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The Rarest Earth ~ Ted Butler
February 11, 2011
Issue 92
Today's Gold/Silver Ratio: 45/1
Issue 95

The Rarest Earth
Ted Butler

Those who keep up with business news will have no doubt read about the recent developments in the category of minerals known as rare earth elements (REE's). These are minerals that are vital to modern industrial applications, ranging from lasers, batteries, alternative energy, and superconductors to all sorts of important high-tech applications. There are 17 minerals classified as REE's with exotic names like scandium, yttrium, lanthanum, cerium, and praseodymium. Don't worry, this is not a technical discussion and this will probably be the only time I write about rare earth elements.

Actually, these minerals are not all that rare, in the strictest sense of the word. Many are quite abundant in the earth's crust. What makes them rare is that they are generally not concentrated in ore bodies offering economically feasible extraction. The first rare earth mineral was discovered around 1800, in a village in Sweden named Ytterby, and several REE's are named after that village. Up until about 1950, most rare earth production came from India and Brazil. In the 50's, South Africa was a big producer, then California took the lead from 1960 through the 1980's. Then, China came to be the dominant producer by far, and currently produces 97% of world production.

Due to booming world demand, production has strained to keep pace. This was recently exacerbated by China's new export restrictions, due to falling ore reserves and environmental concerns. This sent the price of rare earth elements soaring by hundreds of percent, prompting a world-wide effort to ramp up production. However, you just don't flip a light switch and begin new mine production. It can take years to develop a mine and begin production. In the meantime, industrial consumers must compete for available supplies by bidding up the price. This is the essence of the law of supply and demand.

Since I'm not a REE expert why am I writing about them? The answer has to do with silver. Silver shares many characteristics with the rare earth elements and there is a lot to learn from them in our analysis of silver. In fact, the purpose of this article is to make the case that silver is the rarest of all the rare earth elements.

One of the common characteristics between silver and the rare earth elements is that many REE's are mined in conjunction with other minerals, the same as silver with its by-product mining profile. Mining for both tends to concentrate on the easiest to exploit properties first. Consequently, the remaining properties tend to be lower-grade and more expensive and difficult to develop. Both silver and REE's have seen the emergence of China as the chief producer of each. (In the case of silver, the production reliance includes the processing of scrap material not mined in that country.) Silver production from China is nowhere near 97% of world production, as it is in the rare earth elements, but it still is significant. Environmental issues and restrictions inhibit the production of both silver and the REE's. And with both, higher prices don't automatically guarantee immediate new production. For instance, last year on an 80% increase in silver price, the mine production of Peru (the world's largest miner) declined 7% or 12 million ounces. That's a million silver ounces less per month than from a year earlier. Recently, the price of REE's skyrocketed, due to China's sharply curtailed exports. Should any major silver producing country sharply restrict the export of silver, the price would soar.

Read The Rest of the Article ...

ACH Debit Now Available             

We now have the ability to do an ACH debit for auto-recurring or regular orders.

On checkout, simply select the 1) Offline Payment option, and 2) tell us your preference in the Comments box, 3) then complete authorization form and 4) fax to us at 480-275-3284 (or if you can scan it and eMail it that works to) . If you have set up an automatic monthly order, please just call/email us to change your payment option.

Quote of the Week                               

"The scarce and valuable commodities such as copper, lead, zinc, uranium, gold, silver, platinum, and palladium just to name a few are limited. These are the basic building blocks for all the goods and services we desire in modern society. You can't have a car, a house,
a cell phone, a refrigerator, a simple bar of soap, etc. etc., without them.
"

-Greg McCoach    

Other Articles      

Why Every Hard-Working
American Should Be Loading Up On Silver

Jeff Clark, BIG GOLD

7 Reasons Why Silver Will Make You Rich
J. Edwards

Are Precious Metals Still a Good Buy?
Lakshimi Capital

1-oz Silver Coin Sales Shatter U.S. Mint Records
Mineweb

Why Governments Will Buy Silver
SilverStrategies

About Coin Cleaning

MTP is a Free Service
Please recommend to friends, family, & acquaintances to help put a network in place for what may
lie ahead.

