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Gold, Silver vs. 'Worthless' U.S. Treasuries ~ Jeff Nielson
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Today's Gold/Silver Ratio: 54/1 UP from 44/1

Issue 125

Gold: $1650.00/ Silver: $30.33

SGS Notes: We're featuring a lot of material this week from Jeff Nielson, from BullionBulls, Canada... be sure to listen to the 3 Videos (which are really audio interviews)... We've had a lot of his articles in our Newsletter in the past... you can find them by searching his name on our Newsletter page on the SGS site.

In the past couple of weeks we have seen yet another bankster takedown of the precious metals prices... it is clear they are covering their short positions... see the link to the COT reports... and being allowed to do so by the very institutions that are to set position limits so that they cannot do this to the market. Wise investors should understand that this is an opportunity to BUY, because this activity will only create shortages in the marketplace which will drive prices to the moon...

Gold, Silver vs. 'Worthless' U.S. Treasuries

Jeff Nielson, BullionBulls, Canada

Two weeks ago, I wrote that volatility was "the new bankster weapon" in the gold and silver markets. In writing that this marked a "new phase" for these markets, I admit to never imagining that we would immediately see the bankers display this new phase with such a vivid "exclamation mark."

That said, it is now equally important to emphasize to investors that nothing at all has changed for gold and silver from a long-term perspective. What makes this current episode of market manipulation all the more surprising is that there wasn't even any serious attempt by the mainstream media to manufacture a "reason" for the plunge in gold and silver -- as "cover" for the banksters' actions.

With "competitive devaluation" still the mantra for the economically/intellectually bankrupt governments of the West, and with most of the rest of the world also being forced to play this game, we know that the banksters' fiat currencies will continue losing value at an increasing rate. Note the use of the word "competitive." It directly implies that these governments are driving down the value of their currencies as fast as they can.

Obviously, saying a currency is losing its value is exactly the same thing as saying that prices are going higher. As a matter of the simplest arithmetic, and the simplest logic, if most of the governments of the world are trying to push up prices (as fast as they can) then the prices for gold and silver can also only go higher over time.

Of course, some things are "different" in the gold and silver markets -- in comparison to where we were when this bull market started over 10 years ago.

Back then, the banksters had lots and lots of bullion to dump onto the market to depress prices. Now they don't. Back then, the governments of the world were not deliberately trying to drive up prices. Now they are. Back then, our governments were not obviously insolvent, and gold and silver were not viewed as "safe havens." Now they are.

In short, 10 years ago there were lots of reasons to worry about the "strength" and "stamina" of the gold and silver markets (as "long" investments). What happened at that time? The price of gold nearly quadrupled from under $300/oz to over $1000/oz. The price of silver more than quintupled, from under $4/oz to nearly $20/oz.

Another 'Must See' Video:

 

Other Articles      

Return to Good Money
Jeff Neilson

Extreme Times For Central Bankers - A Time For Gold
MineWeb

Big Hitters Very Sharply Reduce COMEX Silver Shorts
MineWeb

Currency Wars: Restricting Gold and Silver Sales In France
Jesse's Cafe American

Plan To Return America To the Gold Standard Set To Be Offered at Washington
NY Sun

It's Official: HFT Breaks Speed-of-Light Barrier, Sets Trading Speed World Record

This is the key to taking back our FREE MARKETS and until it is banned "they" will be behind the curtain pulling the strings of the market manipulation.This is the key to taking back our FREE MARKETS and until it is banned "they" will be behind the curtain pulling the strings of the market manipulation.

CFTC Facilitates Cartel Silver Raid
See also CFTC

 

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Bankers Have Lost The War
Part 1 Interview with Jeff Nielson

Bond Fraud & Brainwashing
Part 2 Interview with Jeff Nielson

Bullion, Mining Stocks & Hyperinflation
Part 3 Interview with Jeff Nielson

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Gold & Silver Are The Currencies of the Free
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Today's Gold/Silver Ratio: 44/1

Issue 124

Gold: $1813.40/ Silver: $40.73

SGS Notes: Our main article this week is one of several from the Cheviot Sound Money Conference that was held in the January. Clicking on the photo link will allow you to listen to one of the key speakers of the conference who gave this speech below. Don't miss the links in the right column of that page to other very informative other speeches...

Gold & Silver Are The Currencies of the Free

Dominic Frisby
Goldcore
 

The President of the World Bank, Robert Zoellick, called for a new post Bretton-Woods currency system involving gold, in November 2010. Zoellick said that gold was worthy of consideration as a reference point for modern currencies and as an indicator to help set foreign exchange rates.

At the end of January, the Cheviot Sound Money Conference held an excellent conference in London which examined the practical application of gold and silver as money within a modern context.

The context to these proposals is crucial as without an understanding of the modern financial and monetary system one cannot possibly comprehend the continuing importance of gold and silver.

We live in an era of surging trillion dollar deficits and surging national debts in the US and internationally.

The US recorded its biggest monthly deficit in history two days ago with a $223 billion deficit for February alone, the 29th straight month of deficits – a modern record. The US budget deficit in 2010 was over $1.45 trillion and is forecast to be of a similar magnitude in 2011. At the close of business on Feb. 28, the total federal debt stood at $14.195 trillion ($14,194,764,339,462.64).

We live in an era of massive creation of government bonds.

Foreign central banks hold $5 trillion in US Treasury bonds and agency debt alone. Chinese foreign exchange reserves alone are soon to reach the $3 trillion level.

We live in an era of of thousands of trillions of dollars, euros, pounds etc. of derivatives.

The enormous OTC sector of derivatives alone is worth nearly $600 trillion on paper, roughly 10 times world economic output.


We live in an era seeing the creation of and speculation with trillions of dollars (euro, pound etc.) of electronic currency.

According to the Bank for International Settlements, as of April 2010, average daily turnover in global foreign exchange markets was estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007 - soon after the financial crisis began. Some firms specialising in foreign exchange have put the average daily turnover in excess of US$4 trillion.

We are experiencing a scale of global currency debasement, the likes of which the world has never seen before.

We live in an era where thousands of millions of people live on less than a dollar or two a day in the "developing world". While millions of people in the "developed world" are now debt slaves - both individually and as citizens of increasingly bankrupt nation states.

Reformation or replacement of our debt-based fiat paper and electronic financial and monetary system is one of the most important debates of our times.

The modern monetary system of paper and electronic money is inherently unstable and unsustainable and there is a strong case for considering using gold and silver as money once again.

At the Cheviot conference, Money Week's Dominic Frisby gave an excellent talk in which he outlined why gold is the currency of the free.

Frisby eloquently outlined how the modern system of finance, banking and credit (or debt) impoverishes and enslaves. It has "made wars that should never have happened possible; its brought about a relentless needless commercial expansion and malinvestment that has raped the earth."

He points out how the world is cursed by monetary illiteracy and it is amazing how few people understand the modern monetary system, and how it is to blame for the huge inequalities in wealth we see in the world today.

"Money must be sound and true, at the moment it is neither and society is corrupted as a consequence."

Dominic Frisby's lecture can be watched here:
http://www.cheviot.co.uk/sound-money-conference/presentations/why-gold-is-the-currency-of-the-free

There were a number of other excellent talks all of which are worth viewing. The highlights include Chris Powell, the Secretary/Treasurer of GATA (Gold Anti-Trust Action Committee), lecture 'Gold price suppression purposes and proofs':
http://www.cheviot.co.uk/sound-money-conference/presentations/gold-price-suppression-purposes-and-proofs

There is then an excellent panel discussion and question and answer session on gold at the end which involved Max Keiser, James Turk, David Morgan, Ben Davies, Richard Cragg, Sandeep Jaitly. It is surprisingly entertaining and very informative:


http://www.cheviot.co.uk/sound-money-conference/presentations/panel-discussion-with-audience-q-and-a

GoldNomics - Cash or Gold Bullion?

