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The Price Of Gold Spikes As Investors Get Spooked By Talk Of World War III And Nuclear Conflict

Whenever the world starts going crazy, investors instinctively begin flocking to precious metals.  So it wasn’t exactly a surprise when gold and silver prices started to move upward aggressively as global leaders continued to talk about the possibility of World War III and nuclear conflict.  The price of gold spiked to a five month high on Tuesday, and as I write this article gold is currently sitting at $1277.10 an ounce.  Right now silver is at $18.35 an ounce, and many analysts believe that it is poised for a dramatic jump in the weeks and months to come as global tensions continue to rise.  Google searches for the phrase “going to war” are the highest that they have been at any point in recent years, and many people out there are starting to understand that the U.S. could soon be facing military conflicts in Syria and in North Korea simultaneously.

In response to persistent threats from the Trump administration, the North Koreans are promising that they will not hesitate to use nuclear weapons if they are attacked by the U.S. military.

In particular, an article that was just published in North Korea’s official state newspaper says that U.S bases in South Korea and the Pacific operation theater but also in the U.S. mainland would be targeted.

Most analysts do not believe that North Korea has any missiles that can reach the U.S. mainland, so that is probably an empty threat, but they can definitely hit Seoul, Tokyo and all U.S. military bases in South Korea and Japan.

And even if the U.S. was able to locate and take out all North Korean nukes in an overwhelming first strike, the North Koreans would still have thousands of artillery guns and rockets aimed at Seoul.  Military analysts in the western world have estimated that North Korea could fire off up to half a million rounds within one hour of being attacked, and the devastation that such a barrage would cause in Seoul would be beyond anything that we have ever seen in the modern world.

Personally, I have come to the conclusion that it is going to be nearly impossible to conduct a conventional military assault on North Korea that does not result in an absolutely catastrophic death toll.

Unfortunately, Donald Trump appears determined to do something anyway.  A couple of days ago we learned that he “has ordered his military advisers to be ready with a list of options to smash North Korea’s nuclear threat”, and on Tuesday he told the world that the U.S would “solve the problem” whether China helps or not…

Trump, who has urged China to do more to rein in its impoverished ally and neighbor, said in a tweet that North Korea was “looking for trouble” and the United States would “solve the problem” with or without Beijing’s help.

Just like he did with Syria, Trump’s words have now committed us to taking military action in North Korea.

Let us hope that any military action is delayed for as long as possible, but it is definitely alarming that Trump boasted to the Fox Business Network about the “very powerful” naval armada that is sailing toward North Korea right now

“We are sending an armada. Very powerful,” Trump told Fox Business Network. “We have submarines. Very powerful. Far more powerful than the aircraft carrier. That I can tell you.”

Meanwhile, it is being reported that the Chinese have deployed 150,000 troops to their border with North Korea as they continue to warn both sides against taking military action.

Over in the Middle East, things continue to get even more tense as well.

Russia and Iran have pledged to “respond with force” to any additional U.S. attacks, but the Trump administration is not showing any signs of backing down.  In fact, White House press secretary Sean Spicer has substantially lowered the threshold for more military conflict by suggesting that the use of “barrel bombs” may be enough to justify another attack.  Considering the fact that everyone in the Syrian civil war has been regularly using barrel bombs for many years and that approximately 13,000 were used in 2016 alone, it is very alarming for Spicer to say such a thing.

On Tuesday, Trump told the American people that “we’re not going into Syria”, but what happens if he orders another missile strike and the Russians and Iranians respond by shooting down some U.S. aircraft or by sinking an entire aircraft carrier?

I can guarantee you that members of Congress from both parties will be absolutely screaming for war if CNN starts endlessly playing footage of a U.S. aircraft carrier sinking after it has been struck by the Russians or by the Iranians.

We are so close to World War III erupting in the Middle East, and there was no need for the U.S. to get involved in the first place.  According to former CIA officer Philip Giraldi, evidence continues to mount that Assad had absolutely nothing to do with the chemical attack that Trump got so upset about…

Philip Giraldi, former CIA officer and director of the Council for the National Interest, stated on the Scott Horton show that “military and intelligence personnel” in the Middle East, who are “intimately familiar” with the intelligence, call the allegation that Assad or Russia carried out the attack a “sham.”

Giraldi said the intelligence confirms the Russian account, “which is that they [attacking aircraft] hit a warehouse where al-Qaeda rebels were storing chemicals of their own and it basically caused an explosion that resulted in the casualties.” Moreover, Giraldi noted, “Assad had no motive for doing this.”

