Everyone's favorite cartoon is back after the silver bears make yet another return appearance, this time number 7, in which more than anything,zt is made clear that the name of Blythe Masters will live in infamy long after she no longer has anything to do with the price of silver, and, allegedly, its ongoing suppression.
For those that have not seen parts 1-6 of the silver bears series which lays out how JP Morgand and company are manipulating the silver market you can view those episodes in our "Silver" section.
Showing posts with label Silver. Show all posts
Showing posts with label Silver. Show all posts
Monday, August 8, 2011
Monday, July 25, 2011
Gold And Silver: We Were Right – They Were Wrong
by Brandon Smith of Alt Market
Only now, after three years of roller coaster markets, epic debates, and gnashing of teeth, are mainstream financial pundits finally starting to get it. At least some of them, anyway. Precious metals have continued to perform relentlessly since 2008, crushing all naysayer predictions and defying all the musings of so called “experts”, while at the same time maintaining and protecting the investment savings of those people smart enough to jump on the train while prices were at historic lows (historic as in ‘the past 5000 years’).
Alternative analysts have pleaded with the public to take measures to secure their hard earned wealth by apportioning at least a small amount into physical gold and silver. Some economists, though, were silly enough to overlook this obvious strategy. Who can forget, for instance, Paul Krugman’s hilarious assertion back in 2009 that gold values reflect nothing of the overall market, and that rising gold prices were caused in large part by the devious plans of Glen Beck, and not legitimate demand resulting from oncoming economic collapse:
To this day, with gold at $1600 an ounce, Krugman refuses to apologize for his nonsense. To be fair to Krugman, though, his lack of insight on precious metals markets is most likely deliberate, and not due to stupidity, being that he has long been a lapdog of central banks and a rabid supporter of the great Keynesian con. Some MSM economists are simply ignorant, while others are quite aware of the battle between fiat and gold, and have chosen to support the banking elites in their endeavors to dissuade the masses from ever seeking out an alternative to their fraudulent paper. The establishment controlled Washington Post made this clear with its vapid insinuation in 2010 that Ron Paul’s support of a new gold standard is purely motivated by his desire to increase the value of his personal gold holdings, and not because of his concern over the Federal Reserve’s destructive devaluing of the dollar!
So, if a public figure owns gold and supports the adaptation of precious metals to stave off dollar implosion, he is just trying to “artificially drive up his own profits”. If he supports precious metals but doesn’t own any, then he is “afraid to put his money where his mouth is”. The argument is an erroneous trap, not to mention, completely illogical.
Numerous MSM pundits have continued to call a top for gold and silver markets only to be jolted over and over by further rapid spikes. Frankly, it’s getting a little embarrassing for them. All analysts are wrong sometimes, but these analysts are wrong ALL the time. And, Americans are starting to notice. Who beyond a thin readership of mindless yuppies actually takes Krugman seriously anymore? It’s getting harder and harder to find fans of his brand of snake oil.
Those who instead listened to the alternative media from 2007 on have now tripled the value of their investments, and are likely to double them yet again in the coming months as PM’s and other commodities continue to outperform paper securities and stocks. After enduring so much hardship, criticism, and grief over our positions on gold and silver, it’s about time for us to say “we told you so”. Not to gloat (ok, maybe a little), but to solidify the necessity of metals investment for every American today. Yes, we were right, the skeptics were wrong, and they continue to be wrong. Even now, with gold surpassing the $1600 an ounce mark, and silver edging back towards its $50 per ounce highs, there is still time for those who missed the boat to shield their nest eggs from expanding economic insanity. The fact is, precious metals values are nowhere near their peak. Here are some reasons why…
Debt Ceiling Debate A Final Warning Sign
If average Americans weren’t feeling the heat at the beginning of this year in terms of the economy, they certainly are now. Not long ago, the very idea of a U.S. debt default or credit downgrade was considered by many to be absurd. Today, every financial radio and television show in the country is obsessed with the possibility. Not surprisingly, unprepared subsections of the public (even conservatives) are crying out for a debt ceiling increase, while simultaneously turning up their noses at tax increases, hoping that we can kick the can just a little further down the road of fiscal Armageddon. The delusion that we can coast through this crisis unscathed is still pervasive.
Some common phrases I’ve heard lately: “I just don’t get it! They’re crazy for not compromising! Their political games are going to ruin the country! Why not just raise the ceiling?!”
What these people are lacking is a basic understanding of the bigger picture. Ultimately, this debate is not about raising or freezing the debt ceiling. This debate is not about saving our economy or our global credit standing. This debate is about choosing our method of poison, and nothing more. That is to say, the outcome of the current “political clash” is irrelevant. Our economy was set on the final leg of total destabilization back in 2008, and no amount of spending reform, higher taxes, or austerity measures, are going to change that eventuality.
We have two paths left as far as the mainstream economy is concerned; default leading to dollar devaluation, or, dollar devaluation leading to default. That’s it folks! Smoke em’ if you got em’! This train went careening off a cliff a long time ago.
If the U.S. defaults after August 2nd, a couple of things will happen. First, our Treasury Bonds will immediately come into question. We may, like Greece, drag out the situation and fool some international investors into thinking the risk will lead to a considerable payout when “everything goes back to normal”. However, those who continued to hold Greek bonds up until that country’s official announcement of default know that holding the debt of a country with disintegrating credit standing is for suckers. Private creditors in Greek debt stand to lose at minimum 21% of their original holdings because of default. What some of us call a “21% haircut”:
With the pervasiveness of U.S. bonds around the globe, a similar default deal could lead to trillions of dollars in losses for holders. This threat will result in the immediate push towards an international treasury dump.
Next, austerity measures WILL be instituted, while taxes WILL be raised considerably, and quickly. The federal government is not going to shut down. They will instead bleed the American people dry of all remaining savings in order to continue functioning, whether through higher charges on licensing and other government controlled paperwork, or through confiscation of pension funds, or by cutting entitlement programs like social security completely.
Finally, the dollar’s world reserve status is most assuredly going to be placed in jeopardy. If a country is unable to sustain its own liabilities, then its currency is going to lose favor. Period. The loss of reserve status carries with it a plethora of very disturbing consequences, foremost being devaluation leading to extreme inflation.
If the debt ceiling is raised yet again, we may prolong the above mentioned problems for a short time, but, there are no guarantees. Ratings agency S&P in a recent statement warned of a U.S. credit downgrade REGARDLESS of whether the ceiling was raised or not, if America’s overall economic situation did not soon improve. The Obama Administration has resorted to harassing (or pretending to harass) S&P over its accurate assessment of the situation, rather than working to solve the dilemma:
Ratings company Egan-Jones has already cut America’s credit rating from AAA to AA+:
Many countries are moving to distance themselves from the U.S. dollar. China’s bilateral trade agreement with Russia last year completely cuts out the use of the Greenback, and China is also exploring a “barter deal” with Iran, completely removing the need for dollars in the purchase of Iranian oil (which also helps in bypassing U.S. sanctions):
So, even with increased spending room, we will still see effects similar to default, not to mention, even more fiat printing by the Fed, higher probability of another QE announcement, and higher inflation all around.
This period of debate over the debt ceiling is liable to be the last clear warning we will receive from government before the collapse moves towards endgame. All of the sordid conundrums listed above are triggers for skyrocketing gold and silver prices, and anyone not holding precious metals now should make changes over the course of the next month.
What has been the reaction of markets to the threat of default? Increased purchasing of precious metals! What has been the reaction of markets to greater spending and Fed inflation? Increased purchasing of precious metals! The advantages of gold and silver are clear…
European TARP?
The MSM blatantly glossed over the EU decision on the latest Greek bailout, as many pundits heralded the plan as decisive action on the part of Europe. But, what was the EU solution to the possibility of Greek default? In the end, their solution was to LET GREECE DEFAULT! Brilliant!
EU proponents of the plan for Greece are calling the solution a “selective default”, which I suppose, is meant to make it sound less default-ish. However, this is, indeed, a default, and many Greek bondholders are going to lose substantial sums of money as the Greek government decides who they are going to pay back, and who they are going to give the finger. Strangely, this plan also includes the creation of a kind of European Monetary Fund, or a European TARP. This means a broader strategy is being put into motion that involves continuing bailouts and fiat injections of Euros, not just into Greece, but into other countries as well, including Ireland, Portugal, Spain, and even Italy:
Extended printing of Euros means devaluation, and devaluation means greater international interest in gold and silver. The EU Council plan is a blinding flashing neon sign telling us to BUY PRECIOUS METALS, while we still can.
Stock Market Facade Is Over And Inflation Is Here
The “great bull run” over the past two years has been somewhat successful in fooling a certain percentage of Americans into believing all the recovery talk was real. The fundamentals, though, show that this run is entirely fabricated. Besides a static real unemployment rate of around 20%, housing market hellfire, and crushing inflation in commodities, trading volume in stocks is also at a three year low:
This means that the overall value of the Dow is being driven by a much smaller pool of investors. A smaller pool of active investors means a more volatile market, with a greater chance of wild swings or inflated values. This lack of stock participation also leads one to question the validity of the bull run as a whole. What, we might ask, has really been holding the markets up for so long, if so few people are feeding the machine?
We must keep in mind that since the credit crisis began the Fed has held interest rates at near zero. That’s almost 3 YEARS of near zero interest rates; far beyond the predictions of many mainstream analysts. The reason? Easy fiat from the Fed is the only thing keeping markets alive. Without it, they would crumble. We hear only of the fiat pumped into the system through bailouts and quantitative easing, but rarely do we hear about all the printing that goes on in-between these public events. The extent of Fed currency creation is made more apparent by the St. Louis Fed’s Adjusted Monetary Base:
According to the Fed publication ‘Monetary Base In An Era Of Financial Change’, the AMBSL is an index measuring the central bank balance sheet, including open market operations, statutory reserve requirements, and foreign exchange market interventions. The index, though, includes only what is reported by the fed, and without an audit, it is impossible to determine its accuracy. In all likelihood, it actually under-reports the amount of fiat being flooded into markets.
Can the Fed prop up the markets forever? No. The volume versus value conflict is too revealing, and I believe we have reached a point at which the weight of negative data is preventing any further significant climbs in the Dow even in the face of manipulation. A kind of critical apex is created; a point at which two forces once balanced meet and derail each other. Stocks, at this time, are very vulnerable, especially when they are supported by a central bank induced fiat framework.
When investors realize that the bull run is fake, not to mention over for a very long time, that dollar devaluation is a certainty, and that bonds are a deathtrap, where will they turn to protect their savings? That’s right…gold and silver. The price potential for metals going into the final half of 2011 is extremely high. Lows can strike abruptly, and they do often under such volatile circumstances, but unlike MSM talking heads, we look well beyond week to week progressions. The long term trend is really what matters, and the long term trend for gold and silver has been impressively positive.
To those who chose not to take my advice over the past three years, or the advice of countless other alternative analysts and economists, I can only say we stand by our record. Our purpose is to help you secure the safety of your buying power as much as possible in these dangerous days. That is all. It is not too late to establish a foundation in precious metals, and it is not too late to accept the reality of our country’s quandary. Warnings, though, are just a small window in time, and they are only useful, so far as they are heeded.
Friday, May 20, 2011
China Becomes World’s Larest Gold Buyer - Buys 93.5 Tonnes Of Gold Coins / Bars in Q1 - Gold Ownership Rising From Minuscule Levels
from Goldcore.com
Gold and silver are higher again today with the debt laden dollar, euro and yen all being sold. News that China has become the world’s largest buyer of gold bullion and has seen investment demand double continues to reverberate in the markets and may have contributed to this morning’s strength.
Both gold and silver are marginally higher for the week and after last week’s gain appear to have regained their poise and are consolidating after the recent sell off.
Gold Investment Demand in China - Courtesy of the Wall Street Journal
China becoming the world’s largest gold buying nation is very important. While informed analysts have been saying that this would inevitably happen much of the commentary and most of the public remain completely unaware of the huge implications that Chinese gold demand has for the gold market.
Indeed, there continues to be a huge level of ignorance regarding the scale and sustainability of China’s, but also India’s and other large and increasingly wealthy Asian countries, demand for gold and silver bullion.
Chinese investors bought 93.5 tonnes of gold coins and bars in the first quarter. China produced 340 metric tons of gold last year and consumption was about 700 tonnes, leaving a gap of nearly 360 tonnes.
Demand is forecast to increase due to the growing wealth of the Chinese middle class and deepening inflation in China.
What is most important and rarely covered is the fact that gold ownership by the Chinese public remains minuscule. Especially when compared to other Asian countries such as Vietnam and India.
Gold ownership is rising from a very, very low base which means that the investment demand and demand for an inflation hedge from 1.3 billion increasingly wealthy Chinese people is more than sustainable.
The not realized important fact that the people of China were banned from owning gold bullion from 1950 to 2003, means that the per capita consumption of over 1.3 billion people is rising from a tiny base.
Cross Currency Rates (Including Gold and Silver)
While the recent increase in Chinese demand has been very significant, it is likely to continue and the demand is sustainable due to Chairman’s Mao’s half-century gold ownership ban.
Should the Chinese economy crash as some predict, demand could fall. However, sharp declines in Chinese equity and property markets and a depreciation of the yuan would likely lead to significant safe haven demand for gold.
Indeed, should high inflation continue in the Chinese economy or should higher inflation or even stagflation occur than Chinese demand could even increase.
Chinese demand alone likely puts a floor under the gold market at $1,450/oz.
The inflation adjusted high of $2,400/oz remains very likely given Chinese and Asian demand alone for gold bullion.
Many market participants and non gold and silver experts tend to focus on the daily fluctuations and “noise” of the market and not see the “big picture” major change in the fundamental supply and demand situation in the gold and silver bullion markets – particularly due to investment and central bank demand from China and the rest of an increasingly powerful and wealthy Asia.
It is worth noting that the People’s Bank of China’s gold reserves are very small when compared to those of the U.S. and indebted European nations. China appears to be quietly accumulating gold bullion reserves. As was the case previously, they will not announce their gold purchases in order to ensure they accumulate sizeable reserves at more competitive prices.
SILVER
The recent bear raid on silver is being challenged by silver’s very favourable supply and demand fundamentals.
The Comex Registered Silver Bullion Inventory Data shows that silver bullion inventories are now at record lows (see chart).
Speculative paper players on the COMEX may have been successful in again manipulating prices lower but as ever the physical reality of supply and demand for the underlying commodity, asset and currency will dictate prices in the medium and long term.
Comex Silver Bullion Inventory Data/Registered
Gold
Gold is trading at $1,500.90/oz, €1,049.95/oz and £922.95oz.
Silver
Silver is trading at $35.10/oz, €24.55/oz and £21.58/oz.
Platinum Group Metals
Platinum is trading at $1,763.50oz, palladium at $728/oz and rhodium at $1875/oz.
News
(Financial Times) --Chinese set new standard in buying gold
http://www.ft.com/intl/cms/s/0/8843dbb8-824a-11e0-961e-00144feabdc0.html
(Wall Street Journal) -- China Is Now Top Gold Bug
http://online.wsj.com/article/SB10001424052748704816604576333080229436072.html
(Bloomberg) -- Gold May Gain on Europe Debt Concern, Inflation, Survey Shows
http://www.bloomberg.com/news/2011-05-19/gold-may-gain-on-europe-debt-concern-inflation-survey-shows.html
(Reuters) -- PRECIOUS-Gold regains strength on bargain hunting,silver steadies
http://www.reuters.com/article/2011/05/20/markets-precious-idUSL4E7GK0OB20110520
(Bloomberg) -- Gold Advances as Europe Financial Turmoil, Dollar Weakness Spur Purchases
http://www.bloomberg.com/news/2011-05-20/gold-advances-as-europe-financial-turmoil-dollar-weakness-spur-purchases.html
(Bloomberg) -- Gold Imports by China May Rise After Demand Gains to Record, Council Says
http://www.bloomberg.com/news/2011-05-20/gold-imports-by-china-may-rise-after-demand-gains-to-record-council-says.html
Gold and silver are higher again today with the debt laden dollar, euro and yen all being sold. News that China has become the world’s largest buyer of gold bullion and has seen investment demand double continues to reverberate in the markets and may have contributed to this morning’s strength.
Both gold and silver are marginally higher for the week and after last week’s gain appear to have regained their poise and are consolidating after the recent sell off.
Gold Investment Demand in China - Courtesy of the Wall Street Journal
China becoming the world’s largest gold buying nation is very important. While informed analysts have been saying that this would inevitably happen much of the commentary and most of the public remain completely unaware of the huge implications that Chinese gold demand has for the gold market.
Indeed, there continues to be a huge level of ignorance regarding the scale and sustainability of China’s, but also India’s and other large and increasingly wealthy Asian countries, demand for gold and silver bullion.
Chinese investors bought 93.5 tonnes of gold coins and bars in the first quarter. China produced 340 metric tons of gold last year and consumption was about 700 tonnes, leaving a gap of nearly 360 tonnes.
Demand is forecast to increase due to the growing wealth of the Chinese middle class and deepening inflation in China.
What is most important and rarely covered is the fact that gold ownership by the Chinese public remains minuscule. Especially when compared to other Asian countries such as Vietnam and India.
Gold ownership is rising from a very, very low base which means that the investment demand and demand for an inflation hedge from 1.3 billion increasingly wealthy Chinese people is more than sustainable.
The not realized important fact that the people of China were banned from owning gold bullion from 1950 to 2003, means that the per capita consumption of over 1.3 billion people is rising from a tiny base.
Cross Currency Rates (Including Gold and Silver)
While the recent increase in Chinese demand has been very significant, it is likely to continue and the demand is sustainable due to Chairman’s Mao’s half-century gold ownership ban.
Should the Chinese economy crash as some predict, demand could fall. However, sharp declines in Chinese equity and property markets and a depreciation of the yuan would likely lead to significant safe haven demand for gold.
