight shows that Mexico added 16.8 metric tons of gold valued at about $906.4 million to its reserves in March."  Russia continued to diversify its foreign exchange reserves and increased its gold reserves by about 16.5 tons according to a statement by its central bank on April 20."

Who's right?  Who knows?  Maybe both are.  If so, my guess is that the sellers are right in the short term.  If Europe implodes, who knows what kind of rush to liquidity that might cause?  In the long term though, that almost certainly means vastly more QE (give it a different name if you care to), and we know what THAT does to prices of everything.

Finally, if this next QE is the one where our monetary masters lose control, it's hard to imagine a price too high for gold--or too low for fiat currency.

Got Gold?

I hope so, as this video offers lots of compelling reasons you might want to.

Central Banks Buying Silver?

Forecasts of higher silver prices are nothing new. I've been following them closely for a couple of years, and documenting them here for a year now. This one is a bit different though. It goes beyond the "dollar dropping/commodities rising" theme and supplies an entirely new--and potentially huge--source of demand.

SilverStrategies.com freely acknowledges that silver prices may be manipulated.

"If something is important to your livelihood chances are you're going to pay attention to it. Well, we are here to tell you that silver is important to governments, has always been, and is about to get VERY important going forward. Government did not decide that silver is money. People - you and your ancestors - did. So why is it a revelation that governments would be involved in the silver market? Didn't you appoint them to manage the monetary system? We're not saying whether it's good or bad. It just is."

They go on to suggest that ultimately, governments will have no choice but to admit that fiat currencies have failed again, and to seek protection in silver, as they been increasingly in gold.

"Why have central banks from China to Mauritius been buying gold in recent months and years? Not to help your mining shares. You decided that currencies were not doing their job and the central banks concurred. We predict that the same thing will happen in silver. It may not be the central banks doing the buying, - it could be sovereign funds, state owned/controlled companies, government backed agencies/institutions, etc. The flavor of the entity and the form such buying may take will differ from country to country - however, the essence will remain same."

Imagine the price action we'll see in the silver market if this type of move by central banks does occur? Can you say "game changer?" Sure, I knew you could.