Silver demand not paper but physical silver demand and Gold Demand is finding a lack of storage space. Since the financial crisis demand for precious metals has surged so much that major vaulting companies are finding it hard to take on more clients without expanding storage. The true nature of gold and silver demand is beginning to show through and it is much to large to contain.
Dr. Ron Paul say's this is the biggest bubble economy in the history of the world. He goes on to say that over the last several decades, The Fed has created many trillions of dollars out-of-thin-air, but consumer prices have not spiraled out of control. Do the same economic laws that have destroyed countless currencies throughout history apply to the Fed? Have they avoided their day of reckoning? Have they outsmarted supply and demand? Are they really Masters of the Universe?
London Mayor and actual defender of terrorists, Sadiq Kahn, went on Good Morning Britain Tuesday with Piers Morgan and Susanna Reid to discuss Jihadi terrorists pouring into the UK. Kahn tried to weasel out of the notion that Britain - the most surveilled country in the world - can't keep track of 400 Jihadis...
Susanna Reid: How are you letting people back in to the UK who haven't just been trained - they've actually fought, potentially against our troops... Where are they? You're the mayor of this capitol city!
Kahn: With respect.. I can't follow 400 people, what I can do is make sure---
Morgan: Why can't you instruct the police, and say every one of those people that have come back from a war zone is in London, I want them followed?
Kahn: Cause the police budget, roughly speaking, 15-20% is funded by me, the mayor. The rest is from Central Government. The Met police government has been shrunk and reduced. They've got to prioritize...
Morgan: "What could be a bigger priority than people coming back from a Syrian battlefield with intent to harm British citizens? Why is it not the number one priority? Why are these people allowed to come back in?
In a series of articles posted on www.paulcraigroberts.org, we have proven to our satisfaction that the prices of gold and silver are manipulated by the bullion banks acting as agents for the Federal Reserve.
The bullion prices are manipulated down in order to protect the value of the US dollar from the extraordinary increase in supply resulting from the Federal Reserve’s quantitative easing (QE) and low interest rate policies.
The Federal Reserve is able to protect the dollar’s exchange value vis-a-vis the other reserve currencies—yen, euro, and UK pound—by having those central banks also create money in profusion with QE policies of their own.
The impact of fiat money creation on bullion, however, must be controlled by price suppression. It is possible to suppress the prices of gold and silver, because bullion prices are established not in physical markets but in futures markets in which short-selling does not have to be covered and in which contracts are settled in cash, not in bullion.
Since gold and silver shorts can be naked, future contracts in gold and silver can be printed in profusion, just as the Federal Reserve prints fiat currency in profusion, and dumped into the futures market. In other words, as the bullion futures market is a paper market, it is possible to create enormous quantities of paper gold that can suddenly be dumped in order to drive down prices. Every time gold starts to move up, enormous quantities of future contracts are suddenly dumped, and the gold price is driven down. The same for silver.
Rigging the bullion price prevents gold and silver from transmitting to the currency market the devaluation of the dollar that the Federal Reserve’s money creation is causing. It is the ability to rig the bullion price that protects the dollar’s value from being destroyed by the Federal Reserve’s printing press.
Recently, the price of a Bitcoin has skyrocketed, rising in a few weeks from $1,000 to $2,200. Two explanations suggest themselves. One is that the Federal Reserve has decided to rid itself of a competing currency and is driving up the price with purchases while accumulating a large position, which then will be suddenly dumped in order to crash the market and scare away potential users from Bitcoins. Remember, the Fed can create all the money it wishes and, thereby, doesn’t have to worry about losses.
Another explanation is that people concerned about the fiat currencies but frustrated in their attempts to take refuge in bullion have recognized that the supply of Bitcoin is fixed and Bitcoin futures must be covered. It is strictly impossible for any central bank to increase the supply of Bitcoins. Thus Bitcoin is standing in for the suppressed function of gold and silver.
The problem with cryptocurrencies is that whereas Bitcoin cannot increase in supply, other cryptocurrencies can be created. In order to be trusted, each cryptocurrency would have to have a limited supply. However, an endless number of cryptocurrencies could be created that would greatly increase the supply of cryptocurrencies. If entrepreneurs don’t bring about this result, the Federal Reserve itself could organize it.