Indeed, should high inflation continue in the Chinese economy or should higher inflation or even stagflation occur than Chinese demand could even increase.
Chinese demand alone likely puts a floor under the gold market at $1,450/oz.
The inflation adjusted high of $2,400/oz remains very likely given Chinese and Asian demand alone for gold bullion.
Many market participants and non gold and silver experts tend to focus on the daily fluctuations and “noise” of the market and not see the “big picture” major change in the fundamental supply and demand situation in the gold and silver bullion markets – particularly due to investment and central bank demand from China and the rest of an increasingly powerful and wealthy Asia.
It is worth noting that the People’s Bank of China’s gold reserves are very small when compared to those of the U.S. and indebted European nations. China appears to be quietly accumulating gold bullion reserves. As was the case previously, they will not announce their gold purchases in order to ensure they accumulate sizeable reserves at more competitive prices.
SILVER
The recent bear raid on silver is being challenged by silver’s very favourable supply and demand fundamentals.
The Comex Registered Silver Bullion Inventory Data shows that silver bullion inventories are now at record lows (see chart).
Speculative paper players on the COMEX may have been successful in again manipulating prices lower but as ever the physical reality of supply and demand for the underlying commodity, asset and currency will dictate prices in the medium and long term.
Comex Silver Bullion Inventory Data/Registered
Gold
Gold is trading at $1,500.90/oz, €1,049.95/oz and £922.95oz.
Silver
Silver is trading at $35.10/oz, €24.55/oz and £21.58/oz.
Platinum Group Metals
Platinum is trading at $1,763.50oz, palladium at $728/oz and rhodium at $1875/oz.
News
(Financial Times) --Chinese set new standard in buying gold
http://www.ft.com/intl/cms/s/0/8843dbb8-824a-11e0-961e-00144feabdc0.html
(Wall Street Journal) -- China Is Now Top Gold Bug
http://online.wsj.com/article/SB10001424052748704816604576333080229436072.html
(Bloomberg) -- Gold May Gain on Europe Debt Concern, Inflation, Survey Shows
http://www.bloomberg.com/news/2011-05-19/gold-may-gain-on-europe-debt-concern-inflation-survey-shows.html
(Reuters) -- PRECIOUS-Gold regains strength on bargain hunting,silver steadies
http://www.reuters.com/article/2011/05/20/markets-precious-idUSL4E7GK0OB20110520
(Bloomberg) -- Gold Advances as Europe Financial Turmoil, Dollar Weakness Spur Purchases
http://www.bloomberg.com/news/2011-05-20/gold-advances-as-europe-financial-turmoil-dollar-weakness-spur-purchases.html
(Bloomberg) -- Gold Imports by China May Rise After Demand Gains to Record, Council Says
http://www.bloomberg.com/news/2011-05-20/gold-imports-by-china-may-rise-after-demand-gains-to-record-council-says.html
Saturday, May 14, 2011
Inflation Is Already Here
The recent correction in the commodities markets may be providing Bernake, Geithner and their easy money acolytes with a sense of relief given the relentless run up in prices of raw materials since the announcement of QE back in 2008, but they should not sleep tight just yet. As anyone in the markets will tell you, when any underlying commodity has a price move so vertical in its trajectory it’s bound to face a correction as the smart money, having gotten in for fundamental reasons much earlier along the trend line now wait for the panic buyers or the Johnny-come-lately’s to give the rally that last unsustainable spike to unload their longs and leave the suckers holding $40.00 silver in their purses.
So one must step back and take a long view. Although it would appear that those of us who warn that inflation is not just a threat but very much a fact of life now were knee-jerk pontificators jumping on the commodities rally trend for political (read: Fed/Obama bashing) reasons, the analysis is quite sound. Most important, it is methodical not emotional as price surges tend to make investors and analysts from time to time.
Here are some facts: even with the inevitable correction in commodities, as of this writing crude oil is 35% more expensive than it was a year ago…advancing with ups and downs along the way from as low as $17.50/bbl in November of 2001 to its current level of over $100/bbl or around a 19% annual appreciation in a decade since the Fed started giving away dollars. In that same year silver is still up 93% Wheat 84%. Cotton 100% Coffee 55%. Cattle 10%, etc. In that same decade the USD index against all currencies shed 40% of its value. Gold is up 22% for the year. More revealing, the most precious metal and most stable of exchange mechanisms is up an astonishing 450% since 2001. Put another way, whereas the dollar was worth 1/250th of an ounce of gold in 2001, it is now only worth 1/1500th. Money can be printed with much more ease and speed than gold can be mined.
To understand why the Bernake’s and Geithner’s of the world view CPI through rose-tinted glasses we must remember who they are. They are wonks who have spent their entire careers lecturing and/or fidgeting with economies without actively participating in them. They are awash in data and are hardwired to extrapolate patterns from the past to predict the future. But we have only had a non-gold fiat monetary system in place since 1971 which is hardly enough time to get a handle on repeating macro-economic cycles in such an ever changing and dynamic landscape. And I want to offer something else. From the late 1940s to the mid-1980s the United States was the dominant manufacturer in the world. The reason? Of our three main foreign competitors today, China, Japan and Germany, one was mired for much of the third quarter of the 20th Century in a disastrous experiment with Maoist communism while the latter two’s urban centers had been reduced to utter wasteland as their reward for launching the most devastating war in human history. Indeed, all of Europe was digging out of the wreckage of their mass-fratricide, including a bankrupted Great Britain…once the supreme power of the world.
Into that void poured American made cars, radios, appliances, garments, food, you name it. By the mid-1950s the US was producing almost half of the world’s manufacturing output. Now we produce less than 20%. So when Bernake considers whether or not rising prices will result from printing trillions of dollars he looks back to, say 1987 when the dollar index halved yet CPI was only up 4.4% in that same year. Ergo: a falling dollar does not cause inflation. Hence QE I and II should move forward without fear.
But he is wrong on two levels. First of all, a weak dollar is usually a catalyst to prompt more exports as US goods become cheaper. And indeed that has happened as the manufacturing sector has been recovering nicely. But, those US manufacturers that once dominated the landscape are few and far between as we have surrendered our assembly lines to the forces of cheap labor overseas in favor of a service oriented economy. So now when imported goods are more expensive due to their relative strength (or less weakness) against the dollar, unlike in the past when we could shift our purchases to cheaper US-made goods, we instead are compelled to accept higher prices as we have no choice but to buy foreign-made goods. Ask Wall-Mart. (One’s house would be an almost vacant four walls if we invaded it and took away any items that don’t say “Made In USA” on them!) China, for example in 1987 produced less than 5% of the world’s goods. Now it almost a 20%. A four-fold increase.
Secondly, the definition of inflation that most people use, including the Fed, seems to be a measure of the CPI as if the two are interchangeable. Hence, people believe, if the CPI remains steady, so too does inflation. But, what is inflation exactly? Is it really price increases per se? Or are rising prices just one symptom of a larger event? “Inflation” is what the word implies: an inflation in the supply of a currency and thus a decrease in its value and eventually its purchasing power. Consumer prices are not always the best measure for a variety of reasons. Just to give one example, they tend to be ‘sticky’ in that vendors are hard-pressed to jack them up to account for lost dollar values. So they may try other approaches to mitigate the inflated currency’s impact on the bottom line such as keeping prices the same but reducing the package size. Care for some potato chips with your bag of air? How about a 1.5 pint of ice cream that for the same price (hence no measurable impact on CPI) that used to be 1.75 pints? There are many ways short of raising prices to compensate for the effects of an ever expanding supply of dollars. But real costs rise just the same.
The fact is that inflation in its traditional definition is rampant across the globe and it can in large part be attributed to the policy of almost zero interest rates in the form of a greatly expanding balance sheet of the Federal Reserve. Take China for example. They are the largest exporter to the United States and as such have a vested interest in preventing their products from becoming too expensive (although they have less to fear from competitively cheap US goods as they once did). They do this by artificially pegging the yuan to the dollar at a fixed rate. When the Fed prints more dollars, in order to prevent their currency from appreciating as it can now buy more dollars for the same price, the Chinese must expand their own balance sheet to print the money used to buy up the excess dollars in the system and maintain their target exchange rate to keep their exports flowing.
As such, China’s M2 is up 15.3% in April alone in part due to this phenomenon. This is an inflationary policy. There are more yuan than there used to be. So they too are worth less, although not as less as the even more in supply US dollar. And as you would expect, since they have real inflation, prices in China are on the rise. Their CPI, in fact, shows a 5.3% inflation rate. How come their CPI shows a much higher level than ours when our dollar is depreciating faster than their yuan? It all depends on how you measure it. The answer is that their CPI reflects real changes in commodities prices and ours discounts their impact in favor of finished goods. So to put it simply, where their CPI places a larger import on the price of raw materials and food ours places more emphasis products like the price of a cell phone. Considering the first Motorola cell phone retailed for $3,995 in 1983, the price has clearly gone down.
Regardless of CPI though, why would raw materials be impacted by the Fed’s relentless easing? Well, commodities are traded in US dollars which is the world’s reserve currency so a refiner in, say Japan, who has to purchase crude oil for distillation must first take its yen and buy dollars with it before going into the market to buy crude oil. The seller of crude knows that the yen bought its counterparty more dollars and thus will it charge more dollars for its oil, lest the next time he visits Tokyo and converts his less valuable dollars back into fewer yen he may be forced to stay in a Holiday Inn as opposed to a Ritz this visit.
To be sure, demand spurned by economic growth in the developing world is still the prime driver of raw materials price action. Complex systems like global markets are an expression of many factors. But if the supply/demand dynamic is what got dealers into the commodities market from the long-side, the Fed’s policies injected steroids into the rally and has now printed its way into a corner. It cannot initiate more easing as inflation is here. (As companies add more to their payrolls too, though good for the country as a whole, this will put ever more upward pressure on prices.) But should it start tightening by raising interest rates as I think is inevitable, making it more expensive for businesses to borrow, it could threaten the anemic recovery that is already showing signs of slowing if the Q1 numbers are any indication.
Meanwhile the average American is being squeezed ever more by rising prices and diminishing real value of their savings. The Fed and their enablers in the Federal City will have much to answer for in the years ahead. “What’s happening in Washington now is destroying the class of people who save an invest,” said investment guru Jim Rogers. “All the people who did the right thing are earning that much money right now. That’s not how the system is supposed to work.”
But that is how the overrated minds running the Fed and the Treasury, neither of whom has ever run a private business feel how the system should work. They seem utterly incapable of understanding that the past predicts the future…until it doesn’t. By the time we realize the world has changed and the old school approach is just that, it may be too late.
Thursday, May 5, 2011
How Far Does Silver Fall?
by: Jeff Clark - financialsense.com
With silver dropping roughly 19% in the last three days, a correction is clearly under way. Let's take a quick look at how far it might drop.
I've updated the "corrections" chart, which shows all major pullbacks in silver since our bull market began in 2001. The data measure any clearly visible drop in price greater than 10%, regardless of time length. As you'll see, some drops occurred over short periods of time, while others were prolonged.
It's clear that silver has had some large and scary sell-offs. But the "silver" lining to that fact is the realization that our current volatility is perfectly normal.
The average of all corrections is 19%. Applied to our high of $48.70 on April 28, silver would fall to $39.44 if it matched an average drop. So as I write, our current pullback is about average - though it's been quicker than most.
But corrections don't happen in a vacuum. It's generally true that the larger the rise, the bigger the subsequent pullback. Silver has registered an incredible 59% year-to-date gain - and measured from its January 28 low, it's up an astonishing 82.5%. This is important to note because based on my research, this was the biggest surge in the silver price in the current bull market. Thus, it seems reasonable to expect that the metal might fall more than the average.
You'll notice a couple corrections where silver fell by about a third; if we dropped 33.3%, we'd hit $32.48. As another reference point, a 25% fall would take us to $36.52. And if it matched the giant 53.9% sell-off, we'd get to $22.45, though I wouldn't hold my breath for that.
The value in this, of course, is that it gives us some idea of where we might start buying again. I personally would love to see $32 silver, because that would represent a healthy sell-off and appear to have limited downside from there. Only if you believe inflation "loses" would you hesitate to buy at that level.
Regardless of when you start nibbling again, it's important to remember that the fundamentals driving this market haven't changed one iota. The two big "Ds" - debts and deficits - are among the largest in history and cannot be repaid in sound currency. The U.S. dollar and other fiat currencies are getting inflated into oblivion - the full ramifications of which have yet to play out. In my opinion, viewing silver as a monetary replacement in our current environment is very prudent.
So maybe the appropriate question to ask isn't "How far does silver fall?", but "When do I get to start buying again?"
With silver dropping roughly 19% in the last three days, a correction is clearly under way. Let's take a quick look at how far it might drop.
I've updated the "corrections" chart, which shows all major pullbacks in silver since our bull market began in 2001. The data measure any clearly visible drop in price greater than 10%, regardless of time length. As you'll see, some drops occurred over short periods of time, while others were prolonged.
The average of all corrections is 19%. Applied to our high of $48.70 on April 28, silver would fall to $39.44 if it matched an average drop. So as I write, our current pullback is about average - though it's been quicker than most.
But corrections don't happen in a vacuum. It's generally true that the larger the rise, the bigger the subsequent pullback. Silver has registered an incredible 59% year-to-date gain - and measured from its January 28 low, it's up an astonishing 82.5%. This is important to note because based on my research, this was the biggest surge in the silver price in the current bull market. Thus, it seems reasonable to expect that the metal might fall more than the average.
You'll notice a couple corrections where silver fell by about a third; if we dropped 33.3%, we'd hit $32.48. As another reference point, a 25% fall would take us to $36.52. And if it matched the giant 53.9% sell-off, we'd get to $22.45, though I wouldn't hold my breath for that.
The value in this, of course, is that it gives us some idea of where we might start buying again. I personally would love to see $32 silver, because that would represent a healthy sell-off and appear to have limited downside from there. Only if you believe inflation "loses" would you hesitate to buy at that level.
Regardless of when you start nibbling again, it's important to remember that the fundamentals driving this market haven't changed one iota. The two big "Ds" - debts and deficits - are among the largest in history and cannot be repaid in sound currency. The U.S. dollar and other fiat currencies are getting inflated into oblivion - the full ramifications of which have yet to play out. In my opinion, viewing silver as a monetary replacement in our current environment is very prudent.
So maybe the appropriate question to ask isn't "How far does silver fall?", but "When do I get to start buying again?"
Wednesday, May 4, 2011
Silver Sell-Off, Record Low T-Bill Rates And Inflation
Peter Schiff discusses the important issues within our economy in his weekly video blog. Peter Schiff is the CEO of Euro Pacific Capital. In the first segment of this video Peter addresses the recent sell of in the silver market. This is important information for anyone who is loosing sleep over their silver investment.
Sunday, May 1, 2011
Where Were You On Super Bowl Weekend?
compliments of: tfmetalsreport.com
I was in Vegas with my friend, Sweetness. He and I gambled too much. Drank too much gin and played a little golf.
Where were you? Did you watch the game? Perhaps you had a party? Maybe you're not an american football fan so you spent the weekend relaxing and catching up. Either way, like me, you had no way of knowing what was going on behind the scenes.
My next question is: Where was Ben Bernanke? Where was Tim Geithner? Where were the rest of the Fed governors and the heads of the TBTF banks? We may never know, though history one day may record their actions for posterity.
Why do I ask and why was February 4, 2011 so important? In hindsight, it is clear that 2/4/11 was the day that the Fed's hand was forced. A critical moment in time had come. The ruinous implications of the Fed's quantitative easing policy had been made clear. That weekend, both the dollar index and the long bond were moving toward critical, long-term support. Both could not be saved and a decision had to be made.
Sometime over Super Bowl weekend it was decided. Your monetary "officials" chose to preserve their own power at your expense. Why do I say this? Three months on, it's clear that the decision was made to support the long bond at all costs, to the detriment of the dollar. The global reserve currency was sacrificed on the altar of low interest rates and the maintenance of the Fed/TBTF/Govt ponzi. Because of this decision millions, even billions, of people will suffer. The inflation that is coming will spark food shortages and protest. This unrest may/will lead to war. All of this so that the Fed can maintain their power, the TBTF and primary dealer banks can remain afloat and the bankrupt U.S. government can continue printing and spending money, thereby allowing elected officials to escape the scrutiny that would come from actually leading. Neither history nor The Almighty will judge their selfish and cruel actions well.
Here are the charts that prove this out, beginning with the dollar or, as we call it here, the POSX.
As you can see, post 2/4 the dollar actually rallied for a week. It has since declined by almost 8%.
The critical chart on 2/4 was the U.S. Long Bond. The "long bond" is a futures contract on the 30-year U.S. treasury bond. This contract has been in an uptrend for nearly 29 years, from a bottom in 1982. The trendline lays somewhere around 114 to 115, depending upon how accurately you draw it. This was an important topic back in February. For example, here's a thread from 2/9/11:
http://tfmetalsreport.blogspot.com/2011/02/santas-pillars.html
With the decision made to let the dollar die in order to preserve The Ponzi, the long bond suddenly reversed and has since traded much higher.
Let's judge the practical, short-term impact of this decision by looking at our three favorite dollar-destruction hedges. First, here's crude:
Oh, that's right. The politicians want you to believe that its the oil companies and the evil, scawy specuwators that are driving oil higher. Anything to deflect the blame from themselves.
Now look at gold:
If you haven't yet protected yourself and purchased "wealth insurance" by buying gold, its OK. There's still time. But, if your normalcy bias and blind faith in the status quo keep you from buying some in the future in the face of all the evidence that the dollar is dying, you are the proverbial fool who deserves to be separated from his money.
Lastly, take a look at silver. As we know, silver is also being propelled by some, shall we say "enhanced", fundamentals. Regardless, this performance is stunning and reflects a grass roots, everyday-citizen demand for protection against fiat destruction. My advice is to get some, and take delivery, while you still can.
