Skip Navigation LinksHome > - News
Bill Murphy Bix Weir bullion fraud CFTC deflation derivatives dollar devalued dollar value Eric Sprott free food GATA gold gold bull gold/silver ratio Hugo Salinas Price Hunt Brothers hyperinflation industrial use of silver investing IRA James Turk Jeff Lewis Jeff Nielsen Jeff Nielson JP Morgan Lew Rockwell Lindsey Williams Mineweb Peter Schiff precious metals QE Quantitative Easing rare earth metals Retirement Plans Road To Roota short positions silver silver bull silver conductivity silver purification silver test silver/gold ratio Stephen Leeb stock market - News
A Brief History of Money by Jason Hommel
Article written in 2004
"Silver is money. Silver is wealth. The dollar is fraud -- a deception."
In all of history, wherever paper money has been issued, its value has eventually gone to zero. Its intrinsic value is nothing, and the dollar is no exception. The value of silver and gold is timeless, and cannot go to zero. They are metals that will always be precious and will hold value.
I will answer for you the key questions:
  • Why and how has the dollar gold price declined from $850/oz. in 1980 down to $400/oz. today in 2004, during a time of inflation?
  • Why and when is the silver and gold price going up?
  • Don't take my word for it; I'll give you proof.

    Do you understand the gold & silver markets?
    Do you understand money?
    Do you know the truth about silver, gold, money, and the U.S. dollar backed by neither?

    The U.S. dollar can only survive based on pretext. How much have you been misinformed? Are you aware of how this has taken place? Are you aware of how and why this will end? Have you been able to separate truth from propaganda? Should you pursue wisdom about money? You have come to the right place!

    A few facts about monetary history in the United States

     As America fought the War for Independence (the Revolutionary War), we issued paper money that turned out to be a disaster. Thus, a few years later, when the Constitution was written, it stated that silver and gold would be money. The coin Act of 1792, stated that those who debased the currency,"or otherwise with a fraudulent intent" were to suffer the death penalty:

      Penalty of Death for de-basing the coins. Section 19. And be it further enacted, that if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of the fine gold or fine silver therein contained, or shall be of less weight or value than the same out to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death.

    President Andrew Jackson, our 7th president, was one of our nation's greatest monetary heroes. He recognized the evil of printing excess paper money. He saw a boom (bubble) in real estate, fueled by excess bank loans. He put a stop to it by passing a law that required all land sales to be in gold coin. Banks refused to loan gold coin, and only paper money, so the boom collapsed. He fought the banks, and refused to re-charter the central bank.

    In the Civil War, both sides issued too much paper money to pay for the War. Lincoln's paper money was called "greenbacks." Following the War Between the States, Lincoln was going to go after the banking industry. He was assassinated shortly after the end of hostilities.

    In 1914, during the presidency of Woodrow Wilson, the Federal Reserve was founded. Wilson, on his deathbed, admitted his error, saying that allowing the Federal Reserve to be founded was a betrayal of his country. The Fed quickly issued money to help pay the costs of WWI, and caused the boom of the roaring 20's.

    By 1929, the stock market crashed, and the nation entered the Great Depression.

    In 1933, gold was re-valued from $20/oz up to $35/oz by Franklin Delano Roosevelt. FDR made it illegal to own gold within the U.S. but allowed foreigners to redeem paper dollars for gold.

    By 1945, the end of WWII, the U.S. government was in debt by a total of $250 billion. Valued in gold at $35/oz., that would have been 7.14 billion ounces of gold, which is more gold than has been mined in the history of the world up until 2008, which is only about 5 billion ounces of gold.

    In 1963 Kennedy was assassinated, and 1964 was the final year of issuing 90% silver coinage. People claim that JFK passed an executive order to issue $4-5 billion worth of U.S. notes backed by the silver held by the U.S. Treasury. But that was an insignificant amount, compared to the debt of $250 billion in 1945.

    From 1965 to 1969, fifty cent piece coins were debased and adulterated by reducing the silver content to 40% silver.

