For those wanting (needing?) to read another analysis of the gold price debacle, here Grant Williams provides a good explanation. There are several reasons which might have prompted this engineered attempt at driving down the gold price. If one of those reasons was to scare the public away from gold as a safe asset and a store of value, it appears to have been a failure. Physical demand, at least among the public, is higher than before the crash.
Jim Wyckoff confirms what many others have reported:
Strong demand for physical gold worldwide, and especially from Asia, continues to underpin the gold market. Reports this week have said there are shortages of gold bars and coins in some countries, with gold retailers jacking up their charged premiums over the spot price of gold.
The public, speaking with their purses, seem to have a better understanding of what is happening than governments expected. That is good for the public, but bad for the criminal class that is trying to dupe them. Mr. Williams provides some amazing pictures of what appears to be a gold buying panic.
For those wanting a comprehensive analysis of the gold industry from both a supply and demand standpoint, here is a good resource.
Will there be other raids against gold? Probably, but future ones are apt to not be as dramatic. Is this a time to be buying gold? Time will tell, but it is about $200 less per ounce than it was a couple of weeks ago.
Because I believe that gold should be a part of every investor’s portfolio, this drop provides those who have none or are underweighted to acquire some at what may appear to be bargain prices down the road. Consult your financial adviser before making any financial decisions.
Switzerland, the land of the honest banker and honest banks, is following the path of the rest of the world by allowing “bail-ins.” Bail-ins, for those who may still now know, are what was demanded in Cyprus in order to get an ECB bailout. Bail-ins are the confiscation of all or part of bank deposits held by private individuals and corporations in a troubled bank (or banking system).
When the Swiss resort to such chicanery and theft, it is a likely sign that the financial system is irreparable. Governments seem to be recognizing that their prior efforts have not worked and cannot work and that another, bigger crisis lies ahead.
The laws being reversed in Switzerland have been on the books since 1934. Reports are that similar actions have quietly taken place in the US banking system. The notion that banks are a safe repository for your funds is rapidly being dispelled. Banks no longer appear safe.
Your mattress or traditional stores of wealth like gold appear to be the only safe alternatives. Does anyone think that the recent take-down of gold was not, at least partially, aimed at damaging this alternative? Can you have bank runs if there is no place to run?
Here is the Silver Doctors report on the Swiss change:
The Doc * Silver Doctors
The Swiss Financial Market Supervisory Authority (FINMA) has quietly joined the growing parade of western nations who have quietly re-written banking laws to allow depositor bail-ins upon the next banking crisis. If Switzerland, the once ultimate safe haven for banking deposits across the world is preparing to confiscate depositors funds, there truly is no protection anywhere other than physical gold and silver in your own possession!
In the event that a bank is failing or where its capitalization is no longer adequate, the Swiss Financial MarketSupervisory Authority (“FINMA”) may take measures to improve such bank’s financial viability rather thanliquidating it. “Loss absorption” and “bail-in” are important instruments to support any such measures.
The Swiss document begins by advising that the FINMA now has legal authority to confiscate depositor funds, thanks to a revision of the Banking Act of 1934, completed in 2011, as well as the revision of the Bank Insolvency Ordinance completed Nov 1st 2012:
The plummet in gold prices has all gold holders perplexed and less wealthy. In times like these, the weak panic and get out and the strong get in. If this is a manipulated event (and it certainly appears to be so), then the big money will be accumulating gold at these prices.
That’s fine if you have oodles of money. But what’s the little guy to do, assuming he hasn’t already disappeared and is cowering in a corner somewhere? Peter Souleles provides his answer below:
I would therefore not even consider selling gold until…until….
1. Until someone can explain to you where all the big green boxes of silver eagles you could find on ebay have gone.
2. Until someone can explain why you are confronted by overpriced and limited stock offerings when you type in gold bullion (newly listed).
3. Until the FED allows Ron Paul to head and appoint an audit team that will verify exactly what physical gold the US holds on behalf of its people as well as foreign nations.
4. Until the FED actually sells its gold to prove that it is a barbarous relic without any intrinsic value
5. Until China actually announces what its gold holdings are.
6. Until China, Russia and other central banks stop buying gold.
7. Until someone can tell us all where Libya’s gold is following the overthrow of Gaddafi.
8. Until someone can explain why literally every coin shop and bullion dealer has been confronted by far more buyers than sellers.
