The Race To Debase the World's Currencies is On

Would you like to know why Mike Maloney gets so frustrated when people incorrectly refer to currency as money? It has a lot to do with what he calls 'The Race To Debase'. 

Join Mike in his latest update where he covers the huge change to the Federal Reserve’s balance sheet, reads a segment from his new book, and answers viewer questions.

- Source, Gold Silver

Golden Rule Radio: QE to Infinity and Beyond!

To QE Infinity & Beyond! Gold mines & refineries send workers home for safety - Where will the new gold come from? Bonds are telling us that the system is cracking apart. Figure out what you want to own (gold?) & get it now.

- Source, Golden Rule Radio

Egon von Greyerz: Major Silver Shortage Right Now, Physical Bullion is Virtually Impossible to Find

The Swiss Canton of Ticino, in the Italian part of Switzerland, has just ordered the gold refiners based there to close, initially to March 29th but this is expected to be extended. Three of the world’s largest refiners – Argor, Valcambi and PAMP are based in Ticino. We are likely to see major pressure on the gold and silver paper market. More later in this article.

WHO WILL PAY? – THE PRINTING PRESS, STUPID

The world will now see massive handouts to individuals and corporations, rescues of over-leveraged banks and hedge funds plus rapidly surging government deficits. But Who is going to pay for it? The printing press – stupid! Who else. The printing press has got the world into this financial disaster in the first place and all that is needed now is to speed it up 100x or more.

But who is controlling the printing press? That is an irresponsible elite of central bankers, the Deep State and governments who have all benefitted from the biggest financial bubble in history.

CENTRAL BANKS TOLD US ABOUT THE CRISIS BACK IN AUG-SEP.

The first signals of the latest crisis in the financial system was clear in Aug-Sep when first the ECB said they will take whatever measures necessary and the Fed started desperate money printing that one Fed governor called plumbing and not QE. Of course it was plumbing since the system was leaking like a sieve. I wrote at the time that what will happen next will be as momentous for the world as Nixon closing the gold window in 1971. And here we are 6 months later with the Fed’s balance sheet having expanded by almost $1 trillion. In addition all central banks and governments are now committing trillions to prop up failing economies and a collapsing financial system.

EUROPE IN LOCKDOWN

Most European economies are now at a standstill. Shops, hotels, restaurants, bars, most offices and many factories now closed. Virtually all European car manufacturing has come to a halt. The airline and tourist industry is collapsing and most small businesses haven’t got cash flow for more than a couple of weeks.

It is an unbelievably tragic catastrophe which is now hitting the world. I have talked about the coming collapse of the world economy for many years and done my best to tell people to protect themselves. Sadly, most people believe that good times will go on forever. Therefore the coming economic downturn will shock the world.

Although, there is always a catalyst for a downturn, the world could not have been hit by a worse trigger. The biggest economic downturn in history was due anyway.

Global money printing will increase to $10s and $100s of trillions and when the derivative bubble blows up, it will reach $ quadrillions. There can be no other outcome.

STOCKS WILL GO DOWN BY 90% FASTER THAN IN 1929-32

In 1929, it took the Dow 2 1/2 years to go down by 90% and the depression lasted for many years. This time because of Coronavirus (CV), the collapse will be very fast. It could all happen in 9-18 months. By that time the financial system will be unrecognisable or nonexistent. All the printed money will be valued at its intrinsic value of zero. And so will all the assets that were bought or created by this printed money. Stocks will be down 99% and most bonds down by 100%.

But even if markets will collapse very quickly, the world economy will go along the bottom for years and maybe decades.

Investors in property live under the false impression that bricks and mortar will always have a value. Sadly that won’t be the case. If there are no tenants or if they don’t pay the rent, the properties will be almost worthless. I have already heard from friends in the property business who say that the tenants can’t pay the rent. Governments in some countries have promised to help out with rent. But that help will consist of worthless printed money and therefore only have a very short term effect as its value declines daily. If printed money was wealth, we could all stop working.

FAKE MONEY, FAKE VALUATIONS, FAKE MARKETS

So we are now entering the end of a 100 year phase of fake money, fake valuations, fake markets and unlimited debt, all leading to the biggest bubble in history. This has also led to false ethical and moral values and the breakup of family values. Too many people have been chasing the golden calf or material values.

What makes the coming period particularly difficult is the combination of CV hitting many people combined with severe financial pressures. A very big percentage of the population will experience extremely hard times both physically and financially.

HOSPITALS FIGHTING A DESPERATE BATTLE WITH CV

As we have seen in many European countries, there are not enough intensive care units or ventilators even for a fraction of the patients who need it. Doctors and medical staff, in for example Italy or the UK, are fighting a desperate but losing battle and still working around the clock. Many elderly and severely ill people are not even admitted since there is no room and they are left to die.

The situation is made even worse because most governments have waited far too long to take strong action. If you listened to most leaders of state in Europe and the US, everyone thought that they had it under control and their country wouldn’t be severely affected. And then for every day that passed, they gradually changed the tone as they realised that their country would be hit badly too. All a country needed to do is to look at Italy where CV started only a few weeks ago but sadly is still growing exponentially. Just Saturday there were 800 fatalities making almost 5,000 total deaths. Other countries can just with some delay extrapolate Italy’s figures to forecast what will hit them. Also, in many countries the population is not taking the advice or instructions seriously and openly mixing with other people.

No one can tell how long this will last. Observers on the ground in China are saying that CV is still growing there as opposed to official government information. Some people are saying that it could last for 6 months or more and this doesn’t seem unlikely.

THE WORLD ECONOMY COULD DISAPPEAR IN A BLACK HOLE

If the economy closed for more than 6 months with most people not working and major parts of the manufacturing sector closed, then both the economy and the financial system will disappear in a black hole. Governments will have some very difficult choices in the next few weeks and months – the survival of people against the survival of the economy.

Looking at markets, the bull market is over and whatever outcome we will see of CV and government actions, the world is now entering a severe secular bear market which will be long lasting. All bubble assets, stocks, bonds and property will decline by 90% or more.

