Ainslie Bullion - Daily news, Weekly Radio and Discussions

But aren't all these stories essentially "buy gold & silver" stories?

 

Being regurgitated
It's the links to their website at the end of the post

 

I just realised I need to buy more silver!

 

The price of risk
Yesterday we discussed the anomaly of a soaring US sharemarket and ultra low US treasury yields. One of the key reasons people are entering the sharemarket is a search for yield or risk. As Dr John Hussman describes: "Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." So as the US Fed (and most other Central Banks) drives interest rates to zero and has been buying up US treasuries suppressing those yields, investors have flocked to shares for perceived returns. However it appears to have gone too far. He estimates the market is double its historical valuation norms and "estimate that the S&P 500 will achieve zero or negative nominal total returns over horizons of 8 years or less". That disconnect from sense is called a bubble. The following 4 graphs illustrate this exactly.
Oh, and the relevance for Australia? We've all heard the adage "The US sneezes and we catch the cold". Moreover a crashing US sharemarket inevitably sees a flight to gold and silver, and that's a good thing if you already own it.

 

Whatever it takes
Listeners to our weekly wrap radio will be well familiar with the continual news of a struggling Euro zone. In the midst of the Euro crash their central bank head Mario Draghi famously said:
'Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.'
Since then he has tried zero interest rates, negative interest rates, and free loans but the graph below shows the result. He has hinted at outright money printing (ala US's QE, China, Japan and UK) but just says they are 'preparing' for it. We've spoken before about money printing and GDP and its worth keeping the graph below in mind before they inevitably start and comparing later. As Japan, the US and China (and UK to a lesser extent given they went a bit easier on the money printing) have shown, the new money only works for a little while but makes the core issue much much worse, and sets up a bigger crash when that inevitably happens too. At the risk of sounding like a broken record you can't 'print' gold and silverthey are REAL money.

 

The US Fed's Dilemma
As gold slid down this week on growing speculation of a raise in interest rates sooner than expected in the US, we should pause and consider they also just hit a record debt to GDP figure of 102% and wonder why that is not getting the headlines? In July the US budget deficit grew another $95 billion taking the fiscal year to date deficit to $460b. So far this fiscal year the US has borrowed 15.7c of every dollar it has spent and now carries the burden of no less than $17.7 trillion.

Their dilemma is to either raise interest rates and increase payments on their debt and risk driving the US back into a depression; or as Kirk Lindstrom puts it "If the Fed makes the same mistake it made in the past, keeping rates too low for too long and we get massive inflation where they have to raise rates to double digits again to crash the economy and contain inflation, then gold should soar." So whilst pundits have bet this week on an earlier rate rise by selling gold and buying shares because 'all is good' right now, they should maybe pause and both look below the surface of these employment numbers as we have reported before, and look ahead to a Wall Street without QE and past behaviours, and see a bit of gold as a very wise part of a balanced portfolio ready for either eventuality.


Source:
Also check out today ' Ainslie Radio' for a snapshot of the week, all things bullion.

goo.gl/PLfroc

 

Indian Precious Metals
Last week Indian officials announced they were in no hurry to repeal the gold import restrictions as their current account deficit simply could not handle the jump in (official) gold imports that would inevitably follow. The graph below however illustrates the extent to which silver imports have risen in response, with 2559 t imported year to date. When you consider this together with our previous report on the declining silver stocks on the Shanghai Exchange at a time when the price is below many miner's cost of production it highlights the extent of silver demand in key eastern markets. Stepping back a little, consider that the 10% import duty is applied to both gold and silver. Silver imports have increased since it was introduced whereas gold has markedly decreased. Verified reports of rampant gold smuggling abound, however silver's relative bulk (both in $/oz and relative density) makes smuggling all but impossible. One can only wonder at the real extent of gold smuggling going on and where (if?) that fits in already strong global gold demand figures.


Source:

 

Going broke

The US's own Congressional Budget Office (CBO) last month issued a report bringing forward their forecast on when the US will go broke. They now project this will happen in just 15 years' time, 2030, rather than their previous estimate of 2050. How can this happen? It is a combination of the obvious actions of the past and present, and less talked about future obligations. Simply, the US Government has not run a real surplus budget since the 60's. So to be clear, they have spent more than they have received (through taxes etc) for 40 years. In the throes of desperation trying to stimulate the post GFC economy they have increased it no less than 400% over 6 years funded largely by just printing the world's reserve currency. Their debt now stands at around $17.7 trillion. But that is just the beginning. They have future unfunded obligations that are committed, like social welfare and medicare that they don't even put on their balance sheet. The Government's own CBO say they are $15 trillion short of what is need to meet these needs over the next 75 years, but independent analysts have this number much much higher (go to the excellent http://www.usdebtclock.org/ for an eye opening experience).

Why are we raising this? Because it highlights our continual message that we are living in a world reliant on ever increasing debt and that is simply unsustainable. It highlights the tenuous nature of the whole system and that when it goes pop, which it will, you'd like to have some of your wealth in real money that can't be written off or inflated away. Gold and silver bullion. (It also highlights what our Government is trying to avoid through passing this budget).

 

Forgive my ignorance, but why is a bullion dealer posting on SS? It smells like an advertisement in a public forum of individuals. Meh, just sayin.

 

^^^ because some of us appreciate it !

