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April 17 2018

moneymetals

Global Silver Scrap Supply Falls To 26-Year Low

Global silver scrap supply fell to its lowest level in 26 years. World silver recycling in 2017 dropped by nearly 50% since its peak in 2011. According to the 2018 World Silver Survey, global silver scrap supply declined to 138 million oz (Moz) compared to 261 Moz in 2011. While the lower silver price is partly responsible for the large drop in silver recycling, there are other market dynamics.

For example, silver recycling from the photography sector has declined since consumption peaked in 1999. The photography industry was using 228 Moz of silver in 1999 compared to the 44 Moz last year. Thus, silver consumption in photography has declined by 80% in nearly two decades… and along with it, a great deal of recycled silver supply.

Furthermore, a lot of silverware was recycled during the period of rising prices (2007-2012). A lot of Millennials who inherited their parent’s (and grandparents) silverware decided it was much easier to pawn it rather than spending a lot of time polishing it for holiday gatherings. Which means, a lot of available stocks of silver scrap have already been recycled.

Global silver scrap supply (1990-2017)

As we can see in the chart above, even though the $17 silver price in 2017 was four times higher than in 1991 ($3.91), global silver scrap supply is less than it was 26 years ago. Moreover, world silver scrap was over 200 Moz a year (2005-2009) when the average annual price was much less than it was last year.



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April 09 2018

moneymetals

Two Mines Supply Half Of U.S. Silver Production & The Real Cost To Produce Silver

​Just two mines supply the United States with half of its silver production, and both are located in Alaska. It’s quite amazing that Alaska now produces half of the silver for the U.S. when only 30 years ago total mine supply from the state was less than 50,000 oz per year. The silver produced in Alaska comes from the Greens Creek and Red Dog Mines. One is a primary silver mine and the other a zinc-lead base metal mine.

Even though Hecla’s Greens Creek Mine is labeled as a primary silver mine, 56% of its revenues come from its gold, zinc, and lead metal sales. However, Teck Resources, that runs the Red Dog Mine doesn’t even list its silver production in its financial reports. Because Red Dog produces one heck of a lot of zinc and lead, their silver production doesn’t amount to much in the way of revenues.

For example, the Red Dog Mine produced 542,000 metric tons (1.1 billion pounds) of zinc and 110,000 metric tons (222 million pounds) of lead, while its estimated silver production was 6.6 million oz (Moz). According to Teck’s 2017 Annual Report, total revenues from the Red Dog Mine were $1.75 billion. With the estimated silver price of $17 in 2017, total revenues from 6.6 Moz of silver were $112 million, or just 6% of the total.

In addition, Hecla’s Greens Creek Mine in Alaska produced 8.4 Moz of silver this year, down from 9.2 Moz in 2016. As I mentioned, the Greens Creek Mine also generated a lot of gold, zinc, and lead, equaling $182 million of the total revenues of $326 million (including treatment costs).

The USGS just came out with their final Silver Mineral Industry Survey for 2017, reporting that the U.S. produced 33 million oz (Moz), down from 37 Moz the previous year. U.S. silver production declined due to the union strike and the shut down of Hecla’s Lucky Friday Mine. As we can see, Greens Creek and Red Dog accounted for 15 Moz of the total 33 Moz of U.S. silver production:

Top 2 silver producers vs. u.s. total 2017

While Greens Creek and Red Dog supplied nearly half of U.S. silver production last year, the next two largest mines provided 21% of the total. Coeur’s Rochester Mine in Nevada produced 4.7 Moz of silver while the Bingham Canyon Mine, the country’s largest copper mine, supplied 2.2 Moz. Almost 7 Moz of silver came from these two mines alone.

​Continue to the full article (source) ​

April 02 2018

moneymetals

Silver Price Best Setup In Years & Update On Continued Meltdown In Stock Markets


This update is by far one of the most important as the silver price setup is the best I have seen in years. According to the data, the silver price is by far in much better position to outperform gold when the precious metals market takes off. Also, I do an update on the stock market as well as the continued disintegration of the U.S. Shale Oil Industry.

While most investors will be interested in what is taking place in the silver market, it’s very important to understand how much the situation is deteriorating in the U.S. Shale Oil Industry. Without cheap and abundant oil, the value of most stocks, bonds, and real estate would collapse. Unfortunately, falling stock and real estate prices are precisely what is going to happen to 99% of the public’s investments as only 1% hold precious metals.

