Silver Prices: Why a 42% Move in Silver Could Be Possible in 2016

1 Reason Why Silver Prices Outlook for 2016 Is Bullish
Silver prices remain suppressed for now, but don’t be shocked if 2016 is a big year for the gray precious metal.

One thing must be understood: the silver supply side is getting crushed.
Major Silver-Producing Countries Reporting Declines
Each day, we have more evidence that suggests silver production in different mining regions is plummeting. We also see silver producers are facing severe scrutiny and some are resorting to desperate measures, trying to change their business model and resorting to.

The post Silver Prices: Why a 42% Move in Silver Could Be Possible in 2016 appeared first on Profit Confidential.

First published here: http://www.profitconfidential.com/silver/silver-prices-why-a-42-move-in-silver-could-be-possible-in-2016/

Something Broke In The U.S. Silver Market

 

 

 

 

Something Broke In The U.S. Silver Market

Posted with permission and written by Steve St. Angelo, SRSrocco Report (CLICK FOR ORIGINAL)

 

 

 

 

After looking over all the figures, it seems as if something broke in the U.S. Silver Market this year. By that, I mean the normal supply and demand forces no longer make sense. I believe this stemmed from the massive amount of physical silver investment demand beginning in June as financial and geopolitical events pushed the retail silver market into severe shortages.

To start off, the United States has been the largest importer of silver in the world for many years. Even though India has imported more silver recently, its annual amount has fluctuated widely, while the U.S. has been more consistent.

For example the U.S. silver imports have ranged between 4,500-6,000 metric tons (mt) a year, while India imported between 2,000-7,000 mt. Overall, the U.S. is the clear winner by importing a total of 39,500 mt of silver from 2007 to 2014, while India totaled 31,700 mt.

To put these metric ton figures into perspective… look below:

Total U.S. Silver Imports 2007-2014 = 1.27 billion oz

Total India Silver Imports 2007-2014 = 1.02 billion oz

The reason the U.S. imports so much silver is due to its large industrial silver manufacturing industry. Here were the top five industrial silver fabricators in 2014, according to the 2015 World Silver Survey:

China = 5,788 mt

U.S. = 3,902 mt

India = 1,470 mt

Germany = 652 mt

S. Korea = 652 mt

While China is the largest industrial silver fabricator in the world, it also produces a lot more domestic silver than the U.S. In 2014, China produced 3,568 mt of silver, while U.S domestic mine supply was only 1,169…. three times less. So, the U.S. must import more silver than China to meet its total fabrication needs.

Furthermore, the U.S. Mint has been producing more Silver Eagles each year, which requires additional imports of the metal. Now, with that basic ground work, let’s look at why the U.S. Silver Market dynamics were altered this year.

Something Changed In The U.S. Silver Market

As I mentioned in several articles, U.S. silver imports surged at the beginning of the year. This continued with another whopping 533 mt of silver imported in September for a total of 4,476 mt for the first three-quarters of the year:

Thus, total U.S. silver imports are up 798 mt from the 3,678 mt imported last year during the same time period. Which means, the U.S. imported an extra 25.6 million oz (Moz) of silver this year over last. That’s a lot of silver.

NOTE: These U.S. silver imports are bullion and dore bars. Silver bullion is high quality bullion ready to be used as investment or fabrication, while dore bars are semi-pure bars poured at the mines needing further refinement.

Why all this extra silver? Was it due to industrial demand? Well, let’s take a look. These next two charts show the change in U.S. industrial silver imports and exports (Q1-Q3) compared to last year:

According to the USGS, the U.S. imported more silver waste silver scrap (4,710 mt vs 3,690 mt), semi manufactured forms (795 mt vs 252 mt) and powdered silver (664 mt vs 436 mt) in the first three-quarters of 2014 compared to 2015. The total silver imports of these three industrial categories was 29% lower this year compared to 2014.

Okay, how about U.S. industrial silver exports:

Here we can see the same trend. The U.S. exported less silver waste scrap, semi manufactured forms and silver powder this year to date compared to the same period in 2014.

NOTE: There are two other categories of industrial silver imports-exports, however I did not include them as their total figures were much smaller than the three listed above. In addition, even though total U.S. silver waste scrap tonnage is significant (11,000 mt ytd), it turns out to be only worth 33 cents an ounce.

Now, if we take the net change for Q1-Q3 2014 vs 2015, this is the result:

As we can see in the chart above, the U.S. imported 798 mt of silver bullion and dore bars Q1-Q3 compared to last year, but industrial silver imports (silver powder & semi manufactured forms) were down an astonishing 771 mt and industrial silver exports were down 353 mt.

When I made the chart above, I only included the two fabricated silver components of semi manufactured forms and silver powder. So, as total silver imports surged, industrial silver imports plummeted while industrial silver exports declined significantly.

Again, why did the U.S. import so much more silver this year if industrial silver supply and demand were down considerably compared to last year. If U.S. silver imports continue to be strong for the remainder of the year, it could reach over 6,000 mt. The last time the U.S. imported that much silver was in 2011.

