Email: invest@goldenlionmint.com
Phone: 828-350-1454
""When Central Banks dump gold on the
market – Is this good or bad
for you?"
The short simple answer is – if you’re a gold speculator
it’s very bad, if you’re afraid the US dollar is about to collapse, then
it’s very good (temporarily). Let me explain: the world’s central banks
have a vested interest in not seeing the dollar value of the US debt they
hold in the form of treasuries etc, collapse. So, anytime the US government
can artificially prop up the dollar, for the present moment it’s good.
Before we go further, let’s look at the difference between a gold speculator
and a gold investor. A speculator makes or loses money by betting on the
day to day, month to month fluctuations of the gold price. I was personally
told back in the 1990’s when I was heavily invested in trading commodities
that the average person playing the game loses not some of their money,
but all of their money. The statistics point to somewhere around 85% of
these gamblers losing all their money.
I was lucky. During that time I was also hedging my bets with personal
possession of my own gold that I bought from my minting company, Avalon
Mint, Inc. Today, I’m doing the same thing (somewhat like Warren Buffet
taking physical possession of, as I’m told, more silver than any other
human on earth.) Yes, I buy personally both gold and silver based on the
same prices we use to calculate your price. So, naturally I’ve bought
high and I’ve bought low. Actually, the high price when figured against
the dollar, inflation, and the CPI is the low price. You need to know
this up front, Golden Lion Mint does not play (gamble) on the futures
market. Why? Let me give you an interesting example.
Years ago, early each morning I’d receive the day’s market forecast via
email from one of the largest commodity clearing houses. It might be in
essence read, “Go long on gold at the open, etc…” Soon, I noticed a clear
trend to the advice. It goes a little like this, (a flashback from my
boxing days) your opponent keeps throwing you a jab, until you start always
expecting that’s the punch he will throw – then suddenly it’s not a jab,
but a solid left hook that lands on your jaw making your head swim. What
happened? You ask from your dazed state.
So, here’s what those clever rascals would do, they’d tell you to go long,
knowing as soon as all the speculators did, they’d also flood the market
with massive amounts of orders driving the price up as high as they market
will bear. Then, guess what? They instantly reverse position, leaving
the hapless trader in his long position, while they go short. Since, we’re
talking about more money than you or I can imagine, the gold price falls
and they make a fortune, while the little guys lose their shirt. Sweet,
huh?
So, what’s this got to do with Central Banks? Well, they play the same
game with even larger numbers. Let me explain about how this works in
the most simple of terms and how this will translate into making you an
incredible fortune – if you’re an investor in for the long term. But,
before we go any further I want you to digest what Alan Greenspan said
back on July 4th, 1998 before the House Committee on Banking and Financial
Services. In light of his statements, it was interesting that I was still
able to be successful in the gold and silver business throughout the 1990’s.
He said, “Central Banks stand ready to lease gold in increasing quantities
should the price (of gold) rise.” Yikes! It sounds like Waco (“We’re here
from the government to help you!”)
So, what’s gold leasing all about and how does it work to suppress the
gold price? This understanding is deliberately convoluted and complicated
beyond measure, so excuse me for being overly simplistic. Here goes –
The big Central Banks go to a gold producer (like Barrick Gold) and say,
“We want to lease x number of ounces of gold. Next, they take the leased
gold (remember, “leased” means it must be returned. This is a very important
understanding in building confidence that you’re about to make a fortune
in the soon and come future.) to a “bullion bank” like CitiBank, JP Morgan,
UBS, Bank of America etc. where they loan the gold for around 1%. The
bullion bank now takes the borrowed gold and sells it on the London Bullion
market. What does the bank now do with the proceeds from the sale? It
buys up US government debt by purchasing US treasuries. Now we show less
debt on the books and somehow these debt investors magically convert into
assets and presto! The dollar has magically gained value. Got it?
You see, if the illusion of a strong dollar is accepted, the price of
gold (its valuation in dollars) falls and everything is wonderful once
again! Except for one small problem that nobody seems to think about -
the gold is borrowed and has to be paid back. Now, I’m not an economic
mathematician, but here are the reported figures, as an example from 2005.
The Central Banks borrowed 2,970 tonnes of gold and sold it on the market.
(ps – This dropped the gold price dramatically and gave me a real boon
by buying at these rock bottom prices. Can you imagine – I’m still holding
that gold. :-)
At the same time, jewelry demand was 2,700 tonnes. Subtract 2,700 from
2,970 and it equals 270 tonnes left. Now, world investment demand was
736 with additional bank sales of 656 tonnes. 736 plus 656 equals 1392.
Since, there as only 270 tonnes left once we subtract 1392 from 270 we’re
now in the hole a minus of 1122 tonnes. My simple minded question is,
where do the Central Banks get the gold they borrowed to be able to pay
it back? Sure, they must have some in reserve, but just how many bullets
are left in the gun? And get this, when a producer, (like Barrick Gold)
engages in a practice of “forward hedging” it pre-sells gold YET to be
extracted from the ground! Duh!
By all indications this practice is coming to its predictable conclusion.
Then what? Then there’s not a thing on earth that will stop the gold price
from soaring into the stratosphere! So has Central Bank gold dumping been
good for your portfolio? Absolutely – if you’re a sound investor in the
physical product.
Tony: invest@goldenlionmint.com
Or Call: 828-350-1454