Hi,
Within markets that allow you to invest in a physical asset class, most namely the precious metals industry, there has always been a phrase that floats around working to keep investors aware of the risks they are taking on – and that phrase is, “if you don’t hold it, you don’t own it.” While this may come across as an obvious statement to some, others may be completely in the dark as to what this means in totality. The following hopes to clear up any confusion…
When it comes to precious metal investing, many do not want to take on the “burden” of storing physical precious metals themselves and so search for a way to invest in these inflation hedges/stores of value in digital form. They do so hoping to gain the same protection in digital form that these metals provide their holders in physical form. However, what people are not told about when investing in paper silver or gold contracts through the London Bullion Market Association (LBMA) or the COMEX is that there are actually several hundred other owners of the EXACT same bullion contract you yourself just “claimed ownership” of. So the real “burden” is actually being taken by the paper holders that one day hope to beat hundreds of others to the ‘Take Delivery’ button when they realize they need precious metals in physical form to truly cash in on the shiny metals’ future gains. Below outlines directly from the U.S. National Debt clock how many paper contracts are in circulation for every physical ounce of silver and gold on the market:
When you consider that estimates from 2018 believe there was 2.5 billion ounces of physical gold bullion and 4 billion ounces of physical silver bullion above ground – it becomes glaringly obvious that with almost 8 billion people on earth right now, there is not enough for every person to hold 1 single ounce of each silver and gold. When this is understood, it becomes more clear why these paper contracts are used. If silver is desired by the bankers at $20 USD – it is far easier to hold it down there with 373 contracts being written at $20 rather than just 1 legal paper contract that may get superseded by the physical market (just look at physical premiums – they do not match the supressed paper price). Without them (paper contracts), there would be NO WAY to keep silver and gold trading at their current levels due to their true value being significantly higher after the egregious money printing schemes and reckless monetary policy that have transpired since the 2008 Great Recession.
So what are the impacts of having hundreds of owners of each ounce of silver and gold? Well, take a look at the chart below – it is also from the U.S. National Debt Clock website and clearly shows how undervalued silver and gold are in comparison to how many dollars they are now chasing.
Depending on whom you follow or subscribe to – you are bound to see some insanely high valuations for where people expect silver and gold prices to go. Sure, some sources certainly have more credibility than others and some absolutely apply more sound evidence for their predictions, however, this is right from the U.S. government themselves: truth in plain sight… right in front of our eyes. A silver valuation of $1,402 per ounce and a gold valuation of $10,382 per ounce based off the current circulating money supply.
With all this in mind, what is happening out in Russia is beginning to come full circle. Previously, it was reported that Russia had pegged 5000 Rubles to 1g of gold bullion. Equating at the time of writing to $83.19 USD per gram of gold OR $2,587.21 USD per troy ounce of gold. Significantly higher than the $1740.93 USD price valuation given through the U.S. markets making for a massive golden vacuum into Russia. According to the Finance Ministry of Russia:
The Moscow World Standard (MWS) which will become an alternative to the London Bullion Market Association (LBMA) which systematically manipulates precious metals markets to depress prices. This new, independent international structure is necessary for normalizing the function of the precious metals sector and its creation is critically important.
For those that may question the ability for Russia and other BRICS nations to secure a strong foothold within the precious metals sector, check out the breakdown of world gold supply from the World Gold Council (WGC):
- Gold production share of the U.S. + nations “hostile” to BRICS: 22%
- Gold production share of the Eurasian Economic Union + BRICS + Africa: 57%
- Add Peru and Venezuela: 62%
BRICS is gaining massive momentum, and this on the tailwind of JPMorgan’s guilty verdict for precious metals rigging that has only shone light stronger onto a market that is desperate to be set free so it can find its true valuation. This, too, in conjunction with developing nations around the world becoming increasingly fed up with how the U.S. Dollar has been used as a weapon against their economic and social advancements. It seems that one after another, stories continue to come out that further perpetuate the need for PHYSICAL silver and gold to be held within a personal and national investment portfolio if gains from precious metals wish to be realized.
If you either hold paper silver/gold contracts and wish to cash them in for REAL physical metals or simply wish to expand your current physical holding during times of uncertainty – below you will find a 10 ounce silver bar from asahi and a 1 ounce gold bar from BMO – both holding some of the lowest premiums on our website and around Canada:
