According to reports, the demand for silver from retail investors is driving the refiners to produce 24/7. The price has been slammed down by those behind the scenes in the derivatives markets, but according to the CEO of Sunshine Mint – Tom Power, he’s running at full capacity, and has already turned out 75 million ounces in 2015 so far, three times the level demanded in the last shortage year of 2008.
This has been exacerbated by “a major mechanical production issue” at the Royal Canadian Mint, who contracted with Sunshine, to produce the RCM 10oz silver bars.
Also according to reports, the Fund Manager Dave Kranzler, of Investment Research Dynamics Inc., has speculated that the U.S. Mint, is diverting output to both China and India, to satisfy massive demand there too.
BUT, also the Sunshine Mint, has already sold forward its entire productive capacity for the rest of 2015, and is now not accepting further orders.
Does this mean the price rise is imminent, that I have speculated about in several posts?
Perhaps it has already started, as the price has rebounded slightly, reaching $16.00 several times in recent weeks, and bullion dealers are already charging premiums as high as 30% over spot on bulk orders for less than 1,000 ounces, and even $4.75 per ounce for orders over 5,000 ounces…
Of course this might be coin dealers taking advantage of a short-term rise in demand, having bought silver slightly higher up in price, to get coins out to retail buyers without selling at either a loss, or a lower profit margin than they want, (or need?).
However, the Managing Director of the IMF, Madame Lagarde, has intimated that before 2017, we are likely to have another recession. She has avoided blaming China, which suffered its own slowdown in recent months, for the expected downturn, and the financial commentators have also supported this, partly because India is growing at a robust clip,which according to the Times of India, is forecast to grow at 8% p.a.
To be honest, I have long felt that the rise in precious metals of which I have often spoken, is unlikely to occur before the demographic timebomb that reaches its crescendo in the period 2017-2023, has begun falling. Then all that money that has been pushed into the system, will begin leaking into the economy in circa 2018-19.
However, it could also be the start of the third stage of this precious metals Bull-market, that I have been waiting patiently for ever since I began watching this financial crisis back in 2001. That happened to coincide with my being made redundant, for the third time within 28months, as the Software Company I worked for was wound down, post the Tech fallout in the March of 2000, and the parent Company went from having $4billion in cash reserves, to having the equivalent in debt as the companies they’d bought in the height of the tech-boom failed to realise the income that some thought they would and valuations collapsed.
It was then that Alan Greenspan, began juicing the economy, lowering interest rates to 1%. It was Greenspan’s reference to “irrational exuberance” in 1996, that meant the good chairman raised interest rates to their peak of 6.5% in May 2000, before the economy stalled, and starting January 2001, over the next two years interest rates were lowered in 12 baby steps to June 2003. This provoked the housing boom, as baby-boomers saving for their retirements bought buy-to-let property pushing up an already over-heating market due to the shadow boomers – the children of the baby-boomers – who began moving into starter homes, and trading up in their droves.
Of course the Banks, played along on this wild ride providing “Liar Loans” on the back of dubious proof of income – what did they care if people wanted to borrow 6,8,10 times their income, pushing up property prices still further, into the realms of fantasy. By 2006, prices at the high end were reaching the stratosphere.
And then, when the banks, having loaned out this toxic debt, packaged it up into parcels, bribed the ratings agencies to give it a “Triple A” rating, and then sold it on to unsuspecting pensions companies as Collaterised Debt Obligations – CDOs, but knowing it was bound to fail, then shorted the market to make a killing on Mortgage Backed Securites (MBSs) as they did so.
Hank Paulson, who went on to become Treasury Secretary, after he’d made his millions with his Bank Bonuses after serving as Chairman and CEO of Goldman Sachs until 2006, then begged the President and Federal Reserve Chairman, to bail his sorry ass out, and rescue the banks, post Bear Sterns, and after the weekend when it was decided to let Lehman Brothers fail and the Credit Crunch got under way.
