Silver as an investment

Hi Shelby et al,

I have a confession to make. The fluctuations in the price of gold and silver are all my fault. Every time I buy the price goes down. Likewise when I sell, the price goes up.

I know Shelby works very hard to derive conclusions based on logic and sound math but I have to tell you all that, sadly, he is wasting his time.

Now that I have confessed my role in these markets. As a free service to all of the people who post here I am going to announce my purchases and sales of the PMs so that you can adjust your holdings accordingly.

Putting my ineptitude at your service is my way of "giving back".

Cheers!

angophera wrote:Hi Shelby et al,

I have a confession to make. The fluctuations in the price of gold and silver are all my fault. Every time I buy the price goes down. Likewise when I sell, the price goes up.

I know Shelby works very hard to derive conclusions based on logic and sound math but I have to tell you all that, sadly, he is wasting his time.

Now that I have confessed my role in these markets. As a free service to all of the people who post here I am going to announce my purchases and sales of the PMs so that you can adjust your holdings accordingly.

Putting my ineptitude at your service is my way of "giving back".

Cheers!

Haha, nice joke. I know you feel exasperated by the volatility, but I don't. I have called all the major moves (the peak at $21, my call is documented in the Hommel forum, the call for the bottom at $9 is documented in this forum, and recently I sold at $15.79, and again just under this peak at $15).

I beg to differ. I have been calling for the price to fall since it hit $21. Initially I was under the "eventual inflation" delusion, so I was calling for silver to rise again after that big dip. But now I have become very well convinced that silver and gold have been falling since hyper-deflation started in March 2008:

http://goldwetrust.up-with.com/economics-f4/inflation-or-deflation-t9-225.htm#1791

Shelby wrote:...Given knowledge is heading to 0, there must be widely shared popular delusions. Since 99.9% of the wealthy people (and the governments) who think they own gold and silver, really own a debt, then fiat price signals for gold and silver will act like any other commodity (fall in this deflation). For as long as the mainstream has 999.9 times (99.9% / 0.1%) more mass in the gold and silver pricing markets, I expect fiat prices of gold and especially silver to fall, as they've made lower highs since hyper-deflation started after March, 2008. Money is just a socialized symbol for stored production, so for as long as 99.9% of the wealth doesn't believe physical bullion is money, it will not price (act) as real money. Ultimately gold and silver have theoretical efficiency advantages as money over barter, fiat, or theft, but irrationality (i.e. knowledge heading towards 0), can warp priorities drastically for a long duration, i.e. the Dark Ages persisted hundreds of years. However, if current fiat system is destroyed into chaos of barter or to a new fiat system backed by gold, then at least 15+% of people already believe physical gold is money.

The plutocracy probably has no incentive to move prematurely to the more chaotic hyper-inflation, because the hyper-deflation interventions (crash, stimulus, "green shoots", ... repeat) are enabling the transfer of the formerly $22 trillion private sector notional net worth (down to $12 trillion in March, 2008, back up to $15 trillion in July) of the USA (and globally) to themselves with the high degree of control and certainty that their fiat system provides...

Silver is clearly falling over the cliff, and I bet it will pull gold down with it:

http://www.gold-eagle.com/editorials_08/maund081709.html

You can see I predicted 2 weeks ago, the COTs in silver would increase, and I also mentioned the double-top then, start reading from the following post all the way to the bottom of the page:

http://goldwetrust.up-with.com/precious-metals-f6/silver-as-an-investment-t33-120.htm#1673

RobRoy wrote:China Encourages Silver Bullion for Investment!!!

http://news.silverseek.com/SilverSeek/1249958982.php

This seems incredibly bearish near-term, as it means China has too much silver and needs to find a market for it. Long-term it is bullish for the reasons given in prior post in gold thread.

Note silver dropped about twice as much as S&P500 on percentage basis on last correction from $16, and you can clearly see in this chart that silver is leading the stock market down since March. Silver is signalling deflation:

http://finance.yahoo.com/echarts?s=%5eGSPC#chart4:symbol=%5egspc;range=6m;compare=slv;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined

Here are the potential price trend lines (in lime green) I am seeing for possible bottom in gold and silver prices by 2012:

http://www.gold-eagle.com/editorials_08/maund081709.html (I added lime green lines to Maund's charts):


=========
ADD: note on that green support line for silver, I am projecting the final low for silver in late 2010 or early 2011, thus the green line will be roughly at $7.00-8.00 by then. I think Gold will bottom sooner between $700-$800. I expect silver to sell off to below $12 in the current wave down in 2009 before any significant bounce up again.

