Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter


Gold Lack of GLD Demand, Silver Supply Glut Unfolding

Commodities / Gold and Silver 2011 Jul 13, 2011 - 09:26 AM GMT

By: Ned_W_Schmidt


Best Financial Markets Analysis ArticleCoins always have to sides. We all are familiar with well-worn story of heads I win and tails you lose. Maybe this time the coin may be far more desirable. Perhaps it is now heads we win, tails the politicians lose. Maybe the markets are telling us that indeed the era of Keynesian socialism is now becoming part of history. Another chapter in the book of dead and failed economic and political ideologies may be in the process of being written.

June 2010 was Peak. Down 100 tonnes since then.

In the above chart of GLD's holdings of Gold we can find no rush to buy policies to insure against possible debt defaults by Greece, Spain, Portugal, Italy, U.S. et al, until this week. On Tuesday, panic buying developed on the Street. Such panic buying by the lemmings of the Street never happens at a bottom.

If the financial threat from these Keynesian induced financial disasters were as dire as the commentary suggests, the markets would be sending a far different message. Of course, the ensuing poverty that would develop from such defaults could be causing individuals to hoard cash, rather than investing in insurance.

Discussions on Greece now seems focused on two alternatives, a managed default and an actual default. In a plan that now seems to be moving forward, a managed default would occur. In such a plan investors would have to share some of the loss on that government debt.

This development would be, as they say, a "game changer." With rare exception, for example Argentina which has been a serial defaulter, the world has not allowed sovereign debt to default. In the new game, markets would become the strict disciplinarian for governments with a bad case of Keynesian miseconomic policies. That development may be good news, and we explore that topic more in our July newsletter.

As the cases of the European PIGS are being resolved, the far more important battle on the survival of Keynesianism is taking place in the U.S. Never in 70+ years has a public discourse taken place on whether or not to continue the failed Keynesian policies of the past. Whatever the outcome of the debate on the U.S. debt ceiling, a new game, unlike any before, is unfolding. And the presumption that Gold and Silver price would rise in a U.S. default is likely in error.

This discussion will decide whether Keynesianism withers and dies a slow death, or is marched to the guillotine. Failure to raise the debt limit to a level providing comfort for the ruling junta to win reelection in 2012 may not mean default. Rather, it might mean an end to unlimited spending to buy votes in the U.S. Whatever happens, the world will actually be a financially better place

The above may help to explain why demand for financial insurance, demand for $Gold, has not risen, and why the price remains rather stagnate.

Above chart is for $Silver, a secondary form of financial insurance. While many comments float around on the demand for Silver, price is the ultimate manifestation of the supply/demand for any commodity. Chart formation portrayed might be described as the "squirrel on a limb" pattern.

We have observed on occasion a squirrel moving far out on a limb, in pursuit of some quest only known to it. At some point, the limb fails to provide adequate support, or breaks, plunging the squirrel to the ground far below. Investors may want to get off that limb before the plunge in Silver, moving into Gold, Chinese Renminbi, or Rhodium. Such a move is especially appropriate as near glut conditions will likely develop in Silver during the next couple of years.

Finally, we note with sadness the announced retirement of Representative Ron Paul. He will leave some big boots unfilled, but the record is clear. Ron Paul: 1 Keynesians: 0

Valuation table can be found below.

By Ned W Schmidt CFA, CEBS

Copyright © 2011 Ned W. Schmidt - All Rights Reserved

GOLD THOUGHTS come from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report , monthly, and Trading Thoughts , weekly. To receive copies of recent reports, go to

Ned W Schmidt Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


13 Jul 11, 23:18
you will be a disappointed

You have been dead wrong for so long and yet you are still at it.

I am sticking my neck out to predict that you will end up a very disappointed with regards to gold and silver.

12 Dec 11, 20:03
Track record

Whats this guys track record like?

It's not another "Picture of a patient" guy that used to post articles on Kitco - what was his name, ah yes. The Rosen Market Timing Letter.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules