The biggest lesson you can learn from hurricane Maria is to be prepared. Puerto Ricans are suffering right now with the grid down, and limited access to cash. Make sure you are prepared BEFORE an emergency situation occurs.
I gave a presentation to some corporate board members recently, and they had one primary question on their mind. Why is overall gold demand weak?
These are smart people. They’re successful, both professionally and with their investments. They even believe in owning a little gold. But they’ve been puzzled by the significant drop in demand for physical metal. They had some ideas, which were mostly right, but their main concern was if they were overlooking some critical factor that was making other investors ignore gold.
What was especially interesting was their reaction. Once they grasped the reasons why physical demand has been down, they instinctively concluded that they needed to buy more of it. Now.
See if you’d come to a similar conclusion after viewing my presentation…
The word “fiat” sounds obscure, even mystical, but it’s actually simple. Fiat is Latin for “let it be done,” or “it shall be.” Apply that definition to money and it simply means that the currency we use is “money” because a government says it’s money. The dollar bill in your wallet is money by government decree.
Have all fiat currencies really failed?
I began to look through history to provide documentation of Mike’s claim. But I ran into a problem: there were too many to include in an article!
So I thought I’d look at just those that went bust since the beginning of the 20th century. There were still too many.
So I looked at just those since I was born in 1958. You guessed it, still too many.
I decided to cut it off at 1975, the year gold was made legal to own again in the US. I still found 17 of them—and that’s not even a comprehensive figure.
As you glance through the pictures, keep in mind that every single one of these currencies is now worthless. They’ve all gone bust, whether they got there quickly or took a century or more. And they’re not all from third world countries, either.
How can this possibly be? As Mike explains, a fiat currency relies on faith—and if it’s not backed by anything (like gold), leaders eventually succumb to the temptation to create more and more currency to solve their financial problems. And that dilution has always and inevitably led to extinction.
The scary part? For the first time in recorded history, all of today’s currencies are fiat.
That’s why Mike believes that before the end of this decade, an economic crisis will hit that will eclipse the Great Depression and 1929 stock market crash...
Many analysts are convinced that in the next crisis, the US government will not let banks fail. That’s right, 2008/09 all over again.
Except this time the problem will be much, much deeper. The amount and value of derivatives is MUCH larger than in 2008. And the banks can’t unwind their derivatives because—you’re not going to like this—they’re not able to accurately value them. There’s simply too many and the daisy chain too big and complicated.
But here’s the thing… in the next financial crisis—and there will be another financial crisis, it’s unavoidable—traditional wealth won’t be destroyed by the turmoil in the banking sector. It will destroyed by the reaction of governments and central bankers.
If governments refuse to let the financial industry fail—and logic dictates that they cannot under any circumstances let that happen—and the problem is much bigger than the last financial crisis, then the level of intervention by central bankers and politicians will be on a truly unprecedented scale.
We don’t know exactly what they’ll do, but we do know they will react. We also know what some of the likely options will be—all of which will devalue the dollar bill in your wallet…
• More QE/money printing
• Helicopter money
• Massive expansion of credit
• Massive launch of government backed bonds
As Mike states in his video, the debt based global monetary system has allowed deficit spending, trade imbalances, and bubbles to persist and balloon to levels unprecedented in all of history. They threaten to take down the world economy.
However, Mike is very clear on who he believes will be the survivors: gold and silver owners.
Your wealth will not be destroyed in the next crisis if you own a meaningful amount of gold and silver bullion.
A derivative is simply a contract between two parties, the value of which is based on an underlying financial asset. A stock option is a derivative, for example, because its value is “derived” from the underlying stock.
Farmers regularly use derivatives for hedging. The farmer locks in the price for his corn crop, for example, while the mill gets a guaranteed supply of crop. Sometimes gold miners do the same thing… though it’s usually viewed by investors as negative, management may think the price of gold will fall so will lock in a price now with the refiner, which in turn gives it a guaranteed amount of metal at some point in the future.
Banks have entered into the derivatives world, too. If all they did was what the farmer and miner do, the risk would be contained. But they’ve created such a complex financial daisy chain that the first failed contract could kickstart a massive ripple and quickly put the global economy in trouble…
Banks own lots and lots of mortgage loans. Bank X will hedge that risk with a derivatives contract with Bank Y. But then Bank Y thinks it has too much exposure to mortgages—so it takes out a derivatives contract with Bank Z. Bank Z “insures” Bank Y’s risk. It earns a premium for doing so, which is the motivation behind accepting these contracts in the first place.