Therefore, cryptocurrency might be only a temporary refuge from fiat money creation. This would leave gold and silver, whose supply can only gradually be increased via mining, as the only refuge from wealth-destroying fiat money creation.
For as long as the Federal Reserve can protect the dollar by bullion price suppression and money creation by other reserve currency central banks, and as long as the Federal Reserve can keep the influx of new dollars out of the general economy, the Federal Reserve’s policy adds to the wealth of those who are already rich. This is because instead of driving up consumer prices, thus threatening the US dollar’s exchange value with a rising rate of inflation, the Fed’s largess has flowed into the prices of financial assets, such as stocks and bonds. Bond prices are high, because the Fed forced up the price by purchasing bonds. Stock prices are high, because the abundance of money bid prices higher than profits justify. As the US government measures inflation in ways designed to understate it, the consumer price index and producer price index do not send alarm systems into the markets.
Thus, we have a situation in which the Fed’s policy has done nothing for the American population, but has driven up the values of the financial portfolios of the rich. This is the explanation why the rich are becoming more rich while the rest of America becomes poorer.
The Fed has rigged the system for the rich, and the whores in the financial media and among the neoliberal economists have covered it up.
The choice is heartbreaking: stay to help other families, or leave to help your own.
That’s the calculation thousands in Puerto Rico are making. The bankruptcy of the U.S. commonwealth, the culmination of years of decline, has accelerated an exodus that’s adding to the island’s economic misery.
“I had to choose for my family,’’ said Aledie Amariah Navas Nazario, 39, a pediatric pulmonologist who left behind young asthma patients when she, her husband and two small daughters moved to Orlando, Florida.
The population drop is astonishing. The island has lost 2 percent of its people in each of the past three years. A comparable departure from the 50 states would mean 18 million people moving out since 2013. About 400,000 fewer Puerto Ricans live on an island of 3.4 million today compared with a decade ago, when its economy began contracting.
The departures have trapped Puerto Rico in a downward spiral. A grinding recession, with joblessness at 11.5 percent, and $74 billion mountain of debt that pushed the island to insolvency has made collecting taxes key to an economic rebound. At the same time, more Puerto Ricans from all walks of life are moving away to better their lives, meaning government revenue is dwindling.
Reasons for leaving were compelling enough for Navas Nazario, who treated asthma on an island where it’s more prevalent than anywhere else in the U.S. Puerto Rico’s economy had taken yet another leg down, and she was worried about her future income because of uncertainty about health insurance.
“I’m sad about not being able to take care of those kids anymore,’’ said Navas Nazario, who keeps in touch with former patients on Facebook. “You have to make a hard decision to leave relationships with friends and family just to get out, just because you need a better life.’’
Puerto Rico’s bond debt has grown 87 percent since 2006. A simple way for individual islanders to avoid having to pay it is to move to the mainland.
The government doesn’t seem to have come to grips with the outflow. Puerto Rico’s turnaround plan -- a path to sustainability approved by a U.S. oversight board -- assumes the population will shrink just 0.2 percent each year for the next decade. It uses that number as the basis for its projections of tax receipts and economic growth.
“Most people believe that those forecasts in the fiscal plan are really, really optimistic and probably would have to be revised at some point,’’ said Sergio Marxuach, public policy director at the Center for the New Economy in San Juan.
The exodus isn’t confined to professionals. Among the throngs leaving are construction workers and taxi drivers. Research by the Federal Reserve Bank of New York found that college graduates make up roughly the same proportion of emigres as they do in the island’s general population, suggesting that the departures have touched every corner of the commonwealth.
“If people continue to leave the island at the pace that has been set in recent years, the economic potential of Puerto Rico will only continue to deteriorate,’’ authors including Jaison Abel and Giacomo De Giorgi wrote for the New York Fed.
The earnings disparity between Puerto Rico and the mainland can be wide. Just ask John Starkey, principal of the Lafayette International Community High School in upstate Buffalo, New York, a destination since at least the 1960s for Puerto Ricans, also called Boricuas.
The Puerto Rican government has closed schools to save money, so Starkey traveled to the island in April to recruit teachers, many of whom have advanced degrees. On the mainland, educators find they can double or triple their earnings, he said, even if it means trading a balmy Caribbean island for the frigid shores of Lake Erie.