I went back and looked at the data for 2011 and found some surprising results. If we compare U.S. silver supply and demand for the first three-quarters of 2015 vs 2011, this is the outcome:

Even though the U.S. imported 284 mt more silver bullion and dore bars during the first three-quarters of 2011 than during the same period this year, industrial silver imports were 161 mt higher and industrial exports a staggering 1,150 mt larger. So, it made sense for the U.S. to import 6,300 mt of silver in 2011.

However, this wasn’t the case this year. So, again… where did this silver go? Maybe some of it went into the surging physical investment demand. If we look at the next chart, we can see that U.S. Silver Eagle sales hit a record 47 Moz this year:

While total Silver Eagle sales were 7 Moz higher this year versus 2011, the Comex silver inventories also fell from a high of 184 Moz in the beginning of July down to 158 Moz currently:

To sum this all up, the U.S. has imported 20% more silver in the first three-quarters of 2015 compared to last year while industrial demand has fallen considerably and the COMEX silver inventories declined 26 Moz from its peak.

So, for whatever reason… there is more silver coming into the U.S. than the market dictates. Of course, physical silver investment demand is much higher this year, but it doesn’t account for all the extra silver imports. Thus, some large entities must be acquiring silver off the radar.

Why Did The U.S. Silver Market Break From Its Normal Market Dynamics

According to the USGS silver import-export data, the U.S. Silver Market is behaving much different from previous years. As I stated, U.S. silver bullion and dore bar imports hit a record 6,000 mt in 2011. However, this was due to elevated industrial silver demand and exports.

This year, the U.S. is on track to import 6,000 mt, but industrial silver supply and industrial exports are down considerably. Which means, the huge increase in U.S. silver imports must be due to physical silver investment demand. This doesn’t make sense as the price of silver is trading at a four-year low.

As I mentioned, there was a large decline of silver inventories at the COMEX this year. Furthermore, according to the 2015 Silver Interim Report by the GFMS Team at Thomson Reuters, they show a 17.1 Moz net decline of Global Silver ETF inventories, while physical bar and coin demand rose to 206.5 Moz this year.

Looking at the following chart from my article, DEATH OF PAPER GOLD & SILVER: The Data Proves It,

we can see the drastic change of investor sentiment for physical silver bar and coin over Global Paper Silver ETFs. In over the past five years, Global Silver ETF inventories experienced a net build of 18.2 Moz compared to 994 Moz of physical silver bar and coin demand. Moreover, that figure is conservative due to the fact that the GFMS Team at Thomson Reuters does not include private silver rounds (bars) in their data.

Again, something broke in the U.S. Silver Market this year. I believe it had to do with the beginning shock of a possible Greek Exit of the European Union and continued by the threat of a U.S. and broader stock market collapse. Even though the Fed and Central Banks continue to prop up highly inflated over-leveraged Bonds & Stocks, this is not a long-term sustainable economic policy.

At some point, investors (especially wealthy investors and institutions) will start buying physical gold and silver to protect wealth before the collapse of the Greatest Ponzi Scheme in history begins in earnest. It will only take a small percentage increase of new buyers, say 2-3%, to totally overwhelm the precious metal market. When I say 2-3% new buyers, I am referring to those currently invested in paper assets.

The U.S. Silver Market broke a trend this year which I believe is significant going forward. While precious metal investors may be frustrated by the low paper price of gold and silver.. the fundamentals for owning the metals are stronger than ever.

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

Something Broke In The U.S. Silver Market

Posted with permission and written by Steve St. Angelo, SRSrocco Report (CLICK FOR ORIGINAL)


 

 

Independent researcher Steve St. Angelo (SRSrocco) started to invest in precious metals in 2002. Later on in 2008, he began researching areas of the gold and silver market that, curiously, the majority of the precious metal analyst community have left unexplored. These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy.

You can find many of Steve’s articles on many noteworthy sites. Visit Steve at https://srsroccoreport.com.

 


First published here: http://www.zerohedge.com/news/2015-12-30/something-broke-us-silver-market

NEW: Money Metals Issues 2016 Gold/Silver Forecast

NEW: Money Metals Issues 2016 Gold/Silver Forecast

Looking Ahead to 2016

Forecasting today’s volatile, high-frequency machine driven and manipulated futures markets using fundamental analysis is futile, as a great many precious metals bulls will attest. To complicate matters, an obsession with Fed policy dominates all markets. Officials at the Federal Reserve are often less than forthcoming and are just as bumbling as the Soviet bureaucrats when it comes to centrally planning our economy.

Nevertheless, beneath all of the artificial influences and all of the leveraged paper, the gears of the physical market for gold and silver still turn. We can be sure prices will reflect actual supply and demand for physical metals at some point, even if we do not know when. With that in mind, here is a look ahead to 2016…

Supply Destruction

Silver production peaked in 2014, while gold production is expected to peak in 2015. Falling prices make an increasing number of mining projects uneconomic. Lower fuel costs are helping, but the average all-in cost of production for silver is estimated at around $17/oz and for gold at around $1,150/oz.

Today precious metals sell for well below than their all-in production cost. Primary producers of gold and silver will deliver less to market in 2016 given that a great many miners currently take a loss on every ounce they sell.