So if you follow… Bank Z’s derivative hinges upon the mortgage loans insured by Bank Y, which in turn hinges upon the mortgage loan insured by Bank X. And on and on it goes. Multiply these hundred million dollar deals by thousands and thousands of contracts and you get a sense of how big this problem could be.
Well, here’s exactly how big…
As of the end of August 2017, derivative contracts exceeded a notional value of over $1.4 quadrillion. That’s a one with 15 zeros behind it.
Our debt load is a huge unsolvable problem, and so is the amount of global credit outstanding. Yet derivatives are so big that that debt load is barely visible on a chart.
How this could impact you and me is not just the complicated nature of derivatives, or how big they’ve gotten, or that many banks don’t fully understand their risk exposure, but by…
When we read about George Washington, we learn about leadership and heroism. When we look at the history of Lincoln, the abolishment of slavery and the civil war come to mind.
And when you study monetary history, one glaring fact sticks out: fiat currencies don’t last!
A fiat currency is one that has no backing of gold or any other commodity. “Fiat” means by decree, so the dollar bill in your wallet is currency because the government says it is currency.
Unfortunately, monetary systems over the past 100 years or so have gradually moved from asset-backed currencies to faith-based currencies. The US dollar had full gold backing… then partial gold backing… then “some” gold backing. Today, it has no gold backing.
This gradual decline in the backing of the world’s reserve currency doesn’t come free of consequences. History repeatedly shows that faith-based currencies eventually go bust or are pushed to the back of the currency bus. This means the US dollar’s reign is limited.
We thus shouldn’t assume our dollars will, in their present state, last indefinitely. That has never happened in history.
We may still be using dollar bills with Hamilton and Jackson on them, but it’s the monetary system that supports them that Mike insists will be changed.
And it won’t be just the US dollar. The sobering fact is that for the first time in history, all currencies today are fiat.
This means that the global financial system is more vulnerable than it has ever been in history.
Just like in 1922, 1944 and 1971, there will likely be an emergency meeting to hash out a new monetary system.
And it will affect the entire world—all 180+ currencies in use today—because the US dollar represents over half of all currency in circulation. With this kind of dominance, faith in all fiat currencies could fail once dollar falls.
Make no mistake… transitions like this are never smooth. They cause not just economic turmoil but a massive loss in purchasing power of the currencies in use.
Those who own gold and silver, on the other hand, will not just survive but thrive in the transition.
Mike Maloney and Jeff Clark sit down to talk about the recent action in precious metals and how silver is essentially rocket fuel at this point and is going to catapult higher in price. Jeff and Mike answer readers questions that have been submitted to them.
Mike Maloney talks about the birth of an empire, and how it grows. The seven stages of that cycle and how both gold and silver have played a crucial role in these empires monetary history. They have been crucial in the success of all empires previously seen.
When the average investor thinks about gold, they may view it as an inflation hedge. Or maybe as crisis insurance. Or perhaps solely as a portfolio diversifier.
These are all good reasons to own gold—but those are always good reasons to buy precious metals. Mike Maloney’s reasons to own gold and silver at this point in history are very different than what passes as standard arguments.
Given the monetary and economic risks present today, and the types of crises Mike believes are coming, he wanted to share his personal reasons with everyone. And he has a brand new video that details them.
They center around a perfect storm of worldwide trends that are set to explode simultaneously—and push gold and silver into hyper-bubbles.
Mike Maloney explains how we are at the peak of fiat money around the globe and how we will be forced into a re-evaluation of precious metals. The writing is on the wall and it is now only a matter of time.
Is money the root of all evil? In answer to that question, I had originally intended to set a world record for the 'World's Shortest Article' and simply write 'NO!', then add the video, and post it to the interweb. But that would be far too lazy, and this is far too important. Plus there's a great story behind this weeks post, so allow me to set the scene: Let's start by imagining you are in our main office...
We received many comments from you on the blog thanking Mike for explaining the Seven Stages Of Empire so clearly, but there was definitely one segment of the episode that was a clear favorite and had viewers asking 'Why wasn't I taught that in school!'
We've had a lot of questions from customers asking what Mike thinks about Steve Mnuchin's visit to Fort Knox. Here's part of a Q&A session from a conference where Mike addresses what may or may not be happening to the gold holdings of the United States.
It was a pretty simple inquiry on my part: Mike Maloney predicts the stock market is facing the mother of all crashes—if he’s right, then how long before the average stock investor would get back to even?
I wanted to know not only for myself, but because I have a daughter just starting in her career. I also have a wife with a 401k and over a decade to retirement.
I have a son in college. I handle my retired parents’ money. And I have other family and friends who follow traditional brokerage advice and have 60% of their portfolios in stocks (or more in some cases).
So, if the stock market crashes, how long does history say it’ll take for their stock holdings to return to pre-crash levels… months? Years? Or—gulp—decades?
To understand the value of segregated storage, first you have to understand allocated, as segregated is just its big brother.
Let’s say you bought 10 gold Eagles from a dealer and want to store them in a private vault. Your dealer mails the package containing your 10 coins directly to the vault you designate.
When the storage operator receives the package, they will open it and inspect the contents (done right, all handling from the door to the final shelf are under complete video surveillance, like they are at all of GoldSilver’s vaults).
That’s where things start to differ.
With an allocated storage program, those assets are then brought to the area of the vault exclusively used for GoldSilver or your other allocated storage “master” account. The metals are piled together with all other assets from that master, and the “sub” ownership to you is recorded electronically with both the vault provider and the account master, i.e. GoldSilver.
When it comes time to deliver or sell allocated assets, the vault provider is given verified instructions by the master and pulls that amount of material from the master’s shelves to fulfill the order.
Jeff Clark and Mike Maloney break down the ongoing collapse in Venezuela, a socialist country that has become essentially a failed state at this point. They talk about what is going to unfold next and how Mike Maloney predicted this collapse over four years ago! - Video Source
Mike Maloney and Jeff Clark explain why you need to understand the yield curve – the plot of the expected interest payout of bonds – and what it tells you about the overall health of the markets. You’ll learn how to read the yield curve and how it can predict when the stock market could experience a correction, or worse, a crash.
Mike Maloney and Jeff Clark look at charts that show a slowdown in the commercial and industrial sectors, discuss the possibility of deflation, and review all the bubbles that could pop. You’ll also get their take on if now is a good time to buy precious metals or if you should wait.
Jeff Clark sits down with Mike Maloney to answer questions from GoldSilver customers and readers. You’ll get an update on when gold and silver prices could rise again, JP Morgan's massive physical silver holdings, silver vs. cryptocurrencies, and more.
Most people’s lives are dedicated to money. It’s all people ever worry about or talk about. People train to learn the skills to get jobs to trade hours of their lives for money. But where does money come from? And who controls it? This 21-minute video from ColdFusion explains it all.
In this video, Mike explains that gold has been manipulated for so long, it could catapult up in price during a crisis. The current economic expansion is getting very stretched out and is actually the weakest in U.S. history. There's so much pent up energy gold could gap up.
If you think there isn't going to be another epic crash like the one we had in 2008, wise up. Not only is it coming, it could be far, far worse thank any of us would like. The fact that as of the release of this interview, you still have some time to prepare, may be something of a miracle. Mike Maloney joins me to discuss.
Precious metals expert Mike Maloney points to what large foreign countries are buying and it gold--lots of it. Maloney explains, says, “Between Russia, China and India, their purchases meet or exceed all worldwide production of gold. Whenever they exceed mining supply, the supply has to come from somewhere, and it’s coming from the West. When the dust settles, the East is going to be very wealthy, and the West is going to be poor.”
In closing, Maloney says that all the money printing and manipulation only pushed off the real crash into the future. Maloney explains, “These things bought us some time, but they made the eventual crash much, much worse. What we are going to see is that 2008 is going to be a speed bump on the way to the main event. 2000 was a stock market crash. 2007 was a real estate and stock market crash. This crash is going to be stocks, real estate and bonds. Bonds have been in a 32 year bull market, and no bull market goes forever. It’s just impossible.”
How long will every other nation on Earth allow the US to rake up incredible debts and also own the world reserve currency? In this video, Mike explains how the exponential growth of debt and currency could usher in the SDR.
While the smart money is selling stocks and preparing for a rough road ahead, the general public seems to be missing (or ignoring) the risks -- and instead getting into the markets. Mike Maloney and Chris Martenson discuss the distribution happening right now from the strong hands to the weak hands and all the geopolitical and financial risks out there in this 25-minute video.