Audio/Video      

Silver Shortage This Decade, Silver Will Be Worth More Than Gold
Future Money Trends

 

 

 
Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1
Sound Money ~ Pending Legislation - 6 States to date
February 4, 2011
Issue 92
 
Issue 94

SGS Notes: We've been seeing a lot more on this issue lately across the news articles…and we get asked about this a lot… so this week we're focusing in on the various pieces about Sound Money.

Sound Money Pending Legislation - 6 States to date

Here is a list of 6 states (4 in the last month) and (2 states today) that have pending legislation to authorize the use of gold and silver to settle debts with its citizens and to provide them the legal means to avoid the devaluing of the dollar by having a parallel currency in light of massive bailouts and to protect them in the event of the dollars failure.
New Hampshire (they started this in 2003)

Bill currently mired in their State Legislator's Commerce Committee:

http://www.goldmoneybill.org/goldbill.pdf

Indiana Senate Bill 0453 Authors: Walker, Kruse
Date Chamber Action
01/14/2009 S Authored by Senator Walker
01/14/2009 S First reading: referred to Committee on Tax and Fiscal Policy
01/27/2009 S Senator Kruse added as coauthor

Current version: http://www.in.gov/legislative/bills/2009/PDF/IN/IN0453.1.pdf

Read The Rest of the Article ...

ACH Debit Now Available             

We now have the ability to do an ACH debit for auto-recurring or regular orders.

On checkout, simply 1) select the Offline Payment option, and 2) tell us your preference in the Comments box, 3)complete authorization form, and 4) fax to us at 480-275-3284 (or if you can scan it at email it that works too). If you have set up an automatic monthly order, please just call/email us to change your payment option to ACH.

Special Orders____                              

For those wishing to purchase quantities of 100 rounds or more, we have the ability to do custom divisible coins with the following Obverse designs: Morgan, Buffalo, Walking Liberty, Honest Value & Constitution.

Custom Special Orders require payment via wire or ACH transfer, and are priced at discount. We suggest that you collaborate with friends and relatives to do a group order so you can take advantage of the special pricing and custom minting. Please call or email us if you want to take advantage of this opportunity.

New Shipping Policy                               

Since the 2010 holidays, we are seeing an increase in delivery incidents with our shipping vendor. For this reason, all FedEx shipping will be requiring ‘Indirect Signature’ upon delivery. Indirect Signature can be obtained from anyone at the delivery address, a neighbor, HOA manager, etc. This is not meant to present an inconvenience, but to ensure that if a loss occurs, it will be covered by the shipping vendor.

Quote of the Week                               

"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium."

-Murray N. Rothbard   

 

Other Articles      

Utah Could Use Gold Under Sound Money Act
By: Alex Newman

Virginia Eyes Switching Off Dollar
Kelly O'Meara

Money in North American History: From Wampum to Electronic Funds Transfer

Gold Money Bill Site
Many Links, Articles, Resources

Obama Needs Your 401K to Balance His Budget
By Bob Adelmann

MTP is a Free Service
Please recommend to friends, family, & acquaintances to help put a network in place for what may
lie ahead.

Audio/Video      

Why Gold & Silver
Are So Valuable

Hans Bocker,
German professor and author of
"Liberty through Gold"

Role of Gold In
Next Financial System

Hans Blocker

 
Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1
Silver Rush: Investors Pile Money Into Silver
January 14, 2011 
Issue 91


Silver Rush: Investors Pile Money Into Silver
LONDON (Commodity Online):
January 12, 201
1


Gold has been the hottest commodity that people from India to the United States are piling their money into. Gold's poor cousin silver is emerging as the most luring investment option for traders and common people these days.

What is driving the silver boom? What is it that fascinates investors to silver that used to be the first currency in China centuries back?

Like gold, silver is topping the investment charts these days. In the US, sales of the silver bullion coins have recorded historic high in 2010. A latest commodity report says that silver is the most attractive investment proposition for the people in Australia. In fact, in Australia, people are buying more silver coins than gold coins.

