Author Archives: pmontesdeoca

China Prepares The World With A “Masterstroke” Move!

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In a July 18, 2015 interview, Stephen Leeb, Chairman and Chief Investment Officer of Leeb Capital Management, talked about Chinese gold reserves and predicted gold prices hitting $15,000 an ounce and all commodity prices taking off.

 

The Chinese just released a report on their gold holdings, which claimed they have 1,658 tonnes of gold.

 

“Is it believable that [1,658 tonnes] is all of the gold they have immediate access to?” Leeb asked. “No. That’s preposterous.”

 

Leeb explained that China has many banks outside of the Chinese Central Bank, which may have a tremendous amount of debt, [with] creditors who are underwater.” He argued that “They may be holding massive, massive, massive reserves of gold.”

 

Leeb argued that the Chinese report did not make logical sense. From January through May, the Chinese reported that their gold reserves remained the same at 33,890,000 troy ounces. Then suddenly in June they added 20 million troy ounces.

 

“So,” Leeb said, “all the buying over the past five years has been in June; a month when gold went down….How do you buy 600 tonnes of gold and gold goes down?” Leeb said such an outcome was “Not possible.” He argued that the only place the Central Bank could have purchased the gold from to have the price fall was from their member banks. Leeb believes that there is a fantastic amount of gold in the Chinese banking system, just not concentrated in the central bank. But, he warned, remember that all Chinese banks are controlled by the state.

 

The June increase took Chinese gold holdings slightly above the Russians, but still below the US, and even still below Italy.  

 

The Chinese goal is to make their currency a reserve currency backed by gold. Therefore, they are building up a gold reserve to back up the yuan as a reserve currency. Leeb warned that people who think the report is evidence that the Chinese never had that much gold are in for a “big surprise in October or November,” when, he predicted, the Chinese will start adding gold hand over fist.

 

How much gold do the Chinese have?

 

Leeb believes they have “significantly more than the US claims,” which is 8,000 tonnes. The Russians say the Chinese may have 30,000 tonnes. Leeb said, “I don’t necessarily believe that,” but he would not be surprised if they have 15,000 tonnes.

 

What does such a large amount of gold mean?

 

“Think of the influence they have which no one knows about,” Leeb warned. That amount of gold gives the Chinese the ability to reduce volatility and raise prices. If gold increases to $10,000, “What kind of wealth effect is that having for the country? It is unbelievable.” All of a sudden everyone in China, he said, especially the banks, are that much wealthier.

 

Leeb contrasted the Chinese approach with US, which has tried to raise the wealth of the country by printing money. Printing money has caused the stock market to rise. In contrast, the Chinese are building wealth the hard way, by raising the price of a hard asset: gold. China now has a lion’s share of the gold in the world.

 

Leeb predicted, “You’ll see gold go to $10,000 or $15,000 in a heartbeat.” He believes the Chinese strategy is “a masterstroke.”  They have convinced the world that they haven’t been accumulating massive amounts of gold.

 

Although the Chinese government misjudged the propensity for gambling in stocks of their people, Leeb does not believe the Shanghai stock market will rise quickly or high, because that is not the Chinese strategy. “It’s going to calm down.” He warned, “The wealth effect for China is not the stock market; gold is what the Chinese consider to be wealth.”

 

Leeb believes the Chinese want a quiet market until October or November when the IMF will make its decision about the yuan as a reserve currency. Then he expects “All commodities are going to fly, sooner than later. I am so bullish over the next 10 months for virtually every commodity.”

 

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.

 

JNUG’s Incredible Upside Potential As Gold And Silver Bottom!

JNUG

7/10/2015

 

As silver prices fall, U.S. Mint’s silver bullion coins sell out

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Investors still like silver—so much so that the U.S. Mint sold out of its American Eagle Silver Bullion Coins.

The Mint announced the temporary sellout on Tuesday. It said that the U.S. Mint facility at West Point, N.Y., continues to produce the coins and resumption of sales is expected in about two weeks.

The shortages comes at a time when silver futures prices SIU5, -1.01%  are falling.On Tuesday, they sank 5% to $14.969 an ounce, the lowest settlement for a most-active contract since 2009. They recovered a bit on Wednesday, though year to date prices have lost more than 3%.

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Sprott’s Rick Rule: “We are less well prepared to handle a crisis than we were in 2008”

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In a June 25, 2015 interview by Patrick MontesDeOca of the Equity Management Academy with Rick Rule, President of Sprott Asset Management, USA, Rule discussed the Euro-zone crisis and the relative financial security of the United States, but also the need to own physical precious metals.

When asked about the Euro-zone crisis, Rule said the most important issue was how long could central bankers and financial leaders in government “continue with the easy money program and continue to depress interest rates,” and “How long until private sector borrowers respond to market forces and demand higher yields given the increasing vulnerability that borrowers have to overleveraged balance sheets?”

