THE PRECIOUS METAL STORM IS COMING : The Public Is Not Prepared

The stock markets are experiencing volatile trade winds. The barometer of the world economy grows weak as indicators point to another recession looming on the horizon.

The Precious Metal Storm is coming... unfortunately, the public is not prepared.

U.S. and UK are heading toward an economic collapse that civilization has never witnessed before. Even though we have suffered greatly through World Wars and global depressions, we have always been able to pull ourselves out of the chaos and destruction by regrouping and rebuilding.

The U.S  and UK are heading down because analysts, intellectuals and the movers & shakers running the show, have allowed their ignorance-greed rather than their intelligence-wisdom to guide monetary, economic and governmental policy.

The chart below shows where the majority of U.S. personal sector monetary cash assets are allocated. These do not include retirement or security investments, but are rather paper assets we may label as "Cash or Cash Equivalents."

According to the Federal Reserve Q3 2013 Statistical Release, the U.S. public held $1,174 billion in Money Market Fund Shares, $1,332 billion in Checkable Deposits & Currency and $7,723 billion in Time & Saving Deposits. Thus, there is a total of $10,229 billion or $10.2 trillion in these paper cash assets.

The next chart below details the holdings of the different Silver ETF's from around the world:

As we can see there are 655 million oz of silver held in these Silver ETF's. If we multiply the 655 million oz by $21, we would get a figure of $13.7 billion. 

If we assume that this is the largest store of physical silver in the world, its total value ($13.7 billion) pales in comparison to $10.2 trillion held in U.S. personal cash assets.

Now, if we were to include the current 182 million oz of silver at the Comex and let's say there is another 200 million oz at the LBMA, that would add another $8 billion to the figure... giving us a total of $22 billion.

The U.S. public has $7.7 trillion stashed away in digital Time & Savings Deposits.

However, Time & Savings Deposits are "extra or surplus" funds that are generally not used in the day-to-day business of Americans. Thus, the total value of the Global Silver ETF's are 0.2% (one fifth of one percent) of the value of all U.S. Time & Savings Deposits.

This may not seem so strange to the typical American today. Just fifty years ago the U.S. Dollar was backed by gold and the coinage had a great deal of silver in it.

After President Lyndon Johnson signed the "Coinage Act of 1965", which removed silver from circulation, within a few years... it was difficult to find a silver coin. Once silver was removed from official U.S. coinage, it went into hiding.

The term "went into hiding" means the public instinctively understands the implications of Gresham's Law -- bad money drives out the good. When the U.S. Government starting minting base metal slugs as official money, it didn't take long for the public to withdraw the real money (silver) from circulation.

A few years after the signing of 1965 Coinage Act (removing silver from circulation), the next shoe to drop was gold. On August 15, 1971, Nixon closed the gold window, which meant foreign governments could no longer exchange U.S. Dollars for physical gold.

Because the U.S. was printing so much money in the 1960's to cover the costs of social programs and the war in Viet Nam, foreign countries were exchanging paper Dollars for physical gold. During the 1960-1968 time period, the U.S. was a part of the London Gold Pool that attempted to hold the price of gold at $35 by selling thousands of tons of gold on the market.

The biggest loser in the London Gold Pool was the U.S. as it exported over 4,700 metric tons during that nine-year time period. Here again was another example of bad money driving out good.

If we fast forward to today, Gresham's Law is alive and well as the East continues to exchange worthless fiat Dollars for physical gold. Not only did the Chinese import a record amount of gold in 2013, they also imported a stunning 247 metric tons in January.

Currently, China and many other Eastern countries are focusing on acquiring physical gold... as it is the king of monetary metals. However, this does not mean that silver will miss the huge transfer of wealth show because it is now just a supposed "Industrial Metal."

Silver is still a valued monetary metal due to the fact that the Official Mints continue to produce both Gold & Silver Eagles, Maples, Philharmonics, Koalas, Kangaroos, Pandas and Libertads. Do you see these Official mints producing these coins in copper??

Regardless, demand for silver is picking up as both India and China have increased their net imports of silver over the past several years. 

China has gone from being a big net exporter of silver, to a net importer since 2010. In 2009, (last year being a net exporter), China had net exports of 1,260 metric tons. However, in 2012, China became a net importer of 82 metric tons.

While this may seem like an insignificant figure presently, it is the beginning of another trend change that will more than likely continue to a greater degree in the future.

Furthermore, when the Indian Government cracked down on gold imports in 2013, its citizens switched to buying silver. Indians imported a record 5,400 metric tons of silver in 2013:

This was a record amount of silver imported by India, estimated to surpass the 5,049 metric tons set in 2008. This provides proof that citizens of the world will instinctively purchase silver if they cannot acquire gold. When one monetary metal is unavailable, demand for the other will increase.

If we consider that the U.S. public holds $7.7 trillion in Time & Savings Deposits while the world has a paltry $13.7 billion in total Global Silver ETF's, something is very wrong with the public's ability to understand the wisdom of "real value."

We must remember the KEY INGREDIENT that keeps a Ponzi Scheme alive is the ability to hoodwink a new batch of POOR UNWORTHY SLOBS to part with their hard-earned fiat currency. 

If a typical Ponzi Scheme needs a new supply of victims' funds to keep it going, the Global Fiat Monetary Ponzi needs a growing supply of energy to keep it from collapsing.

The Fiat Monetary System and Derivative's Monster are heading toward certain death.... it's just a matter of time.

S

teve St. Angelo, SRSrocco Report Feb 2014.

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