Stocks appear to be rebounding from Monday's drop:



As the dollar has done a u-turn:



But silver is losing ground.

I do not know if silver can muster a bounce into $14s again, even if the dollar continues down and stocks up. It is also possible for dollar to bounce soon and for stocks to finally roll over. The uncertainty in the market is causing daily zigzag closing volatility, which makes ETF leveraged shorts a bad choice. Go for puts instead to escape the friction of the daily churn. I did not bite today on the SLV puts, but that is mainly because I couldn't stay away after days of non-stop work. I decided not to bite here at end of market day, as I had missed the surge around noon. I like to buy into counter-psychology.

Also it is possible some of the silver shorts have been liquidated, which will be released on Friday, thus perhaps causing a mini rally in silver, before it gets taken down further. However, silver looks very weak right now, and may just gap down and never come back tomorrow.

Prepare to go short on it.

This is assuming the stocks continue to rally tomorrow which I think they will. Also I think Friday's COT report will probably show a reduction of shorts, inspiring people to bid up silver again. But I think this will be the last WEAK gasp up. Take anything in mid-$14s as last chance to go short before multiple gaps down to $11s range.

The macro picture is that China is rolling over, this is causing dollar and Tbonds to strengthen, which is causing silver to roll over more aggressively than gold or US stocks. The asian stimulus was more direct injection of credit thus they will peak before the USA since USA stimulus was a slower indirect financial sector fraud theft. In short, prepare for the asian stocks, dollar, tbonds, and metals to come up and kiss once last time, then say adios. I think the us stock markets can ride to one more higher peak, as the 3rd quarter earnings should be less worse than second quarter, but the financial carnage sector is not going to be avoided and heading for another trainwreck any week now.

In short, once more bounce, then go short. Be cautious on shorting US stock indexes yet.

I could be wrong, but this is my opinion based on data available to me at time of writing this. All the normal safe harbor and disclaimers apply.

Shelby wrote:Prepare to go short on it.

This is assuming the stocks continue to rally tomorrow which I think they will. Also I think Friday's COT report will probably show a reduction of shorts, inspiring people to bid up silver again. But I think this will be the last WEAK gasp up. Take anything in mid-$14s as last chance to go short before multiple gaps down to $11s range...

...In short, once more bounce, then go short. Be cautious on shorting US stock indexes yet.

I could be wrong, but this is my opinion based on data available to me at time of writing this. All the normal safe harbor and disclaimers apply.

I started to go short today on silver, but only about 10% of my cash. I will get more aggressive next week, depending how it plays out.

I think the stock markets can move up another 10% before crashing.

The gap between S&P500 and silver continues to widen:






So silver was overperforming since end of April, and underperforming since start of June and since March overall:

http://www.gold-eagle.com/gold_digest_08/hamilton082109.html

Hamilton wrote:...you really need to consider the SGR's implications for silver. And if you're already trading this SGR anomaly, keep your capital deployed and watch your gains grow. Although unwinding gradually, the SGR anomaly hasn't even come close to being fully unwound yet. But it will.

This SGR reversion's potential silver impact is easiest to understand if we start in the normal years preceding last autumn's crazy stock panic. This first chart compares silver with gold over the last 5 years or so. The 44 months between January 2005 and August 2008 are the control period, showing silver's natural and normal behavior. And the 4 months between September to December 2008 encompass the panic period where the SGR anomaly erupted.

In the years before the panic, silver's very tight correlation with gold was readily evident. Silver surged when gold was strong and fell when gold was weak. Silver's daily price action mirrored and amplified gold's nearly perfectly. Over this 44-month baseline time frame, 94.7% of silver's daily price action could be statistically explained by gold's own. Gold action drove silver sentiment, and hence silver prices.

But late last summer, silver started decoupling from gold...

Hamilton is stating that the ratio was normal (baseline) from 2005-2006, but that is incorrect because silver was peaking in 2005-2007 relative to gold. See how silver under-performed gold for most of this gold bull market since 2001:

http://www.zealllc.com/2007/silvlag.htm

Hi Shelby,

You may remember the post where I confessed that our sales of gold and silver dictate price movements (ie. sell/price up and buy/price down).