In this video, Mike Maloney sits down with Max Keiser and Stacy Herbert in New York to discuss how the outbreak of war impacts the price of gold and the international monetary system. Mike also reveals insights into his personal holdings including cryptocurrencies.
Is silver a good investment? Why should someone buy it?
It’s natural and even prudent for an investor to wonder if a particular asset is a good investment or not. That’s especially true for silver, since it’s such a small market and doesn’t carry the same gravitas as gold.
But at this point in history, there are compelling reasons to add physical silver to your portfolio (and only one is because the price will rise). Here the top 10 reasons why every investor should buy some silver bullion…
#1 Silver is Real Money
Silver may not be part of our currency, but it is still money. In fact, silver, along with gold, is the ultimate form of money, because it can’t be created out of thin air (and thus depreciated) like paper or digital forms.
And by real money, we do mean physical silver—not ETFs or certificates or futures contracts. Those are paper investments, which don’t carry the same benefits you’ll find in this report.
Physical silver is a store of value, just like gold. Here’s why.
• No counterparty risk. If you hold physical silver, you don’t need another party to make good on a contract or promise. This is not the case with stocks or bonds or virtually any other investment.
• Never been defaulted on. If you own physical silver, you have no default risk. Not so for almost any other investment you make.
• Long-term use as money. A scan of monetary history shows that silver has been used in coinage more often than gold!
As Mike Maloney says in his best-seller, Guide to Investing in Gold and Silver, “Gold and silver have revalued themselves throughout the centuries and called on fiat paper to account for itself.”
Owning some physical silver provides you with a real asset that has served as money for literally thousands of years.
#2 Physical Silver is a Hard Asset
Of all the investments you own, how many can you hold in your hand?
In a world of paper profits, digital trading, and currency creation, physical silver stands in contrast as one of few assets that you can carry in your pocket anywhere you go, even another country. And it can be as private and confidential as you want.
Physical silver is also a tangible hedge against all forms of hacking and cybercrime. There’s no “erasing” a silver Eagle coin, for example, but that can certainly happen to a digital asset:
#3 Silver is Cheap
What if I said you could buy a hard asset at 1/70th the price of gold—and it would protect you just as well against crisis?
That’s what you get with silver! It is much more affordable for the average investor, and yet as a precious metal will help maintain your standard of living as good as gold.
If you can’t afford to buy a full ounce of gold, silver can be your ticket to holding some precious metals.
This is also true for gift-giving. Don’t want to spend over a $1,000 on a present but would like to give a hard asset? Silver just made it more affordable.
#4 Silver is More Practical For Everyday Small Purchases
Silver isn’t just cheaper to buy, but can be more practical when you need to sell.
Maybe someday you don’t want to sell a full ounce of gold to meet a small financial need. Enter silver. Since it frequently comes in smaller denominations than gold, you can sell only what you want or need at the time.
Every investor should have some silver around for this very reason.
Keep in mind that silver bullion can be sold virtually anywhere in the world.
#5 Silver Outperforms Gold In Bull Markets
Silver is a very small market—so small, in fact, that a little money moving into or out of the industry can impact the price to a much greater degree than other assets (including gold).
This greater volatility means that in bear markets, silver falls more than gold. But in bull markets, silver will soar much further and faster than gold.
Here are couple good examples… check out how much more silver gained than gold in the two biggest precious metals bull markets in the modern era:
Gain from 1970 low to 1980 high Gain from 2008 low to 2011 high
Gold 2,328% 166%
Silver 3,105% 448%
You might say silver is gold on steroids!
We can expect this outperformance to repeat in the next bull market, too, because the silver industry remains tiny.
#6 Silver Inventories Are Falling
Governments and other institutions have traditionally held inventories of silver. But today, most governments no longer hold stockpiles of the metal. In fact, the only countries that warehouse silver are the US, India, and Mexico.
Look what’s happened to those inventories since 1996.
A big reason governments don’t hold a lot of silver is because coinage is no longer made from the precious metal. But as you’ll see, silver is used in industry to a much greater degree now… so if future industrial needs are difficult to meet, governments will be ill-equipped to support those needs.
#7 Industrial Use is Growing
Believe it or not, you don’t go one day without using a product that contains silver.
It’s used in nearly every major industry, from electronics and medical applications to batteries and solar panels. Silver is everywhere, whether you see it or not.