In all, eight major U.S. financial institutions failed – Bear Stearns, IndyMac, Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Washington Mutual, and Wachovia — six of them in September alone, yet not one of the senior excutives of any major financial institution, has been charged with malfeasance of any sort. Of course this side of the pond, Northern Rock went under, and Lloyds-TSB, and RBS (Royal Bank of Scotland) along with other major financial institutions across the continent, were supported by government’s access to the nation’s credit card.
Were the actions of these banks’ loans officers not monitored by their supervisors? Were the supervisors not monitored by their managers? Were the managers not monitored by their executives? And finally, were the Banks not monitored by the regulators?
Whose heads then should roll?
After $4 trillion was pumped into the American Financial system, with the Troubled Asset Relief Programme (TARP) and then QE1, QE2, Operation Twist, and lastly QE3, which put $85 Billion a month in for nigh on 18months. But not forgetting the $15 Trillion, that was pushed through to Europe’s Banks and Financial Institutions via the Federal Reserve of New York, and RBS., or the heavy hand of the Federal Reserve, when the BLICS – Belgium, Luxembourg, Ireland, Cayman Islands and Switzerland, mysteriously bought Treasurys as the QE programme came to an ignominious end after the taper tantrums, raising their Bond holdings from $151Billion, to $818 Billion. (Source: Treasury (TIC) Federal Reserve)
And through currency swaps, these nations are helping the Federal Reserve export QE. Yet, as Madames Yellen and Lagarde admitted this week another recession looms on the horizon, and so does QE4 according to Bloomberg.
When that does happen, I wonder what that will do for Silver and Gold purchases? Or the value of crypto-currencies such as Bitcoin.
For those still not sure what crypto is all about, here’s a couple of videos.
– Bitcoin, the fundamentals
– Why Bitcoin worries the Bankers.
As many of those contributors to the above videos say, part of the reason for the rise of Bitcoin, is because of overly regulated markets, and governments increasing involvement in markets via central banks.
As government involvement has increased, so has the volatility, as decisions are poured over, by the markets as soon as announcements are made. And volatility threatens markets, because it frightens people away. They can’t make investments, when their lives are guided by making a living, and investing the excess (savings). People need relative stability.
One of the strengths of the free market is that each purchase and sale decision sends a signal to the markets. Is the deal price above or below other prices for similar products, thus sending a signal to other participants in the market. This leads to relative stability. Increases in prices, sends a signal to entrepreneurs to produce more of something, whilst a fall in price sends the reverse signal.
When governments and central bankers get involved, their heavy hand pushes markets this way and that, and those on the inside get the information before the rest of the market meaning they get to benefit. That’s why Bankers’ power has risen exponentially since the dawn of the Federal Reserve in 1913.
For those of you concerned about your privacy, there are tools that can limit the capability of the industrial recording of your on-line inter-actions.
Whilst we don’t advocate nefarious activity, we also believe in the Magna Carta principles enshrined in law in 1215AD, that required a “Writ” to be produced, making an accusation of wrongdoing, “Habeus-Corpus” and for a conviction to be made, there had to be undeniable proof laid before 12 of the wrongdoer’s peers, the basis of our jury system.
Without the government services trawling the internet and recording everything. You should be innocent until proven guilty, and mass surveillance serves no-one’s interests, least of all the wider public.
In a world where almost every activity can have political overtones, theoretically, any action could be used against you in the future.
You have been warned.
The following link, leads to a free download page, of a browser, that allows privacy. Yes there are restrictions, but it is a lot better then having nothing.
And for those who wish to go down the rabbit hole, and disappear from view, there’s a whole new operating system, that can be booted from a DVD or Flash-drive.
We receive no compensation for this service, but we’d appreciate it if you like us, or link to us.
– whatever you feel we are worth.
After posting this, I came across this link, which shows the extent of the government largesse on behalf of the taxpayers of the U.S….
As governments have used their ammunition in fighting to retain power for their Fiat currencies, the price of Gold and the Exchange Traded Product (ETP) or Exchange Traded Fund as it is more commonly called for Gold – the GLD has fallen.
