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Shock And Awe in Precious Metals ~ Jeff Nielson
December 3, 2010 
Issue 87


SGS Notes: I trust you all had a wonderful Thanksgiving weekend... If you've been following silver and gold pricing since the weekend, you know that there has been a rapid rise in price of both metals... silver is now pushing $30 per ounce spot and gold is almost at $1415 per ounce...

Shock & Awe in Precious Metals
Jeff Nielson
December 1, 2010

Earlier this month, precious metals investors witnessed arguably the most concerted take-down of the precious metals sector since the Crash of ’08. First, investors were lathered-up into a mania, after World Bank head Robert Zoellick planted a piece in the Financial Times where he feigned interest in having a gold standard re-instituted.

Then the ambush took place.

This time, China was clearly participating as the ‘tag-team’ partner of the U.S. government. It began by raising reserve requirements for its banks – a move always seen as restraining the growth of an economy (and reducing commodities demand). Then the Chinese government leaked word that it was “planning interest rate increases” (even more bearish for commodities), all within the span of a couple of days.

What launched the “ambush”, however, was the utterly unprecedented move by the CME Group (owner of the Comex exchange) to radically increase margin requirements for silver halfway through a trading session. Clearly, the intent was to get precious metals investors as over-extended as possible – and then to “drop the hammer” on them at literally the best (i.e. most-damaging) moment.

This was immediately followed by yet another increase in bank reserves by China’s government, mere days after the previous reserve-increase was announced. With the U.S. having already taken radical action to curb commodities markets, it is simply not plausible that the Chinese government suddenly decided that further tightening was necessary. Instead, this was a move purely intended to generate more downside momentum in commodities by China, the world’s largest consumer of those commodities (including precious metals). And when those moves still did not generate the downward momentum desired by these market-manipulators, the CME Group announced yet another reduction of “margin” – this time for both gold and silver.

In previous years, a premeditated, orchestrated take-down of precious metals of this magnitude would derail the market for many weeks, if not months. However, that era is over.

Following the inevitable plunge of these commodities markets (as margin players were driven out), gold and silver quickly bottomed and firmed. This epitomizes the entirely different attitude of precious metals buyers. Whereas before such ambushes would create fear among investors that a “top” had occurred in the market, today all that goes through the minds of investors when precious metals go lower is “gold and silver are on sale!”

Buyers gleefully soaked-up every ounce of cheap bullion which the bullion banks chose to bestow upon them (as an early Christmas present). And now, with the month over, and “delivery” due in the Comex, those buyers are saying “give us our gold and silver.” While the numbers bounce around day-to-day, at present these buyers are wanting to take delivery on a large portion of total, available gold inventories and nearly ¾ of all available silver in Comex inventories.

Though it was the bankster cabal which launched this ‘shock’ on the precious metals market (and precious metals investors), the only ‘awe’ that was experienced was that of the banksters, themselves, as buyers are now holding out their hands and demanding that the bullion banks deliver most of their dwindling supplies of real bullion. Much like pointing a bazooka at someone – and not noticing that you were holding it backwards – this ambush has now blown up in the faces of these bankers.

If these manipulative buffoons had the slightest understanding of these markets, the spectacular failure of their attempt to (once again) “cap” precious metals would have come as no surprise. As I write regularly, anything under-priced (like precious metals) will be over-consumed. Push the price even lower, and inventories will disappear that much quicker.

The example I have used previously is chocolate bars. Price chocolate bars at 10 cents each (which was their price before 40 years of banker-produced inflation destroyed the value of our currency) and store shelves will be quickly stripped bare. Yet in the convoluted fantasy-world of the bullion banks, if they saw store shelves being cleaned-out with chocolate bars at 10 cents apiece, their “strategy” would be to attempt to kill demand by pricing them at 5 cents.

In previous years, the banksters could avoid being punished for their total ignorance of commodity fundamentals. Armed with countless tons of bullion which Western central banks had foolishly leased to them, when the cabal drove down precious metals prices and buyers stepped in to load-up, they would simply drive prices even lower (by dumping yet more bullion onto the market) – until even the most ardent bulls capitulated.


Other Articles of Interest

The Dumping Begins:
Chinese Reserve Managers Notified That Any Non-USG Guaranteed Securities Must Be Divested

Zerohedge

China, Russia Quit Dollar
China Daily

Why Governments Will
Buy Silver

SilverSeek


 


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SGS Volume Discounts

SGS has received several inquiries of late regarding our volume discount program. Our volume discounts apply only to non-numismatic rounds and begin with quantities of 200 ounces or more as follows:

200 -500 oz - $1.00 / oz discount
501 - 1000 oz - $1.50 / oz discount
1001 or more - $2.00 / oz discount

Volume orders will need to be placed by phone at present. We welcome individuals to enlist acquaintances to join them in a group order to take advantage of these discounts.

 

Quote of the Week

“The future prosperity of everyone – including the needy – depends on encouraging persons to become millionaires.”

 

– Dean Williams



 

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This Week's Video

The Day The Dollar Died

By InflationUs

 

 

 

Those days are gone, because the bullion is gone. Today, when bullion prices are driven down, and buyers step in to buy, it is the bullion banks who are now forced to capitulate. Much like a thug who points a revolver at someone – after the sixth shot is fired – the banksters now frighten no one in the precious metals market.

In the case of silver, the only “gun” now pointing at anyone is the gun which the bullion bankers are holding against their own temple (with a “silver bullet” in the chamber). As regular readers know, most of the total global stockpiles of silver (accumulated over roughly 5,000 years) are now gone. Used-up (in tiny amounts) in an infinite number of consumer and industrial goods, that silver can now never be economically recovered – unless/until the price rises to many multiples of the current price. Put another way, with gold now priced at roughly 50 times the price of silver, at some point before silver reaches $1400/oz, it will finally become valuable enough that industrial users will take measures to recover this silver, much like virtually 100% of all gold is recovered/recycled.

At the present time, the only message being sent (by the bankers) to silver’s multitude of industrial users is “silver is cheap”. With the bankers ensuring that silver is grossly under-priced, industrial demand is predictably soaring – up 18% year-over-year.

Readers must realize that these industrial users can obviously never be “frightened off” by cheap silver, but instead will simply increase their buying (as they have done). Having gotten industrial users ‘addicted’ to cheap silver, it is now up to the bullion banks to produce enough real bullion to satisfy the rabid appetite for industrial silver – or face the consequences: their own economic annihilation.

“Short” 100’s of millions of ounces of silver, JP Morgan is already facing $billions in losses on that part of their holdings, alone. However, after squandering their bullion inventories, the banksters turned to the derivatives market to use paper leverage to continue to manipulate prices.

Thanks to the CPM Group’s Jeffrey Christian, we have a rough idea of precisely how leveraged is that short position: about 100:1. So when JP Morgan starts with $billions in losses, and leverages that 100:1, the bottom-line is bankruptcy. And the harder these knuckle-draggers push-down on the market (thinking they are limiting their losses), the sooner the last bar of silver is gone – and with it, JP Morgan.

With available silver now nearly gone, we are very close to (if not already at) the point in time where industrial users make a frantic effort to buy and hoard every ounce of silver that they can lay their hands on, and soaring prices will only make them buy faster. Understand that the pretext of raising margin requirements in the silver market was to restore “order” to that market. Instead, because this move was motivated by corruption and malice rather than market fundamentals, raising margin requirements (and creating a “sale” for silver) is creating much more disorder – and rapidly setting the stage for an actual default (a fail to “deliver”) in the silver market.

It is because of this total reversal in attitudes (and the depletion of bullion inventories) that I continue to urge investors to “think like the big buyers”. They want to see bullion prices fall, because they know inventories are depleted, and any pull-backs will be shorter and shorter.

When bullion prices fall, gold and silver are “on sale”. Period. And as we are always reminded when any retailer advertises a sale, buy now – because quantities are limited.

 

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Howard Ruff on Buying Gold And Silver
November 19, 2010 
Issue 86
SGS Notes: Whew! What a week in the precious metals world... today some volatile action as many predicted would happen... Those 'in the know' expected to see JP Morgan sell lots of naked short contracts on silver today to drive the price down under $25 spot, in an attempt to close the day out before the weekend at a low point...

Let's see what actually happened today:

We can see a sharp drop of almost $1.00 from 4:00-10:00 a.m. EST... and then a rally back to previous position...

The past month has seen several of these. Look at this custom chart depicting silver spot prices from October 19 - November 19, 2010. In regard to the gold/silver ratio, October started with a ratio of 60:1, and ended at 54:1. Today's closing ratio ended around 50:1. It still has a long way to go to get back to the historic ratio of 16:1. At today's gold price, that would mean silver should be at almost $85 per ounce.

In an interview this week on Alex Jones' radio show, the international journalist Max Keiser suggested a mechanism for bringing down the 'House of Morgan': Every American should just buy some real silver. The relevant excerpt from the interview is three minutes long and you can listen to it here:

Listen to Max Keiser on Alex Jones here

 

Howard Ruff on Buying Gold & Silver

Gold and silver are perfect pure inflation hedges. Strictly seen as an investment, as the dollar shrinks in value, gold will be worth thousands of dollars an ounce and silver will be worth hundreds of dollars an ounce. Glenn Beck, one of my favorite talk show hosts, said he is “not buying gold as an investment, although it will be a good investment, but as insurance.” He doesn’t tell us what he is insuring against, but I’ll tell you. He’s insuring against the plummeting loss of purchasing power of all dollar-denominated investments (price inflation), even the possible collapse of the dollar.

In these current circumstances, not buying gold or silver is one of the dumbest money decisions you can make in 2010-2011. Here are just a few reasons why this is so:

1. Obamanomics: Socialist states always inflate the paper currency. Obama, Congress, and the Federal Reserve are diluting value of dollars like never before by creating more of them. Accommodating Obama and Congress, the Fed has manufactured trillions of dollars out of nothing at by far the fastest pace in history, and it’s accelerating. Currencies are supposed to be a “means of exchange and a store of value.” The dollar is still a means of exchange, but due to inflation, it is no longer a store of value.

The government has given trillions to the big banks, which will loan the dollars into circulation or give them to politicians to spend into circulation. This money expansion currently dwarfs several times over the monetary explosion that led to the Carter-driven metals bull market in the ‘70s. I can’t overstate what is happening. Economists may call this monetary-expansion process “inflation” but it really should be called “dilution”—dilution of the money supply and consequently its value. Inevitably, sooner or later, consumer prices rise and laymen then mistakenly call that “inflation.” Calling rising prices inflation is like calling falling trees hurricanes. When will the public catch on? Price inflation and gold prices are the chief measurements of public awareness. Sooner or later, awareness becomes a critical mass, the public catches on, and the metals go through the stratosphere.

2. Real money: Gold and silver (especially silver) have been real money over and over again, in all ages of time and on all continents. Ever since Gutenberg invented the printing press 400 years ago, the world has been littered with worthless dead paper currencies every seventy-five to eighty years, due to runaway money printing when the people discover they can vote themselves benefits from the public treasury. Every time the dominant currency has been inflated, gold and silver coins have become hugely profitable investments, and sometimes the only surviving currency!

Throughout history, each time a paper currency finally caved in to inflation, gold and silver (especially silver) became the only universally acceptable coin of the realm. Gold and silver as a means of exchange and a store of value have always survived. They have always been symbols of wealth, far more precious in our consciousness than any mere paper.

During periods of hyperinflation, there always comes a time when people refuse to accept more and more counterfeit, inflated money or base-metal coins in return for their hard-produced goods and services. At that point, society instinctively turns to gold and silver. It has happened over and over again, and as George Santayana said, “Those who cannot remember the past are condemned to repeat it.”

3. It’s early in the game: Gold and silver are early in an historic bull market (in fact, as this is written, it’s only a Golden Calf), making this a low-risk investment with an awesome upside for the long-term investor. Especially silver. This gold and silver bull market will dwarf the last great one in 1973-80, when fortunes were made by relatively small amounts of money invested by amateur investors (many of them my readers). All of the factors that created the last bull market are here again, only amplified several times.

4. Supply and demand: Both metals are far rarer than most people know. All the gold ever mined since the dawn of history, including that in Central banks, gold fillings, and sunken shipwrecks in the Caribbean, etc. would cover a football field about four-feet deep. It would make a cube about the size of a typical 8-room house. Demand is now leaping past new supplies.

Likewise, most of the easy silver has been mined over the centuries, even with primitive methods. For example, during the Roman millennium, they used silver coins for currency and exhausted the Spanish silver mines.

Now that prices are high enough to make gold and silver mining profitable again, it will take as much as seven to ten years to develop new mines, and stagnant supply and rising demand have made higher prices inevitable for the imminent future.

In 1980 the historic ‘70s gold bull market finally topped out at $850. After adjusting for inflation, to merely equal what it did in 1980, gold would have to go (only) to $2,300, and silver topped out at $50 in 1980. After adjusting for inflation since then, to merely make a new high, silver would have to go over $125 and gold to $2,300!

Why might the metals go even higher? Most compelling is the fact that the biggest single factor that drives gold and silver is monetary inflation, and that’s already several times greater now than it was during the great gold-and-silver bull market of the ‘70s. In fact, gold and silver have been rising in response to money creation since 2000. Add to that the silver supply/demand phenomenon, and that means far higher prices—unless they repealed the law of supply and demand when I wasn’t looking.

These are just a few of the reasons why ignoring gold or silver will cost you a fortune in missed opportunities. In the worst case, gold is headed towards at least $2,500 an ounce (currently over $1,000, up from $280 so far), and silver is headed for at least $100 (currently more than $19, up from $4). And the best by far is still ahead. Long term gold and silver investors should make as much as ten times their money—and maybe a lot more—before we get a sudden rush of brains to the head and create a sound, gold-backed currency.


Other Articles of Interest

Ted Butler & Chris Martensen
Discuss the End of the
Silver Price Manipulation

$53,957 in Circulation for Every Ounce of Gold

Delta-Hedging to Cause Gold Price to Explode


 


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SGS Volume Discounts

SGS has received several inquiries of late regarding our volume discount program. Our volume discounts apply only to non-numismatic rounds and begin with quantities of 200 ounces or more as follows:

200 -500 oz - $1.00 / oz discount
501 - 1000 oz - $1.50 / oz discount
1001 or more - $2.00 / oz discount

Volume orders will need to be placed by phone at present. We welcome individuals to enlist acquaintances to join them in a group order to take advantage of these discounts.

 

Quote of the Week

"The major monetary metal in history is silver, not gold.”

– Nobel Laureate Milton Friedman



 

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This Week's Video

David Morgan and James Turk on the Silver Price and CFTC

 

Special Thanksgiving
Greetings

This Week's Ups, Downs And Gold Standard Discussions
November 12, 2010 
Issue 85

S&GS Notes: We apologize for the newsletter coming out a few days late this week... we had a family medical emergency on Friday, which is now mostly resolved...

This week's precious metals news has revolved greatly around Tuesday's rapid rise of gold (to $1421. high) and silver prices (to $29.24) and subsequent abrupt plunge the same day (silver to $26.50 and gold to $1345) coupled with a lot of discussions regarding the potential for world currency(ies) returning to a gold or silver standard. The effects of QE2 is still being discussed as well, but since we covered that pretty thoroughly last week, we're going to talk this week mostly about this volatility we're all watching, and under "Other Articles" we'll provide some links to articles on the issue of precious metals as a currency standard...


BLATANT MARKET MANIPULATION IS EMBARRASSING THE "NEW" CFTC
Bix Weir

November 9, 2010

U.S. Commodity Futures Trading Commissioners
3 Lafayette Centre
1155 21st St. NW
Washington, DC 20581

 

CFTC Commissioners:

The blatant market manipulation of Silver on the COMEX has gotten to a point where even a non-believer in market manipulation can easily detect the illegal maneuvers. The latest side show in this decades long con job is simply EMBARRASSING to your organization and our country.

WE EVEN KNOW WHEN IT'S GOING TO HAPPEN!!!

Case in point: On November 3rd I sent out an alert to people who follow my newsletter warning them that the CFTC has decided to allow the Banking Cabal one more shot at rigging the Silver market before they end the practice of "officially sanctioned" manipulation. Here's the alert:

******

November 3, 2010: Is the CFTC Letting it's Guard Down for the FINAL MANIPULATION?

Watching the current "mini-smash" of gold and silver right before the announcement of QE2 comes as no surprise to most of us OLD TIMERS in the manipulation markets BUT I found it very interesting to read CFTC Commissioner Dunn's latest statement:

(Kitco News) -- Under Dodd-Frank reform legislation, the Commodity Futures Trading Commission must start to increase regulation of swaps and other ways to lower risk. But CFTC Commissioner Michael Dunn is concerned over funding, especially since the CFTC is already operating on only a percentage of its full budget. "If we don't get fully funded, we still have to fulfill the mandate," he said on a panel at the Futures Industry Association Expo. If the commission doesn't get the funding, that means that some self-regulating organizations take some of the work, or the agency becomes "extremely restrictive on what we do." His concern is that requests to the CFTC will have to "go in a queue" and people will have to wait longer to see actions occur. He said one-third of the staff is working on writing regulations, which means they've had to cut back on surveillance and oversight. Another panelist said it is likely all federal budgets will be cut in the future, so some regulations might go to self-regulating organizations. Either that or Dodd-Frank might need to be retooled in some way. END

WOW! Talk about ANNOUNCING to the Banking Cabal that they can go ahead and play their games for a little while longer because THE CFTC IS TOO BUSY TO POLICE THE MARKET AT THE MOMENT!!!

****

Well. What do you think happened in the silver market today? Let's take a quick look:

When JPM/HSBC Don't Like The Results, The CME Just Changes The Rules: Full Revised Silver Margin Schedule


 

 

 


Other Articles of Interest

Germany Unwittingly Adopts A Silver Standard Due to Soaring Price
Toni Straka of The Prudent Investor

 

Zoellick seeks gold
standard debat
e
Financial Times


Going Back To A Gold Standard?
Adrian Ash

Silver Could Spike to $50 Based on Short Positions That Need To Be Bought Back

Three's Company Silver
Margin Change


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SGS Volume Discounts

SGS has received several inquiries of late regarding our volume discount program. Our volume discounts apply only to non-numismatic rounds and begin with quantities of 200 ounces or more as follows:

200 -500 oz - $1.00 / oz discount
501 - 1000 oz - $1.50 / oz discount
1001 or more - $2.00 / oz discount

Volume orders will need to be placed by phone at present. We welcome individuals to enlist acquaintances to join them in a group order to take advantage of these discounts.

 



 

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Quantifying Quantitative Easing ~ David Morgan
November 5, 2010 
Issue 84

S&GS Notes: Talking about Quantitative Easing in today's newsletter…it's all over the news.

There's been QE, QE1, and now the Fed has announced their plan to embark on QE2. With that announcement we've seen the prices of gold and silver rise dramatically in just hours/days… What exactly is QE? Why does it have this affect on silver and gold? What other affects will we see in other markets? I'm no expert on these things… I read, I listen, I learn… here's what the 'Guys That Know' have to say….

Why should you care about this? Well, for starters, it has a tremendous impact on your silver/gold investment...and it will have a BIG IMPACT on your budget in the coming months, food prices, and the prices of other basic necessities.

And… regardless of what you think of Glenn Beck… don't miss his 2-part Video on the subject of QE… explained as only Glenn can do it...

Quantifying Quantitative Easing

From David Morgan…

Many investors are struggling to understand the ramifications of the recently announced QE2 plan. Quantitative easing, or more simply known as money printing, is a dilution transaction similar to issuing more shares for a stock. The dilution has two primary affects: a decrease in the value of the initial shares and a redistribution of wealth from the original owners to the new owners.

The most significant difference between stock dilution and currency dilution is of course that publicly traded companies tend to use the funds raised through dilution to add value by investing those funds - whereas governments don't add value by diluting a currency.

In this case, $900 billion will be diluted to purchase US treasuries so the primary benefactor of the quantitative easing will be the US federal government and the financial institutions selling that debt. However, capital flows can rarely be controlled and the newly created money will find its way into other markets and asset classes.

Interestingly, the $100 billion per month figure that has been mentioned as the target rate for QE is almost exactly what is needed to rollover maturing treasuries coming due - so it could be argued that the plan is to effectively finance the US Federal debt which would eventually lead to a complete monetization of the treasury market. Supporting this argument is the recent projection made by ZeroHedge that the Federal Reserve will own more treasuries than China by the end of November.

If the QE2 funds went into the currency market, its value would fall in half. However, $900 billion is roughly 6 percent of US Federal Debt. Inflation is defined by the growth in the money supply. If using M2, the QE2 plan would dilute the money supply by 10 percent. $900 billion represents 36% of the world's gold supply, so an equivalent move upward in price could be seen if the money finds its way into the gold market. QE2 is 37 times the size of the world's estimated silver supply so a flow of capital into the silver market could be explosive.

A dollar on November 1st is now worth 92 cents if measured in treasuries or 91 cents if measured with the money supply. It can be seen that inflation as measured by the growth in money supply is projected to increase by 10 to 20 percent on an annualized basis.

The result will be a double digit real negative interest rate and a carry trade opportunity to sell treasuries and other US dollar secured paper at a cost of near 0 percent while accumulating real assets such as precious metals and other resources that cannot be diluted.

