Saturday, October 15, 2011

Q&A With The Doc: Will Gold and Silver Soon be Unavailable?

Teun writes:

Hey Doc,
First of all, thank you for keeping this site up to date, I've really learned a lot, though it took me some time figuring out some of the 'slang' as English is not my first language.
Lately I've really been all around the world wide web researching finance and silver, but 2 questions just keep haunting me, and I was hoping you could shed some light on these matters. So for what it's worth, here we go:
1. What do you think will happen when -hypothetically- there is suddenly no more gold and/or silver left, but the (paper) price is still heavily manipulated, and could you please comment on how investors should react to this type of scenario?
2. Every conspiracy theory seems to suggest we will have a 1 world currency, which people say will be the SDR from the IMF, maybe backed by gold. China is being pressured to join the SDR, and when George Soros and Mervyn King start to talk about it, this seems like a credible theory. Do you think TPTB will push it through, and how do you foresee this translating to the price of precious metals?

To answer your first question: Gold and silver will always be available- at the right price.  There may well come a time (and soon) when the physical bullion is not available at the fraudulent paper price, but they will always be available at the true "free market" price. 
This has already actually happened with investment forms of platinum.  The futures market states platinum is currently worth $1557/ ounce. Yet the US Mint has not made a platinum eagle since 2008, and good luck finding any 2008 or prior platinum eagles at anything near $1557/ ounce.  APMEX doesn't have any, in fact- their advertised BUY price is nearly $100 over spot platinum.  Several weeks ago their BUY price was more than $200 over SPOT platinum- and they still did not have a single platinum eagle in stock!
I fully expect to see this same scenario play out with both gold and silver investment coins and bullion in the next few years.  When demand reaches a certain point, the US Mint will stop producing gold and silver eagles altogether, and they will simply be unavailable anywhere near futures market spot prices for gold and silver.
As far as how investors should react in that scenario- the more important question is HOW TO PREPARE for this coming inevitability.  Obviously, the answer is buy as much as you can now, while gold and silver investment coins are still available for a modest premium over spot prices.

As to your second question- I just do not see any alternative fiat currency stopping this worldwide panic.  The only way to bring back CONFIDENCE is to back the currency with a hard asset- be that gold, silver, or even real estate.
As to what shape or form this takes- The legendary Jim Sinclair believes the end-game will be a digital reserve currency linked to gold. It will be FREE-FLOATING, and based on an average of major currencies, which will slow down the movement in the index.  Sinclair believes that the IMF is in fact moving in this direction with SDR's.  Jim Sinclair is the only true "insider" in the gold/silver community.  He has stated that this will be the final outcome or solution for years before the major crisis even began.  Sinclair does not talk much about silver as he admits that gold is his expertise, and not silver.  While silver may or may not play a role in a digital reserve currency, the coming world-wide fiat currency debasement will massively revalue silver regardless.