Category Archives: Outside Commentaries

The Silver Institute released their World Silver Survey 2013 this week. This thorough report on every aspect of the global silver market shows robust investment demand contributed to silver achieving its second highest average annual price on record in 2012.

“Robust global silver investor demand was the dominant driver of silver prices last year, accounting for almost a quarter of total silver demand. Averaging $31.15 per ounce, 2012’s price level was the second highest on record, behind the average reached in 2011. While last year was a volatile year for most precious metals, globally, silver investment rose to a total of 252.7 million troy ounces (Moz). That figure represents approximately $8 billion on a net basis, substantially above the annual average of $1.2 billion over the 2001-10 timeframe, according to “World Silver Survey 2013,” released here today by the Silver Institute.

Investors remained significant net buyers of silver in 2012, as evidenced by the 21 percent increase in implied net silver investment (which includes physical bar investment, exchange traded funds and fund activity on Comex) to set an all-time high of 160.0 Moz. By comparison, in 2004, the level of implied net silver investment was 5.4 Moz.”

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Wealth Wire posted an article today that conveniently overviews the numerous reports about massive physical precious metals sales all around the world. Metals dealers large and small, as well as major mints, are experiencing supply shortages. While we’re not sure if a true run on physical precious metals is imminent, all the evidence suggests that the sooner you take advantage of these bargain prices, the better.

“The crash of the price of paper gold on Monday has unleashed an unprecedented global frenzy to buy physical gold and silver.

All over the planet, people are recognizing that this is a unique opportunity to be able to acquire large amounts of gold and silver at a bargain price. So precious metals dealers now find themselves being overwhelmed with orders in the United States, in Canada, in Europe and over in Asia. Will this massive run on physical gold and silver soon lead to widespread shortages of those metals? Instead of frightening people away from gold and silver, the takedown of paper gold seems to have had just the opposite effect. People just can’t seem to get enough physical gold and silver right now.

Those that wish that they had gotten into gold when it was less than $1400 an ounce are able to do so now, and it is absolutely insane that silver is sitting at about $23 an ounce. If the big banks continue to play games with the price of gold, we are going to see existing supplies of physical gold and silver dry up very quickly. And once reports of physical shortages of gold and silver become widespread, it is going to absolutely rock the financial world. But this is what happens when you manipulate free markets – it often has unintended consequences far beyond anything that you ever imagined.

The following are 10 signs that the takedown of paper gold has unleashed an unprecedented global run on physical gold and silver…”

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In his latest piece on Forbes, Richard Lehmann reviews the simple, intelligent, historical reasons for owning gold, and argues that a sell-off by short-term speculators has not changed gold’s fundamentals.

“Not to own gold is to trust government at all levels and in all times to be able to do the right thing to maintain the economy on a steady course and manage the affairs of man in a fair and orderly manner. I could stop there and have won the argument, but that would not be fair to gold’s critics, so let me give them some things they can shoot at.

Gold is criticized as a relic of the past, but that is precisely why it is still so relevant. At no time in history has it lost its appeal as a store of value and, in fact, it represented the universal money until nation governments and warfare made the creation of paper money a necessity.”

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There’s a lot of misinformation circulating about the supposed economic woes caused by the now-defunct gold standard, and the supposed economic boons created by New Deal government spending in the 1930s. Brian Domitrovic’s recent op/ed in Forbes exposes the errors of some of the highest profile gold detractors in the media. He points to the data that proves the gold standard actually promoted real economic growth and stability. Do you have friends who doubt gold and claim a gold standard is dangerous and impractical? Make sure they read this article!

“Legitimate history of the gold standard, and its real simulacra, will inevitably sing of broad prosperity, growth, and opportunity. Skidding, international breakdowns, and affluence forsaken will be what attends “abolishing” and otherwise finessing the gold standard. (By the way, the worst year in American economic history was clearly 1933, one year gold was in fact abolished.)”

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The Financial Times published a story on Friday featuring Peter Schiff’s new offshore investment bank, Euro Pacific Bank, which has seen a 150% increase in new customer interest since the news of deposit confiscations in Cyprus. The article examines new ways for investors to protect their wealth from irresponsible central banks.

“‘Banks in Cyprus took deposits and lent them to the Greek government by buying Greek government bonds,’ [Peter Schiff] notes.

Under bailout plans hammered out this week, large depositors in Cyprus’s two biggest banks will pay the price for those loans; they could see their money wiped out entirely.

‘What’s going on now is a wake-up call from Cyprus. People are thinking about these things more and doing more research,’ says Mr Schiff.”

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Could the Cypriot crisis be the beginning of the end for the modern fractional-reserve banking system? Joseph Salerno’s commentary at the Ludwig von Mises Institute considers to the possibility. One thing is certain: trusting your savings to a bank is no longer a wise plan for wealth preservation.

“Getting back to the Cyprus deal, admittedly it is hardly ideal from a free-market point of view. The solution in accord with free markets would not involve restricting deposit withdrawals, imposing fascistic capital controls on domestic residents and foreign investors, and dragooning taxpayers in the rest of the Eurozone into contributing to the bailout to the tune of 10 billion euros.

Nonetheless, the deal does convey a salutary message to bank depositors and creditors the world over. It does so by forcing previously untouchable senior bondholders and uninsured depositors in the Cypriot banks to bear part of the cost of the bailout. The bondholders of the two largest banks will be wiped out and it is reported that large depositors (i.e., those holding uninsured accounts exceeding 100,000 euros) at the Laiki Bank may also be completely wiped out, losing up to 4.2 billion euros, while large depositors at the Bank of Cyprus will lose between 30 and 60 percent of their deposits. Small depositors in both banks, who hold insured accounts of up to 100,000 euros, would retain the full value of their deposits.

The happy result will be that depositors, both insured and uninsured, in Europe and throughout the world will become much more cautious or even suspicious in dealing with fractional-reserve banks. They will be poised to grab their money and run at the slightest sign or rumor of instability. This will induce banks to radically alter the sources of the funds they raise to finance loans and investments, moving away from deposit and toward equity and bond financing. As was reported Tuesday, March 26, this is already expected by many analysts…”

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