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Did Gold and Silver Just Get Their “Greenspan Put”?

The world’s central banks and derivatives traders have been having their usual fun with gold and silver lately, dumping huge volumes of futures contracts into thin markets to produce massive declines — just when precious metals SHOULD have been soaring in response to near-global debt monetization.

But something interesting happened as this latest smack-down really got going. Physical buyers — who goldbugs have for years been expecting to ride to the rescue, finally did. Chinese and Indian gold imports, which had trailed off earlier in the year, soared in response to the recent price declines. There’s some debate about exactly how much these guys are buying, but it certainly looks like they’re talking all that’s being produced by the world’s mines, and then some.

Here’s a chart from gold analyst Koos Jansen showing Chinese imports spiking lately:

Chinese gold imports 2014

In silver, the response of individual coin buyers has been even more dramatic. The US Mint, which in a good month sells 5 million one-ounce silver eagles, sold 2 million of them in two hours on November 5, ran out of inventory, and suspended sales until further notice.

For more on the recent tsunami of precious metals buying, see:

Physical gold shortage worst in over a decade as GOFO rate tumbles to negative

China gold buying means price floor to Standard Chartered

US Mint temporarily sold out of silver Eagles amid huge demand

So it looks like physical buyers at long last have decided to tell the precious metals market what the US government and Federal Reserve have been telling the stock, bond and real estate markets markets since the 1990s heyday of Fed chair Alan Greenspan: Relax, we’ve got your back. We’ll short-circuit small declines before they can turn into big ones, and failing that we’ll ramp up a new bubble so quickly that you’ll hardly notice the blip.

There is of course no way to know what the manipulators will do in response, and whether they’ll succeed. They do, after all, have trillions of dollars of fiat currency at their disposal. But at least there’s now a real fight going on in which physical buyers are landing some punches.

20 thoughts on "Did Gold and Silver Just Get Their “Greenspan Put”?"

  1. Pingback: The Küle Library
  2. If Greenspan just hyped it and thinks the metals are great, that means I am running the other direction. Greenspan has never been right on anything his entire career. I am selling now, its a low price but with this endorsement by Greenspan, the metals will probably lose another 50-80% from here.

    1. Or this could be the one time he tells the truth, you know “cya”, a kind of confessional to be on record in the history books as being correct for once, before he croaks.

    2. I think Greenspan wanted fame and recognition more than anything. I think he has known “the truth” all along but his professional ambitions compelled him to play the game. Ayn Rand “fired” him and some financial institution (forget which one) picked him up. If you understand what the game is and are willing to play it you’ll get promoted. There is a cycle in play and the current central banking, fractional reserve, fiat currency system is approaching its inevitable end. There were ways to extend its demise after Nixon closed the “gold window” (the petrodollar system and government deficit spending, for example), so PMs were not yet the best “currency” to use for the last 30 or 40 years, but the end of the existing global monetary system is near and PMs will once again shine by comparison.

  3. In the meantime, I have made some money off the inverse precious metal etfs. If someone is driving the prices down by selling futures contracts I am glad to make money on this trade while till hold onto all my physical gold and silver. what am I going to do with the profits ? buy more physical precious metals , of course.

  4. For a revaluation of gold and silver to come about, the gold exchanges in Hongkong, Singapore and Shanghai – along with those in India – will have to start quoting prices of the actual physical metal, not the paper derivatives. A delightful divergence in prices in Asia and the ones in London and New York will have to come about, and which everyone can see. People will then conclude that one is the true market and the other, a fake and manipulated one. It would be even nicer if the prices on the two conflicting bourses move in opposite directions. The sham that has long been going on will be exposed for what it is. Dare we hope that this will come sooner rather than later. Yah

  5. It’s so hard to know what is really true – and not just qualitatively but quantitatively too – but if I were the Fed I would try to continue “QE” surreptitiously by buying physical gold with counterfeit “US dollars” for as long as possible. That might just entail the unwinding of its leased and hypothecated gold contracts, but it might also involve the replenishing of its supposed stash – the collateral it obtained from the US Treasury in return for financing the Vietnam War. The alleged 8200 tonnes of gold owned by the US is worth only about $350 billion. That is chump change by today’s “standards”.

    Isn’t it interesting that such “large amounts” of physical gold are both impressive at almost atavistic levels and yet represent such low monetary value despite nearly asymptotic currency devaluations?

  6. The manipulators know that a chinese revaluation of gold is coming and they will go long. ahead of this. When this happens a new world order will begin and gold and silver will flow into china, just like they did when America revalued gold.in the thirties.

  7. From the looks of the COT report its the managed money funds that sold heavy not the bullion banks. A matter of fact they increased their longs. Meeza think its a trap to kill off the hedgies and hft’s. The banks will be on golds side going up as t will be to there advantage to own as much as they can. For it will be repriced much higher than the silly $42 an oz. at the UST. Simply all that is needed to settle their books is to simply reprice it. What that price could be is a lot higher than anyone thinks. In the last bull market of the 80’s very few won this game individually. It was the banks that won big. Don’t miss out this time. 5000 govts and their paper currencies have been placed in the trash can. Who is next on the list?

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