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What is “The ‘British Columbia Gold Bank’ Now Open to American Investors?”

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“One unique type of gold investment (that most Americans have never heard of) based in British Columbia has outperformed every asset class in existence – rising twice as fast as gold.

“The average investor in this gold secret made over 80% a year for 20 straight years – even after gold crashed last year.

“But some investors had the chance to make 3,000%+ gains…

“I call this investment the ‘British Columbia Gold Bank’ because it’s a super-safe way to invest in gold.”

That’s the intro from Ian Wyatt for the latest teaser pitch seeking subscribers to his $100K Portfolio newsletter, one of the many newsletters that cropped up over the past few years which runs a “real money” portfolio of the editor or publisher’s actual cash in the market.

Wyatt has been sparking interest among readers with emails that have subject lines hinting at why he’s selling gold — and he says he wants to sell gold and buy this particular “British Columbia Gold Bank.” So that’s getting attention because gold has fallen so hard and so fast, and investors are wondering just what to do with this asset that had seemed — for more than a decade now — like it could only go up.

And he implies a high level of safety for this investment, which also makes Gumshoe readers see green — here’s how he puts it:

“CNBC recently called this investment ‘a banker for gold miners.’

“As I’ll explain, gold banks have all of the upside of gold – with none of the downside – and the potential for much faster gains.”

None of the downside? That’s a big claim. So what’s he talking about?

Well, it’s a Canadian investment — he tells us all about how Vancouver is the “Wall Street of Commodities”, which is more or less true … that British Columbian City is home of what used to be the Vancouver Stock Exchange and is now the Venture Exchange (though I think it’s actually headquartered in Calgary now, the Venture is the combination of the Alberta and Vancouver exchanges), but it’s certainly a hotbed of junior mining and energy financing in Canada, which itself is the land where most mining startups get their sea legs. Vancouver is the silicon valley for venture investments, IPOs, and backdoor deals in the natural resources industries.

Here’s more from the ad:

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“Thousands of small exploration companies vie for limited access to capital – many of them go bust.

“These small companies are the lottery tickets of the investment world.

“And they all need funding.

“That’s where the British Columbia Gold banks come in.

“They provide funding to the BEST possible precious metal startups – the explorers and developers with a track record of success, the best property, the best reserves, etc.

“In exchange, these ‘Gold Banks’ receive a portion of the future production and proceeds of any gold mined during the entire lifespan of the company.

“And the best resource analysts in the world all work in Vancouver – for one little-known gold bank…”

And then Wyatt lets the cat out of the bag a wee bit — telling us what probably most Gumshoe readers already know, that these “BC Gold Banks” are really just precious metals streaming and royalty companies. He even gives the examples of a couple companies that most investors are familiar with, the silver streamer Silver Wheaton (SLW) and the big gold royalty company Royal Gold (RGLD) … but he has another fish in mind:

“You can’t buy past performance.

“Royal Gold just isn’t going to grow another 2000-fold anytime soon. That would make it a $3 trillion market cap company. It would be bigger than the top 5 biggest companies in the Dow put together. It’s just not going to happen.

“Silver Wheaton isn’t likely to grow another 20 fold in the next three years either. That would make it a $140 billion company – bigger than BP (NYSE: BP).

“So if you want to achieve a similar result in your portfolio, you have to find the next Royal Gold and the next Silver Wheaton.

“Such a company already exists – and if you buy it today, you give yourself a great chance at repeating the performance of its forebears.

“This company is only about 4 years old and it is already off to a better start than Royal Gold in its first 4 years.

“That’s because this other ‘gold bank’ already has 10 gold streams producing with more coming online early in 2014 yet it has a total market cap under $600 million.

“And amazingly – they’ve put together deals with their 10 gold streaming clients to ensure they get access to any gold they mine for an average of $400 an ounce…”

OK, so that clears it up pretty well — we don’t even have to take the tarps off of the ol’ Thinkolator to tell you that Ian Wyatt is buying and teasing Sandstorm Gold (SAND in NY, SSL in Toronto)

Which I own as well, and have written about many times here — it’s been teased by other newsletters, and I’ve bought and sold the stock and the warrants a few times since the company was founded, but it is still a substantial position for me and my favorite gold equity investment.

But it sure ain’t a stock that gives you upside with “none of the downside” — those of us who have held the stock for a few years can certainly attest to the upside, but we’ve also felt the downside when gold prices fall.

All of the royalty stocks and streaming stocks, large and small, have fallen very, very hard with the collapse in gold prices — they provide some leverage to the price of gold as it rises, and also the downside of leverage as they fall harder than the gold price when gold declines. I’ve been a bit surprised, actually, to see that the royalty companies have not done much better than the average large mining stocks during this latest collapse in the price of gold — they’re better companies, with less downside than the miners in a normal operating environment, but they either got too expensive when people ran to them (they rose to trade at a marked premium to the big miners in terms of cash flow or earnings) or they got sold off too aggressively because everyone fled any investment with “gold” in its name.

Sandstorm does indeed get to buy gold for an average of $400 an ounce (roughly — it’s probably a bit higher than that now), but that doesn’t mean they are necessarily going to be profitable if gold falls to $800 or $700 per ounce. That’s because they’re a passive partner in the mines — and they don’t get to decide whether or not the miners produce, or how much they produce in any given year.

If you’re not familiar with this passive model, there are basically two kinds of these “gold bank” investments — royalties and streamers.

Royalties are generally a small net participation in the mine, either the full output or the output of a particular mineral (ie, a few percent of the NSR, or net smelter return, of gold from the mine). Royalties are sometimes sold by miners as a way to finance early development or exploration, and sometimes are earned by landowners or early prospectors.

Streaming deals are generally for a larger share of the production but they also require an ongoing payment — in the case of Sandstorm Gold or their progenitor, Silver Wheaton, they pay up front to help fund the mine construction or late stage exploration and receive the right to purchase a large portion of the mine’s output of the metal in question, often 10-25%, at a set price well below the market price. In practice, these are larger deals with bigger up-front payments, and they are usually done only when the mine is pretty close to production or expansion — needing just a big chunk of change for construction or final permitting or whatever the case might be.

Most companies in this mine finance space do at least a bit of each kind of deal — Sandstorm is primarily focused on streaming deals but they do have a few royalties, including some that they made as small deals that included a “right of first refusal” on any future streaming deals. Royal Gold is primarily a royalty company, but does have a few “streaming” deals as well. No one “owns” the idea or the concept, the reason there aren’t hundreds of these companies is that the market is fairly small, but also because you need a capital base from which to make those initial deals and build that portfolio of royalties or streaming deals, and it’s tough to grow until those deals start to generate cash flow that you can then commit to buying new deals and financing new mines.

The CEO of Sandstorm Gold, Nolan Watson, timed his formation of the company pretty well in what turned out to be the early days of gold’s run from $700-$1,900, and, perhaps more importantly, he made good deals that were close to generating cash — including one early deal that has become a much larger mine than anticipated and which generates the largest slice of their cash today (that’s Luna’s Aurizona mine in Brazil). Watson came from Silver Wheaton, where he helped to perfect the model of the public streaming company as a very young CFO, so he doubtless had good connections and good experience in finding and evaluating deals, but he also got a bit of luck in those early years. The company grew quite nicely but gradually early on, signing larger and larger deals and eventually growing the company large enough to make a NY listing feasible (it formerly traded only at SSL on the venture exchange, then graduated to the Toronto exchange before getting the SAND listing in New York).

