In America, today is a special day to reflect and appreciate those who gave all for freedom (US markets are closed in remembrance). Unfortunately, the world continues onward in a complex monetary fashion attempting to correct decades of mistakes. Today we will feature several current events affecting the precious metal most of you own. Currencies across the globe are now in search of the next safe haven but few are yet to realize one currency is no better than the next. This will eventually lead boatloads of wealth into the ultimate safe haven of silver & gold.

News Worthy:

NY Times– Giant Lender in Spain asks for Billions to Fend Off Collapse

MADRID — Spain’s banking crisis worsened Friday as the board of Bankia, the country’s biggest mortgage lender, warned that it would need an additional 19 billion euros ($23.88 billion), far beyond what the government estimated when it seized the bank and its portfolio of delinquent real estate loans earlier this month. When Spain seized Bankia May 9, Luís de Guindos, the Spanish economy minister, said it would need at least $11 billion.

The government is trying to head off a collapse of the bank, which could threaten the Spanish banking industry and reverberate through the financial centers of Europe and beyond. The fear is that it will not have the money to save its banks, and their $1.25 trillion in deposits, and will need a rescue by the rest of Europe — even as political and financial leaders struggle to resolve Greece’s debt debacle.

The rising fear now is that the recent steady outflow of deposits from Spain’s banks, which are suffering from the bursting of Spain’s real estate bubble, to institutions outside the country could eventually turn into the sort of bank run that almost brought the financial world to its knees after the collapse of Lehman Brothers in 2008. Read it here.

News Worthy:

FXSTREET.com– Central Bankers Bought More Gold While European Leaders Kept Talking

Central banks gold purchase data in April cheered gold market on Thursday, however. Mexico, Kazakhstan and Ukraine added about 204,000 ounces in April. The Philippines added a whopping 1.033 million ounces in March with gold now at 13.6% of its total reserves. UBS highlighted the Philippines’ gold purchase is significant as this is the second largest monthly Central Bank’s purchase after Mexico’s purchase of 2.5 million ounces in March 2011.

World Gold Council (WGC) reported that central bank purchases were 80.8 tonnes in Q1 2012 or around 7% of global gold demand. What is more interesting is that WGC is now confident that central banks will continue to buy gold and has added official sector purchases as a new element of gold demand while eliminating official sector sales as a negative supply factor. Read it here.

News Worthy:

MONEY MORNING–Good News for Gold Prices: Commodities are Wounded, But Far From Dead:

Greece is frozen in a political stalemate. Youth unemployment is running at over 50%. And there has been a $1 billion run on Greek banks.  From near and afar, there appears to be no easy way out, especially now that the Eurozone is heading back into a recession.

It’s times like these when investors pour into the U.S. dollar for its “perceived safety.”

With commodities priced in U.S. dollars, this spike in the greenback has sent commodities-including gold prices-into a tailspin since early March. That has many doubters asking: “Has the commodities super-cycle ended?”

It’s a reasonable question considering the Continuous Commodity Index (CCI) is back down to levels it last saw in September 2010.  What’s more, gold prices have backed off to near $1,500/oz., and oil prices have fallen from $110 to $90/barrel.

But as you’ll see, the commodities coin does have another side.

And debt in the West (U.S., Europe, England, and Japan) has doubled in a little over three years to almost $8 trillion in a veritable monetary flood that’s bullish for gold.  Read it here.

News Worthy:

SILVERSEEK.com– Illegalities

The Commodity Futures Trading Commission (CFTC) has been negligent in failing to terminate the obvious manipulation ongoing in silver. Furthermore, the agency may be complicit in this manipulation. Worse, it has lied to the public and elected officials. This all goes back to the time when Bear Stearns was taken over by JPMorgan in March of 2008.

It is well known that Bear Stearns went under as a result of a sudden loss of liquidity amidst a run by creditors and customers. What is not well known is that those problems were greatly exacerbated by a $2 billion margin call on silver and gold short positions from the end of December 2007 to March 2008. I believe the silver and gold margin calls were at the heart of Bear Stearns’ failure. Read it here, thanks to a reader named Jeff.

Comments & Questions:

Hello,

I have been a reader of your website since early this year and reading your book re-emphasized what you have written at TPS. I just finished reading Why Silver & Gold Will Go Higher and enjoyed it.

You raise a lot of good questions, and its clear that sooner or later US monetary system are forced to increase interest rates and when that happens we can see gold skyrocketing as banks will be unable to pay back on its obligations demanding more bailouts and devaluing the dollar further. Maybe that will be the start of the biggest bubble of all? Time will tell.

I had big aha when you said that the world is moving into a scaled down version of itself, like when home equity owners scale down to protect remaining equity value in PM.  I guess we are all on the same ship, and like you said, this ship seems more like a titanic ship, were there just isn’t enough lifesaving boats for all!  Lets hope not.
Cheers for all!

Prospector Reply: Thanks for reading and commenting. You mention “obligations” and it’s important to realize another word is soon to find worldwide popularity, default. This happens while we watch a giant currency shuffle from euros into USDs. The problem, the USD is no more worthy to take on liquidity than the euro is.

The ability to print over monetary mistakes causes a false belief that will someday leave masses very disappointed. Good for you, and other readers too, for not falling for this “lifesaving boat” to nowhere.

QUESTION:  (edited for space) Hi, I am just a small investor in Physical Silver Bullion. I have currently about 720 oz’s of all types, & sizes of silver bars, rounds, and coins. All .999 Fine Silver, some Canadian Silver that is .9999 Fine. My goal is 1000 oz’s before I can’t afford to buy silver anymore. 90 % of the silver I own I bought when spot price was still under $20 an oz spot price, so I am already way ahead financially.

What I need to know is when it is time to get out, what do I invest in, or sell My silver for when it has reached the top of the Bull? Not US dollars, because that would be defeating the purpose of owning Physical Silver Bullion.

Prospector Reply: Thanks for the question and nice job on the silver stack. I’m guessing many readers are wondering when to jump from PM (precious metals) but the truth is we are nowhere near the end of this bull run, at least in my opinion. Think of it like this if you will. Everything sending PM higher is soon to enter warp speed. Deficit spending, unilateral fear or concern, equity market volatility, loss of real estate faith, etc are all feeling the ill effects of fiscal irresponsibility.

The “top” you ask about could look more like a last man standing scenario if central banks refuse to back off.  Be sure to keep at least 1/3 (or more) of your physical silver close at hand. Don’t be afraid to store some silver internationally, but outside the banking system, just in case some bureaucrat decides to target PM. Keep up the good work.

Tags: bullion, bullish for gold, gold demand, gold prices, gold skyrocketing, investors, physical silver, precious metals, recession

You read it everyday but few connect the dots to a lift in precious metals. I see them, hopefully you do too, the problem is the masses do not. Today I want to include not only what I view as news worthy events but events soon to project silver and gold out of reach for most in the middle class. Once again, I don’t believe one particular event will send metal beyond what most view as unimaginable. Accumulation of multiple events will ultimately push, or influence, your PM (precious metal) higher.

The attraction to precious metal is NOT universal, let me explain. Indians buy gold stemming from tradition realizing gold jewelry is not only attractive but a great store of wealth. China buys gold to empower themselves into the next reserve currency. Americans buy gold either to hedge against uncertainty or grow rich. Canadians buy gold for the same reasons as Americans.

But Europeans buy gold for an entirely different reason, the same reason most will eventually own PM. Europe is trading currency, or other assets, for gold to preserve wealth lost otherwise. This reason, their reasoning, is a snapshot of our world’s future.

By the way, be sure to read the six plus reasons Why Silver & Gold Will Go Higher available right here.

NEWS WORTHY:

THE DAILY CALLER: “The US has 2-5 years before financial meltdown….it is dishonorable to lie to the American people….based on the debt we have now, it takes $650 billion annually just to pay its interest. I want people to see what’s coming, this is why I wrote The Debt Bomb.” U.S. SENATOR TOM COBURN.  You can watch a short video right here.

NEWS WORTHY

ZERO HEDGE: As US weak hands keep piling out of gold whether to make space for the Facebook IPO tomorrow, or just to load up on paper currencies in advance of central banks printing much more, two things have happened: China is now on its way to becoming the biggest source of gold demand, surpassing India, but more importantly as of hours ago, in a truly historic move, “Okayama Metal & Machinery has become the first Japanese pension fund to make public purchases of gold, in a sign of dwindling faith in paper currencies.” Not our words: the FT‘s. This is worth the time to read.

NEWS WORTHY

THE GOLD STANDARD: The Rising Price of the Falling Dollar by Charles Kadlec – Forbes:

The debauch of the dollar also erodes our prosperity and our security. Since the final link between the dollar and gold was severed in 1971, the paper-dollar system has produced slower growth, higher average unemployment, deeper recessions and more frequent financial crises.

• Chinese yuan, the price of oil today would be $78 and a gallon of regular gas would cost about $2.95;

• euro, the price of oil today would be $74 and regular gas about $2.80;

• Japanese yen, the price of oil today would be $67 and regular gas about $2.60;

• Swiss franc, the price of oil today would be $60 and regular gas about $2.40.

Very interesting read for those questioning the value of a gold standard, it’s right here.

NEWS WORTHY:

FOX BUSINESS:  Gold Fields Says Prices Need to Rise to Avoid Industry Cuts

JOHANNESBURG – Gold prices need to rise or mining companies may be forced to start cutting output and project financing, Gold Fields Ltd. (GFI) chief executive said Thursday.

In recent weeks the price of gold has fallen, with the metal trading around a four-and-a-half-month low in Europe this week.

“We need higher prices over the long term or we will see curtailment of projects,” Nick Holland said. “(The industry) could see output cut if we see gold go down to some of the forecasts.”

The promising production target comes despite mining companies in South Africa experiencing bigger-than-normal drops in output due to more frequent labor disruptions and Department of Mineral Resources-mandated safety stoppages. Read more right here.

NEWS WORTHY:

L.A. TIMES:  “Grexit”: Are Greece’s Euro Fears Causing a $1-Billion Bank Run?

Greek officials were busy today cobbling together an emergency plan after talks to form a coalition government disintegrated Tuesday. In the meantime, Greeks have withdrawn $900 million from local banks.

So said President Karolos Papoulias, according to minutes of a government meeting procured by Reuters. Papoulias, in turn, was quoting George Provopoulos, governor of the Greek Central Bank, who said depositors took out 700 million euros earlier this week and will likely withdraw at least 100 million more.

Greeks have withdrawn 72 billion euros since January 2010, leaving bank deposits with 165 billion euros in March, according to the central bank. Social media users were buzzing Wednesday about rumors that Greek banks had set a withdrawal limit of 50 euros on accounts. Read it here.

PROSPECTOR: It is hard for me to say which article above concerns me most. I wrote about all the above in Why Silver & Gold Will Go Higher so I’m certainly not surprised. Senator Coburn’s book The Debt Bomb intrigues me and sounds like my weekend read, you might consider it too.

Gold Field’s honesty as it relates to mining challenges is something I see as a sign of times to come. The likelihood of environmental concerns complicating an already complex mining industry is something all metal owners should expect, and plan for. Gold and silver are already in short supply at least compared to demand. How can this not affect metal prices of both silver and gold?

Japanese pension funds investing in physical gold could be the purest example of today’s flight to all things real. Folks, this is only the tip and you and I both know it. All the reasons above are why I’m not concerned when gold metal drops $50 or $350 over short term!

Affordable Gold:

Miles Franklin sent over an offer (5-17-12) selling 1/4 ounce fractional gold bullion at a very good price. Supplies limited and will not last considering the offering at 5.5 % over spot. You can find them here if interested.

FEEL FREE TO SEND OVER ALL COMMENTS OR QUESTIONS RIGHT HERE. THANKS FOR READING TPS TODAY!

Tags: buy gold, gold, gold demand, gold standard, physical gold, precious metals, preserve wealth, reserve currency, silver, Why Silver & Gold Will Go Higher