When you watch mainstream media or listen to central bankers, gold is constantly deemed to be the redheaded stepchild of the investment industry.
Just that alone, is unbelievable, considering that gold has been one of the best performing investments of the 21st century. On December 31st, 1999, gold closed at $290.25. As of today it is trading at $1327.80.
That is a percentage gain in the last 16 years of 357%! Compare that to the Dow Jones, which closed the 20th century at 11497 and currently is at 18085 for a gain of only 57.3%.
If there is a business sector or financial asset class that has outperformed gold in the last 16 years, I can’t think of one. Yet, aside from your crazy neighbor with a bomb shelter or those who read The Dollar Vigilante, how many people do you know who understand the necessity for owning gold and have actually acted on that knowledge?
Meanwhile, central banksters like Alan Greenspan call gold a “barbarous relic,” and Ben Bernanke has opined that gold is not money and the only reason central banks hold it is because of “long-term tradition. ”
And so, it was with great interest, shock actually, that I came across this headline, “Switzerland and Norway Begin to Massively Accumulate Precious Metals Mining Shares“.
It outlines how the central banks of both Norway and Switzerland have been buying up nearly $1 billion worth of gold mining stocks.
Well, isn’t that interesting!
The moves of these banks are noteworthy not for their strategies, but because they are indicative of the perilous state of the world’s financial and monetary systems.
Central banks have sold gold regularly over the years, probably as part of a larger propaganda campaign to convince the public that gold and silver don’t matter anymore. (And there’s another reason I will get to in a moment.)
If central banks are starting to become so worried about the state of the world economy that they are willing to reverse an obvious manipulative meme, that’s something to take quite seriously.
For central banks to buy gold in 2016 is akin to what we have often called a Jubilee Jolt – a surprise move that emphasizes the seriousness of the crisis that is now upon us.
Certainly, these purchases go against the grain of traditional – modern – central bank investment activism. The Swiss central bank, for instance, campaigned against a Swiss referendum to back the franc with gold, but now seems to be far more supportive of the yellow metal.
Throughout the latter stages of the 20th century and into the 21st, central banks have disgorged gold with varying degrees of enthusiasm.
Britain managed to sell a good deal of gold at the turn of the century near gold’s all-time low against the dollar.
And much more recently, Canada managed to sell the remnants of its gold stock.
Of course, other central bank gold transactions are shrouded in mystery. Both France and Germany recently wanted to repatriate gold from the US and ran into a good deal of difficulty doing so.
And when it comes to the US itself, the size of the nation’s gold stock remains similarly mysterious. In fact, for decades, there has been speculation that US gold supposedly doesn’t exist, or that what remains is gold of a most inferior kind.
It is impossible to say with any surety what resides in Fort Knox because no audit has taken place for more than half-a-century. But now pressure may rise on the US government to confirm gold holdings.
Here, from ZeroHedge:
Both banks are being reported to have printed close to $1 billion dollars of fiat money as of recently. This should come as no shock to anyone, as this is all Central Banks know how to do – print money. What is more stunning, however, is where they immediately moved these funds. You guessed it right – into precious metals.
They know that the physical precious metals market is limited, tight, and scarce. They also know that if they simply printed $1 billion worth of fiat money out of thin air and moved it into physical, then they would risk blowing the market apart, sending prices potentially catapulting higher.
Since they are not yet willing to face the wrath of the other Central Bankers around the world, they did the next best thing. They bought shares in the gold mines themselves.
The article points out what we have mentioned before, that central bank disgorgement of gold never seemed to make much sense. But not trusting anything that central banks do, here’s the other reason I mentioned above: Maybe gold sales were in part aimed at building up the BRICS stores of gold and silver.
Russia and China in particular have been aggressive buyers of gold and it is certainly possible that sales were engineered to provide liquidity to the market and to ensure additional economic leverage accrued to BRICS countries.
In addition to China buying physical bullion, the BRICS have also made strategic moves to supersede western commodities exchanges. Back in April, the Shanghai gold exchange launched a new benchmark price fix for the metal to challenge the long established, Rothschild-created, benchmark in London as well as the COMEX exchange in New York.
China isn’t the only country in Asia leveling the playing field. In July, Japan’s TOCOM exchange announce a new physical market for gold where market participants can trade gold in futures and physical at more transparent prices.
As we’ve pointed out numerous times, Western elites are working overtime to “even out” the economies of developing and developed countries. In fact, this is one of the reasons for the creation of the BRICS – to make clear that there is a formalized alternative to Western economies.
It should be clear to anyone who examines the position of the BRICS closely – especially China – that Western powers have played an extraordinary role in elevating the industrial might of these countries.
The idea of course is to facilitate further globalism and eventually world government. But presumably not all central banks are eager to support this strategy at the expense of their own solvency.
In other words, central banks may have been content to sell gold in the past, but now faced with an oncoming financial hurricane they are having second thoughts – as well they should.
In fact it may have occurred to central bankers that the solvency of their own institutions has been purposefully jeopardized because a global central bank will likely have little need for local and regional ones.
As usual, we’ve been ahead of the curve and owned gold and gold stocks since 2001.
TDV’s Senior Analyst, Ed Bugos, is one of the most highly respected analysts in the entire sector. Some of the gold stocks that the central banks have been buying are the same gold stocks which Ed Bugos has been recommending, in various forms, since 2001 (when he recognized the gold bull market began before almost anyone else).
Ed is up 200% in the last year in the TDV Premium portfolio (click here to subscribe to get access to this info) and many of his mining picks have generated extraordinary returns as well.
It is getting to be VERY interesting times when central banks are counterfeiting their own currencies and buying gold mining stocks with the proceeds. We’ve been buying gold and gold stocks for years because we knew we’d arrive at this point in time when things started to get crazy. The craziness has just begun, by the way, and there is still a long way to go. We expect gold and gold stocks to be much, much higher in the next few years.
But, here’s the bottom line: Even central bankers are now buying gold mining stocks! They see the same craziness that we do, and are purchasing gold for the same reasons as us… to try to survive through the coming collapse and to also profit from it.