9. Until the USA stops raising its debt limit.
10. Until the FED raises interest rates to a level that equals the REAL inflation rate plus 2%.
11. Until the governments of the world can unanimously guarantee that there will be no further culling of bank accounts as happened in Cyprus and that suchbehaviour is not part of a new template for “saving” our economies.
12. Until governments such as Canada withdraw proposed legislation authorisingbank deposit haircuts in future.
13. Until the FDIC and its equivalent in other nations no longer find it necessary to guarantee deposits (even in limited fashion). After all, Cypriot bank accounts up to 100,000 euros are guaranteed but still remain inaccessible for total withdrawal so what kind of a guarantee is that?
14. Until new gold production outpaces population increases which is in stark contrast to worldwide behaviour by Central Banks printing money.
15. Until gold ore grades rise dramatically or production costs fall dramatically
16. Until food recipients (currently at 47,791,966) fall to pre GFC levels of just over 26 million in 2007.
17. Until they can explain how the stock market continues to climb in the face of so many deteriorating indicators.
18. Until they jail Corzine, the bankers who launder drug money, and the bankers who manipulated LIBOR amongst others.
19. Until they put an end to fractional reserve banking and limit banks from leveraging to obscene levels.
20. Until women stop wanting gold jewellery
21. Until you believe that governments will not eventually in some mannernationalise your 401k’s and IRA’s.
22. Until sales of paper gold and silver cease to take place.
23. Until the people of India start selling their gold in bulk. In Sydney Australia I was told by one bullion dealer that Indian people were lining up as if his office was a soup kitchen.
24. Until the German Government actually gets all of its gold back. Or are they powerful only when it comes to little countries like Cyprus?
25. Until someone can explain what will happen to South African gold mine economics and production in view of the higher wages negotiated last year and the plummeting prices of precious metals.
In a world rife with duplicity, it is downright dangerous to listen to what motivated, powerful people say. Never has the advice: “Watch what they do” been so important. So, what are some of them doing?
According to King World News in an interview with Richard Russell, some very important people may be preparing for an economic Armageddon:
What do billionaires Warren Buffet, John Paulson, and George Soros know that you and I don’t know? I don’t have the answer, but I do know what these billionaires are doing. They, all three, are selling consumer-oriented stocks. Buffett has been a cheerleader for US stocks all along.
But in the latest filing, Buffett has been drastically cutting back on his exposure to consumer stocks. Berkshire sold roughly 19 million shares of Johnson and Johnson. Berkshire has reduced his overall stake in consumer product stocks by 21%, including Kraft and Procter and Gamble. He has also cleared out his entire position in Intel. He has sold 10,000 shares of GM and 597,000 shares of IBM.
Fellow billionaire John Paulson dumped 14 million shares of JP Morgan and dumped his entire position in Family Dollar and consumer goods maker Sara Lee. To wrap up the trio of billionaires, George Soros sold nearly all his bank stocks including JP Morgan, Citigroup and Goldman Sachs. So I don’t know exactly what the billionaires are thinking, but I do see what they’re doing — they are avoiding consumer stocks and building up cash.
One obvious answer to what the billionaires are thinking has to do with America’s consumers. Consumer buying makes up roughly 70 percent of the nation’s Gross Domestic Product. And with interest rates near zero, with jobs hard to find, with unemployment up, and with savings scarce, the billionaires are thinking that consumption is heading down and that America’s consumers are close to going on strike.
To understand why markets are so dangerous, it is only necessary to listen to this interview with economist Jeffrey Sachs. Regarding the rampant disregard of honor, truth and legality in markets, he says:
I regard the [Wall Street] moral environment as pathological …
We have a corrupt politics to the core, I’m afraid to say… both parties are up to their necks in this.
Mr. Sachs is not an outlier on this subject. People like William Black and others have been saying similar things for years.
It is interesting that given all the regulations passed in the last five years, the integrity of markets has never been so compromises. Regulations mean nothing if you don’t take and hang some prisoners.
Read Janet Tavakoli’s article on this issue and listen to the interview of Mr. Sachs.