The reason I believe the gold and silver prices will start to take off when the stock markets begin to really plunge lower is due to the setup of these assets since the Fed’s Q3 policy at the end of 2012. Because the precious metals sold off from 2013 to 2016 and are still close to their lows, they are ripe for much higher prices. However, the real estate and stock markets are near their highs. Thus, we are going to experience one hell of a disconnect between the stock and real estate market and precious metals.. quite the opposite that took place after 2012.

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March 27 2018

moneymetals

Physical Gold Production May Be Peaking, But There Is No Shortage In Paper Gold

Gold production numbers for 2017 are still being compiled but estimates call for the first annual decline in mine output since 2008.

The gold price fell dramatically in the months following the 2011 peak in prices. It has languished at, or near, the cost of production for years. Low gold prices are having a predictable effect on mine output.

Many projects with marginal ore deposits were rendered uneconomic. High cost operators went out of business. Exploration budgets got slashed dramatically. And all of these factors compound a larger underlying issue. It is increasingly difficult to find gold deposits that make sense to mine. New discoveries are less than a fifth of what they were in 2006.

Exploration fail (chart)

Much higher gold prices will drive more exploration and should boost discoveries. Some projects which have been mothballed due to higher costs will become feasible once again. But the trend seems clear – the drought in discoveries, which began more than a decade ago, looks likely to persist regardless of the gold price. And the struggle to find economic deposits will translate to a serious decline in production in the years ahead.


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March 19 2018

moneymetals

New Sound Money Public Policy Breakthroughs Occur in the States

Well now, without further delay, let’s get to this week’s featured interview between Money Metals president Stefan Gleason and Pete Fetig during a recent summit on all things precious metals.

Stefan gleason

Pete Fetig: Stefan, I would like to start with what are precious metals and why should someone even own something like that?

Stefan Gleason: Thanks Pete. That is obviously the most fundamental question to this entire conversation. Is what are precious metals and why should you care? And this is something that has been driven out of the public consciousness to a great extent over the last 80 or 90 years and especially in the last 40 years. And that is that the role the precious metals play in our society and in our monetary system and as an investment. First and foremost, I would say that people should understand gold and silver is money. It is true money. It is been chosen throughout time as a medium of exchange, a store of value, and has been used in trade ever since several thousand years B.C. So gold and silver is first and foremost money. It has been chosen as money for a lot of reasons and those reasons are still in existence today.

First of all, it is tangible. It’s an actual asset. It cannot be created from nothing. Like paper money today is created from nothing or even electronic equivalent of paper money. It is private. It is something that you can exchange between people and it is not tracked or traced. Like so many things are in our electronic monetary system today. It is highly liquid. It is accepted by all people or governments at least. Certainly, private individuals understand that it has value. Always going to have value. It has always been accepted. Ultimately, even central bankers view it as that. Even though, they have waged a war against gold and silver and gold and silver ownership, particularly in the last several decades, they hold it as a reserve asset. They understand that it is the ultimate form of payment. It’s a form of payment that has no counterparty risk. It is not also someone else's liability at the same time, like the dollar is. And so central banks, while they do not talk about it, are holding gold and silver as reserve assets because they know that it has timeless value.

More immediately gold and silver are precious metals that are really a form of financial insurance. It’s a non-correlating asset. It does not move necessarily with the stock market, the bond market, the real estate market. It’s something that you should have as a part of your asset allocation because when everything else falls apart, gold and silver typically does very well. Just like an insurance policy that you do not necessarily want to have to cash in. You still have it. You have an insurance policy in your house. You probably have one on your car. You should have an insurance policy against your financial asset. Gold and silver is that insurance policy. It is also of an excellent hedge against inflation. It is really the ultimate hedge against inflation.

That is today, in the last 40 years in particular, since the United States and really the whole world, went off the gold standard. You’ve had an explosion in debt. You’ve had an explosion in the creation of fiat money. We now have really a competition going around the world to devalue fiat money. It’s a race to the bottom. That is done with the creation of new debt and the printing of new money to sort of prop up the economy, prop up the bond market, the stock market. And as result of that, as a result of more paper money and electronic money being created, it has caused data reduction in the purchasing power of these other currencies. Gold and silver have maintained and even increased their purchasing power, over time.

