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Silver Eagle Sales Set A February Record – Dave Kranzler

Tuesday, March 1, 2016 15:53

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Betting against gold is the same as betting on governments. He who bets on governments and government money [fiat currency like the U.S. dollar] bets against 6,000 years of recorded human history. – Charles De Gaulle

TND Guest Contributor: Dave Kranzler

Silver, for 6,000 years of human recorded history, has been “poor man’s gold.” In fact, based on everything I can find on the topic, silver was used as currency before gold. Buying silver with the gold/silver ratio at 80 is like buying gold on steroids.

Charles De Gaulle is the person who is credited with forcing Nixon to “close the gold window” in 1971. De Gaulle had figured out the U.S. had issued far more debt to foreigners than it had in gold to back that debt, per the requirement of the Bretton Woods Agreement. De Gaulle had been quietly exchanging Treasury debt purchased by the French Government for gold, per the terms of Bretton Woods. Before De Gaulle had a chance to clean out the Treasury’s gold, Nixon unilaterally and illegally terminated that portion of Bretton Woods. To this day I have not read a reasonable analysis which explains why the rest of the world enabled the U.S. to get away with this.

The massive issuance of paper claims on the stock of physical gold and silver supposedly available to deliver into those claims should they be exercised has risen to proportions which would make the Johnson and Nixon Governments blush. Meanwhile the visible inventories of gold and silver continue to diminish (see this, for instance: Deliverable Silver Stocks At The Comex Reach Historic Low).

it seems a small portion of the U.S. public understands the reasoning behind De Gaulle’s assertion above and has been converting fiat dollars in poor man’s gold, as U.S. minted silver eagle sales hit an all-time high for the month of February: Sales Of Silver Eagles Smash February Record.

If the percentage of the public – currently estimated at maybe 1% – that is buying gold and silver were to increase by just a few percentage points, the monstrous paper gold/silver short position underwritten by the bullion banks and the entities standing behind the bullion banks will go from potentially unmanageable to catastrophic.

Many of us think silver will be the ultimate “Achilles Heel” of these entities who have been aggressively manipulating the price of gold and silver since 2011. While the impending move by Governments to a “cashless” banking system will likely cause a run on cash at the banks by the public, I believe that the run on cash will be followed by a run on gold and silver.

Paper money eventually returns to its intrinsic value – zero. – Voltaire

Something feels “different” about the way the precious metals are trading. This is reinforced by trading action in the mining stocks. The silver junior stock I recommended in the Jan 10th issue of the Short Seller’s Journal is now up 50%. It could easily be a 5-10 bagger from here. I recommended another silver stock, an emerging producer, in the current issue. I also featured a short idea this week that could quickly shed 50% once this latest short-squeeze bear market rally subsides. Today might have been the start of that. You can subscribe to the Short Seller’s Journal by clicking HERE.
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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.