Silver and Gold News From the Web – 12th August

China’s Relationship With Gold

In this blog post Jeff Clark looks at the relationship between China, the gold market and some common misconceptions some mainstream analysts have about this relationship. He also looks at what this relationship means for western precious metal investors.

Clark looks at how the Chinese see gold in its historical context as a monetary metal vs many analysts in the West who see it as an “outdated relic” He believes that the Chinese are buying gold in preparation for a new international monetary system.

He like many other precious metal investors thinks that China is being less than truthful about their current Gold reserves as it is in their interests to keep precious metal prices down while they build their reserves.

“Most advisors who look out to the horizon and see the same future China sees believe you should hold 20% of your investable assets in physical gold bullion. I agree. Anything less will probably not provide the kind of asset and lifestyle protection you’ll need. You don’t have to worry about silver, either, which we think holds even greater potential for investors.”
– Jeff Clark, Casey Research Senior Precious Metals Analyst.

Read the full article here

Paper Silver Market vs Physical Silver Market

In this interesting blog post the author Fabrice Drouin Ristori looks at the size of the paper silver market vs the size of the physical silver market. Ristori quotes a Bloomberg report that says that annual silver market is equal to $5 trillion. An annual physical silver production of about 1 billion ounces and with silver at $20.00 per ounce would mean that the size of the physical silver market is relatively much smaller at $20 billion. This would make for a ratio of 250 : 1 implying that the paper silver market is 250 times the size of the physical silver market! This is most certainly a case of the tail wagging the dog and in a market dominated by paper silver the current silver spot price does not reflect the value of an ounce of physical silver.

Read the full article here

Shanghi Futures Exchange

John Embry is the business partner of billionaire Eric Sprott. Embry is of the opinion that it is in the interest of western central bankers to suppress the price of silver.

“With interest rates that bear no resemblance to reality, i.e. terrible paper providing a negative real rate of return, it is essential that sharply rising gold and silver prices don’t tip off the largely unsuspecting public to the real gravity of the situation.”
– John Embry

He notes that in the first week in August the Shanghi Exchange the latest silver contracts were trading at an 8% premium to the London exchange. He also discusses the current gold / silver ratio which is currently around 65 / 1. Embry believes that before the end of the current precious metals bull market the gold / silver ratio could fall to as low as 15 / 1.

African Bullion comment : The silver inventory of the Shanghi Futures Exchange has fallen from 1143 tons in March of last year to 148 tons in July 20124

“So I can’t emphasize enough the importance of people buying physical silver at this time because it is an all-time gift considering the move that is still in front of us.”
– John Embry

Read the full article here

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