Investors that can see the writing on the wall are already getting out of stocks and into precious metals while there is still time to do so.

Because if we get into a direct military conflict with Russia and Iran in Syria, global financial markets will crash and gold and silver will soar into the stratosphere.

And of course a similar scenario would play out if we attack North Korea and the North Koreans respond by firing off nuclear or chemical warheads at targets in South Korea and Japan.

I did not expect that we would be on the verge of World War III less than three months into the Trump administration, but here we are.

These are perilous times, and those that are wise are moving their money and are making key preparations before things spiral completely out of control.

The Price Of Silver Explodes Past 20 Dollars An Ounce As The European Banking Crisis Deepens

Silver Coins 2 - Public DomainHave you seen what the price of silver has been doing?  On Monday, it exploded past 20 dollars an ounce, and as I write this article it is sitting at $20.48.  Earlier today it actually surged above 21 dollars an ounce for a short time before moving back just a bit.  In late March, I told my readers that silver was “ridiculously undervalued” when it was sitting at $15.81 an ounce, and that call has turned out to be quite prescient.  The Friday before last, silver started the day at $17.25 an ounce, and it is up more than 18 percent since that time.  Overall, silver is up more than 30 percent for the year, and that makes it one of the best performing investments of 2016.  So what is causing this sudden surge in the price of silver?  This is something that we will discuss below…

This sudden spike in the price of silver has definitely caught a lot of analysts off guard.  Some are suggesting that the fact that the Fed is now less likely to raise rates after the Brexit and the fact that the dollar has been slipping a bit lately are the primary reasons for silver’s rise

This isn’t a gradual increase either. It’s an explosive growth spurt. Just three months ago silver had reached an 11 month high. Now silver prices have reached a 23 month high. Several factors appear to be influencing these gains, including a weakening dollar, and the fact that the Fed may cut interest rates in light of the Brexit vote.

Personally, I don’t buy those explanations.

To me, the continuing implosion of major banks over in Europe is the main factor that is driving investors to safe haven assets such as silver.

Rumors continue to spread that Deutsche Bank is essentially insolvent at this point, and many are watching for the imminent collapse of the largest and most important bank in Germany.  When this happens, it will be a much, much more cataclysmic event for the global financial system than the collapse of Lehman Brothers was back in 2008.

But today I want to focus on the ongoing implosion of the major banks in Italy.

Italy has the 8th largest economy on the entire planet, and their banks are drowning in approximately 400 billion dollars worth of non-performing debt.

The Italian government would like to bail these banks out, but the rest of the EU appears ready to block that effort because it would violate EU rules.  As a result, the big Italian banks experienced a bloodbath on Monday

Italy’s Banca Monte dei Paschi di Siena SpA BMPS, -13.99% closed down 14%. The move came after a report that the European Central Bank is pushing the lender to draft a new plan aimed at reducing non-performing loans.

Other Italian bank shares were lower, with Banca Popolare dell’Emilia Romagna BPE, -6.73% down 6.7%, Intesa Sanpaolo SpA ISP, -3.04% off 3% and Banca Popolare di Milano SpA PMI, -1.40% lower by 1.4%.

And these stunning declines come on the heels of last week’s nightmare

As a reminder, the Euro Stoxx Banks index was down -0.88% last week and is nearly 19% down from its pre-referendum levels. Italian Banks are at the heart of that weakness with the likes of Unicredit, Intesa, Banco Monte dei Paschi and UBI down -9.78%, -3.44%, -15.79% and -6.11% respectively last week, in the process sending Italian stocks to levels not seen since Draghi’s famous “whatever it takes” speech.

So what happens when all of the major banks of a country collapse at the exact same time?

Basically, Italy is facing “financial Armageddon” if nothing is done, and so some Italian politicians are desperate to step in and do something about this crisis even if it means defying the EU

The Financial Times reported Sunday that Italy was prepared “to defy the EU and unilaterally pump billions of euros into its troubled banking system if it comes under severe systemic distress … despite warnings from Brussels and Berlin over the need to respect rules that make creditors rather than taxpayers fund bank rescues.”

Citing “several officials and bankers familiar with the plans,” the FT said that the threat has raised alarm along Europe’s regulators “who fear such a brazen intervention would devastate the credibility of the union’s newly implemented banking rule book during its first real test.”

But of course the rest of the EU is not about to let this happen because it would be a gross violation of European Union rules

Michael Hewson, chief market analyst at CMC Markets UK, said: “Under current EU state aid rules any attempts to help banks must involve a bail-in process that doesn’t involve using taxpayer’s money.

“Italian Prime Minister Matteo Renzi has tried to argue that the Brexit uncertainty has destabilised Italy’s already fragile banks.

“The reality is the problems of Italy’s banks predate last week’s Brexit vote, and he knows it.”

So what is going to happen?

Could Italy be forced to leave the EU?

Will the rest of the European Union eventually cave in and save Italy?

We all remember how difficult it was for the EU to save Greece, and they are just the 44th largest economy on the planet.

So where in the world are they going to come up with the resources to rescue the 8th largest economy on the planet?

Immediately following the Brexit vote on the Friday before last, we witnessed the biggest one day global stock market loss in world history.  But since that time many global markets have bounced back, and a lot of people seem convinced that the crisis has passed.

Unfortunately, the truth is that the crisis is just getting started.  As I warned before the Brexit vote, European banks were going to continue to implode no matter what the result was, and that is definitely what we are seeing come to pass right now.

Without bailouts, virtually all of the major banks in Italy are going to fail.  It is just a matter of time.  And each of those failures would send financial shockwaves all over the planet.

Personally, I am convinced that the second half of 2016 is going to be even more eventful that the first half of 2016, and this new global economic crisis is going to continue to accelerate.

Unfortunately, most Americans are preoccupied reading about Taylor Swift’s new boyfriend and things of that nature, and so they are totally oblivious to the global events that are about to turn their lives totally upside down.

Silver At Less Than 19 Dollars An Ounce? Are You Kidding Me???

SilverThe day that silver traders have been waiting for has arrived.  On Wednesday, the price of silver dropped another 5 percent.  As I write this, it is sitting at $18.55 an ounce.  On Wednesday it hit a low that had not been seen in three years.  Overall, the price of silver has declined by 34 percent this quarter.  That is the largest quarterly move in the price of silver in more than 30 years.  So what does all of this mean?  It means that we are looking at a historic buying opportunity for those that are interested in silver.  Yes, gold is undervalued right now as well, but it is absolutely ridiculous how low the price of silver is.  At the moment, the price of gold is about 66 times higher than the price of silver is.  But they come out of the ground at about a 9 to 1 ratio, and unlike gold, silver is used up in thousands of common consumer products.  Those that want to invest in silver should be shouting for joy that prices have fallen this low.  If you have been waiting and waiting and waiting to “load the boat”, your moment has arrived.

In my previous articles, I have warned over and over again that we would see wild swings in the prices of gold and silver.  For example, I wrote the following back in April

As I mentioned above, gold and silver are going to experience wild fluctuations over the next few years.  When the next stock market crash comes, gold and silver are probably going to go even lower than they are today for a short time.  But in the long run gold and silver are going to soar to unprecedented heights.

Investing in gold and silver is not for the faint of heart.  If you cannot handle the ride, you should sit on the sidelines.  We are entering a period of tremendous financial instability, and holding gold and silver is going to be like riding a roller coaster.  The ups and downs are going to shake a lot of people up, but the rewards are going to be great for those that stick with it the entire time.

Right now, a lot of people that bought silver when it was 25 dollars an ounce or 30 dollars an ounce are probably feeling discouraged.

Don’t be.  You will be just fine.  When the price of an ounce of silver hits 100 dollars an ounce you will be very thankful for the silver that you stored away at those prices.

We are moving into a time when we will see more volatility in precious metals prices than we have ever seen before.  That means there will be some tremendous opportunities to make money.  But in order to make money, you have to buy low and sell high.

The current decline in the price of paper silver does not have anything to do with the demand for actual physical silver.  In fact, demand for physical silver is higher than it ever has been before.

For example, sales of silver coins by the U.S. Mint have set a brand new all-time record high during the first half of 2013.

Last year, the U.S. Mint sold 33 million ounces of silver for the entire year.

This year, the U.S. Mint is on pace to sell 50 million ounces of silver for the entire year.

So don’t be alarmed that the price of silver is falling.

Instead, be very, very thankful.

Hopefully it will go even lower.

And you know what?  There is a decent possibility that the price of silver may go down a bit more.  This will especially be true during the initial stages of the next financial panic.