    By 1971, Nixon closed the gold window, and stopped redeeming paper money for gold. Gold quickly rose in price over the next decade by an average of 34% per year, up to $850/oz. Some say Nixon really resigned (not over Watergate which was the smokescreen) but over the real embarrassment of selling off our nation's gold hoard while trying to defend the fraud of issuing too many paper dollars (inflation).

    In 1975, Americans were allowed to own real gold again. The day before, December 31, 1974, 'paper gold' began trading again. Except this time they were called "gold futures contracts." These were used to depress the price of gold substantially until the late 80's. Thus, people who bought physical gold were hurt badly as the value of physical gold was cut in half right in the middle of the ten year boom. Gold futures contracts are still used today to cap the price of gold.

    In 1980, bonds were used to lure people away from gold. Bonds were paying a high interest rate, and a nation-wide ad campaign was designed to get people to buy bonds instead of gold. And if you wanted gold, you were supposed to buy the paper gold of "gold futures contracts" for the increased rate of return. The nation was deceived and rushed back into paper money.

    In 2003, the U.S. Bond market is valued at over $20 trillion, which is $20,000,000,000,000. The measure of the money supply in U.S. banks is valued at about $8.8 trillion. The total paper money is $29 trillion. The U.S. gold hoard, 261 million ounces, at $400/oz. is valued at $104 billion, or $104,000,000,000.

    By 2008, M3 was valued at $14 trillion, and no numbers for the size of the bond market are available.

    If you divide $29 trillion, into the 261 million oz. of gold, there are $111,111 dollars for every oz. of gold. This is a price target for if we went back to using gold as money, and the fraud of the dollar, and the fraud of fractional reserve banking were destroyed.

    Gold Delivery Default

    There is one important point to make regarding the last two defaults in gold deliveries in 1933 and 1971. The inability to pay in gold came before the price rise. Gold deliveries stopped before the price rose. Clearly, there does not need not be a substantial rise in the gold price before the default hits. Delivery defaults occur when they run out of the gold to deliver. The rise in price comes after the delivery default happens.

    In all of monetary history, paper money always fails. It always goes to a value of zero. Don't forget the lessons of history.

In all of history, wherever paper money has been issued, its value has eventually gone to zero. Its intrinsic value is nothing, and the dollar is no exception. The value of silver and gold is timeless, and cannot go to zero. They are metals that will always be precious and will hold value.
Dynamics Of The Silver Price Revolution ~ Vincent Bressler
Related Articles:
Dynamics Of The Silver Price Revolution
by Vincent Bressler
June 14, 2008

Recently, when silver was topping out at around $21 per ounce, there was an acute shortage of silver available for investing. This investment demand problem threatened to kick silver into an industrial deficit driven price revolution. The problem was resolved via unofficial rationing. New silver eagles and new 100 ounce bars have become increasingly unavailable since that time. In fact the time required to get new 100 ounce silver bars continues to increase. However, as the futures market price of silver went down from $21 dollars per ounce, weak hands holding silver once again have come forward to sell. The weak hands fear further price declines and are unable to wait because of financial stress. I monitor this by watching the prices on ebay. These prices have begun to converge with the futures price for the nearest delivery month. Smart, strong hands are buying this cheap silver. The silver price at this point in the cycle (illustrated below) is the Optimal Point, the point where Maximum Surplus of silver is available to investors beyond that which is consumed by industrial demand.

Over the last several years, the Maximum Surplus amount of silver available to investors at the Optimal Point has declined as the weak hands become extinct and the strong hands more certain of the coming price revolution. This game will be over when there is no more Maximum Surplus, no Optimal Point, and the only thing that can happen to free up more silver for industry is a price revolution. By forestalling the price revolution for so many years, the price managers of silver have battle hardened the strong hands. Industrial silver users and consumers will be big losers, and presumably, the price managers will be big winners, if that they own a lot of silver.
This last point inspires me to speculate about short of silver position on COMEX:

Let's assume that the immense short position on COMEX is not naked, but that it is held by an entity that is beyond the reach of the law or in some sense exempt. When the price revolution happens, what is the chance that this short of silver entity will deliver actual silver to the longs? The chance is approximately zero. First, there are strict delivery limits on COMEX right now and their rules are "flexible" to say the least, second, since the entity is exempt, who can make them deliver?