Finally, the intention here is not to say that the demise of the dollar is imminent. The death of the dollar is similar to that of a terminally-ill, cancer patient. There will be good days. There will be moments of hope. The dollar will bounce, probably from the area around 72. The long bond will peak and consolidate in the area around 124. The PMs will correct again soon giving you another buying opportunity. In the end, however, the fate of the dollar was sealed over the weekend of Super Bowl 45. The Packers won but we all lost. For the Steelers, there's always next year. For us, nothing but an uncertain and perilous future.
Read this article and more at tfmetalsreport.com
I was in Vegas with my friend, Sweetness. He and I gambled too much. Drank too much gin and played a little golf.
Where were you? Did you watch the game? Perhaps you had a party? Maybe you're not an american football fan so you spent the weekend relaxing and catching up. Either way, like me, you had no way of knowing what was going on behind the scenes.
My next question is: Where was Ben Bernanke? Where was Tim Geithner? Where were the rest of the Fed governors and the heads of the TBTF banks? We may never know, though history one day may record their actions for posterity.
Why do I ask and why was February 4, 2011 so important? In hindsight, it is clear that 2/4/11 was the day that the Fed's hand was forced. A critical moment in time had come. The ruinous implications of the Fed's quantitative easing policy had been made clear. That weekend, both the dollar index and the long bond were moving toward critical, long-term support. Both could not be saved and a decision had to be made.
Sometime over Super Bowl weekend it was decided. Your monetary "officials" chose to preserve their own power at your expense. Why do I say this? Three months on, it's clear that the decision was made to support the long bond at all costs, to the detriment of the dollar. The global reserve currency was sacrificed on the altar of low interest rates and the maintenance of the Fed/TBTF/Govt ponzi. Because of this decision millions, even billions, of people will suffer. The inflation that is coming will spark food shortages and protest. This unrest may/will lead to war. All of this so that the Fed can maintain their power, the TBTF and primary dealer banks can remain afloat and the bankrupt U.S. government can continue printing and spending money, thereby allowing elected officials to escape the scrutiny that would come from actually leading. Neither history nor The Almighty will judge their selfish and cruel actions well.
Here are the charts that prove this out, beginning with the dollar or, as we call it here, the POSX.
The critical chart on 2/4 was the U.S. Long Bond. The "long bond" is a futures contract on the 30-year U.S. treasury bond. This contract has been in an uptrend for nearly 29 years, from a bottom in 1982. The trendline lays somewhere around 114 to 115, depending upon how accurately you draw it. This was an important topic back in February. For example, here's a thread from 2/9/11:
http://tfmetalsreport.blogspot.com/2011/02/santas-pillars.html
With the decision made to let the dollar die in order to preserve The Ponzi, the long bond suddenly reversed and has since traded much higher.
Now look at gold:
Lastly, take a look at silver. As we know, silver is also being propelled by some, shall we say "enhanced", fundamentals. Regardless, this performance is stunning and reflects a grass roots, everyday-citizen demand for protection against fiat destruction. My advice is to get some, and take delivery, while you still can.
Read this article and more at tfmetalsreport.com
Saturday, April 30, 2011
How To Buy Gas For $0.25 Per Gallon
by: Chip WoodSome neighbors and I were reminiscing recently about "the good old days" when the talk turned to how cheap things were back then. I immediately concurred. I told them of the very first credit card I got for one of the gas-station chains. Back then gasoline cost less than 25 cents a gallon.
And then I said something that stopped them cold: "Do you know that you can still buy gasoline for 25 cents a gallon?" They were all certain that there was a trick to my question … and there is.
My claim is absolutely, totally, 100% true – if you pay with a quarter that was minted prior to 1965.
We've written many times before about how much we like "junk silver" coins – the dimes, quarters, and half-dollars the U.S. Mint produced prior to 1965. These coins are 90% pure silver. A $1000 face value bag of them contains 712 ounces of the metal.
With silver now at an eye-popping $48 an ounce, one of those bags will cost you around $35,000. (If you bought one … or maybe several … back when they were a fraction of that amount, congratulations. Feels pretty good to own an investment that's gone up 160% in the past year, doesn't it?)
But the point of today's column isn't to applaud you if you already own plenty of silver; or to encourage you to get some, if you don't own enough. It's to make you realize how little prices have changed in the past 50 years – or even in the past 2,000 years. It's the value of our money that has changed.
In those wonderful days of yesteryear that I was talking about, a gallon of gas cost less than 25 cents. In real money – that is, silver – that same quarter is worth around $8.70 today – or enough to get you twogallons of gas at my local station.
Remember when a loaf of bread was ten cents? Well, a "junk silver" dime is worth about $3.50 today. That will get you the fancy hand-made loaf in the deli section of our grocery store. One of the mass-produced marvels with more air than nutrients will cost half that amount.
I'm told that in Roman times, the very best toga in the market place, along with a pair of sandals and a wreath for your head, would set you back one gold Caesar, or whatever coinage you happened to have. Today, that same ounce of gold will buy the best suit of clothes you can find at your local department store – along with a shirt, tie, and other accoutrements.
Well, actually, not that same ounce of gold. If you happen to have a 2,000-year-old-gold coin in your possession, please don't sell it for its bullion value. Even if it would be graded "very circulated" by a professional numismatist, it is probably worth much more than its bullion content.
Okay, okay. Some of you are getting a bit impatient. I can hear you muttering, "These stories are all very interesting, Chip. But what's the point? Get to the bottom line, would you?"
My point is simply this: The value of the goods you buy every day hasn't changed. A loaf of bread is still a loaf of bread. Ditto a quart of milk, a gallon of gasoline, or a suit of clothes.
The reason they cost 10 or 20 or 50 times more than they did isn't that they are worth more. It is that our measuring stick, the U.S. dollar, is worth so much less. Back in our grandparents' day, the dollar was not only backed by gold, but for most of this country's existence the U.S. government promised that it could be exchanged for gold at any bank in the federal system.
The Treasury also produced something called "silver certificates" which operated the same way, except they could be exchanged for silver. And our government promised to keep enough gold and silver in its reserves to honor all of those commitments.
Today, the U.S. dollar is an "I.O.U. nothing," as a friend of mine likes to put it. Oh, it says it is backed by "the full faith and credit of the United States."
But let me ask you: When you look at the disaster that Washington has made of the budget process and our economy, how much full faith and credit do you have in the people running the show today?
And how much "full faith and credit" do you have in the pieces of fiat currency called the U.S. dollar that they are manufacturing by the trillions?
I hope the answer to both of my rhetorical questions is "very little" and "not much." Or maybe "none."
source
Tuesday, April 26, 2011
Short Sellers Now Screaming About a Buy Side Silver Conspiracy
article by: Avery Goodman
It was only a matter of time. Now the talk of silver price conspiracies has shifted from long buyers to those on the other side of the fence. On April 21st, the historically anti-precious metals editorial staff of the London Financial Times ran an article titled "Silver Surge Prompts Conspiracy Theorists". Meanwhile, order was reestablished among the short side conspirators once the COMEX trading floor opened on Monday morning.
After silver prices had temporarily risen to over $49 per ounce during Asian trading, they were beaten down again to about $47 in a flood of newly opened short positions. From this return to discipline within the bullion bank ranks, we can assume that the Federal Reserve probably will temporarily halt QE-2 at the end of June or before.
At the close of business on Tuesday, April 26, 2011, the COMEX performance bond committee will, yet again, significantly raise silver margin requirements. We believe that this is an attempt to suppress prices and delay the inevitable reckoning. With the end of QE-2, short-sellers hope the exponential rise in the price of silver will also end. But, in our view, artificial price attacks in the futures markets are unlikely to help short sellers in the long run. The nexus of price appreciation is NOT at COMEX, but in the physical market. Physical silver buyers pay cash, and it doesn't matter to them how high or low COMEX committees set performance bonds.
If the performance bond committee is successful, they will manage to reduce the so-called "spot" price. In practical terms, however, the only thing they will have accomplished is to cause a few speculators to lose money while helping well-financed market vigilantes to buy more bars of physical silver for the same money. The bankers will then need to deliver even more physical silver than they would if the committee had done nothing. These futile attempts to fight back illustrate that a market manipulation cannot be effective in a market that is well aware of it.
The massive losses that short sellers have been taken has naturally led to some new urban myths. Some now claim that "evil" long side billionaires are out to "ruin" the market. Yet, even the Financial Times article points out the ridiculously paranoid nature of this theory. The author notes that silver prices were rising even as speculative positions at COMEX were reduced by 8.4%. This illustrates that the COMEX is now just a sideshow. A lot of people are simply buying physical silver.
The silver buyers do include some billionaires, undoubtedly, but most of them are simply folks who watched Jeffrey Christian's testimony at the well publicized CFTC position limits hearing back on March 25, 2010, and came away with the distinct impression that a small group of London banks have been creating alchemic silver. The banks were ostensibly "selling" and then "storing" so-called "unallocated silver bars" for silver investors. In reality, they seem to have been maintaining a fractional banking system in which only one physical ounce is really purchased for every 100 ounces they supposedly sell.