Since the Federal Reserve System in the United States was created a little over 100 years ago, the US dollar has lost over 97% of its purchasing power. In the 100 years prior to that, except for a short period of time during the Civil War when they went off the gold standard, the purchasing power of the dollar was relatively the same, but then declined dramatically since the Federal Reserve system was created. So you have this massive devaluation of currencies happening all across the globe, and gold and silver are tangible assets that are a hedge against that, that benefit from really the devaluation as they rise in price. We have seen that, gold and silver, have reached all-time highs in recent years. They got a little overheated and pulled back in dollar terms since 2011, but at the end of the day you want to own a certain amount of gold and silver as a hedge against inflation and financial turmoil.

Read/Listen to the full podcast (here) ​

March 12 2018

moneymetals

Gerald Celente Exclusive: "If rates go up too high, the economy goes down, end of story"

Mike Gleason: It is my privilege now to welcome in Gerald Celente, publisher of the renowned Trends Journal. Mr. Celente is perhaps the most well-known trends forecaster in the world and it's always great to have him on with us.

Mr. Celente, thanks again for the time today and welcome back.​

Gerald Celente: Oh, it's always great being on. Thank you.

Mike Gleason: Well, Gerald, it's never a dull moment in Washington, D.C., these days. President Trump always keeps it lively. We have the never-ending Russia controversy, of course, the war of words with North Korea, and the intervention in Syria have both been regulars in the headlines over the past year. Now Trump is talking about tariffs and people are worried about a trade war. Volatility is coming back to the stock markets and some investors are getting nervous about rising interest rates. When it comes to Russia interfering in U.S. elections, it seems more or less like a smoke screen. We have very little doubt there is plenty of collusion and a fair bit of it involved Hillary shepherding the Uranium One deal over the finish line.

So, we're finding it hard to predict which of these stories are worth paying attention to and which are likely to fade away. And there's nobody better who can help us evaluate this than you, so I'm excited to talk today. So, which of the current stories have legs, Gerald? Will there be a trade war, a big correction in stocks, another attempt by Democrats to impeach Trump? What?

Gerald Celente: Well, the attempt by the Democrats to impeach Trump have never stopped. And, again, Mike, I've been at this a lot of years, and anybody awake and alive that hasn't tuned out knows that every time we've had an election in this country, whether you like the person or not, they always used to say, "Well, whether you like it or not, this is the new person. Let's rally behind him and try to push the country forward." That never happened with Trump. And I want to make this really clear. I'm not a Trump supporter. I didn't vote in this last election. And (people say), "Oh, you didn't vote? Did you get what you deserve?", to which I say, "Grow up. If you voted for any of these people, then you got what you deserve and I don't deserve either of them. My standards are different."

And I look what's going on. It doesn't make the news, all the things that you just mentioned. Hey, how about what just happened in Italy with Cinque Stelle, the Five Star Movement, becoming the major party, a party that just started in 2009 because the people are disgusted with the establishment. How could you be disgusted with the establishment? You should love the establishment. How could you dare be anti-establishment? That's the stupidity of the language that they use.

They call it, for example, what Trump is doing, protectionist movements. Oh, a protectionist? Oh, I'm a close combat practitioner, have been for over a quarter of a century. I'll protect myself. I'll protect myself if I'm being attacked. But yet if you're being attacked trade-wise, economically, and you go to protect yourself, well, you're a protectionist. So, listen to the language, it's very important as a trend forecaster.

You mentioned about the Russian elections. The bar has sunk so low that people are listening to Samantha Power, the former UN Ambassador. And I'm tired of hearing this baloney, "Oh, if only women were in charge." It's not about men, women, race, creed or color. Good and bad comes in all of them. Let's call it equal. This is a woman, along with Hillary Clinton, Samantha Power and Susan Rice that started the Libyan War, that overthrew a sovereign nation, whether you liked the guy or not, that did nothing to us and created the refugee problem that nobody talks about and the migrant crisis. Because when Qaddafi was in there in Libya, they weren't going into Europe. He made a deal with them and warned them that when he went, the migrants would come.