All major countries led by the Fed, the ECB, the IMF, BOJ, PBOC etc will print unlimited amounts of money. All currencies will decline by 100% as they finish the race to the bottom to their intrinsic value of ZERO. We will soon see high inflation, quickly leading to hyperinflation.

PAPER GOLD MARKET WILL COLLAPSE

Gold and other precious metals will maintain their purchasing power and most likely much more than that as the huge and manipulated paper market in gold and silver collapses. Comex and other futures exchanges will default combined with the whole LBMA system of bullion banks.

There is very strong demand for gold and especially silver currently. Small dealers are out of stock of most items. Bigger buyers like ourselves can still get hold of gold from the refiners but for silver there is a delay of a couple of weeks currently.

So there are many factors which will be extremely favourable for the precious metals:

• Fear and loss of confidence in economy
• Financial system collapsing
• Failure of paper market
• Debasing of currencies and hyperinflation
• Exponential increase in demand
• All current gold production absorbed annually so no surplus
• We have reached peak gold and production will decrease

It is still possible to buy physical gold and silver at a very low price based on the fake paper market. This will not last long as shortages will soon develop and repricing of the metals is imminent. The previous sentence was written on March 24. Gold is up $100 since then. This is just the beginning of a major long term repricing of gold.

Please remember that the principal reason to hold physical metals is for insurance and wealth preservation and not for short term gains.

Finally please remember to look after yourselves and families and in particular the older generation.

- Source, Egon von Greyerz via Gold Switzerland

Alasdair Macleod: Will Financial Cancer Plus COVID-19 End Fiat Currencies?

Alasdair Macleod believes the dollar-based global fiat monetary system is doomed to fail given the cancerous growth of debt from the fiat monetary system.


How long can the ponzi scheme continue on? Is this crisis what will finally bring the entirety of the system to its knees, sending physical precious metals to astronomical new highs?

- Source, Jay Taylor Media

The New Zeitgeist: Massive Demand for Physical Precious Metals, Tangible Assets, Here to Stay

Wall Street has finally found its footing, after the Federal Reserve gave the green light to investors, indicating that endless amounts of quantitative easing was about to be unleashed upon the markets, using whatever tools they have available to them to achieve their goal of "supporting the economy".

Additionally, the G7, after facing extreme criticism for their lack of united effort thus far, released the following joint statement;

“We will do whatever is necessary to restore confidence and economic growth and to protect jobs, businesses, and the resilience of the financial system.”

This statement, in addition to the measures put forward by the Federal Reserve earlier in the week was all that was needed for many investors to start feverishly buying stocks hand over fist, sending indexes shooting higher and posting monstrous gains.

(Chart source, google.com)

Meanwhile, and quite ironically, this had the opposite affect on precious metals, as both gold and silver bullion "paper" prices nose dived lower.

(Chart source, goldprice.org)

This move lower occurred because people once again felt secure in purchasing paper assets, knowing that the Federal Reserve and other Central Bankers would simply do "whatever it takes" to keep prices sustained at higher levels. 

Essentially, they believe that safe haven assets are no longer required. 

Obviously, this is going to be a drastic miscalculation in the coming days, months and yes, even years, as this crisis is far from over.

If anything, it is gold and silver bullion that should be soaring higher, as governments around the world just told us that they are going to be printing an endless supply of money, out of thin air.

Already the physical bullion market has caught on to this fact, as the premiums to get your hands on REAL, PHYSICAL, metals has exploded higher, leaving the artificial paper bullion prices in the dust.

Every physical bullion dealer across the market is reporting a surge higher in sales, with many of their most popular products simply being sold out completely, with long delays in shipping times, due to the tremendous demand that is occurring in the physical metals markets.

Finally, after so many years of stating the obvious, the general public is finally catching on to the harsh reality that so many of us in the precious metals markets have been stating for years, "if you don't hold it, you don't own it".

As a rule of thumb, you are much better off with ability to access, hold, sell and use your precious metals, then have your money tied up in an ETF that has zero accountability, or even the option to take possession of your metals if need be.

However, their are phenomenal funds out there, such as Sprotts Physical Bullion Trusts, which does offer accountability and the option to redeem for physical product, but they are the exception, not the rule.

Regardless, you should always have a portion of your gold and silver bullion saving in your possession first, with access to it at a moments notice if need be.

Heading forward, I believe that even the paper gold and silver markets are going to surge higher, as institutional money begins to understand the new endless fiat money reality we now live in. Coming to the realization that bullion prices are going to have to move higher, accounting for the tidal wave of money entering into the system.

Additionally, stocks are going to continue to gyrate wildly, as the coronavirus crisis is far from over, leading to the shedding of more and more "weaker hands", as people continue to seeks safer alternatives.

(Chart source, worldometers.info)

Many experts are indicating that we could easily be facing this problem well into next year.

This means that more money is going to need to be printed, more companies are going to need to be bailed out, more government intervention is going to occur. The economic fall out is going to be one for the history books.

In the end, I truly do believe that a change in the zeitgeist is going to occur. People are going to return to a "hold it, own it", mentality.

Tangible assets are going to continue to trend higher in price, while paper assets are going to become increasingly worthless, possibly leading to one of the greatest wealth transfers that this world has ever seen.

I believe that this new mentality is not only for the duration of this crisis, but is going to be deeply ingrained into peoples minds for many years to come.

In my opinion, physical precious metals, if you can even still get your hands on them, are a screaming buy, that are going to make you tremendous gains over the course of the next 12-24 months.

Keep stacking.

- Nathan McDonald, via the Sprott Money Blog

Coronavirus: How Bad Will Things Truly Get, Before They Get Better?

Fiat Failure: Japan's QE On Verge Of Failure As Nobody Wants To Sell To The BOJ

Over a decade since central bankers started a stealthy nationalization of capital markets by purchasing a wide range of securities from Trasuries, to MBS, to corporate bonds, to ETFs and single stocks, their actions are finally catching up to them, and in the process breaking the very markets central bankers have worked so hard to prop up. And nowhere is this more obvious than in Japan, where the shrinking universe of Japanese government bonds (as a reminder the BOJ now owns more than 100% of Japanese GDP in JGBs) is "causing havoc" in Japanese money markets as the Bank of Japan continues to buy while dealers refuse to sell.