Let's go over that again...because once you understand the particulars, the reaction of the price of silver becomes perfectly understandable. 1) Bank sells silver, a very precious item, for big money; 2) Bank doesn't buy the silver it sells, or, if it does buy it, leases out or sells 99 ounces for every 1 ounce in the vault; 3) Bank gets paid "storage fees" from all its customers, even though their silver is not in the vault; 4) Bank profits are equal to 99 times what it sells initially, and then, the value of the stream of storage fees after that. Nice work if you can get it.
But, then there's the downside. 1) The market might discover your scam and you'll need to deal with investigations; 2) Leverage so high that, if discovered, it is a recipe for disaster; 3) Courts may deem the arrangement a fraud, in spite of disclaimers that say otherwise, and whereby customers waive liability for fraud; 4) the market will inevitably punish you severely with heavy losses after discovery of the scam. For more information on "unallocated storage" in London, see our previous article.
Had the worldwide silver scam remained a secret, suppression of precious metals prices might have gone on forever. But the genie is now out of the bottle and mortal men, not even those who run casino-banks, cannot hope to put him back in. Once it became clear that the bullion banks were leveraged 100 to 1 in a silver based fractional banking scheme, it was only a matter of time before the market clobbered them. That is what is happening.
People have only begun to scratch the surface of the precious metals markets, and few fully understand how undervalued all of them are. Silver has always been worth far more than it had been selling for in the last 30 years. People are starting to see not only this, but also how that corrupt pricing situation came to pass. The whole world now understands that the silver trade has been carried out in a deceitful manner for many years. So, naturally, many people are starting to buy physical silver again, just as they did for 10,000 years before COMEX began trading it. Those people happen to include, in all likelihood, a few billionaires, a few sovereign wealth funds, and a few Asian bankers. Many are politely refusing offers of "unallocated" bullion bank "storage".
The silver market is not rising because of a conspiracy. If so, it would be the most disorganized conspiracy that has ever existed. On the contrary. What we are seeing is the massive unwinding of a silver price control conspiracy that many of us predicted, in public or private for many years. The biggest scam in world history is ending. Sellers are now desperately trying to find metal. A lot of banks that were supposed to be storing silver are really storing air. Converting large amounts of air to large amounts of silver is difficult and bound to be costly. The process, once completed, will permanently increase the price of silver.
Intense upward pressure on silver prices is evident because physical silver is being purchased as never before. It is not stemming from trading on COMEX. In fact, deliveries at COMEX have been relatively small for several months. The process that is now ongoing is one that no performance bond committee can stop. COMEX could declare liquidation-only, as they did in 1980. The only end result would be to catapult the demand for and price of silver even higher. COMEX is now irrelevant except as a way for banks to bankrupt themselves if they continue to try to reduce the price of physical silver by manipulating futures prices there and taking on more short positions to do it. They can crash the paper futures price as much as they wish. It won't stop buyers from demanding physical silver in the real market outside COMEX.
The old prices were a result of a naive market, overwhelming short positions at the futures exchanges, manipulative trading techniques and a deceitful unallocated storage arrangement. The current silver pricing surge may look like a typical short squeeze, but it is nothing of the kind. It represents a permanent change in market perceptions. That is not to say that silver prices cannot fall, but the pressure to buy physical silver will continue to mount. When silver prices finally reach equilibrium, $50 per ounce might be the floor, rather than the ceiling. We don't know how high the price will climb under these circumstances.
One thing is clear. Buyers have discovered that they hold the power to defeat the largest financial firms in the world at their own game. But they still don't recognize the extent of their victory. Silver is the beginning, not the end. It is only one of the precious metals, but not the only one. The same unethical practices have been used for years to suppress the price of gold and platinum, for example. Both metals have been traded in a naive market, with overwhelming short positions at the futures exchanges, manipulative trading techniques and deceitful "unallocated" storage arrangements. There is no fundamental difference except that the metals have different names and appear at different locations on the periodic table.
Central bankers may be able to supply large amounts of the gold, for a while, to assist their minions in the commercial banking sector in the artificial suppression of gold prices. But, with emerging market central banks, the developed world's pension funds and university endowments, hedge funds and sovereign wealth funds all heavily buying gold, that resistance to the market cannot last forever. The most effective way to suppress gold would be to take steps to crash the entire world economy by cutting off most of the current flood of liquidity. However, even that would be only a temporary measure.
With stock prices collapsing, a mega shift from demand for stocks and bonds to demand for gold, silver and platinum would occur. One way or another, the current management of gold prices, which currently includes allowing a slow upward trend to relieve buying pressure without collapsing fiat currencies, will change into an explosion. This will happen with or without the help of market vigilantes.
So what will be the vigilante target after they are finished with normalizing the price of silver? Central banks like low platinum prices almost as much as low gold and silver prices. Manipulating platinum prices up and down helps bank profits. Since it has proven impossible to fully suppress price increases, the next best thing is to orient the manipulation process to create artificial high volatility, and thereby discourage conservative investors from buying the metal. This leaves more for industry at cheaper prices.
Platinum is an important metal in so many industries, not the least of which is the auto industry, that it seems to us that the Orwellian Ministry of Truth (aka, the New York Branch of the Federal Reserve) would strongly prefer a low, or at least, a very volatile price. Platinum, like gold and silver, also has a history of being used as money (in Russia) and possesses sufficient monetary qualities to be a significant threat to central bank emissions of fiat money. But, similar to silver and unlike gold, central bankers have no platinum reserves. Russia has large palladium reserves, but is unlikely to sell much, going forward, unless it is pressed against the wall by a steep drop in oil prices below its budgetary minimum (about $65 per barrel).
The platinum market is smaller than the silver market. The percentage of above-ground platinum is smaller, compared to consumption, than the percentage of above-ground silver. When the silver price revaluation runs its course, and silver is finally sell for a normalized value based upon its 16 to 1 ratio in the earth's crust, versus gold, we believe that vigilantes are most likely to turn toward platinum. We believe that J.P. Morgan Chase (JPM), accused of being one of the New York Federal Reserve's primary agents in manipulating stock, commodities and precious metals prices, knows this. It is actively buying huge amounts of physical platinum bars. Being 14.7 times rarer than gold, if platinum prices normalize to the metal's abundance, one troy ounce would be worth $22,000 right now, 14.7 times more than the current price of gold.
In a typical London Financial Times fashion, the silver long-side "conspiracy" article ends by saying that
Recently, we read an article published by Minyanville, which is usually a good source of information. But this particular Minyanville article advises buying U.S. dollars and selling silver short. The author claims not to be interested in past performance in making his decisions, but, then presents a chart of 1970s era silver prices to support his claim that the white metal is set up for a price collapse. There is great danger in blind adherence to charts. They are rear view mirrors, and cannot be used in the absence of common sense. If the focus of a driver's attention is on the rear view mirror, he will surely crash.
The first part of the Minyanville article recommended trade might work, because the U.S. dollar may rise for a while, if the Fed stops counterfeiting (aka quantitative easing) June. However, the second part of the trade will fail. At best, there will be a few weeks or a few months of fallout from the end of QE-2 if it happens. It is true that during that time the price could fall substantially, especially if helped along by the members of the silver price conspiracy. After that, however, it will be back to the races.
Assets in a collapsing stock market will eventually be shifted into precious metals. Since the silver vigilantes are extremely well capitalized, the main achievement of the price manipulators will simply be to allow them to buy more silver with the same money. In the end, their delivery obligations will simply be larger. Simply put, the old methods of price manipulation will no longer work against an informed market.
The question of where precious metals vigilantes' attention will turn after mopping the floor with the silver short sellers may be a moot point. If they manage to bankrupt the bullion banks (and associated hedge funds, shadow banking system entities, etc.), it will be game over. Free of price management, gold and platinum will join silver in a price explosion to the stratosphere, and they won't need any help from vigilantes. But private profit appears to be only one of the motives for silver market manipulators.
Another motive is to support irredeemable fiat paper money issued by central banks. Therefore, a massive bailout may save them from bankruptcy. After the short-side manipulators finally give up, many contracts for silver delivery will be settled for astronomical sums of fiat money. As schemes and scams continue to unwind, the next few years are going to be very interesting.
Read more at Seeking Alpha
It was only a matter of time. Now the talk of silver price conspiracies has shifted from long buyers to those on the other side of the fence. On April 21st, the historically anti-precious metals editorial staff of the London Financial Times ran an article titled "Silver Surge Prompts Conspiracy Theorists". Meanwhile, order was reestablished among the short side conspirators once the COMEX trading floor opened on Monday morning.
After silver prices had temporarily risen to over $49 per ounce during Asian trading, they were beaten down again to about $47 in a flood of newly opened short positions. From this return to discipline within the bullion bank ranks, we can assume that the Federal Reserve probably will temporarily halt QE-2 at the end of June or before.
