In a financial world of contradictions, chaos, and confusion, perhaps a “gold-centric” perspective will provide clarity.

The media is filled with comments from notable “gold-bashers” such as Benjamin Bernanke, Warren Buffett, and Bill Gates. Their criticisms of gold (in my opinion) boil down to:

Gold has no real value – you can’t eat it or do much with it except make jewelry. It is a barbarous relic etc.
Gold makes no sense. Why dig it from the ground, refine it, and then lock it in a vault where it sits producing nothing?
Gold prices are volatile.
Gold is an unsafe investment.
Gold pays no interest.
101 more criticisms of the oldest money in the world.
However, if the “gold bashers” were correct then why are the following true?

“Wealthy Hindu temples such as this one are repositories for much of the $1 Trillion US worth of privately help gold in India – about 22,000 tons, according to an estimate from the World Gold Council.” The temples have accumulated 1 $Trillion worth of gold, but “gold bashers” claim it has no real value. I think gold has value.
“Prime Minister (India) Narendra Modi’s government is looking to monetize India’s vast hidden wealth…The gold, officials said, would be melted down and sold to jewelers.” If gold has no real value, but jewelers want it, and the government wants to monetize (sell) it and convert real gold to fiat currency to support the government, then the “logic” escapes me.
“El Salvador’s central bank sold about 80% of its gold reserves last month to diversify risk and take advantage of the metal’s appreciation, a central bank official said on Friday.” Really? Gold in dollar terms is down 40% and the central bank wants to take advantage of the metal’s appreciation. They sold gold and converted it to fiat currency to diversify risk. I doubt it. They need the cash and the gold is valuable or there would have been no buyer.
Greece and their financial troubles: “… upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.” In summary, print euros, lend them to Greece, take Greece’s gold upon default, and the result is the euros are spent, Greece’s gold is gone, and the lenders possess real gold, not digital euros. What a simple and brilliant plan to convert paper into gold! If gold is so useless why demand Greece’s gold?
We can find many other examples of the real value of gold and the global recognition of such. Ask yourself:

What happened to Libya’s gold after the bombing and NATO invasion?
What happened to Iraq’s gold after the US invasion?
What happened to the Ukraine gold after the revolution in 2014?
What happened to Kuwait’s gold after Iraq invaded in 1990?
Why has China purchased many thousands of tons of gold in the past 5 years?
Why has Russia substantially increased their gold reserves?
If gold has so little value and use, why was Fort Knox built?
Can Gold Save The World from the Credit Bubble?

It has been reported that global debt is about $200 Trillion. Central banks supposedly hold about 30,000 tons of gold. If the total debt were backed by central bank gold at 40%, that would price gold about $80,000 per ounce.

In the US, the official gold reserve, which has not been audited in about 60 years, is about 8,200 tons. Official national debt is about $18 Trillion. If the official gold backed the debt at 100%, the price of gold would be about $70,000 per ounce.

Interest rates are at multi-generational lows. It has been reported that over $5 Trillion in sovereign debt “pays” negative interest. German 10 year debt pays less than 0.20% per year. Some European mortgages have negative amortization. Clearly credit, debt and currency bubbles have been created. All bubbles eventually pop, often with disastrous results.

The credit bubble has grown so large that the supposed central bank gold would have to be valued at $40,000 to $80,000 per ounce to back all the debt. Revaluing gold higher by a large factor may become necessary in the future to reestablish confidence in currencies. However a revaluation certainly will not be welcomed by central banks, governments, or most individuals. The transition to $80,000 gold, or even $10,000 gold, would be very traumatic.

But can the world increase debt forever, inflate the sovereign debt and global credit bubbles even further, and not create an equally disastrous hyperinflation or a severe deflationary depression? Something is likely to break.

Governments and central banks created the credit and currency bubbles. When fiat currencies crash in the next crisis, backing currencies with gold could “save the world” and restore confidence in fiat currencies but only after significant trauma.

Perhaps central banks will do the “right thing,” but only after they have exhausted all other alternatives. It will be a long and difficult wait.

