Gold At Extremely Favorable Prices; Won't Last - von Greyerz

Release Date: 
Friday, June 23, 2017

Gold prices rose on Friday due to a weaker dollar and a move by investors to safe haven assets.

"Gold turned higher for the week, as prices gained Friday on the back of declines in the U.S. dollar and recent weakness in assets perceived as risky, including stocks and beleaguered crude oil… A softening dollar helped to give precious metals a lift for the session, with the ICE U.S. Dollar Index DXY, -0.27% , a measure of the greenback against a half-dozen currencies, down 0.4%. Slack in the dollar can give commodities priced in the currency a boost, making them cheaper for buyers using weaker currencies… Precious metals also have partially benefited over the week from haven bids, amid concerns about the impact of falling crude-oil prices… 'Gold bulls received inspiration this week in the form of plunging oil prices, which weighed on global sentiment and soured risk appetite,' wrote Lukman Otunuga, FXTM research analyst in a Friday research note… A weakening dollar, coupled with mixed messages from policy makers on U.S. rate hike timing, supported the metal further,' said Otunuga…." ("Gold poised for a weekly gain as dollar and Treasury yields sputter," MarketWatch, 6/23/17.)

Gold ended the week up $3.20, closing at $1,257.60. Silver prices closed at $16.78, down $0.01.

Gold At Extremely Favorable Prices; Won't Last - von Greyerz
Egon von Greyerz, Founder and Managing Partner of Matterhorn Asset Management, is warning investors that the dangerous central bank policies which have flooded markets with "fake" money will ultimately lead to collapse.

"Throughout history, governments have attempted to set aside the natural laws of sound money by manipulating the financial system using criminal methods like counterfeiting and creating money out of thin air. With their hubris, they believe they can get away with their evil deeds. All they would need to do is to look at history. Long term, no one has ever got away with creating a system based on fake money, unlimited debt, zero or negative cost of money with the government and the bankers being the main beneficiaries. They will of course not succeed this time either but the power and massive wealth created by a small elite make the 'Powers That Be' so corrupt and so arrogant that they can't even see the consequences…

"In the next few years, we will experience the consequences of the failed experiment in creating wealth from printed money. The signals will be quite obvious like: Rising inflation; Higher interest rates; Falling dollar. Interestingly, all those three factors are already happening, albeit at a slow pace currently. In the next year or so we will see much higher inflation and interest rates as well as a crashing dollar…

"Just like in the 1970s, physical gold and some silver will protect investors from the ravages of inflation. At that time, gold went from $35 to a high of $850 or up 24x. A similar increase this time would take gold over $6,000. But history won't repeat itself but it will rhyme very nicely. This means that gold will go up substantially more than 24x due to the massive amount of money that will be printed to cover $2.5 quadrillion of debts, derivatives and liabilities…

"Gold at $1,255 is as low as the $300 early this century if adjusted for real inflation. The manipulation of gold has made it possible for many investors to buy gold at extremely favourable prices just as the Chinese and the Indians are doing continuously. But when the next upleg starts, there will be no physical gold available anywhere near current prices. Gold will go 'NO OFFER' which means that sellers of gold are not offering it at any price. So for anyone who is not fully protected, now is the moment to acquire wealth protection insurance in the form of gold…." ("Hubris Kills Whilst Gold Projects," Gold-Eagle, 6/22/17.)

U.S. Unable To Add To Gold Reserves; Extreme Leverage Will Collapse System
A MarketSlant commentary observes that the United States' growing debt will ultimately lead to collapse to the detriment of those without gold or silver.

"As the United States continues to push towards a military conflict with Russia, there will likely be no real winner when the dust settles.  However, if we compare these two superpowers in the current 'gold market', the Russians are the clear winners. While the U.S. has been (secretly) liquidating its once massive official gold holdings, the Russians have been doing quite the opposite…

"Basically, Russia's official gold reserve additions Jan-May 2017 accounted for 88% of its domestic mine supply.  Whereas, the United States continues to export all of its gold supply…

"You see, the U.S. Government cannot buy any gold because it continues to run a fiscal deficit, while the country suffers ongoing trade deficits.  A country can only add gold if it has SURPLUSES… not DEFICITS.  This is why the U.S. continues to print the DOLLAR to continue business as usual. The U.S. is in serious trouble as it uses extreme leverage in financial and economic markets.  When this leverage finally cracks, those holding real gold and silver will experience the insanity taking place in the CRAZY CRYPTOCURRENY MARKET." ("RUSSIA VS. USA: WHERE IS THE GOLD REALLY GOING??" MarketSlant, 6/22/17.)

"Helicopter Money" Returning To U.S. - Giustra
Leagold Mining chairman Frank Giustra believes the Federal Reserve will be forced to return to quantitative easing to combat the next financial crisis.

"The Federal Reserve has backed itself into a corner, which means it might be time for quantitative easing to make a comeback, this according to mining maverick and Fed critic Frank Giustra… 'They'll continue to talk about normalizing rates and they'll find excuses not to,' he said.

"I think the next accident that happens - whether it's a stock market crash because stock valuations are at all-time highs now and we are ready for a major correction there - any event that causes crisis in the system will be met by further easing and another version of QE." Giustra said that he expects the next version of quantitative easing will be 'helicopter money.'… According to Giustra, the solution will take a lot of time and for that reason, it likely won't happen.

"'I think a solution requires a complete - and it's not going to happen, politically I mean, it's not going to happen - 10-year mandate to really restructure education, vocational training, clean technology, and creates jobs… When you're in a political system where you have an election every 2 years, it's impossible to implement, you can't get it done because there's too many special interests.'" ("'Helicopter Money' Is Making A Comeback Says Frank Giustra," Kitco, 6/21/17.)

Gold Provides "Freedom Insurance" - Durden
Efficient-markets analyst Tyler Durden wrote that gold provides personal and financial freedom.

"It's predictable… A government in need of cash will turn to destructive 'solutions.' Money printing, higher taxes, and more regulations often come first. Unfortunately, these are just the hors d'oeuvres before a 10-course meal.

"As they become increasingly desperate, governments implement increasingly destructive policies. This might include capital controls, price controls, people controls, official currency devaluations, wealth confiscations, retirement account nationalizations, and more. The same pattern has played out again and again around the world and throughout history. The worse a government's fiscal health gets, the more destructive its policies become…

"Most people have medical, life, fire, and car insurance. You hope you never have to use these policies, but you have them anyway. They give you peace of mind and protect you if and when the worst does happen. International diversification is the ultimate insurance policy against an out-of-control government. Think of it as 'freedom insurance.'

"It frees you from absolute dependence on any one country. Achieve that freedom, and it becomes very difficult for any group of bureaucrats to control you. The results can be life changing…

"Buying gold is perhaps the easiest step you can take towards diversifying your savings. When you buy gold, you trade in paper money-which the government can devalue and confiscate at will-for a hard asset that's been a stable store of value for thousands of years. Gold is universally valued. It's worth doesn't depend on any government. In other words, simply buying gold is the easiest way to lessen the political risk to your savings…." ("Owning Gold Is The First Step To 'Freedom Insurance,'" Zerohedge, 6/21/17.)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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