By The Phaser | April 12, 2015 0 Comments

by The Wealth Watchmen, The Daily Coin.com:  

 

This is a Biggie!

Sometimes an event can come and go, and become important much later, without setting off any alarm bells, as to whether it was important or not from the start.  It happens every day.  Yet, at other times however, you just can’t help but to immediately understand the significance of something the moment it happens.

Brothers, I have a feeling that what was just reported in the gold market, seems to strike that crucially, unmistakable note.  First, let’s touch upon the parties involved, and what they did, because it’s a strategy that seems like such a no-brainer, that I’m surprised most of the big players in the business world aren’t already doing it.

That announcement was this:

 

Indian jewellery billionaire Rajesh Mehta to buy Australian gold assets

 

“Big deal, Watchman!  So some billionaire wants to buy some gold, that happens all the time!”

Au contrare, Doubting Thomas!  That’s not exactly what just happened.  Let me unpack it a bit more, so you’ll see the scale of it.

World Gold Supply Deficit Grows

Firstly, as we all know, gold and silver are becoming more precious every day.  As the price keeps descending, demand keeps advancing higher with each passing downtick.  Not here in the West, mind you, I mean in places of actual gold-buying significance!

As we previously covered in last week’s Clarion Call, India and China alone have now bought well over 800 tonnes of gold, in just the first 3 months of 2015!

Meaning, if this pace holds, that 2 billion people alone will have consumed between 3,200 to 3,300 tonnes of gold in 2015(leaving available gold mining supply in a near 1,000 tonne deficit).  

Because gold and silver are woefully under-supplied, and because these countries not only prize gold and silver, but actually are forward thinking in this matter, some are now beginning to ask the question:

What do we do on the day that central banks can no longer surreptitiously pawn off any more of their gold holdings to us? 

What, indeed?!

What will happen to companies, who are heavy users of gold, when the market riggers no longer have anything which with to do their worst?

Well, they can either: 1 )pay more for their metal, 2) go without ample supply, or 3)….

Be the first to go to the source!

Indian Jewelry Makes its Move

That’s exactly what billionaire businessman, Rajesh Mehta, has just gone and done.

Mr. Mehta is a man on a mission!  He’s increasingly looked for new and creative ways to ensure constant supply of gold for his company, and he’s on the prowl in Australia to find willing partners within the Australian gold mining industry.

Why gold?

It’s because his business, Rajesh Exports, is India’s single, largest jewelry maker!  This isn’t some dinky mom and pop operation, we’re talking about!

With over 80 retail locations in India, Rajesh Exporters is truly one of the largest, most dominant, gold-buying forces within the private sector on planet earth!

His Bangalore company is also worth over $1.2 billion in assets, and is listed on the Bombay stock exchange.  The hard, tonnage numbers that his company consumes is even more impressive, coming in at roughly 140 tonnes of gold per year(or nearly as much as the Central Bank of Russia purchased last year).

This is remarkable, remember that Australia, which mined 284 tonnes of gold last year, is the 2nd biggest producer behind China.  So, this one company consumes a tonnage figure, equal to half the annual production of the world’s 2nd largest producer.

“Well, I don’t get it, Watchman, why wouldn’t he simply import the gold he needs to India?”

Well, brother, he’s already been doing that for years!  The problem though, is that in these final days of the global, monetary system, the price-rigging in gold and silver become has become so extreme, so terminal, that it’s now becoming a threat to supply itself.

Mr. Rajesh has far too big a stake in the gold scene, to allow his supply and contracts to be threatened by all this.  So, he’s decided that he’s simply not gonna take any chances of that happening.

“Don’t be a fear-mongering pumper, Watchman!  This man isn’t afraid of his gold supply being compromised!   He’s just branching out.”

Well, he is branching out, but if you think he’s not concerned about future, reliable gold supply being an issue, then you obviously missed his explanation as to why he’d actually go so far as to take ownership of Australian gold mines and assets:

“We have been importing gold from Australia on and off in the past, but now we want to have a formal presence in Australia,” he said.

“We are setting up a subsidiary in Melbourne primarily to look into acquiring interests into the gold sector of Australia, looking at gold mining assets in terms of equity or loan or whatever is feasible for us so we can ensure a reliable and permanent gold supply-line to our company.”

BRICS Moving In

There’s even more going on here though, because up until now, it was mainly China which had gotten involved in buying up Australian gold assets.  This move isn’t a haphazard one either, as in the words of the Sydney Morning Herald, it follows:

“Recent momentum towards a free trade agreement between Australia and India, and last year’s visit to Australia by Indian Prime Minister Narendra Modi.