The Gold price fell last week as forecast. It is beginning to look weak — and anyone with a bullish bias should be concerned at its lacklustre performance over the last couple of weeks. In view of this, we forecasted a much larger decline than we actually got. Nonetheless, we still believe we are in a bearish continuation and that our timing is slightly off.
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Like nature, we think prices tend to take the path of least resistance. Likewise in the case of gold at present, it appears the path of least resistance is unfortunately down. We can see very little to be positive about at this stage. Therefore, we are still forecasting a fall in gold — as that is where we think the balance of probability lies.

Just as a river does not go from the mountain to the sea in a straight line, nor do prices as they too are also a part of nature. The market itself is a collection of participants, prices are made at the margin between buyer and seller on a daily basis, the market has its own character which is separate to the individual participants. Just as a colony of termites can create structures far in excess of the capacity of each of its individual participants so the collective actions of all gold buyers and sellers creates its own character and structure.

The stream will take the path of least resistance, when it comes across immovable objects in its way it side steps the object and continues on its course. Like a stream gold has just been hitting a rock for well over a year and there seems no way to force price above the $1,200 – $1,300 region.

There seems no option but to go around the price obstacle which in our view means a capitulation that generates an extreme value play, this would then create the energy required to blast back through this area at some point in the not too distant future. Investors who wouldn’t buy at current prices before, would buy in as they would be fearful they had missed the bottom.

“Public sentiment is everything. With public sentiment nothing can fail. Without it nothing can succeed.” — Abraham Lincoln

The bulls will need a substantial change in sentiment to change the fortunes of the precious metals complex in general. Currently, the gold price is an under-owned and unappreciated asset — and there seems little appetite amongst investors to re-evaluate their portfolios.

Moreover, it is well worth remembering that economic crises are always really political crises. And with the level of economic literacy prevailing amongst our ruling elites, it can only be a matter of time before they drop the ball again and force another substantial rise in the price of gold.

(Kitco News) – Once again, speculation is cropping up regarding the size of China’s gold reserves and whether or not the People’s Bank of China has been bolstering its holdings in secret.

According to data from the International Monetary Fund, China’s official gold reserves have not changed since 2009, standing at 1,054 tonnes.

However, Marc Chandler, head of global strategy at Brown Brothers Harriman, said in a report Thursday that the country could soon update its reserves. He noted China will be meeting with the International Monetary Fund (IMF) in May to make a case of including the yuan in the IMF’s Special Drawing Rights (SDR), a basket of currencies made of U.S. dollars, Japanese yen, pound sterling and euros.

“The cloak of secrecy may be lifted if China wants to bolster its case for being included in the SDR. We have previously made a similar point about the currency allocation of its currency reserves,” Chandler said.

However, Chandler added that because of the small size of the gold market, compared to foreign exchange markets, it is unlikely that China has significantly increased its gold reserves.

“The gold market is far too small to replace even a significant part of the paper money,” he said.

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BBH is not the only firm speculating on China’s official holdings. Also on Thursday, French bank Natixis presented arguments for and against China buying more gold.

They noted that China could have doubled its gold holdings to 3,200 tonnes in 2013 by taking its entire domestic mine supply.

“As for local demand for gold, it could have been adequately satisfied by imports,” said Bernard Dahdah, precious metals specialist at the France-based bank.

Similar to BBH, the argument against China increasing its reserves is, as Dahdah agrees, that the gold market is too small to make a difference in a central bank’s total foreign reserves, and maybe not an efficient way to diversify its holdings.

They noted that if China did actually double its reserves to 3,200 tonnes, it would only increase its percentage as part of total holdings to 3.3% from 1.5%.

“While some would see this as a patient, long-term way to add gold reserves, others view it as an argument against attempting to accumulate significant volumes of gold, indeed some Chinese officials have voiced publicly their opposition to the idea of adding gold to FX reserves,” Dahdah said.

Dahdah added that it makes more sense for China to decrease its foreign currencies, thereby increasing gold’s role.

