Institutional Gold And Silver Demand, The Final Piece Of The Puzzle

The war for control is raging on, as dying Central banks step up unprecedented money printing, market manipulation, and propaganda to truly historic levels – in a last ditch, but dramatically failing, attempt to prolong history’s largest, most destructive fiat Ponzi scheme.  Hence, for the second straight week, the “magical” stock market rebounds following major down days, and relentless capping of Precious Metals’ increasingly frequent surges.  To wit, even Thursday’s $40/oz gold surge started with a typical $10/oz “2:15 am” paper raid, and ended with a $10/oz “tail” in the ultra-thinly traded post-NYSE trading session.  Then on Friday, another “2:15 am” raid; a massive COMEX-opening “cap and attack”; and when gold again fought its way back, another $4/oz “tail” in the post-NYSE close market.

Then a weekend of massively PM-bullish news, including the following…

1. UK Pound tumbles to seven-year low, as London Mayor Boris Johnson announces support of the potentially Eurozone crippling BrExit referendum, which was officially scheduled for June 23^rd

2. Plunging European PMI, Chinese MNI Business Indicator, Japanese manufacturing, and U.S. Manufacturing PMI series’

3. Proof that the Fed, under the auspices of the U.S. Treasury, has in fact been pressuring banks to usurp GAAP accounting by not writing down non-performing energy-related loans

4. News that the mortgage-backed bond market had a significant, “Big Short”-like stair-step downward in the year’s first two months

5. An utter collapse in U.S. Treasury income tax withholding receipts in the year’s first two months

Which, of course, yielded the 134^th “Sunday Night Sentiment” raid of the past 140 weekends; the 604^th “2:15 am” attack of the past 689 trading days; and how about that, another COMEX opening attack when gold had the gall to fight back.  I mean, consider this.  Precious Metals are not only the best performing asset class of 2016, but essentially the only assets up year-to-date.  And yet, gold has been smashed EVERY Sunday night so far, and more than 90% of the “2:15” am London paper “pre-market” openings…

…including the “Big Daddy” nine days ago – when, in response to Thursday, February 11th’s $50/oz surge, the Cartel capped gold’s gains with a prototypical “Cartel Herald” algorithm at EXACTLY the 12:00 PM “cap of last resort”; and the following day – starting at “2:15 am,” of course – six separate times…

…before viciously attacking Sunday night – in ultra, ultra- thin holiday trading conditions, to the tune of, what do you know, $50/oz in 24 hours!

Market manipulation dramatics aside, even the Mainstream Media is writing incessantly of how Central banks have “failed”; are “out of options”; and of the hideous ramifications of what they have wrought – the latest being the most ominous of all, the unprecedented wealth confiscation scheme of a “cashless society” featuring negative interest rates.

Heck, Central bankers themselves are admitting their collective impotence – as I predicted they would in December, after South African Central bank governor Lesetja Kganyago espoused “no amount of Central bank intervention can stem market-driven Rand moves.”  A view which, this morning, was reiterated by the head of the Danish Central Bank, Lars Rohde, who ominously stated “we have reached a point where monetary policy no longer has a big overall impact.”

To that end, there’s a reason why physical gold and silver demand is surging; as Cartel paper manipulations aside, prices have hit 52-week highs – and in the process, demonstrating a level of “fight” I haven’t seen in years.

Which is, that in alarmingly rapid fashion, hundreds of millions – soon to be billions – are realizing that the cumulative impact of the aforementioned monetary and economic horrors were directly responsible for the purchasing power annihilation they have experienced in recent years.  And worse yet, will cause significantly worse purchasing power destruction in the coming months and years.

To that end, in both 2014 and 2015, physical gold and silver demand hit new records worldwide.  And yet, prices did not rise in dollar terms, although they most certainly have in nearly all other currencies.  Yes, retail demand has been on fire.  And yes, Central banks have been buying – particularly in the Eastern Hemisphere, led by China and Russia; much of it, supplied by covert dishoarding of the remaining “fumes” of Western Central bank inventories – not to mention, overt “dishoarding” of GLD and the COMEX’ piddling registered inventories.  This is why the Germans can’t get their gold back from the Fed, and why the U.S. Treasury opposes an audit of Fort Knox – which mathematically, MUST be out of, or nearly so, the 8,133 tonnes it supposedly owns.  Which, even if they owned every ounce (LOL), would still represent a drop in the bucket compared to America’s massive, skyrocketing debts and unfunded liabilities.

However, the “final piece of the puzzle” has been institutional Precious Metals demand – which according to David Morgan, on the must hear “2016 Silver Outlook Webinar” Miles Franklin hosted on January 28^th, has been largely flat for the past four years, the result of propped-up financial markets and unrelentingly fraudulent economic propaganda – like the BLS claiming millions of “birth-death” related jobs being created, when more companies have died than birthed!

In the case of Precious Metals institutional demand, the first place one looks is paper proxies – as most institutions are not allowed to invest in physical assets.  This is clearly evident in the mining stocks, which have had their best run since dollar-priced gold topped in 2011.  And GLD, where inventories have started to rise anew, as institutions clamber into the leading paper proxy for gold (that is, until it is inevitably discredited for fraud).  That said, from my standpoint, the most important such indicator is the rising valuations of the closed-end bullion funds CEF and SVRZF (Spicer); and  PHYS and PSLV (Sprott) – which, when prices rise significantly above net asset value, offer secondary stock to investors, which in turn is used to purchase physical metal.

Back in late 2010, the IPO and follow-on offerings of Sprott’s PSLV silver bullion trust were the principal catalyst of silver running to $50/oz in early 2011.  And cumulatively, when premiums to net asset value rise to 3%-5% or so, the funds’ administrators are mandated to increase the funds’ eight years and liquidity via said offerings.  This is why I warned three years ago that the Cartel would viciously naked short them, to make sure such offerings never occur.  After that article, premiums to NAV plunged to negative territory – for the Spicer funds, in the 10%-15% range; and for the Sprott funds, which unlike the Spicer funds are actually redeemable for metal, to the 2%-5% range.

However, a funny thing has occurred lately, as said institutional demand has picked up significantly.  Which is, that the Spicer funds’ discounts to net asset value have declined to just 7%-9%; whilst the Sprott gold fund (PHYS) now trades at net asset value; and the Sprott silver fund (PSLV), at a 2% premium.  PHYS’ successful takeover of Spicer’s dedicated gold trust (GTU) has certainly helped its valuation; and once PSLV inevitably wins its proxy fight with the Spicers and takes over SVRZF, its valuation, too, will likely be supplemented.  In other words, PSLV is already close to the level at which “Admiral Sprott” will be able to execute what will undoubtedly be a MASSIVE, physical silver inventory-draining secondary offering; whilst PHYS is not far from such levels.  Which, in my view, screams of surging institutional demand – just as retail demand is at record levels; and Central banks, too, are starting to visibly demonstrate fear of the fiat monstrosity they’ve created.

In other words, my view that the dollar-priced gold and silver “bear markets” have ended has never been stronger.  Nor is my expectation that physical shortages are heading our way like a runaway train, down an icy slope with no brakes.  Thus, when the Cartel affords opportunities to protect yourself at such ridiculously “subsidized” prices, you should take them!  To that end, please give Miles Franklin a call at 800-822-8080 to ask about the best ways to capitalize on such opportunities – such as the gold “Roaring Grizzly” and silver Predator Cougar I wrote of yesterday.

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