Will Future ETF Selling Keep Silver and Gold Prices Down?

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Mainstream Media Fails to Explain Recent Precious Metal Move – Have the Precious Metals Really Hit Bottom – But Just For Now? – Will Gold Crater Below $1,300 By The End of 2013? – Will Future ETF Selling Keep Silver and Gold Prices Down? – Are Worldwide Central Banks Tapering Off their So Called Asset Purchases?

Will Future ETF Selling Keep Silver and Gold Prices Down?No one was more confounded by silver and gold’s rapid recovery this past week than mainstream financial media. They had just killed and buried the white and yellow metals with unbridled glee. The ink on the media’s obituaries for the precious metals had not even dried. Suddenly, without fair warning, silver (and more especially gold) rallied back from the so called grave.

This is yet more evidence that you should pay no attention to the man behind the curtain. He is busy telling you that the end of the barbaric precious metals is at hand. Nothing could be further from the truth!

For the week that ended Friday, April 26th, silver recovered solidly. The white metal opened spot markets at $23.36, roared back to as high as $24.66, then closed the spot market week at the important $24.00 round number. This means that silver ended up by 2.7%. More impressively, it had been up by as much as 5.6% around mid to late week.

Mainstream Media Fails to Explain Recent Precious Metal Move

Naturally, the mainstream media attempted to explain this heroic comeback away. Their mixed up theories looked a little tired and worn out this past week. Still, they told you everything from “the precious metals have hit bottom – but just for now,” to “ETF selling will keep silver and gold prices down,” to “the worldwide central banks are basically tapering off their so called asset purchases” (better known as money printing in honest, intelligent circles).

In your heart and gut, you know that these ideas are utter and total nonsense. In this issue, you will learn why these mainstream media concepts are merely a smokescreen. Someone out there is busy running interference…

Have the Precious Metals Really Hit Bottom – But Just For Now?

If you listened to financial media this past week, then you had considerable reason to doubt the rally off of the crash bottom in silver and gold. More than one major analyst danced out on stage to say that this was only a temporary recovery rally.

George Gero of RBC indicated that we have made a temporary bottom… then asked if the smart money really believes that the lowest price of the last two years is worth them buying back the precious metals or not. At least that is a somewhat positive criticism of the precious metals rally!

Other analysts were not so kind in their assessment. One of the famed talking heads that correctly predicted gold’s retracement is Michael Haigh. The Society General Commodities Research Head believes that gold will soon drop under $1,300, and silver with it. He goes so far as to say that gold will crater to under $1,300 after the end of the year.

Will Gold Crater Below $1,300 By The End of 2013?

While anything is possible in life, let’s look at what’s wrong with this basic assessment. Michael Haigh did make a prescient call on a long overdue gold correction. The idea that silver and gold are finished is another long stretch altogether!

The Society General mouthpiece admitted later in the same interview that there are risks to his predictions for gold prices in the medium to long term. He said that his prognosis would be negated if QE continues, U.S. economic growth stalls, or the dollar weakens.

Do any of his caveats seem likely to you? Even a third grader knows that the U.S. economy is over the shoals and headed for the rocks now! Could QE become a never ending drug fix? A recent report showed that the unsettling and growing income disparity between the poor and the rich has worsened with the artificially inflated stock market recovery.

QE – A Never Ending Drug Fix?

QE is what propped the stock market up in the first place! So the Fed has yet to produce the effect that they desired. This is despite the fact that they have printed about three trillion new dollars (that will be here with us forever).

Add to this that the end of QE would mean higher real interest rates. It is a well known fact that the U.S. government could barely make its interest payments (on the current $16 trillion and change in debt) at five percent interest.

Imagine if the interest rates rose to a more historically typical level of 7-8%! QE to infinity is insured, the dollar will weaken, and the U.S. economy is on track for another recession possibly later this year or early next. The real question is whether the Fed will soon decide to print even more than their current $85 billion per month…

Will Future ETF Selling Keep Silver and Gold Prices Down?

The verbal attacks on precious metals just kept on coming all the while silver and gold rallied impressively. HSBC was quick to point out the data on SPDR Gold Shares’ GLD ETF over the past week and year so far. They said that last Tuesday, small investors cashed out 7.52 metric tons of gold from GLD, the world’s largest gold ETF.

Besides that, HSBC mentioned that 253.63 tons of gold had left the fund through share redemptions so far this year. Rather than state the data indicated that the selling should be coming to an end, the mainstream king of international banks said that the gold redemptions are not yet over. Selling by ETF’s is standing in the way of a more substantial and sustainable comeback, according to the world’s largest bank by balance sheet.