As a public service I said I would advise of our transactions in PMs.

Soooo! We are going to exchange a few hundred ounces of silver for gold. Never done this before. Previously it was fiat currency into either gold or silver.

Uncharted territory. Anything could happen. Fasten your seatbelts.

Cheers!

UPDATE: I crammed a lot into this post and as you read towards the bottom, you see I may be on the verge of changing my opinion about direction of the metals. I am still thinking about what this correction to 2002 means.


I am going to suggest that we focus any replies in this thread exclusively on the topic of the following post, so we can stay focused not on the short-term gyrations, but on non-gambling winning strategies. Of course, I won't censor anyone who wants to post about gyrations or other silver investment info, I am only suggesting we focus. Any way, here follows my thinking...

It is too soon to short the general stock market:

http://financialsense.com/fsu/editorials/ciovacco/2009/0821.html

Next:

angophera wrote:...We are going to exchange a few hundred ounces of silver for gold...

That is a wise move, because according my paper, we are in hyper-deflation for the near-term, and we are currently on Exter's inverted pyramid towards to lower end of the "Fed notes, i.e. green cash & Treasuries" and nearing the top of "Gold":

http://www.coolpage.com/commentary/economic/shelby/Bell%20Curve%20Economics.html

For the near-term, dollars and US Treasuries are appreciating assets still. Whereas, everything else, including commodities (i.e. silver) are wasting assets caught in speculative waves. The problem with playing speculative waves is you must know the timing, the direction, and the inter-day volatility. For example, if you think silver will go down, you can buy ZSL 2x leverage ETF, but if silver has high inter-day volatility and takes a long time to go down, then you are holding an asset that is shedding value to the casino house every day (i.e. JP Morgan). If you instead buy $14 strike Puts for Oct or Jan contract on SLV (not to mention SLV has other risk of insolvency, but this would increase the value of your Puts if the share price collapsed), you watch the value of your casino chips decline every day unless the silver price moves down quickly enough. With the Oct Put, if silver goes to $11.40 before Oct 16, then I can gain 2.5x (250% gain) of my investment, but if silver doesn't fall below $14, I lose all my investment, or $13.15, I lose some of my investment. With the Jan Put, if silver goes to $11.40 before Jan 16, then I can gain 1x (100%) of my investment, but if silver doesn't fall below $14, I lose all my investment, or $12.60, I lose some of my investment. I just can't guarantee to myself that silver will fall below $13.15 before Oct 16, perhaps the plutocracy will play "muddle through" until December. And although I am reasonably confident silver will be below $12.60 before Jan 16, how much below and is it adequate reward for holding an asset that could go to zero if I am wrong on the direction of silver? What if silver only goes to $12, so I will gain 43% in exchange for risking 100% on the direction of silver. At least with Puts, I don't have to worry about volatility eating my asset value daily as the leverage ETFs do. I could further reduce my potential loses on silver going the other direction (e.g. $17+), by buying some Calls as insurance, but the cost of these will thus further decrease any gain I can make on the Put bets. Maund's recommendation (link in prior sentence) doesn't make any sense, unless you buy the Put while Gold is rising and buy the Call while Gold is falling. You don't make money in Options by not knowing the direction and timing. The reason is because you are not betting against the price move alone, you are really betting against the opinions of everyone else in the options market. You have to be both correct on all the factors (timing, volatility, price, news, rumors) and be unique in that opinion.

So I was holding mostly silver, and I know that I need to shift to gold near-term (because it will outperform silver near-term and because it can be shipped to where ever I am in world, unlike silver and unlike paper money which is a problem of "which bank do you store it in?"), so rather than trade silver to gold, I chose to trade to cash first, thinking both silver and gold will go down, but silver much more so. I was also thinking I could use the cash with some leverage to increase my gains on this direction for the metals interim time, before I repurchase the gold.

However, as explained above, playing the Puts can lose dollars. Whereas, the dollar should be strengthening (not wasting) as the stock markets and metals eventually fall. The benefit of staying in dollars versus Puts, is the time limit on the dollar is probably not as soon as Jan 16 or Oct 16. Some people are saying there will be bank holidays or capital controls soon, so in that case I should be in gold now and move it all out of USA. I believe those rumors were planted as a way to keep the gold bugs in the metal when the price will be dropped when the markets crash again. Remember the casino house sets the rules to insure the most players lose. So they can play with the news, rumors, volatility, the timing, and the direction, because they have all the data on what our bets are. They just plug it into a computer which then calculates the exact movement to make in the silver price so as to steal the most bets for the house.

Another way to play the game is on the very short-term volatility, e.g. the Oct $14 strike Put on SLV was selling for $1 when silver was at $13.90, then at $0.75 when silver was at $14.35 recently. So given I expect a general direction down in price, then I would buy puts on up waves and sell on down waves, for quickly 30% gains. This seems to be the smartest strategy if you want to speculate. You go into a fairly near contract month, but not too near that you lose all your investment, then your leverage is very high on any move in both directions. Then you wait for the silver price to come lower than the price at which you purchased (even if it goes higher first, the Put in the nearer contract month is not wasting as fast as latter months, and leverage is higher).

So those are the risk factors and potential rewards as I see them near-term. Which is wisest? A mix?

I also found this article interesting:

http://www.gold-eagle.com/gold_digest_08/droke082309.html

Also very important, $972 appears to be the magic number for Gold (even Pretcher says same), it gold goes above that, then go bullish on gold, and change the near-term bearish outlook:

http://www.gold-eagle.com/editorials_08/moolman082409.html

It is possible that some event happens (e.g. the court ruling that the Fed must be audited!), that sends gold skyrocketing.

Let's compare what gold did coming out of the last recesssion to silver:

http://kwout.com/t/mhir648s




Note that both gold and silver rose from Jan to May 2002, with gold up +27% and silver +25%, but then silver fell back -13%, not to make a new high until Sept 2003. While gold made a new high in 2002 peaking in Jan 2003 at +23% from the May 2002 peak.

Then look how gold did most of it's gains throughout 2002, but after silver, and up more by +35%.

This is what appears to be happening now!

Let's do a more detailed comparison, you can clearly see silver out-performed in Dec. 2001, but then it lost momentum, same like what happened in May 2009, the pattern is almost exactly the same, even the earlier highs in 2001 like what we had in March 2008:





Compare 2002 and 2008-9!!! below, I think we have a big secret here, don't tell any one!!!. Looks like Gold nearly exactly mirrored the prior period, and blasted off right about now going to a new high equivalent of $1150 on percentage basis. Whereas, Silver only went back to about equivalent of $16.50 on a percentage basis, but during prior period that matched the prior high ($5); whereas in this period silver's prior high is $20. What this is telling me is that silver is weaker as the recession actually bottoms and then lags. Perhaps that $21 rocket shot was an abberation by JP Morgan to wipe out the tinfoil hats? Or is silver just getting more volatile in both directions and thus will hit $20 again when gold hits $1150?

Perhaps even more importantly notice that the timeline for gold&silver has become uncompressed by 1/3! This means the action in gold&silver is running 200% (3x) slower than in the prior dot.com bust! Whereas, the timelime for the S&P500 has only become about 25% (1.25) slower. So this means to me that the monetary devolution of the dollar is proceeding on a different scale now. But notice the percentage range in gold&silver during the comparative periods is increasing from 10% to 45% for gold and 15% to 125% for silver. So the time wave is slowing down as gold&silver eat more of the size of the fiat pie.

However, there is a big divergence possibly developing between the prior period and now. Notice that from Dec 2002 to March 2003, the S&P500 fell about -15%, and then gold did a +15% rocket shot, until the S&P500 started to go up again. So it appears at that time that gold and S&P were correlated, but now they are somewhat on different timescales. It appears people still had fear about 9/11 in 2002 and thus they sold the stocks and bought the metal. But is that correlation still holding and do we expect a -15% dip now in stocks? I see from Q4 2007, Gold rose before the S&P500 fell, then fell with the S&P500, then rose back again before the S&P500 rebounded, then Gold has been doing nothing while the S&P500 has been rising. The next move may be for Gold to fall before S&P500 does, but I think that 3 month rise in gold would only be a 9 month rise now, with gold rising while the S&P is rising.

But when we look at the dollar charts, it becomes much clearer. Gold did the rocket shot in Dec 2002, because the dollar proceeded to fall in Dec 2002. And we see from 1987 - 1995 S&L loan crisis, that dollar was supported by "flight to safety" and Gold declined. So will dollar do same now as 1987-1995? I noted that Pretcher has reported an all time low is sentiment when dollar hit 77 recently at only 7% bullish, so that indicated to him that dollar was at a low and ready to reverse. However sentiment has risen to a still very low value of 18% bullish on dollar (but back at near 77 again), so the dollar has been able to go lower with a higher sentiment by bouncing then falling.

So what do go with, the pattern from 2002 which suggest dollar will soon break lower with S&P continuing to rise into next year, or do we look dollar sentiment index and say dollar must bounce up?

Note if the dollar were to fall hard, it will help the profits reported by us companies doing business abroad, thus perhaps boosting the stock market.

Note the mountain rise in dollar from 96-2001 was accomplished by central banks selling gold. I don't think they are selling any more significantly.

Gold:




Silver:




S&P500:



S&P500 larger scope:



Dollar:





2002:





2008-9:

I have reached some more coherent conclusions from the "brainstorm scratchpad" multitude of charts and thoughts in the prior post.

(1) As charts below show, the S&P500 was positively correlated to the direction of the dollar since 1995, up until the recovery from the prior recession blasted off in March 2003. This correlation was held together by big Central Bank sales of gold (to the "banksters") to keep the dollar strong, which enabled the big european "banksters" to buy gold at top of dollar and bottom of gold (while the masses were pre-occupied with dot.com):

http://www.kitco.com/ind/Thomson/aug252009.html

...Most in the gold community have a picture of the US dollar falling drastically in price in coming years. So do I. But few are focused on where all those dollars would go. The top in the US dollar in 2001-2002 came because the major European banking families began selling their dollars. The dollar is held now by government and funds. Price chasers. They are badly underwater now on their dollar positions against gold, and the situation could get a lot worse...

(2) Since March 2003, the dollar and S&P500 changed to inversely (negatively) correlated, the reason being that the world knows the dollar must fall in order for the USA to be competitive again, and because when USA markets are down then the non-decoupled (globalization) world also gets pulled down lowering income, thus increasing hoarding of dollars to pay the majority of the world's debt and letters of credit for trade denominated in dollars:



(3) Gold has been positively correlated to S&P500 and inversely correlated to Dollar, with larger % moves in gold, except in any given month can change correlation, but then it corrects itself within the next month or couple months to recover the ground lost in the correlation:

http://zealllc.com/2009/spxgold.htm


(4) Thus, unless the consistent (since March 2003) inverse correlation between the S&P500 and Dollar ends, then the Dollar must continue to fall or the top in the S&P500 is near. And unless the Gold correlation ends, then Gold must go the direction of the S&P500, give or take a month. The only thing that can de-couple the dollar from gold is for the rest of the world to walk away from it's dollar debt and trade-- not very likely. The value of this debt and trade would need shrink drastically first, i.e. hyper-deflation. Governments can pull demand forward at the cost of lower demand later ("Cash for Clunkers", etc), and shift supply and demand so relative higher prices in some things at the cost of much lower prices in other things, but this is not the same as inflation. China can buy up all the world's copper, the US government can buy up all the houses + old cars, even destroy them, but they can not create an aggregate increase in employment and prosperity via centrally managed mis-allocation of capital.

Chart below shows that Gold was more correlated to Dollar before the big crash of the S&P500, as Dollar and Gold were telegraphing the crash before it happened, then we had the middle area where hedge funds leaving the stock market were buying Gold (see the blue Zeallc chart in prior set of charts) pushing Gold out of it's correlation in two counter-correlation thrusts, then Gold flatlined while the S&P500 and Dollar continued their correlation to bring Gold back in alignment. Gold is showing that it can break it's correlation when big hedge fund players move counter-trend, but so far this has not been sustained. Perhaps the IMF gold sale was arranged to counter-act the threat of big players moving counter-trend, because if Gold goes counter-trend then the world switches to hyper-inflation and tosses the Dollar economy causing massive rationing and shortages worldwide as the global economy would be reset.



