TND Podcast Spotlight: Shadow of Truth #70
Below is a highly engaging interview with James Turk in which he discusses the key indicators to watch in order to anticipate the next big leg of the precious metals bull market. “To me the real bull market in gold began in 1913 with the creation of the Federal Reserve.”
By law the U.S. Mint is supposed to produce enough silver eagles to meet demand. Originally the law stated that the silver used in U.S. minted coins had come from U.S. mines. The U.S. produces roughly 40 million ounces of silver per year. About five years ago the demand for silver eagles began to outstrip the amount of silver sourced from U.S. mines that could be made available for silver eagle production. The law was amended to enable the mint to use silver imported from Mexico.
From time to time since the summer of 2008, the U.S. mint has had to halt its silver eagle sales because of a shortage of silver. This occurred once again in the middle of 2015 and the production halt lasted about 3-4 weeks. Since that time, the mint has limited the amount of silver eagles to one million coins per week. In 2015 the mint sold 47 million silver eagles, an amount which was stunted by the production halt. It is likely that the mint would be able to sell in excess of 60 million silver eagles in 2016 in the absence of production limits.
Make no mistake, curtailing production like this is nothing more than a form of price control. If the demand for silver eagles outstrips the supply, then the price should rise. “Price” is the ultimate mechanism by which supply and demand is equalized. That is a law of economics. If the demand for silver eagles is greater than supply because the mint can’t secure enough silver to meet demand for its product, then let the price of silver rise to the point at which supply and demand equalize. That’s how free markets are supposed to function.
They can force a market into a certain price level but that has to be met with metal if people are asking for metal to be delivered at those low prices and metal is getting scarce. – James Turk
The fact that the U.S. Government has had to impose production controls on the production of silver eagles is one of the many indicators which reflect the fact that the Government is losing control over the financial and economic system.
The relative price of gold and silver is a thermometer that measures the degree of systemic health at any given point in time. Since gold and silver hit interim bull market highs in 2011, the western Governments and Central Banks have colluded to suppress the price of gold and silver. This was imperative to their ability to continue the massive transfer of wealth from the middle class to the ruling elite through the use of Wall Street’s financial Ponzi schemes and the Fed’s ongoing debasement of fiat currency.
The Shadow of Truth hosted Bitgold’s and Goldmoney’s James Turk for a highly engaging discussion about the current move in the precious metals market. Mr. Turk sees it as yet another signal to the markets that Governments are losing control:
Both gold and silver are so cheap relative to historical norms and historical valuations that it doesn’t matter if it’s overbought, it can stay overbought on a short term basis for a long time – longer than we can possibly expect. What’s important is not short term overbought or oversold indicators but what the trend is. And to me the trend is higher in both gold and silver. I’m measuring this by saying that gold is above all of its short term moving averages. – James Turk
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About Dave Kranzler:
I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics. Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.
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