When the price of silver does dip, it is a perfect opportunity to load the boat, because even many mainstream analysts are projecting that the price of silver is headed into the stratosphere over the long-term.  For example, the following is what Citi analyst Tom Fitzpatrick told King World News the other day…

Again, if you look at silver going back to the 2008 correction, we got down to levels below $9, then we saw the silver price multiply by a factor of over 5 times. So assuming this marks a point near the end of the correction in silver, then our bias would be one that would take silver not only to new all-time highs, but we would look for a target as high as $100 for silver

A chart illustrating the projections that Fitzpatrick is making can be found right here.

There are so many reasons to own silver (even as opposed to owning gold).  The following is an excerpt from a recent article about silver that really caught my attention…

*****

7. Silver is way below its nominal record price of $50 in 1980.  It is even further below the government inflation adjusted level of $135.  And if you use REAL inflation adjusted numbers, like Shadowstats, the REAL 1980 inflation adjusted price of silver would have to be $450!  Silver is a precious and depleting resource and when you look at the price of housing, cars, education, food, energy, taxes, insurance back in the 1980′s, it is insane to think that silver is so cheap on any level.  Especially when the uses of silver have skyrocketed since the 1980’s.  It is now used in technology on a massive scale and is even now said to cure cancer.  Heck, they did not even have Silver Eagle sales back then, or the Silver Bullet Silver Shield for that matter.

8. This time it is going to be much larger!  None of the problems from the 2008 Banking Crisis have been solved.  In fact it is orders of magnitudes worse.   What started out as an institutional  problem, is now a sovereign nation problem.  This collapse will not be a puny multi – billion dollar corporation like AIG disintegrating, it will be the Trillion dollar economies of the nations of the world and the Quadrillion dollar derivative monster markets cracking apart.  There is no financial, political or social safety net left.  We destroyed all of that in 2008 and are on a debt based junkie delusion.

The collapse of currencies will affect every counter-party, debt based asset in the world. Your cash, stocks, bonds, Real Estate, pensions, insurance, all of it.  The collapse of financial contracts will lead to the collapse of all political and social contracts.  The Anger Phase of humanity is coming and only real assets with no counter party risk will be worth anything.  Most commodities have storage or degradation issues leaving only precious metals as a real store of wealth.

9. 1:65 Ratio makes silver the only choice.  The current gold to silver ratio is: 1 ounce of gold is worth 65 ounces of silver.  These come out of the ground at a 1:9 ratio!  That means just to get back to the natural mining ratio, silver would have to out perform gold 600%.  This is regardless what happens to the dollar value of gold.  If gold goes to $13,000 an ounce, silver at a 1:9 ratio would be $1,444 silver.

10. The historical stockpiles of silver are destroyed.  We know implicitly that gold has been treasured and kept secure.  While silver has been used and abused as a cheap, industrial metal like tin.  Since the price of silver has been under attack since the Crime of 1873, silver has been used in such small quantities that it has been destroyed.  The US government in 1950 had 5 billion ounces of silver in its strategic stockpile, now it has ZERO. So if gold and silver come out of the ground at a 1:9 ratio and gold has been treasured and silver stockpiles destroyed, logic would dictate that the end of this silver bull market will find the gold to silver ratio BELOW 1:9 and I think it will come close to a 1:1.  Either way, we are a long way away from those levels which makes silver so exciting right now.

It is the destruction of huge stockpiles like this that explains the decade long supply deficit to the growing demand of silver.  Do not forget that we are only 7 years away from the United States Geological Survey’s prediction that if we continue to consume silver at these rates, silver would be the first metal to become extinct.  When I challenged the USGS on that statement, they said that only a massive revaluation of silver to bring on more production and wiser use of silver would stop the extinction.  I don’t think we will ever run out of silver, but I do believe that the free market will crush this paper manipulation and that anyone holding physical silver on that day will then have a lottery ticket in real value.

*****

You can read the rest of that excellent article right here.

Do you want some more reasons to own silver?

The following are some excerpts from an excellent article by Mark Thomas

*****

The amount of silver consumed annually and bought for investment exceeds currently exceeds total annual mining output and has for years. That gap has been filled by sellers willing to sell from existing inventories and as prices rise. As time passes this will naturally push prices significantly higher until this fundamental imbalance reaches a true equilibrium price where supply is closer to demand.

*****

Both industrial and investment demand for silver is growing in excess of the annual increase in mining production growth. The available inventory is low and will get even tighter over time. These two factors will lead to a continued tighter supply-demand situation going forward.

