Archive for the ‘World View’ Category

Delusions of Paper Silver vs Silver bars and Silver Coins

Sell Your Paper Silver and Get Your Hands On Some Silver Bars And Silver Coins
JANUARY 23, 2012

paper silver vs silver bars and silver coinsThe price action of silver is one of the most volatile within the commodity markets.  Several factors contribute to this volatility and have actively dissuaded some investors from participating through this initial phase of one of the strongest, ongoing, asset revaluations in decades.

As we begin to move into phase two of this silver bull market, continuing increases in industrial demand and applications, the growing crowds of new investors, and the diminishing rate of silver extraction from the earth (alongside several other factors) continue to produce a set of fundamentals which are unique to this essential, monetary precious metal.

Today, there are notable distinctions between the paper silver and physical silver markets.  Understanding the distinctions between paper and physical silver is critical to any serious precious metals investor.

The overabundance of paper silver has brought about a new dynamic in both the trading and physical delivery of investment grade, production ready, .999+ fine silver.

The advent of electronic and over-the-counter derivative trading has provided large financial institutions broad avenues for potential short-term price manipulation and chicanery.  Government and regulatory agencies have often overlooked the disproportionate grasp several large commercial bank participants currently have on the short-term silver market.

The bulk of today’s paper silver markets are centered around the trading of futures contracts mostly at the COMEX, ETFs or exchange traded funds in the equity/stock markets, and the over-the-counter derivatives traded amongst financial institutions.  These paper vehicles and ETF’s simply give investors paper silver price exposure, but they fail to provide any further insulation from broader economic risks such a currency collapse, a liquidity crisis, or a systemic failure.  Furthermore, the actual physical silver ownership for many ETFs is questionable, as many times exchange traded fund prospectuses are laden with exhaustive and vague legal terminology and loopholes.


To learn more about ETFs click here


The ownership of silver via the traditional paper silver markets such as the ETFs, options, and futures poses additional counter-party exposure to investors.   While counter-party risks may have at one point seemed minimal, incidents like the recent MF Global debacle prove otherwise.  In the case of MF Global, it appears that segregated customer account funds were used by MF Global, to place losing speculative bets using derivatives on European credit markets.  Many former clients of MF Global may never see their capital again, while derivatives have again helped produce a destabilizing effect on our financial system.

These financial derivative instruments, referred to by Mike Maloney as “financial voodoo” and by Warren Buffett as “financial weapons of mass destruction”, were initially created to limit risk.  But, instead of limiting risk, they have simply spread risk to the entire world!

Much of the paper silver markets now function like our current, hyper-levered, fiat currency system.  Many paper silver market makers hold merely a fraction of the underlying reserves they trade, yet they continually issue IOUs for potentially nonexistent amounts of underlying metals.  Meanwhile, additional participants are then allowed to build leverage upon the aforementioned fraction of silver reserves held, similar to banks in today’s fractional reserve lending scheme.

If a great number of big silver market participants overwhelmingly demand delivery in silver bars and silver coins, the fragility of today’s overly-leveraged paper silver market could be exposed for the world to see, driving physical silver prices to astronomical levels.

silver bars and silver coinsWe believe a gigantic divergence in the price of paper vs. physical silver bars and silver coins  is almost inevitable, as the illusive pricing of paper trading is overcome by the true market forces of, real world, supply and demand.  Understanding the importance of physical ownership is critical.  We aim to lead by example as we continue to acquire physical investment grade silver bars and silver coins, while avoiding paper vehicles.


Did you catch this article? Gold Price History All The Way Back To 1265.  *** Read More***

What’s your view on paper silver vs silver bars and silver coins – You comments are welcome.


Debt Collapse – The Case For $20,000oz Gold

Here is the trailer for the 90 min. video in the previous post.

What side of the greatest wealth transfer in history are you going to be on?




The Best Explanation of Money and Investing Ever!

Mike Maloney is the author of the world’s best selling book on precious metals investing. Since 2003 he has been advocating gold and silver as the ultimate means of protecting wealth from the games played by our governments and banking sector. In this 90 minute presentation he lays down his ‘most likely’ scenario for the global economy over the next deacde…short term deflation, followed by big or even hyperinflation. Here you will learn the true definitions of inflation/deflation, the difference between currency and money, price vs value, ‘Wealth Cycles’, gold and silver accounting for the expansion of fiat currency, gold and silver supply and demand, the differences between the today’s bull market and that of the 1970s, The Debt Collapse, and more.