“Many of the candidates wanted to stay on the island to help their community,’’ Starkey said. “Our pitch was: come up to Buffalo and you’ll be able to better provide for your family, but you’ll also be able to help your community here.’’
Puerto Rico has been a U.S. possession since American troops invaded in the Spanish-American War, and Puerto Ricans have been U.S. citizens since 1917. That means there’s little to prevent them from seeking better prospects on the mainland, something they’ve always done, just not to this extent.
While migration is the main driver in population fluctuation, a declining fertility rate isn’t helping either. The natural population increase -- excess births over deaths -- fell to 3,000 last year from 20,000 a decade ago, as families facing poorer economic prospects and the threat of the Zika virus put off having kids. At the same time, younger generations of child-bearing age are more likely to take off for the mainland...
After a delighted Kim Jong Un supervised the latest successful test of North Korea's latest ballistic missile controlled by a precision guidance system, the leader ordered the development of more powerful strategic weapons, the official KCNA news agency reported on Tuesday.
According to Bloomberg, the missile launched on Monday - the ninth such test this year and coming two days after the G-7 pledged to “strengthen measures” aimed at prompting North Korea to cease nuclear and ballistic missile trials - was equipped with an advanced automated pre-launch sequence compared with previous versions of the "Hwasong" rockets.
In fact, according to KCNA, the latest ballistic missile test involved a precision guidance system that landed within seven meters of its target. As Reuters further adds, The North's test launch of a short-range ballistic missile landed in the sea off its east coast and was the latest in a fast-paced series of missile tests defying international pressure and threats of more sanctions.
The latest missile was first unveiled at an April 15 military parade celebrating the birth anniversary of North Korea’s founder Kim Il Sung, the news agency said. It flew 450 kilometers (280 miles) toward Japan, according to South Korean military officials, with the government in Tokyo saying it may have reached waters in Japan’s exclusive economic zone.
The accuracy claims, if true, would represent a potentially significant advancement in North Korea’s missile program. KCNA said Kim called for the continued development of more powerful strategic weapons, though the report didn’t mention whether the missile could carry nuclear warheads.
“We can’t prove if it’s bluffing, but North Korea is basically saying it can hit the target right in the center, which is scary news for the U.S.,” said Suh Kune Y., a professor at Seoul National University’s department of nuclear engineering. “If true, that means they’re in the final stage of missile development.”
The successful test was music to Kim's ears, who said the reclusive state would develop more powerful weapons in multiple phases in accordance with its timetable to defend North Korea against the United States. "He expressed the conviction that it would make a greater leap forward in this spirit to send a bigger 'gift package' to the Yankees" in retaliation for American military provocation, KCNA quoted Kim as saying.
KCNA said North Korea won’t be swayed by pressure from the G-7.
“The G-7 summit is a place where those nuclear- and missile-haves put their heads together to discuss how to pressure weak countries and those incurring their displeasure,” the news agency said. “The U.S. and its followers are seriously mistaken if they think they can deprive the DPRK of its nuclear deterrence, the nation’s life and dignity, through sanctions and pressure,” it said, using an abbreviation for North Korea.
Trump, who has sought more help from China to rein in its neighbor and ally, said on Twitter that “North Korea has shown great disrespect for their neighbor, China, by shooting off yet another ballistic missile...but China is trying hard!” Beijing also expressed its opposition to the test. All sides should “ease tensions on the Korean Peninsula as soon as possible and bring the Peninsula issue back onto the right track of peaceful dialog,” China’s foreign ministry said.
Meanwhile, South Korea said it had conducted a joint drill with a U.S. supersonic B-1B Lancer bomber earlier on Monday. North Korea's state media earlier accused the United States of staging a drill to practise dropping nuclear bombs on the Korean peninsula.
The U.S. Navy said its aircraft carrier strike group, led by the USS Carl Vinson, also planned a drill with another U.S. nuclear carrier, the USS Ronald Reagan, in waters near the Korean peninsula. A U.S. Navy spokesman in South Korea did not give specific timing for the strike group's planned drill.
North Korea calls such drills a preparation for war, and prompted yet another outburst from Kim on Tuesday:
"Whenever news of our valuable victory is broadcast recently, the Yankees would be very much worried about it and the gangsters of the south Korean puppet army would be dispirited more and more," KCNA cited leader Kim as saying.
