A New Rush to Gold Has Begun

So here’s the good news. A new rush to gold has begun. To see where we’re headed, let’s first see where we’ve been. 

Gold and silver owners in the first ten years of this new century were in for quite a ride, watching gold soar to $1,895 and silver to $49 by 2011. Even those who jumped in midway saw their paper money values zoom. 

Gold had bottomed at $255.95, Apr 2, 2001. Note the gold bull began months before the attacks of 9/11. Silver bottomed nine weeks after the attacks at $4.06, alongside crashing stock markets. 

The national debt in 2001 was $5.8 trillion, on its way to today’s $20 trillion. Savers and retirees could depend on CD and bond returns well north of 5%. U.S. bonds were still triple-A rated. You could take your cash from your bank without federal snooping. 

“War on cash” was an unknown socio-economic term. No one predicted massive, taxpayer funded bail-outs, threats of bail-ins, or the terrible twins, ZIRP and NIRP – zero and negative interest rates. 

While the DOW and S&P languished in the agony of three crashes from March of 2000 through 2009, gold and silver got no respect from Wall Street or financial media. That’s despite gold doubling in paper money terms 2.8 times from 2001 to 2011. Silver had 3.5 doubles. Both metals had short-lived drops along the way.

 From High to Low since the year 2000 as of 6-1-16

+319.5% Gold

+161.9% Transports

+132.7% Utilities 

+  91.8% Oil
+  59.4% 30 year Treasury bond

+  58.5% Swiss Franc's

+  54.7%  Dow
+  42.7% S&P 500

+  21.6% Nasdaq 

Thanks, in part, to the top-down manipulation of bullion bank price suppression, gold steadily fell 55% and silver 72% from 2011 through 2015. Supply and demand played no role. Governments and banks did a superb job protecting the illusion paper money still has value.

Global Negative Bond Yields – Swiss 30-year bond yield dips into subzero territory

Global bond yields are now heading into subzero territory. Investors simply pay just to place their cash in government debt. After German 10-year sovereign bonds dipped to under zero this week (SEE: German 10-year sovereign bond yields reach negative territory for first time in history), Swiss government debt followed suit. 

The yield on the 30-year Swiss bond declined into negative territory on Thursday, according to MarketWatch. During the trading session, the 30-year bond yield tumbled 5.5 basis points to negative 0.055 percent.

DYI Comments:  European demographic imbalances.  Far more older folks than young slowing their economy to crawl along with social programs that are in need of reform.  With so few young citizens the burden becomes excessive to pay for their version of social security and health care so the politicians leaned heavily on borrowing to make up the difference.  Now the European central bank is buying up the debt in an effort to free up the private economy.  If the union doesn't fly apart their central bank in the end will result in direct payments for the remaining portion of their social programs that taxes are unable to support.  In other words they will use the most inciduous tax of all: INFLATION!  This is comming to the U.S. during the 2020's but first it will be Europe and that is what the gold market is telling us.

DYI