At the close of business on Tuesday, April 26, 2011, the COMEX performance bond committee will, yet again, significantly raise silver margin requirements. We believe that this is an attempt to suppress prices and delay the inevitable reckoning. With the end of QE-2, short-sellers hope the exponential rise in the price of silver will also end. But, in our view, artificial price attacks in the futures markets are unlikely to help short sellers in the long run. The nexus of price appreciation is NOT at COMEX, but in the physical market. Physical silver buyers pay cash, and it doesn't matter to them how high or low COMEX committees set performance bonds.
If the performance bond committee is successful, they will manage to reduce the so-called "spot" price. In practical terms, however, the only thing they will have accomplished is to cause a few speculators to lose money while helping well-financed market vigilantes to buy more bars of physical silver for the same money. The bankers will then need to deliver even more physical silver than they would if the committee had done nothing. These futile attempts to fight back illustrate that a market manipulation cannot be effective in a market that is well aware of it.
The massive losses that short sellers have been taken has naturally led to some new urban myths. Some now claim that "evil" long side billionaires are out to "ruin" the market. Yet, even the Financial Times article points out the ridiculously paranoid nature of this theory. The author notes that silver prices were rising even as speculative positions at COMEX were reduced by 8.4%. This illustrates that the COMEX is now just a sideshow. A lot of people are simply buying physical silver.
The silver buyers do include some billionaires, undoubtedly, but most of them are simply folks who watched Jeffrey Christian's testimony at the well publicized CFTC position limits hearing back on March 25, 2010, and came away with the distinct impression that a small group of London banks have been creating alchemic silver. The banks were ostensibly "selling" and then "storing" so-called "unallocated silver bars" for silver investors. In reality, they seem to have been maintaining a fractional banking system in which only one physical ounce is really purchased for every 100 ounces they supposedly sell.
Let's go over that again...because once you understand the particulars, the reaction of the price of silver becomes perfectly understandable. 1) Bank sells silver, a very precious item, for big money; 2) Bank doesn't buy the silver it sells, or, if it does buy it, leases out or sells 99 ounces for every 1 ounce in the vault; 3) Bank gets paid "storage fees" from all its customers, even though their silver is not in the vault; 4) Bank profits are equal to 99 times what it sells initially, and then, the value of the stream of storage fees after that. Nice work if you can get it.
But, then there's the downside. 1) The market might discover your scam and you'll need to deal with investigations; 2) Leverage so high that, if discovered, it is a recipe for disaster; 3) Courts may deem the arrangement a fraud, in spite of disclaimers that say otherwise, and whereby customers waive liability for fraud; 4) the market will inevitably punish you severely with heavy losses after discovery of the scam. For more information on "unallocated storage" in London, see our previous article.
Had the worldwide silver scam remained a secret, suppression of precious metals prices might have gone on forever. But the genie is now out of the bottle and mortal men, not even those who run casino-banks, cannot hope to put him back in. Once it became clear that the bullion banks were leveraged 100 to 1 in a silver based fractional banking scheme, it was only a matter of time before the market clobbered them. That is what is happening.
People have only begun to scratch the surface of the precious metals markets, and few fully understand how undervalued all of them are. Silver has always been worth far more than it had been selling for in the last 30 years. People are starting to see not only this, but also how that corrupt pricing situation came to pass. The whole world now understands that the silver trade has been carried out in a deceitful manner for many years. So, naturally, many people are starting to buy physical silver again, just as they did for 10,000 years before COMEX began trading it. Those people happen to include, in all likelihood, a few billionaires, a few sovereign wealth funds, and a few Asian bankers. Many are politely refusing offers of "unallocated" bullion bank "storage".
The silver market is not rising because of a conspiracy. If so, it would be the most disorganized conspiracy that has ever existed. On the contrary. What we are seeing is the massive unwinding of a silver price control conspiracy that many of us predicted, in public or private for many years. The biggest scam in world history is ending. Sellers are now desperately trying to find metal. A lot of banks that were supposed to be storing silver are really storing air. Converting large amounts of air to large amounts of silver is difficult and bound to be costly. The process, once completed, will permanently increase the price of silver.
Intense upward pressure on silver prices is evident because physical silver is being purchased as never before. It is not stemming from trading on COMEX. In fact, deliveries at COMEX have been relatively small for several months. The process that is now ongoing is one that no performance bond committee can stop. COMEX could declare liquidation-only, as they did in 1980. The only end result would be to catapult the demand for and price of silver even higher. COMEX is now irrelevant except as a way for banks to bankrupt themselves if they continue to try to reduce the price of physical silver by manipulating futures prices there and taking on more short positions to do it. They can crash the paper futures price as much as they wish. It won't stop buyers from demanding physical silver in the real market outside COMEX.
The old prices were a result of a naive market, overwhelming short positions at the futures exchanges, manipulative trading techniques and a deceitful unallocated storage arrangement. The current silver pricing surge may look like a typical short squeeze, but it is nothing of the kind. It represents a permanent change in market perceptions. That is not to say that silver prices cannot fall, but the pressure to buy physical silver will continue to mount. When silver prices finally reach equilibrium, $50 per ounce might be the floor, rather than the ceiling. We don't know how high the price will climb under these circumstances.
One thing is clear. Buyers have discovered that they hold the power to defeat the largest financial firms in the world at their own game. But they still don't recognize the extent of their victory. Silver is the beginning, not the end. It is only one of the precious metals, but not the only one. The same unethical practices have been used for years to suppress the price of gold and platinum, for example. Both metals have been traded in a naive market, with overwhelming short positions at the futures exchanges, manipulative trading techniques and deceitful "unallocated" storage arrangements. There is no fundamental difference except that the metals have different names and appear at different locations on the periodic table.
Central bankers may be able to supply large amounts of the gold, for a while, to assist their minions in the commercial banking sector in the artificial suppression of gold prices. But, with emerging market central banks, the developed world's pension funds and university endowments, hedge funds and sovereign wealth funds all heavily buying gold, that resistance to the market cannot last forever. The most effective way to suppress gold would be to take steps to crash the entire world economy by cutting off most of the current flood of liquidity. However, even that would be only a temporary measure.
With stock prices collapsing, a mega shift from demand for stocks and bonds to demand for gold, silver and platinum would occur. One way or another, the current management of gold prices, which currently includes allowing a slow upward trend to relieve buying pressure without collapsing fiat currencies, will change into an explosion. This will happen with or without the help of market vigilantes.
So what will be the vigilante target after they are finished with normalizing the price of silver? Central banks like low platinum prices almost as much as low gold and silver prices. Manipulating platinum prices up and down helps bank profits. Since it has proven impossible to fully suppress price increases, the next best thing is to orient the manipulation process to create artificial high volatility, and thereby discourage conservative investors from buying the metal. This leaves more for industry at cheaper prices.
Platinum is an important metal in so many industries, not the least of which is the auto industry, that it seems to us that the Orwellian Ministry of Truth (aka, the New York Branch of the Federal Reserve) would strongly prefer a low, or at least, a very volatile price. Platinum, like gold and silver, also has a history of being used as money (in Russia) and possesses sufficient monetary qualities to be a significant threat to central bank emissions of fiat money. But, similar to silver and unlike gold, central bankers have no platinum reserves. Russia has large palladium reserves, but is unlikely to sell much, going forward, unless it is pressed against the wall by a steep drop in oil prices below its budgetary minimum (about $65 per barrel).
The platinum market is smaller than the silver market. The percentage of above-ground platinum is smaller, compared to consumption, than the percentage of above-ground silver. When the silver price revaluation runs its course, and silver is finally sell for a normalized value based upon its 16 to 1 ratio in the earth's crust, versus gold, we believe that vigilantes are most likely to turn toward platinum. We believe that J.P. Morgan Chase (JPM), accused of being one of the New York Federal Reserve's primary agents in manipulating stock, commodities and precious metals prices, knows this. It is actively buying huge amounts of physical platinum bars. Being 14.7 times rarer than gold, if platinum prices normalize to the metal's abundance, one troy ounce would be worth $22,000 right now, 14.7 times more than the current price of gold.
In a typical London Financial Times fashion, the silver long-side "conspiracy" article ends by saying that
Wishful thinking. We don't know where silver's price explosion will end. However, as more and more people realize that they have been duped into accepting fake prices for silver, bullion banks may need to buy 100 ounces of silver for every one ounce that is withdrawn. How high is that going to drive the price of silver? We'll leave that to you to decide.
History may be informative. After the Hunt brothers’ squeeze in 1980, the price of silver collapsed 80 per cent in four months.
Recently, we read an article published by Minyanville, which is usually a good source of information. But this particular Minyanville article advises buying U.S. dollars and selling silver short. The author claims not to be interested in past performance in making his decisions, but, then presents a chart of 1970s era silver prices to support his claim that the white metal is set up for a price collapse. There is great danger in blind adherence to charts. They are rear view mirrors, and cannot be used in the absence of common sense. If the focus of a driver's attention is on the rear view mirror, he will surely crash.
The first part of the Minyanville article recommended trade might work, because the U.S. dollar may rise for a while, if the Fed stops counterfeiting (aka quantitative easing) June. However, the second part of the trade will fail. At best, there will be a few weeks or a few months of fallout from the end of QE-2 if it happens. It is true that during that time the price could fall substantially, especially if helped along by the members of the silver price conspiracy. After that, however, it will be back to the races.