But there is another factor likely to decimate supply in 2016. Base metal prices, including for copper, fell dramatically this year, and the outlook is not too bright for the year ahead. The Chinese economy, the world’s largest market for commodities, is slowing. Brazil is in real trouble and economists are worrying more about the possibility of recession around the world.

Supply and DemandSlumping demand for base metals will impact supply of gold and silver because huge quantities of these precious metals are produced as a byproduct of mining for base metals such as copper and zinc. The reorganization of Anglo-American PLC, one of the world’s largest mining conglomerates, earlier this month highlights just how difficult the current environment is for producers – regardless of which metal they are mining.

Gold and silver prices have been in decline since 2011, but it is only during the past year that average prices will finish well below even the most conservative estimates of production costs. The recent carnage in base metals will add significantly to constraints on precious metals supply in the months ahead.

Physical Demand Rising

Investment demand for physical bullion is perhaps the biggest story in precious metals for 2015. Mints and refiners spent much of the 2nd half of the year unable to keep up. Investors had to contend with higher premiums and delivery delays, finally getting some relief now as the year draws to a close.

Only time will tell if 2016 can top this year’s record. We look set to enter the New Year in much the same way we entered 2015 – with steady, but far from overwhelming buying activity for fabricated coins, rounds, and bars. Investors loaded up in recent months and now await the next catalyst.

Silver and Gold Demand RiseIt may be price action. Lower spot prices over the past 4 years have been a big driver of demand. And prices moving consistently higher will also inspire demand from newcomers (as we saw during the last bull cycle between 2009 – 2011). Only flat or range-bound prices typically lead to investor apathy.

As always, geopolitical events will play a big part in whether or not metals benefit from safe-have buying. In 2016, investors will be watching the ongoing saga surrounding Greece and other hopelessly indebted European nations. The U.S. is at odds with Russia in the Middle East and in Ukraine.

And recent tremors in high-yield debt markets may be advance warning that extraordinary leverage is about to rock financial markets once again. These stories, and others no one can predict, have potential to generate a flight to safety in the coming year.

Industrial demand for gold and silver may turn out to be tepid for 2016. This is less of a factor in gold markets than for silver, where manufacturers consume a good portion of what is produced annually. As mentioned above, some economists worry about the possibility of recession in the coming year. Any slump will weigh on demand for items such as jewelry and other goods. However, a lot of industrial demand comes from high-growth sectors which have proven resilient during past recessions. Electronic, solar, and healthcare related applications for silver come to mind.

Some 2016 Wildcards

Delivery defaults are possible in the futures markets. The explosion of leverage in COMEX gold futures bears watching in 2016. The number of registered bars available for delivery in exchange vaults relative to the number of paper ounces being traded shrunk dramatically to record lows in recent weeks. It’s a trend that simply cannot go on very much longer – not at the current pace of decline.

Reforming America's Monetary SystemExchange participants may convert more gold stocks from “eligible” to the “registered” category. That’s possible, though there is good reason to wonder how much physical metal the holders want to part with at current prices. The precipitous drop in registered stocks may well be signaling they are more than a little reluctant to part with it.

If holders of silver and gold futures contracts start standing for actual delivery of more metal than the COMEX has available to deliver, or should traders even begin to seriously entertain that possibility, we’ll see some fireworks.

Leading Republican candidates are making noises about sound money. Donald Trump, Ted Cruz, Rand Paul, and Ben Carson all have questioned the wisdom of Fed policy. Republicans everywhere are critical of federal debt and deficits and have been for decades now. Given the Party’s atrocious record of turning the talk into actual policy, we should remain skeptical that any elected Republican leader will actually achieve reform.

But there can be no doubt that the sound money issue is gaining traction. We can’t rule out someone in the crowded field of candidates tapping into the popular outrage over out-of-control borrowing and spending. Should ideas like reinstituting gold backing for the dollar gain serious momentum in the campaign, the metals markets could perk up.

Clint Siegner is a Director at Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

First published here: https://www.moneymetals.com/news/2015/12/28/gold-silver-forecast-000807

How Western Bankers SERVE Precious Metals Holders

 

 

 

Hold your real assets outside of the banking system in a private international facility  –>  http://www.321gold.com/info/053015_sprott.html 

 

 

 

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How Western Bankers SERVE Precious Metals Holders

Written by Jeff Nielson (CLICK FOR ORIGINAL)

 

 

For the last four years (in particular), those who have chosen to convert their paper wealth into gold and silver have been suffering – just ask them. It might be time to remind these individuals of an old adage:

Be careful what you wish for; you just might get it.

Playing the “what if” game with precious metals markets (and invoking the old adage) is relatively simple. For instance, what if the silver market had not been subjected to the most ruthless financial attack on a commodity market in the history of commerce?

Back in the spring of 2011, it was the silver market that was leading the way through the strongest segment of what was (at the time) a ten-year, uninterrupted bull run in precious metals markets. This is a matter of both empirical and historical fact. The trough-to-peak move in the silver market during that run was much greater in magnitude than the same move in the gold market. Historically, the trough-to-peak move in the silver market is always stronger.