MontesDeOca raised the issue of the crisis spreading to the United States, but Rule said, “I think we have the ability internally if we put our own house in order to survive Eurozone instability.”

Rule said we have had three years to prepare for a Greek default, and private sector banks have done “a very good job” of shifting potential costs to taxpayers. He said banks have followed the “Fascist response: privatize the profits, shift the risk to the public sector.” He said a Greek default will not have real ramifications in the private sector, but may affect sentiment.

When asked if a major economic crisis is coming, Rule explained, “I’m not an economist. I’m a credit analyst.” As an analyst, he said, “We are less well prepared to handle a crisis than we were in 2008” because debt levels are higher now than in 2008. Therefore, the ability to add liquidity and generate economic activity has been damaged because “we have played that card so much.”

Looking to history, Rule said the 1960s shared similar traits with today, in terms of easy money, which led to instability in the 1970s. He does not believe current conditions will lead to an economic apocalypse, but he said that the 1970s were “very good for the price of precious metals.”

He advised holding physical precious metals “not for collapse, but to bolster the purchasing power of the US dollar.” He mentioned that in the 1970s, Motel 6 rooms near his home cost $6; now they cost $69. The dollar’s purchasing power has decreased 90% in 30 years. Rule advised listeners to be aware that “the purchasing power of your dollar depreciates at 3% or 4% every year,” so you should keep some money in gold and silver.

Discussing the paper market, Rule said the gold and silver paper markets will lead most of the time, whether they are moving higher or lower. He also pointed out that over the past “14 or 15 months, gold and silver have been in bull markets in every currency except for the US dollar,” which is a phenomena eerily similar to the market of 2000. At that time those who held precious metals were “worn out,” yet gold was up in every other currency. Then in 2001, gold and the US dollar began to rise against other currencies. Gold rallied from $252 up to $1,900 an ounce by 2011. Rule did not predict such a rise, but he believes circumstances now are similar to 2000.

Rule argued that all currencies are weak, with the US dollar the “prettiest mare in the slaughterhouse,” but “don’t bet it will continue.” He sees confidence in the market as “artificially high.” Many people believe that since financial leaders appeared to have saved the world from an apocalypse in 2008, they can do it again if there is another financial crisis.

Rule argued that at other times when most people were wrong, a few have made fortunes. George Soros’ famous run on the British pound was based on his belief that broadly held support for the pound was wrong. He was wrong for two years, and then he was “a billion dollars right.” Rule also mentioned those who bet against real estate debt in the early 2000s made billions when the real estate and bond markets crashed. He warned that the crash can come quickly because confidence can vanish overnight.

Rule believes that gold will not replace the dollar, but that “It will lose the fight less badly.” Precious metals account for about one-third of 1% of US savings, so if that percentage rose to even just 1%, demand would triple and prices would rise.

In comparing gold and silver, Rule said, “Silver is in effect gold on steroids.” In bad markets, silver underperforms gold; in bull markets, silver outperforms gold. Silver is cheaper per unit to acquire, so if there is a bull market, poor people have more access to silver than to gold. If there is a bull market and more and more poor people use silver as a medium of exchange, silver will outperform gold.

SPECIAL EVENT – Rick Rule Live June 25, 2015 at 10:00 am PDT

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You are invited to an exclusive Equity Management Academy webinar featuring special guest Rick Rule, one of the wealthiest, street-smart professionals in the business.

Rick Rule

Rick Rule:  “at age 62 this is my fifth natural resource up-cycle and it will be my last.  I can tell you that in my experience the length and the severity of the down-cycle is the determinant of the up-cycle, and by that measure this up-cycle should be one for the history books….”    

Details

Title: Rick Rule Live

Overview: Hear Rick’s views on the global markets with emphasis on precious metals and natural resource investing. The audience is encouraged to send questions ahead of time, either by email or Facebook.

Date: Thursday, June 25th

Time: 1 pm (EST), 10 am (PST)

Duration: 1 hour

Cost: RSVP

About Rick

Mr. Rule has dedicated his entire adult life to many aspects of natural resource securities investing. In addition to the knowledge and experience gained in a long and focused career, he has a worldwide network of contacts in the natural resource and finance worlds. As Director, President, and Chief Executive Officer of Sprott US Holdings, Inc., Mr. Rule leads a highly skilled team of earth science and finance professionals who enjoy a worldwide reputation for resource investment management.

Mr. Rule is a frequent  speaker at industry conferences, and is interviewed for numerous radio, television, print and online media outlets concerning natural resource investment and industry topics. He is frequently quoted and referred by prominent natural resource oriented newsletters and advisories.  Mr. Rule and his team have long experience in many resource sectors including agriculture, alternative energy, forestry, oil and gas, mining and water. Mr. Rule is particularly active in private placement markets, having originated and participated in hundreds of debt and equity transactions with private, pre-public and public companies.

To make your reservation click HERE

 

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