I had just gotten off the phone to find out why the silver I ordered last month
has not arrived, and I get some runaround about how there is no silver to be
had to fill my order. Naturally, being familiar with how the supply/demand
dynamic works, I call the little clerk a lying piece of thieving garbage
because it is impossible that the market price of silver is going down in an
environment of zero supply and obviously rising demand.
Well, the phone mysteriously went dead right after that, and before I could
call him back and REALLY tell him off, I see where this is common right now, as
Theodore Butler says that "Premiums are up and delivery delays are longer. This
is something we are all witnessing for the first time."
And James Turk at Free Market Gold & Money Report notes that
it is the same thing in the gold market, too.
He says that a normal person would assume that the size of the working stock of
gold held by the United State's Mint to make the popular Gold Eagle coins and
miscellaneous trinkets would vary "from month to month, just like inventory
varies from month to month in any business as a result of changes in production
and the ebbs and flows in sales".
It gets spooky when he goes on to note that "indeed, the Mint's inventory did
vary monthly, up until March 2006. But according to the Treasury's reports, the
Mint's working stock has remained exactly 2,783,218.656 ounces since April
2006. How is it possible that the Mint's working stock has remained unchanged
for 28 months?"
Instantly I was on my feet, shouting, "Because they are all a bunch of lying,
corrupt scumbags exploiting a fiat currency and insane levels of
fractional-reserve banking, which is the very reason why you should be buying
gold and silver in the first place!"
I thought, you know, that this witty interruption of mine would impress Mr
Turk, and so I sat back down with a big smile on my face and crossed my arms in
smug self-satisfaction as I waited for him to shower me with praise, and maybe
offer to buy me a drink, or a pizza, or let me use his car for a couple of
hours or days.
Sure enough, he immediately said, "There are an infinite number of possible
answers. Maybe the Treasury does not want to part with its remaining gold at
these current low prices. Maybe the Treasury does not want Americans to
exchange their fiat dollars for the safe haven of gold as the central banking
fiat money scheme implodes. Maybe the Mint doesn't have any gold because the
2,783,218.656 ounces were loaned out. Maybe the Treasury doesn't have any gold
either. Of course, no one really knows because the Treasury isn't talking."
So, realizing that I am going to have to do more to impress Mr Turk, I stand up
and say, "I think it is all of these, and more! So much more! Maybe even
involving creatures from outer space, probably in the form of spores; and these
spores, see, have infected the brains of everybody except smart people like you
and me, so that they could control the behaviors of members of Congress, the
Federal Reserve, the media, the schools and most of the general moronic
populace to cause the collapse of the world's economy, whereupon flying saucers
containing the Main Invasion Force (MIF) will appear and take over the world,
whereupon everybody will cry out, 'Save us, oh, Mighty, Mighty Mogambo (MMM)!'
and I will laugh - 'hahahaha!' - rudely in their faces and say, 'It's too late
for that now! You should have listened to me years and years ago when I told
you to either stop electing socialist/collectivist morons who will bankrupt us
with allowing, and then spending, a fiat currency multiplied to ridiculous
extremes by a ludicrous fractional-reserve banking system, or start buying gold
and silver, but preferably both! So shut the hell up, you morons, because you
are getting exactly what halfwits like you so Richly, Richly Deserve (RRD)!'"
Apparently, Mr Turk was not impressed by my insights, and has not been around
many paranoid, schizoid, raving gold-bug lunatics like me, either. Obviously
visibly shaken, he cleverly diverts my attention by appealing to my greed, and
notes that the gold-mining XAU Index shows that "The XAU Index has fallen back
to the bottom line of its long-term uptrend channel."
If you have ever worked with technical analysis, you know that the price of
something that "has fallen back to the bottom line of its long-term uptrend
channel" that has been in effect since October 2000 is one of those rare Holy
Grail occurrences that make you salivate with sheer greed and all you can think
of is, "Who can I borrow some money from with which to buy this asset at an
interim low?" and "How much money am I going to make when the price of gold
goes 'boing!' back up to the top of the channel and will it be enough to quit
my stupid job?"
On the other hand, the same XAU Index measured not in dollars but in grams of
gold reveals that "It now takes only 5.0 goldgrams to purchase the XAU Index,
just a whisker above the all-time historic low of 4.9 goldgrams reached in
November 2000."
Such a paradox will obviously be resolved somehow, and Mr Turk figures that "we
will not see the prices of the mining stocks this dirt cheap again for years to
come - if ever."
I'm betting he is right. You should, too, as that is the One Real Lesson (ORL)
to be gleaned from the long, sad, sordid history of fiat currencies in the
hands of governments; go gold!
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2008, The Daily Reckoning.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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