As Mike says in his book, “Of all the elements, silver is the indispensable metal. It is the most electrically conductive, thermally conductive, and reflective. Modern life, as we know it, would not exist without silver.”
Due to these rare characteristics, the number of industrial applications for silver has skyrocketed. In fact, industry now gobbles up more than half of all silver demand.
Silver is used in a wide number of industries and products, and many of those uses are growing. Here’s a few examples…
• A cell phone contains about one-third of a gram of silver, and cell phone use continues to climb relentlessly worldwide. Gartner, a leading information technology research and advisory company, estimates a total of 5.75 billion cell phones will be purchased between 2017 and 2019. That means 1.916 billion grams of silver, or 57.49 million ounces, will be needed for this use alone!
• The self-heating windshield in your new Volkswagen will have an ultra-thin invisible layer of silver instead of those tiny wires. They’ll even have filaments at the bottom of the windshield to heat the wipers so they don’t freeze to the glass.
• The Silver Institute estimates that silver use in photovoltaic cells (the main constituents of solar panels) will be a whopping 75% greater in 2018 than it was just 3 years earlier.
• Another common industrial use for silver is as a catalyst for the production of ethylene oxide (an important precursor in the production of plastics and chemicals). The Silver Institute projects that due to growth in this industry, 32% more silver will be needed by 2018 than what was used in 2015.
There are a lot more examples like this, but the bottom line is that due to its unique characteristics, industrial uses for silver continue to expand, which means we can reasonably expect this source of demand to remain robust.
But that’s not the whole story… unlike gold, most industrial silver is consumed or destroyed during the fabrication process. It’s just not economic to recover every tiny flake of silver from millions of discarded products. As a result, that silver is gone for good, and limits the amount of supply that can return to the market through recycling.
So not only will the ongoing growth in industrial uses keep silver demand strong, millions of ounces cannot be reused. That might be a problem, because…
#8 Supply is About to Fall
As you might be aware, the silver price crashed after peaking in 2011. Over the next five years it fell a whopping 72.1%. As a result, miners had to scramble to cut costs to turn a profit. One of the areas cut dramatically was exploration and development of new silver mines.
It doesn’t take a rocket scientist to understand that if you spend less time and money looking for silver that you will find less silver. That drought in exploration and development is starting to take effect.
Low prices have affected how much scrap metal is available, too.
All of this is starting to have an impact on total supply.
Silver supply has fallen three consecutive years, the first time since 1991-1993.
As much as two-thirds of silver mine supply comes as a byproduct from base metal operations (copper and zinc, for example). But these other sources of supply will clearly have an impact on the availability of new metal coming to the marketplace.
These realities have set the stage for a peak in silver supply. If demand stays at current levels, it will be difficult for everyone who wants silver to get as much as they need. And don’t look now, but…
#9 World Demand is Growing
Global demand for silver is growing. Virtually all major government mints have seen record levels of sales, with most already operating at peak production.
Surging demand is nowhere more evident than China and India. These two behemoth markets have long histories of cultural affinity toward precious metals. And with their populations growing (the opposite of what is happening in the West), their tremendous appetite will continue.
Here’s a couple good examples… check out the growth in silver demand in China (for all uses):
And look at the growth of silver jewelry in India:
This kind of demand doesn’t happen in a vacuum. Sooner or later there will be consequences when surging demand meets crimped supply—and those consequences are all positive if you own the metal.
#10 The Gold/Silver Ratio Favors Silver
Last, the gold/silver ratio (the price of gold divided by the price of silver) can give clues about which metal might be the better buy at any given time. Especially when the ratio reaches an extreme…
The gold-to-silver ratio averaged 47:1 during the 20th century. It’s averaged about 61:1 in the 21st century. So a ratio at or above 70 is in outlier territory and thus makes silver a good buy relative to the price of gold.
You can see that the ratio sank to almost 30 at the peak of the bull market in 2011. It reached as low as 17 in early 1980. This compression in the ratio shows just how much silver can outperform its cousin gold. It also confirms it is undervalued compared to gold.
• Add all up the reasons and silver just might be the buying opportunity of the decade.
It’s hard to find an asset with a greater distortion between price and fundamentals. Not only is it a good hedge against crisis, the price will be forced up by a perfect storm of fundamental factors.