Those short of silver contracts will be settled in cash or not at all, depending on who the entity on the short side is and whether they have access to the FED begging bowl or printing press. So in the end, it really does not matter at all whether the short position on COMEX is naked or not. I believe that even Antal E. Fekete would agree with this, although I suspect that he would characterize the default as the end of the world, whereas I would call it business as usual.
Gresham's Law ~ Gary North
S&GS notes:  This week's post may be a little 'heavy reading' for many… admittedly, it's very academic in style, but, I came across this in my research travels this past week and thought it sufficiently interesting and noteworthy to share in our TP News. I found the concepts very apropos to what's happening in the US and World economies today…

Some links to other reading along these lines:
Other articles:
Gresham's Law What is Money?
by Gary North
October 17, 2009

"Bad money drives out good money." This aphorism has been known as Gresham's Law for almost 500 years. Sir Thomas Gresham never said it exactly like this. The statement is wrong in its familiar form.
Bad money does not drive out good money in a free market. The free market rewards producers of customer-satisfying products and services. Good money drives out bad money on a free market. The definition of bad money is money that the free market refuses to use. Gresham's law, as stated, is incorrect. The opposite is true.
A correct version of Gresham's Law is this:
"In an economy with a government-legislated fixed price between two currency units, the artificially overvalued currency drives out of circulation the artificially undervalued currency."
This does not have quite the same ring to it as the more familiar version.
Gresham's Law is simply an application of the economic analysis of price controls to monetary units. There is nothing complicated about it.
From the early days of the republic, the United States government legislated a price control between gold and silver. At the time the law was first passed, gold was worth 15 times as much as silver was. The ratio of 15 to 1 became law.
In 1848, there was a huge gold discovery in California. For discussion's sake, let us say that the price of gold in silver on the free market subsequently fell to 10 to 1. But the government's law still holds. Banks are required to pay 15 ounces of silver to anyone who brings in an ounce of gold and asks for silver.
Let us say that you were there. You get a bright idea. You go to the bank with two ounces of gold. You demand 30 ounces of silver. Then you take your 30 ounces of silver and buy three ounces of gold. Where? Across the border in Canada or Mexico. (OK, it was a long ride on horseback. Maybe there were banking trading ships just off San Francisco.) You then take your three ounces of gold to the bank and demand 45 ounces of silver. You repeat the procedure until the bank has no more silver to sell at the price of 15 to one.
Of course, you would do this with ten times as much gold. Your competitors, currency speculators, would buy a thousand times as much gold. We call this "economies of scale." Sorry, Charlie.
The artificially overvalued currency (gold) remains in circulation. "One ounce of gold is worth 15 ounces of silver. The government says so." The artificially undervalued currency (silver) disappears. "One ounce of gold is worth 10 ounces of silver. The free market says so." So, people start buying 15 ounces of silver with an ounce of gold in the government-rigged market in order to buy an ounce and a half of gold with silver in the free market.
Meanwhile, anyone in the know who receives a silver coin in exchange sets aside the coin. Silver coins go out of circulation. Mexico and Canada wind up with America's silver coins. The U.S.A. winds up with gold coins.
Trade between Canada and the U.S.A. then falls. So does trade with Mexico. The foreigners don't want to accept gold from Americans at the fixed rate of 15 to one, since it is worth only 10 to one. Signs go up: "For sale to Americans: for silver only." But Americans cannot get their hands on much silver; it has already been transferred to Canada and Mexico, or it is in coin hoards in Americans' homes. So, Americans cannot buy goods from Canada and Mexico.
Throughout American history, right up until gold was declared illegal in 1933, either gold coins or silver coins were driven out of circulation at any government-mandated price. The 15-to-one price was used for decades. This system was called bimetallism. It did not work. It was monometallism operationally.