The result is that rates in Japan's repo market, which traditionally connects holders of bonds with investors looking to borrow them, jumped to a record Tuesday (although they since retreated on Wednesday) because as Bloomberg notes, "the introduction of cheaper, more regular dollar-swap auctions has generated huge demand from U.S. currency-starved dealers who are keeping their JGBs to put them down as collateral."

So here is what the math looks like now that the Fed has launched enhanced swap lines with central banks such as the BOJ, allowing local entities to obtain dollar funding at much lower rates: in last week’s first round of the Fed’s revamped dollar-swap auctions, banks borrowed greenbacks for about 3-months at 0.37%, a massive discount to the near 2% it would cost them in the currency swap market. $32 billion was alloted in the first operation.

This huge difference in available borrowing costs, highlighted in yellow in the chart above, means JGB holders who still haven't offloaded to Kuroda are now unwilling to participate in the BOJ’s bond purchases.

This was readily apparent in Monday’s Rinban operation (i.e., Japan's POMO) across 5-to10-year bonds which saw the lowest offer-to-cover ratio on record, as dealers refused to sell to the BOJ! Other tenors also saw a sharp drop in the amount of bonds offered to sell.

"Demand for JGBs as collateral and its importance now is heightening." SMBC Nikko rates strategist Souichi Takeyama told Bloomberg. And here is the big problem that is now facing the BOJ: "There is little incentive to sell to the BOJ because there are more effective ways to make use of JGBs."

In other words, unless the BOJ provides dealers with a substantial "pick up" in principal relative to market prices, dealers will simply hold on their bonds as they can earn far more by simply renting the bonds out than purchasing any comparable securities. However, that would be frowned upon as it would constitute a clear subsidy to the local banks which, ironically, have been crushed in recent decades by the lack of net interest margin with the entire Japanese yield curve trading flat.

Making matters worse, the surge in demand comes at a time when the Bank of Japan is stepping up its own JGB purchases, in its bid to provide liquidity to financial markets grappling with the worsening coronavirus outbreak. However, with banks now openly refusing to sell to the BOJ, either the Japanese QE will fail, or bond prices will have to rise much more, pushing yields even lower, and further impairing bank interest margin calculations. On net, as Bloomberg notes, "that means less supply available for Japanese banks who have so far tapped over $150 billion in ultra-cheap dollar funding."

The bottom line, according to Takeyama, is that "there is risk that the BOJ offers may not get sufficient bids."

In other words, we may have finally hit a point where the market becomes self-stabilizing, as the very mechanism that central banks used to nationalize capital markets results in so much distortion that market participants no longer have an incentive to use it. In short, QE in Japan, which was first among the developed nations to hit the zero bound (and drop below it) and the first to exponentially ramp up bond purchases, is now on the verge of failure.

- Source, Zero Hedge

Goldman Sachs On Gold Bullion: It's Time To Buy The Currency Of Last Resort

A month ago, Goldman Sachs suggested there is more to come for precious metals as with rates getting closer to their lower bound, gold looks increasingly like the safest haven.

At the start of March, Goldman's head of commodity strategy said there is one commodity that will be safe: gold "which - unlike people and our economies - is immune to the virus."

And now, Jeffrey Currie and Mikhail Sprogis are saying The Fed's "open ended" QE reverses funding stresses and will offset the negative impact from lower EM demand:


"We are likely at an inflection point [for gold] where 'fear'-driven purchases will begin to dominate liquidity-driven selling pressure as it did in November 2008."

As such, Goldman raises both the near and long-term gold outlook, saying they are “far more constructive,” reaffirming their 12-month target of $1,800/oz.

In 2008, the turning point for bullion was the announcement of $600b QE in November, after which gold began to climb despite further weakness in equities and commodities.

A similar pattern is emerging as gold prices stabilized over the past week and rallied as the Fed introduced new liquidity injection facilities.

A similar pattern is emerging as gold prices stabilized over the past week and rallied as the Fed introduced new liquidity injection facilities.

Goldman's full note below:

1) We have long argued that gold is the currency of last resort, acting as a hedge against currency debasement when policy-makers act to accommodate shocks such as the one being experienced now.

So why has the gold price fallen? The answer is the world is short dollars.


First, both physical and financial market participants face severe funding constraints; they have been forced to sell liquid positions which include gold and other commodities to generate dollars for other funding needs (see Exhibit 1).

Second, large falls in the price of oil have created dollar shortages for emerging market (EM) economies. This has become particularly apparent with the Russian central bank in the past several weeks as the oil price decline shifted Russia from a net buyer of gold to a possible net seller.

We believe that yesterday’s announcement from the Fed for ‘open ended’ QE reverses these funding stresses and offsets the negative impact to EM wealth and are recommending buying December 2020 gold.

2) Gold has been severely impacted by liquidity issues, correcting by $120 (-7%) from its peak.

The situation resembles 2008, when gold also failed to act as safe-haven asset initially, falling by around 20% due to dollar strength and a run into cash. In 2008, the turning point was the announcement of $600bn QE in November, following which gold began to climb despite further weakness in equities and commodities (see Exhibit 2).

We are beginning to see a similar pattern emerge as gold prices stabilized over the past week and rallied the last two days as the Fed introduced new liquidity injection facilities with this morning’s announcement.

3) We analyze gold through the prism of our ‘Fear and Wealth’ framework, where ‘Fear’ of currency debasement is the primary driver of developed market (DM) investment demand while ‘Wealth’ is the primary driver of EM purchases.

Debasement ‘Fear’ is often, but not al ways, correlated with US long-term real rates (see Exhibit 3).

With funding stresses likely eased, focus will likely shift to the large size of the Fed balance sheet expansion, increase in fiscal deficits in DM economies as well as issues around the sustainability of the European monetary union.

We believe this will likely lead to debasement concerns similar to the post GFC period. Accordingly, we are likely at an inflection point where ‘Fear’-driven purchases will begin to dominate liquidity-driven selling pressure as it did in November 2008. As such, both the near-term and long-term gold outlook are looking far more constructive, and we are increasingly confident in our 12-month target of $1800/toz.