In the last one year-in fact from 2009 onwards-silver price has more than doubled. Silver has boomed to the current $30 level from the $13 level in 2009.

Why is silver booming? Why are investors piling their money into silver?

In this following lucid write up, precious metals analyst Dr. David Eifrig provides some fascinating inputs on silver:

Surging Silver Investment is changing the nature of this market. A couple of years ago, I shared two shocking silver charts with DailyWealth readers.
These charts showed how governments around the globe have abandoned silver as money. They've decided it's easier to expand a nation's credit with fiat paper money than to mine more silver. They've sold off their silver stockpiles to industry and investors.

This trend is decades in the making. At first, much of this silver was used up in industrial manufacturing and processes like photography. That silver is gone forever.

But starting around 1997, silver began flowing into private hands. Folks concerned with wars, investment bubbles, and mismanaged economies were buying it up. They turned to silver as a safe form of savings that can't be debased by a gang of spend-happy politicians.

It was a modern day "rush" into Silver Investment. And Buying Silver back then was a smart move. The metal is up sixfold over the last 14 years...while stocks and real estate have struggled to do anything...and while paper currencies have depreciated in value.

The thing is, the silver rush is still on.

Demand for silver coins is taking off. It's up almost sevenfold from the mid-1990s. The public is catching on to the value of silver, and I expect this trend to continue for years.

Since my first essay back in 2009, the price of Silver Bullion has soared more than 100% - from $13.50 to about $29 today. But over the long term, there's much more to come.

Here's how I explained it in 2009:

"Governments around the world are behaving absolutely stupidly right now. Our vice president just said with a straight face that the government has to spend more money in order to save the nation from bankruptcy. That's crazy...but it passes for conventional wisdom these days.

"In my 30 years of investing, I've never seen so many risks in the financial system. That kind of 'patriarchal thinking' is producing those risks."

The stupid thinking I saw in 2009 hasn't gone anywhere. Governments across the globe are spending with abandon and creating big risks for savers and investors.

That's why it's a good idea to keep a portion of your assets in "chaos hedges" like gold and silver. You should know, I'm not the kind of guy who lives in a concrete bunker. I don't think the world is about to end. I'm not anyone's idea of a "gold bug". I buy this stuff just like I buy car insurance.

You should think of gold and silver as insurance against calamity. You should think of it as a safe store of wealth. And as I've just shown you, many people are catching onto this line of thinking. I expect millions more will over the next few years.


Traditional Tea Party Rounds Coming Back…
 

We will be minting the Traditional version of our
Tea Party Round very soon.
These will be available in quantity
(see discount rates at right) as well as
smaller individual orders.
Please call or eMail us if interested in
placing a quantity order.

 


Click to verify BBB accreditation and to see a BBB report.

Silver & Gold Shop is now officially
a member of the Better Business Bureau.

 


2011 Silver American Eagles…


Each year the US Mint's production of new Silver (& Gold) American Eagles is released late in January. We can special pre-order these right now, but will be carrying 2011 Silver Eagles in stock once they are available. Please call or eMail us if you would like to pre-order now.
 


Other Articles of Interest

US Mint Reports Unprecedented Buying Spree Of Physical Silver
Zerohedge

Silver: From $30/oz to
Over $500 by 2020

Jason Hommel

Virginia Offers HR 577 and Alternative Currency to Protect Itself from "Likely" Federal Reserve Meltdown
Before It's News

Ongoing Battle for the
Silver Market

Silver Coin Investor

____________________
 


MTP is a Free Service
Please recommend to friends, family, & acquaintances to help put a network
in place for what may lie ahead.

_____________________

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.

With the recent price drop
This is an excellent time to
take advantage of
volume discounts

_____________________
 
 

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Quote of the Week

"If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand. "

Milton Friedman



 

This Week's Videos
 


The Real Value of the Dollar
Robert Kiyosaki

Gold and Silver: The Price Is High For A Reason
Lind-Waldock Strategist Jim Comiskey talks about the relationship between precious metals and other commodities.