This is another case of the economics of price controls. The process is not limited to money. If the government says it is illegal to sell gasoline above $4.00 a gallon in order to avoid a fine for price gouging in a time of crisis, and the free market price is $5.00 a gallon, expect to spend lots of time in gas lines.
This happened in Nashville and Atlanta in September of 2008. People could not buy gasoline. The pumps were dry. When a gasoline truck drove into town, it was soon followed by a line of cars, rather like a mother duck and her ducklings. Drivers did not know where the truck was heading. They followed it, so they could line up as soon as it unloaded its cargo.
Let us assume that Congress passes a new law. The exchange rate between gold and silver is no longer fixed by the government. People can buy and sell gold for whatever price they can get.
Nobody is sure what the gold/silver ratio will be after the law is passed. But speculators expect gold's price to fall toward ten ounces of silver - the free market's price.
As soon as speculators think that this new law will pass, they start selling gold - "Get rid of it; it's overvalued" - and start buying silver. They know that gold will not be artificially overvalued much longer. Better to start buying silver in Canada and Mexico and hold it across the border until the law passes. It will not take long for the new ratio to be established. At that time, gold and silver coins will circulate side by side in the United States. The government does not set a price. There is neither overvaluation by law - fiat valuation - nor undervaluation. Supply and demand jointly establish the exchange rate, moment by moment. No problem. No glut of gold coins. No shortage of silver coins.
If both gold and silver coins are called dollars, these dollars will buy varying quantities of goods and services, moment to moment. A gold dollar is not worth what a silver dollar is.
Back in the 1960s and 1970s, there was a debate between those who advocated fixed exchange rates for the currency market - the Bretton Woods system - and those who advocated floating exchange rates. Milton Friedman was the best-known advocate of floating rates, meaning market-established rates. Friedman always had the advantage conceptually. He stood for free-market pricing. The fixed-rate people were in favor of price controls. They never used that language, however. Had they been forthright in this regard, they would have lost the debate much earlier in free-market circles.
The debate ended after December 1973. That was a year and a half after Nixon took the country off the international gold-exchange standard, i.e., the Bretton Woods agreement. From late 1973 on, the dollar has floated. Defenders of the old fixed-rate system are few and far between.
The fixed-rate system was a Keynesian-like imitation of the international gold standard. It began in 1922. Prior to World War I, when a nation's currency was defined as a specific quantity and fineness of gold, and when the central bank or treasury redeemed gold on demand, there were fixed exchange rates between gold-backed currencies. The free market adjusted the rates. Because the exchange was in fact gold for gold, ounce for ounce, the currency exchange rates remained fixed. These rates were definitional. They were rates of exchange between quantities of gold.
It is 1875. A British citizen walks into an American store in New York City. He sees something for sale for an ounce of gold. He hands the store owner four British gold sovereigns. He walks out with the item. Some critic might exclaim: "But the sovereigns have a dead king's face on it. This face is not like the goddess of liberty, whose face is on a $20 gold piece." "His money's good in this store," declares the owner.
The money was good because it was gold. The pictures on the coins were irrelevant to the store owner. He did not honor any British king. He also did not worship a goddess. He just wanted the gold. Dollars. Pounds. Who cares? He wanted the gold.
The modern gold-exchange standard (1922-1971) was a statist imitation of the gold coin standard. The rates of currency exchange were set by governments and their agencies. The currencies were no longer redeemable in gold after World War I broke out in 1914. The Bretton Woods system of 1944 extended this system. The results were predictable: foreign currency shortages, then announced devaluations by governments, which in turn forced operational revaluations of the other currencies in relation to the devalued currency.
Price controls do not produce markets that balance supply and demand. Price controls are a government's assault on free-market pricing. They create gluts (overvalued item) and shortages (undervalued item). This does not change merely because the items are called national currency units.