*****

Silver is an industrial metal with over 10,000 commercial applications. Because it is one of the best electrical and thermal conductors, that makes it ideal for electrical uses such as switches, multi-layer ceramic capacitors, conductive adhesives, and contacts. It is used in some brazing and soldering as well. Silver is also used in solar cells, heated automobile wind shields, DVD’s and some mirrors.

*****

Silver is an essential element in the electronic gadgets that are a growing part of our digital age. It is in every cell phone, smart phone, tablet, computer keyboard, solar cells and every radio frequency if ID device (RFID). This makes it an essential element going forward as the world becomes more addicted to gadgets. The growth and rising living standards of people in the emerging economies will drive long-term growth of new customers that will demand more and more electronic gadgets.

*****

Silver’s industrial demand should increase 60% to 666 million ounces per year by 2016 from 487 million ounces in 2010. Current annual mine production is only around 700 million ounces per year growing a few percent annually.

*****

Of a total of fifty billion ounces of silver that have been mined in history, only two ounces (estimate) or 5% remain in above ground inventories available to be bought and sold. This is due to silver being used up in industrial applications in very small quantities, which makes it unprofitable to recycle at today’s prices. A lot of silver is used in minute quantities in industrial products which are used up and discarded without being recycled.

*****

The total amount of silver available to trade in the physical silver market is only about $70 billion versus the total gold market which now exceeds $4.3 trillion. As you can see from these numbers, the total market size of the silver market is only 1.6% of the size of the entire gold market. This lack of liquidity and use of extreme leverage in its respective futures market produces wild volatility in price fluctuations of silver.

*****

You can read the rest of his excellent article right here.

Are you starting to get the picture?

Let us hope that the price of silver stays below 20 dollars an ounce for as long as possible, because once this opportunity is gone we will probably never see it again.

It is important to realize where we are in the greater scheme of things.  The world is moving toward another major financial crisis which will usher in a brief period of deflation.  Unlike many others that are talking about the coming economic collapse, I have always maintained that we are going to see deflation first and then the response to the crisis will give us the rip-roaring inflation that so many talk about.  The following is an excerpt from one of my articles where I talk about this

So cash will not be king for long.  In fact, eventually cash will be trash.  The actions of the U.S. government and the Federal Reserve in response to the coming financial crisis will greatly upset much of the rest of the world and cause the death of the U.S. dollar.

That is why gold, silver and other hard assets are going to be so good to have in the long-term.  In the short-term they will experience wild swings in price, but if you can handle the ride you will be smiling in the end.

During the initial stages of the next major stock market crash, gold and silver will not do very well.  But that is okay.  Dips are buying opportunities.

As the coming economic crisis unfolds, governments and central banks all over the world will desperately attempt to resuscitate the global financial system.  We are going to see money printing and “stimulus packages” on a scale that we have never seen before.  Crazy things will happen with stocks, bonds and currencies.

When the dust finally settles, those that are holding “real money” will be the ones that will be in the best shape.

Is The Takedown Of Gold A Sign That The Entire Global Financial System Is About To Crash?

The Collapse Of GoldSomebody out there is sure getting prepared for something really big.  We have just witnessed a takedown of gold and silver unlike anything that we have witnessed in decades.  On Monday, the price of gold had fallen by more than 10 percent at one point.  It shocked investors all over the globe, and overall what we have just seen was the largest two day decline in the price of gold in 30 years.  The price of silver dropped even more rapidly on Monday.  It was down more than 14 percent at one point.  There was an atmosphere of “panic selling” as investors and financial institutions raced to liquidate their holdings of silver and gold.  But was this exactly what someone out there wanted?  As I wrote about the other day, big banks and news outlets all over the world have been boldly proclaiming for weeks that gold is entering a “bear market” and that now is the time for all of us to sell our gold.  In particular, Goldman Sachs reportedly told their clients earlier this month that they “recommend initiating a short COMEX gold position“.  Was that just a “good guess” on their part, or was something else going on?  Were they actually trying to help create a “selling frenzy” that would drive the price of gold much lower?

What we witnessed on Monday was absolutely jaw-dropping.  Just check out this chart of the price of gold over the past 10 years.  The takedown of gold on Monday sticks out like a sore thumb…

The Price Of Gold

And that chart does not even show the full extent of the collapse.  As I write this, the price of gold is sitting at $1355.20.

But this is just the beginning for gold and silver.  As I have warned repeatedly, the price of gold and the price of silver will experience wild swings in the years ahead.

For example, the following is what I wrote about gold and silver on August 7th, 2012

I like precious metals myself, but if you are going to invest you need to get educated so that you know what you are doing.  If you go in blindly you are likely to get burned at some point.

In addition, you need to be prepared for wild fluctuations in price over the coming years.  There will be times when gold and silver absolutely soar and there will be times when they drop like a rock.

So if you are going to play the game you need to be able to handle the ride.

Monday was an example of what I meant when I said that “you need to be able to handle the ride”.  There are going to be a lot more days like Monday (both up and down) for gold and silver in the years ahead.

The foolish people are those that are scared out of their wits and that are selling off all of their gold and silver right now.

Sadly, there was reportedly a tremendous amount of panic selling of gold and silver during this collapse.  The following is what Dennis Gartman told CNBC on Monday

“There are a lot of people throwing up their hands. Throwing positions overboard. Panic is everywhere,” Gartman said in a “Squawk Box” interview on Monday. “I’ve never seen anything like this. I mean it.”

It just shows that there are a lot of stupid people out there.  The following is an excerpt from another CNBC report about the panic selling that was happening on Monday…

“I think the last $20 has been margin selling. The market is falling like a knife. People are saying, ‘Get me out now,’ ” Phoenix Futures President Kevin Grady said. “You’re also seeing people selling energy profits to pay for metals losses. You’re seeing a tremendous amount of gold liquidation today.”

According to Dr. Paul Craig Roberts, Assistant Secretary of the Treasury under President Ronald Reagan, all of this panic selling is the result of an orchestrated takedown of gold and silver…

This is an orchestration (the smash in gold). It’s been going on now from the beginning of April. Brokerage houses told their individual clients the word was out that hedge funds and institutional investors were going to be dumping gold and that they should get out in advance.

Then, a couple of days ago, Goldman Sachs announced there would be further departures from gold. So what they are trying to do is scare the individual investor out of bullion. Clearly there is something desperate going on…

So who is behind all of this orchestration?  Well, according to Dr. Paul Craig Roberts, it is actually the Federal Reserve

The Federal Reserve began its April Fool’s assault on gold by sending the word to brokerage houses, which quickly went out to clients, that hedge funds and other large investors were going to unload their gold positions and that clients should get out of the precious metal market prior to these sales. As this inside information was the government’s own strategy, individuals cannot be prosecuted for acting on it. By this operation, the Federal Reserve, a totally corrupt entity, was able to combine individual flight with institutional flight. Bullion prices took a big hit, and bullishness departed from the gold and silver markets. The flow of dollars into bullion, which threatened to become a torrent, was stopped.

In fact, Dr. Roberts says that former Goldman Sachs trader Andrew Maguire is reporting that the Fed orchestrated the dumping of 500 tons of naked gold shorts into the market on Friday…

According to Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can be to drive down the market price.

If any of the allegations above are even remotely true, then a whole lot of people need to be criminally investigated.

Meanwhile, many are considering this takedown of gold to be an ominous sign that another major financial crisis may be heading our way.

Just remember what happened back in 2008.  As Zero Hedge noted on Monday, the price of gold suddenly plunged 21 percent in July 2008.  That was just a couple of months before the U.S. stock market crashed in the fall…

The rapidity of gold’s drop is impressive, concerning, and disorderly. We have seen two other such instances of disorderly ‘hurried’ selling in the last five years. In July 2008, gold quickly dropped 21% – seemingly pre-empting the Lehman debacle and the collapse of the western banking system.

Is this collapse in the price of gold a harbinger of another major stock market crash?

Time will tell.

Meanwhile, many average Americans are wondering if they should dump their gold and silver while they still can.

As I mentioned above, gold and silver are going to experience wild fluctuations over the next few years.  When the next stock market crash comes, gold and silver are probably going to go even lower than they are today for a short time.  But in the long run gold and silver are going to soar to unprecedented heights.

Investing in gold and silver is not for the faint of heart.  If you cannot handle the ride, you should sit on the sidelines.  We are entering a period of tremendous financial instability, and holding gold and silver is going to be like riding a roller coaster.  The ups and downs are going to shake a lot of people up, but the rewards are going to be great for those that stick with it the entire time.

Why Are The Banksters Telling Us To Sell Our Gold When They Are Hoarding Gold Like Crazy?

Why Are The Banksters Telling Us To Sell Our Gold When They Are Hoarding Gold Like Crazy?The big banks are breathlessly proclaiming that now is the time to sell your gold.  They are warning that we have now entered a “bear market” for gold and that the price of gold will continue to decline for the rest of the year.  So should we believe them?  Well, their warnings might be more credible if the central banks of the world were not hoarding gold like crazy.  During 2012, central bank gold buying was at the highest level that we have seen in almost 50 years.  Meanwhile, insider buying of gold stocks has now reached multi-year highs and the U.S. Mint cannot even keep up with the insatiable demand for silver eagle coins.  So what in the world is actually going on here?  Right now, the central banks of the world are indulging in a money printing binge that reminds many of what happened during the early days of the Weimar Republic.  When you flood the financial system with paper money, that is eventually going to cause the prices for hard assets to go up dramatically.  Could it be possible that the banksters are trying to drive down the price of both gold and silver so that they can gobble it up cheaply?  Do they want to be the ones sitting on all of the “real money” once the paper money bubble that we are living in finally bursts?

Over the past few weeks, nearly every major newspaper in the world has run at least one story telling people that it is time to sell their gold.  For example, the following is from a recent Wall Street Journal article entitled “Goldman Sachs Turns Bearish on Gold“…

Another longtime gold bull is turning tail.

Investment bank Goldman Sachs Group Inc. said Wednesday that gold’s prospects for the year have eroded, recommending investors close out long positions and initiate bearish bets, or shorts. The shift in outlook was the latest among banks and investors who have soured on gold as its dozen-year runup has been followed by a 12% decline in the last six months.

Goldman began the year predicting gold would decline in the second half of 2013, but said Wednesday the drop began earlier than expected and doesn’t appear likely to reverse. Like others, the firm said the usual catalysts that have been bullish for gold during its run are no longer working.

Major banks over in Europe are issuing similar warnings about the price of gold.  The following is from a Marketwatch article entitled “Sell gold, buy oil, Societe Generale analysts say“…

Analysts at Societe Generale predict in a note Thursday that gold prices will fall below $1,400 by the year’s end and continue heading south next year.

They cite two main reasons:

1.  Inflation has so far stayed low and now investors are beginning to see economic conditions that would justify an end to the Fed’s quantitative easing program.
2.  The dollar has started trending higher, which should make gold prices move lower as the physical gold market is extremely oversupplied without continued large-scale investor buying.

And even Asian banks are telling people to sell their gold at this point.  According to CNBC, Japanese banking giant Nomura is another major international bank that has turned “bearish” on gold…

Nomura forecast gold prices will fall in 2013, on Thursday, becoming the latest bank to turn bearish on the precious metal which has been a favorite hedge for investors who fear aggressive monetary stimulus will lead to rising inflation.

“For the first time since 2008, in our view, the investment environment for gold is deteriorating as economic recovery, rising interest rates and still benign Western inflation (for now) will likely leave some investors rethinking their cumulative $240 billion investment in gold over the past four years,” wrote Nomura analysts in a sector note on Thursday.

A lot of financial analysts are urging people to dump gold and to jump into stocks where they “can get a much better return”.  They make it sound like it is only going to be downhill for gold from here.  The following is from a recent CNBC article entitled “Gold’s ‘Death Cross’ Isn’t All Investors Are Worried About“…

Gold is flashing the “death cross” but the bearish chart pattern is not the only thing scaring investors.

The magnetic appeal of a rising stock market has pulled some investment funds away from the yellow metal. Since the beginning of the year, stocks are up nearly 7 percent and gold is down nearly 6 percent.

But if gold is such a bad investment, then why are the central banks of the world hoarding gold like crazy?

According to the World Gold Council, gold buying by global central banks in 2012 was at the highest level that we have seen since 1964

Worldwide gold demand in 2012 was another record high of $236.4 billion in the World Gold Council’s latest report. This was up 6% in value terms in the fourth quarter to $66.2 billion, the highest fourth quarter on record. Global gold demand in the fourth quarter of 2012 was up 4% to 1,195.9 tonnes.

Central bank buying for 2012 rose by 17% over 2011 to some 534.6 tonnes. As far as central bank gold buying, this was the highest level since 1964. Central bank purchases stood at 145 tonnes in the fourth quarter. That is up 9% from the fourth quarter of 2011, and the eighth consecutive quarter in which central banks were net purchasers of gold.

This all comes on the heels of decades when global central banks were net sellers of gold.  Marcus Grubb, a Managing Director at the World Gold Council, says that we are witnessing a fundamental change in behavior by global central banks…

Central banks’ move from net sellers of gold, to net buyers that we have seen in recent years, has continued apace.  The official sector purchases across the world are now at their highest level for almost half a century.