The basic argument for the streaming and royalty companies is that unlike gold mining, they’re not terrible and unpredictable businesses — miners are often awful at managing costs, meeting deadlines, and handling the financial side of things, and they’re also subject to several things outside their control that dramatically impact their results, like natural forces (flooding of mines, etc), energy costs (mines suck up lots of electricity and diesel fuel), and labor costs, all of which can change dramatically in the many years between when the mine is initially drawn up and the time when it hits commercial production.

But streamers and royalty owners don’t really care about production costs, they care about production levels — they get their share of the output at a fixed price, so whether the mine’s cash costs of production are $400 an ounce or $1,000 an ounce doesn’t matter to them. It matters intensely to the miners themselves, of course, since that’s their profit margin, but, at least in theory, the passive financiers don’t have to care whether the mine is profitable — they get their ounces of gold, in Sandstorm’s case, for anywhere between $350-500 an ounce, depending on which deal it is, so they profit even if gold falls dramatically lower.

The downside, beyond the fact that they obviously have lower profits if they buy at $350 and sell at $1,200 than if they can sell at $1,800, is the same as the upside: They are passive. They have no real say in the operation of the mine. And if the miner is losing money for an extended period of time they may either slow production, slow expansion, or shut down the mine entirely until the economics (ie, the gold price or the input costs) improve. If the mine shuts down then the streamer or royalty owner may have some recourse if there’s a clause in the contract that they have to produce a certain amount by a certain date, but that’s not always the case and any such clauses tend only to cut losses, not guarantee profits.

It’s very hard to rely on analyst estimates for these companies, because those estimates obviously depend on the analyst’s vision for gold prices in the next year or two, but currently SAND carries a trailing PE ratio of over 50 and a forward PE of about 15, with analysts expecting the company to earn 23 cents per share this year and 40 cents next year.

Analysts haven’t been getting the guesses very close to correct on this one, and we can be sure that if gold stays in the $1,200 neighborhood for the next year they’re definitely not going to earn 40 cents per share — but if we assume that all of their partners will keep up their production to match estimates over the next year they will see a steady increase in ounces of gold delivered as a few new mines begin to boost production. They also have some potential catalysts — their next Brazilian mine, Serra Pelada, begins production this Summer and finally releases a reserve statement to give some idea of what that large mine might produce over time, and the Deflector project in Australia is in a spot of financial bother (they have to raise their last cash just when it’s hard to finance mines) but should be able to start production soon as a low-cost producer, and both of those are expected to be meaningful producers for Sandstorm within two or three years.

Sandstorm’s estimates are that they will go from an estimated 35-40,000 ounces of gold this year to 70,000 ounces in 2016, and they are becoming more diversified as more new mines grow and come online, so there is a strong growth potential and they do pay a low average price of probably $450 for those ounces (the later, larger deals they signed are generally for $500 an ounce, bringing the average up a bit) — but with average all-in costs of gold production for most big miners in the neighborhood of $1,200-1,300 an ounce this is a pretty critical price point. If mines shut down or pause development, they’ll be in trouble, but Sandstorm’s focus has generally been to make deals with lower-cost producers so they should be OK as long as prices don’t fall below the $1,000-1,200 range.

“OK” doesn’t mean hugely profitable, though, it just means they should be profitable or at least breaking even and generating some positive cash flow — their profits would be dramatically higher if you can use a $1,800 gold price estimate. On the flip side, they do have close to $100 million in cash and another $100 million in a line of credit, so they have some flexibility to sign good deals with desperate miners right now — which, if you assume that gold will eventually recover, could lead to even better growth. Money is very tight in the mining industry these days, so they are, at least, in a strong bargaining position for new deals they make.

So I can’t say that Wyatt’s right about this pick having “none of the downside” of gold, because we’ve clearly seen that if gold falls the royalty and streaming companies can fall even further (gold fell about 25% over six months, SAND fell 50% as a result) — but I still prefer SAND to their larger competitors RGLD and Franco-Nevada (FNV), and I think they should be in reasonable financial shape as long as gold remains firmly above $1,000 and their partners keep mining. And that leverage that brought the price down works both ways, so if you think gold recovers or resumes the push upward to $2,000 an ounce, Sandstorm will be extremely profitable. Hopefully after having made some lucrative deals at these relatively low gold prices.

What do you think? Will the continued absence of inflation mean gold stays low or falls further, or will the continued efforts by every central bank to devalue their currencies eventually work and drive more investors or savers to gold as a store of value or “safe haven” refuge? I keep some of my savings and portfolio in gold because it has held its value over the long term, but “long term” when it comes to the enduring value of and human interest in gold has often meant decades, not weeks or months or even, as we’ve seen recently, years. I’ve written to the Irregulars recently that the fall in gold has led me to think that I should be rebalancing a bit and adding some to my holdings in the metal or in Sandstorm or one of the other royalty companies, but I haven’t had the gumption to actually do so.

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63 Responses to What is “The ‘British Columbia Gold Bank’ Now Open to American Investors?”

  1. I looked at gold and silver after the 2007/8 fiasco affected my IRA. I wish I had known about inverse ETFS then and I’d be ready to retire!

    But I do now and I have been making some money on GLL and ZSL but with my cues from an experienced pro. He is assocaited with Weiss and resides in Thailand, so you may be aware of him. I also read every article I could find from Ted Butler and have coem to believe that gold and silver in particular are maniplated by several entities that include JP Morgan bank and the Federal Reserve and Treasury. And the fundamental reason that makes sense to me is because gold and silver (to a lesser degree) have been money all through history until the 1933 confiscation and the early 1970s abandonment of the gold standard by Nixon. gold and silver stand in opposition as a true vehicle of value and neither can be inflated. All currencies represent something, but an ounce of metal simply exists as currencies ‘refer’ to it or ‘represent’ it.

  2. Very good write up, and I agree completely. I too have owned SAND for some time, and I am staking a lot on Nolan’s expertise. Also I see a steady increase in earnings ahead. This is a long time hold for me, and I hope it is not too long as I am 77 now. Still young, lol.

  3. I have no exposure to gold and was considering the three stocks above. But am I trying to catch a falling knife?

    • The only really justifiable answer to that is “maybe,” I think — the chart-watchers and quantitative traders can try to identify “bottoms” when a “falling knife” stock or commodity has bounced off the floor and is safe to pick up, but even systems or charts that might turn out to be right more than half the time, on average, can’t give you much certainty in any specific case.

      Gold is particularly difficult to predict — add together the global rush to devalue currencies, the manipulated nature of interest rates, and the human affection for shiny stuff and any one of dozens of other variables (central banks buying or selling, more or fewer weddings in India, near-criminalization of gold a’la FDA or decriminalization a’la modern China, futures and paper trading conspiracies or deliverability issues, mines being shut down or discovered, etc.) and the mind boggles. The recent love of gold in the financial sector, among hedge funds and investors who pile into the GLD ETF as a safe haven, is, as we’ve seen this year, also very sensitive to competing liquid financial investments … higher interest rates make other “safe havens” like Treasuries more appealing, great stock market performance makes folks chase the performance of stocks.