While the U.S. oil and gas industry struggles to stay alive as it produces energy at low prices, there’s another huge problem just waiting around the corner. Yes, it’s true… the worst is yet to come for an industry that was supposed to make the United States, energy independent. So, grab your popcorn and watch as the U.S. oil and gas industry gets ready to hit the GREAT ENERGY DEBT WALL.
So, what is this “Debt Wall?” It’s the ever-increasing amount of debt that the U.S. oil and gas industry will need to pay back each year. Unfortunately, many misguided Americans thought these energy companies were making money hand over fist when the price of oil was above $100 from 2011 to the middle of 2014. They weren’t. Instead, they racked up a great deal of debt as they spent more money drilling for oil than the cash they received from operations.
As they continued to borrow more money than they made, the oil and gas companies pushed back the day of reckoning as far as they could. However, that day is approaching… and fast.
According to the data by Bloomberg, the amount of bonds below investment grade the U.S. energy companies need to pay back each year will surge to approximately $70 billion in 2017, up from $30 billion in 2016. That’s just the beginning…. it gets even worse each passing year:
As we can see, the outstanding debt (in bonds) will jump to $110 billion in 2018, $155 billion in 2019, and then skyrocket to $230 billion in 2020. This is extremely bad news because it takes oil profits to pay down debt. Right now, very few oil and gas companies are making decent profits or free cash flow. Those that are, have been cutting their capital expenditures substantially in order to turn negative free cash flow into positive.
Unfortunately, it still won’t be enough… not by a long-shot. If we use some simple math, we can plainly see the U.S. oil industry will never be able to pay back the majority of its debt:
Shale Oil Production, Cost & Profit Estimates For 2018
REVENUE = 5 million barrels per day shale oil production x 365 days x $50 a barrel = $91 billion.
EST. PROFIT = 5 million barrels per day shale oil production x 365 days x $10 a barrel = $18 billion.
If these shale oil companies do actually produce 5 million barrels of oil per day in 2018, and were able to make a $10 profit (not likely), that would net them $18 billion.
However, according to the Bloomberg data, these companies would need to pay back $110 billion in debt (bonds) in 2018. If they would use all their free cash flow profits to pay back this debt, they would still owe $92 billion.
Yes, it is true, I am not including all U.S. oil and gas production, but I am just trying to make a point here. We must remember, this debt is below investment grade and is likely more of the shale oil and gas producers. Furthermore, these shale oil and gas producers are using most of their free cash flow to drill more wells to produce more oil. So, in all reality, they would not take most all of their profits or free cash flow to pay down debt. They just wouldn’t have the funds to continue drilling.
The Bloomberg data on the U.S. oil and gas companies outstanding debt (bonds) came from the following chart:
I made my own chart (shown at the top of the article) by estimating Bloomberg’s debt figures (they did not provide actual figures) as it seemed more fitting to show U.S. energy debt in a BRIGHT RED color. Their chart seemed a tad boring, so I thought it would be nifty to jazz it up a bit. While I have reproduced their data in my own chart, I give them full credit for the figures.
That being said…. there is no way in hell the U.S. oil and gas companies are going to be able to pay back this debt. NO WAY…. NO HOW. So, we could either see a lot more bankruptcies, companies rolling over the debt to a later date, or Uncle Sam could come in and buy the debt. However, all these options won’t change the dire situation the U.S. energy sector will face as it becomes more difficult and less profitable to produce oil and gas in the future.
I would kindly like to remind all the precious metals investors as well as those who follow the alternative media…. ENERGY IS THE KEY PROBLEM…. not the debt. The debt is a symptom of the Falling EROI of energy. For some strange reason, a lot of people still don’t get that. We must remember the following:
DEBTS = UNBURNED ENERGY OBLIGATIONS
For example, a home mortgage is a debt owed by the homeowner. Energy must be burned every day, week, month and year(s) to create the economic activity that pays the homeowner a salary to pay off the home mortgage over the 20-30 year period. Thus…..
HOME MORTGAGE = UNBURNED ENERGY OBLIGATION
Now, I can go on and on by using other examples such as car loans, boat loans, RV loans, credit cards, second mortgages, company and public debt. All of these debts are “Unburned Energy Obligations.” When you can finally look at the market in the terms of “ENERGY”, and not “FIAT MONEY”, “ASSETS” or “DEBTS”, then you will finally understand why the debt is not the real problem.