In this Insider’s Report, Mike Maloney shows you the differences between the gold and silver markets. He explains why gold is in a cyclical bear within a secular bull market and how silver is being manipulated. You’ll also get Mike’s latest technical analysis including updates on his personal holdings, the Commitment of Traders Reports, and the Gold/Silver Ratio.
When a grab is made for people’s savings, governments don’t bother to confiscate instruments like stocks and bonds and savings accounts—those can be wiped out by simply devaluing the currency. But when times are really tough, governments have “requested” citizens turn over their gold—the one asset they’ve historically been unable to control, since it’s not someone else’s liability.
When a gold confiscation happens, there unfortunately aren’t a lot of viable solutions. If your government declares it illegal to own a meaningful amount of bullion, you’d have little choice but to comply. Either that or play the role of a fugitive—with the prospects of financial penalties, forcible confiscation of your metal, and even jail time waiting for you.
Many investors believe gold won’t be confiscated today because it’s not part of the monetary system like it was during the U.S. nationalization in 1933, under Roosevelt. While it’s true we’re not on a gold standard today, if the crisis gets bad enough any and all viable solutions could be on the table. Debt in all developed countries is unpayable, for example, especially when you add in unfunded liabilities… where could the government get funds to service it all? One source could definitely be gold.
The sober reality is, while lower than in the past, the risk of a gold confiscation is not zero. The world today can be an uncertain place, and what were once “local” issues can rapidly escalate and have global consequences. This does not mean, however, that we are suggesting a gold confiscation is imminent or even probable; simply that it could happen if one or a series of events having significant worldwide implications occurs. Without official gold-backing on most major currencies today, the specific motivation to “confiscate” gold that existed during many previous confiscations barely exists today. But as you’ll see, even that hasn’t stopped modern government’s without a gold standard from doing the same, ostensibly as a form of currency controls to slow down market-driven devaluation.
Financial analyst, Author and fmr. Goldman Sachs Managing Director, Nomi Prins sits down with EIR's Paul Gallagher to discuss just how rotten the current financial system is, making a sobering case that we are far worse off today than we were before the 2007-08 crisis. Prins refers to her political and financial road map for 2017, (nomiprins.com) and discusses the important, combined role China and Japan can play in bringing the US back from the brink and into the new paradigm of investment in the real economy.
Mike Maloney shows you the disaster-in-waiting that is the ERISA Act. It’s a law that's forcing the oldest of the baby boomer generation to start selling stocks today. This is the beginning of a mass exodus from the stock market.
In this video, Mike Maloney explains why the debt ceiling is coming back and when. This is setting up an epic showdown with President Trump and Congress. Watch the Greg Hunter and David Stockman interview Mike references for more information.
Donald Trump looks to reverse former President Barack Obamas’ climate efforts to preserve earth. The American stock market takes a hit after failure of “Trumpcare”, we are joined by Dr. Ron Paul to discuss further.
RT’s Alex Mihailovich joins us to discuss, Chinas’ desire for total access to Canada when it comes to trade. After the break, we talk about the EU approved merger of DOW and Dupont. Talk of building a border wall between the United States and Mexico has prompted fear and sometimes excitement across America.
Boom Bust’s Manuel Rapalo takes a look at the end of an era of massive low-skilled immigration into America. A new study shows 1 in 4 Americans have less than $1,000 saved for retirement, Boom Bust’s Bianca Facchinei has the full story.
Mike Maloney breaks down the recent news surrounding the SpaceX moon mission that is set to happen in 2018. This is a huge step forward for mankind, and is the next step in our evolution. Mining on the moon can now be thought of as a real thing, including the mining of precious metals.
We can only be kept in the cages we do not see. With over four million video views on YouTube, The Story of Your Enslavement is the most successful video ever published on this channel. Mike Maloney joins Stefan Molyneux to discuss the important themes contained within the video and how it relates to the word today!
Michael Maloney is the founder and owner of Gold Silver, a global leader in gold and silver sales and is also the author of the bestselling precious metals investment book of all time, “Guide To Investing in Gold & Silver: Protect Your Financial Future.”
Mike Maloney, who is joined by the silver expert David Morgan, explains how the old gold standard simply won't work in todays modern world. He wants a return to the gold standard, but a new, more improved version of it, that is more resistant to corruption.
Mike Maloney breaks down the precarious position that the silver markets now findsitself in once again. Silver is once again seeing record high short positions. Are we setup for a record crash, or a boom higher as investors are forced to close their short positions?
