Gold IS Money

December 2, 2019

The Miles Franklin Newsletter

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From the Desk of David Schectman

" And as time has rolled on, the signs have only gotten stronger that the silver manipulation will end in even more spectacular fashion than would have been the case had it ended decades ago. What signs? Start with the massive accumulation of physical metal that JPMorgan pulled off in full view since 2011. Or the fact that it has never lost when adding new short positions. Or that only COMEX silver has a concentrated short position larger than any commodity in terms of real world production and consumption. These facts have gone unchallenged by all the parties involved - JPMorgan, the CME, the CFTC -- and now the Justice Department.

Have you ever witnessed major financial institutions or regulatory and law enforcement officials refuse to respond to reasonable accusations of illegality? And if anyone questions the reasonableness of the accusations of manipulation, then come up with the reason why silver is and has been so cheap on every absolute and relative measure - away from the concentrated and manipulative short selling by a handful of banks. No explanations will ever be forthcoming from the entities involved - JPM, as well as the CME, CFTC and DoJ - as that ship has long sailed. If there were reasonable explanations, we would have heard them by now.

That's what makes the signs that can be seen so important and encouraging. Signs like JPM's epic physical accumulation and very recent aggressive buyback of futures contracts, as well as the lack of selling by the managed money traders for the first time in memory. There will never be an announcement of an official end to the manipulation - it will just end. And when it does end, it will be an end like none other ." -- Silver analyst Ted Butler : 27 November 2019

As Ted has pointed out on numerous occasions, it's the resolution of this short position that will determine whether we blast higher in price from where we stand now -- taking the Big 7 traders down at the same time...or there is one more final price smash to the downside...accompanied by a concurrent collapse in the stock market. If it's the latter scenario, then it most surely will be the last one before precious metal prices -- and all commodities, rise in unison, as all things paper crash and burn. – Ed Steer

There are few heavy hitters out there that haven't spoken up about the dangers that lurk in the current economies and financial systems of most nations of the world...including corporate debt and negative bond yields. Virtually all of them are on the brink of recession, or are already there. Only rampant money printing by the world's central banks, with the Fed being the latest culprit, is keeping interest rates in the dirt -- and the 'everything' bubble rising higher into the ever-thinning stratosphere.

It is now obvious to even the central banks that endless money printing will never bring about the economic 'growth' and inflation that they were so anxious to spawn... with the mea culpa from the past chief of the BoJ being the latest. Of course us lesser beings had this figured out years ago -- and I'm sure that these central banks did as well, but would never admit it until it became so obvious that even Stevie Wonder could see it.

As I've said before on several occasions this year...they're all out of aces...except for the gold card. – Ed Steer

David's Commentary (In Blue):

You know our position on this. Gold IS Money. An ounce of gold is an ounce of gold. The variable is how many dollars it takes to buy an ounce of gold. It’s the dollar that is the variable, not gold (or any other currency that is used to purchase it.) Check out the chart below, which shows the “price” of gold adjusted for fiat money quantity. This is just another way to look at the strength of the dollar. How is it doing vs. the “price” of gold, which is the standard? What happened to the dollar after 1970 and 2000?

In the fall of 1970 Nixon cut the link between gold and the dollar and the dollar (USDX) fell by 20% and gold started its move up from $42.22 to $850 over the next decade.

In 2000 the USDX peaked at 112 before plunging nearly 30% to 80 by the summer of 2011. Gold moved up during that time frame from $280 to $1900.

Egon von Greyerz says gold is as cheap today as it was in 1970 and 2000 and he issues a warning. The world is being flooded with dollars, which are holding up the stock market. That will come to an end and when the stock market crashes, gold will be the last man standing.

“ So this is the decision that investors have to make right now. Either stick with stocks that are likely to start crashing in 2020 and wipe out your wealth totally or hold physical gold and preserve as well as enhance your wealth.

Quite an easy decision really but sadly 99% of investors will follow the road that leads to ruin.”

GOLD AS CHEAP TODAY IN 2019 AS IN 1970 & 2000

Gold is as cheap today as it was in 1970 at $35 and in 2000 at $288. The chart below shows the price of gold adjusted for US money supply.

I write a lot about the decline of the dollar. It’s inevitable. The decline of the dollar will be measured in the price paid for gold. You might think that I’d be happy about this since I own gold and my firm sells gold. You’d be wrong. This is a two-sided sword. No one really benefits from rising prices and social unrest. But, having a lot of gold ( as yes silver too) will softens the blow.