 

Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1
Past Wisdom And a Return To A Reality-based Monetary System ~ Larry Myles
December 10, 2010 
Issue 88


SGS Notes: This week's video is important to listen to. We are seeing increasing delays in obtaining inventory. I had a conversation with one of our suppliers today who informed me that they are starting to see delays in getting the silver to mint...EVERYONE PLEASE UNDERSTAND : it's beginning to 'hit the fan'... there is a very real silver shortage... You may see some dramatic dips that happen in conjunction with the manipulations going on, but the duration is getting shorter and shorter... the prices are quickly returning to free market rates... Gold/Silver ratio is now down to 48:1... still has a long way to go...

Past Wisdom And a Return To A Reality-based Monetary System
Larry Myles

"Precious metals alone are money. Paper notes are money because they are representative of metallic money."

Samuel Jones-Loyd, 1st Baron Overstone. (1852)

We can thank Baron Overstone for his words of wisdom; although it appears many of our modern leaders have forgotten the foundation of true wealth - prosperity through production and fair trade, along with a value-consistent currency based on gold and silver. True wealth… sustainable wealth cannot come about through the printing of air-backed fiat currency, followed by sophisticated multi-layered financial scheming that makes the collection of fiat an end unto itself. Sooner or later the inflationary factor will erode the wealth right out of those air-backed paper notes.

Worth noting: Prior to 1914, each of the above mentioned in-country paper notes were representative of a certain weight of gold. The U.S. Dollar equalled 1/20th of a gold ounce. The British Pound Sterling was representative of ¼ of an ounce of gold. I for one am not interested in debating the alleged absurdity of returning to the gold standard; other than to say the fiat-only model is clearly not working.

Making the case is the frequency of the recent spate of (unsuccessful) G20 meetings. In 1944 the Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states. The agreement lasted almost forty years. In 1971 Richard Nixon removed the U.S. from the gold standard and commented on the success reached by world leaders (Smithsonian Agreement): "The greatest single monetary agreement in the entire history of world civilization and will guarantee global prosperity." A little over a year later, the agreement collapsed in total failure.

Both of those agreements came after months of careful planning and were trumpeted as a final solution to monetary stability. Fast forward to the present; we are now enjoying G20 meetings that are becoming almost monthly events, replete with wrangling and finger-pointing. Yet no amount of trickery or shadowy alliance-building is working. Why? Trying to sculpt a coherent policy based on the irrational printing of air-backed fiat currency is a fool's game. Again, the futility of the Glass Bead Game comes to mind; especially when a monetary formula for success and prosperity is readily available - but it would mean wresting control away from the world's bankers!

Basing the worth of any and all currencies on the weight of gold would bring much-needed reality to a world awash in worthless paper money. Believing in a gold-based system too hard to swallow? Okay, what is your solution? That we remain rooted in the world of Reductio ad absurdum? That is no solution and I think you know it.

A personal solution; and one being practiced globally, is the growing number of people who are shunning paper money and turning to gold and silver. China is one nation that is openly encouraging its 1.3 billion citizens to get out there and accumulate the currency metals. It is the same story in India where you can even buy or order gold from neighbourhood postal outlets. You do not have to tell the Europeans twice; they are buying gold like there is no tomorrow. America? Two years ago we did not succumb to the scandalous falsehood that 'buying gold is un-American'. That whisper campaign failed miserably. Last year, the 'phony gold bubble' story enjoyed even less success. In 2010, the current administration in Washington, has proven itself to be pathologically stubborn. I am certainly not expecting an endorsement from our Keynesian enamoured leaders to buy gold. They will go down with their ship; but that does not mean you have to join them.

If Washington attempts to outlaw gold and silver, we will respond with scoffing defiance, followed by anarchy and lawlessness. As I have stated many times, the collapse of currencies is coming.

Hopefully, out of the rubble, a system may emerge based on two radical ideas; we will embrace a monetary system based on gold, and the world governments will adapt a plan that includes a schedule of debt forgiveness. Think about it. This is not a position of destructive radicalism; more a case of remorseless logic and a valid attempt to at least move the dialogue in a different direction.