But there comes a time in every charlatan’s performance when those watching no longer believe in the power of the magician pulling the strings behind the scenes.
In this case the arm of power behind the throne – the Central Banks – have sold or leased much of their Gold to Bullion Banks, who have sold this gold on the markets as their futures contracts came to an end, and the buyers took delivery, rather than as might have happened previously – settled in cash – it is increasingly obvious that as the number of contracts increase and more and more gold heads east to China and India, and north to Russia, and to numerous other central banks worried about their gold held in U.S. vaults, and have begun to increase their holdings, and repatriate their gold from overseas vaults, that it couldn’t go on forever.
And then this piece caught my eye…
So what will happen when the gold does really run out?
Initially, I suspect Bankers will settle for cash, but probably have to pay a premium to do so, as those who own the metals contracts extract their pound of flesh. This will probably be under the radar, at first, but it will eventually leak out, and as more and more people have to settle for cash, the premiums will rise. This will feed through into the published prices, as the disconnect between the paper price and the settle price increasingly becomes obvious.
According to figures I’ve seen there are between 100 and 200 contracted ounces, for every real ounce in existence. This is how the Bankers came to dominate the world and its economies. The left hand not letting the right hand know the truth or what it was upto.
Fractional Reserve Lending meant lending out upto 10times the amount held on deposit. Of course this assumes they hold ten per-cent in reserve. BUT in the last ten years, those same bankers have had as little as 3 per-cent and that means they were lending out in excess of 30x their reserves. And that is the reason for the boom, and the bust when we had our Bear Sterns and Lehman moments.
If the Bankers persist in this lending and futures contracts binge, then it will end in disaster for the banks (and us) but at that point, the price of gold – both official and unofficial, will explode to the upside.
Of course in the meantime, as Harry Dent has stated on several occasions, the price may fall in the meantime, as first deflation due to demographics, and his convergence waves take hold, but as has been mooted on Bloomberg today, perhaps QE4 is but a printing press away?
And if it happens, when all that money leaks into the economy?
Can you say Boom?
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To many, Capitalism, is what makes the world go round. But many others don’t really know what that is.
Where will all the food come from to feed these extra mouths?
So what is Capitalism?
Capitalism the word, derives from the word Capital – and Capital is…. “Savings”.
Of course savings, are generally stored in Banks, and that “capital” should generate interest. Of course interest is what the Banks give to the owners of Capital, and traditionally, the Bankers loaned out that capital to business people who would use that injected capital to increase profits, and those increased profits, would pay back the loan, and add value so that the expenditure of the capital is justified.
If we have a population explosion, such as happened after the second world war – the baby-boomers – we have a situation where fast approaching retirement the ‘boomers’ are now saving like crazy in their pension accounts, insurance or assurance policies, bank accounts and stock market brokerage accounts. Of course those who retire inevitably need income from their savings (some of which went into buy-to-let property which led to the boom, between 2002-2007) And yet interest rates have been lowered to zero per-cent or close to it, in Europe, the UK. and the U.S.
So as these savers are looking for yield from their savings, this has driven down Bond yields (A bond is a loan, to a country – such as aTreasury Bill, or Gilt – or a corporation, which generates interest to the holder.).And we know that to produce that interest, we need to generate growth – in the economy, and in the corporation.
BUT, all that growth relies on energy, and despite recent price falls in oil and gas, longer term, much of what happens in the sphere of energy is reliant on oil and gas production, which because of something economists are famiIiar with – EROI – Energy Return, On Energy Invested – we know that we are close to or past the Peak, and the energy cost of producing more energy, will lead ultimately to a collapse in the economy.
But few in the mainstream media, or among our politicians are willing to discuss this or how we might resolve this issue. Fracking is the U.S’s attempts, but as energy prices have fallen, the financial cost of Fracking is now placing undue strain on oil and energy suppliers, and upto 100,000 workers have been laid off in the U.S., and numerous oil companies are either in, or facing bankruptcy.