Our educational video, 'Goldnomics - Cash or Gold Bullion?' complements the excellent interviews from the conference. It clearly shows how gold has retained value throughout history.

'GoldNomics' can be viewed by clicking on the image above or on our YouTube channel: www.youtube.com/goldcorelimited

The US dollar has been the strongest fiat currency in the world in the last 100 years and indeed it became the reserve currency of the world during the period (due to victories in the two World Wars and the accumulation of the largest gold reserves in the world).

Despite that the dollar has lost 97% of its value in 97 years. The massive loss of purchasing power of the preeminent currency of our age, the US dollar, clearly shows gold's importance as a currency, as money and as a store of value.

Individuals, families and societies can never be free as long as money is based on debt and compounded interest and as long as the money we use day to day is constantly depreciating and being debased.


Other Articles      

Once Upon A Time

The story of two different monetary conferences, two "committees of experts" that both met in Genoa, and changed the course of monetary history.

Advanced Q & A on the Silver Manipulation
Bix Weir



Donald Trump Confirms His Confidence in Gold
NY Magazine

Identities of JP Morgan Silver Manipulators Exposed
King World News

 

The New Bankster 'Weapon' Against Gold/Silver
Jeff Nielson

The Precious Metals Tsunami
Goldrunner


Run To Safety

Mary Anne & Pamela Aden
 

Central Banks Waging War on Gold At This Hour
Trader Dan


Gold-Backed Dollar Puts ‘Fair Value’ at $10,000 an Ounce
Bloomberg
 

The Case for Gold and Silver Investment Gets Stronger and Stronger
MineWeb

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

 

 

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The Upside for Gold and Silver will Knock Your Socks Off ~ Embry
 
Today's Gold/Silver Ratio: 44/1 Up

Issue 122

Gold: $1833.70/ Silver: $41.85

SGS Notes: This week we can only say, there's a 'Whole Lotta Shakin' Goin' On!' Not just geologically, but in the markets as well... we've seen silver up over $44 this week, and gold broke through the $1900 barrier before heading back down. We see the big manipulators scurrying to cover their short positions and a lot of new activity 'out there'... The Warren Buffet Bailout of B of A is a big item...another is the Jackson Hole conference on the economy. This week's newsletter, like many, will try to cover the highlights...

 

The Upside for Gold and Silver will Knock Your Socks Off Embry

Geoff Candy Mineweb


With no easy solutions to the globe's debt problems visible, Sprott Asset Management's John Embry expects gold and silver to be significant beneficiaries but the road ahead will not be easy.

 

With no easy solutions to the globe's debt problems visible, Sprott Asset Management's John Embry expects gold and silver to be significant beneficiaries but the road ahead will not be easy.

For many commentators, gold is considered not only a constant store of value but, also, a barometer for the health of the global economic system and the currencies that pump through its veins.

For, John Embry, chief investment strategist at Sprott Asset Management, the current parabolic rise in prices, which have beat even his optimistic performance expectations this summer, is indicative of the unsustainable debt situation in which the world now finds itself.

Speaking on Mineweb.com's Gold Weekly podcast, Embry explains, "We've reached a stage in the debt cycle where it doesn't appear we can move forward and on that basis you need more and more debt creation to generate the same dollar real GDP growth - and I don't think we can get that kind of debt growth. So to keep these systems stuck together they [governments] are going to have employ quantitative easing in massive quantities, and if they don't, the current softness in the economy is going to turn into a rout."

Given the current levels of growth, Embry says, any halt in the funds propping up the banking system will result in significant deflation in "fairly short order" because the deflationary pressures within the West are huge.

But, he says, it is not just the West that is likely to suffer. "The Chinese miracle is grinding to a halt, they've dined out in the West for years and they paid for it by taking back our crappy paper but the fact is that they kept their economy going at breakneck pace and I would also say it is probably one of the most unbalanced economies I have ever seen.

"They have depended so heavily on exports and capital spending and now the export markets are weakening at the same time they have massive over capacity. So those two engines are coming to a halt and the hope is that they can do lateral arabesque into consumer demand to keep the thing going. I think that will be a hard act in the short run and consequently China faces some fairly difficult economic problems going forward.

What this means for prices?

While this rather bleak scenario does not bode well for the financial system as a whole, gold's performance over time [as well as that of silver] is likely to "knock your socks off", Embry says. But, he adds, especially after this latest move, he would prefer to see a correction in prices before that happens.

"I don't want to see this thing just scream away and become out of control and conceivably if you got a strong effective action in either Europe or the United States - that might be the catalyst for a significant correction of a couple of hundred bucks - but having said that I don't see the easy solution."

Embry points out that it is also important to note that, "It's not gold and silver that are doing anything. There have been constant stores of value for centuries. It's the value of the paper money that they are being denominated in that is at risk here and you know every attempt in history, fiat paper currency has always ended in tears and this one has been going for 40 years since Nixon closed the gold window and it's probably in its terminal stages."

Indeed, he is of the belief that the world will ultimately see a return to some kind of a gold standard.

"When we do have to recast the currency system, just to restore confidence there will have to be some backing that maintains discipline - and gold has traditionally filled that role. So I can see gold being introduced as a maybe fractional reserve like there was before 1971 in the United States. but to do that given the amount of paper out there and the limited amount of gold, they would have to mark the gold price up dramatically."

And, while he cannot put any kind of timing on such an event, he does think that gold could move as high as $2,500 within the next twelve months.

 

Quotes  ____________     

“Gold, unlike all other commodities, is a currency,” he said. “And the major thrust in the demand for gold is not for jewelry. It’s not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating.”

Alan Greenspan

For Full Article, Click Here

SGS Note: Perhaps Mr. Bernanke needs to confer with Mr. Greenspan...

 

Other Articles      

 

Living Through A Currency Devaluation

 

Warren Buffet Injects $5 Billion into Bank of America

 

Think The Buffet Investment In BAC Is Investing Savvy?

 

JP Morgan May Take Over Bank Of America


Currency Devaluation and Revaluation

 

British Government Begins Stealing its Peoples’ Bank Deposits Ahead of the Global Financial Collapse

 

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Buffetoon – Implications of silver remonetization
Response to
"A Wolf In Sheep's Clothing"

The Wolf Invests in Bank of America

The World's 30 largest banks by market capitalization

 

 

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Gold, Silver And 'Leaky Buckets ~ Jeff Nielson
Issue 92
Today's Gold/Silver Ratio: 43/1 Dn

Issue 121

Gold: $1872.60/ Silver: $43.80

SGS Notes: These days, events are happening almost daily in the precious metals market. The latest big news this week is the move by Hugo Chavez, dictator of Venezuela, to Nationalize the Venezuela gold industry, and to repatriate the country's gold holdings around the world. See links in 'Other Articles' about this.

 

Gold, Silver And 'Leaky Buckets
Jeff Nielson, BullionBulls, Canada

 

To those of us who have "found" precious metals, their (financially) life-saving properties are blatantly apparent. Indeed, apart from explaining the 5,000 year heritage of gold and silver as premier financial assets in our civilization, most of the arguments in favor of gold and silver are straightforward, simple arithmetic.

Because of this reality, one of the great frustrations for all precious metals bulls are the thankless (and generally fruitless) efforts we make to try to enlighten friends/relatives/associates. The pattern of such attempts is maddeningly similar.

Some friend or loved one mentions how "inflation" is hurting them financially. So the gold/silver bull begins to explain what inflation really is, who is causing it, and how it is done. So far, so good. However, as soon as we move on to explain how we protect ourselves from this "inflation" (i.e. through accumulating gold and/or silver), a subtle metamorphosis inevitably takes place with our subject.