4) While ‘Wealth’ is likely to continue to be a headwind for gold, particularly in the near term as oil prices, EM growth and EM currencies remain under pressure, China and other parts of Asia are showing reassuring signs of recovery.

Last week we reduced our 6-month gold price target by $50/toz to $1700/toz to reflect the impact of lower EM ‘Wealth’, and we believe this has already been reflected in current gold pricing. Continuing to draw on the 2008 parallel, we believe that the increase in ‘Fear’-driven investment demand is likely to trump the negative ‘Wealth’ shock in the near term (see Exhibit 4).

As gold demand can be deferred as opposed to permanently lost like energy demand, we expect as Asian EM economies stabilize, EM gold demand will rebound strongly as consumers make up for missed purchases, particularly for speculative purposes as they have done in the past when chasing a trending market (see Exhibit 5).

5) However, the wealth outlook for commodity-rich EMs is not as optimistic in the near term, but their demand for gold is not as large as that from the Asian EMs.

So while we are comfortable being long gold, it doesn’t mean that our FX strategists believe that the dollar shortages are behind us or that we would want to be long other commodities. As we have argued in the past, given the size of the global oil market, a drop in the oil price of recent magnitudes accentuates dollar shortages as oil and commodity prices are highly correlated with the accumulation and dissipation of EM excess savings (see Exhibit 7).

Financial markets normally transform these excess savings into greater global liquidity, supporting asset valuations and improving credit conditions globally. Hence, when weak commodity prices create a draw on EM savings they act as a drag on financial conditions and a headwind on gold prices as dollars become more scarce. Accordingly, the negative oil-dollar price correlation has been re-established (see Exhibit 8).

6) Ultimately, once their GDP stabilizes, EM consumers should help prolong the current ‘Fear’-driven bull market in gold.

Drawing one last parallel to 2008, while EM wealth continues to be under pressure due to the reasons cited above, once the COVID-19 crisis abates, we see potential for sequential improvement in Asian EM growth to lead DM out of the crisis as it did in 2008/09. This China-driven growth will likely give rise to inflationary concerns given the sharp expected contraction in oil and other commodity supply like agriculture and livestock. Combined with the fiscal nature of the current policy response to COVID-19, we believe physical inflationary concerns with the dollar starting near an all-time high will for once dominate financial asset inflation that was a feature of the past decade. Such inflationary concerns should further support gold prices as the currency of last resort.

* * *

So, Gold, which a WSJ "expert" idiotically called a "pet rock" back in 2015...

... is according to Goldman the last thing and only thing that might store value, namely "the currency of last resort and avoids the concern that paper currencies could be a medium of transfer for the virus. 

As a result, gold has outperformed other safe haven assets like the Japanese Yen or Swiss Franc" a trend Goldman sees continuing as long as uncertainty around the full impact of COVID-19 remains, which will be the case for a long time, and is also why gold is currently the best performing asset class YTD, a "once in a decade event" as the last time this happened was back in 2010.

- Source, Zero Hedge

It's Selling Like Toilet Paper: If You Haven't Bought Physical Gold Yet, It's Probably Too Late

Over the past decade, one of the most fascinating observations in the world of precious metals has been the bizarre decoupling in the supply/demand dynamics and thus pricing, between paper and physical gold.

As gold became increasingly financialized in recent years - through futures, ETFs, derivatives and so on - and as the impact of "financialized" gold became the dominant price-setting factor in a world where the nominal volume of "paper gold" traded is now orders of magnitude greater than "physical", a bizarre decoupling emerges every time there is a major market stress event. 

A pattern that has emerged is that during periods of "bathwater" liquidation, when levered asset managers are forced to dump paper gold to cover margin calls in different parts of their book, sending the price of gold sharply lower also happens to be when physical gold buyers step up amid concerns over the viability of either the financial system and/or the reserve currency.

The result, as discussed last week, is that "the price of physical gold decouples from paper gold" resulting in an arbitrage that physical gold buyers, i.e., those who don't have faith in gold ETFs such as the GDX or simply prefer to have possession of the metal, find especially delightful as it allows them to buy physical gold at lower prices than they would ordinarily have access to.

The immediate next step is a surge in demand for physical gold that results in precious metal vendors and exchanges becoming sold out in very short notices. Take for example the largest US precious metals exchange, APMEX, where any attempt to buy gold in size, or rather weight (because the truly rich who need to park several millions can't be bothered with individual gold coins and instead go for the 400 oz brick or 1 kilo bar), finds, well, nothing because everything is sold out, and not just for bars...

... but also smaller gold rounds.

... and even plain vanilla gold coins are now only available for pre-sale.

But don't take our word for it: as that beacon of pro-fiat, anti-hard money dogma, the Financial Times, reports this morning, traders have reported and lamented a growing global shortage of gold bars, as the coronavirus outbreak both disrupts supply and stokes demand, "with one business comparing the frenzied buying of the yellow metal with the consumer rush for toilet roll."

Of course, the fact that gold makes for very expensive toilet paper and is thus available to a far more exclusive audience, one that can spend substantially more on the yellow metal, was lost on the FT, so here's the recap: there is a wholesale flight out of "paper" and into physical among some of the world's richest people.

One thing the FT does get right is that "retail investors in Europe and the US have bought up gold and silver bars and coins over the past two weeks in an effort to protect their money from the collapse in global stock prices and many currencies." And with the Fed now set to unleash unprecedented dollar destruction by injecting over $625 billion in freshly printed fiat into the system this week alone...

... concerns about the collapse of currencies will only grow.

But what is more concerning is that it's not just a demand problem: supply chains are also freezing, and Europe’s largest gold refineries have struggled to keep up because of the region’s widening shutdown. Valcambi, Pamp and Argor-Heraeus are all based in the Swiss town of Ticino, near the border with Italy. Local authorities announced in recent days that production in the area was to be temporarily halted.

Unfortunately, just like everything else, gold refiners are also shutting down, ensuring that any gold shortages will persist for months at least.

With supply collapsing and demand soaring, one would hardly think that the price of gold would plunge, and yet that's precisely what happened much of last week as funds dumped paper gold, leading to the abovementioned paradoxical divergence in paper and physical prices.