      • Look at SAND – from $13 to $5 … and that is an investment???? NO this is rubbish.
        Shame – Travis, you of all people should be able to say the Emperor has no clothes!
        I am really disappointed in stockgumshoe this time.

        • Sorry Roger but I have to come up in defense of Travis in this matter. He has never wrote a letter incorrect on the subject of royalty companies and Sandstorm in particular. What we are experiencing in the financial markets and Gold1Silver in particular is out of the “normal”. But still, although the price of Gold and Silver has come down, early investors are still smartly UP; The market is manipulated and a massive flow of physical Gold has moved and is moving from the Western vaults to the vaults in Asia, Russia and India. How long the manipulation can continue and who is benefitting is an open matter but physical Gold is dissapearing fast which could make an end to the manipulation via PAPER Gold on Comex and LME. The verb : “the one who laughs last is the best laugh” will probably be true in the Gold &Silver market. Remember AIG, GE, GMC, BAC etc all going out of business in 2008 and their stockprices decimated; Travis ‘ fault as well I presume?

        • Sorry friend — I certainly write about and sometimes own stocks that fall. That’s unlikely to ever change. My goal is to try to understand the future potential of a stock — if I had known it would fall from $13 to $5 I would have sold the shares, sure, but if I consistently had that level of prescience I would spend a lot more time in Las Vegas. Alternatively, I also could have cut my paper losses with a trailing stop loss — but I find that stop losses would have been mistakes for my portfolio a good chunk of the time so I don’t use them mechanically.

          The stock has fallen in value thanks to gold’s fall, which is interesting only in retrospect and says nothing about the company’s prospects from the point. What matters is not that the stock is lower than it was, what matters is what will be. I want exposure to gold and like this method, but certainly many folks will disagree — that’s why we each make our own decisions with our own money.

          • Travis was kindly pointed out what the tease was and was obliged to report his holding! I for one thanked Travis for it. I would like to use Sand for my short put trade if I can get the premium for it. I am fully aware of the pitfall for Short Put trades, like I shorted EWH for $17 just before the Banking collapse of 2008. As I remembered, EWH fell to $13 but eventually I got my money back. Gold is my favourite Bet against inflation. I know it it difficult for it to defense itself against Government printing press. But printed paper, even with shiny papers will not hold its attraction for never. I am dreading the days of reckoning. The coming is not IF but WHEN!

        • For those of us thatn bought at $.80 before the 1:5 reverse split this is just normal gold gyrations.

          We are in for the long haul and protection against fiat money failiure.

        • I think any comment that begins ‘Sorry Friend….’ says it all !!

          Play nicely now boys……. and don’t encourage the Trolls.

  4. To me its one of those stocks at the price it is to grab a few hundred shares on the HOPES gold goes up a bit. I think its going to be in the doldrums for a bit because of the negative publicity surrounding the drop. NOT the demand just the drop in price. I buy physical gold dollar cost average for my grandkids . When they get out of High School they get the coins for college if not I hold them until they get married[no wasted money on cards and partying lol] My opinion is if Trvis owns it then its worth a little investment .I’d only buy this if the rest of my purchase plan for the month was fully funded and had extra. Gold and anything to do with miners is ALWAYS risky in mu opinion. Guess Travis has a stronger stomach than I do > That being said look at CODI with an 8% yield. I just bought 110 shares of that . for the grandkids and my income as I get ready to retire.

  5. we agree with your sentiments. however, all this QE and watering down currencies values as far as FAIT is concerned is problematic. we are of the opinion that gold has a split personality, that is is it a asset or commodity. Once gold decides on her personality then things will change. please consider, inflation since end of WWII up until today. It is apparent that inflation has not really had an effect on the AUXUS$ price, since if it did then gold should be sitting at levels somewhere between and in between US$3500 – 4500/oz…the manifestation of this in its self will be profound.

  6. Nice presentation of SAND Travis, and it will likely experience big gains over time.
    The best of these opportunities in juniors and well positioned mid tier producers / streamers will come through this rough patch. Private funding is happening, and much like SAND, very talented speculators like Sprott’s Rick Rule know who the likely winners are and fund them.
    As for the price, if you hesitate too much, you’ll miss it- buy some now, and be prepared to buy more at lower prices. If your already holding, keep holding, as most of the damage is done, and its arguably one of the cheapest assets right now. Be greedy when others are fearful Warren says. The short positions in both gold and silver by the commercial’s are signaling a change in their strategy. From 259M oz’s short in Feb to 20M oz’s in Ag now.
    Also noteworthy is JPM has dramatically increased their holding in SLV so they are also long on Ag.
    There have been major changes in who is holding the physical bullion, and you might consider that a physical shortage may exist when you finally decide to buy.
    Nobody knows what might happen next in these markets, with the possible exception of JPM et.al. and the prices are likely to make new lows – or go no where, but there are many things likely to happen before this year is out. A plunge can be due to an event regarding Japan or Europe that would be good cover to temporarily hit the metals. This may also result in a stampede into the metals at some point.

  7. Travis;
    Could you comment: is it better to buy the Toronto Exchange – ssl.to ; or the NYSE Sand?
    Also isn’t it always better to buy a small stock off its exchange, rather than the pink sheets?
    Links for further reading would be appreciated.

    Thanks
    Charlie

    • For small investors it makes no big difference SAND vs SSL.TO, both are plenty liquid. In general the home exchange is better than pink sheets because of much better liquidity and sometimes better pricing, but when there’s a real listing on both exchanges, with decent liquidity like Sandstorm has in both NY and Toronto, then convenience wins.

      • ….hi, I got into sand. at 6,50 – now for a long position what are the expectations;
        should I buy more now that it’s cheaper – or will it go even further down? what
        do you all out there think??

  8. http://sandstormgold.com/investors/warrant_info/

    Another rookie question: The April 14 warrant requires you to buy 5 warrants to exercise one share of stock at $3 USD? correct?

    http://finance.yahoo.com/echarts?s=ssl-wt.to shows the warrant at .61 (7/9); .61 x 5= 3.05 is the cost to purchase the warrants for 1 share.
    Exercise price of $3.00 plus $3.05 equals $6.05
    http://finance.yahoo.com/echarts?s=sand current price is $5.94
    $6.05 minus $5.94 equals 11 cents for almost 10 months of time value.
    That is extremely low. Am I getting it right? I don’t follow this every day, but is it possible for there to be a negative time value?

    • Yes, the warrants sometimes trade at a small discount to exercise value, particularly when sentiment is lousy. I haven’t checked your calculations but that sounds about right — note that the warrants aren’t that liquid so there’s no guarantee you can really get the quoted price on any given day, and I don’t think their warrants can be exercised by US investors (though you can certainly buy and sell them, I have)

  9. Gold is not manipulated by any means. this thing about stop hunters and blah..blah….simply when leverage is involved expect wild swings. Travis, in the end we agree with your analysis. long term trend lines for AUXUS$ still untouched…so maybe you are wrong on this day…however in the end it will still manifest.
    as for folks who are not doing their own homework….they are the first to be wiped out. you can not rely on Travis’s crystal gold ball. if he had that ball…his name would be with the legends. anyhow, not a bad hit run Travis 1 strike 9 hits.
    Consider rule 1: manage your risk and let your profits run!!