A bland/placid expression creeps over their face, and is frozen into their features. Through years of experience with this phenomenon, I know exactly what that expression translates to in terms of the person's thoughts: "I'm trapped with this dangerous lunatic. How can I escape?" At that point, any attempt at "conversion" becomes purely an exercise in futility.

After each such failure, I inevitably review the process which has taken place, and ask myself where I could have gone wrong. The reality, of course, is that the fault does not lie with ourselves, nor with the individual whom we have failed to convince. Rather, the "blame" belongs to the propaganda machine of the bankers, which for the past century has blared out one message above all others: paper currency = money = wealth.

It is the fact that this simple, but totally erroneous equation is embedded in the "programming" of most of us which prevents the precious metals message of financial salvation from penetrating the psyche of those so afflicted. Thus, the initial step in being able to re-program the minds of these propaganda victims is to de-program them first. It starts with repudiating the bankers' odious "equation" (above).

First of all, paper currency does not equal "money". This is actually an entire discussion in itself. I could abbreviate it by listing the four qualities which all "good money" must possess. However, without expanding on the reasoning behind those traits, such mere assertions will not sway the brainwashed mind. Readers can review my own previous discussion on this, or the many similar efforts of other commentators, however the conclusion is unequivocal: paper currency is not money.

Now let's examine the third element in this propaganda-chain: wealth. The more cumbersome way to refute this equality/equivalence would be to explain why paper currency does not equal wealth. However, the better way to do this would be to simply point out the basic difference in the properties of these three elements. Paper currency is tangible. Money is tangible. Wealth is intangible.

This can be easily demonstrated anecdotally. Many people (including myself) often go days at a time carrying out all of our commercial transactions without ever once using "money". Thanks to the credit card (which is simply an electronic cheque-book), we no longer need money to convey our wealth to a vendor to make a purchase. It can all be done electronically because of the intangible nature of our wealth.

In similar terms, if we get up in the morning to discover that interest rates have been raised or lowered, this immediately affects property values - and the wealth of each/every property owner. Our properties have not changed in any way. We have not done anything ourselves. However, our level of wealth has gone up (or down). In fact, countless exogenous events affect our precise level of wealth at any given moment. Clearly, if wealth was not intangible than its exact level at any moment in time would not be so fluid.

Our equity markets leap higher or plunge lower (affecting the wealth of any/every equities-holder) often based only on "sentiment" or "expectations" - purely intangible drivers themselves. Obviously anything which can be altered by mere attitudes is intangible. As with any "intangible" (in our material world), we often find it helpful to adopt a (tangible) metaphor to allow us to have a better conceptual grasp. In the case of wealth, the obvious metaphor is a liquid. Indeed, the very frequent use of the term "liquidity" as a synonym for wealth is proof of such suitability.

Once we have conceptualized wealth as a "liquid", then it becomes equally simple to conceptualize "money" and "paper currency" within the same metaphor. They are containers for this liquid. Now let us make our metaphor even more tangible and precise.

Instead of "money", let us divide this into two "containers": gold and silver - the best/most-preferred forms of money in the history of our species. And instead of "paper currency", let's call that container "U.S. dollar". Finally, let's simply refer to these containers as "buckets".

We now have a very specific metaphor, and a very clear choice for each of us. We each have our own quantity of liquid (wealth), and we can store/hold that liquid in the "gold" bucket, the "silver" bucket, or the "U.S. dollar" bucket. Now let's examine the quality of each bucket.

Why have gold and silver been the preferred forms of money for our species for 5,000 years? Because they perfectly preserve (i.e. contain) the wealth of the holder. Look back 2,000 years to ancient Rome, and a stylish Roman could adorn himself in the finest toga, sandals and accessories for the cost of 1 oz of gold. Flash ahead to today, and any gentleman could obtain a top-quality suit, shoes and accessories for the cost of 1 oz of gold. Clearly, the gold bucket does not leak.

Now let's look at the U.S. dollar bucket. In the less than 100 years since the creation of the odious Federal Reserve, the U.S. dollar has lost approximately 98% of its value. Obviously the U.S. dollar bucket does leak. Hold your liquid in the U.S. dollar bucket long enough and you will lose all of it.

A (literal) "Devil's Advocate" would argue that a bucket which takes nearly 100 years to lose all of its liquid is "good enough". The rebuttal to this is as frightening as it is simple.

In the 40 years since Nixon severed the last connection between the U.S. dollar and gold, the dollar has lost more than 75% of its value. In other words, the hole in the bucket has gotten much larger. Today, as the price of food soars, and the price of gas soars, and the price of gold soars, and the price of silver soars none of these items have changed in any way, rather it is the value of the U.S. dollar which is plummeting. The hole in the bucket is rapidly getting larger.

Throughout history, all paper currencies which have not been backed by gold or silver (i.e. "fiat currencies") have failed. The most common means of failure is through the destruction of these paper currencies via hyperinflation: the value of the currency plummeting to zero. We can describe "hyperinflation" in our metaphor very easily: it's when the entire bottom of the U.S. dollar bucket has disappeared. Liquid (i.e. wealth) pours out the bottom as fast as we can funnel it in.

Looking at the first two buckets provides us with a crystal-clear picture. We have the gold bucket which never leaks. Not in 100 years, not in thousands of years. We have the U.S. dollar bucket. Not only does this bucket "leak", guaranteeing the loss of all liquid/wealth over time, but the hole in the bottom is getting larger every day - and soon it won't be capable of holding any liquid at all.

Given this stark illustration with just two buckets, some might presume that my inclusion of a silver bucket in this metaphor is redundant. However (as we shall see), the silver bucket is actually quite distinct from the gold bucket.

Obviously the silver bucket is just as leak-proof as the gold bucket, but silver buckets cost much less. After decades of being impoverished by our own, elitist governments (primarily through storing our wealth in 'leaky buckets'), many people can no longer afford gold buckets - however virtually everyone can still afford silver buckets.

This makes silver the "People's Bucket", a leak-proof container to store our "liquid" (wealth) which everyone can afford. However it gets even better. In continuing with our metaphor, we must all understand that the bankers have their own "Magic Bucket". How magical? Every drop of liquid which leaks out of the U.S. dollar bucket ends up in the bankers' Magic Bucket. That's pretty "magical"!

It is because the bankers have their own Magic Bucket that they hate silver buckets with every fiber of their evil beings. For the last century, and especially the last 50 years the bankers have made a concerted effort to destroy all of the world's silver buckets. How? Through manipulating the price of silver to a ridiculous low (in real dollars, the price of silver hit a 600-year low in the 1990's), they simultaneously destroyed "supply" (by bankrupting more than 90% of the world's silver miners), while causing demand to explode. Global inventories and stockpiles have been obliterated.

The result of this is that in relative terms there has not been this little silver in the world (above ground) in thousands of years. This is true both in relation to the quantity of gold and on a per capita basis. This means that in relation to gold buckets, silver buckets are now very rare - some might even call them "magical" too.

Not only is silver a leak-proof bucket to carry our liquid (wealth) which is still affordable for the average person, but it has become extremely useful in countless industrial applications - meaning that "everyone" wants silver buckets. Because of this high scarcity and soaring demand, it is a matter of elementary supply/demand analysis that the price of silver must rise to many multiples of its current price.

To translate this back to our metaphor, when we put liquid in our silver bucket, not only does the silver bucket prevent any leaks, but it actually increases the amount of liquid in our bucket. The silver bucket is also a Magic Bucket - but not an "evil" Magic Bucket like the one owned by the bankers. The bankers' liquid increases through leeching all of the liquid out of the U.S. dollar buckets, while the silver Magic Bucket increases the liquid of the holder without stealing any liquid from anyone else.