Russia has been virtually eliminating U.S. dollars and other dollar-related holdings from its reserves for fear of financial sanctions, and its increase in its gold holdings has been a significant part of this process. The Russians, along with the Chinese, feel that gold will have a significant role to play in any global currency reset when the current system likely collapses under the pressure of effectively unlimited debt run up by key economies - notably in the U.S. and in some key European and Asian countries. Russia has been building its gold reserves openly, while many believe the Chinese have been doing so surreptitiously with its true gold reserve position hugely higher than the figures it reports to the IMF. With both nations being significant gold producers in their own right, their gold reserve building capability is without question. – Sharps Pixley

Greg Hunter (USAWatchdog)

Putin Predicting US Dollar Collapse is Serious Warning

Investment advisor and former Assistant Secretary of Housing Catherine Austin Fitts thinks Vladimir Putin saying “the dollar is going to collapse soon” is a flashing warning for the U.S. dollar’s value in the not-so-distant future. Fitts explains, “What Putin is saying is the dollar is going into a steep decline, and what was interesting about his comment is he said ‘soon.’ . . . What is the ability of the U.S. military versus the Russian or Chinese military to defend the dollar’s position? That is intelligence that Putin has, and because Putin has this intelligence, people really stood up and I really stood up and took notice. If Putin has access to that intelligence, and I don’t, which is saying the dollar could go into a deep decline, we need to take a serious look at it. The dollar is clearly under pressure, and if you look at reserves, the central banks are buying gold and selling dollars, including the Russians and Chinese.”

Fitts also points out, “The dollar is holding, and yet, if you look at the price of household goods in America, where I live, it’s approximately 8% to 10% a year in prices of household goods (going up), and you can tell the money printing has been significant. If you look at what the Fed is doing in the repo market, we are really on the next QE. So, we’ve got a problem with currency debasement, and what Putin is saying is it’s going to go faster, a lot faster in 2020, and that is an issue I am looking at. . . . One of the scenarios I am looking at is the dollar declines significantly in 2020. . . . When you have real household inflation at 10% every year for the past five years, the dollar has really already taken a hit as are many fiat currencies around the world. . . . What has really supported the dollar is its huge market share both in trade and traditionally in reserves. . . . You need to withstand a scenario where in 2020, instead of getting 10% inflation, you need to withstand 20% or 25% inflation in real household goods. . . . I have been saying for many, many years the dollar is strong. This is the first time I started to see the potential for a crack in the armor. I think we have to be prepared for the potential for a more serious decline than we’ve been dealing with for the last five years.”

More…

Doug Casey

Doug Casey on the Destruction of the Dollar

"Inflation" occurs when the creation of currency outruns the creation of real wealth it can bid for... It isn't caused by price increases; rather, it causes price increases.

Inflation is not caused by the butcher, the baker, or the automaker, although they usually get blamed. On the contrary, by producing real wealth, they fight the effects of inflation. Inflation is the work of government alone, since government alone controls the creation of currency.

In a true free-market society, the only way a person or organization can legitimately obtain wealth is through production. "Making money" is no different from "creating wealth," and money is nothing but a certificate of production. In our world, however, the government can create currency at trivial cost, and spend it at full value in the marketplace. If taxation is the expropriation of wealth by force, then inflation is its expropriation by fraud.

To inflate, a government needs complete control of a country's legal money. This has the widest possible implications, since money is much more than just a medium of exchange. Money is the means by which all other material goods are valued. It represents, in an objective way, the hours of one's life spent in acquiring it. And if enough money allows one to live life as one wishes, it represents freedom as well. It represents all the good things one hopes to have, do, and provide for others. Money is life concentrated.

The link is here .

Zero Hedge

Will The Global De-Dollarization Collapse The Greenback?

...the world has started to witness an incremental de-dollarization push by a handful of nations .

Will America's Trade Policy End Up Destroying The Dollar?

A subversive attempt by America to divert global portfolio investment from China by destabilizing Hong Kong will force China into a Plan B to fund its infrastructure plans... hastening the end of the dollar as the world’s reserve currency...

Ed Steer

I'm posted the long-term gold chart...dating back to 1970 , the year before Nixon pulled the plug on what was left of the Bretton Woods gold standard.

A lot of pundits, including this writer, feel that we're now in a new bull market for gold that started very early in 2016 -- and if that's the case, the new all-time high for gold when it finally does arrive, it will not only be a fairly substantial number, it will most likely arrive with breath-taking speed as well. The same can be said of silver -- and a lot of other commodities...precious, or otherwise.

This might be an excellent time to consider selling some gold that you purchased at higher prices and book the tax loss and then use the funds to purchase silver, which offers a better “value” since its silver to gold ratio greatly favors silver at current prices. The tax loss on the gold will further reduce the price you pay for the silver.

Tax loss season = opportunity for gold and silver investors

Precious metals are still in “correct and consolidate” mode, which has many resource investors worried. With Tax Loss Season heating up, I can’t blame them. But I do see this situation as a terrific opportunity, and I’ll tell you why.

To me, the critical factor is that—whatever Powell says—the Fed’s easy money policy is in high gear.