From Bob rinear at Financial Intelligence on Gold and Silver:
Insiders Club Update
2/23/17
What a push/pull sort of day this has become. The DOW has been green, then slightly red, then Brightly green. The S&P has hugged the flatline all session, going back and forth between green and red. The bulls aren't finished buying but the bears are pushing back a bit more than they have been. I guess that makes sense as we're working on 10 up days in a row.
After looking around, I'm pretty content to let this market have it's day and I'm sort of camping out with what I have. That said however, I'm liking what I see at GNC. A recent filing shows that insiders bought 700K shares, the stock is coming off a huge dip, and if it gets over 9.05 I think I'd have to take some on. The stochasitichs are a bit higher than I'd like, but the MACD is curving higher and has room. I like it.
Okay, so I said I wanted to talk about the metals for a bit, and here it is.
The Metals
For quite a while it's been my thought that the metals market might start to make a move in March. Now it's no big secret that I'm a gold and silver guy. This should come as no surprise to anyone. But on the other hand gold and silver has done me very very well since I started playing int he gold pits in 2001 and silver in 2007.
There are a myriad of reasons why I think that Gold and especially silver are gearing up for another big move higher. One is as simple as the fact that the Overall stock market is so bloated and bubbled that the mining stocks are long left behind. If some air comes out of the highest flyers in the stock market, some amount of that will find a home again in the metals.
But that's just part of it. I sense some real creaks and groans in the Comex lately and I think it's going to ultimately fail. Let me explain...
Gold and silver aren't priced by physical demand. They're priced in futures contracts and futures can be shorted. Well the Fed's along with Central banks the world around have been on a gold suppression manipulation for over 20 years. This isn't speculation or tin foil hat stuff folks, they've admitted it through leaks. Likewise many institutional banks have already plead guilty to "rigging" the fix price of gold and silver.
Well the fixing is huge. How huge? Let me quote James Turk....
Here's another startling statistic. Silver open interest on the Comex rose 5,000 contracts on Thursday, the latest day available. That pushed total open interest to over 204,000 contracts. Given that each contract represents 5,000 ounces, the total short position is over 1 billion ounces, and that is just the Comex. The really big positions are taken in the over-the-counter market here in London. So the total short position is a multiple of the Comex short position.
Now let's put that multi-billion ounce short position into perspective. There are only 880 million ounces of silver newly mined in a year. If the short position in an agricultural market were this unbalanced relative to annual production, the CFTC would be going bananas and likely forcing shorts to unwind positions in order to reduce the likelihood of a short squeeze. So where are the regulators in silver? They are turning a blind eye, which is one of the reasons this epic battle is looming.
Do you see that? They are short more silver than the entire world produces in a FULL YEAR. Now, I'm not going to explain all the mechanics of why they've been doing all this, I'll save that for a Sunday letter because it will be really long, just know that they have had a concerted effort to keep gold and silver as low as they can, and they do it with the paper market. See what happens is that they whip up all these synthetic short sales with a particular price level in mind that they are going to drive the price down to. Each time they do it, it it's requiring more and more paper shorts. But recently we've been noticing that they haven't been able to achieve the levels they want to push the metals down to. So what happens is that if they can't get the price as deep as they want, they're left on the wrong side of a ton of paper derivatives. But worse, much worse is that for the buyers such as bullion banks that they HAVE to make good on delivery, if the physical price is higher than the paper price, they have to buy the metal at a higher price than they expected and literally deliver it at a loss. For years untold they've been able to avoid that for the most part.
But there's a problem brewing and it's because of the Chinese mainly. The nations that have oil have decided they don't like the old "petro-dollar" set up any more. They've begun to sell their oil for Yuan's in China, and then trade those Yuans back on the Shanghai exchange for Physical gold. Russia, Turkey and even Saudi Arabia have been doing this, and the demand for Gold is getting to the point where they're truly losing the capability of continuing to cap it via the paper market.
We have said for over 15 years that the only way the price manipulation of the gold and silver market was going to end, was when physical delivery of the metal itself overwhelms their ability to push it down with short sales. In other words, in the past, if they were long a futures contract and they were in a winning position, the COMEX rules allowed for them to be paid in Dollars, instead of the metal itself. Well that works fine as long as no one stomps their feet and says the hell with that, we want the metal itself. Well, we're in that period right now. Mainly because of the Yuan convertability spreading around the globe, and the Shanghai exchange, the demand for Gold has been incredible. Real physical gold is getting harder and harder to come by to supply the people that want it.
So there's a war going on right now. The crooked central banks and Treasury departments that whip up all these short side futures, are having to produce more and more and more of them to offset all the physical demand. There's creaks and groans in the system. I truly believe we're nearing the tipping point where they lose control.
Think about it like this... you're an oil producing country. It takes millions of dollars and hours of manual labor to extract that goo out of the ground. And then ( up until now) you've been forced to sell that goo for US dollars. Dollars that are produced out of thin air, by pressing a button at the Treasury/Fed. Well what if you don't want dollars any more? What if you know that since we came off the gold standard the dollar has lost 90% of its value? What if you want something real, something that's had value for 5,000 years? Well you exchange your oil for gold and the Chinese have crafted the way for it to happen.
And it is happening. Happening to the point where the dealers are saying they can't find the kilogram bars to supply. They're digging deep in vaults around the world to supply it.
Now, with silver you get two things happening at the same time. Silver is still considered "money" in almost all the world, but yet it is also a manufacturing material. Solar panels, medical, electrical contacts, solder, etc, etc...means silver gets consumed each year. With gold, they may turn it into coins or jewelry, but that's it. It's still there. With silver, tons of the stuff ends up in landfills as people discard their TV's and old computers and cell phones. So as the demand for Gold is going parabolic, the demand for large purchase silver is catching the rebound. Sure you can go to any dealer and buy 20 silver eagles. But try and buy 10 million in silver bars. Tell me how you make out. Because supply is almost gone.
If I'm right and the London exchange and the Comex are losing control of the Gold pricing mechanism, we could see a dramatic rise in both metals. Even if I'm only half right and they simply get forced to allow the prices to move higher in a controlled manner, then it stands to reason that the miners are going to see another surge.
I'll let you all chew on what I just wrote and then maybe tomorrow we'll talk about some companies and some plays we can concentrate on. But know this... if you do NOT own any physical Gold or Silver, do yourself a favor. Call Chad at Cornerstonebullion.com and buy "some'. I have been using Chad at cornerstonebullion.com for 9 years now and find them to be reliable, honest, and prompt. I've heard from many of our subscribers that have indeed had very good experiences with them. So if you want to buy some ( and you should) you should give Chad a call.
I have never wavered on my prediction that we will see Gold north of 3000 and Silver north of 70 dollars an ounce. Nothing feels better than having a roll of 20 nice shiny silver eagles in your hand. There's no counter party attached to it. It owes no one. It can't be replicated with a push of a button, it takes incredible labor to extract it from the ground. I truly believe Gold and silver are tremendously under valued.
