Bullion Banks Used Paper Gold and Silver to Restrain Price Advance in 2019 / Commodities / Gold and Silver Stocks 2019
Gold and silver investors buy metals because they are scarce.Precious metals are by nature difficult to find, and hard to produce.Consequently, above ground stocks are limited and valuable, particularly whenpriced in unlimited fiat currencies.
The bankers and government officials behind these fiat currencysystems don’t like stable monetary benchmarks such as gold putting theirinflation schemes on full display. They absolutely hate that gold works as arefuge.
Inflation is a stealth tax. Instead of overtly raising taxes,politicians simply borrow and print the money needed for more government. Theyjust need people not to notice.
Which brings us to the futures markets for gold and silver. Theyare the solution to the difficult scarcity problem that metals pose for bankersand bureaucrats. The futures markets are the primary tool formanaging prices and discouraging people from turning to metals as a hedgeagainst inflation.
Craig Hemke of the TF Metals Report published a recap offutures market activity in 2019. It perfectly captures how their tool works.They replaced real markets for actual gold and silver with a market for papergold and silver proxies. Then they severed all connection between the proxiesand physical metal.
Hemke writes with regard to gold:
For the year, Comex Digital Gold was up 18.75% from $1,280to $1,520. An 18.75% gain is certainly impressive, and we'll take every basispoint. However, it's even more impressive when you pause to consider that thetotal amount of Comex contracts was increased by 74.2% from 451,460 to 786,166.That's an increase of 33,480,600 digital, pretend ounces all while the totalamount of vaulted gold in the Comex depositories was barely changed.
And for silver:
For the year, price rose 15.1%from $15.55 to $17.90. Total contract open interest rose from 176,159 to229,680 for a total of 30.4%. Again, that's a total of 1,150,000,000 ounces offantasy silver on an exchange when the ENTIRE WORLD produces less than900,000,000 ounces in a year.
The bullion banks are selling a lot of paper gold and silver.
Imagine the gold price if demand for more than 33 million ounceswere actually directed into the physical bullion markets, where supply isscarce and limited, rather than the futures markets where banks supplycontracts for all the buyers who show up.
And barely an ounce of actual metal has to be found, mined,refined and moved into bullion bank vaults.
This mechanism works beautifully for those who prefer to keep alid on prices. Precious metals and the topic of honest money get almost zeroattention.
Almost no one is talking about the trillion-dollar federaldeficits. In 2019, the Federal Reserve returned to monetizing hundreds ofbillions in federal debt. Most people now assume that is normal.
Perhaps most important for the central planners trying tomaintain the fiat dollar, there is very little discussion about why gold and silver prices are rising.
Bankers and bureaucrats are trying to herd people into theFederal Reserve Note and other preferred asset classes, including bonds. Theydon’t want people buying, or even talking about inflation and financial turmoilhedges like precious metals.
These people are not good shepherds, and they don’t have thepublic’s best interest at heart. As such, it is probably not a good idea tofollow the herd.
By Clint Siegner
Clint Siegner is a Director at MoneyMetals Exchange,perhaps the nation's fastest-growing dealer of low-premium precious metalscoins, rounds, and bars. Siegner, a graduate of Linfield College in Oregon,puts his experience in business management along with his passion for personalliberty, limited government, and honest money into the development of MoneyMetals' brand and reach. This includes writing extensively on the bullionmarkets and their intersection with policy and world affairs.
© 2019 Clint Siegner - All Rights Reserved
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