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DEATH OF PAPER GOLD & SILVER: The Data Proves It

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The death of paper gold and silver has arrived, however the public doesn’t realize it yet.  They will, it’s just a matter of time now.  This is like the poor slob whose diet of McFats, Done-Kin Doughnuts and Cancerette smokes, is just one heart-attack away from being six-feet under.  The paper precious metal market is also one serious fiat monetary attack away from certain death.

I say this with some conviction as the data already proves it.  Of course, there will always be a certain number of analysts and individuals who believe the Fed and Central Banks will be able to continue propping up the market until they retire and are playing golf or shuffleboard while under the care and maintenance of a dozen or more prescription drugs.

Unfortunately, for these shortsighted individuals, they fail to understand how ENERGY plays a vital role in this highly over-leveraged debt based financial market.  If we remove ENERGY from the equation, I would imagine the Fed and other assorted Central Banks could continue printing money and GDP growth forever. This is the downside of specialization, especially in the analyst community.

Basically …. THE BLIND LEADING THE BLIND… right over the cliff.



That being said, I am not going to focus on energy in this article as I believe many readers’ eyes would glaze over.  I will leave the detailed discussion for another day.

THE DEATH OF PAPER GOLD & SILVER

Okay, getting back to the Death of paper gold and silver, if we look at the change in paper gold and silver buying from 2006-2015, we will notice an interesting trend.  Let’s look at the forensic evidence presented in the following two charts:

As we can see, something interesting happened with the net build of both Gold and Silver ETF’s after 2010.  Basically, there wasn’t any.  And if we look at the gold chart, it was actually negative.

From 2006 to 2010, the Global Gold ETF’s experienced a net build of 61.4 million oz (Moz) versus 122.8 Moz of physical bar and coin demand.  In the silver market, Global Silver ETF’s reported a build of 569.3 Moz compared to 528.9 Moz of Official Coin & Bar demand during the same time period.

Now, let’s compare that to the second five-year time period after the precious metals prices peaked in 2011 and then declined to the present lows.

Not only did demand for Global Gold ETF’s decline 2011-2015 (2015 f = forecasted) compared to the previous five years, it went negative by 21.2 Moz.  This was in stark contrast to the huge increase in physical gold bar and coin demand of 208.8 Moz during the same time period.

Furthermore, we see the same trend taking place in the silver market.  Investors purchased a record 994.1 Moz of physical silver bar and coin demand during the 2011-2015 time…