In the UK, the government has given corporations the power to search for oil and gas under homes, without the normal permissions processes, that the local community normally have, through the licensing process, and through local council control and planning laws.
This therefore begs the question, what should we be told, and if we should what we need to do about it.
This video over an hour long explains how we have been duped.
At almost two and a half hours long this video below gives a full picture of how those in power, are still duping us.
As these videos suggest, the rise of the corporation and its influence of the political process, suggests we are well on the way to neo-fascism along the lines of Hitler’s Germany. And the energy revolution I spoke of in a previous post can’t come soon enough.
And Michael Ruppert who you saw in the first film, was a man on the inside, who having been threatened and shot at by CIA operatives, left the police force to investigate how the world really works. Here he discusses his findings, shortly before his untimely death at his own hand.
According to one recent Reuters article, China has now decided to update the world with its Gold holdings on a monthly basis, and has informed us, that they have added another 19 tonnes to their holdings. Not a huge figure given what we have learned of imports and production in recent years, but perhaps it is an attempt to ratchet up pressure on those pesky western bankers in the IMF that have refused entry to the SDR currency basket?
Time you made some changes in your life?
Time to get some Gold? Or Silver? Or Crypto-currency?
Is this the calm before the storm? Some months ago, before Xmas, I floated the proposition that “The West” might be about to shoot itself in the head, heart, AND foot, just to make sure.
My reasoning was that I felt Russia, might be about to demand payment in Rubles for their gas, and other things, which would effectively shoot the west in the aforementioned organs, as the U.S. sought to ratchet up pressure on President Vladimir Putin.
The U.S. through its monetary influences and power in International Organisations – the IMF, BIS, Federal Reserve, and of course the ECB, Bank.of.England, U.N. and Bank of Japan. is waging war on Russia, and the Fed by its agents is waging that same war on both Gold and Silver too, in a vain attempt at defending and extending American Capital influence ostensibly to protect itself from the rise of China and a resurgent Russia.
However, having recently read some Russian blogs, I now know that Russia is using its dollars received for its energy, to buy Gold at the artificially low prices that are artificially low due to Fed manipulations, thus doing two things.
One is that President Putin is helping to relieve America, and the West of its Gold hoard, and two, he’s also ridding himself of those pesky dollars, that he doesn’t really want.
And China a little over week ago released its “ahem” Gold reserve figure, which appeared to all the gold watchers as an absolute falsehood. It just isn’t possible, that after importing 100 tonnes per month plus, for three consecutive years, and mining 3-400 metric tonnes per year, that the PBoC only increased its Gold holdings from 1,054tonnes, by some 600 tonnes over the 5years since its last declaration to 1,658 tonnes.
As it is, we will need to wait to find out just how big of a lie this really was.
On bloomberg yesterday morning (EST-July 29, 2015) we learned that Russia is stopping the purchase of foreign currencies, as the Ruble comes under renewed pressure. And later a talking head – Scott Bauer – Senior Market Strategist for Trading Advantage, in a face to face commentary with Julie Hyman of Bloomberg, suggested “Now is the time to dip a toe in the water” with regard to Gold bullion.
But as I was trawling the blogosphere, looking for additional information, I fell upon this recording of an interview between gold commentators with Dave Kransler and Rob Kirby of Kirby Analytics from a couple of days previously:
The key takeaways from the interview, are that the recent price fall in Gold, was as a direct result of manipulation, as $2.7billion worth of Gold Futures contracts, were sold short on Sunday evening EST, (Monday morning – Shanghai time) a full two minutes before the Shanghai Exchange opened, which if it was an attempt to get the best price for Gold – failed abysmally.
In fact Rob Kirby, thinks it was a warning shot towards the Chinese, via Asian markets to stop buying Gold. He then went on to quote fellow Gold Bug and commentator when he quoted – James Turk:
“We’re witnessing the Western World destroy its money”
And yesterday also, the Fed announced it was on course to raise interest rates sometime this year. One commentator on Bloomberg even went as far to suggest that it would be better to raise early, and then have ammunition if they fell back into recession, but I’m not so sure that they’re not already pushing on a string as the saying goes.
After the stock market crash of 1929, the Fed cut interest rates too, and then 8 years’ later in 1937, raised interest rates again, only to watch as the U.S. quickly fell back into recession, until the second world war which meant the U.S. had to turn some of its productive capacity over to war production. We shall see if a repeat of this is on the cards.
The beginnings of this financial madness began with the Soviet Union. The west in NATO, but especially the U.S., needed to outspend the Soviets with military spending, and the only way to do that, was with a flexible currency, and that meant, they couldn’t have a currency backed by gold, as that would limit the ability of politicians and the Fed to inflate the currency supply – remember Nixon closed the Gold window temporarily in August 1971, and this temporary closure has been in effect ever since.
At the end of the Soviet Empire, the European organisations made agreements with the Soviets, to not encroach into former soviet countries, yet many of those countries, in order to not risk re-colonisation, chose to either join the North Atlantic Treaty Organisation (NATO) or European Union. (E.U.). This was of course encouraged to strengthen the U.S’s Federal Reserve monetary system, which as I’ve mentioned numerous times is now no longer backed by physical metals but requires constant growth to feed the beast. At one point Russia even made overtures to join NATO.
But like the childhood game of “King of the Castle”, the U.S. right-wing group within government – the neo-cons – decided it wasn’t enough for the U.S. to win. The old cold war enemy – Russia, had to lose.
Dr. Paul Craig Roberts – Ex Treasury Secretary under President Reagan, says “The US Government is the most corrupt on Earth”.
“It’s like that film The Matrix… We live in a totally made up world”
– Dr. Paul Craig Roberts.
When this House of Cards collapses, real money will achieve its true value.
So, from a financial perspective, buying into Gold, Silver, and Gold and Silver miners at their current low valuations is beginning to make even more sense as most miners have fallen in excess of 70% in price, and Silver now trades below $15/ozt.
And if you’re wondering about the demand for metals, perhaps these two silver charts will reassure you of where the future lies…
And this, that shows how silver has been supplied by government sales that have come to an end…
To that end, I’d like to re-introduce you to a miner, that I have been following for some 12+years…
The company is predominately a junior gold miner, but has mineral properties in several countries in Sub-saharan Africa – Democratic Republic of Congo, Angola, South-Africa, Botswana and Zimbabwe…
Unfortunately for its shareholders, a number of events outside management control have had a dramatic effect on the company over the last decade, and its share price has suffered, this has also meant several management changes, particularly in early June of this year, when the most recent CEO was voted off the board by some large shareholders, as the share-price languished.
Shortly after, the company announced the Nominated Adviser (NOMAD) was to resign too, and a new one would be looked for.
This prompted much speculation amongst shareholders, that the new board would deliberately fail to appoint within the required timescale, and thus the listing on the AIM would be withdrawn under its rules, taking the company private.
However, on the final day before de-listing, a new NOMAD – Grant Thornton UK LLP – was announced, and a new broker too to come on board in the not too distant future.
The price prior to these announcements, had dropped like a stone, and halted at just 1.15p (GBP) before a small rebound to circa 1.35p.
However, in the last two days, the board has published its Annual Accounts, and laid out management plans for the future.
The mood of the newcomers to the board appears to have been, that things were happening too slowly, and that the necessary cost cuts, and financial re-organisation was long overdue, meaning Corporate Overheads were too high at a time of falling ore prices.
The Company owns several properties in Copper, Nickel, Diamonds, and of course Gold.
The principal producing Gold mine is flowing at the rate of just below 60,000 ounces of Gold per annum (a little over 1,000 ounces per week) (85% owned). Their subsidiary Nickel mine has been on care and maintenance as has the 75.4% owned Nickel smelter and refinery. Which is the only Nickel mine, smelter and refinery in the whole of sub-Saharan Africa, and to build from scratch would cost upwards of $500million. (some valuations have even suggested circa $750m)
Annual Revenue increased 6.9% to $152.3 million, with group net cash rising by 81.3% to $11.6m and EBITDA came in at $18.8m, with COP rising slightly to $1,067/ozt up from $959/ozt last year, with the all-in costs up to $1,259/ozt from $1,186/ozt..