It also comes after two years of regular deal-making in the Australian gold industry, as  several foreign gold miners have sold assets to try to reduce their exposure to Australia.”

Firstly, this is further evidence that the influence of the BRICS is growing by the day, and that it’s not simply China or Russia that’s driving this vehicle.  Indian businesses, flush with cash, are eyeing key markets, and are looking to move in and make deals happen. With both the Australian dollar and gold mining companies at multi-year lows, I expect this trend to grow in Australia.

Secondly, Mr. Rajesh isn’t merely moving into Australia to buy their gold, he’s also moving in to establish the first major Indian jewelry retailers within Australia itself!  I’ve often wondered how long it would take for the incomparably beautiful jewelry of India to catch on in Western countries.  With this bold stroke, it appears that this man has pondered the same thing, and wants to make that happen.

Mr. Rajesh is a serious straw in the wind that the time is ripe for India to move into both Western-oriented, gold assets.  He’s also the first major Indian jeweler to bring attempt to bring Indian products into the West’s mainstream.

An Unexpected War

There’s one more point I wanna bring up in regards to this deal, though.  Gold and silver are now so low, that any business that moves into the sector, can speak for a great deal of future supply.  This one company is bringing in over $700 million dollars to remove a huge chunk of Australian gold. Since that’s the case, let me ask you a few questions:

Do you think that the rest of India’s major jewelers aren’t watching their competitor’s actions with concern?

After all, once the deal is closed, Mr. Rajesh will not have only locked in his future supply of gold, he’ll have done so at prices so low, that he’ll be able to keep his inventory stock priced much lower than many of his competitors.  This will be crucial later on, when gold’s price is much higher, as he’ll be able to outprice them all, and still manage to be insanely profitable.

Lastly, I’d also like to say, that what’s true of gold in this regard is true for silver in spades!

I continue to resolutely hold to the belief that India is the real key for silver going forward.  When the paltry amount of gold supply is all locked up, and price inevitably soars to heights which precludes hundreds of millions of Indians…..where do you think they’ll turn?

That’s right, they’ll increasingly turn to silver jewelry for their weddings and their savings.

What would a mere $700 million dollar purchase of silver by someone like Mr. Rajesh do to the microbial silver market?

Furthermore, what do you think that silver end users like Cisco or Apple Computer will do, once some major players start to buy up silver mines, or lock down multi-billion dollar orders for silver supply?

They will not sit on their hands, and watch as other sectors and businesses make off with the element that is needed to guarantee that their plants and assembly lines don’t grind to a screeching halt.  They will come into the market, and likewise buy up these mines, just as Mr. Rajesh is doing.

Conclusion

As I’ve said for months, I welcome all the price smashes, because they cut off supply:

In their decimation of mining companies…

In their prevention of new mining exploration projects…

In their prevention of adequate refining and recycling…

In their effect of creating higher tonnage demand.

Gold and silver investors have been utterly spoiled!  We’ve become so accustomed to there being seemingly “infinite supplies” of gold and silver, that oftentimes we actually complain about their availability!

Well, I’ve got news for those folks: this is a reminder that gold and silver supply are not only not infinite, but that a day is soon coming where supplies will be so tight that you’ll wish for those “bad old days”, when you felt like the only one in the world who wanted to buy it.

Soon, you’ll yearn for a time again, when you could go to most any bullion retailer, and buy from a wide range of bullion products, with tiny premiums, no wait times, and almost zero shipping fees!

billionaires rarely get it wrong.

Buying mining stocks as a retail investor doesn’t often make a great deal of sense nowadays, but, with deep enough pockets, buying controlling ownership stakes at the source, for gold-oriented businesses, could be a move of inspired genius.

With both the Australian dollar and their mining companies(which are unfairly taxed in Australia) at multi-year lows….this is certainly the perfect time to strike.  I assure you, that we’ve not seen the last of this type of acquisition, either.

You and I, as stackers, are in excellent company.  Mr. Rajesh is a keen businessman, with extremely deep pockets.  You don’t get to be a billionaire by being behind the trends.  This man knows exactly what is happening, and what the future holds: a future he’s going to be leading.  He also knows the truth that the rest of the world will soon figure out:

Planet earth is in the early stages of a race to “get physical”.

Gold and silver are not infinite in quantity, they’re a tiny drop in a vast, global asset pool.  I assert that Mr. Rajesh is the kick-off, the first, real glimpse of a whole new era and reality that the world will witness in gold and silver.

For it will be an era, where virtually all silver and gold will already be spoken for, before it even leaves the ground!

When(not if) that happens, I’ve already got my seat at the table.  Do you?

 

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