Continue to the article (source

February 28 2018

moneymetals

February 23 2018

moneymetals

5 Big Drivers of Higher Inflation Rates Ahead

Investors got lulled into a state of inflation complacency. Persistently low official inflation rates in recent years depressed bond yields along with risk premiums on all financial assets.

That’s changing in 2018. Five drivers of higher inflation rates are now starting to kick in.

Inflation Driver #1: Rising CPI

The Consumer Price Index (CPI) is a notoriously flawed measure of inflation. It tends to understate real-world price increases. Nevertheless, CPI is the most widely followed measure of inflation. When it moves up, so do inflation expectations by investors.

On February 13th, the Labor Department released stronger than expected CPI numbers. Prices rose a robust 0.5% in January, with headline CPI coming in at 2.1% annualized (against expectations of 1.9%).

In response to the inflationary tailwinds, precious metals and natural resource stocks rallied strongly, while the struggling U.S. bond market took another hit.

Inflation Driver #2: Rising Interest Rates

interest rates

Since peaking in mid-2016, the bond market has been stair-stepping lower (meaning yields are moving higher). In February, key technical levels were breached as 30-year Treasury yields surged above 3%. Some analysts are now calling a new secular rise in interest rates to be underway after more than three decades of generally falling rates.

The last big surge in interest rates started in the mid 1970s and coincided with relentless “stagflation” and soaring precious metals prices. It wasn’t until interest rates hit double digit levels in the early 1980s that inflation was finally quelled and gold and silver markets tamed.

​Continue to the full article (source)

February 14 2018

moneymetals

Huge Market Correction Update & Silver Price Trend

While the Dow Jones Index and broader markets are recovering from their lows set on Friday, the worst is still yet to come. Investors need to realize that stock market indexes don’t fall in a straight line. Also, there is also the possibility that the Dow Jones Index could surpass its previous high of 26,600 points. Only time will tell.

However, the leverage, margin and insane valuations in the markets are still in way out of whack. Just because the Dow Jones Index has added 1,200 points from its lows in early Friday trading, it is still 2,000 points below its peak of 26,600. Furthermore, when the Dow Jones peak at 14,100 points in 2007, it took six months and three different peaks before the index started to fall off a cliff in 2008.

For example, the Dow Jones Index hit three peaks in 2007:

  1. July 2007 = 13,900
  2. Oct 2007 = 14,100
  3. Dec 2007 13,600

Over that six month period in 2007, the Dow Jones Index rose and fell three different times. The biggest percentage drop was between July 2007 and Oct 2007, at nearly 10%. However, the Dow Jones index peaks were at the most, 3.5% from their high of 14,100. Moreover, it took six months for the Dow Jones Index to finally head lower on a sustained basis and it wasn’t until nearly a year later in Oct 2008 did the market finally crash.

So, if you think the Dow Jones correction is over, then you are going to be in for a rude awakening.

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February 05 2018

moneymetals

January 31 2018

moneymetals

WORLD’S LARGEST SILVER MINES: Suffer Falling Ore Grades & Rising Costs

The world’s two largest silver mines have seen their productivity decline substantially due to falling ore grades and rising costs. Gone are the days when silver mines could produce silver at 15-20 ounces per ton. Today, the Primary Silver Mining Industry is likely producing silver at an average yield of 4-5 ounces per ton.

In my newest video, I discuss the changes that have taken place in the world’s two largest silver mines, the Cannington Mine in Australia and the Fresnillo Mine in Mexico. Falling ore grades and rising energy costs have contributed to the doubling and tripling of production costs at many silver mining companies. Investors who believe it still only costs $5 an ounce to produce silver, as it did in 1999, fail to grasp what is taking place in the silver mining industry:


A big problem that has confused investors is the reporting of the “CASH COST” metric by the mining industry. Some silver mining companies can brag that they have a very low cast cost of $5 an ounce, but they arrive at that figure by deducting their “by-product credits.” By-product credits are the revenues they receive from producing copper, zinc, lead, and gold along with their silver.


Continue to the full article here: (source

moneymetals

For Anyone Still Wondering If Gold Prices Are Rigged...

That said, it is way too soon for investors in gold futures to start counting on fair dealing. There are, as usual, a few telltale signs that the action is unlikely to have much effect.

