Thursday, April 14, 2011

Overview: Main Thesis

By the Constitution, precious metal is monie.  By definition, fiat currencie is not monie, because the debt instrument is backed by a bond with no sound backing, which makes it an IOU.  This means that "a storage of wealth" it is not.  Fiat currency is not money.

The above ground supply of silver bullion is equal to the above ground supply of gold bullion.  The gold and silver bullion would fit nicely into four Olympic sized swimming pools.  Platinum is an even smaller market.

One percent of Americans own physical precious metal.  The world population has a percentage far less than that.  The realization that precious metal is the definition of money should raise this group, and that will increase the demand significantly.

As of now, most of that above ground supply sits in Central Bank vaults.  The banks rely on it as collateral to make loans.  They have other instruments, but nothing works better to make a loan than gold.  The other instruments are MBS, bonds, and the like.  These are mere IOUs in the face of physical assets, like precious metal.

Gold and silver are in every piece of technology there is.  Cars, computers, phones, medical equipment, etc.  Therefore investing in precious metal is a direct investment in technology.

The supply of precious metal is low, and slowing.  Gold production peaked in 2001.  Platinum peaked last year, and with silver demand increasing significantly, it will not be long before the sister metals Trinity are all on the backside of production.  Oil production peaked last year, and the price pf oil and precious metal has a direct correlation, because oil is the lifeblood of the economy, and this real asset only trades in unison with the price of money.

4 comments:

  1. Mr. Hendrix,

    from cold math's standpoint: would it pay off to crash stock market in order to cause global liquidation (which in turn could implode PM market) ?

    Being short tens of thousands of contracts (which is - as we know - exceeding yearly world mine production), with inflation pressing you to the wall and with the need of some cash flows into bond market, would you consider it as the option BEFORE end of June (May is the delivery month for Silver, therefore such timing scenario) ?

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  2. Lennon: I realize, as you do (hopefully) that the owners of the FED, the greatest criminal enterprise ever formed in the world, probably have vaults filled with 100s of tons of gold.

    I agree with the previous poster that they will crash the market to buy everything on the cheap thereafter. The agenda is quite clear.

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  3. Many thanks on previous answer Mr. Lennon.
    there is a very well known trader on Kitco called "cyclist", the guy is been on the spot in every mayor turning points...he also stated about the debt ceiling been a serious matter...plus QE ending by June... look like there is no other way to either rise the ceiling?, or continue QE?, both?, other are calling for a crash in the whole market if previous options are not approve?...what's your take on the matter?, many thanks for your time and guide.

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  4. The "M"arket "M"akers already crashed and burned the markets in the way you described during the Fall of '08. If they try and do that again, the rest of the world (BRICS/etc) will pull their assets, not buy US bonds, and seize the COMEX and other precious metal positions.

    Thank you for your comments.

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