When it comes to the demise of fiat currency throughout the ages, I am not just talking through my hat. I do have history on my side. Debauching the in-country currency toppled Rome and lead to the French Revolution. The audacity to think our system cannot collapse is almost laughable.

In the interim, fasten your seat belts and prepare for the global carnival of madness to continue! Expect currency swings, sovereign debt defaults, the collapse of national governments, isolationism and trade wars becoming the order of the day. The carnival show is already in progress. For those in the know, some are comparing this to a fiscal Greek Tragedy. Please, do not take yourselves that seriously. Looking back over 2,000 years of currency default, we are merely watching a repeat performance of a not very original, hackneyed misadventure in Black Comedy.

Other Articles of Interest

2012 IRS Rules Change

David Nguyen Activist Post

Silver Supply Crisis Looms
Part I

Part 2

Jef Nielsen Bullion Bulls Canada

Bernanke: 60 Minutes,
2 Big Lies

Michael Pento
Euro Pacific Capital

News: Backwoods Home
Magazine now accepting
Silver in payment for
subscription.


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in place for what may lie ahead.

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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Quotes

"Precious metals alone are money. Paper notes are money because they are representative
of metallic money."

Samuel Jones-Loyd, 1st Baron Overstone. (1852)

Recurring Orders At SGS

We are asked occasionally to set up recurring orders for customers who desire to place monthly orders on a scheduled basis. We have done that on a case-by-case basis with a few customers who have requested it.

 

If you would like to set up a recurring order, please contact us by phone or eMail. There is some paperwork that must be completed for us to do this for you.

888-203-2232 x1
info@silverandgoldshop.com

 

This Week's Video

NIA Interview with Bill Murphy
Note: Bill Murphy & Andrew Maguire testified at the CFTC Hearings in the spring regarding the
Fraud of naked shorting of precious metals. He is the world's top expert on the manipulation and price suppression scheme that has been taking place in the gold/silver markets.

By InflationUs

 

Ideas for Christmas Giving...
 
Silver makes a wonderful lasting and valuable gift!
Call us to arrange for a gift certificate !
 

LEATHERETTE GIFT BOX

Steel case wrapped with Leatherette, white satin interior top and Leatherette base. Available for Bars or Multiple Coins by Special Order

BLUE VELVET GIFT BOX

Sized to hold Airtite containers in sizes 39mm or 40.6 mm. Perfect presentation box for gift-giving. Available for Silver Bars by Special Order. Available in 3-coin size also by Special Order.

 

ALBUM STORAGE BOX

Album Storage Box by AirTite, in black. To be used with AirTite Storage inserts (In black, red, or blue sold separately) & Plastic Holders (sold separately)

And don't forget to get AirTite coin or bar holders to protect your gift...

Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1
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


Free Service

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 Week's Video

 

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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



Free Service

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


 

Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1
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
The Precious Metals Roller Coaster ~ Exerpts from Ted Butler, Larry Edelson, and John Embry
The Precious Metals RollerCoaster - From The Experts
Summary of information from Ted Butler, Larry Edelson, & John Embry
 
SG&S: With the high volatility in the precious metals market this past week, I thought I would provide you with some good resources to help you understand what this has been all about, and what forces are impacting the price of precious metals right now.

Larry Edelson - Financial Advisor, Weiss Research & Uncommon Wisdom Publisher.

Notes: Larry talks about how the markets are all in 'chop city', which means that when they are moving up and down quite violently they have a 'tendency to chop up short term traders with a lot of losses and a lot of sideways action'. He says this is due to the fact that many of the important cycles are now in a transition phase; indicating that the next big move, while certainly around the corner, is just not yet here yet. So all the major markets-all of them-- are floundering and swinging wildly trying to find their next positioning for their next big moves. This market could continue to be choppy for another 4 weeks.
 