There are no U.S. based banks listed as part of this enforcement action, but that is merely suspicious. What really looks bad is the fact that, once again, no senior bank executives have been charged with a crime.

No matter how often people at these same firms get caught lying, rigging, and defrauding their own clients and investors at large, regulators never manage to pin blame on the top brass.

They have yet to suspend the trading privileges of any major bank.

James McDonald, who became the CFTC’s head of Enforcement last year, gave market participants a pretty good idea of what to expect from the agency – a passive attitude toward enforcement. Reuters summarized his approach this way:

He plans to encourage companies and staff to report their own wrongdoing and cooperate with investigators, a strategy he hopes will make it easier to prosecute more individuals.

With a policy like this, Wall Street banks don’t have much to worry about. Investors looking for a fair shake in precious metals futures markets, on the other hand, don’t have a whole lot to look forward to.

 (Original Source)

January 30 2018

moneymetals

Illinois’ Debt Crisis Foreshadows America’s Financial Future

Those wanting a glimpse into the future of our federal government’s finances should have a gander at Illinois. The state recently “resolved” a high-profile battle over its budget. Taxpayers were clubbed with a 32% hike in income taxes in an effort to shore up massive underfunding in public employee pensions, among other deficiencies.

But, predictably, it isn’t working. People are leaving the state in droves.

Illinois the land of debt

In fact, Illinois now leads the nation in population collapse. Statistics show people leaving the state at the rate of 1 every 4.3 minutes and the state dropped from 5th place to 6th in terms of overall population.

Turns out that people with options aren’t planning to stand there and take the epic tax increase.

Illinois officials’ hands are tied. Decades ago, public employee unions successfully lobbied for an amendment to the state constitution which prevents cuts to pensions. The taxpayers are hostages.

Illinois officials are instead considering one final gambit, one well-tried by many insolvent governments through history. They will address the problem of too much debt by borrowing even more money. Specifically the plan under review calls for selling $107 billion in debt in the largest ever municipal bond offering.

Worse, the state would use the borrowed funds to invest in financial markets. The state would purchase stocks and other securities near their all-time highs.

The Illinois credit rating has suffered in recent years, so borrowing costs will be higher. That means the state will need to take on even greater levels of risk to generate returns. What could go wrong?

Illinois is demonstrating a universal truth which certainly still applies at the national level. Governments do not voluntarily shrink. They grow until they can no longer be sustained. Then they get desperate – just before the default.

(Original Source)


January 29 2018

moneymetals

The Coming Market Crash Will Set Off The Biggest Gold Panic Buying In History

The leverage in the economic system has become so extreme; investors have no idea of the disaster that is going to take place during the next stock market crash. The collapse of the U.S. Housing and Investment Banking Industry in 2008 and ensuing economic turmoil was a mere WARM-UP for STAGE 2 of the continued disintegration of the global financial and economic system.

While the U.S. and the global economy have seemingly continued business as usual since the Fed and Central Banks stepped in and propped up the collapsing markets in 2008, this was only a one-time GET OUT OF JAIL free card that can’t be used again. What the Fed and Central Banks did to keep the system from falling off the cliff in 2008 was quite similar to a scene in a science fiction movie where the commander of the spaceship uses the last bit of rocket-fuel propulsion in just the nick of time to get them back to earth on the correct orbit.

Thus, the only way forward, according to the Central banks, was to increase the amount of money printing, leverage, asset values, and debt. While this policy can work for a while, it doesn’t last forever. And unfortunately, forever is now, here….or soon to be here. So, it might be a good time to look around and see how good things are now because the future won’t be pretty.

To give you an idea the amount of leverage in the markets, let’s take a look at a chart posted in the article, A Market Valuation That Defies Comparison. The article was written by Michael Lebowitz of RealInvestmentAdvice.com. I like to give credit when credit is due, especially when someone puts out excellent analysis. In the article, Lebowitz stated the following:

The graph above highlights that valuations using this measure dwarf any prior valuation peak since at least the 1950’s. At over 350% above the mean, stock investors are currently paying significantly more for a unit of economic growth than at any time in the last 70 years. To extend the analysis, we estimated the adjusted CAPE level of 1929, as shown on the graph, and come to the same conclusion.

Margin & gdp adjusted cape (chart)

Most astute investors know that stock valuations are at or near historical highs. Even these investors, however, may be unaware that today’s valuations, when adjusted for the level of economic growth and heightened profit margins, defy comparison with any prior period since the Great Depression. The simple fact is that investors are paying over three times the average and almost twice as much as the prior peak for a dollar of economic growth. Furthermore, it is happening at a time when we are clearly late in the economic cycle and the outlook for growth, even if one is optimistic, is well below that required to justify such a level.


Continue reading (source) ​

January 24 2018

moneymetals

Rickards: Next Financial Panic Will Be the Biggest of All, with Only One Place to Turn…

Well now, without further delay, let’s get right to this week’s exclusive interview.

Jim rickards

Mike Gleason: It is my great privilege now to be joined by James Rickards. Mr. Rickards is Editor of Strategic Intelligence, a monthly newsletter and Director of the James Rickards Project, an inquiry into the complex dynamics of geopolitics and global capital. He's also the author of several bestselling books including The Death of MoneyCurrency WarsThe New Case for Gold and The Road to Ruin. In addition to his achievements as a writer and author, Jim is also a portfolio manager, lawyer and renowned economic commentator, having been interviewed by CNBC, the BBC, Bloomberg, Fox News and CNN, just to name a few. And we're happy to have him back on the Money Metals Podcast.

Jim, thanks for coming on with us again today. We really appreciate your time as always and how are you?

Jim Rickards: I'm doing great Mike, great to be with you. Thank you.

Mike Gleason: Well Jim, I figure a good place to start here is with one of your most recent books. We want to get your take on the state of the world economy. In your book titled The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis, you make some very interesting comments. Now while the financial media is talking about booming stock markets and accelerating GDP growth, you aren't quite as optimistic. We both know that most of the growth we've seen in recent years has been built with huge amounts of central bank stimulus and the fundamental problems that drove the last financial crisis have hardly been resolved. In fact, you think the next financial catastrophe isn't too far away and many among the elite are getting ready for it. If you can, briefly lay out some of what you've been seeing.

Jim Rickards: Sure Mike, you touched on two different threads. One is, let's call it the short to intermediate term, which is how's the economy doing? What would the forecast be for the year ahead? What do I think about stocks and so forth? That's one part of the analysis, but the other one is a little bigger and a little deeper, which is what about another major financial crisis, a liquidity crisis, global financial panic and what would the response function be to that.

Let me separate. They're related because, I mean the point I always make is that there's a difference between a business cycle recession and a financial panic. They're two different things. They can go together, but they don't have to. For example, October 29, 1987, the Stock Market fell 22% in one day. In today's Dow terms that would be the equivalent of 5,000 Dow points, so we're at 26,000 or whatever, as we speak, a 22% drop would take it down about 5,000 points. You and I both know that if the Dow Jones fell 500 points that would be all anybody would hear about or talk about. Well, imagine 5,000 points. Well, that actually happened in percentage terms in October 1987. So, that's a financial panic, but there was no recession. The economy was fine and we pulled out of that in a couple of days. Actually after the panic, it wasn't such a bad time to buy and stocks rallied back. Then, for example in 1990, you had a normal business cycle recession. Unemployment went up. There were some defaults and all that, but there was no financial panic.

In 2008, you had both. You had a recession that began in 2007 and lasted until 2009 and you had a financial panic that reached a peak in September-October 2008 with Lehman and AIG, so they're separate things. They can run together. Let's separate them and talk about the business cycle. I'm not as optimistic on the economy right now. I know there's a lot of hoopla. We just had the big Trump Tax Bill and the Stock Market's reaching all time highs. I mean, I read the tape. I get all that, but there are a lot headwinds in this economy. There's good evidence that the Fed is over-tightening.

Remember the Fed is doing two things at once that they've never done before. They're raising rates. I mean, they've done that many times, but they're raising rates, but at the same time, they're reducing their balance sheet. This is the opposite of QE. I'm sure a lot of listeners are familiar with QE, Quantatative Easing, which is money printing. That's all it is. And they do it by buying bonds. Then when they pay for the bonds from the dealers, they do it with money that comes out of thin air. That's how they expand the money supply. Well, they did that starting in 2008 all the way through until 2013, and then they tapered it off and the taper was over by the end of 2014, but they were still buying bonds. So, that was six years of bond buying. They expanded their balance sheet from $800 billion to $4.4 trillion.