Let us review (one last time) the three "buckets" we can choose from to store our liquid/wealth. We can choose the gold bucket, a leak-proof bucket guaranteed to hold every drop of our liquid over the long term. We can choose the U.S. dollar bucket: a leaky bucket, with a hole in the bottom that gets larger every day - and which is guaranteed to lose all the liquid contained over time.

Lastly there are the silver "Magic Buckets". These marvelous devices not only ensure against leaks, but actually cause the liquid contained to increase in volume. The only down-side to these Magic Buckets? There is a very limited supply.

It can be virtually impossible to explain to a brainwashed mind how/why U.S. dollars are just scraps of worthless paper - just as it was impossible to convince the Dutch 400 years ago that tulips were mere flowers. It can be equally difficult to explain the concept of "saving our money" (i.e. wealth) in the form of gold and/or silver - despite the fact that 100's of millions of Indian peasants understand it and have been doing it all their lives.

Conversely, even the most brainwashed mind should still be capable of understanding the difference in "utility" between a 'leaky bucket' guaranteed to fail in its sole purpose, and buckets which have demonstrated themselves to be leak-proof over thousands of years.

Other Articles      

Eric Sprott Sells Gold Holdings to Buy Silver
The Globe Investor

 

As Chavez Pulls Venezuela's Gold From JP Morgan, Is The Great Scramble For Physical Starting?

Zerohedge

 

Chavez to nationalize Venezuelan Gold Industry

Reuters

 

Chavez Launches War Against US Dollar

The Daily Bell

 

What's Pushing Gold to New Highs
Jason Hommel

 

Honest Work For Honest Silver Pay

Silver Shield

 

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Bill Murphy : The Gold cartels have lost control over the market

King World News:

John Embry - Silver About to Roar Through $50 All-Time High

Ben Davies - Expect $2,100 Gold by the End of December

Richard Russell - Expect Mass Entry Into Gold By Retail Public

Eric Sprott - The Price of Silver Should be $110 to $120 Today

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Dorothy's Silver Shoes or The Re-monetization of Silver Currency ~ Hugo Salinas Price
Issue 92
Today's Gold/Silver Ratio: 44/1 Up

Issue 120

Gold: $1751.10/ Silver: $39.18

SGS Notes: This week the GATA Gold Rush 2011 Conference was held in London. GATA is the Gold Anti-Trust Action Committe (http://www.gatagoldrush.com/ ) ... and we've seen material in the past from Andrew Maguire, Bill Murphy, and Ted Butler and others who have been actively involved in fighting the precious metals' manipulation over the years. Speakers this week at the conference include such big names as James Turk, Eric Sprott, Hugo Salinas Price, John Embry, Jim Sinclair... you've read articles by these folks and others in the SGS Newsletter since we began it.

The issue of the possible re-monetization of gold and silver is a hot one as we watch fiat currencies around the globe crumble into ruin. It's been on our radar screen at SGS since we began in 2008. There are many credible experts that believe it is coming faster than a speeding freight train... Bix Weir, of Road To Roota, is one such person. He has long been associated with GATA. As the world wakes up to the fiat schemes of the central bankers, there will be a rush... supplies will be in limitation... prices will skyrocket...

 

Dorothy's Silver Shoes or The Re-monetization of  Silver Currency of the United States of America

Hugo Salinas Price

President, Mexican Civic Association Pro Silver

www.plata.com.mx

Download article + bonus article, Gold Standard Generator & Protection Of Jobs

Why not re-monetize the silver dollar? Re-monetization could put the silver dollar and its subsidiary silver coinage into circulation in parallel with FRNs – “Federal Reserve Notes”.

There are several reasons that make this action possible, and only one that might be considered as an unimportant material obstacle.

In favor:

The silver dollar is the money that is still the Constitutional “coin of the realm”, defined by Act of Congress as 371.25 grains of pure silver. (The Troy ounce contains 480 grains.)

The silver dollar is familiar or at least known to almost all Americans.
A considerable quantity of these silver dollars is owned by Americans.

The silver dollar is a cherished symbol of a great past.

The monetized silver dollar would ignite a desire to save such as America has perhaps never seen before. The very first thing that must be done, to encourage people to save, is to give them something worth saving. As the US government gallops toward the abyss of bankruptcy by unlimited spending, the American people desperately require a refuge for their savings!

In this writer’s opinion, a large majority of the American people can see themselves as owners of silver money and, if a poll were taken, one can imagine that most Americans would express themselves in favor of silver money. Not so with gold, towards which the American people have little emotional attachment: gold is seen as the money of the élite. William Jennings Bryan exploited this fundamental attitude of the American people with his “Cross of Gold” speech. (Note: this should not be taken as disparaging gold; it is simply the statement of an opinion about the attitude of Americans regarding gold.)

Against:

The silver dollar bears a value stamped upon it: “One Dollar”.

***

The branch of government which the Constitution has designated as the agency “to coin money [and] regulate the value thereof” is the Treasury.

If the Treasury were to monetize the silver dollar coin by attributing to it a monetary value in terms of FRNs - “Federal Reserve Notes” - the public would very probably ignore the inscription of “One Dollar” upon the coin and accept it as legal tender money for the amount of the Treasury quote given to it. It would not be necessary to explain that twice, to anyone owning a silver dollar coin! In a short time, people would regard the term “One Dollar” as the name of a coin, rather than as a numeric indicator of legal tender value.

Determining the value of the silver dollar falls quite nicely into the Constitutional mandate to the Treasury: “To coin money [and] regulate the value thereof…”

How would the Treasury go about determining a quote to regulate the value of the silver dollar? Let bureaucrats and lawyers write books about how it should be done; here it is in a few words:

Suppose the price of silver bullion is $35 per ounce.

The silver dollar contains 77.34166% of a Troy ounce.

$35 X .7734166 = $27.07, the value of the silver in the silver dollar.

The Treasury will quote the silver dollar’s value in FRNs, with a margin of 15%, and round the figure to the next highest multiple of four:

$27.07 X 1.15 = $31.13, rounded up to $32.

The silver dollar as a legal tender coin worth $32 FRNs. The American public would eagerly purchase these silver dollars, worth $32 FRN dollars, and which could be used for all transactions without any haggling. The silver dollar worth $32 FRNs could even be deposited for that value in banks, if anyone had a mind to do such a thing.

If the price of silver rose to $37.61, the margin of profit of the Treasury, or seigniorage as it is formally known, would be reduced to 10%; at that point, a new and higher quote would be issued, to restore the 15% profit of the Treasury:

$37.61 X .7734166 = $29.09 value of silver in the silver dollar X 1.15 = $33.45, rounded up to $36 FRNs - 36 being the next highest multiple of four.

Why “the next highest multiple of four”? Because by doing so, the result would be the re-monetization of the entire silver currency system of the United States as it existed up until the Sixties of the last century.

In the last example, the silver half-dollars would automatically be worth $18 FRNs, the quarter-dollars would be worth $9 FRNs, and the dimes would be worth one-tenth of the silver dollar: $3.60 FRNs.

As pointed out in many articles at www.plata.com.mx, in the section in English, the last quote of the Treasury would remain firm and not subject to reduction, just as if the value in FRNs had been re-stamped upon the coin. The Treasury quote would simply take the place of a stamped quote, which cannot be reduced. The Treasury quote would only be raised, to follow the rising price of silver. In this way, the silver dollar would be a coin that would remain in use permanently.

This program would return the silver dollar and its subsidiary silver coinage of half-dollars, quarters and dimes to the American people in such a way as never to disappear again: all rises in the price of silver would be matched with rises in the quoted monetary value of the silver dollar and by derivation, of its subsidiary coinage: the silver half-dollar, the quarter and the dime.

This program would not cost the Federal Government – or the taxpayers that support it – one single cent! And yet, it would constitute the greatest gift to the American people that any US Congress could possibly invent, next only in importance to the return of the Gold Standard. The restoration of the silver currency of the United States to circulation, in parallel with the fiat FRN, can be considered the prelude to the revived Gold Standard.