  10. Very interesting reactions from readers. I actually just finished reading Wyatt’s promo and then “googled” for a $600. million Mkt. Cap Gold Streaming Company to confirm my guess that this had to be Sandstorm, which I still own as “free trading shares” after getting my initial investment off the table. Of course this column by Travis was on of the first to show confirming my guess, and for the most part I agree with him, the main difference being I was in earlier at low prices.
    To make money in the juniors mkt. you need to have a disciplined strategy on BOTH buying and selling. Currently based on market conditions I am taking profits more quickly than what was working extremely well in 2009-10 when I had the bulk of my 200 juniors become free trading. My disciplined plan then was to sell 1/3 at 50% gain and another 1/3 on a DOUBLE, of course I also had a lot of triples and a sprinkling of 10 baggers to bring the averages up. Under current market conditions I am cutting those profit levels in half and only hold free trading shares on the cream of the crop, managements in whom I have high confidence, whose projects are higher grade and well financed.
    Several people gave “ROGER” a good rebuttal, the point being that if he was doing his proper due diligence he would not have been buying at $13. so his example is irrelevant.
    ALL sectors of all markets have cycles in which you need discipline and adequate research to be buying LOW and selling HIGH, Sandstorm while a quality company is no exception, it is a trading vehicle based on its ups and downs. The time to BUY may again be approaching rapidly, the last few days 22 companies I follow have appeared on my CIBC ALERTS for percentage increases, volume, or breakouts, indicating investors are starting to accumulate shares of mining companies again. While Sandstorm was not among them, I doubt that anyone buying at todays price will be disappointed 18 months to 2 years down the road.
    As always I recommend “stink bids” once you have identified stocks you want to own, say 20% below the asked price. I rarely pay the ASK on any stock I want to buy, have some patience and let the price come back to your bid, they almost always do, if not there are always lots more fish in the sea. Good advice from Chad G. “the first to be wiped out are those who rely on some “guru” and FAIL to do their own homework.” (paraphrased) None of us gets it right 100% of the time and neither will you, but exercising patience, discipline and good money management will make you a better investor over time.

    • Im always intrigued when someone talks about ‘due diligence’ as if its an exact science coz there are so many versions. Asking as a novice (which I am) Id love to get your explanation. If its too long for this sheet, Id appreciate an email via gumshoe office email….they have passed stuff on before. Regards Alan

  11. Please don’t say this market cannot be manipulated. This market can be manipulated, and may be. We have no way of knowing with the information we have now.
    Where is the bottom? I don’t know. I am now in 100% cash, and probably will not invest until a new trend is established.
    In the mean time, study the Hunt Brothers and their attempt to corner the silver market in the 70s:

    http://en.wikipedia.org/wiki/Nelson_Bunker_Hunt

    Here is a book on the subject I would love to read, but don’t have the money for:
    http://www.amazon.com/Manipulation-Trial-Economic-Analysis-Silver/dp/0521440289/ref=sr_1_3?s=books&ie=UTF8&qid=1373486194&sr=1-3&keywords=silver+hunt+brothers

    • and in the end what happened to the Hunt brothers?? how about the others who have tried…Enron….Bears Sterns and how many banks??

      people should rather vote for responsible governance instead of the thugs stealing from our life’s work….governments can do market manipulation..but that will also catch up and the consequence is dire…we have 2 many super powers with money that they will flush down the toilet protect their interest….since they have no clue of an honest day of work. Economy of scales are against them.

      ask yourself a question. if all World Banks increased their current gold holding by 0.5%, how many tonnes will that be??

  12. I am no expert on gold shares, but I have held the physical stuff for many years, and the recent drop in price has not put me off – indeed I bought more at US$ $1200 a couple of weeks ago. Gold is a must for any portfolio. I have heard figures from 5% to 15% bandied around as a percentage of worth which should be invested invested in it, and I would think either end of the range reasonable – no point in having all your eggs in one basket, but this basket is a must. I would not call myself a gold bug though. It is just pragmatism. The current handling of the western world economies by the powers that be is buffoonery, and the piper will have to be paid at some point. The bill is getting more expensive by the day. Until the central banks come to their combined senses, I will not sell.

    Of course, we are too far down the road for that to be possible. The central banks and their friends have done their best to knock the price of gold down as far as it has gone, by using the ETFs as massive puts, forcing the price down on a Monday morning, and buying the physical stuff on the dips. It is absolutely amazing how the ETFs, with about 6% of the gold market, can dictate the price, but that has played into the banks hands, and allowed them to buy back ingots which they have on their books, but not in their vaults. If you have doubts about this bold statement, please think about Iran. If you believe that it does not have nuclear material for building weapons, and is just shy when the inspectors come to town, then perhaps you will think that this is the reason the Federal Reserve refuses audits of its gold reserves, and the reason that Germany will wait until 2020 to receive back 300 tonnes of its gold held in the USA. Of course, this latter delay could be a shortage of ships, planes, security guards, to move the stuff before then. What do you think?

    There is nothing quite like gold. When ships sink, treasure hunters don’t go looking for US government treasury bonds, the Conquistadors didn’t want to copy the Aztec and Inca hairstyles, nor did Midas hoard heating oil. No, they, and every other Mogul, Emperor, King, Pharaoh, and so on just wanted gold. This has been going on for millennia. As a store of value is second to none. Some say it’s not edible, but that applies to a dollar bill too. These puerile arguments are put forward by folk that think the world started when they left business school, and suggest leveraged products, so you can loose your shirt.

    Like I wrote, I am no authority on gold shares of any company, but I do know that they go up and down roughly based on the price of the commodity they mine. I would prefer to hold the real thing. This may well become difficult again in the USA in the near future, and forays into Switzerland by the Men in Black would have made it difficult for US citizens to buy it in what is the most friendly country in the world for that metal. One now has to wait 100 days for delivery of physical gold at the London Metal Exchange – start counting after payment. In the past 6 months, when the price has dropped by more than a third, physical gold has never been so popular. I, and many like me, do not hold it to make a profit when it goes up. I didn’t sell it at US$1900, not because I though it would go up even further, but because I didn’t want to be without it. We hold it to ensure that we don’t end up in pecuniary. It’s cheap insurance, especially at US$1250. Only buy the real thing, though. It won’t go bankrupt. Guaranteed.

  13. Theres nothing like gold to polarize a crowd. Still no one has mentioned the effects of India putting a 8% tax on physical and persuading dealers to stop selling bars and coin. Is that why its fallen so bad? I guess stashing your black cash in gold makes it far less visible for tax than a bank account that reports your savings back to the gov.

    Also the comparison between gold and AUXUS$….. if it hasn’t risen to $3.5k, doesnt this reflect how much more gold has been dug up over the period ie its not as rare as it once was? Doesnt that indicate its not the ‘perfect’ store of wealth, but simply insurance policy for those that have more liquid $ than they will ever need to spend.