He believes that gold on the short term will hold above its floor position swinging between the $1060 mark and the $1160 range…with wild swings. On the other hand, if it breaks through the support level of $1000, there will be no long term trend change. He is still very bullish on gold. On the flip side there is mounting evidence the gold will hold its own, and rise above the $1160 range and take off again.
As for the dollar, it's been 'rallying' lately because of the imminent threat of sovereign debt default in Greece, Italy, Spain & Portugal, which are valid concerns. So many European countries holding these currencies are being driven into the dollar… pushing it higher. However, the long term trend for the dollar is substantially lower. So this short-term rally for the dollar is not so much of a real 'rally' in the strength of the dollar, bur a reflection of the weakness of other world fiat currencies.

Ted Butler Butler Research
 
Notes: The Big Commercial Bank Shorts (i.e. JP Morgan) in silver have begun covering their short positions in the last few weeks. They have reduced their net short position by about 20,000 contracts (100 million ounces). This is the largest 2 week decline in the net short position in 2 years and represents about 80% of the total short position.

The good news, is that it's really improved the situation; they've liquidated just about as much of the technical accounts as they can liquidate. It's a very exciting development, and very encouraging because while painful, when they are done, they are unlikely to short again, paving the way for a price explosion.

And, from his recent newsletter,
"Silver is not money, it is Super Money, a kind of money that's different than any of us has ever experienced. It's sort of like there is ordinary man, but then there is Superman, who can bend steel in his bare hands, has x-ray vision and can leap tall buildings in a single bound. The main characteristic behind Super Money is that it is outside any government's edict. The value isn't based on what a government says. Simply stated, there is less silver available as money or investment to the world's citizens than at any point in history. Silver's rarity is unlikely to change in the relative near future. And remember - rarity is the first determinate of value.

As long as there are far more efficient mediums of exchange, like cash and electronic payments, silver or gold can't function as a realistic medium of exchange. This is Gresham's Law ; bad money will drive good money out of circulation. Here's a corollary to that law; Super Money drives itself out of circulation. As people start to realize the great difference that exists between money and Super Money, more demand for Super Money is certain.

Silver, more than gold, is the true Super Money. That's because, as time has evolved, there is less of it, relative to total world population. There is less above ground silver bullion in the world than there is gold bullion. Due to relentless industrial consumption over the past 70 years, there is 90% less silver bullion in the world than there was back then. This is something that cannot be said of gold.

Super Money is money that can't be created at will; it only comes from blood, sweat and tears, and at great expense. It is money that can't become worthless. It is money that can be passed to future generations without fear of what the future may hold. It is money whose value will be determined by the collective judgment of the world's citizens. One of the main factors that guarantees that silver is the Super Money of the present and future is how few people are aware of the facts surrounding silver. As those facts become increasingly known, the demand for silver must grow. The next time someone tells you that silver is money, please correct them. Let them know it is Super Money, and make sure you own as much as you can."
 
John Embry - Chief Investment Strategist at Sprott Investment Management
Notes: John talks about what he considers to be the final death throes of paper currency market.

On gold detractors: There is a lot of angst among mainstream commentators fearing a drop of $300 or worse… these are the same individuals trying to frighten the public with prophecies of falls in the gold price. Despite this ongoing aggravation John is even more bullish on the prospects for gold than he was a year ago.

On how price affects psychology: This is a classic example of where gold has moved nicely higher but people are still afraid. Psychology is a big part of the arsenal of the anti-gold group. Price action creates commentary and if you can knock gold value you can come up with all sorts of reasons that are false which does keep people away from the metals. He says, "I think that's part of the plan".

He says, "I still have the strong feeling that the vast majority of people have no clue about gold and aren't aware that gold is experiencing an historic bull market with much, much further to go. What we have seen today is merely a prelude to the appreciation we are going to see in future years which is going to greatly exceed what we have seen today. "

On Gold re-establishing itself as money: If you go back and look throughout 6000 years history, gold has always been the mainstream currency . It always tends to come back and re-establish itself when fiat money founders or comes under suspicion. We're in a period right now with a lot of debt problems, and sovereign debt is becoming strongly suspect (TP Notes: with just this past week several European countries in danger of default having a dramatic volatile affect on the market). I believe gold is really going to come back to the forefront, because people aren't going to be able to trust any paper currency on this planet.
 