And since gold vendors are constrained by the price of spot which is largely determine in the paper market, the result is that retailers are reporting shortages and delays of up to 15 days on shipments as demand has surged. Markus Krall, chief executive of German precious metals retailer Degussa, said it was struggling to meet customer appetite for gold bars and coins and had to turn to the wholesale markets. Demand is running at up to five times the normal daily amount, he said.

“We are being creative to find new sources but what is driving it all are the measures by authorities to stop coronavirus. This is so unpredictable,” added Mr Krall.

Rob Halliday-Stein, founder and managing director of Birmingham-based BullionbyPost, said the situation was unprecedented. “Basically we’re selling as soon as we get stock on location in secure vaults — but we’re restricted to what we can get hold of, it’s a bit like toilet roll.”

Another irony: while London’s gold vaults are full of gold bars, they are of the 400-ounce "good delivery" variety traded (and rehypothecated) among large banks (and central banks) such as HSBC and JPMorgan, not the smaller bars that retail customers buy, which tend to be 1kg (35 ounces) or lighter.

"I don’t think you will find a kilobar presently in Europe and the US for love nor money,” Ross Norman, a veteran gold trader, said. "It’s quite extraordinary."

And speaking of Apmex, its CEO Ken Lewis told the FT that in the past week that “product has become increasingly difficult to source as the market becomes more volatile day by day”.

The company said it had purchased more than 1m ounces of silver grain and bars, more than 20,000 American Gold Eagles coins, thousands of gold bars, and “anything else we can find utilising our many partners and mint relationships”.

And all of that gets sold out the moment it becomes available for sale.

JM Bullion, another US-based precious metals retailer, said customer orders would be delayed by 15 days, and introduced a minimum order size (as did Apmex).

BullionStar, a Singapore-based precious metals retailer, said it is paying a premium to buy back silver and gold coins from customers in an effort to replenish supplies, according to Ronan Manly, one of its analysts. “There’s a disconnect between prices in the physical gold market and the prices you see on your screen,” he said, repeating precisely what he wrote here several days ago.

- Source, Zero Hedge

The System Just Broke: Financial Armageddon with Chris Martenson & Mike Maloney

Join Mike Maloney & Chris Martenson as they discuss the ‘financial armageddon’ taking place in markets, along with information on how they are investing and protecting themselves financially during this crisis.

How bad are things going to truly get financially, before the system can stabilize itself? Or will the system completely collapse under the coming economic pressure?

- Source, Gold Silver

Gold Silver Ratio Highest in History, Silver Bullion Set to Surge Higher

The market volatility continues as stocks declined heavily alongside almost all currencies except for the dollar. 

The gold to silver ratio reaches its highest point in history this week, and even though spot prices for the precious metals declined this week, demand for physical product went through the roof leading to product shortages across the industry. 

We cover the price movements of the US Dollar Index, DOW Industrials, DOW Transports, gold, silver, platinum, & palladium.

- Source, Golden Rule Radio

Make it Rain: Coronavirus Unleashes Historic Quantitative Easing Worldwide

We live in historic times, that are going to be remembered for decades to come, if not centuries. It is going to be studied, documented and written about extensively for the rest of our lives and beyond.

Our current world leaders are going to be scrutinized, or praised, depending on how they handle this unfolding crisis. I truly don't envy them, for I believe we are truly living in a "damned if you do, damned if you don't" style scenario.

Unfortunately, it appears that what I have been writing about for the last few months, in regards to how the coronavirus crisis was going to unfold, appear to be coming true, but much worse than anyone could of anticipated.

(Chart source, Worldometers)

Being the honorable tin foil hat wearer that I am, I was well ahead of the curve in predicting what was going to come next, the carnage that it was going to inflict on our markets and the way that our governments around the world were going to react, as the crisis spread.

Sadly, it appears that my small group of tin foil hat wearers has ballooned to monstrous proportions, as conspiracy theories abound on social media and even in the Mainstream Media, as people attempt to make sense of what is unfolding, how it happened and what governments are going to do.

What they are going to do next, will determine our economic future for not only the next few years, but possibly even the next decade.

What governments are going to continue to do, because in their eyes they have no choice otherwise, is exactly what they have done over the past week, except more, much more.

Quantitative easing, the likes of which we have never before seen is going to be unleashed around the world. This has already begun, with countries such as Canada, the United Kingdom, the United States and countless many others unveiling massive stimulus programs to help keep their citizens afloat, while the economy grinds to a halt due to self isolation measures being put in place.

Canada has just unveiled an $82 billion stimulus program, that will go directly towards keeping businesses and individuals afloat while they are out of work, due to the coronavirus. This may not sound like much to Americans, but to an economy the size of Canada, this is monstrous.

The United States, in true Trump fashion, has decided to go big league, with the Senate putting forward a stimulus proposal that is expected to top $1 trillion.

Just like with Canada, the US stimulus program is intended to keep its citizens and businesses afloat, while the economic pain that the coronavirus is inflicting, continues to be felt.

Depending on peoples income, this means that US citizens could be directly receiving either a $1200, or $2400 cheque each.

Meanwhile, the Federal Reserve has had to remain directly involved in the repo markets, injecting billions upon billions of dollars into the markets, as credit starts to freeze and as institutions stop lending to each other.

(Chart source, Federal Reserve)

These stimulus programs come on top of Central Banks slashing interest rates across the world, hoping that will help mitigate some of the economic fallout that is occurring.

Unfortunately, as seen when the Federal Reserve slashed interest rates to 0%, earlier this week, Wall St is still not satisfied and stocks, although recovering temporary, have continued their trend lower.

(Chart source, google.com)

Meanwhile, precious metals, after taking a beating earlier in the week due to people liquidating all paper positions, are beginning to recover as of today, posting significant gains at the time of writing.

(Chart source, goldprice.org)

However, even though bullion prices took a beating in previous days, what many people aren't aware of, was that these losses were largely only in paper positions, as bullion dealers around the world are experiencing massive backlogs and huge premiums, due to the monumental demand for PHYSICAL precious metals.