The global financial world is increasingly unstable and approaching a reset. A few reasons why:
Global debt is approximately $200 Trillion and rapidly increasing. Debts are either paid or defaulted. Default seems likely – either directly or via hyperinflation.
Global derivatives are, depending on who is counting, around $1,000 Trillion. Derivatives were at the center of the 2008 crash and are even more dangerous now.
Speculation, debt, and “printing currencies” have been excessive in many countries. Other similar periods of excessive speculation were 1929 and 2000. “Printing currency” has never solved problems.
So how does the financial world, as we know it, reset? Let’s speculate!
The Big Bang Scenario
Nuclear war creates a Mad Max scenario. The US and Russia have the means and opportunity. I trust they do not have the motive.
Extended conventional war that starts small and expands, ends an empire, and destroys several countries and currencies.
Financial or economic collapse occurs. If credit collapses and businesses aren’t paid for products and services, the distribution system could temporarily shut down. Contemplate empty grocery shelves, empty gasoline stations, electricity and water outages, empty ATM’s, and EBT cards that don’t work.
I think we can all agree that the “Big Bang” reset is undesirable. Let’s trust that we reset under the “Whimper” scenario.

The Whimper Scenario

(possibilities)

The US dollar, the global reserve currency, gradually loses value and importance. Other currencies, such as the Yuan or SDR from the IMF, rise to importance. Prices reset higher, especially in the US. Economic weakness “forces” the Fed to expand its QE program.
The gradual demise of the EU, the euro, peace in the Ukraine and Middle-East results in a further shift of economic power and wealth to Asia. Prices rise in Europe, some banks are forced to acknowledge their bankrupt capital condition, and unemployment increases even further. The ECB reacts with either hyperinflationary “printing” or the EU descends into a long depression.
The Japanese central bank, after buying all their government bonds, also purchases ETFs, individual stocks, real estate, and more. The Keynesian experiment of “printing money” is declared only a partial success because the central bank “did not do enough.” The yen drops well below 200 to the US dollar even after the dollar has weakened considerably.
China and Russia increase their influence in the global economic system and eventually acknowledge that they own most of the world’s gold, outside of India. They thank western central banks for selling almost all their gold at bargain prices. Western central banks deny that their vaults are nearly empty but refuse all requests for an audit or examination.
Gold prices, in spite of negative commentary in the media almost every day, increased well beyond $3,000 as the dollar weakened and inflation hysteria overwhelmed the western world.
The US congress and the President in 2016 announce that, primarily due to bad weather, the SNAP (food stamps), unemployment programs, and aid to bankers will be doubled in the coming fiscal year. Detractors noted that food prices had more than doubled in the previous two years and that, as usual, congress and the President “did not do enough.”
The Fed discussed a “helicopter drop” of freshly printed $100 bills as a temporary calming influence in major cities but many discounted the proposal as “not doing enough.”
There are so many more possibilities…

CONCLUSIONS
A reset in the financial system seems inevitable.
We survived other resets, such as the depression of the 1930s, WWII, 1971 separation of the dollar from gold, 1970s inflation, year 2000 stock crashes, and the 2008 financial crash. The world will survive the next reset.
Excess debt, fiat currencies, and “printing currency” are the center of global economic problems. Those problems will not be resolved with more debt and “printing currency.”
As debt is marked down to a more realistic value, and excessive printing (QE etc.) devalues all fiat currencies, consumer prices for commodities will rise. Expect higher prices for food, energy, gasoline, and clothing – anything you NEED.
As fiat currencies are devalued confidence in the value of paper assets evaporates and the prices for gold and silver increase substantially.
If central banks and politicians choose hyperinflation, all bets are off regarding how high gold and silver will climb, and how crazy our Twilight Zone world will become.
I hope you are prepared with physical gold and silver in a secure depository outside the banking system. Read the 1st edition of my book, “Gold Value and Gold Prices From 1971 – 2021” available from Amazon and my site.

Gold (CEC:Commodities Exchange Centre: @GC15K) started the week on a bright note, settling almost 1.5 percent higher on Monday.

What’s more impressive is that with Monday’s rally, gold is now up 2.5 percent this year, outpacing the S&P 500 (^GSPC)’s mild 1 percent gain. The last time gold beat the S&P’s price appreciation in a full year was in 2011, when gold rose 16 percent while stocks were flat.

George Gero, a precious metals analyst with RBC, credits Friday’s especially weak jobs number for gold’s rally.

