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Gold +$2,230 oz | Cocoa, Silver, Gold 1970s vs Today

Summary

  • Gold price increase is linked to high government debt and weak currencies.
  • Central banks are purchasing record amounts of gold.
  • The analysis suggests gold may be entering a final bull market phase.
  • A claim is debunked: Hunt Brothers did not corner the silver market in the 1980s.
  • The cocoa market's price increase resembles gold's surge in the 1970s.
  • Bull markets are cyclical, and gold may be on the verge of a significant one.
  • Consider direct gold ownership to avoid unsecured ETF risks.
  • Media silence on the gold bull market could be positive for investors.

Heading into this Easter 2024 weekend, gold is starting to stair step higher away from its two thousand fiat notes to afford a troy ounce of bullion support level.

We're about to run through mass trillions of growing reasons for this.

Neighbors up north, their gold spot price has now inched above $3,000 oz priced in fiat Canadian dollars.

Gold is not the only number heading north and higher.

The trend of government central banks opting for gold bullion over further fiat promissory notes is only likely to continue at a record rate given a few of the following facts.

Global government debt levels are again exploding higher, substantially larger and taken on faster in nominal size than the post 2008 GFC to 2020 Covid era.

The USA is doing its part. 

Recent US debt issuance levels have spiked to again reach Covid 2020 levels.

Late last week another $1.2 trillion special interest US spending bill was jammed through lawmakers offices in the wee hours last Saturday prior to coerced signings into law.

The US Government Accountability Office admitted this week of estimated improper payments by executive branch agencies to the tune of $2.7 trillion in the last two decades.

Before I boggle our minds with more mind numbing numbers. Let me quickly remind ourselves just how ridiculously large the nominal figure of $1 trillion actually is if stacked in fiat $US dollar 100 bill notes. 

According to the fiat Federal Reserve there is currently just over $2.3 trillion in physical cash in circulation, up +28% since 2020 Covid. Of course when they admit too, to the broad fiat US dollar issuance supplies outstanding using measures like M2, most of which are digital entries into bank and financial institutional ledgers.

We can see that the current spot gold price today has to basically double in price just in order to revert back to levels breached in August 2011.

Hard to say if that lower blue line rollover has begun in earnest quite yet given that every decade or so throughout this full fiat currency era, the broad fiat US dollar M2 currency supply doubles in size. So yea, think $40 trillion some time in the 2030s and where gold might by then, be forced to go.

We now have supposed insiders admitting facts like price inflation has been way worse than collectively lied about over the last few compounding decades and years.

Having now devalued the fiat US dollar to 1/2,230th an ounce of gold, the fiat Fed research team decided it was time to remind everyone that gold is useful in stabilizing prices in economies. 

But what about all the other disgraceful government regimes of the past, who did similar to their currency supplies and oversized debt loads? How'd this work out for them, I again wonder?

Hang on now, who is that 1 of the 52 countries that didn't yet default you might wonder?

Well it's the fiat British pound not sterling of course, the oldest full fiat currency to still exist and have some relative purchasing power remaining.

After loading up on a debt to GDP north of 200% after the start of this post World War 2 debt super-cycle era, they simply let their gold price go moon and to date their currency has lost over -99.75% of its purchasing power to the current fiat pound price of gold now nearing $1800 oz.

The United States for comparison sake just passed a -99% devaluation to gold. The last -1% coming loss will likely be the loudest and most obnoxious of all time.

And while physical gold is indeed flowing from the west (the United States and the UK mainly) to the east (China & India). 

Is it any wonder that in order to buy their collapsing currency issuances, more time in relative purchasing power exists, City of London and the COMEX, still represented nearly 90% of notional gold price discovery trading in the first quarter of last year 2023 globally?

Time is obviously ticking louder for the next system, as on net central banks continue buying gold bullion in record size.

Their apparent collective plan to upend our antiquated fiat financialized system, is about to go next level. 

You see the underlying global payment settlement system SWIFT, announced this past week, that the coming Central Bank Digital Currency platform, or CBDC payment settlement system will be ready for launch within the next 12 to 24 months.

Good luck to us all in keeping up with price inflation and digital monetary base supply metrics after that system kicks on. The effort to devalue record debt and promise pile levels via price inflation galore is the main trick about to pulled on us all. Of course consolidation of top-down control is part of the coming plan too. Bullion is still relatively cheap, get it while you can.

And stick around after this short break, we're about to go over further large inflows into London silver ETFs and refute some of Bloomberg's latest silver misinformation this week.

And we'll also examine the current NYMEX cocoa short squeeze in relation to past 1970s short squeezes of cocoa in the context of gold's similar timeframe short squeeze. 

Those charts and historical price data facts will blow your mind.

The silver and gold markets were both up on the week, with gold finishing trading with real upside strength.

The spot gold price closed above $2,230 oz bid while the spot silver price finished near $25 oz bid.