The main mine – Freda Rebecca produced 57,799 ounces of Gold, slightly down on 2014 from 58,704, but given that a leach tank fell over duriing the early part of the year and was out of commission for a few weeks while a suitable replacement was found and repair carried out meant some lost production. The Company’s nickel production was also down slightly.
However, the company last year raised a $20m corporate bond, which now sits on the books as an asset, with $16.4m banked last year, and the final tranche some of which was recently received, and the rest to be received by the end of September this year.
This money will be used to restart smelter operations, at the Nickel smelter and refinery, which were put on care and maintenance during the nickel price collapse, and the collapse of the economy during the Zimbabwe hyper-inflationary period.
For these reasons, the company share price collapsed, but if a fair metals price and a stable political environment ensues, then a share price in the region of £0.50 – 0.90 would seem realistic, and that is a long way up from these depressed levels.
The Smelter’s excess capacity will be used to smelt ores from nearby miners to ensure full capacity, which is 17,000tpa, and to raise profitability, at least until the “Trojan” mine which is part of the group, can be brought back into full operation, and the massive ore bodies accessed. The existing nickel mine is one of four – Hunter’s Road, Shangani, Maligreen, and Trojan
which is due back on-line early next year, which together with two Gold mines – Freda-Rebecca, and Makaha (100% owned) which is an exploration property are Zimbabwe based.
In South-Africa, they have the Klipspringer Diamond mine. And in DRC, they are not yet mining, but are exploring on several properties, which are either wholly or jointly owned, with a 9kilometre rift, that has already had measured 2.9million ounces of Gold, with 6 of the nine kilometres still to explore.
Whilst I am not advocating anyone invest their pension pot in this junior, with political risk, not least from a President and his closest advisers, who seem to have a deep seated resentment for ownership of Zimbabwean assets by non-natives.
Despite this, a wind of change is beginning to emerge, as recognition that without access to expertise and finance from the best sources, that the economy cannot hope to flourish, but as Robert Gabriel Mugabe is now the oldest Head of State in the World, and its longest serving, when he departs the political stage, the political risk in this blighted country will turn, and the price of this small miner will explode to the upside, as happened several years ago when it was reported that he (RGM) was ill, I do feel that for those with a little risk tolerance, a small investment might be worth the inevitable risk. But nothing in life is a certainty…
However, if Gold explodes upwards to the prices I ultimately predicted for precious metals some years ago, of $8,500 for Gold, and $500 for silver, then all miners will benefit, but those who are highly leveraged with controlled costs, will benefit the most, and junior miners with good resources, will explode by multiples of this. In the last Gold bull market in the 1970s, some of the junior miners went up 100,000%.
And this miner is? MWA,- Mwana Africa.
In summary, the company Mwana Africa has operations in Zimbabwe and South Africa, has several exploration properties in 3 other countries, a controlling interest in a nickel mine, smelter and refinery estimated to be worth half a billion pounds, a well educated and trained workforce, 5+million ounces of Gold, A total of 2 million tonnes of kimberlite with diamond grades in the measured and indicated categories of 51 carats per hundred tonnes, a copper resource in DRC that is currently estimated to be in excess of 200million pounds, and 36million tonnes of nickel ore with a grade at 0.55%.
So, why is this company still valued at a Price Earnings Ratio of 7, and a valuation of just $17million?
In a word – Politics – at home and abroad. But the storm is approaching, which will give this junior a serious jolt of lightning.
NB: Nothing in this post should be considered investment advice. The prices of shares can go down as well as up, and those who invest should seek professional advice. The writer of this post has a small holding of this particular stock. And this is considered a long-term holding.