The problem with floating exchange rates is not floating exchange rates. It is the lack of any fixed exchange rate between a nation's currency and gold.
The modern floating exchange rate system is comparable to floating exchanges between the currency units of two rival gangs of counterfeiters. By "comparable" I mean "identical." There are still a few defenders of fixed exchange rates who decry floating exchanges between currencies because the system leads to monetary inflation. The problem is not the floating exchange rate system. The problem is the counterfeiting.
Milton Friedman was not wrong for his defense of floating exchange rates and a system of free market currency speculation. He was wrong because he was a defender of government counterfeiting. He attacked the gold coin standard. So do his followers. He thought that a hypothetical system of automatic, fixed-rate monetary expansion was preferable to a gold standard. But there is only one way to get the central bank counterfeiters to pick a monetary expansion figure and stick to it. That way is called the full gold coin standard.
There were two gold standards: the gold coin standard and the gold exchange standard. To understand the two gold standard systems, think of paper money, gold coins, and a gun. The government holds the gun.
In a gold coin standard, a bank issues paper money: banknotes. A banknote is a legal IOU. Each piece of paper promises to deliver an ounce of gold upon presentation of the paper. Think of the paper as pre-1933. The paper says $20. It promises one ounce of gold.
The government holds the gun. It is pointed at the banker. "Fail to deliver an ounce of gold for each $20 warehouse receipt, and you go to jail."
This analysis also applies to checking deposits. But it is easier to imagine when we talk about bank notes. They are IOUs.
In a free banking system, the government does not check to see if a bank has enough gold to meet all demands. In a 100% reserve system, it would. In a free banking system, rival banks and a bank's depositors serve as the executioners. Ludwig von Mises favored free banking. Murray Rothbard favored 100% reserves.
Step two: the issuing bank is the central bank. Does the government hold a gun on the central bankers? In theory, yes. In practice, it depends on how dependant the government is on loans from the central bank.
After World War I broke out, every European government except the Swiss holstered its gun. The commercial banks were allowed not to redeem gold on demand.
Then, within weeks, there was a new rule. The central banks demanded the gold held by commercial banks. Each government unholstered its gun. "Fork over the gold," they said.
In the gold exchange standard, central banks and governments held British and American debt certificates instead of gold. The British and the American governments promised to redeem their debts in gold on demand. The British went back on the gold standard in 1925, but at the pre-War rate of exchange. It had to shrink the money supply. This reversed the boom. Then they inflated. Gold began flowing out to the United States. The head of the Bank of England persuaded the head of the New York Federal Reserve Bank, Benjamin Strong, to inflate the dollar, in order to take pressure off the Bank of England's gold outflow. The NY FED did as Strong asked. This inflation was the origin of the U.S. stock market bubble. The FED reversed course in 1929, the year after Strong's death. That caused the crash.
In 1931, Great Britain went off the domestic gold coin standard. It continued to redeem gold for other central banks. The U.S.A. followed this lead in 1933.
Busby Berkeley unknowingly launched a fond farewell to the gold coin standard in "Gold Diggers of 1933." That was the first and last time any movie chorus line was decked out in Liberty head $20 gold pieces. Ginger Rogers sang "We're in the money!" ( That same year, Roosevelt pointed the gun at every American and every resident in the United States. "Turn in your gold." The next year, the government hiked the dollar-gold exchange rate of gold to $35 per ounce. It let the Federal Reserve System issue currency against this gold.
In 1971, Nixon took the nation off the gold-exchange standard. Not a shot was fired.
Conclusion: civil government points its gun at private citizens. It does not point it at itself. Cleavon Little's scene as the sheriff in "Blazing Saddles," where he points his gun at his own head, threatening violence, was good for laughs. It was not good political theory.