 

 

 

For the sake of simplicity, let’s assume that there were only two possible alternative scenarios if precious metals markets had not been subjected to the price capping operation of 2011 and the permanent (until default) price suppression we have seen in these markets since that time. Let’s call one possibility the “fair-price” scenario, and let’s call the other one the “full-price” scenario.

Then we have our definitions. The “fair-price” scenario is defined as a partial move in gold and silver markets, where the prices move roughly halfway toward their full value. The “full-price” scenario, as the name implies, means a full price for gold and silver, or as close to full price as we can get, given that Western paper currencies are already worthless .

For readers not familiar with previous commentaries, a “full price” for precious metals today waspreviously pegged at $10,000/oz for gold, and $1,000/oz for silver. For the purpose of this analysis, the fair-price scenario will peg the price of gold at $5,000/oz and the price of silver at $200/oz. The fair- price scenario represents a partial reduction in the utterly absurd gold/silver price ratio, while (naturally) the full-price scenario represents a relatively correct gold/silver price ratio, given the depletion of global stockpiles of silver.

Let’s begin with the fair-price scenario. It is undoubtedly the more benign scenario, since it does not require precious metals holders to make the most difficult decisions. Imagine the full implications of $5,000/oz for gold and $200/oz for silver.

At those prices, gold and silver holders would already be listening to a deafening crescendo from the mainstream propaganda machine. Gold is a bubble! Silver is a bubble! Run for your lives! Simply remember how loud that cacophony grew with gold under $2,000/oz (USD) and silver still below $50/oz (USD).

Thus, we begin our benign scenario with precious metals holders already feeling intense psychological pressure to reduce their concentration of wealth in gold and silver. Add to this struggle the “wealth effect,” where the paper exchange rate for gold and silver would make precious metals holders feel much wealthier.

Part way into the benign scenario, gold and silver holders would be seeing/reading/listening to a constant propaganda barrage urging them to “diversify” out of their gold and silver, or face the consequences. Meanwhile, feeling much wealthier (with the same amount of metal), many precious metals holders would conclude that they didn’t need all of that gold and silver, the trouble of storing it, or the added cost of insuring it at higher prices. They’d think, “Why not lighten the load and take some (paper) profits?”

Of course, most of us would not have much metal to begin with in the fair-price scenario. If the price of gold and silver had not been capped (and then reversed) with gold below $2,000 and silver below $50, it would have cost us much, much more for each ounce we purchased between 2011 and today. This means (unless we had inexhaustible wealth) that we would start our fair-price scenario with fewer ounces of metal and then have to fight the psychological impulse to sell that is fuelled by media propaganda and our own delusions of greater wealth.

Now it’s time for us to move to the full-price scenario, where gold and silver holders “get what they deserve.” Let’s think about what a wonderful world that would be. To begin with, we would have even less metal, as the much higher paper exchange rate would dramatically reduce our purchasing power.

And remember how much sell-and-run propaganda came from the mainstream media with gold at $5,000/oz and silver at $200/oz? Now imagine the decibel level of that Chicken Little propaganda when the price of gold doubled, yet again, and the price of silver quintupled (after an already greater-than-tenfold rise in price).

Imagine dealing with that “sell, sell, sell” pressure every day, while simultaneously feeling much wealthier. How long could we listen to the chant of “Bubble, BUBBLE, BUBBLE!” from the mainstream media before we began to reallocate our wealth away from gold and silver

What would we hold instead of our gold and silver? Bushels of wheat? Barrels of oil? A warehouse-full of lumber? True, we could follow those wealthier than ourselves and funnel our gold and silver into high-priced art, or antiques, or some other wealth-preservation vehicle of the Ultra Wealthy. But this presents two additional issues.

First of all, when the Ultra Wealthy put some of their wealth into such vehicles, they do so to shelter their wealth from the Tax Man. And they have no need, or intent, to liquidate such holdings in “an emergency.” Most of the people reading this commentary will not fall within that privileged group.

If we choose to move our wealth out of gold and silver and into art and antiques – with these asset classes already at record prices – we do so with the knowledge that we may be forced to sell these less-than-liquid assets during a trough in the market. Out of the frying pan and into the fire. Moving from one (supposed) asset bubble to another, less-liquid asset bubble is not the path to “financial security.”

Of course, we could not move our wealth directly from gold and silver and into art-and-antiques, or even into other commodities. First we would have to convert our gold and silver back into the bankers’ paper currencies (sell our metal). But now we are traders of gold and silver, and we say hello to the Tax Man.

Different readers around the world with different income levels would face different “hits” as the Tax Man took his cut, so readers are invited to pull out their calculators and think about how much of their wealth would evaporate into taxes, should they liquidate any substantial amount of their bullion holdings with gold at $10,000/oz and silver at $1,000/oz, or even at the previous fair-price numbers.

After facing the taxation consequences, we would be trying to move between asset classes without assurance that (priced in the bankers’ worthless paper) the new asset class would be at any less of a “bubble” price.