The frightening thing about the coming gold supply deficit is that it doesn’t require an outside force to make it happen. It’s locked in. I hate to use the word “guaranteed,” but regardless of any other development, new gold supply is going down. Worse, there’s little that can be done to reverse the trend.
The primary reason new gold supply will fall is because mine supply is set to decline. And producers can’t easily or quickly increase mine output even if gold prices jump, as you’ll see. This is something I know a little about, having worked in the industry as a mine analyst for a number of years. See what you think…
If You Spend Less Looking for Gold, What Do You Get?
The following charts paint a clear picture of what’s happened to the gold mining industry.
When the gold price was soaring, producers spent lots of money looking for metal. But when the price crashed, guess what they cut back on? Exploration spending was one of the first categories to get whacked, because it’s an easy way to quickly reduce costs when you’re making less money.
The amount of money spent exploring for gold has fallen by two-thirds just since 2012. This is a stunning drop—because if you spend less time and money looking for gold, you will, of course, find less gold.
Here’s proof. Even before the gold price got hammered, check out the trend in the amount of gold that’s been discovered over the past decade.
It’s incredible, but the number of gold ounces the mining industry has brought to market has plunged by 85% in just 10 years.
But it’s worse than this. Not only have many producers cut exploration funds, they’ve spent less on development, too. This basically means they haven’t built the infrastructure needed to produce more ore, for both existing projects and upcoming ones. So even if the gold price shoots up tomorrow, it’ll take years for them to ramp up production and be capable of bringing more ounces to the marketplace.
Because of all this, as well as a lower gold price, the amount of metal that’s currently deemed economic has fallen. The word “reserves” carries some legal definitions, but suffice it to say that it refers to ore that has a high level of confidence of being in the amount the company thinks it is.
Well, look what’s happened to reserves just since 2011.
The amount of mineable ounces around the world has fallen by over a third just since 2011.
Clearly, spending less money looking for gold leads to finding (and digging up) less gold.
This trend is also partly due to what’s called high grading… most deposits have both low and high grade ore, and what management teams usually do is mix the ore to get a more consistent grade running through the mill. Well, when the gold price fell off a cliff, what do you suppose management teams did? Many of them mined just the high grade portion of their deposits. This allowed them to remain profitable at lower gold prices—but what it also did was not only deplete their reserves at a much quicker pace, it left behind low grade ore that in many cases is no longer economic. That’s because it required the high grade ore to be feasible, and now it’s gone. Much of this ore won’t be economic at higher gold prices, and even then miners will be very reluctant to take the expense to dig it up when it’s so low grade.
There’s just no escaping the fact that…
Mine Production is Peaking
Final production numbers for 2016 aren’t out yet, but most analysts agree that the total will be less than it was in 2015. If so, the beginning of the fall in mine supply has started.
But even if it hasn’t yet begun, it’s virtually inevitable that it’ll soon get underway, as the above charts imply.
Every analyst report I’ve read on the topic projects mine supply will fall over the coming years. The only point they disagree on is how soon it kicks in. They all recognize that underinvestment in the industry will have years-long consequences.
How long will the supply crunch last? Credit Suisse estimates that even if the gold price rebounds, supply in 2022 will still be, at best, 4% lower than 2015. BMO Capital Markets thinks mine supply will still be falling “through at least 2025.” (I certainly wouldn’t look to any of these companies for gold price projections—they’re almost always wrong—but they do have armies of analysts working in the mining industry).
And that’s a point worth considering: won’t higher gold prices end the problem? No, for several reasons:
• It takes years to bring new projects on line. Even mothballed projects can’t resume production quickly. It takes time and money and many employees to ramp up exploration, find economic deposits, develop them, and reach commercial production.
• Management teams will be very hesitant to significantly increase exploration and development costs until gold prices are significantly, and sustainably, higher. They got burned over the past few years, and won’t be eager to open that spigot until the gold price is not just high, but looks like it will stay high.
• Even at an average gold price of $1,300, supply will still fall. Every analyst has a different number for the “average” cost to produce an ounce of gold, but the more reputable ones are around $1,200 per ounce (this includes the total cost of mining operations, which is higher than the headline numbers you see companies report). So as you look at today’s gold price, how much money do you think miners are really making? If most can’t turn a true profit until gold is above—and stays above—$1,200, how much money do you think they’ll spend on exploring and developing new projects? The industry won’t come to a standstill, but the point is it’s not going to grow at anywhere near current gold prices.