Gresham's Law, properly understood, is a real phenomenon. When a government threatens violence against currency traders for daring to make an exchange at a rate not mandated by the government, there will be a glut of the overpriced currency and a shortage of the underpriced currency in that jurisdiction. The result will be decreased trade across borders. There will be shortages of goods on both sides of the border. Most people's wealth will decline as a direct result of reduced trade.

Gresham's Law for centuries was observed in action, but it was not analyzed in terms of the economics of price controls. This was true in the pre-Nixon era. The discussion of fixed exchange rates by those favoring fixed rates was never discussed in terms of the controls' legal status as price controls, any more than a tariff is ever discussed by its proponents as a sales tax on imported goods and, necessarily, as an export restriction. The problem with people's incomplete understanding of Gresham's law is that they treat money as arising from government rather than from the free market. They imagine that there is a failure of the free market: "Bad money drives out good money." There is no failure of the free market. There is a failure of a government-imposed price control. People see government as sovereign over money. It is not. Here is why bad money drives out good money: a bad law forces people into capital-defense mode.
Gary North [send him mail] is the author of Mises on Money. Visit He is also author of a free 20-volume series, An Economic Commentary on the Bible.
Tracking The Re-Monetization of Silver ~ Vincent Bressler
S&GS Notes:    See also
Tracking The Re-Monetization of Silver
by Vincent Bressler
July 2, 2008

Silver has been thoroughly de-monetized. The best way to observe this phenomenon is by looking at the above ground stock of silver. Many words have been written on this subject over the last ten years by Ted Butler and others. Let me simply state that that there is very little above ground silver left in the world, perhaps less than 1% of what there used to be.

In order for anything to effectively act as money, there must be a stable supply. Today annual mine supply is about 900 million ounces and above ground silver supply is about 1/3 of that. This is not a stable situation, not the situation that existed 100 years ago when silver really was money. In order for a metal to function as money, the above ground supply should be equal to the mine supply for the last several decades at least! This is certainly the case with gold.

The second best way to observe the level of monetization of silver is via the silver/gold price ratio. When silver is a monetary metal, the silver/gold price ratio should be equal to the relative abundance of silver vs. gold in the Earth. When both silver and gold are money, mining each metal is a form of direct money creation. Capital will compete to create the most money for the least cost. The cost to produce an ounce of new silver will track the relative abundance of silver in the Earth, as will the cost to produce an ounce of gold. Therefore the natural silver/gold price ratio will settle in at about 1 to 15.

Now that I have given you some tools to track the re-monetization of silver, the big question is, will it happen?

I think that we don't know the answer to this question yet. The critical point in this process will occur when the silver to gold price ratio crosses the 1 to 15 line in a few years time. At this time, investor demand for silver will be running wild. Silver is bound to overshoot the 1 to 15 ratio this time (in 1980 the 1 to 15 ratio was the peak). If the silver to gold ratio continues to go up and stay up above 1 to 15 for several years while the above ground supply increases year after year after year for a decade, then silver will have been effectively re-monetized. Only monetary demand can support the price of silver at 1 to 15 as the above ground supply grows. This will be a natural process which will play out over decades, if it happens. My suggestion to the investor today is to load up on physical silver and start selling it for gold as the 1 to 15 ratio is breached.
The Tiny Silver Market, Part 2 ~ Jason Hommel
The Tiny Silver Market Part 2
(Over the Counter Silver Derivatives, Exposed!)
Jason Hommel
October 1, 2009

Last week, I reviewed the tiny size of the silver market. (Tiny Silver Market, Part 1) 
I compared the following statistics:

World annual silver investment demand ($1 billion)
World annual gold demand ($80 billion)
Federal Budget ($3,000 billion)
China's foreign exchange reserves ($2130 billion)
China wants to diversify $80 billion into gold.