Glenn Beck Explains Quantitative Easing
Part I & II

 


Other Articles of Interest

Not A Good Time To
Be Short Silver

Tradeplacer.com

Why The Price Of Gold
Soared After the QE Announcement

Bill Bonner, Daily Reckoning

How High Would Gold & Silver Prices Go if GS, JPM and HSBC Were Barred from Participation in Gold/Silver Markets?
JS Kim - SmartKnowledge

Gold Jumps $50 in 21 Hours As Fed Prints Money
Adrian Ash

Silver Blasts Through
To 30 Year High

Mad Hedge Fund Trader



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SGS Volume Discounts

SGS has received several inquiries of late regarding our volume discount program. Our volume discounts apply only to non-numismatic rounds and begin with quantities of 200 ounces or more as follows:

200 -500 oz - $1.00 / oz discount
501 - 1000 oz - $1.50 / oz discount
1001 or more - $2.00 / oz discount

Volume orders will need to be placed by phone at present. We welcome individuals to enlist acquaintances to join them in a group order to take advantage of these discounts.

 



 

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"I doubt we will ever see sub $1300 gold again for the duration of this secular bull. Now that the HUI and silver have broken to new all time highs we have a rare condition in that the entire precious metal sector is trading in a vacuum with no real overhead resistance. This is the only sector in the world in this position. That is the recipe for an incredible move higher in a short period of time as funds begin to chase the out-performance in the precious metal sector."

Toby Connor
Goldscents


 

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Will the CFTC Actually ACT to Protect Silver Investors? ~ Tradeplacer.com
October 29, 2010 
Issue 83

S&GS Notes: There has been more developing this week on the issue of manipulation of the gold & silver markets. While we've covered this topic in the past, we felt it best to devote this week's newsletter to an update on what is happening on this scene to keep our subscribers informed.

What does this have to do with silver investing you may well ask? Well, it's been driving the price points for some time now; and the more pressure is brought to bear on the guilty parties, we may well see significant spikes in the pricing as they try to cover their short positions, and the downward manipulation of price ends due to public pressure and possible CFTC regulatory activity. Grab your silver and hang on for the ride…

Will the CFTC Actually ACT to Protect Silver Investors?
from Tradeplacer.com

The silver market has seen a lot of surprises this year, and the statement today made by CFTC Commissioner Bart Chilton is probably the most unexpected yet. After more than two years of "investigation" into the silver market with no acknowledgment of structural issues, Chilton gave a public meeting in which he was quoted as saying "There have been fraudulent efforts to persuade and deviously control that price... the public deserves some answers to their concerns that silver markets are being, and have been, manipulated." He went on to state that the CFTC would be introducing new regulations to curb manipulation in the precious metals markets. Silver rose nearly 80 cents from its intraday low on the news.

Silver analyst Ted Butler has been writing letters and warning the CFTC of the consequences of manipulation in the silver market for more than 20 years. Not many people would bother to warn of these issues when ignored and ridiculed, however Butler persisted with his call for action to remove manipulators from the market. Up until recently, these warnings have been completely ignored.

As Butler and others have documented, a concentrated group of four to eight traders have been responsible for nearly 70 percent of all short positions in silver on the COMEX. These traders have consistently traded in unison to move prices while collecting large profits along the way. It is suspected that JP Morgan holds the majority of these short positions; however the CTFC has refused to acknowledge this and trading positions are not publicly disclosed.

Why Now? What does the CFTC and the short commercial banks know that we don't?

It doesn't take 20 years, or 2 years for that matter, to realize that there are obvious structural problems with the silver market - especially when the issues are spoon fed by letters from thousands of individuals. Given the reactive nature of the CFTC, it is unlikely that Chilton is acting preemptively to protect the small investor. It is more likely that the CFTC position is changing due to the structural change in the silver market. In 2008 weak long speculators were categorically replaced with blood thirsty hedge funds, wealthy investors, and developing nations who buy in cash.

(click to enlarge)

As previously documented on Tradeplacer.com, the commercial banks began to cover their short positions in a rising market about four weeks ago which is highly unusual. While silver has oscillated between $23 and $25 over the last month, the banks have continued to quietly cover. Perhaps Chilten means what he says and the banks began to cover in anticipation of further regulation by the CFTC.

Is it too late?

As of October 19th, the commercial traders were still net short 58,150 contracts - roughly 290 million ounces of silver. There are currently only 52 million registered ounces and 59 million eligible ounces held in COMEX warehouses. It would not be possible to remove the short commercials from the silver market in an orderly fashion. The majority of contracts would have to be settled in paper at much higher prices. As pointed out by Butler, the worst case scenario - and increasingly likely - would be a closure of the paper precious metals markets. If that occurs physical silver would likely trade in multiples of its previous paper price and would be unavailable to most buyers. The apparent choice by the CFTC to act is most likely no choice at all. It is a desperate move to maintain the status quo and a reaction to an eminent emergence of either physical shortages or dollar devaluation instigated by a wave of quantitative easing.

Jeff Lewis, of Silver Coin Investor, has the following perspective on this week's announcement by Bart Chilton:

"Almost every major financial media entity ran the story about CFTC regulator, Bart Chilton's statement regarding silver manipulation.

This is quite a remarkable event for our small, yet growing community. 

But given the fact that governments have little incentive to prevent a crisis, I believe this was a very well-crafted and strategic announcement.

Yes, I'm feeling a bit cynical about it.
 


Other Articles of Interest

Commercials Begin To
Cover Silver Short Position
s

Tradeplacer.com

Could This Be It?
David Bond, Publisher

Traders Accuse HSBC,
JP Morgan
of Silver Manipulation

Forbes Magazine

Silver to 30 In 18 Days
James Turk

The Return to Good Money
Jeff Nielson


Free Service

SGS: We saw a 'correction' briefly this past week in the price of silver/gold… this was more likely the combination of manipulative activity plus the drop that usually accompanies the gold/silver options expiration date each month (Oct 26). We see this over and over… when these dips happen, buying RETRACTS… it is the old 'loss of confidence' phenomenon… wise investors don't let themselves get caught by this…. BUYING SHOULD SURGE on the price dips…

SGS Volume Discounts

SGS has received several inquiries of late regarding our volume discount program. Our volume discounts apply only to non-numismatic rounds and begin with quantities of 200 ounces or more as follows:

200 -500 oz - $1.00 / oz discount
501 - 1000 oz - $1.50 / oz discount
1001 or more - $2.00 / oz discount

Volume orders will need to be placed by phone at present. We welcome individuals to enlist acquaintances to join them in a group order to take advantage of these discounts.

 



 

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"This fiat currency experiment will end badly in a currency crisis, and when that happens, as it surely will, gold will go parabolic and silver along with it but even more so as the gold/silver ratio adjusts itself to a more historical correlation. The wealthiest people in the world will be those who put 10% to 15% (or perhaps more, much more!) of their portfolios into physical silver today."

Lorimore Wilson
Editor Financial Article Summaries today


 


 

Dollar, Silver, GDP, QE2, elections
Peter Schiff - Schiff Report

 


On the surface, The Wall Street Journal's 'C1' article provided one of the most compelling and in-depth accounts:

http://online.wsj.com/article/SB10001424052702303341904575576203310056046.html

There was mention of the concentrated short position.
They named the major players -- HSBC and JP Morgan.
Many of the other reports were phrased in such a way that it almost sounded like prices were being manipulated higher, not lower.