By paying the Treasury a premium of 15% over the bullion price of silver, the American people would actually be subsidizing the Treasury’s work of monetization. This cost would be a one-time cost of obtaining real money of permanent value and utility, independent of the Fed and the banking system.

The re-monetization of the silver currency of the United States would create a new, vast market for physical silver and drive the price of silver very much higher. Those who might not be able to afford the purchase of monetized silver dollars could purchase half-dollars, quarters or dimes, which would provide the same security: they too, would rise with the rise in the price of silver. The rise in the price of silver would affect gold, which would also rise in price.

In order to facilitate larger transactions in silver, the Treasury could once again issue “Silver Certificates” attesting to the existence of silver held in its vaults.

With regard to the present faux-silver coinage in circulation, the American people are too intelligent to be deceived by it; this coinage may remain in circulation until the Treasury issues new coins for the purpose of making change in small transactions.

Though the restored silver currency may legally circulate, in practice it will be saved in its entirety and only be used in cases of emergency. Its “velocity of circulation” will be effectively close to zero.

******

Dorothy wore silver shoes, in L. Frank Baum’s classic book. Silver shoes on the yellow brick road! Dorothy symbolized then and still does today, the American people. Dorothy was unaware of the magic power of her silver shoes – and the American people are still equally unaware of the magic power of the re-monetized silver dollar: the power to recover America as the land of Hope and Opportunity!

What are the obstacles to regaining the silver dollar as money which can circulate in parallel with Federal Reserve Notes? The main obstacle will be the weapon of fear wielded by the entrenched interests of banking and the Federal Reserve, the intellectual centre of the banking cartel. These fiat money-mongers will rely on generating fear of the consequences of silver money so that they can maintain their huge fraud of fiat money FRNs; the Fed and the “Too Big to Fail” Banks are deathly afraid of the competition of silver. They know that the slightest crack in their monopoly of issuing fiat money will expose their scheme.

The Fed and the banking system will without doubt claim that “silver money is very costly”, but they will certainly not mention that the American people will fall over themselves to acquire it and even pay a premium of 15% to the Treasury, for the blessing of owning real money. Nor will the Fed and the banking system ever mention the gigantic costs that the depreciating FRNs have inflicted upon American savers; nor will they wish to recognize that the fiat FRN and the Fed are directly responsible for the present financial and economic destruction of the once great United States of America.

Another objection which will be put forward forcefully is that what the American economy requires is more spending on the part of the public. They will argue that more savings on the part of the American people spells doom for the economy: “More drink for the drunkard” is essential, according to the prevailing Keynesian thinking.

However, the humbug wizard has already been exposed and the Fed has lost its prestige forever. Toto has drawn the curtain! The State of Utah has already voiced its dissatisfaction with the present monetary system, by legislating in favor of gold and silver as legal tender money. If this project - monetizing the silver dollar by the Treasury’s giving it a numeric monetary value in FRNs, which immediately places it alongside the Federal Reserve Note as money – if this project comes to the notice of the several States of the Union, they together may force the issue.

The present policy is to “kick the can down the road” and postpone the final reckoning. But, the end of the road is already in sight! The condition is one of utter helplessness. The re-monetization of the silver dollar is the first step toward regaining health for the economy of America. Paper, fiat money will probably remain in use for some time, but the presence of the monetized silver dollar will force the Federal Reserve, the banking system and the US Government itself, to a more prudent financial course. It will be possible to regain financial health, because an alternative is available. Savings, the foundation of prosperity, will bloom as Americans opt for massive voluntary austerity by saving monetized silver dollars, half-dollars, quarters and dimes.

The banking system in the United States will be anxious to receive the massive savings in silver of the American people as deposits, but this will only be possible when the price of silver bullion has stabilized. Thus, the American people will have the upper hand; they will bend the banking system to their will by refusing to deposit their silver in the banks and thus force the banking system to reform itself to prudent monetary practice and desist from inflating by expanding credit out of nothing. After a stabilization of the banking system, the way would be open to a resumption of the Gold Standard.

Americans are today caught in a financial calamity with no parallel in history. They are being told this every day by every medium of communication. But they watch their crumbling economy in utter paralysis, because there is no alternative to which they may turn. The whole world is a mirror of their plight.

The restoration of the silver currency of the United States of America by the very simple procedure outlined here can provide the life-saving alternative. There is, at present, no other practical proposal for a viable action in the field of money. Perhaps there can be no other practical proposal? Perhaps a return to silver money is the only path out of the present crisis of civilization?

Let us hope that a political leader in the United States understands this message. The popular appeal of silver is universal; “silver shoes” will take that leader far – and the American people will follow him on that road!

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Silver's Performance to Triple That of Gold over The Next 3-5 Years..
Issue 92
Today's Gold/Silver Ratio: 43/1 Up

Issue 119

Gold: $1684.80/ Silver: $39.15

SGS Notes: The big news this week was the downgrading of the US credit rating from AAA to AA+ with S&P. I won't fill the newsletter with that since it's been in all the news... But what we are about to watch is the coming spike in gold and silver prices due to this and other factors... The downgrading of the US Dollar will have a huge domino effect on other currencies around the world. So we will be seeing unbelievable volatility everywhere in the markets... and demand is about to go sky high.

 

Silver's Performance to Triple That of Gold over The Next 3-5 Years..

Eric Sprott

Silver is likely to be the investment of the decade in the same way that gold was the investment of the last one as both industrial and investment demand come to the fore, says Eric Sprott

 

According to Sprott Asset Management CEO, Eric Sprott, Silver is the investment of the decade. Not only is it likely to reach $50 an ounce by the end of the year but, he says, over the next three to five years, it's performance is likely to treble that of gold's.

Speaking on Mineweb.com's Metals Weekly podcast, Sprott said, "We've been huge proponents of gold over the last 11 years, and we've been involved in silver over that same time period but beginning about a year ago it became extremely evident to us that the investment demand for silver was massively understated."

This move also appears to be occurring in India, where festival celebrants, deterred by high gold prices have been buying silver ornaments as gifts. (See: Silver puts gold in the shade.)

He adds, as a result of this, the ratio between the two metals is likely to get back to a more "appropriate" level around 16:1 - it is currently around 37:1 and only in June last year it was sitting around the 70:1 level.

"If one looked at the silver and gold sales as an example of the US Mint, so far this year, people have put the same dollars into silver as they've put into gold - which can't carry on with the price being 38:1 - you just can't have the same amount of money going in. We see the same thing in the ETFs - the silver ETFs have been growing while the gold ETFs so far this year, have declined," he says.

One of the main reasons for this, according to Sprott is that more and more people are viewing gold, and now silver, as the reserve currency and given the state of the world, there is a shift from paper to hard currencies.

It is not, however, just Sprott who sees this shift toward hard currencies. The state of Utah, recently signed a law which has made it the first U.S. state to recognize federally issued gold and silver coins as legal tender.

Asked why there is likely to be such a large relative outperformance, Sprott says, "the fundamentals for the two metals are entirely different. There is huge industrial demand for silver, there's not much industrial demand for gold. It's interesting when you look at how many dollars of gold are produced in a year and what's available for saving, and how many ounces of silver are produced per year, and how many of those ounces are available for investment, the ratio is something like there are 10 times more gold available for investment in dollars every year, than there is silver. So if the guy is just as happy to own silver as gold, the fundamentals are going to diverge markedly here."

With the growing industrial uses for the metal in, among other areas, photovoltaic cells, and the medical field (for its antibacterial properties) on top of the growing investment demand, higher prices could result in some substitution but, according to Sprott this is not really a concern as the dollar value of the silver is almost immaterial to the total cost of the product.

Any clouds to the silver lining?

