Ron Paul, former congressman for Texas, laid plain the absurdity of central policy towards the markets in a recent interview with Amanda Diaz on CNBC. He believes a day of reckoning is in the cards because the central banks “can’t print money forever.”

Dr. Paul blasted the role of the Federal Reserve in markets where superficial pronouncements herd speculators to and fro: “I am utterly amazed at how these Federal Reserve Chairman reports can play havoc with the market: one word – what they say and what they don’t say and who’s going to interpret i

Gold in U.S. Dollars - 5 Yearst,” he said.

He believes this manipulation of markets by the Fed is having very negative consequences for the economy. Speculators are chasing Fed-induced momentum rather than making investment decisions based on analysis of what is happening in the real world. Savings, once the bedrock of American capitalism, have been replaced by easy credit leading to “a lot of malinvestment and a pyramiding of gigantic debt”, adding, “People don’t depend on savings for their capital – they depend on the Fed!”

He states that at some point the financial elites are going to have to admit that Greece’s debt is unpayable and will have to be liquidated. He sees the same thing eventually unfolding in the U.S. also, saying, “there will be an unwinding of this pyramiding of debt and all this malinvestment that has occurred for a good many years.”

The interviewer – abandoning any pretence that the markets are in anyway independent – states, “This is a Fed that has held this market up for quite some time now” and then asks Dr. Paul to indicate when he thinks the crisis will unfold.

He states that it could happen any time – maybe tomorrow, maybe two years from now. “It all depends on a psychological acceptance of this system. So, a lot of people who are still making a lot of money know that it is not going to last but they figure ‘well, everybody else thinks it’s going to last…’ and they just keep owning bonds and buying stocks.”

He therefore believes that it is impossible to gauge when the day of reckoning will come.

“So no, I don’t think there is anyway to know what the time is but after thirty five years of a gigantic bull market in bonds: believe me, they cannot reverse history and you cannot print money forever and deceive the markets forever. Eventually, the markets will rule and that’s only a question of when that will happen and of course I’m running a little bit scared because I think there will be a day of reckoning.”

In the event of currency devaluations, physical gold and silver – which cannot be printed and devalued by central banks with reckless abandon – will not only survive but thrive.

Must Read Guide: 7 Key Gold Must Haves

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,174.60, EUR 1,052.51 and GBP 748.80 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,175.75, EUR 1,048.93 and GBP 744.71 per ounce.

Gold fell $3.20 or 0.27 percent yesterday to $1,174.40 an ounce. Silver climbed $0.07 or 0.44% percent to $15.90 an ounce.

Gold in U.S. Dollars – 5 Years
Gold in U.S. Dollars – 5 Years
Gold in Singapore for immediate delivery was up 0.2 percent to $1,176.80 an ounce.

Gold’s move lower is counter intuitive as the poor GDP number, while expected, allied to lower stock markets on continuing Greek concerns should have provided a boost to gold.

It suggests that the gold market is still largely controlled by speculative, fast trading money going long and short and trading the range between $1,150 per ounce and $1,225 per ounce. Passive allocations to physical gold and global physical demand is not impacting prices at this time.

Even the introduction of a gold dinar as currency by the ISIS fanatics has been greeted with a huge yawn as traders hold sway for now.

Gold in U.S. Dollars – 5 Years
Gold in U.S. Dollars – 5 Years
China’s Industrial and Commercial Bank of China (ICBC) is making a move to be part of the London gold price benchmarking process, the bank said during the LBMA bullion market forum.

Only last week, the Bank of China (BOC) became the first Chinese bank to participate in the LBMA Gold Price, which formally replaced the 100 year old London Gold Fix on March 20th.

Standard Chartered and Morgan Stanley will join present members JPMorgan Chase Bank, Scotiabank, HSBC, Société Générale, UBS, Barclays and Goldman Sachs including the two Chinese banks.

The ICE Benchmark Administration (IBA), was established in April 2013 to administer benchmarks, and currently provides the price platform, methodology and overall administration and governance for the LBMA gold price after a price fixing scandal.

Chinese banks are ramping up their commodities business while some western banks are exiting them.

In late morning European trading gold is U.S. dollars is down 0.01 percent at $1,175.23 an ounce. Silver is down 0.30 percent at $15.85 an ounce and platinum is up 0.21 percent at $1,076.44 an ounce.

Silver has been mined for thousands of years. But for most of the 20th century it was the poor man’s precious metal, its value eclipsed by the enduring lure of gold.

The first big revolution in silver came in 1492 with the discovery of the New World, which opened up mining of the metal on a scale not previously seen. In the centuries that followed Hernán Cortés and the conquistadors’ destruction of the Aztecs, Peru, Bolivia and Mexico accounted for three-quarters of all world production and trade in the metal.
Today, more than 877m ounces of silver are mined annually and the metal is increasingly being employed in new industrial processes. A major catalyst for demand over the next decade will be in the production of solar energy.

Silver is a key component in crystalline silicon photovoltaic (PV) cells. According to IHS, demand for solar power is set to increase by 30pc to 57 gigawatts of electricity in 2015. China alone is expected to install something in the region of 17 gigawatts of solar capacity by the end of the year, creating huge potential demand for silver.

The majority of PV cells use silver paste in their construction and that industry alone is expected to account for 70m ounces of supply through to the beginning of 2016.

Silver demand for the PV industry grew by about 7pc last year and that rate of growth is expected to increase over the next decade. Despite the bright long-term demand picture for silver, prices for the metal have slumped over the past three years from an average of $61 per ounce to just under $17 per ounce. A major cause of this drastic drop has been China, which is the world’s major industrial user. Like all commodities which depend on Chinese factories, silver has suffered.

Solar industry is creating demand for silver

According to the latest World Silver Survey published by the Silver Institute and ThomsonReuters: “A combination of a slowdown in Chinese growth, a move away from commodities as an asset class, a stronger US dollar, and a challenging year for most precious metals in general, led to a lower average annual silver price.”
But long-term prospects could improve should a binding agreement be reached among major nations in Paris this year on climate change.

Such a deal would result in already strong demand for PV cells increasing further as major developing economies such as India and China increase the contribution that solar makes to their overall power generation network. A bigger problem than demand could be future supply. After years of growth in supply to meet this new demand for renewable energy, silver production is expected to stall this year as part of a wider slowdown among commodities.

Silver mine production grew by just 5pc to 877.5m ounces last year, according to the ThomsonReuters survey. “This growth is attributable to stronger output from the primary silver and copper sectors, new projects that came online last year and significant production gains in Central and South America,” the report said.

Primary silver mine production grew by 8pc and accounted for 31pc of global silver mine supply. The report said that Mexico was the world’s leading silver producer, followed by Peru, China, Australia and Chile.

However, analysts fear that a lack of investment by silver miners could see production plateau over the next few years at a time when demand from the fast-growing solar power industry is expected to pick up rapidly. According to the report, total physical silver demand hit 1.07bn ounces last year, the fourth highest level recorded since 1990. This was a 4pc decline from the 2013.

“A main factor in the decrease in physical demand was a fall in coin and bar demand from 2013, which had been a record year,” said the report.
Of course, silver will always be second to gold in the eyes of precious metals investors. But like its cousin, copper, it is a commodity that will grow dramatically in importance as the world searches for new sources of renewable energy.