Prices for gold and silver have seen major increases this year, and interest in these precious metals is rising in tandem as both new and experienced investors rush to the space.
But higher prices aren’t the only reason market watchers should pay attention to gold and silver. According to Steve St. Angelo, independent researcher at the SRSrocco Report, there’s much more to the story, including a key aspects that many investors miss: energy.
“What’s happened in this complex world we live in with a lot of technology and a lot of levels of the supply chain — we just forget about the energy. We take it for granted,” he explained.
Tom welcomes Jan Nieuwenhuijs onto the show to discuss the commodity markets, gold, and the problems within central banking.
Jan explains how many issues with the Comex are due to misinterpretations of the data, and so far, he doesn't see any fraud.
There are only unsubstantiated rumors that the Comex has failed to deliver. Futures markets act as a hedge for many players, and it is normal for open interest to be concentrated in the near month.
This year's deliveries are higher than in the past, but it's quite normal to see large open interest positions.
Jan discusses how speculation on these markets work and why there were many lucrative arbitrage plays early this year. He discusses central bank's activity and why inflation has yet to appear in the financial system.
QE is creating imbalances in the system, and eventually, inflation will appear because central banks are in a dead-end street and can't reverse.
Deflation is like kryptonite for central bankers because lower prices result in lower wages, making it more difficult for people to repay debts.
Jan discusses how gold is fairly evenly distributed amongst the world's nations, and why the trend may be toward a new multi-currency system where gold becomes the benchmark standard.
Lastly, Jan explains the strategic secrecy around gold by governments and central banks and the risks to the financial system if they discuss gold openly.
When someone asks what the price of gold is, the answer depends on which gold market he means.
In most cases, the different gold markets are close enough that the minor differences are insignificant. TV news anchors just want to know if the price is in a major trend, up or down (up). Old Uncle Ernie could be reminiscing about the bull market of the 1970s and comparing the price back then to the price today (spoiler: it’s higher today).
It must be emphasized that these are three different markets. That is, there are different buyers and sellers. Hence there are different balances of supply and demand. And the price in one market is not the same as in the other two.
The prices in these markets are usually very close to one another, but they’re not the same.
If the prices in two different markets are normally very close, then there must be some force that ties them together. It does not happen by accident, and no one maintains it out of charity...
Money manager and economist Michael Pento says his portfolio is now weighted with 20% Gold and Silver.
He predicts Fed policies that are coming soon on inflation and interest rate suppression “will be rocket fuel for gold and silver and gold and silver are just getting started.
If Bitcoin is $10,000 per unit, why can’t gold be $5,000, $10,000 or $15,000 per ounce?
With the amount of dollars out there, it could easily be $5,000 or $8,000 per ounce, and that is where it is headed.”
Pento also says, “The bond market will eventually collapse, but the biggest collapse coming is the faith in all fiat currencies.”
Ron Paul discusses the recent announcements out of the Federal Reserve, including the fact that they plan on keeping interest rates low for possibly several years.
Is hyperinflation in store? Will this enable out of control lending and debt creation?
The Fed seems hell bent on destroying the economy and Ron Paul explains how it will all unfold.
The Federal Reserve has snapped up $1 trillion of mortgage bonds since March, a record pace of purchasing.
The Fed bought around $300 billion of the bonds in each of March and April, and since then has been buying about $100 billion a month.
It now owns almost a third of bonds backed by home loans in the U.S. Buying the securities has pushed mortgage rates lower, with the average 30-year rate falling to 2.91% as of last week from 3.3% in early February.
Former Assistant Treasury Secretary in the Reagan Administration and award winning journalist Dr. Paul Craig Roberts says it will someday come down to one extremely difficult choice for the Fed.
Dr. Roberts contends, “The way you can measure the pressure on the dollar is rising gold and silver prices. So, if gold and silver continue to go up and you see the dollar under pressure, at some point, the Fed is going to have to make a decision.
Do they continue to support the stock and bond market to keep financial asset prices up or do they have to let that go and allow interest rates to rise to draw people back into the dollar? That will be a new kind of crisis.
I can’t predict when it will happen, but at some point, if the dollar becomes in danger as the world reserve currency, which goes to the heart of United States power. That tends to prevail over other considerations.”
