Servias Ministries Blog

Gold continues to be a tale of two cities.  The paper market shows gold to be in a bear market whereas the physical market continues strong physical demand and indicates the strong bull market is still intact.  Central banks continue to increase their physical inventory of gold reserves.  If gold was out of favor as the mainstream financial media would have us believe, why are central banks dramatically increasing their positions?  They are not optimistic about the future of the U.S. Dollar as a reserve currency.  The Kings of the East continue to gain power in the global marketplace.  They are distancing themselves from the Western control that has exploited them for the last several decades.  China increased its reserves by 20% in the first quarter.

There has been much written about economic changes ahead.  Only Our Heavenly Father knows how all of this complexity will play out.  It is critical to pursue the wisdom from Above.  Our Heavenly Father has given us principles to live by.  The world system would have us throw away all the wisdom contained in Scripture and pursue man’s idea of wealth and safety.  The past financial bubbles are a testimony to man’s inability to preserve wealth.  There is no level playing field in the current financial infrastructure.  The financial markets favor the wealthy and well-connected as does the political environment.  Insiders exploit their positions with impunity.  Meanwhile the masses attempt to make ends meet with inflation eating up the weekly paycheck.

Proverbs 22:7  The rich rules over the poor, And the borrower becomes the lender’s slave. (NASB)

When you are focused on serving the lender, it surely is more challenging to be quiet and hear that still, small voice.

:9  He who is generous will be blessed, For he gives some of his food to the poor.

When you are not highly leveraged, you are able to meet others’ needs instead of serving your leveraged position.

When you possess physical gold and physical silver, you have voted against the current system of fractional banking.  When you pay off your debts, you have freed up your cash flow to respond to unexpected events.  When you remove the complexities, weights, and hindrances from your midst, you allow yourself to become more flexible and agile in responding to the Word of THE LORD.  Let not the cares of this world, and the deceitfulness of riches, and the lusts of other things entering in prevent you from being fruitful for the Kingdom.

Gold and silver are “bridge” items between now and the fulfillment of the Kingdom.  These precious metals are useful for storing value until we no longer have use for them, the point at which the Kingdom has replaced the world system.  Our Heavenly Father established their characteristics and value among men.  There is no evidence that Adam had need of these metals prior to the fall.  Jesus was able to rally the required assets as the need arose.  He saw no need for precious metals other than to meet the obligations at hand.  When the Kingdom Economy comes forth, Our Heavenly Father will fully reveal the details of how exchange of value will work in a fully righteous system.  Until then, reduce your exposure to the current system’s snares.

The average person cannot take the following steps since you have to be extremely large, highly funded, and well connected to play the game.  Most of us don’t understand the mechanics of this complex market.  However that does not prevent the bad guys from exploiting the complexity.  Lack of transparency and regulation allow these unrighteous acts to continue each and every day.  The one thing they are not counting on is the fact that Our Heavenly Father fully understands their actions and intent AND is tracking it all as the Day of Reconciliation approaches.  Their lawlessness does have ramifications.

The elites are using the current paper system to loot the gold out of the GLD Exchange Traded Fund (ETF).  How?

Step 1   Investment bank shorts the Comex futures market for gold to push the price of gold down.  GLD tracks this market by design.  Comex affects the London fix price of gold.

Step 2   The investment bank then buys shares of GLD at the discounted gold price.

Step 3   Present the lots of 100,000 shares of GLD (+- $14 million) to Bank of NY Mellon (the Trustee for GLD).

Step 4   Bank of NY Mellon must cancel the shares then instructs HSBC London to release the gold to the investment bank.

Step 5   The investment bank covers their short position from Step 1 at a profit.

Since the Fed uses the investment bank to manage gold prices downward, the investment bank can loot the gold held in HSBC on behalf of the GLD ETF with impunity.  They can either hold the gold at the discounted price or sell it in the Asian market and make a profit based on the physical price differential.

Thousands of investors have been given exposure to the price of gold by this investment vehicle as described below.  However the investment banks have figured out how to skim money and profit off of the average investor in gold.  Without investors being informed and in unity, this fraudulent behavior will continue.

SPDR^® Gold Shares

Ticker: GLD

Trustee:  Bank of New York

Marketing Agent:  State Street Global Markets, LLC

Custodian:  HSBC Bank USA, N.A.

Shares Outstanding:  346.20 M

Total Net Assets:  $46,480.38 M

Key Benefits:

• Accessibility: Lowers many of the barriers associated with investing in gold.
• Cost efficiency: Costs of ownership are limited to an expense ratio of 0.40% plus the costs of buying and selling shares.
• Transparency: As with other ETFs, price, NAV, and detailed performance information for SPDR Gold Shares are available daily online.
• Liquidity: GLD shares are listed on the New York Stock Exchange Arca electronic exchange and can be bought and sold throughout the trading day through an ordinary brokerage account. GLD is the world’s largest gold ETF and the second-largest of all ETFs.
• Backing by physical gold: GLD shares track the spot price of gold because they are backed solely by physical gold bullion held in a vault in London, the world hub of gold bullion trading.

The following interview provides another view of how gold demand is broken down:

The only group that is negative on gold is the short-term trader/investor.  This includes the agents of the Fed such as Goldman Sachs.  Is the tail wagging the dog?

Notice what the average cost to mine gold is- $1,200 to $1,300 per ounce.  Do you think gold miners will sell their product at a loss at any significant volume?  Thus you can see why my bottom number is in the $1,250 range for a short term dip.  What do you think will happen to the share price if gold skyrockets to $3,500 per ounce?

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I wrote last week of the expected takedown of gold as early as Friday, maybe Monday.  It appears that the central planners have figured out that a quick smackdown will be met with immediate increased buying in the physical market.  A slow decline causes investors to deal with sustained emotions of loss.  How much pain can one take?  The offset is the belief that the current environment is only temporary and that requires commitment.

The Baltic Dry Index (BDI) is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides "an assessment of the price of moving the major raw materials by sea. Taking in 23 shipping routes measured on a timecharter basis, the index covers Handysize, Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain."

The BDI has never recovered from the 2008 slide.  This ought to tell us that the stock markets around the globe do not represent consumer demand for products.

Source: http://www.bloomberg.com/quote/BDIY:IND/chart

If the markets reflected true demand for goods, they would be down well over 50% of their current levels.  The central banks continue to “goose” the numbers hoping that consumers will be convinced of a real recovery but that is not happening.  23% unemployment in the U.S. is a constant reminder that all is not well.  The BDI is not a popular index by the media so it has no focus placed on it by central planners.  Instead, gold & silver continue to be where the battles are being fought.  The mainstream media accommodates those who want to depress the price and this has been the case for the last twelve years.  The markets have a serious disconnect with main street reality.

Interest rate suppression has caused investors to chase returns.  Junk bonds are now yielding 5%.  In 2008 junk bond yields were 20%.  There is no way that a high risk bond should yield only 5%!

Gold buying volumes in China year over year are up four to five times.  India is also a big purchaser.  And the price of gold is declining?  During the last smackdown there was the sudden appearance of a naked short sell order for 400 tons of gold.  Who has 400 tons of gold?  Goldman Sachs put the order in.  This should be investigated but I seriously doubt that anyone will take the “perp walk”.  These acts by central planners indicates desperation at the highest levels.

“The stock averages are over-bought, over-valued, over-loved and at record highs.  Margin debt is sky-high, showing that there is a great deal of speculation built into this market.” says Richard Russell, a seasoned investment newsletter writer.  I agree.

Power Consumption in China is no longer on a growth pattern:

If their economic engine isn’t supporting global growth, who is?  This virtual reality being promoted in the markets cannot last indefinitely.  When the curtain is finally pulled back, I would not want to be on the wrong side of the gold & silver market.  The foundation of the shell game is deceit and a slight of hand where your eyes are misled by distraction.  We are in the midst of a “super bubble” and the inside of the bubble looks calm… until it bursts.

As I mentioned before, gold could test the $1,260 area with silver dipping below $20 in the paper market.  Clearly the physical market will not observe these prices and will simply increase premiums if and when the price drop occurs.

The central planners are trying to make the markets look robust and profitable under the current fiat system.  Their goal is to break the emotional back of the gold investors and traders.  In the meantime, the BRIC countries continue to accumulate gold:

China gold imports to keep growing after hitting record high.

Net gold flows from Hong Kong to China, the world’s No. 2 gold consumer after India, jumped to 223.519 tonnes in March from 97.106 tonnes in February, smashing a previous record of 114.372 tonnes in December, data from the Hong Kong Census and Statistics Department showed on Tuesday (www.censtatd.gov).

See: http://uk.reuters.com/article/2013/05/08/uk-hongkong-china-gold-idUKBRE94702C20130508

Gold Imports by India Seen Topping 100 Tons for a Second Month

Gold imports by India, the world’s largest consumer, are set to exceed 100 metric tons for a second month in May as jewelers rush to beat central bank curbs on overseas bullion purchases by banks, a refiner said.

See: http://www.bloomberg.com/news/2013-05-08/gold-imports-by-india-seen-topping-100-tons-for-a-second-month.html

The Kings of the East continue the wealth transfer while we focus on being entertained.

Columbia Economist Dr. Jeffrey Sachs speaks candidly

His statements include:  Settlements without much effect.  $602 Million fine and the CEO takes home a $1.4 Billion paycheck.  Massive bonuses, massive campaign contributions, massive fraud.  Upside, no downside for CEO’s who have Cayman Island ties.  He indicates corruption is independent of the political parties.

From a Biblical point of view.  What happened to “Truth in Love”?  Our focus is to promote lawfulness for all of mankind.  The Law must have Love at its primary foundation.  Dr. Sachs makes a convincing argument that massive corruption and the the complete failure of the U.S. Legal system is alienating other countries from the use of the U.S. Dollar-centric system.  The anger and vulnerability of other countries is coming to the surface.

Sachs ends with the “love of money” criticism of the Wall Street elite.  As you know, we are apolitical.  However, when an economist with impeccable credentials voices the same concerns about the current system lawlessness, we must allow his comments to be heard.  You must judge the veracity yourself.

There appears to be a lot of political pressure on the U.S. Bureau of Labor Statistics to show improvement in the economy.  Shadowstats.com reports:

Employment and Unemployment Data Were Nonsense:
The Economy Remains in Serious Trouble

April Unemployment: 7.5% (U.3), 13.9% (U.6), 23.0% (ShadowStats)

Our goal is to express the truth, not only facts that can be misinterpreted.  Politicians use “plausible deniability” to be elected and reelected to office.  With misleading winks and nods they continue a charade.  23% unemployment is more believable to me than 7.5%.  Why?  Look at how many people are on government assistance.  Many of these people are discouraged workers and thus are no longer counted as unemployed in the 7.5% number.  Why doesn’t our economy look like it did back in the 1930’s?  Several decades of infrastructure building along with astronomical Federal & State deficits have changed the landscape but the reality remains the same.  The largest economy in the world is extremely fragile.  The banking system is technically insolvent.  The fiat currency system has ballooned to epic proportions.  In fact, Cyprus depositors in the failed bank should expect to lose 75% or more of their money.  Notice that Cyprus is no longer part of the national news in other countries.  The template for “bail-in” of banks has been implemented and observed by the central planners and it appears that the fallout was minimal.  Who’s next?

Mankind’s idols are about ready to be toppled.  The groves will be cut down in a “Gideon style” manner.  The remnant is being raised up to bring forth fruit around the globe.  The Census has been called to count those who are committed to bringing forth the Kingdom.  This 2nd census is not only about Spiritual warfare but inheritance as well.  “Blessed [are] they which are persecuted for righteousness’ sake: for theirs is the kingdom of heaven.”

The Canadians have figured it out.

Watch the following: