Mish: India gold premiums hit 21.6% over global spot

Long time readers will know that I have long predicted that some day there will be a delinking of paper assets from hard assets, namely gold and silver.  In fact, one of my key metrics of this has been to watch the gold:GLD ratio.  That is, the ratio of the spot price of real physical metal to the share price of the GLD Exchange Traded Fund.  When last I checked, what was supposed to be a 10:1 ratio was actually a 10.380:1 ratio.  In other words, the GLD ETF is supposed to track at 1/10 the price of ozT (Troy ounce) of physical gold.  But as people begin to wake up they are starting to figure out that paper assets are not the same as real assets.  This is why the divergence is happening.  It is an exponential function so it starts off very slowly but it diverges at an exponential rate.  It is still tame in the US but give it time folks.  Give it some time because long time readers will also recall what I learned from a wise man by the name of Gary North: the marginal players get hit the first and the worst.  In other words, it pays to look for canaries that can tell you in advance that your mine is filling with deadly gas.

Combine those concepts and you get what is happening in India right now.  In short, despite government mandates and laws and edicts and rules and other bull$hit that doesn't matter, the people of India are buying gold.  And they are doing it at pretty much any price.  Mish had an article recently that contained the eye opening chart you see below.  The bottom red curve is the most important part.  It is the chart of what people are willing to pay for gold over the global spot price.  It is measuring the same thing as gold vs. GLD.  It is screaming the fact that in any crisis, possession becomes 9/10ths of the law.

As you can see, this chart is going exponential.  What it really signifies is that the Indian people are losing confidence in the con men running their country.  They know that a collapse is coming and they are moving towards a von Misses moment: the so called crackup boom.  This is when fake money that never had any value to start with is finally recognized as not having any value by the people.  It is generally the public rapidly coming to the understanding that fake money, AKA fiat currency, is for the benefit of the state while at the same time being a weapon against the people.  The state uses inflation to impoverish the people and to strengthen the state and its cronies.  Fiat currency is a tool of economic vampirism.  It is how human parasites infect society and grow.

The chart above is not one of a spreading sickness but rather one of healing.  It simply shows that people are entering the phase of realization where you cannot fool all of the people all of the time and at some point you can't fool anyone ever.  That's not to say that there will not be danger associated with it.  A lot of people have gotten used to the way that the fake money works, just like they did in Wiemar Germany before hyperinflation set in.  Those people have worked many years or perhaps even their whole lives for what they have but they stored most of their liquid assets in ridiculous, worthless paper representations of wealth.  As the fake money collapses there will be many who believed in government who will be caught off guard and they will be angry and hungry and violent.  They will come to believe that they have nothing to lose so they might as well lose all inhibitions and do what they want and take what they want.  It leads humans down a path where might makes right and the law of the jungle prevails.  It will take great strength to overcome these conditions but at least most Indians have gold because it was always part of their society.
 
India might be the first to encounter this but it will not be the last.  This same chart will occur in every country in the world because every country uses fake money which is printed up with reckless abandon by the state not only when it is in trouble but at all other times in order to drive its agenda.  In places where people were brought up without any understanding of what money is and where they put waaaaay too much trust in the government, things could actually end up being a lot worse than they are going to get in India.  After all the higher you fly on the wings of Icarus, the further you have to fall when the feathers fall out under scrutiny of the bright light.