Printed money is like heroin, the patient needs bigger and bigger doses until it finally kills him or makes him totally dysfunctional. And this is what is happening to the world economy. Government benefits are increasing and the people are in need of even greater stimulus as unemployment escalates. - Egon Von Greyerz, Matterhorn Asset ManagementWe are starting to see the unmistakable signs of the law of supply and demand gripping the market for physical silver. By this I mean the endless of supplies of paper fiat currency chasing after the relatively fixed supply of physical silver. Last week the U.S. Mint announced that it had run out of its initial production of 2013 Silver Eagles and that new shipments would not be available until late January. This is just one of many examples.
What this means is that we are going to see a much higher price for silver over the next several months, as the Comex paper market bullion bank manipulators begrudgingly retreat in order to allow a higher market price to possibly induce some supply from existing holders how bought at lower levels.
I discussed this topic in an article over the weekend published by Seekingalpha: LINK
On another topic, it looks like the economic numbers are starting to reflect the economic downturn that I've been expecting and have been forecasting on this blog. The not widely followed/reported Chicago Fed National Activity Index came in at .02, significantly below the expected reading of .28. Uglier, the 3-month moving average was -.11. This index is a weighted average of 85 monthly indicators of national economic activity.
In addition, the more widely watched/reported Richmond Fed business activity index literally plunged to -12 in January from an expected reading of 5 and a December reading of 5. It was the biggest miss vs. expectations since September 2009: LINK
Finally, existing home sales dropped 1% in December. This is based on a seasonally adjusted annualized number, so theoretically December's seasonal effect is washed out of the calculation. I haven't had a chance to run through the actual numbers to see what the real number looks like, but no doubt they are not good. The excuse being given is a lack of inventory, especially at the lower end. All that means is that big investment funds have stopped buying blocks of crappy low end homes because the rental market is starting to saturate. I know this is for a bona fide fact in Denver. More on housing soon, as I'm working on a big report about it. Soon the music will stop and a lot of the "speculators" who have appeared this year buying and flipping will be left holding homes they can't sell.
What all this means is that we can expect a continued increase in the supply of printed paper money as the Fed/Government policy makers desperately try to artificially stimulate/revive demand. The paper money will continue chasing the dwindling availability of physical gold/silver to higher price levels. Don't blame me if you are left holding bundles of paper dollars and are having a hard time finding physical gold/silver to buy with it at some point down the road.