Of course, we haven’t yet arrived at the best part, should precious metals holders be lucky enough to see a “fair” or “full” price for gold and silver today. As regular readers have been warned in these commentaries, we enter the New Year facing another scenario: the Next Crash in 2016. The bankers scripted this nightmare for us right after the Crash of ’08 ended.

Imagine feeling the daily pressure of the media “warning” you that the gold and silver bubbles were going to implode “in a deflationary crash” in the near future. Imagine your joy as you watch the Tax Man snatch a large chunk of your profits from whatever portion of your gold and silver you liquidated to alleviate that pressure, and then imagine choosing another asset class in which to invest the remains.

Now imagine trying to juggle those financial pressures knowing that the greatest economic crisis of our lifetime could come at any time – like tomorrow.

There are worse things in life than being able to exchange debauched paper currencies for gold and silver at absurdly advantageous prices. An ounce of silver costs little more than an average pound of steak in Canada today, an even more advantageous ratio than when the ten-year bull run began in gold and silver, and silver was priced at under $5/oz.

There are worse things in life than going to sleep at night feeling financially secure, with not the slightest doubt that your wealth is misallocated and not the slightest intention of liquidating even a single ounce of bullion – with gold and silver ridiculously undervalued. Certainty and security. How much is that worth?

Yes, there are worse things in life than the suffering we have been forced to endure in the gold and silver markets over the past four years. Be careful what you wish for, you just might get it.

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

 

How Western Bankers SERVE Precious Metals Holders

Written by Jeff Nielson (CLICK FOR ORIGINAL)

 

 

 

 

 

 

 

Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers/investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.

First published here: http://www.zerohedge.com/news/2015-12-30/how-western-bankers-serve-precious-metals-holders

Why Austrian Investing Is Important In The Era Of State Imposed Fiat Money

We are living in extreme times. When it comes to investing, the economy and markets, the extreme monetary policies of central banks all over the world should be top of mind of every investor.

To make our point, we refer to the 3 following charts that readers know by now … But it always helps to put things in perpsective. Our focus here is on the time period as of 1971 which will likely go in history books as the era of the “Great Monetary Experiment” (or something alike).

An explosion of the monetary base. Nothing new here, but notice the trend as of 1971, and the different phases of acceleration in growth of the monetary base.

austrian_money_supply_1971_2015

Real interest rates since 1971. Between 1971 and 1980, there was some sort of attempt to stabilize real interest rates, but as of 1980 the masters of the central bank have been pushing real interest down.

interest_rates_1971_2015

As a result of the previous two trends, the value of our currency has gone one (and only one) direction: down. These are simple economic laws: the more currency available, the lower its value, and gold has the ultimate characteristic to measure that.

GOLD-vs-currency_1971_2015

Today’s complex economic and finanical environment requires a prudent investment approach. That’s where Austrian investing can play an crucial role. Although Austrian economics is witnessing a growing follower base, not much has been written about Austrian investing principles.

As of now, however, investors have a comprehensive guide at their disposal: the book “Austrian School for Investors: Austrian Investing between Inflation and Deflation” written by Rahim Taghizadegan, Ronald Stöferle, Mark Valek and Heinz Blasnik.

John Hathaway, Senior Portfolio Manager of Tocqueville Gold Fund, wrote the following in his foreword:

“The financial markets of today are dominated by hyper active high frequency trading guided by trend following quantitative algorithms. Original thought is replaced by artificial intelligence. Market prices are manipulated and gamed by institutional and political interests. Valuations are inflated by the zero interest rate policies of all central banks for whom it is dogma to drive up the prices of paper assets to influence the behavior of individuals and corporations to achieve their announced goals of full employment, moderate inflation, and financial market stability. Financial wealth has become an illusion that has little resemblance to real wealth. Financial wealth is dependent on the functionality of a matrix that must be navigated according to its unique rules that are often at odds with common sense. For those who fear that the functionality of this matrix is unsustainable, The Austrian School for Investors offers a path to the kind of critical thinking that will provide sustainability for its practitioners long after the demise of the artifice of paper wealth.”

Along the same lines, we very much like the following quote which is copied from the introduction of the book:

“Confusion and uncertainty with regard to investing have rarely been as pronounced as they are today. On the one hand, we are living in an era in which wealth can seemingly grow to incredible heights. On the other hand, there are always rumors of crisis – a dark premonition that security prices could collapse at any moment, and the savings of a lifetime could be decimated overnight. Although official data show only moderate inflation, in some cases even deflation, many people feel that their currency is continually losing value. Most of them suspect that they should give a bit more thought to preserving the value of their savings, but are faced with contradictory advice. Trust in “experts” is declining, whether they are economists, bankers or politicians. If someone dispenses investment advice, he wants to make money from it – just as everyone seems eager to make money from retail investors.

It is difficult for investors to do the right thing, but incredibly easy to make a mistake. The current economic environment seems like a game with marked cards, with the odds of winning systematically stacked against the multitude of small players. One gets the impression that it is all a giant rip-off.”

Uncoincidentally, the authors have focused on the monetary system, as without a deeper understanding of the monetary system it is impossible to understand current investment trends.

Looking at the above charts, it goes without saying that a new financial crash is in the making. And that’s where Austrian investing can save your wealth.