Well, now they're putting that in reverse. They grabbed the gear and they shifted it into reverse and they're actually not dumping bonds. They're not going to sell a single bond, but what happens is, when bonds mature, the Treasury just sends you the money, so if you bought a five-year bond five years ago and it matures today, the Treasury just sends you the money. Well, when you send money to the Fed, the money disappears. It's the opposite of money printing. So, the Fed’s are actually destroying money, actually reducing the money supply, so they're raising rates and destroying money at the same time. It's a double whammy of tightening and I don't believe the U.S. economy's nearly as strong as the Fed believes. They rely on what's called the “Phillips Curve," which says unemployment's low, that's a constraint and wages are going to go up and inflation is right around the corner. And that's part of the reason they're tightening, but there are a lot of flaws in that theory....

Read/Listen to the full podcast (source)

January 03 2018

moneymetals

How the Investor Fundamentally Changed the Silver Market

While silver investors continue to be discouraged about the low price, the market has experienced a fundamental change that needs to be understood. Ever since governments removed silver from official coinage, over 50 years ago, the market has been supplemented by several billion ounces of silver. The majority of that supply has been depleted.

The reason the United States and other countries stopped producing official silver coinage wasn’t due to any monetary conspiracy; rather it was based on a straightforward problem; supply versus demand. Because industrial silver consumption had skyrocketed after World War 2, the silver market would have suffered deficits if the U.S. Treasury didn’t sell silver into the market.

It was quite simple; there just wasn’t enough silver to go around. So, governments started to reduce, then eliminate silver from their coinage in the 1960’s. A lot of this silver, known as “junk silver,” was either purchased by investors or remelted and sold back as supply into the market. While there is no way of knowing how much of the older official junk silver remains in the market, the majority of it was recycled for much-needed supply.

We can see the dwindling down of government stocks and older official silver coinage in the following chart:

Global silver scrap supply & net govt. sales (chart)

The BLUE bars represent silver scrap supply, and the OLIVE colored bars show the amount of net government silver sales. From 2000 to 2013, governments sold 636 million oz (Moz) of silver into the market. Net government sales were from stockpiled silver and older official coins. However, in 2014, this supply totally dried up. For the past four years, there haven’t been any government silver sales.

Another interesting aspect of this chart is the declining amount of silver scrap supply. Even though the price of silver during the 2015-2017 period was much higher than from 2000-2007, scrap supply is considerably less. For example, the price of silver in 2000 was $4.95 while global scrap supply was 181 Moz. However, the silver price has been three times higher (2015-2017), but the average scrap supply has been 140 Moz.

Continue to the full article (source)

December 22 2017

moneymetals

David Smith: Cryptos Bringing Broad Attention to All Dollar Alternatives

Well now, without further delay, let’s get right to this week’s exclusive interview.

David smith

Mike Gleason: It is my privilege now to welcome back David Smith, Senior Analyst at The Morgan Report and regular contributor to MoneyMetals.com. David, Merry Christmas, and thanks for joining us again. How are you?

David Smith: Very good Mike, and thank you and the very same to you and yours.

Mike Gleason: Well, as we start out here, David, let's talk first about the setup as we finish up 2017 and move into the new year. There are a lot of similarities to last year, maybe the year before. We've had the Fed just announce a rate hike. The move was well telegraphed and all the selling in the metals happened prior to last week's FOMC meeting. Open interest in the futures got pretty extended about a month ago, and as often happens in that scenario, the speculative long buyers were taken out to the wood shed and punished as the bullion banks cashed in on their shorts. Now we're seeing a bit of a rally in the metals, so the situation in these regards is very similar to a year ago. What are you expecting from the metals markets in the weeks and months ahead? Are you looking for a rally to match last year's?

David Smith: I really think that we could be looking at a very similar set up to 2016 where the metals actually bottomed in December, and the mining stocks tried to put a lower low in in mid-January. And I'll never forget it, January 19th, and on an inter-day basis, they turned around, and then it was up and away for the metals and the miners for the next six months.