But not this one.
And to top it all off, we are now considered 'manipulation theorists', rather than 'conspiracy theorists' - which has a more credible sounding ring….
I don't mean to diminish the significance of this event, but...

Below the surface of this news, I believe we are witnessing a political announcement meant to create the sense that we are being protected by regulators.

If and when the price of silver explodes, the noise from this statement may serve to position blame in such a way that the call for more regulation will once again have the political will of the people behind it.
Recall the politics surrounding the formation of the Federal Reserve Act.

The bill was presented as a way of protecting the people from a crisis caused by banks.
Look what that got us.
I want to believe this is a step in the right direction in terms of the general awareness created in the mainstream.
However, the reactionary nature of governments to form committees after the fact leaves me suspicious.
And the natural laws of supply and demand will come to pass, despite efforts to interfere - for or against. "

Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1
An Encore Presentation ~ Art Cashin
October 22, 2010 
Issue 82

An Encore Presentation
by Art Cashin 10/12/2010

(Today we will revisit one of the most devastating economic events in recorded history.It all began with the efforts of a few, well-intentioned government officials.)

Originally, on this day (-2) in 1922, the German Central Bank and the German Treasury took an inevitable step in a process which had begun with their previous effort to "jump start" a stagnant economy. Many months earlier they had decided that what was needed was easier money. Their initial efforts brought little response. So, using the governmental "more is better" theory they simply created more and more money.

But economic stagnation continued and so did the money growth. They kept making money more available. No reaction. Then, suddenly prices began to explode unbelievably (but, perversely, not business activity).
So, on this day government officials decided to bring figures in line with market realities. They devalued the mark. The new value would be 2 billion marks to a dollar. At the start of World War I the exchange rate had been a mere 4.2 marks to the dollar. In simple terms you needed 4.2 marks in order to get one dollar. Now it was 2 billion marks to get one dollar. And thirteen months from this date (late November 1923) you would need 4.2 trillion marks to get one dollar. In ten years the amount of money had increased a trillion fold.

Numbers like billions and trillions tend to numb the mind. They are too large to grasp in any "real" sense. Thirty years ago an older member of the NYSE (there were some then) gave me a graphic and memorable (at least for me) example. "Young man," he said, "would you like a million dollars?" "I sure would, sir!", I replied anxiously. "Then just put aside $500 every week for the next 40 years." I have never forgotten that a million dollars is enough to pay you $500 per week for 40 years (and that's without benefit of interest). To get a billion dollars you would have to set aside $500,000 dollars per week for 40 years. And a…..trillion that would require $500 million every week for 40 years. Even with these examples, the enormity is difficult to grasp.

Let's take a different tack. To understand the incomprehensible scope of the German inflation maybe it's best to start with something basic….like a loaf of bread. (To keep things simple we'll substitute dollars and cents in place of marks and pfennigs. You'll get the picture.) In the middle of 1914, just before the war, a one pound loaf of bread cost 13 cents. Two years later it was 19 cents. Two years more and it sold for 22 cents. By 1919 it was 26 cents. Now the fun begins.

In 1920, a loaf of bread soared to $1.20, and then in 1921 it hit $1.35. By the middle of 1922 it was $3.50. At the start of 1923 it rocketed to $700 a loaf. Five months later a loaf went for $1200. By September it was $2 million. A month later it was $670 million (wide spread rioting broke out). The next month it hit $3 billion. By mid month it was $100 billion. Then it all collapsed.
Let's go back to "marks". In 1913, the total currency of Germany was a grand total of 6 billion marks. In November of 1923 that loaf of bread we just talked about cost 428 billion marks. A kilo of fresh butter cost 6000 billion marks (as you will note that kilo of butter cost 1000 times more than the entire money supply of the nations just 10 years earlier).

How Could This All Happen? - In 1913 Germany had a solid, prosperous, advanced culture and population. Like much of Europe it was a monarchy (under the Kaiser). Then, following the assassination of the Archduke Franz Ferdinand in Sarajevo in 1914, the world moved toward war. Each side was convinced the other would not dare go to war. So, in a global game of chicken they stumbled into the Great War.

The German General Staff thought the war would be short and sweet and that they could finance the costs with the post war reparations that they, as victors, would exact. The war was long. The flower of their manhood was killed or injured. They lost and, thus, it was they who had to pay reparations rather than receive them.
Things did not go badly instantly. Yes, the deficit soared but much of it was borne by foreign and domestic bond buyers. As had been noted by scholars….."The foreign and domestic public willingly purchased new debt issues when it believed that the government could run future surpluses to offset contemporaneous deficits." In layman's English that means foreign bond buyers said - "Hey this is a great nation and this is probably just a speed bump in the economy." (Can you imagine such a thing happening again?)


SGS Volume Discounts

SGS has received several inquiries of late regarding our volume discount program. Our volume discounts apply only to non-numismatic rounds and begin with quantities of 200 ounces or more as follows:

200 -500 oz - $1.00 / oz discount
501 - 1000 oz - $1.50 / oz discount
1001 or more - $2.00 / oz discount

Volume orders will need to be placed by phone at present. We welcome individuals to enlist acquaintances to join them in a group order to take advantage of these discounts


Free Service

 

Other Articles


One Hellish Predicament
BY Jim Cook

The World According to Gold
James West, Midas Letter

Don't Worry About A
Gold Correction


How High For Gold & Silver
Part I & Part II

Jeff Nielson


New CFTC Whistleblower

 



 

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"True individual freedom cannot exist without economic security and independence. People who are hungry and out of a job are the stuff of which dictatorships are made."

Franklin D. Roosevelt
 


Warning! The Bullion Banks
Are Losing Control

 

When things began to disintegrate, no one dared to take away the punchbowl. They feared shutting off the monetary heroin would lead to riots, civil war, and, worst of all communism. So, realizing that what they were doing was destructive, they kept doing it out of fear that stopping would be even more destructive.

Currencies, Culture And Chaos - If it is difficult to grasp the enormity of the numbers in this tale of hyper-inflation, it is far more difficult to grasp how it destroyed a culture, a nation and, almost, the world.

People's savings were suddenly worthless. Pensions were meaningless. If you had a 400 mark monthly pension, you went from comfortable to penniless in a matter of months. People demanded to be paid daily so they would not have their wages devalued by a few days passing. Ultimately, they demanded their pay twice daily just to cover changes in trolley fare. People heated their homes by burning money instead of coal. (It was more plentiful and cheaper to get.)

The middle class was destroyed. It was an age of renters, not of home ownership, so thousands became homeless.

But the cultural collapse may have had other more pernicious effects.

Some sociologists note that it was still an era of arranged marriages. Families scrimped and saved for years to build a dowry so that their daughter might marry well. Suddenly, the dowry was worthless - wiped out. And with it was gone all hope of marriage. Girls who had stayed prim and proper awaiting some future Prince Charming now had no hope at all. Social morality began to collapse. The roar of the roaring twenties began to rumble.

All hope and belief in systems, governmental or otherwise, collapsed. With its culture and its economy disintegrating, Germany saw a guy named Hitler begin a ten year effort to come to power by trading on the chaos and street rioting. And then came World War II.
We think it's best to close this review with a statement from a man whom many consider (probably incorrectly) the father of modern inflation with his endorsement of deficit spending. Here's what John Maynard Keynes said on the topic:

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some…..Those to whom the system brings windfalls….become profiteers.