Why? Because times during which the monetary system was impaired were always times when monetary theory made great strides. In times of crisis, the enduring value of the Austrian School comes to the fore. It is no great feat to make money during a boom – it practically self-multiplies. Good investors differentiate themselves from bad ones in times of crisis. The most famous recent example of an investor who succeeds in times of crisis is probably Nassim Taleb, who is clearly influenced by the Austrian School. His long-term partner and even more successful investor, Mark Spitznagel, has written a book on “Austrian” investing as well.2 A book that, although penned by a practitioner, is far more theoretical and philosophical in its approach to the topic than this book.

Analysis grounded in Austrian thinking has been remarkably accurate in separating illusion from reality. It provides a sensible, highly accessible big picture of view of what exists and what is likely to happen as a result. That is because it portrays economic activity and likely developments as the product of individual behavior, a common sense and practical framework. It does not employ abstract groups or forces that are somehow quantified and correlated by unintelligible formulas, a methodology that succeeds only in explaining the artificial reality that it has created.

The Austrian analytical framework is not a prescription for short term investment success or even a pathway to building a fortune. There is no such magic here. However, it does provide a foundation for sanity in the midst of mass delusion. It is grounded in ethical behavior, common sense, and sober reflection. The Austrian investment approach eschews leverage, promotions, and fads. It is likely to steer one away from disastrous investment outcomes through a balanced approach to wealth preservation. In short, the Austrian methodology is based on reality, not fancy, and its application in daily practice will provide an investor with favorable odds to achieve financial well-being.

Let’s not forget that the Austrian theory is not ‘exotic’. On the contrary. Two of today’s most famous investors are testament to this: Warren Buffet’s father was strongly influenced by the Austrian School and passed important insights to his son. George Soros’ longtime partner and most important analyst Jim Rogers is also an Austrian School adherent. Benjamin Graham, Buffet’s teacher and mentor, developed a methodology that shows astonishing parallels to the Austrian School’s ideas, although Graham actually was not aware of it. Lastly, the Austrian School originated when its founder Carl Menger, who worked as an economic journalist, came to realize by observing activity on the stock exchange in great detail that classical economics was unable to explain the real world.

The book “Austrian School for Investors: Austrian Investing between Inflation and Deflation“does not introduce a new investment fad, it is not an advertisement for a new investment product and not an ideological program. It aims to make knowledge that is highly useful in dealing with the questions of our time but has been unjustly forgotten, available to the average investor. It is based on the research of an economic school of thought that has only in recent years slowly been rediscovered by the broader public, because it was once again proved to be prophetic. In the history of ideas, this tradition is known as the “Austrian School” or the “Viennese School of Economics”. Engaging with the Austrian scholars of yesteryear is tantamount to being inoculated against all sorts of illusions. The Austrian school makes clear why the so-called “orthodox” perspective on the economy, savings and investment borders on irresponsibility. While the Austrian School definitely offers a kind of therapy, it is not a ready-made miracle cure, but rather a thorough program in disillusionment helping to activate one’s own mind.

In sum, this book is to date the most comprehensive attempt at a critical examination of today’s investment universe from the perspective of the Austrian School and deriving conclusions for investors from it. To this end, we frequently move back and forth between theory and current practice. The difficulty of connecting these two worlds will become clear to the reader as the book progresses: the relationship between taking the time for slow and deliberate reflection and the pressure and urgency that characterize investing in financial markets under distorted and volatile circumstances.

More about this book on Amazon.

First published here: http://goldsilverworlds.com/investing/why-austrian-investing-is-important-in-the-era-of-state-imposed-fiat-money/

Silver and S&P Similarities – Tops and Bottoms

Examine the 30 year log scale chart of the S&P 500. What I see:

S-S&P

 

  1. Tops occurred about every seven years. Tops were usually rounded, followed by intense drops.
  2. Tops were approximately Aug. 1987, Jan. 1994, March 2000, Oct. 2007, and May 2015.
  3. Once the S&P broke below the red up-trending support lines in 2000, 2007, and (probably) in 2015, the rally was over and large corrections occurred.
  4. The next large move in the S&P looks like it should be, based on history, a substantial correction to the 600 – 1,400 range.

Other Considerations:

  1. Federal Reserve easy money has helped create the last six years of S&P rally. The Fed has been propping up the stock and bond markets while it has been antagonistic to the silver and gold markets.
  2. Investors, Wall Street, pension funds, and more will scream in anguish if the S&P crashes. The upcoming correction/crash could be worse than the 2008 crash.
  3. Market breadth, P/E ratios, other fundamentals, crashing commodity prices, and accelerating wars also indicate a likely correction.
  4. We have been warned, just as we were in 2000 and 2007.

Shorter Term:

Examine the weekly S&P 500 on a log scale for two periods, 2003 – 2008, and 2010 – 2015. There are similarities.

S-S&P-wkly-4

S-S&P-wkly-3

  1. Significant bottoms: 3/14/03, 8/13/04, 8/17/07, 11/30/07
  2. Significant bottoms: 7/2/10, 9/23/11, 10/17/14, 8/28/15
  3. Major top: 10/12/2007
  4. Major top: 5/22/2015

The bottoms and single top line up fairly well.

