The Gold (and Silver) Volcano Is Ready to Erupt / Commodities / Gold & Silver 2019
In March 1980, the University of Washington installed a seismographsystem designed to monitor earthquake activity in the Cascades, with a focus onincreased seismic activity around Mount St. Helens.
Starting just a few days later, a series of earthquakes, smalleruptions, and steam releases took place. Near the end of the month, the peakof the mountain started to open up.
But this was only the beginning. For the next six weeks, smalleruptions alternated with intermittent quiet periods. But beneath the surface,liquid magma was forcing its way upward, creating intense pressure.
News wires in Washington State reported on these changes, butfew people – including scores who would later be killed – paid much attention.
As reported in LiveScience, even the USGS position at the timewas that "The changes to the bulging mountain were consistent with whathad been reported several times daily since the watch began and left noindication of what was about to happen."
Then on May 18, a lateral blast involving a release of pressureover the magma chamber created "a glowing superheated cloud of gas anddebris moving at nearly supersonic speeds" leaving an eight-mile path ofdestruction.
A second, vertical explosion at the summit took off the topthousand feet of the mountain, killing 57 people and scattering ash over seven states.
PressureIs Building Inside the Gold (and Silver) "Volcano"
The Mount St. Helens explosion offers a fitting metaphor for thepressures building in the gold and silver markets.
Tremors are intensifying around the globe due to the massiveoverprinting of fiat currencies, creating debt levels without historicalprecedent. Financial "earthquakes" are taking place as we speak inVenezuela, Argentina, parts of the Middle East and Africa. Yet most people –especially in the West – are simply not paying attention.
Yearly gold acquisition by four countries alone – China, India,Russia, and Turkey – now exceeds annual global production. Central banks arevaulting gold at the fastest pace in decades.
Falling gold reserves of major producers have declined 26% since2012. Gold (and silver) yields during the last few years have plummeted on theorder of 50%, with discoveries of new projects headed in the same direction.The time frame from discovery to production is moving off the charts.Derivatives have been written dwarfing the total amount of precious metals everproduced in history.
Since 2001, gold owners, even incountries where inflation has so far been low, have profited by holding thishistorically powerful asset protection vehicle. Their otherwise less-fortunatebrethren in other locales who did the same have done very, very well indeed!
RisksAre Mounting
"From a risk/reward perspective, there is no asset classthat has anything even close to the positive attributes that gold has at thispoint in US business cycle time." StewartThomson, GracelandUpdates.
For over a decade, the policies of central banks – including theFederal Reserve – have been almost entirely unblemished by success. Keepinginterest rates below what would normally be the case when borrowers and lendersagree on a loan, based upon the risk/reward economics of doing so, has createda series of asset bubbles.
This monetary malpractice hasimpoverished the majority while excessively rewarding the minority who cancomfortably take highly-leveraged risks, knowing that "theauthorities" have their back, come what may.
But now the banks are stuck between the proverbial rock and ahard place, with nowhere to go but zero to negative rates.
The result, as Jim Rickards puts it, is that the "Failureof central banks to exit from radical monetary experiments will drive the nextleg of the gold bull market."
If you wait until a crisis situation is obvious to everyoneelse, most of the profit opportunity – not to mention even the ability toprotect your finances by acquiring "hold in your hand" gold and silver – may havedisappeared or will seem to have become unaffordable (See last month's When (not If)Silver has a Bitcoin Moment).
"SeismicActivity" in the Gold Markets Is Increasing
A number of increasingly – evident factors are building pressureunder this "golden volcano." Like the Mount St. Helens eruption in 1980,it's difficult even for professional observers to gauge just when an explosion– not to mention its magnitude – is going to take place.
What's important in our analysis is not precisely when gold (andsilver) is going to "erupt," but that the evidence overwhelminglysuggests we're getting closer by the day.
In fact, as this is being written during the overnightsession, gold has penetrated the $1385 level for the fourth time in the last few years. Regardless of whetherthis price holds, it should forcefully demonstrate – to anyone paying attention– that the preconditions necessary for an unexpected and sustained upside priceexplosion are being laid.
Look objectively at what's causing the pressure to build, decidehow it might affect your situation, make a plan (how much to devote, level ofrisk tolerance, time frame and goals) – then begin to act.
Pressure is building. You may thinkyou're not living in a "financial blast zone." But neither did thatdoomed volcanologist who woke up that morning on a ridge 6 miles north of MountSt. Helens' peak. After finding himself directly – and unexpectedly – in thepath of an explosion traveling 90 miles per hour, his last radio transmissionwas, "This is it!"
Don't let time run out before taking action to protect yourfinances. Learn from what others, across cultures, have done ahead of time forthousands of years, and from what millions of people around the globe are doingtoday.
The clock on the coming eruption of the gold (and silver)volcano is ticking...
David Smith isSenior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com aswell as the LODE Cryptographic Silver Monetary System Project. He hasinvestigated precious metals’ mines and exploration sites in Argentina, Chile,Peru, Mexico, Bolivia, China, Canada and the U.S. He shares resource sectorobservations withr eaders, the media and North American investment conferenceattendees.
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