May 25, 2024

Inflation, Deflation or World Depression?

calculatorShould We Discount The Consensus?

The debate on the outcome of bailouts and money printing continues.  A review of some of the current thoughts on Fed and Governmental action predict different possible outcomes – none of them particularly desirable.   When the consensus seems unanimous, maybe it’s time to discount the consensus?

The Marc Faber Interview by Peter Schiff

Marc Faber explains why bailouts and fiscal stimulus don’t work and are counterproductive to economic recovery.  Inflating our way out of the financial crisis is seen as the only option by the government.  Higher inflation  will be negative for both bonds and equities.

The Marginal Productivity of Debt

New money creation will only cause a further drop in price levels and cause a further contraction in the economy since the marginal productivity of debt has turned negative.  Bernanke’s flood of new money may cause something far worse than a depression.

Bailout Economics

Are we destroying capitalism by trying to save it?  The diversion of capital to failed enterprises is a recipe for disaster as money moves to the weaker hands.  What types of reform would foster an economic recovery?

Barack Obama as Herbert Hoover

How one small unanticipated event can trigger another depression.

Obama’s Auto Plan Gets Mixed Reviews

The administration’s first effort at ending the endless bailout cycle gets mixed reviews.  Sometimes you just can’t win.

US Mint Suspends Production of More Gold Coins

For those seeking the safety of gold coins, more bad news as the US Mint further restricts the production of gold coins.  Is the US Treasury seeking to limit the exchange of paper money into  hard assets?

Money Creation and The Fed

Does the explosive growth in the monetary base imply future uncontrollable inflation?

Where Is The Physical Gold And Why Does US Restrict Gold Purchases? Does The GLD Have Any Gold?

Strange Situation In The Gold Market

Two recent articles seem to suggest that there is a large physical shortage of gold.

Is the physical shortage of gold the reason for the large restriction in US Mint gold coin sales?   If there is no physical shortage, then why would the US government be severely restricting the ability of its citizens to own physical gold?

Furthermore, if there is a physical gold shortage, how is it possible for the ETF GLD to purchase 45 tons of gold last month?  Do the gold ETF’s really hold physical gold?

Gold Coin Sales Further Restricted By US Mint

US Mint Suspends Production of More Gold and Silver Coins

March 14, 2009 | Filed Under US Mint | 11 Comments

The United States Mint has officially announced the suspension of another slate of gold and silver products. The affected products are 2009 dated American Gold and Silver Eagle coins produced for collectors. These coins are considered collectible versions of the bullion coins.

Although these are collectible coins, they represent a sizable amount of precious metals sales and represent a method of gold and silver investment for many individuals. Last year, the US Mint sold 1,157,911 ounces of silver in the form of Silver Eagle coins minted for collectors. They also sold 155,740 ounces of gold in the form of Gold Eagle and Gold Buffalo coins minted for collectors.

The following message was posted on the US Mint’s website in the space where the collectible Gold Eagle coins typically appear. The proof coins has been offered uninterrupted since 1986. The uncirculated version has been offered since 2006.

Production of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins.

This adds to the lengthy list of 2009 dated precious metals products that have been “temporarily delayed” or suspended by the US Mint. In my previous post Actions of the US Mint Discourage Gold Ownership, I mentioned the delayed release of 2009 Gold Eagle fractional coins, 2009 Gold Buffalo coins, and all 2009 Platinum Eagle coins. The delay, which was first announced in November 2008, continues with no further explanation provided.

That makes a total of 38 precious metals products which have been delayed, suspended, or discontinued by the US Mint.

As it currently stands, investors or collectors looking to purchase newly minted American Eagle or American Buffalo precious metals products have only two options available. These are the 2009 1 oz. American Gold Eagle and the 2009 1 oz. American Silver Eagle. Both of these products continue to be subject to rationing.

Did The ETF Fund GLD Really Purchase 45 Tons Of Gold Last Month And If So, Where Did It Come From?

Where Do All The Gold ETFs Get Their Bullion From?

Don’t you think it is about time GLD and all the other popular international gold ETFs told its owners exactly what kind of gold they claim to own?

Can you imagine a situation where a person buys a gold ETF to own “non-gold” but finds out that they in reality own OTC derivatives on gold? That would be an investment in the same type of financial instrument (not gold) that one owns gold bullion to protect against.

The failure to unearth the Madoff scandal becomes incredible when one understands that the returns from the market claimed on the size of the hedge fund were logically impossible.

The exact same reasoning screams bloody murder when applied to the many Gold EFTs in terms of what it is they really own.

This begs one major question: From where did all the gold claimed to be owned by all the gold ETFs come from?

Where did funds such as GLD get their additional 45 tons in the last month?

We certainly can forget about that gold coming from the Comex. 12 deliveries would stand out like a sore thumb.

This concept and record keeping eliminates all exchanges around the globe as the source of bullion delivery in any size to all Gold ETFs.

The physical market is so tight that coin minting has all but closed down compared to what it was one year ago. It is hard to accept that the Gold EFTs can buy what the mints can’t.

Like so many other surprises of the last two years the Gold ETF shareholder may actually have no gold at all.

A perfect Ponzi scheme would allow you to surrender shares for bullion. You need only think about it.