Then between then and now they gave back about 50% of it, which is what you'd expect on a retracement, and nobody can predict the future exactly, but I really feel pretty strongly that we're going to see a very strong, right out of the box, in January, on the metals and miners, and it may even turn before the new year, but there's so many technical indicators themselves, that when you add them all up, they become something larger, and so I think if a person is waiting to purchase their metal, they shouldn't be waiting too much longer if they had the same view I do.

And not only that, as you know, when the demand starts ramping up pretty quickly, the premiums go up too, so you would have a double whammy against you, buying at a higher price and paying a higher premium if you wait until a lot of other people kind of get the same idea.

Mike Gleason: Yeah, certainly a buyers’ market right now, both in terms of low spot prices, and also the premiums, as you mentioned. And the last couple years, we have had pretty strong, right of the gate, moves there in the metals and the miners, and maybe 2018 is going to have the same thing.

Now in your most recent article that we published this week in MoneyMetals.com, you make the case for physical metals and cryptocurrencies to coexist. Now we think that is a vitally important idea right now as people are working through questions about what the advent of Bitcoin and other cryptocurrencies will mean for gold and silver. It would be pretty easy for people to look at price charts and leap to the conclusion that metals are quickly becoming irrelevant. The reality is that the times we live in are desperately calling for honest money and that both cryptocurrency and metals both have important roles to play. They have very different strengths and weaknesses, however, so talk for a minute, David, about how these two asset classes are likely to coexist.

Read/Listen to the entire podcast here: (source)

December 20 2017

moneymetals

Be a Precious Metals' Winner with a Mind Like Water

We're in the midst of a massive, transformational change that will redefine where we are, what we think is true, and where we believe the future is headed.

With sensory input from across the political and economic spectrum of the Internet bombarding us 24/7, it's understandably difficult to follow through on a decision once made, even if you've researched carefully and thought things through beforehand.

Nowhere is this more difficult right now than the decision of whether or not to invest in – or add to – one's position in the physical gold and silver space.

Not only that, but when you add all the noisy arguments from competing investments which seem to be doing much better while the precious metals slumber, it's understandable why some long-term information-overloaded investors have decided to sell their metal.

I'd like to suggest that those who hesitate to buy, or worse, decide to sell what they already have are going to experience considerable remorse – and soon.

A potent way to avoid such a struggle and stick with your original decision is to practice developing mizu no kokoro – Japanese for a "mind like water."

In this state, thinking is minimized, listening/watching emphasized. To get an idea of the clarity that can be achieved, look at the picture below.

I took this photo during a rare moment when all the elements necessary to build such a scene were present. The water is dead calm; the sky is so full of more-or-less stationary cloud formations that it's difficult to see where one begins and the other ends. At the same time, nothing is distorted. The glassy water "mirrors" the clouds exactly as they look in the sky.

Mind like water

Being in the moment mostly involves paying attention.

There's a lot to be said for "planning your work"; then "working your plan." At some point you've taken your position and set aside money to buy more metal, either at certain intervals or into declining prices.

Then just let things be. Try not to be swayed by counter opinions, even if they seem to make sense. If this is difficult, don't feel so bad about it. Even the investing greats have to remind themselves from time to time.

​Continue reading here: (source)

December 18 2017

moneymetals

A Bit of Tax Planning Can Turn Lemons Into Lemonade

Inline image 1

The IRS classifies bullion coins and bars which carry zero collectible value the same way it categorizes a collection of baseball cards. Because of the IRS’s dishonest interpretation of tax law, gold and silver bullion is currently subject to the higher 28% long-term capital gains rate for “collectibles.” By comparison, the rate for Wall Street and government approved assets – just about everything else – is 15-20%, depending upon the taxpayer’s income.

Investors might as well use this punitive long-term capital gains rate to their advantage. Metal purchased more than a year ago at a higher price can be sold to unlock losses and reduce taxes. Individuals can claim up to $3,000 in losses against ordinary income, and more if they have capital gains on another asset. (Check with your own tax advisor.)

Tax breaks

Now is certainly not a great time to exit the metals markets, in our opinion. Fortunately, realizing capital losses can be done without relinquishing a position in metals for more than a few seconds. Investors can immediately buy replacement metals without having the transaction classified as a wash sale (wash sale rules do NOT apply to precious metals – only to securities).

Read more: (source

moneymetals
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