Note that five months after the 2007 high the S&P bottomed in March 2008, rallied back into May 2008, and crashed from there.

Three months after the May 2015 high the S&P bottomed in late August 2015, rallied back to November 2015, and — we are waiting to see if a crash occurs in 2016.

WHAT ABOUT SILVER?

Examine the 30+ year log scale chart of (paper) silver. Note the major lows in silver prices, as indicated.

S-Silver-xx

Silver lows occurred about every seven years in May 1986, February 1993, November 2001, October 2008, and December 2015. Now compare the silver lows to the S&P highs over the past 30 years.

S&P Tops Silver Bottoms

August 1987 May 1986

January 1994 February 1993

March 2000 November 2001

October 2007 October 2008

May 2015 December 2015

The S&P tops line up moderately well with silver bottoms. The last three S&P tops have preceded silver lows.

WHAT DOES THIS PROVE?

In my opinion this proves very little, but the above certainly SUGGESTS the following:

  1. The S&P has peaked about every seven years and the peak in May 2015 probably marked the end of this seven year cycle.
  2. The next big move in the S&P will probably be down, based on cycles, the 30 year charts and the five year charts.
  3. Silver bottoms occur about every seven years and roughly line up with S&P tops. Assuming the S&P has topped, that supports the expectation for a silver low in December 2015 or perhaps 2016-Q1.
  4. The next big move in silver should be a substantial, multi-year rally to much higher prices. My 5 – 7 year estimate is $100 per ounce for physical silver.
  5. Continuing central bank “money printing,” currency devaluations, fiscal and monetary madness, unsustainable debt levels, massive deficits, and accelerating wars suggest higher silver prices.
  6. In the long term, silver prices increase along with US government official national debt, deficits, and dollar devaluations. Increasing debt, deficits and devaluations are all but guaranteed, and consequently so are long term silver price increases.
  7. Wars, political stupidity, monetary and fiscal madness, and central bank interventions all seem to be in “bull” markets. Expect silver prices to benefit from all the above.

Read: Watson: Market Tops in Gold and Silver

Spitznagel: When’s the Crash Happening?

Summary: Buy silver, sell the S&P, rig for stormy weather, and expect a turbulent 2016.

Silver thrives, paper dies!

Gary Christenson
The Deviant Investor

Temp Cover-FrontMy book “Who Killed Doctor Silver Cartwheel?” explores the reasons for silver demonetization and projects future prices for silver in five years. The book is a quick read and is priced at $6.99 in paperback on Amazon. Buy it!

First published here: http://goldsilverworlds.com/gold-silver-experts/silver-and-sp-similarities-tops-and-bottoms/

The Catastrophic Threat of Bail-Ins

 

 

 

Hold your real assets outside of the banking system in a private international facility  –>  http://www.321gold.com/info/053015_sprott.html 

 

 

 

The Catastrophic Threat of Bail-Ins

Written by Jeff Nielson (CLICK FOR ORIGINAL)

 

 

The Catastrophic Threat of Bail-Ins - Jeff Nielson

 

 

It has now been more than two and a half years since the Cyprus Steal, the first “bail-in” perpetrated in the Western world, occurred. Before reviewing the history of this newest financial atrocity, it is necessary to define the terms.

The term “bail-in” describes a scenario in which a bank confiscates private property to indemnify itself for losses it has suffered. A bail-in is a totally lawless theft of assets, as there is no principle of law (of any kind) that could authorize such a seizure of private property. And in fact, there are many principles of law that demonstrate the lawlessness at work here. As with much of the financial crime jargon, “bail-in” is simply another gibberish euphemism like “quantitative easing” or “derivatives.”

As custodians of the financial assets of their clients, banks represent a form of trustee. The purpose of any trust relationship is to provide absolute security to the beneficiary of the trust (i.e., the legal owner of the property). Thus, one of the most fundamental principles of our legal system is non-encroachment regarding the property held in the custody of a trustee.

From a legal standpoint, it is like there is an invisible and impenetrable wall that surrounds the trust property. The only exceptions to this wall (ever) occur when the trust beneficiary makes a legal request for some disbursement or related transaction, when the trust itself directs some form of action (in the interests of the trust beneficiary), or when the trust allows the trustee to manage the trust assets on behalf of the beneficiary.

The idea of trustees using assets for their own benefit or (worse) claiming ownership of any trust assets represents one of the most serious forms of financial crime in Western civilization. Given this context, how did the government of Cyprus respond when its own Big Banks whined and claimed that they “needed” to confiscate deposits in order to pay off their own gambling debts? It meekly rubber-stamped the lawless theft.

How did other Western governments react to the violation of one of the most sacred legal principles in our entire financial system? They simply nodded their heads in unison, and, as a single chorus, called the Cyprus Steal “a precedent” – a template for future systemic financial crime in their own regimes.