Asked if there are any potential hiccoughs to the run for silver that he is predicting, Sprott says that while there are a few things that would cause him to change his mind, he does not really see any of them coming to pass any time soon

The first cloud, according to Sprott would be fiscal and monetary responsibility by governments and central banks but, he says, this is certainly not evident at present and would go so far as to say, " ever since we had QE1, the reason to own gold and silver has just changed materially here because of the irresponsibility of the central banks in the world

The other potential hiccough, he says would be some kind of massive mania type blow off, " you have to take your best guesses when something like that might end - I don't see it as being anywhere near that stage at this point."

And, finally he says, "The other thing that would have an impact is if, ultimately, gold and silver in fact are named reserve currencies - then we will all have accomplished what we're after and you may or may not need it neat because it's now money."

Where to from here?

According to Sprott Silver will move to $50 dollars this year before powering ahead, "If you ask me in the three to five year time frame, obviously I think it's going to go north of $100 simply because we'll get that 16:1 ratio and I certainly see gold going a lot higher, so that's my outlook here and therefore the rewards for owning silver and the equities will be quite outstanding."

Quote of the Week                               

“By this means (fractional reserve banking) government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”

--John Maynard Keynes
The Economic Consequences of the Peace (1920

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U.S. Debt Ceiling Crisis Only A Minor Player in Gold And Silver Prices

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Gold Is The True Reserve Currency

 

We Are at the Cusp of a Global Move into Gold and Silver

Chris Weber

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Gold and Silver Beyond the Limit ~ Peter Schiff
Issue 92
Today's Gold/Silver Ratio: 41/1 Up

Issue 118

Gold: $1628.00/ Silver: $39.95

SGS Notes: We are watching a political theater unfold that is certain to have a dramatic and lasting effect on silver and gold prices well into the future.

Gold and Silver Beyond the Limit

Peter Schiff

Perhaps the debt ceiling should be renamed the "national debt target," for it seems Washington is always trying to reach it. One could say it's their only reliable, time-tested achievement. And without fail, upon reaching their national debt target, they promptly extend it further in order to discover how quickly it can once again be attained!

While I have little doubt that the ceiling will be raised, my readers have been curious as to the implications for gold in each of the debt and "default" scenarios possible after August 2nd. This month, I'll outline how each outcome could affect the price of gold and silver.

BEARISH GOLD CASE #1: DEBT CEILING NOT RAISED - ENOUGH CUTS MADE TO AVERT DEFAULT

My readers know that this scenario is actually what the US government should do. The debt ceiling should not be increased and massive cuts must be made. We know this outcome is extremely unlikely - it would require not only a resolute steadfastness to sound money, but also a 180-degree change of philosophical beliefs by the majority of Congress (and the American public) overnight.

Yet in our fantasy world, if this did occur, it would be bearish for gold. It would mean the US government was shrinking, that debts were being paid, that the entire US economy was becoming more solvent and viable. Gold would be less important to own, as the risk of both currency crises and sovereign debt crises would be lower.

BEARISH GOLD CASE #2: DEBT CEILING RAISED - FEDERAL BUDGET BALANCED

If the debt ceiling is raised in order to avert imminent default, but the spare time is used to truly bring the federal budget into balance, the US economy might still be saved. But when I say "balanced," I mean it. This would mean not only eliminating the entire $1.5 trillion deficit, but also leaving enough of a surplus to cover all outstanding debt and unfunded liabilities. For perspective, Senator Rand Paul's proposal to but $500 billion a year, widely considered more radical than landing a man on Mars, would only address 1/3 of the annual deficit - it would take cuts many times that for the US to return to solvency.

But let's be optimistic: if the budget could be balanced, then the fact that the debt ceiling was being increased yet again would not be so awful. Since the US government's fiscal policies would be completely reversed, we could expect to start seeing a strengthening of the dollar (so long as Bernanke stopped the printing presses too) and a weakening of gold and silver.

However, this is just as much of a pipe dream as the first scenario. No government in history has dug itself out of the hole we now face without defaulting. If Congress even tried to enact a plan like this, people would be rioting in the streets over their lost entitlements. And we'd suddenly have millions of unemployed soldiers. Not exactly a recipe for peace and prosperity.

BULLISH GOLD CASE #1: DEBT CEILING NOT RAISED - US DEFAULTS ON TREASURY DEBT

This is the scenario that President Obama and Secretary Geithner are threatening. They claim that if the debt ceiling is not raised, they will have to immediately begin defaulting on Treasury interest payments. This is rather unlikely, as interest payments make up only 10% of spending, but let's say they stop paying anyway.

If they do this, market interest rates for US debt would skyrocket, meaning the only buyer left at rates the Treasury could afford would be the Fed. In other words, if they default on August 2nd, QE3 will start on August 3rd. Of course, a default would be absolutely devastating to the dollar and a boon for gold and silver. Global confidence in the invincibility of the United States would be shattered, and the underlying problem of excessive spending would still remain to be addressed.

Another interesting scenario would be if Congress didn't raise the debt ceiling and the Treasury just kept borrowing anyway. It's not like the Executive Branch follows laws scrupulously nowadays. What if they just ignored it? Someone could challenge the act in federal courts, but the odds are often in the President's favor. In this case, gold and silver might experience less of an initial spike, but their long-term prospects would be elevated as the world recognized that we were one step closer to becoming a banana republic.

BULLISH GOLD CASE #2: DEBT CEILING RAISED - SYMBOLIC CUTS IN SPENDING

This scenario is by far the most likely outcome of the debt talks in Washington; they will raise the debt ceiling and make spending cuts which sound substantial, but which only mange to slow the accumulation of new debt.

The plans on the table suggest cutting a couple trillion in cumulative spending over the next decade. In other words, they propose cuts that only reduce deficits by about 10-20%; they do nothing to reduce actual debt levels. So if these talks are successful, then instead of a $1.5 trillion deficit each year, perhaps we only suffer a $1.2 trillion deficit. Meanwhile, the debt continues growing. This is "success" in Washington.

Clearly, this is bullish for precious metals. It means more of the same - more spending, more debt, and necessarily more money-printing.

The Empire Has No Ceiling

Over the past 50 years, the US debt ceiling has been raised over 70 times. In other words, there is no ceiling at all - it is as fictitious as the idea that central planning works, or that the US has anything resembling a "free market."

So, I guess it stands to reason that regardless of the debt ceiling increase, it is likely that the US will be downgraded by one or more ratings agencies. The effect will be massive because the world's largest pension, mutual, and sovereign wealth funds typically mandate investment only in AAA-rated securities. A downgrade of US debt means those funds must immediately sell off their primary reserve asset. The effect of this cannot be overstated, and gold would be the first and best refuge for an onslaught of orphaned capital.

Despite gold once again hitting new highs, I can only recommend my readers continue to keep a healthy portion of their portfolio in precious metals. Given the sad realities of the US fiscal and monetary situation, it's prudent to assume that nothing will be solved by August 2nd.

Quote of the Week                               

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Gold settles at record as GDP Disappoints
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U.S. debt ceiling crisis only a minor player in gold and silver prices
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The Buzz Around Gold Is Growing Louder
Jeff Clark

 

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Ron Paul to Bernanke:
Is Gold Money?

Eric Sprott, of
Sprott Asset Management

Financial Sense
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" Silver Set to 'Explode' "

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Central Banks Unanimously Prefer Gold Over Paper ~ Jeff Nielson
Issue 92
Today's Gold/Silver Ratio: 39/1 Dn

Issue 117

Gold: $1600.60/ Silver: $40.16

SGS Notes: This week's news has centered around the debt ceiling, the budget 'crisis', and the impending economic crises for Europe, Italy, Greece (again)... all of these things are having an impact on gold and silver prices.