To convert the business man into a profiteer is to strike a blow at capitalism, because it destroys the psychological equilibrium which permits the perpetuance of unequal rewards.

Lenin was certainly right. There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose….By combining a popular hatred of the class of entrepreneurs with the blow already given to social security by the violent and arbitrary disturbance of contract….governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century.

To celebrate, have a jagermeister or two at the Pre Fuhrer Lounge and try to explain that for over half a century America's trauma has been depression-era unemployment and deflation while Germany's trauma has been runaway inflation. But drink fast, prices change radically after happy hour. And, tell Fed Chairman Bernanke that it was the "German Experience" that caused many folks to raise an eyebrow when he alluded to the power of the "printing press" a few years ago. But, rest assured that no one would let it happen again.
 

Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1
The Long And Short Of What's Happening With Silver by Chris Mack
October 15, 2010 
Issue 81

SGS Notes: Wow! There's so much happening in the precious metals marketplace in the last 2-3 weeks, it's hard to just give you 4-5 articles…  October 13 (yesterday) silver started off at $23.47… and today (Oct. 14) as I write this spot silver is at $24.63. The gold:silver ratio is down to 56:1… from its high of 65:1… and still has lots of room to go. This means that silver is still at LOW PRICES… and investors who take advantage of them still have lots of room for making profits. Remember, the historical ratio is 16:1. At today's gold price of $1381, that would price 1 oz of silver at $86.

The Long And Short Of What's Happening With Silver
by Chris Mack
10/12/2010 - FinancialArticleSummariesToday.com

Things appear to have changed in silver trading with the bullion banks nearing a position where they may have lost control of the markets.
Something has drastically changed in the silver market. The banks that once controlled the price of silver are now closing positions at a loss. The commercial shorts have begun to bleed money - and when blood spills sharks will circle. Hedge funds and traders that never even thought of silver before will begin to squeeze the shorts. If the big banks don't quickly regain control of the silver market they may lose it forever.

So says Chris Mack (www.tradeplacer.com) in a recent article* which Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com, has reformatted into edited [...] excerpts below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) Mack goes on to say:

Anyone following the futures market for silver knows that the large commercial traders, banks such as JPM, always win. That is until now. Let's look at the history of short selling as it related to silver in the past, what has been occurring recently and what may unfold in the very near future, as follows.

THEN

During the bull market in silver that began in 2001, a pattern of trading similar to the "Martingale Betting Strategy" emerged in which 8 trading institutions sold short increasingly larger amounts of contracts into rallies until their sales volumes overwhelmed the market into a freefall. After the freefall they then repurchased those short positions at a profit and the rally process began again. This process of taking money from precious metals investors has been well documented by analysts such as Ted Butler, David Morgan, and others. The strategy was so successful that some futures traders began to front run the banks on their own using tactics such as the COT report and other sentiment indicators. As a result of their actions it has been argued that these large short positions have suppressed the price of silver by a multiple of itself. This may be proven sooner than many expected.

RECENTLY

Over the last 6 weeks all was going according to plan. Silver rallied and the commercial banks shorted an ever larger amount of contracts as the open interest swelled to the point at which most silver analysts were expecting a correction. In the last 2 weeks silver rose by nearly $2 dollars and most were expecting to see an even larger commercial short position reflected in the COT report. Instead, the commercials actually covered 2297 contracts, and bought an additional 989 long contracts during the week of September 28th to October 5th when the price of silver rose by $1. The covering was down at what appeared to be a short term top to many.

THE NEAR FUTURE

While it can be speculated on how short covering could impact the market, a short squeeze could feed upon itself as it attracts capital. In five trading days of buying a net 3,286 contracts the price of silver rose by $1. However the commercial banks are still a net 62,127 contracts short so at that linear rate it would take them 94 trading days to cover with a silver price of roughly $117. The resulting losses would be around $15 billion. Of course markets aren't linear and after the second or third week of covering traders would begin to purposefully front run and squeeze the commercial shorts so it is unlikely that the positions could be covered that low or if at all.

CONCLUSION
Unfortunately, those of you who were hoping for a correction to accumulate more silver may not get it here as a price reset may be on the horizon.

http://tradeplacer.com/blog/2010/10/08/1286584740000.html

US Mint Raises Premiums

Effective October 1, 2010, the United States Mint has increased the premium charged to their network of authorized purchasers for American Silver Eagles from $1.50 to $2.00 per coin. SGS, consequently, has had to also raise our prices accordingly.

SGS Volume Discounts

SGS has received several inquiries of late regarding our volume discount program. Our volume discounts apply only to non-numismatic rounds and begin with quantities of 200 ounces or more as follows:

200 -500 oz - $1.00 / oz discount
501 - 1000 oz - $1.50 / oz discount
1001 or more - $2.00 / oz discount

Volume orders will need to be placed by phone at present. We welcome individuals to enlist acquaintances to join them in a group order to take advantage of these discounts


Free Service


Other Articles


Why The Coming Option ARM
Crisis Will Send Gold Higher

 Investing In Gold & Silver
Is a 'No Brainer'…

 How Dare You Take My Pension Becomes Refrain

Trader Dan Says Silver
Target of $25 has been
'effectively' reached

 FED Says it 'MUST'
Create Inflation…

 Debt Market Strips US
Of AAA Rating…

(One of the reasons for this week's dramatic rise in silver and gold prices!)



 

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"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."

William F. Rickenbacker

 

 
Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1
Fragging Your Own Money ~ by Bill Bonner

October 10, 2010

Issue 80


Fragging Your Own Money

by Bill Bonner
10/01/10 Baltimore, Maryland

"Monetary warfare!" says The Financial Times. In North America, the US is pointing its heavy guns at China… The US Congress has proposed a bill naming China as a "currency manipulator." How, exactly, is China manipulating the renminbi? It is holding steadfast to the dollar! This, says US Speaker of the House, Nancy Pelosi, "translates into a significant subsidy, artificially making US products more expensive, and jeopardizing efforts to create and preserve manufacturing jobs in America."

In South America, Brazil fires salvoes at Japan, South Korea and Taiwan. "We're in the midst of an international currency war," said Guido Mantega, Brazil's finance minister, on Monday. What makes the Asian countries a target of Brazil's artillery? They intervened in the currency markets directly, selling their own currencies and buying, among other things, Brazil's real.

The remarkable thing about these battles is that admirals scuttle their own ships. Generals spike their own cannon. All the combatants send out their currencies like foot soldiers - and then shoot them in the back. They are all trying to "manage their currencies down," the FT explains.

Meanwhile in Europe, Ireland cannot assassinate its own homegrown currency. It doesn't have one. It signed on to the euro. For the moment at least, the euro managers hesitate; Ireland will have to cheat its people and its creditors flagrantly rather than surreptitiously. On Thursday, it put another 5 billion euros into Anglo-Irish Bank.

These strange facts incite the following reflection on the whole scammy system. The trouble with today's capitalism is that there is little honest capital left in it. It has been drained away by quackery, debt and fraud. Real capitalism requires solid capital - money you can trust. But real money disappeared nearly 40 years ago. That was when the last traces of gold were removed. Since then, all currencies have been "managed." No longer fixed measures of real wealth, they have become tools…supposedly used by the authorities to promote full employment and growth…but in fact little more than monetary felonies.

