- Mike Maloney
Gold and Silver Are Officially On Sale!GoldSilver.com
SEPTEMBER 27, 2011With
European bank failures looming, threats of sovereign debt
defaults, and recent margin hikes implemented across the globe, we have
witnessed gigantic price pullbacks for both gold and silver.
On page 112 of Mike Maloney's #1 book Rich Dad's Guide to Investing in Gold and Silver,
he wrote his vision of what the economic storm would most likely look like. Thus far Mike Maloney has been spot on:
<blockquote> First the threat of deflation, followed by a helicopter drop, followed by big inflation, followed by real deflation, and then followed by hyperinflation.
- Mike Maloney
In 2008 we certainly had a massive threat of deflation. This was followed by the TARP bailout, QE1 , QE2
and other lending program Ben Bernanke helicopter drops (estimated to
the tune of $16 trillion). We then witnessed the price of gold more
than double and the price of silver more than quadruple, all while
gasoline prices first shrunk and then inflated again. And now here we
are, on the cusp of what may be Mike's forewarned real deflation!
Some major points to keep in mind:
1) Last week, record sales volumes were recorded here and widely
reported around the industry. Bullion investors are moving into
physical silver and gold at higher volumes than ever witnessed.
2) Though they have not yet risen, per usual at the close of summer,
premiums on bullion products will be rising industry wide, especially
now given the immense volume of physical buying we are witnessing. We
fully expect the reemergence of supply shortages, backorders, and
inventory sellouts in the coming weeks and months.
3) Many are comparing the recent gold and silver price drops to those
of the great 2008 price crash. One look at the long-term silver chart
(above) and gold chart (below) and you can see why:
There are a few things to remember about what buying bullion in 2008 was like.
That year began brilliantly for both gold and silver prices. Gold
eclipsed $1000 and silver got to $21 by early spring only to have the
floor pulled out from their price levels as the financial crisis took
effect in the second half of that year. Gold dropped peak to trough in
2008 as much as 30% while silver fell more than 50% in dollar terms.
What we wouldn't give to go back and buy gold at $1000 and silver at
Bullion shortages began appearing in the market by middle August of
that year. Lacking inventories and supplies permeated throughout the
remainder of that year and all the way into early 2009.
Remember in the fall of 2008, banks and financial institutions were failing left and right, panic buying was on high.
The divergences between the sinking paper spot prices of silver and
gold from the actual physical bullion prices was extremely vast
throughout this time period. Here are but a few real life example
orders from our database: October 27, 2008 On that day, the only gold products available were 32.15 troy ounce gold kilo bars.
Gold Spot Price -> $ 733.00 vs. 2 Gold Kilos sold per ounce price delivered to door -> $901.79
That is a 23% difference between the paper gold spot to physical gold bullion price. November 21, 2008 During many months of the 2008 price
downturn, silver eagles, silver maples, silver bars and rounds, every
product traded moved in and out of availability. It was very difficult
to know what would be available even the next day.
Silver Spot Price -> $ 9.22 vs. 5000 oz Silver Eagles sold per ounce price delivered to door -> $13.75
A 49% divergence between the paper spot price versus the physical silver price.
This spot price verse physical bullion price divergence of 2008 may not
only repeat in 2011 but it has the potential of becoming even worse
this time around. SO WHAT DO WE THINK IS GOING ON?
Something big is probably on the horizon. European bank failures are
looming and there is a very real threat of sovereign defaults (Greece,
etc.) which could set off a chain reaction of bankruptcies, not only in
the Eurozone, but across the globe.
Given what occurred in 2008, if today's gold spot price blasts through
its 150 and 200 day support levels, bullion supplies will begin to
stretch so thinly that we may again witness a major disruption between
the paper spot vs. the physical investment grade bullion prices.
Looking at the charts, it appears physical silver and gold investors
would again be paying premiums so high for physical that the 200 day
spot price moving average levels (for both gold and silver) may again
act as the floors to the physical price of investment grade bullion
products (like it did in 2008). In other words, overwhelming physical
demand will simply create a physical pricing floor for bullion products
thanks to vast supply shortages and and overwhelming demand.
Those looking to increase their physical positions should do so now
with both hands. Sure spot prices may sink even lower, the problem is
at the rate of today's current demand, securing your bullion may become
next to impossible.
Remember, no serious long term bullion investors are going to be giving
up their holdings for a $30, $40, $50 silver price or even a $1800,
$1900, $2000 gold price. YOU KNOW WHAT THE BEST NEWS OF ALL IS?
The fundamental reasons for bullion investing have not changed... the
health of the global financial system has only gotten worse!
At these current price levels, gold and silver are officially on sale and we are acquiring now.