 

Gold Silver Ratio
Whilst most people avidly track the gold price and silver price, fewer follow the ratio between the two. At the time of writing this morning that ratio has breached 66:1, near the top of its trading range over the last few years. Over the thousands of years that gold and silver have been used as money and wealth preservation that ratio stood at between 12 and 15 until the end of the 19th century. Since we left the gold standard in 1971 it has tracked up from the low 20's, dipping below that only once as the Hunt Brothers cornered the market in 1980. The last time it exceeded 70, it was followed by the 2011 rally that saw silver sky rocket to $48 and the ratio down to only 30.
The chart below illustrates where we are right now from a technical view point. For technical traders you can see it is due for a move toward the mean which would see silver outperform gold from here.

There is no doubt silver is the more volatile of the pair, seeing bigger highs and bigger lows. Some people trade that behaviour and we are seeing more people swapping their gold for silver in the store here too. If you really want to get adventurous and hedge your bets a little, you could look at going short a gold ETF or futures contract and long physical silver. That way if both go down you don't lose and if the ratio reverts to its mean you win.

 

The battle of the USD
On an almost weekly basis in our Ainslie Weekly Wrap radio we are reporting yet another attack on the USD's status as world reserve currency. This following quote from a recent Clive Maund article probably puts this and the growing tensions with Russia into perspective as well as any:
"Russia, in alliance with China, is threatening to bring an end to the dollar as the global reserve currency, which would mean the end of the American empire.
We are witness to the greatest struggle of our age the battle to maintain global dollar hegemony, and with it US economic, military and political dominance of the entire planet and this struggle is now coming to a head.

Notwithstanding its undeniably great accomplishments of the past hundred years, the relationship of the United States to the rest of the world is parasitic. This is because it creates money and debt instruments out of nothing, requiring virtually no effort, which it then swaps for goods and services with other countries. Because the US dollar is the global reserve currency, it is able to rack up astronomic deficits that would be untenable for any other country. US debts are now at such levels that if the US dollar loses its reserve currency status, the United States economy will implode and it will quickly be reduced to the status of a banana republic hence the sense of urgency in the face of growing threats."
Even a weakening USD normally sees gold prices increase so one can only imagine the implications should this actually play out

 

Frowns not necessary, was not knocking Ainslie Ronnie, just ignorant and asking. They have a comprehensive website providing detailed info, pretty easy to find by yourself?

 

That is true but many people who post on SS are dealers or ordinary SS looking to sell their products - from Administrators to ordinary members. Why single out Ainslie ? I and several others appreciate their posts. I have never considered it a ploy to buy their products but general info on the market and the current trends and developments. Ainslie Bullion keep up the good work.

 

Yes TingTing......a lot of it is biased, a lot of it is wrong and a lot of it is complete bullshit.........so how can I even think that....well for all that has been written...the proof is in the pudding and gold is.......still falling.
Regardless.....read and believe at your own peril.

 

Tolly it depends on your time frame. Gold is not falling for us all. Coins I bought in 2003/4/5/6 have fallen from highs a few years ago but are still up 200-300% on what I paid.
Also if you take June 2014 to now, gold is up not down. So to make a statement that gold is falling is not altogether accurate. To predict gold will fall to $1100 or $1000 or back to $700 (Goldman) to me is as bad and misleading as a prediction of $5000 by Christmas. $5000 gold will come but not likely this year.

 

If Gold is falling it is falling for all investors and dealers alike regardless of any previous lows. The long term trend is a different aspect to current movement and long term trend still remains Bullish although currently in a Bear cycle period.

This is always something to consider when you look at investing in the precious metals market, your potential time frame you are willing to invest for can give you a different prospective for profit/loss.

 

Yes, I agree.
$5000 - $8000 is a long term possibility but it could be at least 8 to 10 years away for this high to form. I still believe the $1000 or lower is required to build the base for the final assault. At this point it will be the darkest for most stackers but those that have the fortitude will be rewarded.

 

Where's the silver gone?
We reported previously on the 90% decline in silver holdings in the worlds largest physical silver exchange, the Shanghai Futures Exchange, on July numbers since the April 2013 price route. Well the first 3 weeks of August have seen another (incredible) 29% reduction taking the total holdings to just 103t! The graph below shows a number of things. Firstly the 2013 numbers explain where a lot of that missing silver has gone investors snavelling silver up whilst it was "on sale". Secondly, have a look at what happened in 2008 when the world economic system collapsed and people fled to the safe haven, and again in 2011 when we saw a supply squeeze. When you consider we are getting very close to another GFC (with many saying this one will make 2008 look like a picnic) and the SFE barometer of supply indicating another supply squeeze we may be set up for a new record in investor demand and this time with limited supply, associated price rises.

 

Interesting chart, pity it is not extrapolated.

What I see is industrial demand consuming silver, at about 500 million ounces per year; less the recycled element that moves forward into the next year, about a third I think.

We then have the investment demand which is increasing each year at about 250 million ounces. This supply is accumulative, so for the period of the graph, 10 years, investors have accumulated about 1,200 million ounces.

Further, I believed supply was about 1,000 million ounces a year so we are about 250 million ounces adrift. So I ask is this a jewellery element not included in the industrial application or has the recycled element already been factored in?

Finally, as jewellery, though overpriced to spot, is an investment in silver, and accumulated, it should be represented in the chart.