    • India put a tax on gold to raise money, not to persuade dealers to stop selling it, even if that was the party line. It is a pre-requisite of marriage contracts in India that gold is delivered with the bride. This is a centuries old practise, and I do not believe that 4% extra tax would stop it.

      I do not know how much gold is still in the ground, nor do I know the whereabouts of the gold already turned into bars, coins, jewellery, and other items. I would not put much store in comparisons. Like silver to gold, platinum to gold, etc., comparisons vary greatly from decade to decade. I have no idea where the price will go tomorrow, next month, next year, next century, but one has to try to look at the matter with a longer attention span than a gnat. Fact is, gold buys today the same as it did a century ago, or two centuries ago, etc., whereas the usual comparison, the US$, which is still used to price the commodity, does not. The value of the US paper promise has dived over 99% in that time. That means it’s a pretty poor investment.

      You are right – those of you not living in Monaco, Andorra, Switzerland etc. would be advised to keep prying eyes off your assets to some extent. The EU or US governments are not your friends. They want your money, and will stop at nothing to get it. They need it, like a mosquito needs blood. However, taking gold out of a bank and burying it in your back yard is not a very wise idea – you would have to get it re-assayed before selling. Better would be to use one of these gold vaults in Switzerland which do not belong to the banking system.

      It is, as you write, an insurance policy. However, it is not limited to those who have more money than they can spend. One never knows how much that cash will be worth further down the road. If one is happy with the current handling of the economies of the world, endless paper printing, ever mounting debts, massaging of the figures, lying and cheating of those in power, mockery of the poor, massive costs to keep wars going, damage to our environment of astronomical proportions and the extermination of countless other species, in the search of more of the same, then gold will not be on ones list. Otherwise, it should be.

      • Ignoring your Gnat obsession (Im sure you are far too much of a gent to have directed the remark at me) I was quoting from Reuters today: The All India Gems and Jewellery Trade Federation, which has more than 40,000 members, added that over 65 percent of jewellers had agreed to the ban on sales of (gold) bars and coins.
        I’ll accept that the bride comes with gold, but that tends to be jewelry, (or teeth if they’re as ugly as a mosquito)
        ”One never knows how much that cash will be worth further down the road.” That was my point. Those that have excess (and make no mistake I envy them) can afford to squirrel some away to ensure that they remain ‘comfortable’ come what may. Those who do not have excess cash tend to need something more liquid. I’ve yet to hear of anyone traveling the subway to work, paying for their ticket by chiseling a chip off the golden block.
        ”One never knows how much that cash will be worth further down the road. ”
        On this we agree……LESS. But that still doesnt answer my question: Dont the rules of supply and demand apply to gold? Given that it doesnt rust away, its practically indestructible and people tend to look after it ……. and they keep digging the otherwise practically useless stuff up, doesn’t all that extra supply have some effect on its value?

      • Oh sorry I forgot a couple of things:
        Reuters today: India’s government has hiked import duty to 8 percent. While I have no doubt that every taxman wants to get his grubby hands on 8% of her teeth, there is probably a 2nd objective. Gold is a STORE of value. Squirreling it away in some bank vault or just decorating Doris Patel’s scrawny neck, starves their economy of gazillions of working capital that could be being used to develop their industrial base, feed the poor, improve the environment, build infrastructure and secure a prosperous and lasting future for the entire nation. Nah…lets buy some gold.

        • Hello Alan,

          I wrote a long reply, and then shut the computer down without sending it. So this is guaranteed to be shorter. An advantage, you might say! Anyway, the gnat remark was not directed at you, nor anyone in particular. It was just to say that in my view gold should be regarded as an investment, not a high frequency trade.

          Gold teeth is good – but those and jewellery will not be likely to come under the gold ban which I see as coming to a cinema near you soon. Western governments should not be trusted as far as they can be collectively thrown, along with their paper promises, and they may well ban the holding of the yellow metal in bullion form. It has been done before, and before that you would have had to have enough power to stop someone taking it from you by force. The Chinese government is actively advising its citizens to keep silver, and they themselves are buying gold. Perhaps they are fed up of the US dollar – or see the writing on the wall.

          I would like to speak to the 65% of jewellers in India that think gold should be banned. Do you trust this? Me not. Were you being ironic in making buying gold the choice for the Indian government over social advantage for its citizens? I don’t think that the Indian government is interested in anything else but its own survival and betterance. These central banks are all working together, and it is most definitely not for hoi polloi. George Orwell would have been proud of himself. We are now seeing dictatorship (which has always followed democracy throughout history), by the back door. Pretty clever. They take over without a shot being fired. And very few will complain, as long as they can keep buying apps for their smartphones. So, ass you write, gold it is then, and straight in the pockets of those in power.

          You are right to say that gold cannot be destroyed, hence its value. However, we have a somewhat larger population than before, and a somewhat larger economy, so we need a somewhat larger supply of gold. Supply and demand is only a very small part of the equation as far as the price of gold is concerned, as it is not really a commodity, rather a currency. I smiled on reading your idea of the tram conductor (it’s a long time since I was on public transport) not being able to take gold instead of money, but that is probably because he or she has a diploma and/or degree in anything other than common sense and practical knowledge. Nowadays folk need a calculator for adding 1+1 together. And if they get the answer 3, they have no idea that it might be incorrect.

          Mines. well, they stay open, or mine new seams , or open new ones, depending on the price of the product. Too low, well, they close, only to cost even more on re-opening. Then there’s how long they can get the poor sods going down into them to work for a pittance. One needs over US$1400 an ounce for gold to even get interested in opening a new mine. However, I do not use that as a price for gold (although one might use it as a minimum guide). The price is what it is, and mining cost don’t have much to do with it.

          People say that an ounce of gold will buy today what it bought a hundred years ago – a good suit of clothes. Not if you buy Armani Black Label it won’t!

          • “…then there is how long they can get the poor sods going down into them to work for a pittance.”
            Where are talking about – maybe Africa. Gold miners make very good money in North American, Australia and other countries.

          • Your right,, Ed, some miners do well, although 50% of the worlds’ gold reserves are found in Africa, and between 15% and 30% of production is usually there. That would make a difference, wouldn’t it, if South Africans were paid the same? Even if one ignored Argentinian miners, Chileans, Uzbekistanis, Indonesians, miners in New Guinea, Peru, Egypt, Pakistan, China, Ghana, Burkina Faso, Mali, Russia, and the famous miners of Ecuador. So just where are we talking about that miners earn a wage commensurate with the risk apart from the USA and Australia?

          • Wow: that sounds like the guy who said the majority of oil was in the middle east 30 years ago.
            Technology determines where every energy source and metal are “found”. 8 years ago we started to see the potential of new metal resource bodies, but only now are the new processes starting to work that will allow the extraction. Gold recoveries in the future will be as different from this discussion as x-rays and MRI’s are, or drilling and fracking. And the reserves in the “mines” accessible to these technologies may also be of comparable scale differences. Geological events determined accessible reserves, technology will open them up, and just like oil, where they are located will likely be totally unrelated to the location of the big mines are today.