Central Banks Unanimously Prefer Gold Over Paper

Jeff Nielson

After the Western banking cabal engineered the "crash" of the global gold market in 1980, Western central banks spent more than a quarter-century perpetrating the lie that gold was a "barbarous relic" - which was supposedly "inferior" to the worthless, un-backed paper they were cranking out (in record amounts) on their privately-owned printing presses.

Their incentive was obvious. In getting the entire world to believe that lie, they were able to enrich themselves by $10's of trillions of dollars. This was done by creating those $10's of trillions ("out of thin air"), pretending that this paper actually represented real wealth - and then getting people all over the world to give them $trillions more paying interest on worthless paper which never represented any real wealth in the first place.

While it was the largest fraud (and theft) in the history of the world (by a factor of more than 1,000), it was by no means an original act of fraud - being nothing more than the same scam which all bankers always perpetrate, whenever they are (foolishly) granted the privilege of inventing "money" out of thin air, going back a thousand years.

During the first twenty-five years of this institutionalized fraud/theft, the bankers supported their fraud by dumping their vast hoards of gold onto the market (in the largest quantities in history). "Look," they would say, pointing with their evil talons, "Even we bankers, the greediest creatures ever hatched on this planet, have no use for this archaic, yellow metal - so why would any of you want to own it?"

It was a very successful strategy

The price of gold was pushed to an all-time low (in real dollars), so low that more than 90% of the world's gold mines were forced to close since they couldn't manage to break-even at those fraud-induced prices. And individual holdings of gold (especially in the West) fell to their lowest level in history.

Obviously, with that privilege to print money not having been revoked yet (a literal "license to steal"), their incentive to continue this fraud/theft is as strong as ever. However, over the past five years a "funny" thing has occurred. First these central banks rapidly slowed their dumping of gold, then they stopped it altogether, and now they are the single-largest bloc of gold-buyers on the planet.

Recent statistics released by the World Gold Council allow us to go even further. Over the past two years, the world's central banks have demonstrated a 100% unanimous preference for gold over their own banker-paper (i.e. all those un-backed "fiat currencies"). During that span of time, only three nations have been modest "net sellers" of gold - and in all three cases this related to "long term sales agreements" (i.e. old obligations). During the past two years, not one single central bank on the face of the Earth has chosen to be a net-seller of gold over that time.

I drive a Toyota

Let me construct an analogy here. A person goes shopping for a car. He goes to a Ford dealership, and after getting the full "sales pitch" on what wonderful vehicles all Ford products are, the shopper asks the salesman "what kind of car do you drive?" And the salesman answers "I drive a Toyota."

The car-shopper then goes to a GM dealership, a Chrysler dealership, a Volkswagen dealership, and every other auto-dealership he can find. At each dealership, the salesman tells the shopper what "wonderful vehicles" they make, but when the shopper asks each one what car they drive themselves, every one replies "Toyota". The obvious question to ask is that armed with such data, is there a single (rational) auto-buyer who would buy anything other than a Toyota?

The equally obvious answer is that "no", no rational buyer would ever choose any vehicle other than a Toyota - unless he/she simply couldn't afford the purchase price.

The most charitable statement we can make about the world's central bankers is that they are the world's "sellers of money". Indeed, since I have already pointed out that what they are selling is worthless, we could obviously come up with a long list of terms less-neutral than "sellers". Unquestionably, with armies of statisticians and data-gatherers at their disposal, they are the world's foremost experts on "money" (assuming we generously include their fiat currencies with that label).

Much like a hypothetical world where all the sellers of automobiles (who know these cars the best) all buy a single brand of automobile themselves, all of the world's foremost experts on "money" are showing a 100% preference for one kind of money: gold. The message from the world's central bankers is absolutely unequivocal: only chumps would choose to hold paper over gold.

Clearly, the massive paper-fraud of these banksters is in its final stages of decay: a Ponzi-scheme of unimaginable proportions, where people willingly funneled $trillions of their own wealth into the clutches of Western bankers - only to ultimately end up with zero (or near-zero, or less-than-zero). We know this, because the scammers themselves are now publicly fleeing from their own scam.

Ironically, the same, semi-comatose mainstream media which still alerts us when "insiders" in our equity markets are "dumping" their shares, has been 100% oblivious to the "insiders" in our monetary markets dumping their banker-paper (in favor of gold). The parallel cannot be missed: when corporate insiders are unanimously dumping their shares, only the "Mother of All Fools" would be a buyer in equity markets. When all of the world's monetary "insiders" are dumping their banker-paper in favor of gold, only an equivalent "fool" would attempt to swim against that tide.

To avoid getting "lynched" by all of the silver-bulls who follow my work, let me take a moment to include silver in this analysis. To begin with, if anything the bankers have even more fear/hatred of silver than gold. However, their hatred/aversion to silver is so extreme that rather than merely lie about silver (so people would not want to hold it), and then hoarding as much as possible themselves, they decided on the "nuclear option": destroying the world's stockpiles of silver. The only reason why the world's central banks have shown no interest in silver is because inventories have been decimated to such an extreme (more than 90% lower than 15 years ago) that (relative to gold) there is no silver for the central banks to start hoarding.

At the household level, the world's silver shortage is not yet that extreme. We can still buy what we want/need as individuals - and at "sale" prices, thanks to the recent ambush of the silver market by the CME Group. Of particular relevance, for those small investors who are finding the price of gold moving out of their "reach", silver remains accessible - and a fantastic bargain.

Short of B.S. Bernanke starting to walk around with a neon sign hanging around his neck saying "buy gold", it is impossible for ordinary investors to get any clearer warning that "cash is trash" and bullion is "golden". Ignore such a warning at your own peril.

Quote of the Week                               

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Silver is a Powder Keg
Waiting To Explode
Andy Schectman, CEO
Miles Franklin

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Silver and Industrial Demand - Part I by Jeff Lewis
Issue 92
Today's Gold/Silver Ratio: 42/1 Dn

Issue 115

Gold: $1545.70/ Silver: $36.67

SGS Notes: This week's article was too long for one newsletter, so we've split it up into 2 parts. This week will deal with historical and established silver demand; Part 2 will deal with Future Trends and silver's role in them. Meanwhile, if you haven't been watching silver and gold prices lately, you'll note that in the past week, we've seen a rise again in silver from the $34 range to the $36 range, and gold from the $1490s to the mid $1500 range and a drop of the gold:silver ratio of 2 points...

 

Silver and Industrial Demand - Part I

Jeff Lewis

I. Introduction

As you know, silver is much more than just a form of money. Although not often discussed in great detail, silver is actually an incredibly important and strategic industrial commodity. In fact, demand for silver by industry has increased dramatically in recent years and shows no signs of slowing despite price fluctuations.

Silver's incredible versatility - as a conductor, a catalyst, an antibacterial agent and much more - and unrealistically low prices have made it ideal for use in a huge number of products spanning countless manufacturing sectors. And the continued (relative) affordability of this super-metal points to dramatically increased demand in coming years.

As silver investors and educators, we feel that understanding silver's tremendous role(s) in industry (along side its importance as a store of wealth) is critical to understanding its past, present and future value. In fact, we are confident that you will find the insight and knowledge gained to be crucial for maintaining perspective as we head through the upcoming currency storm.

Ironically, if not miraculously, we find ourselves at the cutting edge of technology, while simultaneously, re-aligning with what also happens to be an excellent, proven, and historic form of wealth preservation - and money. Not to mention it is becoming increasingly scarce!

To broaden your understanding of silver's industrial applications, we're examining past and current industrial demand and looking forward toward what is expected to be a very bright future for this powerful and increasingly rare metal.

Growing Industrial Demand

As recently as 1990, total annual demand for silver by industry was about 273 million ounces (Moz). This represented about 39 percent of the total amount of silver fabricated each year. By 2000, industrial demand represented over 40 percent of total fabrication. And as of 2007, it had climbed to an all-time high of 465 Moz annually - or 55 percent of total fabrication - where, despite a downturn related to the global economic crisis that began in 2008, it is approximately today.