Beyond the perfect choreography demonstrated by Western governments immediately after this act of theft, how do we know that the Cyprus Steal was a scripted event orchestrated by the Big Banks? To begin with, all of the Big Money deposit holders in Cyprus had already moved their money out of Cyprus banksbefore the Big Banks began their pillaging and plundering. The “fix” was in.

Not a single Western government raised the slightest qualm about violating one of the most sacred principles of law in our legal system. Rather, these puppet regimes went about creating their own “rules” as to how/when the Big Banks would be allowed to steal property from the accounts of their own account holders. The Harper regime entrenched “the bail-in” in Canada’s official budget, while other puppet regimes were sneakier and more circumspect when “legalizing” this crime.

Here it is necessary to back up and address the “reason” (excuse) behind this newest form of systemic bank crime. The “bail-in” is the ultra-insane culmination of the “too big to fail” doctrine. By this doctrine, any and all assets, public or private, in our financial system can and will be sacrificed (stolen by the Big Banks) to prevent any of the Big Banks from “failing” – that is, going bankrupt as a consequence of their ownreckless gambling.

The legal and economic principles violated by the concept of “too big to fail” are too numerous to list. However, they begin with the following objections:

        1) The concept of “too big to fail” is contrary to numerous tenets of capitalism. In any capitalist/free market system, insolvent entities are supposed to fail in order to correct the misallocation of assets. Any entity that grows to become an existential threat to the system is simply too big to exist.

        2) Banks should never be allowed to gamble. Period. There would have been no need for the $10’s of trillionsin “bail-outs” given to this crime syndicate following the Crash of ’08 if our puppet governments had not previously erased our laws that prevented such gambling.

        3) “Too big to fail” is based on an overtly criminal premise called systemic blackmail: “Give us everything we demand, or we’ll blow up the financial system.” It is extortion in perpetuity: financial slavery.

Note how (2) and (3) relate directly back to (1). Why shouldn’t banks gamble with their clients’ assets? Because by doing so they not only jeopardize the property they are holding in trust but also become a threat to the financial system. Why shouldn’t financial entities be allowed to grow so big they become an existential threat to the system? Because size (as we now see) gives these Big Banks the leveragenecessary to blackmail our corrupt, limp-wristed governments, perpetually.

So what is the only possible way to put an end to this Big Bank blackmail? Well, should our corrupt governments ever decide to once again enforce our anti-trust laws , we can end the cycle by smashing these Big Banks “down to size,” or down to the largest size allowed by law . Indeed, “too big to fail” is the ultimate example of why we need anti-trust laws and why they need to be vigorously enforced.

Anti-trust laws are anti-corruption laws. For decades, there has been almost no enforcement of our anti-corruption laws. The result is a global economy now almost totally dominated by just one of the major (and illegal) oligopolies that has emerged: the crime syndicate readers know as the One Bank.

It is this crime syndicate that engages in the systemic blackmail of “too big to fail,” supposedly to indemnify its Big Bank tentacles for the losses they incur. However, in almost every case, these “losses” are nothing but an accounting sham: paper losses owed by one Big Bank tentacle to another. No entity could ever be bankrupted by a “debt” owed to its right hand by its left.

The “losses” do not even exist, but the blackmail and fraud is all too real. Having totally depleted the public treasuries of most Western nations with its “bail-out” extortion following the Crash of ’08, the One Bank needed a new mechanism of theft by which to continue its permanent, institutionalized blackmail.

The bankers demanded that they be allowed to steal private assets (already in their custody), directly, any time they claimed to suffer a “substantial loss.” Our puppet governments, as usual, caved to the crime syndicate’s demands, and the “bail-in” was born.

What is at risk with a “bail-in?” According to the (perversely named) Financial Stability Boardany and every paper asset in the custody of the Big Banks and (potentially) any paper asset in the custody/control of our governments. The Financial Stability Board is one of the propaganda mouthpieces of the Big Bank crime syndicate, and its “guidelines” have been directly cited as authority by several of these puppet regimes, including the Canadian goverment.

How do people protect themselves from the massive bail-ins that are imminent as the Next Crashapproaches? There is only one way: get your assets (i.e., your wealth) out of all paper instruments. This includes the fraudulent paper currencies of our fiat-currency/ fractional-reserve Ponzi scheme system. Hold only enough wealth in paper instruments to satisfy current cash-flow requirements and short-term “emergencies.”

For the longer term financial Armageddon that is now inevitable, the only secure form of wealth-preservation is the oldest-and-surest tool for that task: precious metals. Rather than offering holders short- or medium-term protection for their wealth, gold and silver represent lifetime security, what people are supposed to have, and what most people still think they have when they entrust their wealth to a bank.

 

Once upon a time, we had strong, vigorously enforced laws that made a bank the safest place to store paper assets. That is no longer. Now banks are where your wealth is most likely to be stolen – and by the bank itself. Thanks to the bail-in, the term “bank robbery” now has an entirely different meaning.

 

 

 

 

Please email with any questions about this article or precious metals HERE

 

 

The Catastrophic Threat of Bail-Ins

Written by Jeff Nielson (CLICK FOR ORIGINAL)

 

 

 

 

 

First published here: http://www.zerohedge.com/news/2015-12-29/catastrophic-threat-bail-ins