(5) So there are two orthogonal questions, will the S&P500 go much higher and will Gold break it's correlation? Let's tackle the latter first.

http://www.kitco.com/ind/Thomson/aug252009.html

...the only question is whether the bankers want to see the carcass of money from the stk mkt then flow into the bond market first, and then to gold, or immediately from the stock mkt into the gold market. To move gold to say $1500-$3000, money from the stock market would easily do that. But a US dollar currency wipeout could see money flowing from paper currencies into gold on a mass scale, which would send gold to levels like $10,000, and perhaps much higher...

Understand that Gold to $3000 with skyrocketing Treasury rates is the hyper-inflation end-game, and will wipe-out (reset to miniscule non-debt portion of) the global economy. The "banksters" want to make sure the world eats from their hand after the wipe-out, so the best way is to make sure the whole world is globalized with massive NPLs (non-performing loans). The rest of the less-indebted world is being forced to take on massive mis-allocated debt ("stimulost") in order to offset the hyper-deflation in the over-indebted countries. Globalization is a process of spreading the banksters debt system into the hinterlands of every nook of the earth. So for as long as the masses are not running to Gold themselves, it is in the interest of the banksters to continue the current process, i.e. send the stock market stampede back into Treasuries again. So the answer to the question is to ask when the masses will break trend. There are already 60,000 riots a year in China, but dump some "stimulost" on the burgeoning speculating middle-class, which is a political defense against the rioting peasants. In USA, it is reversed, dump "stimulost" on the burgeoning dependent peasant class, which is a political defense against the increasing belligerent middle-class. Seems to me that the pain hasn't yet reached critical mass for the belligerent middle-class to fight and flight in mass-- that is the key to watch for. However, a court has ruled the Fed must reveal secrets, so it remains to be seen how the Fed can stall or redirect public attention with a false flag event perhaps.

(6) Will the S&P500 move higher, thus potentially dragging up Gold out of it's sideways wedge, before (reasoning above) the ultimate crash of both? The answer is murky, but I lean towards yes. The main reason is the following chart, links, the increasing corporate earnings that will be seen in Q3 on cost cutting in a jobless recovery, and the final positive lag effects of all the "stimulost" (while the negative lag effects build momentum):

http://financialsense.com/Market/pretti/2009/0821.html

http://financialsense.com/fsu/editorials/ciovacco/2009/0821.html
http://www.gold-eagle.com/gold_digest_08/droke082309.html

However, the sentiment index on the Dollar was bouncing off all time lows recently, and the Euro rally appears to be peaking, so it is not clear how much more blood can be squeezed from the Dollar, because apparently of the successful huge offerings of Treasuries. The Fed did huge currency foreign currency swaps, so these dollars are coming home into Treasuries, with the foreign currency sitting on Fed balance sheet. Thus the fear of dollar needing to drop to incentivize foreigners to buy Treasuries is misplaced given the purchase is rigged. Thus as usual, the herd is always wrong and dollar is probably near a near-term bottom. Remember Gold fell and Dollar rose before the S&P500 crashed in 2008. So this would mean the S&P500 is near to a near-term top, which is what the weakness in silver has been signaling. However silver signaled the same in 2002, and then was whiplashed back up. See the following amazing correlation between the 2002 and 2008/9 bottom and recovery. Thus it appears to me the herd could be given some rope first to hang itself-- which I mean a further up move in Gold and S&P500, down in Dollar, only to reverse in violent fashion after a short time. See the divergence from 2002 and 2008/9 where in 2002 there was a short down-dip in late 2002 to March 2003, before reversing into the long rise in S&P500 and Gold into 2004, whereas now we appear to be getting the inverse continued move. As a final clue, note that the comparative period for the S&P500 between 2002 and 2008/9 is roughly the same (7 versus 9 months); whereas, for Gold and Silver the current period is nearly 3 times longer (7 vs. 21 months). My interpretation of this is that in 2002, there was continuation of the secular bull market (on a nominal basis only), because Dollar shifted from positive to negatively correlated to S&P500 (and Gold), due to the winding down of the Central Bank gold selling (and the start of the War on Terror), thus falling dollar allowing for a continued reflation. Whereas, now this is within a new secular bear market (hyper-deflation) and a too much falling dollar would be a hyper-inflation end game. So the extended duration is the banksters buying time, which further confirms that I think they will throw some rope to the hyper-inflation case, but whiplash to hyper-deflation. However, even if lower Gold prices will be the result, bullion premiums and the gold basis may be increasing, which will ultimately be the final warning of imminent hyper-inflation.