Are you wondering if this is the right year to buy PHYSICAL gold and silver?
By all means you should buy gold and silver now — while dealers still have coins available. Shortages in the West are very real. The exchanges in London and New York are short of physical gold and silver bullion that is “eligible for delivery.”
The silver and gold shortages are hidden by a PAPER Ponzi of epic proportions. It seems incredible, but most of the gold and silver sold through the COMEX [New York Commodities Exchange] and the LBMA [London Bullion Market Association] does not exist (it is mere PAPER).
The PAPER PONZI is a fractional reserve confidence game. For every 100 Troy oz of gold sold daily in futures contracts and ETFs (GLD), there is only 1 ounce of actual gold stored. For every 400 to 500 Troy oz of silver sold daily in futures contracts and ETFs (SLV), there is only 1 ounce of actual silver stored. Fractional reserves are now at dangerously low levels.
Image of Charles Ponzi.
Gold/ silver commodities futures contracts are promises to deliver PHYSICAL bullion when contracts are paid in-full (400 oz gold bars/ 1,000 oz silver bars are supposed to be allocated and warehoused in the bullion bank system). However, existing Good Delivery bars have been REHYPOTHECATED (used as collateral): swapped, loaned, leased, sold, and resold.
The PAPER Ponzi is able to continue because most delivery customers do not actually take delivery of the bars. Instead, customers agree to “store” their gold and silver in bullion bank warehouses. The PAPER Ponzi would break down if more customers demanded delivery of gold or silver outside of the warehouse system of the bullion banks.
When commodities exchanges (COMEX, LBMA) cannot deliver bullion on the delivery month of a contract, there is a default-mechanism for “fails to deliver.” Customers are “cash settled.” It is rumored large customers are paid 20% to 30% premiums so they will quietly accept cash instead of physical bars.
F A I L S T O D E L I V E R
China and Russia want bullion, not dollars. Occasionally, there is a RUN on bullion bank vaults. When large delivery-customers refuse to be “cash settled” and demand delivery, the bullion banks bombard the market with massive, concentrated short-selling of PAPER gold and PAPER silver (representing millions of ounces). For maximum effect, they dump thousands of contracts of PAPER silver or gold on the market all at once, in the middle of the night.
The bullion banks quickly drive down the price to force “weak hands” to sell gold/ silver bullion (they must sell the silver or gold to meet extraordinary margin calls). The banks use the freed up inventory to satisfy the delivery-contracts.
Bullion banks are “primary dealers” designated by the Federal Reserve. When there is not enough PHYSICAL gold/ silver to go around:
- Bullion banks “borrow” from large customers whose segregated gold is stored in bullion bank vaults. (MF Global was a Federal Reserve “primary dealer.” When MFGlobal failed, gold bullion that was 100%- owned by individual customers ended up in the vaults of JPMorgan.)
- Bullion banks “borrow” gold and silver bullion from the inventories of Exchange Traded Funds [GLD and SLV] to fill delivery orders.
- Bullion banks “borrow” gold from countries. Since WWII, foreign nations have stored gold at the Federal Reserve vaults in New York [each 400 oz gold bar has a unique number]. However, when nations have asked to audit the stored bars or have requested “repatriation” of their gold [since 2011], most requests have been denied. Alarmed citizens believe the numbered gold bars are no longer stored safely in their countries’ allocated accounts.
Exchange PAPER currency for REAL money while gold and silver coins are still available. Gold and silver in physical form is portfolio insurance: THERE IS NO THIRD-PARTY RISK if the coins and bars are in your own possession. Real coins and bars will retain purchasing power during periods of hyper-deflation, hyper-inflation, credit collapse, or war.
by Denise Rhyne