  14. Yea, buy some gold.
    To answer your question at least with a point of view regarding hoarding in India, an its an interesting point, yes hoarding does constrain and economy and the multiplier affect called velocity, as the banks are hoarding their cash (and have huge debts too) here as well. The Fed pays them to keep it on deposit.
    So your correct, but do you realize India’s rupee has fallen for quite a while and continues down, so the people protect themselves. There is heightened anxiety everywhere and Argentina just topped Vietnam for highest premium over spot.
    Americans don’t feel so threatened, we only bought 44% more gold in Q1 YoY . That doesn’t include April’s 169%.
    But you phrase it like a politician Allen, the people of India have there wealth, and the gov. is doing everything it can think of to stop this desire of its people, and it will happen here as well, probably in the form of a windfall profits tax like 90%. Like India, I would expect a healthy black market to develop here, although our overlords are far better equipped than theirs.
    If you wanted the people to invest more, I don’t think the Indian gov. is going about it the right way, and neither is ours, and many others as well.
    The number of risks in the “great game” appears to have increased substantially in the last year, and as you have pointed out, humans are not treating the world and their necessities very well either, so the next 20 years won’t be anything like the last 20. If you can, imagine every country that is carrying a huge debt load, and that’s like 75% of the global economy is facing the same trouble- spending forward means indebted future generations. How long will billions of people tolerate it? Unfortunately, since they have been tolerating it, its difficult to think this will change.
    Meanwhile a shortage in physical metals is developing, so keep that in mind.

  15. consider: gold does not know race, religion or any other MAN made concept. rightly a few mentioned gold as a commodity. however, their are many peoples that view it as a asset. we are in that category of asset. simply put you can put a few gold coins which we manufacture in your back pocket and arrive in some foreign land and not understand a word they are say and yet you will still be able to trade and enrich your self. in Zimbabwe the currency has an expiry date valid for 12 months from print…if you do not spend it..it becomes worthless. take a look at an executive order from USA that banned the ownership of gold!!

    the Chinese government has approached London to support them in making a world alternative currency pegged to a gold value…yip…fixed…just like the old days….i guess the Chinese want to dispose of the trillions of surplus US$ they have before the market falls out of the bottom.

  16. As previously said: nothing polarizes the crowd like gold. While the subject fascinates me, I have no gold other than two old wedding rings……..the most expensive purchases I ever made! Strange how the ladies always leave the wedding band on the dresser…..but NEVER the diamond engagement ring. Hmmm….I digress.
    At the risk of outstaying our welcome on this Gummy board, Id like to play devils advocate a bit. Anyone who’s bored can skip to the next reply now with my apologies.
    I think its important (perhaps idealistic) to remember that governments are there to serve the whole of society…not the individual. I think its fair to say that NONE of you would have amassed enough to buy a single gold tooth if you lived on a desert island. Without being part of a hardworking, well managed society all youd have is coconuts. Would you hoard them…..nah? So, you have gained from the other members of your society and a strong government. So, when you stand up at the ball game, slap your hand on your chest, shed a tear while singing the anthem, raise a flag in your yard and declare yourself an American patriot…. how do you square that with stuffing excess working capital in a Swiss bank vault for your sole security/benefit? JFK: Ask not what your country can do for you……!
    Then someone spoke about the debts this generation is inflicting on future generations of American kids (and equally my UK kids). But still the untaxed excess is stored in unusable gold bars (well some of you….not all).
    My US history aint so good, so dont kick me on detail, but this personal greed culture created a huge problem in thirties US when the rich got outrageously richer and the poor starved on a bread line. Why did Roosevelt ban holding gold? A/ Because he had the attention span of a gnat. B/ because he was a visionary who knew he had to flush out all that passive store of wealth and put it to work for the good of society?
    After the 30′s America had the wealth to re-tool, built massive infrastructure, invested in industry which employed vast amounts of starving people, paid them well enough to buy a car, a garage to put it in and a house to put the garage in. All this created even more jobs, more wages, more industry, more entrepreneurs, more sales abroad, more wealth. In short, the USA became the richest, most powerful nation this planet has ever seen because all its money and all its people were working. Its the single reason you all STILL live so well and have fridges full to over flowing, while India has wives with gold teeth, no infrastructure and millions of starving people.
    Then in 74, along came Pres G Ford who said ‘ Guys, we’re so rich and the $ is so strong ‘its fine to squirrel again. Buy Gold !!’ (China’s now doing it with silver). Was he A/ Worried about the value of society’s $ or B/ laying a foundation so that, if things ever got nasty again, the US would have plenty in the larder to confiscate to pull the old FDR trick again?
    Im not a Bible man generally, but ponder….. The love of money is the root of all evil, and the second deadly sin….greed. The definition of greed is personal excess. Nothing wrong with having or earning money…..I guess even the carpenter earned a shekel or two, but use it so that society as a whole (and you) profit.
    But if youve got some spare……… buddy can you spare a grain.

    • Oh and the Chinese…..while all their money is tied up in $’s, you control them. If they form a different standard…….they’ll control you.
      Its a lot cheaper to wage financial war than physical war.

    • Ah, a dreamer. Now I understand. Paraphrasing JFK: We’re the bosses, you’re the workers. No philanthropy there. No different to your unpatriotic patriot. One law for them, another for you. So let’s see. Governments live on taxes – that’s why they like to raise them. But wait – the members of the EU regime don’t pay taxes! Neither do those who work for the IMF! And when you can cream off all the expenses you like, without proof of payment, unlike the population you govern, then who cares? Government employees salaries are taxes, just reduced a bit to make it look as though they have been served the same way as everyone else. Of course they’re not. Governments serve themselves. And when they make a complete mess of everything, well, they’re not responsible either and take no loss, so a cushy number all round, don’t you agree? Even in Germany, after the recent catastrophic floods, all the civil servants private losses were dealt with before the general public. Nice, eh?

      I’m afraid that I am not into superstitions, like religions for example, so you lost me at the end!

      Don’t take any bent nickels!

  17. Hello Paul
    Me a dreamer??? Far from it. You appear to be saying you’d only trust a politician if they are 100% altruistic, smarter than new paint AND guaranteed whiter than white. If you’re ever expecting to meet this human, I think it’s you that’s the dreamer.

    Me?….I’m a realist. I know Im far too busy to run my own country and its economy etc, and given that I can offer just one vote, I know they must appeal to the majority to get the gig ie they must serve the WHOLE of society, not the minority. But we are both fully aware, we can only choose a human , and all humans are, ultimately, motivated by greed and self interest (though some might put up a stout argument for electing a monkey and paying it peanuts). That’s precisely why I know, whoever is chosen will, on balance, do a good ‘big picture’ job in return for a few insignificant crumbs, coz if they don’t, they risk being thrown off their gravy train……and that’s NOT in their self interest.

    As I said, I was playing Devils advocate. I’m human too, so suffer (enjoy?) self interest. But as politicians MUST serve the needs of society as a whole, I agree with you………… the day WILL come when sales of physical gold WILL be banned again, the vaults WILL be opened and your ‘safe’ investment WILL be loaded on their truck, at precisely the moment you need to cash it in. If it’s banned, who will buy it? And (at that time) if you can’t sell it or eat it….what value has it got, unless you desperately need a paperweight. As for today, if its been bought with surplus cash, I guess its superfluous anyway.