Meanwhile, insiders seem to think that gold stocks are actually quite undervalued right now.  In fact, insider buying of gold stocks is now at a level that we have not seen in quite some time.  The following is an excerpt from a recent Globe and Mail article entitled “Insider buying of gold stocks surges to multi-year highs“…

The TSX global gold index has lost about a third of its value over the past two years. The S&P/TSX Venture Exchange, stock full of gold mining juniors, hit a multi-year low this month.

Yet, executives and officers who work within those businesses are showing remarkable confidence that the sector is poised for better times.

In addition, the demand for physical silver in the United States seems to be greater than ever before.  According to the U.S. Mint, demand for physical silver coins hit a new all-time record high during the month of February.

And demand for silver coins has not abated since then.  Just check out what has been happening in April so far

The US Mint has updated April sales statistics for the first time since last week, and to no surprise, the Mint again reported more massive sales, with another 833,000 silver eagles reported sold Monday!   The April total through 6 business days is now 1.645 million ounces, bringing the 2013 total to a massive 15.868 million ounces.  In response to the continued massive demand for silver eagles, the mint also has begun rationing sales of silver eagles to primary dealers resulting in supply delays!  Just as was seen in January, tight physical supplies have seen premiums on ASE’s skyrocketing over the weekend and throughout the day, as ASE’s are rapidly becoming as scarce as 90%!

Something does not appear to add up here.

I also found it very interesting that according to Reuters, Cyprus is being forced to sell most of their gold reserves in order to help fund the bailout of their banking system…

Cyprus has agreed to sell excess gold reserves to raise around 400 million euros (341 million pounds) and help finance its part of its bailout, an assessment of Cypriot financing needs prepared by the European Commission showed.

So exactly who will they be selling that gold to?

And I also found it very interesting to learn that Comex gold inventories have been falling dramatically over the last few months.  The following is from a recent article by Tekoa Da Silva

A stunning piece of information was brought to my attention yesterday. Amid all the mainstream talk of the end of the gold bull market (and the end of the gold mining industry), something has been discretely happening behind the scenes.

Over the last 90 days without any announcement, stocks of gold held at Comex warehouses plunged by the largest figure ever on record during a single quarter since eligible record keeping began in 2001 (roughly the beginning of the bull market).

In particular, something very unusual appears to be happening with JP Morgan Chase’s gold…

JP Morgan Chase’s reported gold stockpile dropped by over 1.2 million oz.’s, or rather, a staggering $1.8 billion dollars worth of physical gold was removed from it’s vaults during the last 120 days.

So what does all of this mean?

I don’t know.  But I would like to find out.  Someone is definitely up to something.

Meanwhile, the central banks of the globe seem determined to put their reckless money printing into overdrive.

For example, the Bank of Japan actually plans to double the monetary base of that country by the end of 2014 as a recent Time Magazine article described…

On Thursday, the new governor of the Bank of Japan (BOJ), Haruhiko Kuroda, announced that the central bank would double the monetary base of the country — adding an additional $1.4 trillion — by the end of 2014 in an attempt to end the deflation plaguing the economy. To achieve that, Kuroda will buy government bonds and other assets to inject cash into the economy — what has now become familiar as quantitative easing, or QE — to bump inflation up to a targeted 2%. The plan is part of a greater strategy ushered in by new Japanese Prime Minister Shinzo Abe to restart the economy through massive fiscal and monetary stimulus. It also expands on the efforts by the Federal Reserve, Bank of England and European Central Bank to stimulate growth and smooth over financial turmoil by infusing huge sums of new money into the global economy.

Many in the western world have been extremely critical of this move, but the truth is that we actually started this “currency war”.  The Federal Reserve has been recklessly printing money for years, and even though we are now supposedly in the midst of an “economic recovery”, the Fed is actually doing more quantitative easing than ever.

Anyone that thinks that gold and silver are bad investments for the long-term when the central banks of the world are being so reckless should have their heads examined.

However, I do believe that gold and silver will experience wild fluctuations in price over the next several years.  When the next stock market crash happens, gold and silver will go down.  It happened back in 2008 and it will happen again.

But in response to the next major financial crisis, I believe that the central banks of the globe will become more reckless than anyone ever dreamed possible.  At that point I believe that we will see gold and silver soar to unprecedented heights.

Yes, there will be huge ups and downs for gold and silver.  But in the long-term, both gold and silver are going to go far, far higher than they are today.

So what do you think will happen to gold and silver in the years ahead?  Please feel free to post a comment with your thoughts below…

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