Top 2 Countries That Accumulate Gold

Do They Know Something You Should Know?

Here is an article from the Wall Street Journal. Some people in the world get it. Inflation is real and anything that is associated with paper dollars (fiat currencies) is going to loose compared to real money – gold and silver.

China Is Now Top Gold Bug

by Carolyn Cui and Rhiannon Hoyle

Friday, May 20, 2011

Gold Bullion coins and gold bullion bars

Gold Bullion

Chinese investors are snapping up gold bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world’s biggest purchasers of the metal.

China’s investment demand for gold more than doubled to 90.9 metric tons in the first three months of the year, outpacing India’s modest rise to 85.6 tons, the World Gold Council said in its quarterly report on Thursday. China now accounts for 25% of gold investment demand, compared with India’s 23%.

The report underscores the rising appetite for gold among the growing middle-class in China. Fears of the country’s soaring inflation, as well as a search for new investments, is luring investors to gold, and marketing of the precious metal has also increased in recent months.

“I think people will be surprised by the strength in the Chinese demand, but we think this is a trend that is set to continue,” said Eily Ong, an investment research manager at the gold council.

Historically, India has been the largest investment market for gold. In 2007, just before investing in gold began to take off globally, India’s physical gold demand accounted for 61% of the world’s total. China’s was 9%. In terms of total consumer demand, which also included jewelry, India is still a bigger consumer of gold than China, taking in 291.8 tons in the first quarter, compared with China’s 233.8 tons.

Still, the voracious appetite shown by Chinese buyers prompted the gold council to increase its forecast for the nation’s demand.

“In March 2010, we predicted that gold demand in China would double by 2020; however, we believe that this doubling may in fact be achieved sooner,” said Albert Cheng, the World Gold Council ‘s managing director for the Far East. “Increasing prosperity in the world’s most populous country coupled with their high affinity for gold will serve to drive demand in the long term.”

Aside from having more money, Chinese investors are also focused on using gold as a protection against rising consumer prices. Unlike paper currencies, gold retains its value when prices increase. That has prompted many Chinese investors to flock to the precious metal.

Gold also is favored by savvy investors as an alternative investment vehicle to assets like shares and real estate. Chinese stock markets have been a disappointment recently, and the government has pledged to clamp down on housing speculation.

Many banks and jewelry stores in China have added outlets to sell gold bars and coins in recent months.

“Those new outlets have not only created demand but also required a starting stock,” which has an impact on total gold demand, said Philip Klapwijk, chairman of GFMS Ltd., a London-based metals consultancy that compiles the data for the gold council’s report.

Investment demand is one part of a broader base of buying. Jewelry demand remains another large source of gold purchases, the segment that India continues to dominate. India’s jewelry sector took in 206.2 tons in the quarter, well above China’s 142.9 tons. Still, China is catching up there, too. Its jewelry demand rose 21% in the quarter, faster than the 12% rise in India.

Demand for gold in the Chinese technology sector is also buoyant, with the country becoming an increasingly important center for electronic-component manufacturing and assembly, the gold council said.

The surge in overall buying came at a time when gold prices took a rare breather from their relentless march higher. Gold prices fell about 8% in late January to about $1,300 an ounce. Since then, prices have risen to $1,492.20 an ounce on Thursday and the metal is up 5% for the year so far.

Global gold investment demand increased by 52% to 366.4 tons in the first quarter, helping offset a 56-ton outflow from exchange-traded funds, which are popular investment tools in the West.

In developed countries, some investors have switched into physical gold holdings from ETFs. Demand in Germany and Switzerland both more than doubled, while the U.S. had a 54% jump to 22.5 tons during the quarter.

As the world’s largest gold producer, China churned out 350.9 tons in 2010, but it wasn’t enough to sate total demand— including bullion, jewelry and technology uses—of more than 700 tons, according to the gold council’s report. As demand continues to outpace supply, analysts expect China to import more bullion.

Thursday’s report covers only private-sector demand, but one wild card for the world’s gold market is how much gold China has been adding to its foreign reserves. Governments tend to announce their purchases after they buy.

Write to Carolyn Cui at and Rhiannon Hoyle at

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