By Greg Hunter’s USAWatchdog.com
Financial writer and precious metals expert Craig Hemke says, “The bear market in gold and silver is over.” Hemke contends the central bankers’ price suppression of gold and silver is grinding to a close. Hemke explains, “. . . They created the illusion of physical delivery. What happens when the banks, wanting the gold because it is now a tier 1 asset, say I can’t play this promissory note game anymore? Just like physical demand broke the U.S. for suppression price in the 1950’s and just like physical demand broke the London Gold Pool price in the 1960’s, physical demand will break this fractional reserve and derivative pricing scheme that has worked since 1975. It’s now going to fail too. . . . Anybody that has one ounce of gold will be darn glad they have it when the time comes.”Hemke says there are several factors leading to the perfect storm of price explosion for precious metals. On April 1st, new rules will allow banks to hold gold as a so-called tier 1 asset. Hemke points out, “This is why central banks are buying gold too. . . . Gold will be considered a riskless asset just like Treasury bonds. The way it is currently structured now, if you had $1 billion in gold in your reserves in the bank, you could only count half of that as your reserves. . . . So, $1 billion in gold only counted as $500 million. Now, it will count for the full $1billion.”
So, central banks will want to shoot this to the moon? Hemke says, “Right. Yes, and wait until the regular banks get involved in this too. Here is the last piece of the puzzle. It expressly states in the Basel III (capital requirements) terms that derivatives don’t count. None of these forward contracts, promissory notes or unallocated metal count. You cannot use derivatives and say I want 100% value on the banks’ books because that all has counter-party risk. The only gold you can use that is considered risk free is physical gold that is audited and shown to be in your vault—period, end of story. Put that on top of Indian demand, China demand, Russia demand, central bank demand . . . and you see this system and you can see how all these pieces fit together, and when you ask me why I think we are going back to new all-time highs in the next 18 months, I can say yes. That’s what I think, yes.”
As far as gold and silver prices in the future, Hemke predicts, “A collapse of the scheme they cooked up. . . . This scheme of digital alchemy, this make-believe gold, getting people to accept gold exposure as an alternative to the real thing, is going to collapse too.”
Hemke says watch the palladium market. It is highly leveraged, and that could be the first metal market to fall when people demand delivery and say ‘I want my metal.’ Hemke says, “Right, that’s when the music stops, and that is what we are all waiting for.”
Join Greg Hunter as he goes One-on-One with Craig Hemke, founder of TFMetalsReport.com.
After the Interview:
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