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The Future Of Money, And Wealth Storage

by Andy Hoffman, Miles Franklin:

Don’t kid yourself. “Paper PM investments” will be under attack for as long as financial markets function – and thus, even when physical gold and silver inevitably win their war with the purveyors of fraudulent fiat currency and “financial markets”, there’s no guarantee that anything other than the real thing will benefit.

Last week’s Miles Franklin All-Star Silver Webinar; in which, it was noted that despite the heinous price suppression of the past six years (that will decidedly end, when the 5½ year downtrend line the Cartel is viciously defending is inevitably broken), the Cartel has been unable to push gold below its cost of production no matter how hard it’s tried. To that end, per the below chart from Steve St. Angelo, the Cartel has never been able to “achieve” this “goal,” all the way back to the bull market’s start at the turn of the century. Similarly, in the silver market, where he estimates the current cost of production to be around $16-$17/oz, not including the “all-in” costs discussed below.

Trust me, if the 2015 cost of production was $1,116/oz for the world’s two largest miners, the overall industry average is much higher. Let alone, the “all-in” cost of maintaining production – which is much, much higher, given that industry-wide proven reserves have been plunging for years. Not to mention, the fact that – as I predicted in more than two years ago, when no one else was talking about it – “peak gold” was reached in 2015, with nowhere to go but down. And likely silver, given that production declined in 2016; let alone, recent developments like plunging production in Peru – the world’s second largest silver producer; and on an industry-wide basis, all-time low productivity.

As for the attractiveness of physical metal versus “paper PM investments,” here’s a comparison of the impact the Cartel has had on the mining industry over the past 15 years. In gold’s case, production rose by less than 15% over the entire period, with the prospect of plunging, per the above chart, back to turn of the century levels over the next decade. Meanwhile, above-ground, available-for-sale inventories have similarly plunged – as evidenced by the whopping 70% decline in COMEX registered inventories since 2008 alone; whilst global demand hit an all-time high in 2015, before numerous currencies started serially crashing. Which, I might add, is a trend that must accelerate in the coming years, as history’s largest, most destructive fiat Ponzi scheme races through its malignant terminal phase.

Moreover, Newmont is projecting flat production into the foreseeable future; and Barrick, a catastrophic production collapse – which may be why, following last night’s disastrous 1Q earnings report, ABX stock is down more than 10%. This, as their cumulative share counts have tripled, as their outstanding debt surged tenfold (again, these are the world’s two largest; and arguably, best capitalized; miners). Throw in the added wildcard of relentlessly increasing operational risks; let alone, market-based risks, such as the recent GDXJ/JNUG rebalancing disaster; and you can see why the reward/risk outlook for physical metal is so much more favorable.

But I digress, given that I’ve already penned a page and a half of text – and haven’t even gotten to today’s myriad PiMBEEB topics; let alone, today’s extremely important principal topic.

Regarding the former; first off, Donald Trump’s proposal of a, for all intents and purposes, completely unfunded corporate tax cut – projected to add $2 trillion to the national debt, just as the “debt ceiling” is about to be reached. This, as he announced onerous import tariffs against China and Canada – which no doubt, will be imminently retaliated against; as simultaneously, the first U.S. warships reached the Korean Peninsula. This, atop the potential government shutdown less than a week away; the historic nuclear war drills in New York and Washington – as if the fear-mongering couldn’t get any more intense; simultaneous with North Korea’s “largest ever live-fire drill.” And oh yeah, the prospect of all laptops being banned from Europe to U.S. flights.

Read More @ MilesFranklin.com

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