BIS reports "other precious metals" over the counter derivatives worth $111 billion.
Very few people understood the importance of the last item from the BIS, which will be explained in this report. The BIS is the "Bank of International Settlements".
The Bank of International Settlements reports there are $111 billion in "Other Precious Metals (IE, Silver) over the counter derivatives, as of Dec. 2008. (We await June 2009 stats.)
The BIS keeps track of statistics of most of the banks of the world. This number, the "other precious metals" over the counter derivatives is very important.
It is extremely important "breaking news" that nobody in this industry is covering. I've tried to make the importance known over the past year by repeatedly mentioning this information, but nobody is getting it.
For ten years, I've been told by all the experts in the precious metals industry that nobody knows nor can know the size of the "over the counter" derivatives, since they are not on the popular, relatively more transparent exchanges, such as the COMEX, and other futures exchanges.
Yet, here we have a report, by the BIS, the best source in the world, fully admitting, and counting, the overall size of precious metals, OVER THE COUNTER, usually non-transparent, derivatives!
THIS IS BREAKING NEWS! I don't care if the stats are nearly a year old, nobody else is paying attention, so this is NEWS! It's not in regular news, not in "alternative" news, not even showing up in our "precious metals" industry news sources. This is a crucial report for our industry, nearly hidden, and unacknowledged!
Here's what I think it means.
How can there be $110 billion of silver investments when the annual silver investment demand is $1 billion?
Think about that.
I think it shows that the $110 billion is all a scam, fraud, nothing but fractional reserve silver accounts!
This over the counter BIS-revealed fraud is the biggest silver fraud in the silver market place.

It is much bigger than the COMEX silver fraud, which is only up to 160,000 contracts of 5000 oz. each, or 800 million oz. of silver by comparison, which is only $13 billion by comparison. The $110 billion is much, much bigger and more important.
The large size alone proves that it's too big to be real silver, because the real silver market is tiny. So, what is that $110 billion, exactly?
It's mostly all silver derivatives, or silver obligations of some sort, and I think it's usually "silver bullion accounts". The other two possible categories are platinum and palladium, but investors only buy about 1% of those two markets, which are also very tiny themselves, so tiny they can be excluded from consideration.
Most of the time, investors who go to buy silver, end up buying paper silver on account with a major bank who does not go out to buy that silver in the marketplace. That's the fraud.
The major brokers first try to discourage any and all such investments into silver. But if the client persists, the client will be persuaded to buy allocated or unallocated silver on account with any of the major banks of the world, usually LBMA member banks.
Read about their common bullion accounts here:
See if your bank is a "market making member"
Or even a "full member"
Check to see if your "silver bank" is on that list!
If you have silver on account with any of those banks, you should carefully think about how all those banks can have $110 billion worth of silver "on account" for all their clients, and let their own number vary by up to $80 billion, as it was $190 billion in the previous period, and yet, the annual silver investment market is only $1 billion.
And the total annual mine supply of silver is only 600 million oz., at $16/oz., is only $9.6 billion.
I would think that banks who owe up to 10 to 20 times worth of annual silver production of silver must be fraud. What do you think?
How many people who own that kind of silver "bullion on account" would be capable of getting real silver, before the silver banking fraud collapses? I'd estimate only about 1-2%, because if even that many converted their silver, it could cause a collapse of the entire system!
How can the silver banking fraud collapse? In many ways. Silver accounts could be mandatorily converted into dollars, or ameros, or pesos. Remember, just a few years ago in Argentina, Americans in Argentina, who held American Dollars in American bank accounts had their accounts frozen, and converted into Argentinean pesos, at a 75% loss, "because of the law".
I'm continually asked if I trust this bank or that bank, or this institution or that institution to hold your silver for you. NO! I don't trust any of them. Look at the size of the fraud. Do the math!
It's really simple, Biblically speaking. If you refuse to be responsible for the security and safety of your wealth, then your wealth won't be providing you with the security and safety that you hope that it should.
One man has often said, "If you don't hold it, you don't own it."
How about this:
"If you didn't accidentally crush your fingers with it, then it doesn't exist!"

Tea Party Silver note: Stay Tuned for Part 3
The Tiny $0.001 Trillion Silver Market ~ Part 1 by Jason Hommel
The Tiny $0.001 Trillion Silver Market Part 1
(Millions, Trillions and Billions, Oh My!)
Jason Hommel
September 25, 2009

The Silver Market is small. Very small. I don't think people quite understand how small it is, nor understand fully the implications, meaning how much higher silver prices must go as the market grows to accommodate future silver buyers.
Confusing matters is that the terms million, billion, and trillion mean different things, in different nations, and other nations also have different notations for how to write numbers exceeding 1000. Furthermore, most Americans are also unfamiliar with the terms, since most people don't use these terms in daily life. Who needs a billion french fries? But you do need to understand the numbers, in order to interpret political events, such as the amounts being spent by Congress.
Here are the American conventions, which I use in my writings. A thousand is written as 1000 and is notated with commas as 1,000. In America, we use a comma after every three zeros, starting from the far right, so every comma signifies another multiple of 1000.
A million is a thousand thousand. 1000 x 1000 = 1,000,000, also written as a million.
A billion is a thousand million. 1,000 x 1,000,000 = 1,000,000,000 also written as a billion.
A trillion is a thousand billion. 1,000 x 1,000,000,000 = 1,000,000,000,000 also written as a trillion.
A quadrillion is a thousand trillion 1,000 x 1,000,000,000,000 = 1,000,000,000,000,000 also written as a quadrillion.
Knowing that, we can now interpret the following key figures:
The annual Federal Budget these days is about $3 trillion, which can also be written as $3000 billion, or $3,000,000 million, or $3,000,000,000,000.
World annual silver production is about 600 million ounces. World annual silver investment is about 50-100 million ounces. All of mine production, and more, including recycling, is consumed by industry, leaving very little left over for any investment.
At $16/oz., x 75 million oz. = $1,200 million, or $1.2 billion, or $0.0012 Trillion.
Again, let's compare:
US annual government spending: $3 trillion
World annual silver investment demand: $0.0012 Trillion
Can you say, "The US government is spending way more than exists in the entire world?" I can. It sounds funny to say it, but I understand what I mean when I say it.
But that's only silver, some will protest. But adding gold to the mix does not help. Watch.
World annual gold mine production is 2500 tonnes, which is (x 32,151 oz/tonne) is 80.3 million ounces. At $1000/oz., that's $80 billion dollars, or $0.08 Trillion.
See, not even all the gold in the entire world's annual production would help the US budget. Gold would have to increase by a factor of 3000 / 80, which is 37.5 times, in order for the entire world's gold production to equal the US government's annual budget. See, gold will go way above $37,500/oz. by the time this bull market in gold is finished, because there are other people in the world who want gold in addition to the US government.
China wants gold. China has said they want $80 billion worth of gold. China has $2130 billion to spend on gold, or $2.13 trillion of foreign exchange reserves.
If China tries to buy a mere $80 billion of gold within one year, the gold price will likely head to $1500 to $2000/oz. this year. But China does not want to push up the price of gold to make it double in price. If they do, the value of the remainder of their $2130 billion will be cut in half.
Too bad for China, they have no choice. The value of their paper money will be cut by 95% or more anyway, even if they do nothing, as other nations, besides the US and China, also want gold. So it will come down to the reality, for everyone, that some gold is better than no gold! And silver, of course, is always better than gold, because silver will increase in value much faster!
China also wants their own people to buy silver!!! !!!
How will $2,130 billion of China's foreign exchange reserves fit into the annual silver market of $1 billion? Think about it. Think carefully. Think hard. Think!
Here's what I think. If China's people started buying $1 billion of silver per year, the silver price would head to $25/oz.
If China's people started buying $10 billion of silver per year, the silver price would head to $75/oz.
If China's people started buying $100 billion of silver per year, the silver price would head to about $750 per oz.
Can you say "Not enough silver!"? I can. There is a world silver shortage, and there will be a world silver shortage for the next few decades to come, probably until silver exceeds thousands of dollars per ounce in price!
There is no possible way that the silver price can be contained for very long, unless they discover a way to divert investment demand away from the limited physical silver, and convince people to hold things like ETFs, or futures contracts, or 'bullion accounts' instead. Oh yes, they have. But not for long, as the truth is getting out.
The Bank of International Settlements reports there are $111 billion in "Other Precious Metals (IE, Silver) over the counter derivatives, as of Dec. 2008. (We await June 2009 stats.)
Stay Tuned for Part 2 & Part 3