• This is also true with recycling. Generally speaking, this source of supply needs high gold prices to make it worthwhile for recyclers to run their operations at full tilt. Again, the recycling industry won’t die, but neither will it grow without markedly higher gold prices.
The only scenario that could reverse this trend is if the world reached true economic growth and stability. I don’t know about you, but I’m not holding my breath that that’ll happen anytime soon. The global debt, currency, and fiscal problems all have to be rectified first, and as Mike insists, it’s hard to see how that happens without some sort of major crisis (or more likely crises).
This all leads to one inescapable conclusion…
Hello, Supply Crunch
The decline in mine supply is important, because it’s the single biggest source of new metal coming to the market. So if your #1 source of supply drops precipitously, and is expected to stay down for years, it will naturally have ramifications on the availability of metal.
And don’t think that those arguments about the massive above-ground supply of gold changes anything. Yes, the amount of gold around the world is big, and yes, most of the gold ever dug up is still in existence, and yes, supply only rises by about 1.5% per year.
But when it comes to you and I being able to buy, say, a gold Eagle, those facts aren’t very relevant. Most of that “above-ground gold” is simply not available…
• Are we going to tear down the Sistine Chapel so we can melt the gold to remake into Eagles?
• Will we reduce how many computers and cell phones we manufacture?
• Would you like to dig up corpses at the graveyard to recover the metal in old teeth?
Remember, only about 15% of gold supply goes directly into coins and bars for retail investors (this excludes central bank buying and Indian jewelry). The biggest chunk of that comes from newly-mined gold.
And don’t think you’ll just buy bullion from the existing supply of coins and bars. They won’t realistically be available. If gold prices are soaring, investors won’t be selling—they’ll be buying. This will further reduce the amount of investable gold for us to buy.
Add it all up and here’s what it means for gold investors…
How a Supply Crunch Will Impact You and I (and Everyone Else)
With gold supply set to decline for many years, we should expect to see the following ramifications. Whether they are good or bad depends on if you already own gold—or are still trying to buy it…
1. The gold price will be forced up by this factor alone, regardless of what else is happening at the time. In fact, imagine an environment where Mike’s predictions come true at the same time a supply crunch starts to make headlines.
2. Bullion will be increasingly difficult to obtain and expensive to buy. Premiums will undoubtedly be higher, delivery times longer, and rationing a distinct possibility.
3. Selling during a supply crunch will maximize the profit of early buyers. We will fetch fantastic resale prices, retrieve much of the premium we paid, and have plenty of eager customers.
Selling during a mania? There’s only one other thing in life that gives me goosebumps.
Clearly, if the coming supply crunch gets anywhere near as bad as many analysts think it could, you will be well rewarded if you're already positioned—or hurt if you’re not.
For years, Mike Maloney has talked about how precious metals markets were being manipulated and today we have the proof. Deutsche Bank recently settled a lawsuit accusing it of the rigging silver markets and as part of the settlement the bank released 350,000 pages of documents and 75 audio tapes.
These documents show there was a silver market “mafia” of big banks including Deutsche, UBS, and HSBC all working together to artificially suppress the price of silver and fleece the general public in the process.
In this video, Mike walks you through the historical silver charts and pinpoints the moments were bank traders colluded together to rig the markets. The evidence leaves little to doubt. But as you’ll learn, there’s an upside for silver investors who accumulate physical metals.
Gold and silver expert Mike Maloney says we have seeing bubbles in stocks, real estate and now in bonds. Maloney contends, “The bond market is in a 35 year bull market, and I don’t know how this can continue on forever. . . .
I am expecting when this next recession starts, it’s going to be a deflationary event. In deflation and a crisis, you are going to see investors run towards safety . . . and bonds get one last pop.
They are going to run to U.S. Treasuries and gold and silver. Those are the safe havens. Then people are going to realize, in this rarified territory, that bonds are not a good deal. You are going to see one last pop in the bond market before all hell breaks loose.” Maloney warns that we may see deflation, but the end game for the Fed is inflation, and that is theft. Maloney says, “When they inflate the currency supply . . . this is the most immoral act because they are stealing portions of our lifetimes.
Slavery is no longer legal. That was when they were stealing present life moments. Now, they steal past life moments. The whips and the chains still exist, you just can’t see them.”