Gold Force Majeure?

So what happens when the "evil rich banks" (tongue in cheek) push paper metals to zero and thus drive physical demand to ad infinitum?

Perhaps we should ask Terrence Duffy, President and Executive Chairman of CME Group Inc,. and see what he has to say.

:40s mark of video

http://libertyblitzkrieg.com/2013/04/30/cme-president-on-gold-they-dont-want-certificates-they-want-the-real-product/

For those short on time and interest in the subject......

"What’s interesting about gold, when we had that big break two weeks ago we saw all the gold stocks trade down significantly, we saw all the gold products trade down significantly, but one thing that did not trade down, was gold coins, tangible real  gold.  That’s going to show you, people don’t want certificates, they don’t want anything else.  They want the real product."

- Terrence Duffy, President and Executive Chairman of CME Group Inc,. on Bloomberg TV  (April 29, 2013)

That is just an amazing statement!

So was it the record sales of physical by the US mint, physical shortages in China, India, and Japan...or perhaps that Perth is once again working weekend shifts to get coins out?  Perhaps it's the 36% premium on silver coins (which are still trading at 29 dollars+, and our local shops which had 0 gold as of yesterday), or JPM's little drop in eligible gold, or perhaps he's just wrong.

http://www.zerohedge.com/news/2013-04-26/jpmorgan-receives-no-new-comex-gold-today-converts-registered-eligible


Or we could look at a bit of history.
When the Great Housing Bubble crashed in 2007/2008 the Fed decided to monetize, or in the words of Ben "to stimulate the economy through lower interest rates", which has been followed by Japan, UK, EMU, BRICS, and Israel.  (I know I missed a lot of countries).  So the question on everyone's mind should be; is this a coordinated effort by central bankers, or are they acting independently and we're witnessing a currency war?  This might explain a bit of Mr. Duffy's comment.

We know for sure, the Fed owns over 4% of the US housing market, Japan has devalued 20% YTD, China is setting up trade clearing accounts with many independents, and "the GDP deflator was 1.838% (1.8%.............I honestly can add nothing, just repeat............1.8%).  Add in a touch of foreign bank buying of US Treasuries (most notably China and Japan.  The first to devalue, the latter to keep inflation in check) and you end up with a lot of folks willing to take no yield on money.  Thus they loose confidence in manipulated markets, purchase physical and wait for the debt to clear and the New Great Depression to subside.  (To be fair, manipulation may be a strong word but interest rates, gold and silver are set/maintained by bankers.  Perhaps we should touch on LIBOR, CDS pricing, HFTs, derivative position with zero chance of clearing, a debt/GDP ratio masked by hidden additions, Cypriot confiscations and the FDIC's post Dodd-Frank implications, and of course US Treasuries Gold/Silver reserves) 

So what happens when the "evil rich banks" (tongue in cheek) push paper metals to zero and thus drive physical demand to ad infinitum?

Cyprus Capital Restrictions Detailed

http://www.telegraph.co.uk/finance/financialcrisis/9958595/Cyprus-imposes-capital-controls-the-measures.html

4D Record

As a bookmark, please note the call for the next 5 years "liquidate all assets buy metals" 3/13/13

Greece is Fixed, again

http://www.guardian.co.uk/world/2013/mar/11/yannis-stournaras-greece

Argentine Inflation = Hot Money

Nothing like pegging your currency to a nation with very low inflation...like the US for example.

http://modernmoney.wordpress.com/2011/01/31/argentina-inflation-due-to-pegged%C2%A0currency/

and that leads to......

http://www.zerohedge.com/news/2013-02-04/argentina-freezes-supermarket-prices-halt-soaring-inflation-chaos-follow

Debt to GDP

Interesting article about historical growth rates for nations based on size (market cycle) and Debt/GDP ratios, and inflationary averages.

GROWTH IN A TIME OF DEBT
http://www.nber.org/papers/w15639.pdf?new_window=1
by
Carmen M. Reinhart
Kenneth S. Rogoff


Notes"
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES (does not include private investors)

FHDebt/GDP Ratio grew 7.5% YoY to 40.49% in October of 2012

http://www.treasurydirect.gov/NP/BPDLogin?application=np
DEBT HELD BY THE PUBLIC
PDebt/GDP Ratio grew 7.7% YoY to 82.8% in October 2012

With the contraction in 4Q 2012 of .1%, and a slight underestimation of the deflator, it's likely PH/GDP is above 85%.  
If CPI is allowed substituted for the deflator it's quite likely the ratio is over 90% on 1/1/2013, we'll just have to wait on the releases to find out.

Credit Supernova! by Bill Gross

http://www.pimco.com/EN/Insights/Pages/Credit-Supernova.aspx#.UQp3KOIdHWo.twitter

Greek Newz

In Greece, purchases of more than 500 bucks must be transacted via credit card to ensure proper tax collections....that's if you have the money.
Seizing bank accounts without due process:
http://www.imerisia.gr/article.asp?catid=26516&subid=2&pubid=112986874


In other news, the bankers confess they hosed the people of Greece???
Confessions of the IMF:
http://www.imerisia.gr/article.asp?catid=26516&subid=2&pubid=112987058

Meet the Money Factory

Great name for a website....

http://www.moneyfactory.gov/

And....We're Out of Silver

http://www.treasurydirect.gov/govt/reports/pd/mspd/1943/opdm021943.pdf
2/1/1943  -  Report showing silver dollar holdings by treasury to equal 361,805,991.7 oz.
Silver holdings of 1.17b oz.


On the treasury FAQ page the following:
http://www.treasury.gov/resource-center/faqs/Currency/Pages/edu_faq_currency_sales.aspx


Question:

I have some old silver certificates. How can I trade them in for silver dollars?

Answer:

On March 25, 1964, C. Douglas Dillon, the 57th Secretary of the Treasury announced that silver certificates would no longer be redeemable in silver dollars. This decision was pursuant to the Act of June 4, 1963 (31 U.S.C. 405a-1). The Act allowed the exchange of silver certificates for silver bullion until June 24, 1968. This was the deadline set by the Congress. Since that date, there has been no obligation to issue silver in any form in exchange for these certificates. You may be interested to know that the Congress took this action because there were approximately three million silver dollars remaining in the Treasury Department's vaults. These coins had high numismatic values, and there was no way to make an equitable distribution of them among the many people holding silver certificates.

Silver certificates are still legal tender and do still circulate at their face value. Depending upon the age and condition of the certificates, however, they may have a numismatic value to collectors and dealers.

That's 2,828,619 oz 

http://www.treasury.gov/about/organizational-structure/ig/Documents/oig11004.pdf

2009/2010

7,075,171.14oz

As of 12/5/12 deep storage had not changed from the 7m oz of 2009/2010.

http://www.treasury.gov/about/organizational-structure/ig/Audit%20Reports%20and%20Testimonies/OIG13018.pdf

This article appeared...source is reputable, though often appears overly pessimistic on silver supplies.

http://www.silverdoctors.com/is-ted-butlers-silver-panic-imminent-apple-contractor-claims-new-imac-production-delayed-over-silver-shortage/

Interesting, when put in perspective of:

http://www.safehaven.com/article/5204/the-real-silver-deficit