Don't Sell Your Gold Until......

To me, at least, times are fascinating as much as they are disturbing. The take down we have seen in gold and silver beginning on Friday and still continuing on Monday is breathtaking. I like many others believe that the takedown was orchestrated and initiated by those who have brought the world to its knees but that after a certain point a whole lot of other factors, whether they be fear, sentiment or computers also contributed to the continuing slide. Precious metals have been a financial anchor for decades but it pays to remember that pirates have never been in short supply either.

Time will tell us more or perhaps another WikiLeak or even a whistleblower.

The ultimate explanation may never be known. After all, certain buildings can come down in a manner that defies physics and logic, but if you are the government you can ignore these phenomena and those that protest because they are powerless to do anything. The same applies to precious metals.

Regardless of what we each believe and how we each react, there are too many inconsistencies to simply view the current devastation as a paradigm shift.

I would therefore not even consider selling gold until...until....

Until someone can explain to you where all the big green boxes of silver eagles you could find on  ebay have gone.

1. Until someone can explain why you are confronted by overpriced and limited stock offerings when you type in gold bullion (newly listed).
2. Until the FED allows Ron Paul to head and appoint an audit team that will verify exactly what physical gold the US holds on behalf of its people as well as foreign nations.
3. Until the FED actually sells its gold to prove that it is a barbarous relic without any intrinsic value
4. Until China actually announces what its gold holdings are.
5. Until China, Russia and other central banks stop buying gold.
6. Until someone can tell us all where Libya's gold is following the overthrow of Gaddafi.
7. Until someone can explain why literally every coin shop and bullion dealer has been confronted by far more buyers than sellers.
8. Until the USA stops raising its debt limit.
9. Until the FED raises interest rates to a level that equals the REAL inflation rate plus 2%.
10. Until the governments of the world can unanimously guarantee that there will be no further culling of bank accounts as happened in Cyprus and that such behaviour is not part of a new template for "saving" our economies.
11. Until governments such as Canada withdraw proposed legislation authorising bank deposit haircuts in future.
12. Until the FDIC and its equivalent in other nations no longer find it necessary to guarantee deposits (even in limited fashion). After all, Cypriot bank accounts up to 100,000 euros are guaranteed but still remain inaccessible for total withdrawal so what kind of a guarantee is that?
13. Until new gold production outpaces population increases which is in stark contrast to worldwide behaviour by Central Banks printing money.
14. Until gold ore grades rise dramatically or production costs fall dramatically
15. Until food recipients (currently at 47,791,966) fall to pre GFC levels of just over 26 million in 2007.
16. Until they can explain how the stock market continues to climb in the face of so many deteriorating indicators.
17. Until they jail Corzine, the bankers who launder drug money, and the bankers who manipulated LIBOR amongst others.
18. Until they put an end to fractional reserve banking and limit banks from leveraging to obscene levels.
19. Until women stop wanting gold jewellery
20. Until you believe that governments will not eventually in some manner nationalise your 401k's and IRA's.
21. Until sales of paper gold and silver cease to take place.
22. Until the people of India start selling their gold in bulk. In Sydney Australia I was told by one bullion dealer that Indian people were lining up as if his office was a soup kitchen.
23. Until the German Government actually gets all of its gold back. Or are they powerful only when it comes to little countries like Cyprus?
24. Until someone can explain what will happen to South African gold mine economics and production in view of the higher wages negotiated last year and the plummeting prices of precious metals.

Other commentators who are far more knowledgeable than I, will no doubt add their own comments both quantitatively and qualitatively to what I have written. The point however is that the fat lady who has appeared on stage to sing the funeral requiem for gold is none other than a certain banker in disguise. 

Make your own decisions based on your own research, your own gut feeling and your own understanding of history. The gold canary may have been temporarily  silenced but silencing the canary does not avoid the explosion in the mine taking place at some stage.

As I finish writing I notice that gold is trading at $1352.60 in New York at 17.16pm (April 15th) and silver is at $22.69. The surreal is now being aided and abetted by the absurd. Gold and silver are neither tulips nor are they without pedigree. Gold and silver may slide further still but what is clear in my mind is that the world economy and its banking system are in for a bigger slide still.

Let's see what comes next. Or should I say, let's see when the fog lifts from the mind.

Peter Souleles

Sydney Australia