Gold and Silver Supply Is VERY Tight!

Folks,

This is very long but it really needs to be read and understood by all of you.  Jeffrey Bennett red this on the air this morning and while I was only able to catch small parts of it due to other things going on here – I heard enough to tell me that this information needs to be spread far and wide – QUICKLY.

I figured out a lot of this back in the late ’90’s as I was into the Y2K preps.  I closed all my investments, cashed them out, and began to limit my checking account to only what was needed to pay the monthly bills.  I still handle my finances in that same way.  I do not trust the banking outfits at all and that includes all of them  –  credit unions too.  My only other concern is when the OCCUPATION FORCE announces that the greenbacks we now use will no longer be accepted as legal tender – turning our stashed cash to nothing more than toilet paper.

Scroll down the text to this portion: The Money In Your Bank Account Was Stolen This Morning
“Russell Napier is declaring November 16th as “the day money dies,” and this constitutes today’s  Zero Hedge’s headline. According to Zero Hedge, Napier says the G-20 will announce “that bank deposits are just part of commercial banks’capital structure, and also that they are far from the most senior portion of that structure.” Pay close attention America this means that following a bank failure, “a bank deposit is no longer money in the way a banknote is.”

Do you think your money is INSURED?  THINK AGAIN.  The 1929 Bank failure (close down) was a disaster at the time – what is coming makes it look like a tap on the shoulder compared to an explosive going off in your gut.  I do hope folks are paying attention and stocking up on the things (legal tender – barter items) that will sustain you for the time that it will take.

The ENEMY WITHIN is hell bent to destroy us – and they are controlling all the things that we use to get thru each day.  Imagine you try to withdraw funds from the ATM and your DENIED.  You go to go inside your bank and the door is LOCKED.  You use your credit card and it is DENIED.  WHAT are you going to do then????  Really think about this and take a day tracking how many times you make use of those things.
How long can you survive on the food in your home right now?  How about that toilet paper on the rolls – first aid items – etc.  All the things that will NOT be readily available to you and your family when IT hits.

Jackie Juntti
WGEN    idzrus@earthlink.net

http://www.federalobserver.com/on-the-air/

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The following is the written transcript of a special three hour broadcast, presented on November 19, 2014 drawn from numerous sources.

Gold and Silver Supply Is VERY Tight!

Bill Holter – Published: November 18th, 2014 I mentioned earlier that I wanted to revisit the current GOFO rate situation and also the huge anomaly which occurred on the COMEX not once, but two days in a row to end last week.  I have written several times regarding “GOFO” which is the lease rate for London gold.  The last time I did this was back in May of this year, rather than writing another explanation I will copy and paste what was written then.  I will comment further after the May missive below:

COMEX backwardation and inverted GOFO rates should never ever happen in a normal world for any reason ever, but they have.  Why or how could this happen?  First let me explain “what” has happened, later I will explain “why.”

GOFO rates had gone negative for 29 of the last 30 days before turning positive for the last two.  GOFO stands for “gold forward” rates.  In other words, when gold gets leased out there is interest paid by the borrower and received by the owner.  When these rates go negative it means that there is more interest payable (higher rates) to the holder of gold than to the holder of dollars.  You can look at this from several vantage points.  First and most obvious is that gold “supply” may be tight, in other words there may be difficulty in sourcing gold.  From another perspective, it can be viewed as too many are trying to exchange dollars into gold or that interest rates on dollars are too low (or could be too high for gold?).

The thing is this, you have always heard the saying, “but gold doesn’t pay any interest or dividends” which is true… unless you are willing to lend it out for interest.  The easy way to understand this is that there are simply not enough lenders willing to lend their gold out into the market place which is another way of saying that supply is tight.  The risk to the borrower is that they might have to deliver higher priced gold while the risk to the lender is that they may never see their gold again.

OK, now let’s look at the COMEX and the futures market.  Since you can lend gold out and receive interest for it, it then follows that “gold in hand” could (should) be worth more say six months down the line because it can be lent out and returned with an added 6 months interest attached to it.  This is why “futures” prices are almost always above the spot price for gold and silver.  This should ALWAYS be no matter what …because they are “money” that are not subject to droughts, floods or whatever that can affect the supply greatly.  This is the case EXCEPT for couple of “mega sigma” events happening.  In one instance, it is possible that traders become fearful that they will not get delivered their contracted gold in the future which would make “gold in hand” worth more to them than the promise of future gold.  They may be fearful because they feel that the current supply is tight and are not sure that future supply will arrive or they may even be fearful that a system wide crash or default will occur before their contracted delivery which might leave them high and dry.  The big point here is that “gold in hand” can never ever be worth more than gold in the future (IF you know for sure that it will be delivered) because you can earn interest on it.

I have gone back and forth with several theorists as to whether or not we have already seen backwardation or not.  To their credit, we have not seen it yet in the out months but they are very flat.  So “flat” that we are only talking .50 cents or less for 6 months out.  But, here is where it gets interesting.  I spoke with a Chicago floor trader this morning who told me that he has actually executed 3 separate “back warded” gold trades since last June.  Normally for example you would buy a June contract and sell in August for a $1 credit, thus buying today and selling later at a $1 profit.  On 3 separate occasions, this trader tells me that the spot month has gone to a premium over the future month in the delivery process.  This past February it went as high as a $3.50 premium.

So how could this possibly be?  How could gold have gone to any premium at all?  How or why could it ever be worth more today than in the future?  Does the old “bird in the hand versus two in the bush” come to mind here?  The only way that the delivery month (for gold because it is money rather than a commodity) can trade at a premium is if it gets bid up in price or the future month sold down in price, one or the other and as simple as that.  The delivery month will only get bid to a premium if enough buyers either question the available current supply to deliver or question the availability of future delivery.  There can be no other reason than this, does or will the supply exist for delivery?  Yes I know, it will be said that “short sellers” may have gotten spooked and bid the spot month to cover a position but why would you do this if supply was not a question and could “buy” your gold in a future month for less if you were 100% sure that you were going to get it?

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