Assets in a collapsing stock market will eventually be shifted into precious metals. Since the silver vigilantes are extremely well capitalized, the main achievement of the price manipulators will simply be to allow them to buy more silver with the same money. In the end, their delivery obligations will simply be larger. Simply put, the old methods of price manipulation will no longer work against an informed market.
The question of where precious metals vigilantes' attention will turn after mopping the floor with the silver short sellers may be a moot point. If they manage to bankrupt the bullion banks (and associated hedge funds, shadow banking system entities, etc.), it will be game over. Free of price management, gold and platinum will join silver in a price explosion to the stratosphere, and they won't need any help from vigilantes. But private profit appears to be only one of the motives for silver market manipulators.
Another motive is to support irredeemable fiat paper money issued by central banks. Therefore, a massive bailout may save them from bankruptcy. After the short-side manipulators finally give up, many contracts for silver delivery will be settled for astronomical sums of fiat money. As schemes and scams continue to unwind, the next few years are going to be very interesting.
Read more at Seeking Alpha
Sunday, April 24, 2011
$50 Silver - The Price Point Of Liberty
article by: Jack Mullen
$50 dollar silver is the first sign of blue sky after a devastating storm. It's the morning after sunshine bringing people out of hiding and together again for the process of rebuilding with the promise of a new start.
For more than 100 years the United States has been at the center of a war being waged around the clock by a cult-of-evil clawing and biting like a rabid dog at the heart of civilization. It has been an epic struggle of an outnumbered, outgunned regiment of courageous defenders of human individuality, dignity, and liberty against a tyranny intent on the enslavement of all humanity. It has been a bloody war, a costly war and even now the battles continue, but the tide is turning, finally, toward the side of good.
This war has been in stealth with the cult-of-evil creating a fictional world being pulled over and smothering the head of humanity. For years this war has involved the creation of a pretended reality that presents lies for all standards of measure of a free society. Recently, like all bubbles, the bubble of pretension has begun to grow exponentially - hiding reality behind a manufactured reality, including a manufactured history of the world - a process that is not sustainable and will soon face the limits of nature ( the real reality) . This fictional reality has reached the proportions of a bubble , not unlike the tulip bubble of 1637 - I would now call this bubble a bubble-of-pretension. The problem with bubbles is they burst and hiding reality is nature's most costly mistake.
Reality is something the criminal class trying to hi-jack the world must, at all costs, hide from the sleeping, drugged, conned and dumbed down public. For the most part hiding reality, especially in the early stages of a bubble-of-pretension has so far been successful but the price is becoming higher. In American alone pacifying the public is a 24-7-365 operation requiring enormous sums of economic energy and decades of dedication to bring about the quickening now underway.
But, I think we have reached a bifurcation point , when the matrix of pretension , consuming enormous and ever growing quantities of energy to maintain escalating lies-of-normalcy, starts to falter. Cracks appear and the engine of deception coughs and gasps for more, more, more -- but energy too is a thing of nature and sooner or later the prevaricators use up all the available energy and the false matrix of reality begins to collapse. It's the moment when Caligula realizes men with swords cannot defeat the sea, or when a parliament of thieves cannot another ounce of gold steal. That point is here today, and I think the signs are clear: gold is approaching $1500 and more importantly Silver is about to smash through the most protected price in the history - $50.
I think it bears repeating, $50 silver is the most protected price in recorded history, it is a price that's cost trillions and trillions and millions of lives and untold millions in misery to defend. $50 silver has been defended with all the energy and manpower the cult of evil can muster. The war is not over and the price is still out of reach, but momentum is on the side of humanity. After $50 there's no more resistance - Silver will break free and rise quickly to crush the banking system, the energy and life blood of the enemy. Beyond $50 silver, the dollar and the banking system will collapse quickly. George Soros and the BRIC nations are already aware - the dollar hegemony is cracking and $50 silver is the wedge in the heart of the beast.
For those of us that understand how much wasted and destroyed wealth has been employed to keep the price of silver from rising with inflation while the purchasing power of the fiat currency in which it is priced is destroyed, $50 silver is monumental. This is the day the bubble in pretension bursts - $50 silver, the top is in, not for silver, but for the century of lies and deception and destruction of wealth that will be the legacy of the private banking cartel and their Federal Reserve.
$50 dollar silver is easily $160 dollars short of its inflation adjusted value since the mid nineteen seventies when silver last rose up against the tyrants. The difference between $210 (an estimate of silver's inflation adjusted price) and $50 seems very little, but that $160 has cost the loss of the worlds reserve currency, the fleecing of two+ generations of Americans and peoples worldwide. Hiding the worthlessness of fiat money though metals price suppression has in a way been responsible for WWI, WWII, the massive loss of lives in Russian and China and Germany to psychopathic dictators. That $160 was responsible for the Vietnam war, the death of Kennedy, the Iraq I and Iraq II wars, the war-on-drugs and the Afghan and now Libyan wars. We could go on and say that $160 has cost the lives of all those Americans in the World Trade Centers during 9-11 and the incredible loss of lives to our criminal monopoly controlled health and food industries. We might even get verbose and mention the deaths caused by fluoride poison in the drinking water and the weight gain and cancers caused by our 'diet' supplements such as Aspartame.
While silver sits below $50 the world has suffered trillions and trillions of wealth stolen for false flag wars and then more wealth destroyed in those wars. Trillions of dollars that could have been used pry off the yoke of the psychopaths creating monopolies in every industry facilitating human life.
Monopolies selling lies: the pharmaceutical industry selling lies of health, the medical services industry selling lies of treatment, the food industry selling lies of nutrition, the military-industrial industries selling lies of safety and protection, the prison-police industries selling lies of safety and peacefulness and more. Monopolies of law and justice selling lies of righteousness, monopolies of transportation and banking and energy and education; lies sold by monopolist in the pursuit of total domination and the suppression of reality.
But the price of lies and the price of monopoly is the inevitable depletion of all the available resources, be it manpower, money, or the human spirit supporting a willingness to be deceived - eventually they are all depleted.
As the peak of pretension is reached and the bubble-of-pretension begins to burst we must make plans take charge of the collapse and work to be sure the evil puffed up in the bubble is evacuated to oblivion as the bubble explodes.
We don't need most of the humans that have been deceived to wake up and join the cause. We only need those of us that are awake to be ready to step in and organize the collapse.
It is in the United States where most of the wealth stolen for pacification has been deployed, because the United States is the only nation on earth with a large armed populace. Not only large and armed, but with a history of documentation and research showing why guns in the hands of people (not guns in the hands of military or militia or police or PERSONS or CITIZENS) is the ONLY way for people: men and women and children, to protect themselves against the onslaught of a cunning and relentless tyranny. It is in America that a small group of awakened humans can take back their freedom and again provide a secure home for liberty - liberty that can again protect the world from the tyranny afoot today.
Oppose gun control at all costs - no freedom or liberty can be protected without the threat of weapons as a last resort. Withdraw your support for the banking system by removing your money and buying physical silver and gold for use later as currency. Use cash for all transactions reducing the flow of money through the banks weakening further the already weak banks.
Infiltrate your local governments by running for office, use the power of the local press to remove corruption by writing letters to the editor. Take back our schools -- home school your children, it should only take a generation or two of home schooled children to move back into the mainstream world as leaders and members of government. Do not depend on the United States federal government for any help. The States are the answer. If your state does not support the right to own guns move. Vote with your feet, do not any longer support evil with your tax dollars. Look for states with nullification laws in the works, these states need our support. Take action against intrusion on your liberties, bring lawsuits against fraudulent banking, TSA assault, criminal foreclosures and file claims against sources of health degradation - we need a call to action for class action lawsuits.
More ways to stop the evil: buy radio stations (lots of them cheap and then use them to get the message out), take back our newspapers and television stations from the elite mega corporations. Write blogs, tell your children every day, talk to them about what is happening and what has to happen before it will change. Look for lies, critique movies for hidden messages of the enslavers, filter your water, buy radiation detection equipment and complain when the media lies about radiation, and get off the power grid with solar and wind generators. The power grid is a great controller, If you misbehave or if you need to be taught a lesson, the power will go down.
Lastly take charge of your health and your families health. The medical-pharmaceutical-insurance industry in the United States are not about health, they are not outcome based. The 'pharmamedisurance' model of business is theft through monopoly and wealth through growth of services. Cures are way to health, health through prevention is the solution. Eat organic whole foods with non-GMO contents. Eat less. Supplement the loss of nutrition in foods with high quality natural supplements. Take charge of your own health, read about nutrition and healthy life ideas, and then shrug off your M.D. , stop taking pharmaceutical poisons, decline unnecessary tests. Stand up to the system that is fleecing your health.
With $50 silver signaling the beginning of the end of the banking system, it becomes imperative that we, the awake, prepare for the final confrontation. It is here that we sink or swim -- practice swimming and buy more real, hold in your hands, silver.
http://news.silverseek.com/SilverSeek/1303153473.php
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