Divining the News (DTN)

Jason Hommel of silverstockreport.com [...] the world “uses up more silver each year (about 850 million ounces) than the world mines (about 600 million ounces),..

The point is that, as Mr Hommel explains, “existing demand can only be met by selling existing inventory”, which can be extremely finite in a hurry

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Ron Paul talks about the Central Banks shenanigans. It has been a long time since Fort Knox was audited. And the Fed has a policy of leasing Gold (& presumably silver). Now how it is possible to lease Gold (or silver) is an absolute mystery.

GOLD ANALYSIS: BACK BELOW $800
Gold demand soars. Price falls. What’s going wrong?

Physical demand for gold is surging but the price keeps taking serious knocks. What’s happening.

Author: Lawrence Williams
Posted: Wednesday , 03 Sep 2008 LONDON

Gold market manipulation conspiracy theorists should be having a field day. The past few weeks have seen solid evidence that physical gold demand from individuals is soaring. We have seen the U.S. Mint having to suspend one ounce Gold Eagle coin sales because of what it terms “unprecedented demand”, Indian gold sales have picked up enormously in the past few weeks leading to purchasers having to wait several days for deliveries as the traditional sellers are short of gold, while yesterday we hear that Abu Dhabi, a major trading centre for precious metals, has seen gold sales rise by 300 percent in volume and 250 percent in value in August compared with a year ago.

According to a Reuters report quoting Abu Dhabi Gold and Jewellery Group Chairman Tushar Patni “It was the best month the market has seen in almost 30 years and it compensated for any drops we have seen earlier this year. [...]

As almost anyone reviewing the gold market will point out, gold price fundamentals are strong. Production is slipping – leading gold producers South Africa and Australia are both reporting production declines and although increases in China will take up some of the slack the overall global trend would seem to be downwards, despite the sharp overall gold price rise over the past three years. Big new gold deposits are not being found – or if they are are in increasingly difficult and hostile political or geographical environments, or frequently both.

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And yet another expert predicting doom and Gloom. Perhaps the dollar is rallying just for the Republican convention. It is actually far safer for an individual NOT to know what conspiracies are at play. Certainly Gold (and silver) have been a safe form of currency for as long as there has been history. In the 70’s when the Arab oil embargo started, Gold increased to something like 20 times its value within days.

(Silver has recently fallen 43% from a March high of $21, while gold is down from its March high of $1,040 and threatening to retest support at $775). [...]

Now we’re told that five of the G7 nations (which account for half of the world’s [economic] output )…Japan, Germany, France, Italy and Canada… contracted in the last quarter. [...]

And Bank of England governor Mervyn King has warned that the British economy is on the verge of recession and will start to shrink by year’s end for the first time since the early 1990’s.

In January this year the DJIA dropped through a major 34-year trendline dating back to 1974 and is now in danger of going into freefall.

The FDIC (Federal Deposit Insurance Corporation) is now anticipating that they are going to have 95 (US bank) failures this year alone. Australian Financial Review, 27th August 2008. [...]

Anyone who has been dragging his feet and has still got the bulk of his savings in the banking system, particularly the U.S. banking system, it’s getting almost too late to act. You need to move very quickly to get the bulk of your savings out of the weaker banks…ideally…you should own U.S. Treasuries directly in a money market fund…don’t sit around until it’s too late…finding yourself at the back of the line in front of your bank

[Nice graphs on the site:]Source

The next excerpt sounds like Ron Paul thinking. It also sounds plausible. That a crash that is out of control will occur. It might be ironic in that it could happen soon, and now we still have food, consumer items, and people prepared to work and to want to buy things. But the predatory globalisation, outsourcing, laissez fare economics and fiat money (with avarice) just buckled under. The crash will be seen as an act of god, as psychological state. The charisma of leaders might not help much…. We will briefly devolve into sectarianism.

Total Meltdown Necessary

[...]While the business cycle and human psychology will always exist and exert themselves on the markets, the economic booms and corresponding busts would be greatly moderated under a sound financial system that is not susceptible to massive credit creation and artificial stimulation.

What will put an end to the Federal Reserve and save America? I believe it will take a complete financial meltdown. A slow deflation like that of post-1989 Japan just won’t do it. Under that scenario, many Americans would turn to Uncle Sam to fix each unfolding crisis, and America would become increasingly socialist or fascist. However, an economic calamity worse than the Great Depression that outpaces federal efforts to ameliorate the situation might wake Americans from their slumber. The outright bankruptcy of our government might force a majority of Americans to realize why free markets and a sound currency are necessary for long term stability, and why government planning and control, no matter how noble in its inception, is always destined to lead to calamitous distortion and abuse over time.

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