Does Physical Demand Come From Emerging Markets?

The all powerful HSBC is right about a few things in this assessment at least. Later in the interview, they indicated that silver and gold prices have bounced because of the physical demand for gold and silver coins and bullion. This demand is in fact sensitive to lower prices, as they claimed. Yet, HSBC says such physical demand of hard precious metals comes primarily from the “emerging markets,” more popularly known as China and India. Is this last claim, the crux of their argument that physical demand alone can not hold up the precious metals, really true?

The Perth Mint of Australia

Consider Exhibit one – the Perth Mint of Australia gave an interesting interview this past week (while HSBC was busy telling you that really only China and India are interested in silver and gold bullion and coins at the current prices).

Perth Mint’s Ron Currie, the Sales and Marketing Director, said that their business has doubled! They have not seen so much precious metals demand since the financial crisis erupted in full force in 2008. They are literally racing against the clock to acquire as many silver and gold blanks as they possibly can.

He claimed that it is the lower price in the precious metals from mid April that kicked it off. The one kilogram (2.2 pounds) silver coins and bars are especially hot. Last time we checked, Australia and its world class official national mint at Perth did not qualify as only “emerging market” interest in physical precious metals.

Queen Elizabeth’s 1,100 year old Royal Mint

Now direct your attention to Exhibit two – Her Majesty Queen Elizabeth’s 1,100 year old Royal Mint produces a new Lunar series of silver coins. These 2013 issue Silver Britannias are one ounce silver coins that they sell most commonly in rolls of twenty. They are not rare and have no significant additional numismatic or collectors’ value.

Yet, they are in hot demand by collectors all over the Western world. Here is the really shocking development in these eagerly sought out British silver coins. Merit Gold and Silver is selling these rolls of 20 silver coins for over $700 per roll.

This amounts to nearly $36 per one ounce silver coin, an almost $12 premium over silver spot prices!

Do not believe for one moment that real physical silver is actually selling at only $24 per ounce. The evidence is shockingly different. A real divergence between the prices of paper silver/gold, and real in your hands silver/gold, has developed as people demand that you “show them the money.” How come mainstream financial media is not pointing this out today?

Are Worldwide Central Banks Tapering Off their So Called Asset Purchases?

Most of the mainstream analysts out there have told you that the Fed is getting ready to stop its QE3 program. Goldman Sachs famously carries the standard of these particular talking heads. If it were true, it would help to explain why silver and gold prices can not continue to rise. The reality is surprisingly different to this consensus view.

Stock markets have been gaining around the world. Despite this, true improvements in the economic fundamentals have been strangely absent. U.S. GDP growth just missed its consensus target of 3% and came in at only 2.5%. Several of the regional economic indicators missed their lofty targets. Consumer confidence is pulling back. The fact is that the trend of the last three springs is once again materializing.

The spring recovery melts in the heat of summer and all of the so called economic progress burns to dust and ash. This makes it difficult, if not impossible, for Federal Reserve Chairman Big Ben Bernanke to stop printing money.

Brian Smedly is a lone voice crying out in the wilderness of the strategists of the significant investment houses. He alone of these talking heads is claiming that U.S. economic data continues to disappoint as the grind of the U.S.’ own version of austerity begins to bite hard.

There Will be More – Not Less – Federal Reserve Quantitative Easing

We call it “sequester” and “sequestration” in the States. Smedly alludes to the fact that unemployment is actually worsening. This is especially the case when you consider the all important participation in the labor force rate that recently set a new all time low. This disturbing fact, coupled with still “officially” tame inflation, indicates that there will be more – not less – Federal Reserve Quantitative Easing.

What about the other central banks of the world? Surely they are done with, or at least wrapping up, their quantitative easing. This is what mainstream financial media is telling you, after all. This past week, Central Banking Publications released a survey with shocking news. The central banks of Japan, Sweden, Israel, and dozens of other central banks claim that they have bought stocks in their own national companies!

What’s more, they are getting set to buy more of them…

They are propping up their own stock markets with printed money for crying out loud! Mainstream analysts have the nerve to tell you that central banks are getting ready to wrap up their money printing efforts despite this…

The thing that you have to keep in mind with all of these mainstream financial media theories is that precious metals are, always have been, and always will be real money. Silver and gold are not simply philosophies, as some analysts wish for you to believe. They are hard and tangible assets.

Most Americans are not aware of the word for silver in many of the languages of the world. This word for silver is “argent” and it translates literally to money. Does that sound like a mere philosophy to you?

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