From the end of the Napoleonic wars until the beginning of World Wars of the 20th century, the world's money system was backed by gold. You couldn't "manage" it. You couldn't devalue it. You couldn't talk it up or talk it down. You couldn't beggar thy neighbor by cheapening it or enrich him by making it more dear. It was what it was. The new experimental money system began in the Year of Richard Nixon, 1971. Thereafter, the supply of money could increase much faster than the supply of goods and services. US money supply (M2) rose 1,314% between 1970 and 2008, from $624 billion to $8.2 trillion. What did all this ersatz new money do? First it flattered…then it corrupted…and finally, it robbed.

America's working stiffs were the first to get whacked. Inflation made them feel like they were earning more; but they haven't had a real, hourly raise since the system was put in place 4 decades ago. And now, America is struggling to make sure they get none in the future either. Lowering the dollar against the renminbi increases the cost of probably 90% of the goods in Wal-Mart and Costco - where the working classes shop.

But this has been going on ever since the managers began taking liberties with the dollar. In the 1960s, the working man - 90% of the population - got 60% of the income gains of the period. By the end of the bubble years - 2001- 2007 - he got just 11%. This has resulted in a "record income gap," says this week's news. Half the nation's income goes to the top 20% of the population, nearly twice as much, compared to the bottom 20%, as in 1967; it's the biggest gap since they began keeping track.

Consumer prices rose 5 times over the last 40 years. The stock market went up 15 times - from 800 in January 1970 to over 12,000 in 2008 - roughly in line with the increase in the money supply. But the phony money betrayed the rich too. Investors were misled. Capitalists erred. Trillions of dollars went down rat-holes. Consumers were spent out, but the capitalists kept building shopping malls. Now, stock market prices have gone nowhere for more than a decade. And household net worth - most of it in the hands of the wealthy - has declined $12.3 trillion from the peak. When the mistakes are finally flushed out, they could be down another $12 trillion.

The horns have sounded and bells have been rung. It is 1939 in the currency war - just the beginning. When it is over, every managed currency in the world will be dead or wounded. But we will be wiser, too. When the new managed dollar was introduced in the "Nixon Shock" of August, 1971, nobody knew what it was worth. When the end comes, everyone will know.


Why Precious Metals Have Intrinsic Value

Announcing New Launch!

My Trading Post (.org) has been created to facilitate trade between owners of precious metals who wish to barter for goods / services, and sellers who wish to trade their goods and services for precious metals.

MTP is a FREE barter classified service, newly launched and just waiting for your input. So spread the word to your networks… and help build this resource so that we all can benefit if/when we have an economic crisis. Please drop in and place an ad.


Other Articles of Interest

Are Corporate Insiders
Ditching Their Firms
or Precious Metals?


Swapping Gold For Silver
Has Historical Merit


The Comedic Value of
Naked-Short Paper Gold


1099 Supply Shock
For Small Coinage


Do Gold And Silver ETFs
Make Good Investments?


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Quote of the Week

"God will not suffer man to have a knowledge of things to come; for if he had prescience of his prosperity, he would be careless; and if understanding of his adversity, he would be despairing and senseless."

Augustine of Hippo


This Week's Video

Why precious metals are best hedge

 

 

Countdown to Gold And Silver Blastoff ~ Sean Broderick


Issue 79


Countdown to Gold & Silver Blastoff

Sean Broderick - Sept. 24. 2010


Last November, I wrote a story titled "6 Reasons Why Gold Is Going to $1,300 an Ounce." Now, we've hit that target. And you know what? I think there's much, much more to come. And you can make a bloody fortune if you position yourself right for the next move … a move that could be PARABOLIC!

What's more, there may be an even better way to play the precious metals bull market than gold!

Why? Well for one reason, it's happened before. The last bull market in gold and silver saw ENORMOUS price gains that put the current bull market to shame. Take a look …

So when the babbling heads on TV and radio try to tell you that "gold is overvalued," tell them to go jump in a lake. Heck, when compared to the ballooning money supply, gold prices are still low by historic standards.

Looking at the previous price appreciation in the last gold and silver bull market, I think both metals have a long, long way to go. Here are some other things you may not know …

#1) Central Banks Are Buying Even More Gold. We've known that central banks have been buying gold for some time. Now the shift in the role of Central Banks has been confirmed by GFMS, a London-based consultancy that tracks the gold market.

GFMS says that thanks to buying by Russian and several Asian central banks, central banks would be net buyers of gold by about 15 metric tons of bullion this year. The last time that happened was 1988.

#2) Gold Is Nowhere Near Its All-Time Peak Price in Real Terms.

In January 1980, the yellow metal reached $873 an ounce. Last week saw gold close at a new record of $1,277.50 an ounce, and adjusted for inflation, it was still under $460 in 1980 dollars.

Gold would have to rise above $2,435 an ounce to exceed its high from three decades ago, based on the CPI's current reading. And I think it could go a lot higher than that.

#3) The Squeeze Gets Worse in Mining Costs.

Mineweb.com quotes the ABN AMRO Gold Mine Cost Report Q2 2010, produced by VM Group/Haliburton commodity research, as saying that gold mine cash costs continue to rise, hitting $558 per ounce in the second quarter of this year.

The good news is that the profit margin on each ounce of gold is widening because gold prices are rising faster than costs. Interestingly, costs are rising faster for low-cost producers. That may be because they are exhausting current deposits of high-grade ore, so they move on to lower-grade, higher-cost ore.

#4) AngloGold Ashanti Ends Its Massive Gold Hedge.

Last week, AngloGold Ashanti (AU) bought back its gold hedge book for $1.58 billion.

The move will "give us full exposure to the gold price," Chief Executive Officer Mark Cutifani said.


Announcing New Launch!

My Trading Post (.org) has been created to facilitate trade between owners of precious metals who wish to barter for goods / services, and sellers who wish to trade their goods and services for precious metals.

MTP is a FREE barter classified service, newly launched this Labor Day weekend. So spread the word to your networks… and help build this resource for the benefit of everyone. Please drop in and place an ad.


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Quote of the Week

"What we obtain too cheaply, we esteem too lightly: it is dearness only that gives everything its value."

Thomas Paine, The American Crisis,
No. 1, December 19, 1776

 

Other Articles of Interest

How I Believe The Dollar
Will Die

by Ray Gano - Prophezine.com

Mint Raises Silver Premiums

The Battle for $21
Silver Begins

Gold is the Final Refuge Against Universal Currency Debasement


This Week's Video

 

 

So what does that tell you? It certainly tells me that AngloGold's management thinks gold prices are going higher. Ask yourself: What does one of the world's biggest miners know that we don't know?

So, I think gold could easily go to $1,400 next year and $1,600 the year after that. But it may go higher yet, to its inflation-adjusted peak of $2,435 and beyond.

And you know what? I'm even more bullish on silver!

Why Silver Could Lead the Next Leg of the Bull Market

Silver lagged gold for quite some time. But that's changing. Now, silver is leading (in percentage terms) the breakout to the upside.