The latest nonfarm payrolls report showed that only 126,000 jobs were created in March, far below the 248,000 expected. Prior reports were also revised lower That caused some investors to push back their expectations of when the Fed will raise rates.

A rate rise is seen as hurting gold, given that it will most likely mean a stronger dollar and higher interest rates. A more valuable dollar means it takes fewer dollars to buy every ounce of gold, and also makes gold more expensive overseas, since gold is priced in dollars. Meanwhile, rising rates make holding gold less attractive than holding other assets, given that gold doesn’t produce a yield.

Read More Here’s why it could get way worse for gold

As expectations about the coming hike get pushed back, then gold bulls breathe a sigh of relief.

“Now, with so many bears in the woods, the fact that the Fed seems to be kicking the can down to the road to maybe September instead of June is helping gold tremendously,” Gero said.
While stocks also cheer an easy-money Fed, equity investors, unlike gold investors, also have to worry about earnings. Bad economic news indicates bad things for earnings, which would explain why the market opened lower on Monday, albeit before rebounding nicely.

Meanwhile, Todd Gordon of TradingAnalysis.com says that gold broke an important resistance level on Monday, as the dollar slips.

“I think this is a story of dollar weakness,” Gordon said. “So actually, I just went long gold today.”

Gordon’s “minimum upside target” on gold is $1,256, more than 3 percent above current levels.

Want to be part of the Trading Nation ? If you’d like to call into our live Monday show, email your name, number, and question to TradingNation@cnbc.com.

Look at our financial world over 30 years from 30 miles high – the BIG PERSPECTIVE.

Break the cycle in your life!
debt_vs_silver_1985_2015
First, look at US population adjusted national debt and the smoothed annual price of silver for the past 30 years.
debt_vs_oil_1985_2015

debt_vs_silver_1985_2015

Then look at US population adjusted national debt and the annual price of crude oil for the past 30 years.

debt_vs_oil_1985_2015

Simple Conclusion: National debt increases inexorably – by 9% to 10% per year, each and every year, and will until the system is forced to reset at some undetermined future date. Silver and crude oil prices will also increase, but very erratically. They are currently quite low. Note these examples of large moves in crude oil and silver.
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Yes, crude oil and silver are notoriously volatile, opposite to the inevitable government debt increases or the election of the next big-spending but impressively sincere politician.

So Stack Silver and remember that the big picture confirms that time, government spending, massive increases in debt, war, and political stupidity are all “on your side,” making that stacked silver more valuable.

No, it will not go up every year – as proven by the last four years of brutal correction in the ongoing silver bull market, or the last year of ugly correction in the crude oil market. All markets boom and bust, in variable cycles. Silver has been crushed for four years and will, in my opinion, rally substantially in 2015 and 2016.

silver_logscale_1990_2015
silver_logscale_1990_2015
Your stack of silver does not care that the powers-that-be have been manipulating the prices of gold and silver downward, or bonds and the S&P upward, because from the big perspective, silver prices will drive much higher, along with national debt, and most other prices.

KISS: Keep It Simple – Stack!
KISS: Keep Investing in Stacked Silver!
KISS: Kindly Ignore Social Stupidity.
KISS: Kleptocracies Invalidated by Stacking Silver!

Buy Low, Sell High. Silver prices have been crushed – a gift from the financial powers-that-be to the patient stacker. Yes, the correction has persisted longer than most “silver bulls” thought possible, but the value in silver remains, and the investment potential has increased in the past two years.

Final question: Would you rather possess a stack of silver eagles, or a stack of $20 paper Federal Reserve Notes, issued by a dodgy central bank and backed by nothing but full faith and credit of a government in obviously shaky financial condition? Repeat the question using euros, yen, pounds, or pesos and you are likely to come to the same conclusion. Trust real money, real silver, in your possession or preferably in secure storage outside of the banking system.

Repeat: Keep It Simple – Stack! Governments borrow and spend, debt increases, and commodity prices inevitably follow. Silver and gold have been money for thousands of years, and still are. Paper substitutes have all failed, either slowly or rapidly, and they will continue to fail, unless governments and central banks responsibly manage the value of currencies (NOT likely).