    In the short term, gold is a great way to hide your wealth from the prying eyes of the taxman. But a house with no outstanding mortgage, by a lake, with several acres of arable land and a couple of cows…….plus the hellava big gun, offers the very best hedge against all eventualities. At least you’ll eat well and still get paid to feed the starving masses.

    As for history: Kings and Cavemen, even animals and squid, have been fighting over territory for far far longer than they’ve fought over gold. That’s why you still celebrate Independence Day (dammit we lost :). Nothing but nothing is more valuable or offers a better store of ‘value’ than land. It can’t rust, doesn’t shrink and, I’ll bet, Ms Patel would seem a damn site more attractive if she had a few hectares round her neck instead of a shiny necklace….. And if youre now gonna tell me you’ve already got 1000 acres…..well liberate that gold and buy another acre or 2 or 22,000……and Im very jealous!

  18. There’s nothing wrong with being a dreamer! It was not a negative comment, rather a positive one.

    No, I don’t trust any politician. That was a full stop. I do admire your level of trust though. I hope they don’t let you down. They will, but I still hope they don’t. Look at the election results almost anywhere in the Western World for the past decade – 51% for them, 49% for the other. It has to tell you something. It tells me that there is no difference which one you vote in. They are both (all) the same – self-serving. It’s just human nature.

    They won’t be loading my gold onto any trucks, that’s for sure (at least not without my say-so), but I do hope that you are right in writing that it will be banned. Hopefully soon, as the price needs to be sky-high if the central banks are to use it to back their paper currencies. Like I wrote before, dictatorship by the back door. Hitler made sure he had plenty of gold. That’s how he paid off the Swiss for allowing the Nazis to cross Switzerland with their armaments during WWII. I know he lost, but it proves there’s always a buyer. Don’t underestimate Au. Jews with gold made it over the Swiss border from Germany – those without got turned back. A rotten world sometimes, but you have to be prepared.

    However I am not advocating gold as the be all and end all. No money is superfluous, at least that is until they put you into a coffin. It’s only one asset, and I agree with you wholeheartedly about land. You need a place to put your gold (only kidding!)!!! Having a house on it is a different matter. Taxes on that, you know. But one has to live somewhere, and living in your own property is usually cheaper than renting – usually. Just remember – you cannot move property, and it can be difficult, long-winded, and expensive to turn it back into something more liquid. Ask a poor sod who’s had his/her house repossessed. I know the British think it’s a sure thing, but it’s no more a sure thing than gold. Property is another good hedge against inflation. That’s all, unless you live in it. You might come back at me with property prices in Cambridge, but I would have to mention Ulster, or central Newcastle, or… Most of the properties that changed hands in the last couple of decades should have had capital gains tax paid on the profit, but didn’t. A bonanza, but you would have made 1000% on changing Sterling into Swiss Francs in the last 20 years or so, without moving a muscle. As an aside, I would certainly not be buying property in the UK or USA now. Land perhaps (not sure), but certainly not property. So take care where you buy property. Rhodesia looked extremely good for a while…

    We do have a farm (see, we agree), albeit a small one, just in case we need to eat as well! Currently we live there for under 6 months a year, as we can still buy food where we like. It is not by a lake (it does have water), but it has a good view of the sea. Not sure about the cows though. Are you sure you’re not a dreamer?!

    You know, gold is not only for those who don’t want to inform a tax-man of their wealth. Some who own it inform him (just don’t keep it in the same country as you live in), and the rest of us don’t have a tax-man to inform. Now you can be jealous!

  19. We could bat this around forever. Best investments change like the wind as you’ve demonstrated by citing Swiss francs over 20yrs. Only 6 months ago I read a gazillion articles predicting gold was going to $2500 (or was it $25,000)…..it’s now half that. Ill bet those who listened are thrilled with that advice…..not ! Of course, if the wind changes it may go to 25k. I’m glad for you that you have all those paperweights stashed away.
    I wasn’t actually talking about property. But…. Houses in Ulster, Newcastle or anywhere else in UK havent gone down 40% in the last 6 months like gold has…. houses in London are booming. Rhodesia may have looked good until they stopped electing their crooked politicians and got even more crooked freedom fighters instead.
    Who wants houses to be liquid? (so long as you own them outright). They’ll return rental income month after month after year, so long as there’s a growing aspirational population. The 30% ‘interest’ on the loan (from your own off shore account) is tax deductible, as are the decoration and plumbing bills, plus its a great way to export capital in the form of monthly ‘loan’ repayments. How much interest did you earn from from gold last month?
    I bought my house for 42k….I recently sold it for £2.5mil. Not quite swiss franc returns, but not too shabby. How much has gold increased over the same 20yr period? I used it to buy my 2 kids their first apartments. This was a great investment (if you still see them) coz they dont keep popping round to tap me for a loan that will never be repaid, plus it will save them £1000 pm (every month for life) which will take a lot of financial stress out of their lives, stop them divorcing and allow them to give me grandchildren the sooner. Bonus!!! I also bought a houseboat in central London to live on……swans peck on the window (porthole) every morning to be fed….heaven ! (no tax on buying/selling or living on a boat…yippee!).
    Its not that I trust any politician…..its just that I accept they’re a necessary evil, so I shrug and get on with it. Whether you trust them or not, unless you really do live on a private island, they WILL affect you…..so vote! or better, stand for election. I guess you can add them to that list about death and taxes.
    Hitler only had plenty of gold because he confiscated it (following WW1′s reparations to UK/US, Germany was skint)……Ill bet the owners also said: no one will get at mine without my say so. I wish you better luck in hiding it. But that was a long un-computerised time ago. These days (like numbered Swiss bank accounts) a squiggle on a G8 proclamation and the truck may be on its way to a vault in your area, or America’s politicians will economically cripple any un-co-operative country.
    I hope you do buy some land and spread some joy by employing some of your countrymen to manage and work it instead of just leaving it as fallow as a gold bar. Who knows, it may even earn you a profit every month. Or perhaps think of it as a hedge against all that mumbo jumbo superstition: I did my bit St Peter….let me in !
    My best, and if you’re ever in London you can buy me dinner ;)
    Regards
    Alan
    Ps I mentioned the cows coz I cant abide the thought of becoming a veggie. Im also intending to grow tobacco and loco weed (if you can remember your early years cowboy films)

  20. Hello Alan,

    Do I live on a private island? No. There are more choices than that in the world. However, I feel you are so well rooted in the UK that you would click your heels together like Dorothy, and say “There’s no place like home”. The British are not a bad lot (nowadays), especially the Polish ones!

    Houseboat. Had it right. Dreamer! Well done, Narrow boats, and especially Dutch barges are very beautiful – and moveable! However, a bit small to grow tobacco on. Are you allowed to grow 4 cannabis plants in London, before the forces that be get a bit stroppy? It’ll stop you thinking about becoming a vegetarian (please don’t even consider this – it’s similar to celibacy), or if you do, from thinking about what you’re forcing yourself to miss.

    May the boats that pass you by drive slowly!

    Kind regards
    Paul

    • Hi again, Paul Jessup and anyone else interested in gold,
      I wasnt expecting to write again, but this hit my inbox. Its from an Economist I read. Its call Things that make you go Hmmm…. Its v long but v v interesting and well worth it. http://www.mauldineconomics.com/ttmygh/what-if
      I think it means they have sold twice as much gold as exists…..perhaps you can translate it into English for me.
      Enjoy
      Alan

      • thank you for sharing this info. it is in line with our analysis….one part we never included though that makes the situation extremely dire is the divergence of available gold in storage and “the cloud” version which does not really exists except on the back of gold owners lending gold. in a nut shell leverage of 100/1 VS gold in storage has a major shortfall. furthermore, when large owners demand their gold to be delivered then gold in storage becomes less…in a way it means the leverage increases since the gold in circulation is decreasing. meaning when the “herd demands real gold for their futures contracts” their will be a shortage…a GIGANTIC shortage. Central banks which are mostly private owned and with the government support will confiscate your gold and print (QE)

        • that is why people are taking their bullion out of banks and other and its disappearing “into thin air” the clever money is avoiding governments forcing you to exchange your gold for FAIT currency. as governments according to the bill of exchange act are in contravention of the act, check your cash notes it says…”i promise to pay the bearer”. Governments are bankrupt and they are coming steal your families wealth…

          • I believe (from a faulty old memory) its Sprott that actually has gold, silver and platinum in a vault and you may be able to get your money in those precious metals.

          • SPROTT is Canadian based company. your gold is not safe their. their are 2 ways to avoid your gold from been confiscated, you need to move it to a place like Switzerland and their are other destinations which we offer our private customers. the other way is to buy gold coin collectibles. for example we have dedicated a gold coins in memory of Nelson Mandela, the Rhino Extinction fund, memorial day of WWII and so fourth. these are collectibles and government cannot take them. our activities are private and not disclosed. and anyone with US$3000 dollars or more can get to own gold coin and keep it your wallet. the smallest coin we make is 1 gram do the maths. and you can order with your credit card to avoid foreign exchange restrictions that will be put into place soon. while their is no glss ball into the future. it is better to be safe and hedge your wealth. we advise clients to have at least 10% of their net worth in Gold and precious metals and gems. if you are a large cash holder then you should be at least 20% weighted with precious metals

      • Hello my All-England friend!

        Read all of the article, watched the video, and heard what Kaye and Cashin said. Very interesting, thank you for posting it. It was more precise that I could be, but exactly my sentiment (or a translation for you regarding the sale of non-existent gold) – we are being had – or at least they are trying it on. Smoke and mirrors.

        As I wrote originally, only buy physical gold. Margin and leverage trading will soon be a loosers game. Gold is not expensive with regards to its cost of mining. I would have bought even more at US$1200/oz, but it seemed a bit excessive, as we already have a holding from years ago. I was waiting for a pull back to do that, and it came within 4 days of placing the order! However, if it goes down again, I will add to our stock, but I do not expect that really. In hindsight, gold has gone up nearly €2000 a kilo in the past three weeks, but that would not have helped me – my problem is that I will not sell any gold to make money at present. I will only do that when the powers that be start acting rationally, so it looks like a long wait! But it will be well worthwhile, methinks. There is a lot of Schadenfreude out there for holders of gold, but he who laughs last…

        The article was very interesting in letting me know why others consider that the price has dived this year. I had explained it as huge puts by the central banks or their agents using these ETFs to lower the price (the price on Monday mornings was invariably depressed to put off the longs), so that they could replenish the physical stocks they don’t have – central banks have been huge buyers since 2012. I suppose this is basically the same thing, but other well thought out explanations are well received. Counter sales at the HK gold market have only been one way – sales. They have hardly bought an ounce from customers in 6 months.

        Remember to keep your head whilst those around you are loosing theirs.

        Paul

        • Hello my (?) friend.
          Thanks for your warm greeting….I wish I could respond in kind but you play your cards too close to your chest for me to know.

          Now I get it. They depress the price of physical by buying ETF puts. Meanwhile they scoop up physical on the relatively cheap till cupboard is full again. Then they will sell the puts rapido causing physical to rise furiously = net gain. Finally, they rent the physical gold back to the etf to cover its shortfall….= profit.
          Neat.
          PS: I assume loosers/loosing = losers/losing. Still an A* for investing aint bad :)

        • Not intending to disparage what you say, but as Gumshoe and a million other threads demonstrate, there will always be an infinite number of speculative opinions especially about money (whatever that is). Here’s mine for what its worth….probably < a nickel.

          As I see it, initially, China never really expected their bonanza to take off like it has or last this long. As they were not sure of the political repercussions of turning towards capitalism, they squirreled their dosh away in the only place they could… the reserve $. Later, they decided the only way they could keep the boom going was to lend oodles of those $ to the West/US so that we could keep buying their cheap tat. However, they are now soooo invested in the $ that they can’t be sure of ever getting it all back….if they suddenly asked for it all, the US would be bankrupt and the $ would crash. So, when you’re in a hole, stop digging. But there’s a huge problem…. where CAN they put it? Well, into commodities throughout the world earning lots of brownie points with 3rd world countries that can vote at various conferences and be manipulated through their self serving/corrupt leaders…. and, if push comes to shove, through sheer military bullying.
          At some stage, some dreamer realised they had a golden opportunity to tip the balance of power away from the West via a bloodless ‘financial’ coup/war. All they had to do was remove their funds gradually. That would progressively devalue the $ to such an extent that it could no longer hold the position of reserve currency. Gold/silver is the obvious replacement as it commands worldwide respect and has been proven over centuries. So they told their population to stockpile silver (which they have) while it bought gold (which they have). Where is most of the gold held….London metal exchange. Who should they talk to about buying more….? When they were asked what they wanted it all for, what would they say? Did someone in London whisper this? Who knows, but suddenly all the countries and all the banks began stock piling precious metal (and buying puts with their soon to be devalued paper, to keep short term prices down)
          Initially, China would appear to be shooting themselves in the foot by wrecking the $ coz their own $ deposits would plunge equally in value…..or would they? Ask yourself…. if all currencies equally devalued 99%, relatively, is your economy any worse off. No ! But now everyone needs a new reserve currency, against which the value of each individuals savings would worth 99% less. Certainly it’s a cheap way to effect a new world order that the gun could never achieve short of wrecking the planet.
          But there has been a quantum tilt of late…..China now has its own middle classes who also want to buy what China makes with the commodities it now owns….and there’s a darn site more of them to do the buying; so it will be far less dependent on selling to the West into the future.

          I dont think that the Yuan will ever be the reserve currency…..it doesn’t have enough history to be trusted. But a return to the gold standard?……quite plausible. And the effect of that on the West’s population would be that their fait paper savings wont be worth the paper its printed on.

          • agreed. China as we all know has a pollution problem. considering the unregulated industries and for the growth to be in the 10% pa ..its a bit like the wild wild west. reform is the talk of today and some cities has already become “green” and industry is been forced to become green. in fact the green movement in China is the fastest in the world considering the economy of scales. one area we disagree on is that our analysis points to the Asian market growing when the west will be shrinking. so the Shanghai composite we think is the time to buy, Korea and Japan will also grow while the rest is shrinking. lol..remember you heard it here!

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