Given gold's relative strength over silver this week, the spot gold silver ratio climbed to 89.

Following up on last week's update of record size inflow into London silver ETFs. An additional +8 million ounces of silver bullion flowed into this unsecured silver ETF's London depository. That's over 240 metric tonnes of silver or 8 times what you see depicted here.

Bloomberg was out this week telling potential silver investors to be careful, siphoning them into short term unsecured ETF trade ideas instead of actually buying and owning their bullion outright.

They even took the occasion of the March 27, 1980 Hunt Brothers silver bailout as an occasion to pretend they had their facts in order.

We're going to pause as they misrepresent what occurred, and clear the record for surely as silver moves back towards $50 oz in time the amounts of sheer scapegoat storytelling fables will become innumerable in fiat financialized media parakeets.

Whether they tried to 'corner' the silver market is still up for debate. And here are some facts having done years of research on the particular episode in order to learn from their shortsighted mistakes.

There was an estimated 12 billion oz of silver existing above ground at the time. The Hunts amassed a silver bullion position of some 100 million ounces throughout the 1970s.

Their mistake was going leveraged long on the COMEX to the tune of about 150 million representative ounces at the time of the Jan 21st, 1980 COMEX silver liquidation only rule enforcement. Meaning no more long silver futures contracts, the price could not go higher.

No coincidence the then price high of both gold and silver following this COMEX rulebook intervention fell back downwards culminating into brutal bear markets that lasted more than two decades to follow. 

COMEX gold and silver traders likely went over to the NYMEX platinum and palladium pits and kicked off a short squeeze there, peaking only a few months later. 

CPM Group's Jeff Christian covered the 1980 Hunt Brothers story as a journalist back then, and he stated to me in an interview in 2019 that the Hunts likely contributed about 75¢ to $1 oz of that exponential silver move. So according to him, no it was not a cornering. It is instead a scapegoat fairy tale the fiat financialized powers would probably prefer you to believe.

I mean use your own critical thinking skills.

From 1978 into 1980, the world witnessed a fiat US dollar quadrupling of crude oil prices, a quintupling of platinum prices, a six-folding of palladium prices, and a gold price spike from $100 USD oz in middle 1976 to a then-record high of $850 oz by January 21, 1980. 

The Hunts had next to nothing to do with the fiat US dollar getting called out by the world's western financial market at large, for overprinting the then-exploded fiat US dollar supply outstanding. No, the free market by sheer fear and greedy force, accounted for the fiat USD fraud then, as it likely will in some form or fashion yet again.

And US Senate Banking Committee Hearings which found the following conflict of interest facts.

Hearings back then held by US Senator William Proxmire's Senate Banking Committee turned up evidence of conflict of interest on the part of members of the then COMEX exchange and possibly certain members of the C.F.T.C. also. 

Based on data provided to the Committee by the Commodity Futures Trading Commission itself, Proxmire revealed that at least 9 of the 23 members of the Board of Governors of the COMEX were holding enormous short positions, which would have required them to deliver more than 38 million ounces of silver bullion, worth about $1.9 billion in January 1980 when silver was still near its peak. 

So no Bloomberg much less the CFTC powers that claim to be impartial commodity market regulators, you don't get to rewrite fiat financialized history. We know what you did.

Finally as promised, the current short squeeze in cocoa has made the price per tonne more expensive than the price per ton of increasing demand but still commonplace copper.

For the most part chart criminals seem to prefer posting shorter term price history charts in order to elicit social media clicks like they're pumping some insider crypto coin. Instead I would like you to take a look at cocoa prices on a full fiat currency era timeline. To better understand how gold performed over a similar timeframe.

Moving in a 10 fold fashion trough to peak during the 1970s, with an interim bear market in between, still five folding after that fact.

This latest move for cocoa is another five fold move over a relatively short time frame.

But zoom out and compare it in terms of gold over the 1970s. Gold ran a 20 fold move over a just slightly longer timespan. And no, the world did not end. And the Swiss are still refining gold to ship off mostly to the eastern world at the moment, and still producing some of the best chocolate bars we can hardly afford to buy anymore.

The point is, every commodity market from time to time does this bull market blast off. Gold is apparently beginning its final bull market phase that threatens to become a global mania before it peaks out in relative value terms. The media is still trying to ignore it, which is great.

And yea, the world will likely go on with those holding bullion from here to there, happy did so prudently by direct ownership.

That will be all for our weekly SD Bullion Market Update. Happy Easter to you who celebrate the holiday.

And as always to you out there, take great care of yourselves and those you love.

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James Anderson
James Anderson
Senior Market Analyst & Content

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and has been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk and many more. You can pick up Jame's most recent, comprehensive 200+ Page book here at SD Bullion.

Given that repressed commodity values are now near 100-year low level valuations versus large US stocks, James remains convinced investors and savers should buy and maintain a prudent physical bullion position now, before more unfunded promises debase away in the coming decades...

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