As I've stated many times before, if you don't hold it, you don't own it. Physical is king and eventually it will completely disconnect from the bogus paper prices, that are highly rehypothecated and thus easily manipulated lower.

Perhaps, what we have seen unfold throughout this week, as the physical metals have maintained a premium over the paper prices, is just the start of this decoupling process, perhaps this crisis is the straw that breaks the camels back and allows tangible metals to break free of their paper shackles?

Perhaps, however, I believe that even paper bullion prices are going to rally and rally hard once sanity begins to return and after all the weak hands have flushed out of their positions.

We are living through a period of time in which the printing presses are going to be running non stop, as bailout after bailout is announced, dwarfing the QE that we saw throughout the 2008 crisis, as now individuals, plus businesses are going to need help remaining afloat.

The question is, for how long? How long will this crisis drag out and how much of a strain can the system maintain? Hopefully a lot more.

Stay safe. Stay prepared. Batten down the hatches. This crisis is far from over.

- Source, Sprott Money Blog

Coronavirus Quarantines Are Coming, What to Stock Up on Now Before It’s Too Late

Photo by Jon Tyson on Unsplash

This is not hype, this is not hysteria, this is the cold hard truth and the reality that we now find ourselves in, quarantines, restrictions, travel bans are coming to North America, to the World and if you don’t prepare now, you may be horribly caught off guard in regards to what is coming next.

I have been working in the financial industry for over a decade, with my specialty being geopolitics, political upheaval and precious metals.

This has led me to learn first hand about what can unfold during various forms of panic, collapse and general unrest. Unfortunately, we are about to enter into one of these periods of time.

Those who are tuned into the zeitgeist of what is unfolding have already been preparing, have already stocked up and will generally weather the coming storm without any financial or personally ramifications.

You too can do so and will likely make it through to the other side largely unscathed, however, your window of opportunity is sadly running out rapidly.

If you have not prepared in any way, shape or form, you need to do so as soon as possible. You may have less than a week to act.

At the very least, ensure you have the following;

• Cash, 2–4 weeks worth.
• Ensure your vehicles are fully fueled, with an additional refill in a Jerrycan.
• Any vital prescriptions, get them filled now.
• Food supply, 2–4 weeks worth.
• Food for you pets (if you have any).
• Water supply, 2–4 weeks worth.
• Over the counter medications (mild cases of coronavirus are similar to a cold).
• Personal protection.

For food specifically, buy canned goods, or other items that have a long self life and that you would consume regardless of whether there was a crisis unfolding or not, resulting in no financial loss to you, if they are not required in the immediate to short term.

Photo by Davy De Groote on Unsplash

Fortunately, unlike a natural disaster, this crisis is likely to hit our supply chain only, with our power grid, internet and other forms of vital communication remaining intact and fully functional.

In a natural disaster, the above list would be greatly expanded and include many other items that would become invaluable in crisis, such as batteries, forms of fuel, lighters, etc.

You would be shocked to learn how much these items are worth in a true economic collapse.

Still, the risks of this turning south quickly are still very real and pose a significant risk to our societies in the West, if people do not act rationally and prepare themselves accordingly, while they still have time to do so.

Sadly, many people will do nothing and be caught completely off guard, under a possible quarantine situation, without the required goods they need to sustain themselves, or like so many others, simply don’t have the access to funds that are needed to stock up on supplies. To the latter people, my heart truly does goes out to you.

This is where the government is going to have to come to the rescue and you can rest assured that relief and aid programs are already being put into place behind the scenes.

Still, you do not want to be a victim, you do not want to be reliant on these programs, as they will be potentially overrun and taxed beyond their abilities, especially when you could of helped yourself, freeing up vital resources for those who could not take action, who could not help themselves, even if they wanted to.

Prepare now. Do your part. Persevere, prosper and above all else, stay safe.

- Source, Nathan McDonald via Medium

Bill Murphy: Black Swan Price Explosion Coming for Gold and Silver

Bill Murphy, Chairman of the Gold Anti-Trust Action Committee (GATA), contends, “Gold and silver prices right now are artificially low because of these (gold cartel) people. 

This is what’s going to cause the biggest move in history. It’s now coming down to the short strokes, and it’s been a long time coming. I can’t wait for it to happen. 

Then our (GATA) story will be told, but our story is not as important as getting the truth out to the people so they can take advantage of what’s going on.” 

In closing, Murphy says, “The gold cartel has done this (price suppression) year after year after year, and now they have hit the wall. 

Some of us thought a ‘black swan’ would do this, and it has. It’s a horrible black swan. It’s a black plague, and it’s changing the American way of life for a long time to come.”

- Source, USA Watchdog

Not QE, Not Anymore: Fed Injects $1.5 Trillion Into Markets, Coronavirus Stimulus Goes Global

The coronavirus, as many health experts are now stating, is beyond the point of containment in North America, if not the entirety of the world. This is unfolding in real time, and as I have stated for over a month now, the economic ramifications are going to be of historic proportions.

As Dr. Scott Gottlieb, the former head of the Food and Drug Administration recently stated, the best that we can hope for now in the West is that we slow down the rate that the virus is spreading, prolonging the lifespan of the virus, but enabling our healthcare systems to handle the monumental workload that is about to come their way, saving countless lives in the process.

Unfortunately, this is going to come at a cost, businesses around the world are already feeling the pinch through a greatly reduced supply chain, via the impact that the coronavirus has had on the Chinese manufacturing sector, however, the real pain is yet to be felt.

Next comes the quarantines, closures and most importantly, self-isolation phase, the latter of which has the potential to bankrupt many small to medium size businesses who won’t be able to weather the storm, due to a greatly reduced cash flow.

Large business, particularly the ones that Western governments deem to be “too big to fail” will be bailed out in the coming months, if need be.

The precedent for this unfolding was already been set by the 2008 crisis and you can expect that the Federal Reserve and other Central Bankers around the world will rev up the imaginary printing presses, printing that sweet, sweet digital fiat currency in illusionary bucket loads.

Never before has it been easier to enact quantitative easing, than in the present day, than any other time in history. Everything is digital, including the vast, vast majority of our fiat money supply.

Add a 0 here, add a zero there, poof, more money.

Issue some more made up out of thin air Treasury Notes, problem solved… Well, at least in the short term.

Already, we can see this unfolding in front of our very eyes.

In what can only be described as a dramatic attempt of “shock and awe”, the Federal Reserve has gone “full force”, pumping an extraordinary $1.5 trillion of “Not QE” into the system.

(Chart source, Zero Hedge)

This is being done in response to a complete and utter meltdown in the global markets, as the coronavirus continues to spread seemingly unchecked throughout the West, with containment, as previously mentioned, well past the point of no return.

What is even more shocking, is the fact that this comes on the heels of the Federal Reserves pumping hundreds of billions of dollars into the overnight repo markets, already this week!

(Chart Source, Federal Reserve)

The last update that the Federal Reserve balance sheet received was on March 4th, therefore, the already rapidly rising Fed balance sheet, is soon to receive another drastic spike higher in the coming days with this latest injection into the markets.

Clearly, this is “Not QE”, not anymore.

Additionally, not to be outdone, other governments around the World are stepping up to the plate, taking action and putting into place their own forms of quantitative easing, hoping to combat the economic fallout that is soon to occur due to the coronavirus.

A quick search on google turns up countless stories, highlighting how much fiat money is soon to be artificially injected into the system.

(Chart source, goldprice.org)

And like clockwork, both gold and silver bullion are being hammered lower in price, following in tangent with the general crash in the markets.

This is happening as people scramble for liquidity, however, just as was seen when the dust settled after the 2008 crisis, precious metals are destined to move higher as the weak hands are flushed out and the smart money solidifies their positions into safe haven assets, pushing bullion prices higher as they account for the historic amount of QE that is soon to be injected into the system.

This storm is sadly far from over, however, this does not mean that you will not weather it, on the contrary, the vast majority of us are going to be perfectly fine, however, cooler heads will prevail above all others.

Be smart, get prepared, mind your personal health, and as always, keep stacking.

-As first seen on the Sprott Money Blog, via Nathan McDonald

Coronavirus VS the Markets and the Outlook for Oil and Gold

David discusses the coronavirus and some of the similarities to the Spanish flu pandemic of 1918. Markets have had a big rally in 2019 and thus are sensitive to bad news. 

Markets are now spooked and there is a lot of ramifications for both oil and transportation. 

The silver to gold ratio is revealing just how undervalued silver is and how early we are in this bull market. Eventually, the gold dow ratio must revert to the mean which could mean $15000 gold.

- Source, Palisade Radio

ALERT: Possible National Quarantine Starting Within Days

Get prepared now, don't say you weren't warned. This is accelerating quickly and regardless of how serious the spread of the coronavirus is, people are beginning to panic.

Act now, or you risk losing everything. Protect your family, stay healthy, prepare, prepare, prepare and prosper.

- Video Source, Reluctant Preppers

Silver Backwardation Returns, Gold and Silver Market

The big news this week was the drop in the prices of the metals (though we believe that it is the dollar which is going up), $57 and $1.81 respectively.

Of course, when the price drops the injured goldbugs come out. We have written the authoritative debunking of the gold and silver price suppression conspiracy here. We provide both the scientific theory and the data. So we won’t say anything more about it today.

On 17 Feb, we wrote about the widening bid-ask spread in the spot markets for gold and silver. The spread in silver was around 2 cents (up from where it had been humming along at ½ cent until about a year ago), then just over 1 cent. By mid-February, it was over 1.5 cents.

We said:

“We would expect widening spreads to cause / be caused by lower volumes. Whether we get rising prices or falling prices, as a result of this, remains to be seen.”

The spot silver bid-ask spread closed the week at well over 3 cents. Here is a graph zoomed in to show just the last month.

We emphasize that one should analyze spreads rather than look too much at price charts. When a spread changes, it is telling you something.

When the bid-ask spread widens, it is telling you that liquidity is drying up. Suppose you run a used-car lot. Bill Average comes in with a 2016 Honda Accord with 50,000 miles on it. You might give him $19,000 for it, if you know that later in the day you will likely have a buyer who pays you $20,000.

But when Eric Atypical comes in with a 1968 Camaro that will also sell for $20,000—in a month or three—you can’t pay $19,000. You might bid $13,000.

It’s pretty easy to see why the dealer lowers his bid when there is uncertainty about when he can sell it. It’s a bit harder to understand why the offer is raised. So let’s look at two reasons for that.

The first applies to a used-car dealer. Suppose the supply of 2016 Honda Accords is intermittent. For example, Honda has a sale and gets lot of people to buy a new car. So many dump their old ones. But a few months after that, there are not many more used cars coming to the market. If you have one or two in stock, you might mark up the price.

We will look at whether this is occurring in the silver market, below.

But first, consider the market maker for precious metals. He takes no price exposure, hedging all of his trades. I.e. when he buys a bar of metal he simultaneously sells a futures contract. When he sells the bar, he buys back the future he sold short. Or, to be more technically precise, we should say that he seeks to take no price exposure.

Of course, the spot and futures trades may not be executed at precisely the same time, due to internal processes or the market. There is always a short window of time, during which the market maker has price exposure.

If market conditions cause this window to lengthen, or if price volatility during this window increases, the market maker must lift his offer price (and drop his bid). His spread must cover the risk of execution slippage on his hedge as well as make a profit.

Finally, the market maker has costs of doing business. These include compliance, regulatory capital requirements (e.g. Basel III), and of course the cost of credit to finance its metal positions. If these costs rise, then he has no choice but to either widen his spread or exit the business. A number of banks have exited in recent years.

Let’s take a look at the Friday intraday silver price and May basis. The price fell over a buck, from $17.74 to $16.67. Clearly the market action was the selling of something. Was this something futures or spot metal?

With the price move from around $17.25 (around 13:30 GMT) to $16.60 (16:00 GMT), the basis drops from a small positive number to -0.65%. For reference, on 14 Feb, it was 0.91%. That is a big drop in basis—from contango to backwardation—as the price dropped a buck.

The basis shows us that the price move was driven by the selling of futures. That is, speculators are repositioning (either by choice or perhaps under stress elsewhere in their portfolios).

Recall the carry trade. The market maker buys a bar of metal and sells a future against it. But consider it from the perspective of the buyer of the future. He buys a contract, and in order to sell it to him, the market maker buys a bar and warehouses it.

When that futures contract owner decides to sell it, the bank reverses the trade. It buys back the contract, and sells the bar. So the metal comes back out of the warehouse.

It is sold to someone else, not seller of the future obviously. And not the market maker, obviously. And not likely another market maker, assuming that the selling of futures is pervasive.

Another way of saying that the metal is coming out of the warehouse is that the inventory levels of the market makers are dwindling. Could that cause them to raise their offers? At the same time that they may be dropping their bids because of uncertainty about the buyer.

Whatever the cause, we predicted a likely price move. We got it in spades.

Our next prediction is twofold. One, if stocks continue to crash (and Treasury yields continue to drop) then the price of silver could drop a bit further. But, unless more silver metal comes to market and basis recovers, backwardationshould provide increasingly firm support as the price declines.

If we had to guess, we would not expect silver stackers to panic and sell their metal at this point. Those who own the metal today likely hold it for reasons other than false certainty of endless gains (which did occur at certain times in the past). However, if economic hardship hits them, they may be forced to unload silver to put food on the table. This may seem premature in the US, but we will write about our observations in Asia. Here is one picture Keith took in the virtually empty Jewell Mall attached to Chiangi Airport in Singapore.

No one discounts seafood that’s kept live in a tank until the moment you order it. They just buy less from their suppliers. Except under one condition. When they are surprised by a sudden collapse in demand. Chiangi and Jewell are normally quite crowded. Now, they are eerily empty. Eerie like 2009.

Perhaps this restaurateur (and many others in that mall) is selling metal in order to keep the lights on, and wait for traffic to return.

We need to say two things about the breathtaking plunge in 10-year Treasury yield. It closed 2019 at 1.9%. It closed February at 1.1%. That is, it dropped 0.8 percentage points. That is, in two months, over 40% of the yield has been sucked out of it.

Two, this is not due to coronavirus. The yield has been evaporating from bonds for 39 years, and the present leg down began in November—over a year ago in 2018. If your favorite economist had been calling for rising interest rates (as a rebellion by investors against rising consumer prices), perhaps it’s time for a new economist.

The US is traveling down the trail blazed by Switzerland, Europe, and Japan. America is just lagging behind. Its economy is a bit less phlegmatic. Thus, there is a bit higher bid on the interest rate. The trend is clear. Demand for credit does not come in size, except on a downtick in rates.

- Source, Silver Beaf Cafe

Why Precious Metals Crash During Market Meltdowns

During last week’s Coronavirus market sell-off, where global stock prices plunged more than 10%, you can assume investors are moving into the usual safe-havens: Government bonds, Japanese Yen, and Swiss Franc, among others, are rallying in unison.

There is, however, one asset class that’s behaving rather strangely: precious metals. Despite their popular safe-haven status, gold, silver, platinum, and palladium — priced in U.S Dollars — have fallen 5% or more from their highs. But why, in a period of mass panic and fear, are metal investors experiencing heavy losses?

The answer is volatility.

When markets undergo extreme selloffs, liquidity evaporates as participants flee, causing volatility to skyrocket. The Volatility Index — or the VIX for short — which tracks the expected one-day move in S&P500 stock prices is the best way to monitor such events: The higher the VIX, the more markets melt down.

In popular finance, the VIX has another nickname: the Fear Index which originates from the index displaying extreme readings when the stock market is in panic mode. Though, it’s important to remember that a higher reading equals higher volatility, not extreme fear as volatility can also rise in periods of extreme greed.

Recently, the VIX showed that the Coronavirus created panic within the financial system producing an illiquid market, however, stress levels rose gradually over a week before the actual sell-off. While the cause, whether fear or deeper technical issues, is still unknown, we do know it was a liquidity-related issue.

Six months prior to the Coronavirus spreading worldwide, the Federal Reserve, in response to a mini-crisis, provided extra funding to primary dealers in the repo markets. The central bank achieved this by injecting billions of dollars into the financial system, and the cheap money flowed throughout markets manifesting itself in speculative asset classes — stocks and high-yield bonds to name a few — creating a temporary credit bubble.

What’s interesting, though, is just before the market meltdown, the Fed suspended its repo operations removing vital liquidity from the system, suggesting that a major liquidity shortage created fear instead of the Coronavirus. Still, the saying goes, “narrative follows price” as illiquidity paired with virus headlines created the perfect storm, and the panic selling began.

Fear alone fails to explain why precious metals sold off, but a liquidity scare makes perfect sense as liquidations always occur when volatility spikes to record highs. When asset prices moving aggressively, highly levered investors are vulnerable — usually to a 100 percent or greater move in the VIX — triggering margin calls: a request from your broker asking you to deposit more money to cover trading losses, which leads to investors liquidating their high-quality assets such as gold and silver to cover any collateral damage.

According to Standard Chartered, preceding a crash, precious metals are the best-performing asset class making them a popular liquidation choice. A concrete example is the Financial Crisis of 2008 where $8 trillion of stock market wealth vanished, but gold also fell by over 20%, bottoming in November 2008 — as shown by the chart below.

Gold predicting the financial crisis, then selling off. — Created by the author

When you combine both high volatility and illiquidity with extremes in bullish metal sentiment, a collapse in precious metal prices soon follows. The “buy the rumor, sell the fact” trade unwinds as markets have already priced in the crash, while other markets prone to speculative manias, such as stocks and high yield debt, tend to mask deteriorating fundamentals, which is exactly what happened in both the 2008 financial crisis and the recent market meltdown.

After this week’s turmoil, some investors will be questioning if precious metals are still classed as a hedge. Though markets are, first and foremost, leading indicators and the big moves occur before a meltdown takes place. Within a liquidity-driven environment, declining economic fundamentals and central banks responding with loose monetary policy are times when precious metals outperform, but not during the market crash itself — as you would expect.

Ironically, during a crisis, buying any element in the periodic table has proved to be one of the most unprofitable, short-term investments in recent times.

- Source, Concoda via Silver Beaf Cafe