Why? Because, even if we could get wipe away all the debt, that would still not solve the Falling EROI – Energy Returned On Investment of our oil and gas sources or the declining net energy that is available to the market. The massive increase in debt has just postponed the inevitable a while longer.
Lastly, precious metals investors who “wrongly assume” that falling oil and natural gas production is bad for gold and silver investments or stores of wealth, you are sadly mistaken. Gold and silver have been providing a store of wealth for 2,000+ years before oil and natural gas came onto the world market. Precious metals were storing mostly economic energy of human and animal labor (as well as capital created from human and animal labor).
So, when oil and natural gas production really starts to decline, the value of most STOCKS, BONDS & REAL ESTATE (where 99% of investors have their money tied up) will implode. Thus, only a 1% movement of that wealth into gold and silver will push them to values never seen before in history.
No incoming President in history has ever been so constantly attacked than Donald Trump. Look, he says some stupid things and nobody is perfect. Still, there is a whole different agenda going on here with absolutely every issue being called a constitutional crisis worthy of impeachment.
Quite frankly, it is time to take off the gloves. Schumer demands a Special Prosecutor on this whole Russia nonsense that even Obama already said did not change any vote. What I would simply do is say fine, but also appoint a Special Prosecutor for Hillary Clinton standing trial for Treason selling influence that is obvious to everyone when as soon as she lost the election, he “charity” had to shut down. That was obviously pay-for-let’s make a deal. That was really Treason and let’s just see how many Democrats go down with the ship-Clinton.
This is not about Trump, every source I have is saying the same thing – this is an attempt to stop any reform process because the corruption in Washington runs so deep and they do not want anyone looking too closely.
The strategy is keep Trump occupied with scandal after sandal. The very fact that Trump called the NSA to inform them of his conversation with the Russian ambassador demonstrates that the NSA is out to get rid of Trump as is the CIA for they both ran to the New York Times and Washington Post. That in itself is Treason and putting National Security at risk far more than Trump warning Russia there was a plot to blow up one of their passenger planes again.
It’s time to take the gloves off. This is really war in Washington and it does not matter who is President, anyone trying to turn the money faucet off is not acceptable.
Global demand for silver declined from 2015 to 2016 by 123 million ozs per numbers from the Silver Institute presented in an article on The Daily Coin yesterday. In fact, for the demand categories primarily driven by the consumer, demand plummeted 125 million ozs, or 15.3%. Industrial demand for silver increased slightly but this was because of the global expansion in the solar panel industry, primarily in India and China.
The consumer portion of global silver demand is derived from jewelry, coins and bars (investment), silverware and electronics. The 15.3% plunge in demand reflects the fact that consumer disposable income is drying up. After making required monthly expenditures – food, mortgage/rent, debt service, healthcare – consumers, especially in the United States, are out of money.
Disappearing disposable income explains only part of the equation. The illusion of economic improvement in the U.S. was created by debt issuance. Between Q3 2012 and now, total household debt expanded by $1.38 trillion dollars. In fact, total household debt is now at an all-time high, driven by auto, student, credit card and personal loans. The truth is that “discretionary” consumption was fueled by the Fed enabling the average U.S. household to accumulate a record level of debt.
The economy likely hit a wall in late 2016 and is now contracting. Today’s retail sales report – to the extent that the numbers have any credibility – showed a .4% gain in retail sales for April vs. March. But these are nominal numbers. On an inflation-adjusted basis, retail sales declined.
While demand for silver products reflects the fact that the average consumer is out of money, restaurant sales confirm this. April restaurant sales declined 1% in April and foot traffic into restaurants dropped 3.3%. This was the 12th month out of the last 13 that restaurant sales fell. Restaurant sales have dropped five quarters in a row. The last time a streak like this occurred was 2009-2010. Sound familiar?
Regardless of what the Fed says in public, the U.S. economy is in trouble. The illusion of economic growth post-2009 was a product of debt issuance. Now the consumer – 70% of the economy – has hit a wall with regard to its ability to take on more debt – look out below. In today’s episode of the Shadow of Truth, we review the silver demand numbers and discuss the implications for U.S. and global economy.