This upward trend is expected to continue, with annual industrial silver consumption growing from about 487 Moz in 2010 to approximately 666 Moz in 2015. This increase in demand will come from growth in both long-established industrial uses of silver and some intriguing new applications.

Established Industrial Applications

Silver's superiority as an electrical conductor makes it ideally suited for use in batteries and electrical contacts. Silver is used widely in automobiles (the list of core automotive applications is growing) and, in the form of a highly conductive paste, in photovoltaic cells. Photovoltaic cells - which convert solar energy into electricity - are already in great demand as concerns about dwindling fossil-fuel supplies grow. Photovoltaics also promises to play a key role in the drive toward clean energy sources in coming years. In fact, silver demand for use in photovoltaic cells is expected to double by 2015.

Emerging Industrial Applications

Thanks to silver's unmatched conductivity and relative affordability, it has become a critical element in the manufacture of a great variety of electronic devices - many of which have become important (and largely taken for granted) parts of our daily lives. Because silver-containing batteries manage energy output in very small packages, they are widely used in smart phones, laptops, and tablets, demand for which seems to be virtually limitless.

Other new applications capitalize on silver's powerful antibacterial properties. Silver-bearing products ranging from socks to cosmetics are appearing on the market with increasing frequency.

Because, in many of its industrial applications, silver performs much better than its possible replacements (if they exist), industry shows little interest in moving away from it toward less expensive or more abundant materials. So long as silver continues to be relatively inexpensive, and consumers don't lose their appetites for silver-containing products - which doesn't seem likely - industrial demand for silver will continue to grow.

 

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Bullion Blows Up Banksters ~ Jeff Nielsen
June 26 , 2011
Issue 92
Today's Gold/Silver Ratio: 43/1 Up

Issue 113

Gold: $1503.30/ Silver: $34.43

Bullion Blows Up Banksters

Jeff Nielsen

When precious metals commentators (including myself) talk about the pathological fear/hatred which bankers exhibit toward gold and silver, we typically focus on their aversion to higher bullion prices – as being the “canary in the coal mine” which warns us that banker money-printing has spun out of control.

There is, however, an even more fundamental antagonism which the paper-pushing “elites” feel toward precious metals: the simple act of holding bullion is effectively an involuntary “de-leveraging” of the endless $trillions in bankster Ponzi-schemes which have totally contaminated nearly all Western economies.

Readers should not confuse my title with the popular “take down JP Morgan” campaign spearheaded by a few so-called “silver vigilantes”. When I talk about bankers being “blown up” by bullion, this is an entirely passive process. First of all, our purchasing of bullion (as has been often explained) is a defensive move to “insure” our dwindling wealth against the currency-dilution inflicted upon us by the excessive money-printing of the bankers. Secondly, the “harm” caused to the bankers by bullion is indirect, and entirely a function of their own excessive behavior.

Let me quickly cover the first premise by once again reviewing the monetary abomination known as “fractional reserve banking”. In the typical, modern “fractional reserve system”, each time we deposit a (paper) dollar with a bank (or invest it), our eternally greedy bankers are allowed to effectively print-up ten more dollars, loan them out into the economy (or “invest” them) – and thus that $1 dollar suddenly becomes $11, with the other $10 dollars being a windfall created (literally) out of thin air, which has neither been “earned”, nor does it have anything at all “backing” its value.

This ten-to-one dilution of our currency – which is nothing less than (legal) systemic fraud – is precisely how the Federal Reserve has been able to reduce the value of the U.S. dollar by roughly 98% (over its 98-year existence). But even stealing at this rapacious rate was not enough to sate the greed of the 21st century Wall Street bankster.

They directed their spineless servants in Washington to change a vast number of rules (and eliminate even more “safeguards”) allowing these banksters to increase that (already obscene) 10:1 leverage to an utterly insane level of greater than 30:1 – which turned the entire U.S. financial system (and most of its debt and equity markets) into a collection of hopelessly unstable Ponzi-schemes. This leverage-insanity has culminated in the creation of the banksters’ private casino: the $1.5 quadrillion derivatives market – by itself more than twenty times bigger than the entire global economy.

Thus when a small minority of individuals engage in the “defensive” strategy of buying bullion, we are protecting ourselves in two ways. First of all, we are isolating our waning wealth in a form which the banksters cannot dilute/debauch with their money-printing. Secondly, we are accumulating this insurance against the inevitable financial collapse when the bankster Ponzi-schemes finally implode. There is, however, an indirect “virtuous circle” which is set in motion by the simple act of buying bullion, which (to the best of my knowledge) is not being discussed by other commentators – either in the mainstream media, or within this sector itself.

Let us back-up to the basic premise upon which fractional-reserve banking exists: we invest or deposit a dollar with a banker, and then they are legally allowed to dilute that dollar by anywhere from a factor of 10:1 or 30:1. However, each and every time that we take one of our dollars and invest it into precious metals, we are breaking that cycle of dilution (and currency-destruction).

As this purchasing of bullion increases, we thus began to weaken the cycle of serial currency-dilution, and effectively de-leverage our own financial systems. Note that this “involuntary de-leveraging” of Wall Street (in particular) has been made 100% necessary due to the complete failure of servile politicians and corrupt regulators to rein-in the 30:1 insanity of Wall Street. Indeed, after only a brief drop-off (when there were no “chumps” available to take their bets), all reports indicate that the Wall Street vampires are just as leveraged today as they were before they almost destroyed the global financial system the first time – except that this insane leverage is now concentrated in even fewer hands.

This means that as individuals accumulate bullion to personally insure and insulate their wealth from the fractional-reserve piracy of modern banking, that collectively our actions are insuring and insulating our entire economies against the inevitable economic carnage as the paper-bubbles collapse – including all of the worthless, fiat currencies themselves.

In fact, I only began to consciously explore this line of reasoning myself when I was admiring the brilliance of Hugo Salinas Price’s movement to re-institute silver money as a “parallel currency” in Mexico. Critics of this scheme have argued that most of the silver money being created would quickly disappear: people would spend their paper money, and hang onto their (higher quality) silver money.

My rebuttal to that has been that this is the beauty of Salinas Price’s proposal. Effectively, instead of Mexicans having paper “savings accounts”, where they give their pesos to bankers – and then suffer the economic rape of currency-dilution – Mexicans would have “silver savings accounts”, 100% immune to the monetary depravity of bankers. I then added to that by pointing out the cumulative effect of this: permanently reducing the percentage of our wealth which is under the control of bankers, and (simultaneously) permanently reducing our vulnerability (i.e. leverage) when these paper-pirates (yet again) destroy themselves (and our system) with their insatiable greed and reckless gambling.

The mainstream media have been programmed with their own rebuttal. They call such behavior “hoarding”. This is nothing less than a perversion of semantics. In fact, for more than 4,000 years most of humanity has held their “savings” in the form of gold or silver, and billions of people do so today, primarily in Asian economies.

What has been “savings” for 4,000 years does not become “hoarding” simply because the mainstream media chooses to be an accomplice of the banksters in helping them steal our money through their fractional-reserve Ponzi-schemes.

This supplies ordinary citizens with yet one more motivation to insure a large percentage of their wealth by converting it to (“physical”) gold or silver. Not only are we protecting ourselves individually, but collectively we are engaging in the “bank reform” which our cowardly and corrupt political leaders have failed to do.

This means that each and every time you hear some media talking-head parrot the words “hoarding silver”, you can immediately translate that to mean “insuring our financial system”. The fact that it will ultimately help to “blow up the banksters” (as a consequence of their own greed) is merely a fringe benefit.

 

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1 of 9
Bix Weir Interview

 

 

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