In Government and Scholars We Trust

Everything went up this week, so if ever there was a risk off week it was the one we just passed through, although something tells me we may be just at the beginning. President Biden, the Fed, Wall St., and the Pentagon see no reason why we can’t print money forever in infinite amounts and everyone can have everything they want. Shucks! There isn’t any reason why people even have to work. They can simply collect checks from the government and be happy. Don’t worry that businesses that are trying to start moving toward production again can’t find any workers.  Someone Ielse can produce the items they need. As long as I have dollars in my pocket, who needs to work?

Since Government is now trusted as God by the woke left, we can simply depend on the miracles of the money printers. These people haven’t any need to understand the basics of economics. Their faith in brilliant PhDs as their gods will suffice. No need to produce, because Government will do it. No need to question government scientists, because collectively they are God. No need to even allow credentialed scientists with different political views, because if they are Conservatives they most certainly have to be wrong!

These people don’t even have the most basic knowledge of supply and demand. Stimulate demand with trillions of dollars created out of thin air and shower it on millions of people who see no reason to contribute to the supply side of the economy and you have the potential ultimately for a hyperinflationary event even if the dollar holds together without going to zero relative to other currencies.  The chart above on your right is compliments of Nothing is more basic to the lives of poorer classes of people than the price of a basic food like bread. The chart above right shows that the price of bread has now risen above the level where it was part of a widespread color revolution that changed the face of many northern African countries during the Obama years. In my view the inflation story is only starting to rear what will eventually be a very ugly head. This smells very much to me like the inflationary 1970s. Yes, I know there is a lot of debt in the system now and debt is by nature deflationary. But that is all the more reason to think it possible that the dollar could be nearing its turn to visit the dustbin of history with all the other fiat currencies in history.

Meanwhile, the masses of America are kept away from gold by trusting in Bitcoin. And while China has now set up their own digital currency, which they can use to spy on their citizens and control them like lab rats, the Chinese are now engaging in a policy of encouraging massive importation of gold. That’s on top of massive gold hoarding over the years that may well already have the Chinese owning more gold than the U.S. Treasury claims to own. No one knows, because the U.S. gold hoard has not been audited since the days of President Eisenhower.

I believe we are getting very close now to the next major move in the price of gold. As my monthly gold chart below illustrates, the yellow metal appears to be breaking out. In the meantime, we have an amazing portfolio of gold exploration stories. Regarding events that transpired last week, many of you are concerned about the need for Novo Resources to raise C$22 million in equity. On page 7, I try to address those concerns as much as possible. Regarding my personal holdings this week, I added to my Firefox holdings this week and also purchased shares of Kuya Silver. I hope to do an update of Kuya in the near future. In addition I would strongly urge you to read Bob Moriarty’s piece that follows my comments. He provides some valuable insights into start up issues  that explain why everything has not gone 100% right at the start of the Beatons Creek gold mine.

The month of April is only about half over but thus far it appears possible that the substantial decline from a monthly average all-time high of $1,969.22 in August 2020 to a March average of $1,718.25 may be about to end. As of April 16, the average gold price for the month of April is $1,744.21, compared to a 20-month average of $1,716.34 and a 50-month average of $1507.67. At the end of March, the 20-month average kissed the March average, but it looks as if the monthly numbers may now be bouncing off the 20-month and starting a new high.

Could it be that we are now getting ready for the next major run in gold and silver? I think that possible, based on an article published by Yahoo Finance ( that says China has given its domestic bankers permission to import large amounts of gold into the country, potentially helping to support global gold prices after months of declines. Following are contents of the article:

“China is the world’s biggest gold consumer, gobbling up hundreds of tonnes of the precious metal worth tens of billions of dollars each year, but its imports plunged as the coronavirus spread and local demand dried up.

“With China’s economy rebounding strongly since the second half of last year, demand for gold jewellery, bars and coins has recovered, driving domestic prices above global benchmark rates and making it profitable to import bullion.

“The local premium is now about $7 to $9 an ounce, according to gold traders in Asia, and would probably have increased further if more imports to satisfy demand had not been allowed.

“About 150 tonnes of gold worth $8.5 billion at current prices is likely to be shipped following the green light from Beijing, four sources said. Two said the gold would be shipped in April and two said it would arrive over April and May.

“The bulk of China’s gold imports typically comes from Australia, South Africa and Switzerland.

“The People’s Bank of China (PBOC), the country’s central bank, controls how much gold enters China through a system of quotas given to commercial banks. It usually allows metal in but sometimes restricts flows. ‘We had no quotas for a while. Now we are getting them … the most since 2019,’ said a source at one of the banks moving gold into China.

“The PBOC did not respond to a request for comment.

“The size of the shipments signals China’s dramatic return to the global bullion market. Since February 2020, the country has on average imported gold worth about $600 million a month, or roughly 10 tonnes, Chinese customs data show.

“In 2019, its imports ran at about $3.5 billion a month, or roughly 75 tonnes.

“China’s absence made little difference to gold prices early in the pandemic when Western investors fearful of economic catastrophe stockpiled vast amounts of the safe-haven asset, pushing it to a record high of $2,072.50 an ounce.

“But the investor interest drifted away as vaccines and government stimulus programmes revived economic growth and gold prices have sagged to around $1,750 an ounce.

“India’s demand for bullion has also rebounded from a pandemic-induced slump, with record-breaking imports in March of 160 tonnes of gold, an Indian government source told Reuters this month.

“China and India typically account for some two fifths of the world’s annual demand for gold.

“Their recovery is ‘critical in setting the floor for gold and should stop prices from falling further over the coming months,’ said Suki Cooper, an analyst at Standard Chartered.

“Jewellery sales in China during the Lunar New Year holiday in February were stronger than in 2019 and 2020 and manufacturers and retailers needed to replenish their stocks, said Philip Klapwijk at Precious Metals Insights, a consultancy in Hong Kong. ‘A pretty decent recovery in gold demand this year will require a generally much higher level of gold imports (than in 2020),’ he said.”

(Reporting by Xiao Han in Beijing, Peter Hobson in London, Swati Verma and Arpan Varghese in Bengaluru; Editing by Veronica Brown, Shri Navaratnam and David Clarke)

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.