Parting shots: Most of the experts are saying this: Use this short term down-trend to buy as much as you can.
Opportunity Knocks

Best of Howard Ruff

Recently after silver had taken a beating for two or three days, I was walking out of church and a friend said to me, "Why are you recommending silver; it's so cheap?"


I attempted to restrain myself. "I thought you were supposed to buy low and sell high." You can't buy low unless you buy when things are out of favor. Today gold and silver are out of favor, and that has created a great opportunity. When it was raging to the upside, I was worried that it would be a very expensive entry point. Actually, you can pay almost any price near these levels and some day brag about how smart you were, but you get better opportunities when the market is down. This correction is a good chance to load up. If you don't load up at times like now, how can you possibly buy low?


I'm really talking about the psychology of the investor. When the markets are going crazy, everyone wants to jump in. That's just an observed fact. But this time the metals have given us a real opportunity. These are the opportunities I lust after.


I recently gave a copy of my new book, How to Prosper in the Age of Obamanomics, to a doctor friend of mine. He told me he hadn't taken my advice before because he had listened to his financial advisor when he pooh-poohed gold and silver.


I told him that when he read the book, to buy quickly while the metals are depressed, and if they go lower buy some more.


Opportunity abounds in alleged bad times. I recently did a radio interview when someone read off the titles of several of my books and said, "You've been wrong before, what makes you think you are right now." The only book I was wrong on was the one about Y2K because I under-estimated the government and industry's ability and resolve to fix the problem. The analysis of the problem was correct, but I under-estimated their ability and resolve to fix the problem in time.


Other than that book, I was right even when I wrote about the Inflationary '80s. While there was less inflation (you might even call it disinflation), in the final analysis there was inflation all through the '80s, although it was diminished from the '70s. It was still an opportunity, but I found better opportunities in other places and concentrated on those.


In the final analysis, if you bought during the '80s, you would have bought cheap; you just needed time for it to pay off.


When will this rally be over?


I'm often asked when it will be time to sell the precious metals. In reality I'm being asked when it is time to transfer your gold and silver into greenbacks.


That time may never come. We may be seeing the total destruction of the dollar - the final collapse. The Obama Administration is determined to weaken the dollar, which is a standard procedure for governments. It means they can borrow a lot of money and pay it off with cheap dollars. They can manipulate the currency to make it possible. That is what is happening now. The Fed and the Administration are determined to drive down the dollar, so why on earth would you want to change your investments from metals into greenbacks?


The only time to sell the investments on my a la carte Investment Menu is when the liquidity of the active stock market, such as the mining stocks is diminishing. You will then switch into bullion and coins. Not yet, as there are still plenty of profits to be made, and the market is still liquid, but some day liquidity will be endangered.


If you are concentrating on the things that are going up, like my Investment Menu, you are actually gambling that you will get out before the dollar bottoms out. Any investment denominated in dollars, other than gold and silver, will be a big problem one of these days - but not yet.


Go to my website (www.rufftimes.com) and click on "Free Stuff." You will find an article that describes how we are doing with the Investment Menu. It is up 86.9% through October of this year. Is that good enough?


In the final analysis, you will be happier that you owned some coins and bullion than some of the high flyers. Fly high for now, but be prepared when I tell you to liquidate those things and buy bullion and coins. I doubt I will ever tell you to liquidate precious metals and buy greenbacks.


I think the dollar is in its death throes. When you buy gold and silver you are not just looking for a profit, you are looking for protection against the decline of the unit of account - the dollar.


Howard J. Ruff is financial adviser and writer of the pro-hard money investing newsletter The Ruff Times. Ruff is the author of Famine and Survival in America (1974), How to Prosper During the Coming Bad Years (1979), Survive and Win in the Inflationary Eighties (1981), Making Money (1984), and other books. He has recently updated and re-released his most successful book, re-titling it How to Prosper During the Coming Bad Years in the 21st Century (2008).

 
The Dollar Bubble ~ National Inflation Association (NIA)

The Dollar Bubble
National Inflation Association

 
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