In fact, my intermediate term target for silver isn't $25 … or even $27. It's over $31 an ounce

As this chart shows, silver has broken out of an ascending triangle. This gives us my new price target. Maybe it will take its time getting there - after all, nothing moves in a straight line. But as many of my friends in the business have been reminding me this week, when gold and silver take off, they can punish patience. The metals can head so high, so fast, it can make your head spin - and leave late-comers weeping with envy as the profit train pulls away from the station!

Longer-term I think $31.39 is only a milepost on the road to higher prices. I think silver is going back to its old high near $50 an ounce. That's more than DOUBLE recent prices. That's like gold moving to $2,580 an ounce.

And you know what? Gold CAN go to $2,580 an ounce! The fundamentals for gold AND silver are there, simmering explosively as they wait to ignite.

Here are three forces driving silver that you should be aware of …

#1) Industrial Demand for Silver in China Is Soaring! Slightly more than half of silver's annual demand is for industrial uses. Silver is used in everything from small electronics and computers (silver is the best metal for making electrical connections) as well as batteries, chemical catalysts, silver plating, mirrors, even nanotechnology. Silver paste is used in 90% of all crystalline silicon photovoltaic cells, which are the most common type of solar cells. So, it's no wonder that demand for silver in China, the factory to the world, is roaring higher.

Net imports of silver into China quadrupled in the first seven months of 2010. That is putting pressure on global silver supplies even as investors demand more of the metal.
#2) New and Growing Silver Investment Demand. We've already seen the silver ETFs buying silver hand over fist. The iShares Silver ETF represents over one-third of the global market for silver.

Now, two new silver funds joining the party!

In Canada, Sprott Inc. filed a preliminary prospectus for Sprott Physical Silver Trust, a closed-end silver bullion fund to be listed in Canada and United States, possibly as early as this fall. And Bullion Management Group Inc. plans to roll out a silver-bullion mutual fund early next year.

As gold gets more expensive, investors are taking another new look at silver. The end result could be an explosive move in silver prices.

The Gold-Silver Ratio Is Out of Whack. The current gold-silver ratio - or how many ounces of silver it takes to buy an ounce of gold - is about 61 to 1. That is much than the historical ratio of 16 to 1.

And if you don't like looking back at the long term, just look at the ratio in the last precious metals bull market. In 1980, the price of silver to gold - how many ounces of silver it would take to buy an ounce of gold - never got higher than 38 to 1.

The gold-silver ratio is dropping, as silver starts to catch up with its flashier cousin. If we went back to a 38-1 gold-silver ratio, silver would cost over $33 an ounce. If silver did move toward the historical ratio of 16 ounces per ounce of gold, silver today would cost $80 an ounce. And that's without gold budging another dollar. And gold's trend is up - way, way up.

So is it time to sit on your hands, the way some analysts are suggesting? No. Heck, NO!

 

 

 

Undervalued Silver In A Government Spending Frenzy ~ Mogambo Guru



S&GS Notes:
If you haven't noticed, that's fine… but we've had a 2 week break from the Newsletter while out of town on the West Coast. Back in the office again now, and wanting to keep you informed on what's going on in the market… You may have noticed that both Silver & Gold have broken through their historic ceilings/resistance points in the last 2 weeks. Gold briefly broke through the $1300 mark today before landing just under that resistance point. Silver broke through the $21 30-year high earlier this week, and has been pushing higher to breaking the next resistance point of $21.50. We may see a correction, but everyone predicts it will be brief and the upward trend will continue.

Undervalued Silver In A Government Spending Frenzy

Mogambo Guru
September 25, 2010

With the U.S. government having already stolen the gold of its own citizens once, a question which I have often been asked by American readers is "do I think the U.S. government will steal [their] gold again?" My reply has always been that in the absence of a gold standard there is no motive for simply confiscating all gold again.

With U.S. debts and liabilities exceeding $10To prove that all my yelling, "Buy silver now, or you're a moron!" has paid off, silver is getting a lot more press coverage lately, like the headline "Silver Hits '80 Level; Gold Sets Fresh High," which appeared on the front page of The Wall Street Journal's "Money and Investing" section.

The reason that gold at $1,271 was hitting new record-highs, but not silver, is that silver, at $20.74 per ounce, is only at the highest price since October 1980, which is almost exactly 30 years ago.

Suddenly, I feel myself wanting to launch into some hyperventilating, rabid recommendation to buy silver, waxing overly-enthusiastic about silver as some "bargain investment of the century" because of any of a dozen reasons right off the top of my head, and probably many, many more if I were smart enough to understand their significance, which I can only barely sense, even though people are screaming at me, "What is it that you don't understand, you moron? We're been over this a dozen times!"

All I know for sure is that silver is actually not anywhere near its record high, as it now sells for a piddly $20.74 per ounce, less than half as high as silver's all-time record price of $48.70 per ounce, which occurred in January 1980 during the infamous episode where the Hunt brothers tried, and almost succeeded, to corner the silver market, which brought out the slimy and infamous insider and government response to counter their ploy and crush the Hunt brothers.

This is not, however, a discussion about how the government is a far greater bunch of scumbags than the Hunt brothers at their worst, and don't get me started on the slimy goings-on in the commodity exchanges, or how the Hunts were destroyed because, I assume, out of envy that they were so rich and so megalomaniacal that they enjoyed shameless orgiastic bacchanalia and other disgraceful perversions of the kind and expense that the government workers have to content themselves to, nowadays, merely view on their computers all day.

Of course, critical people want to know why I even bring up the topic of pornography in the first place, and why dog-eared copies of "Leggy, Lusty and Luscious" magazines are all over my office, when none of it has any relevance to anything, other than my idly musing that if I were rich enough to try and corner the silver market, I know what I would do, you know what I mean?

And anyway, there are enough accumulated news reports of government workers being caught-out watching porn while at work to indicate that the practice is pandemic, which doesn't explain how the average government worker makes twice as much in wages and benefits as the average private-sector worker, nor does it explain how I can get one of those terrific government jobs making a lot of money to watch dirty movies all day, which are not (in case you were wondering) listed on any job listings I've seen, although, believe me, I looked!

But they do make this kind of money, and since the odious Supreme Court said that they could unionize so as to channel gobs of election-money to the very politicians who authorize their salary and benefit packages, I assume it will continue as part of Obama's deficit-spending massive, massive, humongous amounts of money to maintain ALL government spending. And more, to offset the inflation caused by the previous deficit-spending!

Oddly enough, as sadly suicidal as this is to the country, it should make you, a Junior Mogambo Ranger (JMR), giddy with delight, as all this new money means that inflation in prices will soar, which is the stuff of euphoria for those buying gold, silver and oil stocks today at such bargain levels, so that we will attain the state of Nirvana known as "Rich, Rich, Rich (RRR)" when their prices soar as the Federal Reserve continues to destroy the buying power of the dollar!

And with the government and the Federal Reserve working overtime to make it happen just like that, what can you say but, "Whee! This investing stuff is easy!"?


S&GS: Why are prices moving up? See us on the
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(Look for 'Gold Hit Another High' thread)


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Quote of the Week

"Whom the gods would destroy, they first subsidize."

- George Roche


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Discussion on the changes
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We now have the
Walking Liberty
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(These are NOT Silver American Eagles)

 

 

 

 

 

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