Do you trust Wall Street?

Congressman Alan Gray discusses the Federal Reserve lending to foreign countries in the last year with Chairman Bernanke.

The reason people are running to gold is because it isnt paper…it doesnt depend on a bank or a government for it to have value.

There is a reason gold and silver have been money for almost 6000 years of recorded human history. Is it really possible that mankind has become so enlightened in the last 200 years that the accumulated wisdom and experience from the prior 5800 years has become obsolete?

Or maybe is this just hubris?

Interesting Video on Gold and Silver

You are an investor in physical metal and like Marty of “Back to the Future II” you have stumbled into a nightmare world of $10.00 and whatever cents silver (you may have bought back when it was $15-$20 and thought you were doing well) wondering how can you change this distorted world to a peaceful “Hill valley” of the movie and a reality of honest pricing.

Biff / Griff Tannen aka the SEC/CFTC (Securities exchange commission and Commodity Futures Trade Commission) should look like this picture of a nice old chap that cleans your car and keeps the house in order. Not unreasonable given its position of watchdog to the markets.

Instead its accusers of late charge it with sitting in a Jacuzzi laughing at all of us who have invested in real metal or stocks or anything it has involvement with and we only need to look at the decimated mining industry savaged by naked short selling to understand real investors have been getting hammered of late.

If the odds are so stacked then what can I do?

Make Sure you have physical metal and consider the importance of international diversification where you have privacy and ease of deposit / withdrawal as well as physical holdings on your person.

I say that because history has a bad way of correcting in as abrupt a way as Marty and Doc saving the day!

Let’s look at Nickel in 2006. One moment it was meandering happily nowhere while physical shortages built up and the watchdogs did nothing and then out of the blue it exploded

Check out the fine print of the SEC’s announcement back then and my graph showing the rocket launch in price

LME’s press release of August 16 –
“Those with short positions in nickel falling prompt on Friday 18 August 2006, and on subsequent prompt dates until further notice, who are unable to effect physical delivery an/or unable to borrow metal at a backwardation of no more than $300.00 per tonne per day, shall be able to defer delivery for a day at a penalty of $300.00 per tonne. Those with long positions for prompt on those days who are subject to deferred delivery shall be entitled to compensation of $300.00 per tonne per day

I have spoken openly about the laughable situation back in March where silver and gold broke fresh heights all on the back of a Monday morning “ Bears Stern” collapse and that was hardly up there with the plethora of banking collapses of late. It was just a lower pecking order bank and if you watch CNBC, the promo of Dylan Ratigan, host of “Fast Money” saying “tonight your money is safe” in their advertising of the channel now looks hilarious referring to the following day when Bears Sterns affairs were taken over and gold and silver came off sharply supposedly signaling – we are all ok now!

Yay!

Hey Dylan, hello, hello (I am holding the staff now banging away to anyone listening) … that was back then, is everything ok now?

I am not poking fun at Dylan as this TV commercial promo is just a simple clip  of the deception people seem trapped in right now .Who and what do you believe because clearly there are millions around the world asking this very question “ is their money safe”?

Anyway I digress- back to the future!

Oh yes, we all know that Biff will get biffed out of his own hotel and the regulatory authorities will stand and say “this is a new day” and they have fired the old guys cleaned the rules up….blah..blah (just listen to McCain yell out what he plans for Chris Cox, head of the SEC assuming either he or Obama win)……but that’s a fat lot of good to investors holding paper un backed by anything. You only have to look at the heads of failed institutions that presided over the mess and then walked away with fat severance packages. You are still left in the cold!

I ask one of the heads of the company I affiliate to who deal every day with the suppliers as to what is happening right now re premiums given they buy the 1000 oz LBMA good delivery bars at the best price. He replies “there is a disparity albeit modest but who knows where that can go as the paper and real market head opposite direction” says Director -Simon Heapes.” We spend a few minutes discussing the London gold pool of the 60’s and how $35.00 supposed gold price traded in terms of real metal at $44.00 to quote actual events.

If you can have disparity at refinery account supplier level then its small wonder the smaller bars can command even bigger premiums. Have you ever asked yourself what happens when there is a run on a market clearing stock as to what goes first?

A/ the most expensive largest items or
B/ the smaller retail sized items

Anyone looking at this hydro dam of cracks and water spouts would have to be blind to see it needs some engineers to fix it and fast and that is exactly where the SEC and CFTC are supposed to stand in the breach and do their jobs

Histories most ancient of money becomes ever more worthless in this alternate “Back to the future reality” and you must ask yourself the same question all do when a real crisis hits

What is money?

Well hold on to the real stuff as you are about to find out!

http://www.anglofareast.com/afeannouncementbailment2.html

AFE locked away 5 metric ton of allocated silver bars and tens of 1000’s more oz’s of gold in this bailment. Independent Auditor from Grant Thornton, Zurich  in attendance during bailment of silver bars, Philip Judge holding a 400oz gold ‘Good Delivery Bar’ alongside several ton of silver bars during AFE’s  Bullion bailment at ViaMat Securities, Zurich.

Word on the street is large buyers ex comex are getting called and attempted persuasion to settle in cash, not in physical delivery. This is a rare opportunity to dollar cost average previous purchases as some are already doing or simply get in at one of those exceptionally low moments just like last Friday!

10 October , 2008 gold closes 849.90 and silver 10.14

For me, at this low price level of a few years ago, I do the best when my clients can get more bang for buck as I earn in ounces as a percentage of what they get so the sooner we have 1000 oz bars going for $1.00 an ounce and a free set of steak knives thrown in, the better we are all off and the faster we can all move on just as history has done before and go “Back to the real future!”

Disclosure ; Duncan Cameron is an affiliate of “Anglo Far East” and endorses bullion holdings on your person mixed with international diversification via this company that has rigorous 3rd party auditing procedures to verify clients holdings. Whilst I trade, make no mistake, trading is a pastime that can never replace core bullion holdings.

http://www.anglofareast.com/broker/dc-001

So you ask yourself where are all the “silver bananas”.

I mean we have a price that is nearly half what it was at its high back in March when Bears Sterns crashed and burned. The law of supply and demand in housing or fruit in season or whatever has this supply demand fundamental that if a price drops precipitously then it’s a fair bet there are heaps of damn bananas sitting around saying “for sale”.

As I type this, one client I am dealing with in Australia calls me disgusted that whilst opening an account for allocated silver bullion with the company I affiliate to, he also wanted a degree of local physical holdings and found out his order had been sold out from underneath him when he went to uplift it as another had come and paid quicker suffice to say there was nothing left for him as the supplier awaited more inventory.

That doesn’t sound like an “over supply” problem to me as this story is being played out all over the world in the smaller retail bars.

In researching this equivalent event where physical supply and price seem to be in opposition you have to go back to a period of time that historians look back on now and call the “London gold pool”. It has to be irony in listening and reading into this from various sources I find a research article that is an excellent overview by Phillip Judge back in 2001 and of all co-incidences, Phil is one of the heads of the very company I represent as a broker so I encourage you to read his piece on the London gold pool

http://www.rapidtrends.com/blog/the-london-gold-pool/

The London Gold pool

If you prefer not to read up but just want the “executive summary”, the London Gold pool at its heart had central banks led by Governments work in agreement to keep the price of gold down. There was no debate or conspiracy type theory’s here either. This was out there plain as day although in truth like today it was probably only recognized by the discerning investor.

As Phil talks about in his article it failed when too many claims came in on gold to the degree it would clean out all last reserves so we have President Nixon left with the job of decoupling altogether the gold standard in 1971 and not without irony as befitting of the man to whom that task was given, he too was later decoupled off the power system when thrown out of office.

Nathan Lewis writes very well in his book “gold the once and future money” of the many leaders in history that have returned their nations to a sound money system linked to gold saw prosperity and those that did the opposite paid the ultimate cost. Let me say you don’t get a Julius Caesar at the end of empire, you get a Caligula or Nero so get ready for fireworks as we watch increasing intervention in all markets that will distort the real picture until one day you wake up and suddenly gold and silver are double the price. This is simply how history has always played out when markets are manipulated.

Paper selling intervention or should we call it the “paper gold pool”

So to the subject of silver and Gold’s great takedown of late

Well it took 7 billion on short selling of gold to drive that paper price down over a 5 week period and in silver 2.7 billion or the equivalent of between 3 and 4 years of annual delivery demand

3 US banks had 84000 short contracts or a 10 fold increase in a short position in less than a month

3 had 25% of all open interest contracts on silver jumping from a position of 4.8% to 25.4% of all contacts or 170 million oz

This is the largest short position ever taken in history by the banks in a short period and all just before the banking crisis hit.

Now you may laugh at a few billion stated above in light of the trillions being spoken of in the current bail outs. I mean a few billion in shorting metals seems like a banker’s morning tea money to go buy a few sticky buns and well you may be right.

For those using a trading position as well as holding physical it was indeed frightening to watch in NZ time about 12.30- 1.30 pm every afternoon just when all those northern hemisphere traders are fast asleep the sudden lurch that would descend like a storm and in the years I have followed silver and gold you used to be able to turn your market maker programme off in the afternoon so boring was it. In fact I never even used to bother with stops so reliable was the afternoon. If silver/ gold were heart patients in intensive care then any nurse would be happy with the rhythmical undulations of price but here we had in the month preceding the amazing events around the world our silver /gold patient resemble a full coronary arrest every day at the same time but who’s into conspiracy theory eh?

It was all just natural flow right, yeah……whatever!

So if you can freak out at how a banker or hedge fund’s morning tea money can destroy the value of your investment so quick, it might be useful to find out where all the silver bananas are as we agreed at the beginning of this article, supply and demand must make plenty available to the market given the collapse in price, right!

Well there is a shortage of likes we have never seen in silver and far more than gold. If you can worry that a few billion can destroy the paper price just wait and see what happens when those angry hornets using margin sting back. Leverage is a bit like a hornet’s sting really in that it can sting over and over or should I say both down and up. If you can have severe shortages of physical when the price is cheap, wait and see what we can have when the price is high and the same shortages are present or worse as traders like hornets sting “buy, buy buy” over and over again adding to the physical buyers who cant get hold of it!

98% of all futures contracts are settled in paper so very few ever take delivery into vaulted storage or on their person. If you don’t believe me look at what oil has done this day I round off my blog as traders drive nymex oil up the biggest ever one day jump of $20.00 and let me assure you they are not all setting up a fenced secure storage area in their back yard for the 100 barrels they just bought. Nevertheless the price did just jump and whilst there are vagrancies of contract roll over date to consider the point is clear, margin works both ways and physical shortages will dictate the final supply demand fundamental and ultimately the paper price

In the 70’s through to the culmination price highs gold increased 24 x and silver nearly 40 x

Silver can’t be mined by many of the world’s mines much lower than 15-17 bucks and most people want to make a profit so add some and you should have $20 at a minimum. Add the stupid ratio we have and it should be more like $50 plus, then there wouldn’t be a shortage and it would be mined to meet all demand. Such is the law of wacky races this one will correct way to the upside and then find a new level

I like David Morgan’s saying re silver. “If it doesn’t scare you out it will wear you out” so go get some nappies, be patient and enjoy the ride!

About Duncan Cameron

Disclosure ; Duncan Cameron is an affiliate of “Anglo Far East” and endorses bullion holdings on your person mixed with international diversification via this company that has rigorous 3rd party auditing procedures to verify clients holdings. Whilst I trade, make no mistake, trading is a pastime that can never replace core bullion holdings.

(Treasury is now selling T-Bills DIRECTLY to the Fed, no pretense of going through an investment bank anymore)

This is pretty shady stuff, and thats being kind.

To understand why this is BAD, we have to understand why inflation is bad.

Yes of course, inflation is bad because prices go up, but that is not what inflation really is, prices going up is just what happens AFTER inflation occurs.

Put simply, inflation is when you add more currency to the currency supply.

Price increases happen, because when you add more currency then each unit of currency already in existence becomes worth less.

So prices rising arent so much because what you are buying is worth MORE than it was a year ago, but simply because your dollar is worth LESS.

So, the reason I explained that to you, is so you can understand what happens when the Government “bails out” all these failing financial institutions.

Really, two things happen:

1. The government creates Treasury Bills, which it then sells to someone, usually an investment bank and now, the Federal Reserve. In exchange, Congress gets currency from the investment bank, or the Federal Reserve, to spend on Bridges to no-where, military toys, and bailouts of corrupt, overpaid, Wall Street Slicksters who are their buddies.

Guess who gets to pay for that? Thats right, US Taxpayers! Arent you excited?!

2. The second thing that happens is, “liquidity”, which is a fancy term for more money, gets injected into the currency supply because this currency was essentially just “created” in order to bail out these silly greedy Wall Street slicksters and the firms who happen to be buddy buddy with our Congressman and Senators.

Ok, so, what happens when we inject all this currency into the system? Thats right, you guessed it, the value of your dollar goes down, prices go up!!!

So essentially, each time one of these Wall Street firms gets bailed out, the value of your dollar to buy groceries and gas, GOES DOWN, so groceries and gas become more expensive.

Now obviously, if you are a Wall Street Slickster,  you are happy with this deal, because you get to do all kinds of stupid things, then get some silly taxpayer shmuck to pay for your severance package of hundreds of millions of dollars anyway.

If you are a Congressman or Senator of course, this is all good, because lots of cash flows into your tax haven bank accounts from your Wall Street buddies, you get to ride around in fancy cars and go to fancy fundraiser dinners, and you get a HUGE pension for life, even if you dont do crap your entire time in office.

AWESOME! Its good to be the King. Or in this case, a Congressman or Senator.

Now now, Mr. taxpayer, dont complain, you should just shutup and eat your gruel, and be happy to get it! Peasants! Your lucky we dont raise taxes to 85% and then make you WALK to work!

But whats really got me miffed right now, even beyond the fact that our “leaders” have no problem raping the wealth of US Citizens to bail out a bunch of greedy, stupid, people who are already rich anyways, all the while destroying the buying power of the common man AND taxing the common man on top of it to pay for all this shenanigans…

Is that just when we think its IMPOSSIBLE for our leaders to get any more stupid, this happens:

President Bush approved the use of existing authorities by Treasury secretary Hank Paulson to make available as necessary the assets of the Exchange Stabilisation Fund for up to $50 billion to buy more illiquid mortgage assets.

When the Government bailed out the the Government Sponsored Enterprises it promised to buy illiquid mortgage backed securities, but this announcement extends that pledge.

The ESF was created after the Great Depression and uses the US gold reserve as collateral for financial stability.

So what does all that mean?

Basically, it could very well be the dumbest thing any group of government officials has ever done, in history.

This is a quote from the website of the US Treasury describing what the “Exchange Stabilization Fund” is:

The Exchange Stabilization Fund (ESF) of the United States Treasury was created and originally financed by the Gold Reserve Act of 1934 to contribute to exchange rate stability and counter disorderly conditions in the foreign exchange market. The Act authorized the Secretary of the Treasury, to deal in gold, foreign exchange, securities, and instruments of credit, under the exclusive control of the Secretary of the Treasury subject to the approval of the President.

This is my translation:

This thing gives Mr. Paulson, who already has WAY to much authority, the ability to sell off the gold stocks of the United States, manipulating the gold price down, to prop up the US Dollar and make all the sheeple think that gold is falling and the markets and USD are rallying, so all the stupid people can pour more money into the markets, bail out the corrupt Wall Street Slicksters, impoverish and steal the wealth of US Citizens, and perpetuate the scam that the USD which happens to be backed by nothing is actually worth something insteading doing whats smart and backing our currency in gold.

They are going to sell off gold into the international market, which is going to depress the gold price, and use the money to prop up the US Dollar, the stock market, and to try and ‘neutralize’ all this garbage derivative crap that Wall Street has been creating over the last ten years or so.

This isnt just any gold mind you, its the reserves of the United States, belonging to citizens of the United States.

So not only are these guys willing to tax you to pay for bailouts, which then adds currency to the currency supply, which then reduces your buying power, but now, they are selling off the bedrock of the nations financial health, the gold stocks that belong to YOU as a US Citizen, to again save a bunch of fools who probably should have been hung from the gallows a long time ago.

If that does not infuriate you, well….

A brief prediction.

I dont like to make predictions, because predictions usually make a guy look stupid later, but here it is:

The gold price will drop, they will use this as another means to manage the gold price, stocks and the USD will rise or remain level, they HOPE through the elections in November.

This of course is only short term. A band-aid on a gushing severed limb, if you will.

They are willing to sacrifice the nations financial future, and the well being of our children and grandchildren, just to get one more US President in office and perpetuate the non-sense.

But at what cost?

Ultimately, Gold ALWAYS revalues to match the amount of currency that gets pumped into a currency system.

This is not a theory, its not conjecture, history proves it happens over and over, every single time, as predictable as the seasons.

Over the long term we will see the US Dollar devalued, the gold stocks of the United States depleted just when they are needed the most, the common citizen robbed of everything he has through inflation and taxation to bail out those who do not deserve to be saved, and worse case scenario, it could cost citizens of America our freedom and form of government in the end.

We will see the government start to directly monetize debt as a matter of habit, and once that occurs the United States is on the road to hyperinflation.

Solution?

Anchor your finances in gold and silver now while you still can.

“Unjust weights and measures are an abomination unto the Lord” – What is an unjust weight and measure? How about a piece of currency that changes in value constantly? If something is a “measure” it has to remain constant, not change in value.

If you were a carpenter trying to build a house, and the tape measure you used to measure your cuts changed all the time, how solid would your house be?

I am of the opinion that if this thing goes down the tubes, and there is no indication that Congress, the Senate, The President, The Secretary of the Treasury, or the Federal Reserve Chairman have any inkling as to how to prevent it based on recent decisions, then the ONLY safe place in this coming storm is gold and silver.

Those who have gold and silver, will see a huge transfer of wealth to them. Those who dont….well….sorry. Get used to gruel and string vests.

Buy Gold and Silver Bullion

Henry Paulson
US Secretary of The Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Edmond C. Moy
Director of The US Mint
801 9th Street, NW
Room 8S23-3
Washington, D.C. 20220

RE: US Silver Eagles Illegal Rationing

Dear Sirs:

It has come to my attention that 1oz US Silver Eagle coins are being rationed by the US Mint to 13 authorized dealers and not being made available to the public in adequate amounts.
http://www.silverinstitute.org/news/pr29may08.html

According to US Law: 31USC5112(e) this action is illegal and I demand that this rationing program end immediately.

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=browse_usc&docid=Cite:+31USC5112

(e) Notwithstanding any other provision of law, the Secretary shall mint and issue, in quantities sufficient to meet public demand, coins which–

(1) are 40.6 millimeters in diameter and weigh 31.103 grams;
(2) contain .999 fine silver;
(3) have a design–
(A) symbolic of Liberty on the obverse side; and
(B) of an eagle on the reverse side;
(4) have inscriptions of the year of minting or issuance, and the words “Liberty”, “In God We Trust”,
“United States of America”, “1 Oz. Fine Silver”, “E Pluribus Unum”, and “One Dollar”; and
(5) have reeded edges.

(f) Silver Coins.—

(1) Sale price.–The Secretary shall sell the coins minted under subsection (e) to the public at a price equal to the market value of the                 bullion at the time of sale, plus the cost of minting, marketing, and distributing such coins (including labor, materials, dies, use of                 machinery, and promotional and overhead expenses).
        (2) Bulk sales.–The Secretary shall make bulk sales of the coins minted under subsection (e) at a reasonable discount.
(3) Numismatic items.–For purposes of section 5132(a)(1) of this title, all coins minted under subsection (e) shall be considered to be                 numismatic items.”

The law is clear that the silver coins must be supplied to the US public in “quantities sufficient to meet public demand” EVEN IF it means the US Mint drives up the price of silver bullion on the open market in order to obtain the silver needed to produce the US Silver Eagles. That rise in price should, theoretically, decrease the current voracious demand for US Silver Eagles and allow for the true price discovery of silver bullion. That’s how our freely traded markets are supposed to function in order to determine the “fair market value” of any asset.

Unfortunately, the rationing of Silver Eagle coins greatly distort the fair market value of both the coins as well as the silver bullion used to make them. By rationing the coins, the US Treasury and US Mint are artificially suppressing the demand for silver bullion thus creating artificial downward pricing pressure on silver. The size of this artificial price/demand loss is unknown BUT given that the 1oz US Silver Eagle is by far the most popular silver coin in the world, I would suggest that the artificial suppression is significant. For example, when the Silver Eagle rationing program started in mid-March 2008, the price of silver bullion immediately dropped from $21/oz to $17/oz thus trimming 20% off its fair market value in only 4 days. Clearly the fair market value is being artificially distorted. As stated in section (f) above, the public is entitled to purchase US Silver Eagle coins at the “market value of [silver] bullion” plus costs associated with production. Currently, that is not the case. I expect you to end the rationing program immediately and fulfill your legal obligation to the people of the United States of America.

The US Mint is not sanctioned to be a market maker or market manager in precious metals. The Mint is, by law, the facilitator of US Silver Eagle supply and that supply is legally designated to be limited only by the willingness of the purchaser to buy. If the Mint receives an order for 10M ounces or 20M ounces or even more it is 100% legally obligated to immediately supply those Silver Eagles from inventory or enter into the physical silver market and purchase the silver bullion and process it. What effect that purchase has on the price of silver bullion should not be of consequence to the Mint since the price is passed on to the purchaser (plus fabrication).

Luckily, for the stability of the silver market, the CFTC has assured the world that there is no silver price manipulation and that there is currently (and apparently always will be) an adequate supply of physical silver to cover any demand that surfaces.

http://www.cftc.gov/newsroom/generalpressreleases/2008/pr5499-08.html

I would also like to point out that the US Silver coin has always had tremendous historical and monetary significance to the citizens of the United States of America. US Silver Eagles represent “honest money” and to witness their continued manipulation is disheartening.

I am also sending this letter to other interested parties below to inform them that another silver crime is in progress.

Sincerely,
Bix Weir
US Citizen

Cc:
Michael Mukasey, US Attorney General
A. Roy Lavic, Inspector General CFTC
Senator Dianne Feinstein
Congressman Ron Paul

The government rationed food during World War II and gasoline in the 1970s. Now, it’s imposing quotas on another precious commodity: 2008 dollar coins known as silver eagles.

The coins, each containing about an ounce of silver, have become so popular among investors seeking alternatives to stocks and real estate that the U.S. Mint can’t make them fast enough. In March, the mint stopped taking orders for the bullion coins. Late last month, it began limiting how many coins its 13 authorized buyers world-wide are allowed to purchase.

“This came out of nowhere,” says Mark Oliari, owner of Coins ‘N Things Inc. in Bridgewater, Mass., one of the biggest buyers of silver eagles. With customers demanding twice as many as they did last year, Mr. Oliari would like to buy 500,000 a week. But the mint will sell him only around 100,000.

The coins have a face value of $1. But the mint sells them for the going price of silver, plus a small premium, to a handful of wholesalers, brokerage companies, precious-metals firms, coin dealers and banks. The dealers mark the coins up a bit more and sell them to the public. Currently, the coins are fetching about $19 apiece, with some sellers seeking more than $20.

For Coins ‘N Things alone, the shortage is costing hundreds of thousands of dollars in lost sales of silver eagles. The firm sells about $1 billion worth of precious metal every year, including silver, gold and platinum coins. Mr. Oliari, a 50-year-old numismatist who has been in the business since 1973, sniffs: “You can’t print what I want to say about the mint.”

The mint, a bureau of the U.S. Treasury, has offered little explanation beyond a memo last month to its dealers. “The unprecedented demand for American Eagle Silver Bullion Coins necessitates our allocating these coins on a weekly basis until we are able to meet demand,” the mint wrote. A spokesman declined to elaborate.

‘Poor Man’s Gold’

The rare shortage offers a glimpse into the growing love of a commodity known as “poor man’s gold.” With more silver mined than gold traditionally, silver has always been far cheaper than gold and today has less than 2% of gold’s value.

But silver is growing in popularity, and some investors are betting that its value will surge as inventory shrinks. Big investors are loading up on silver eagles, which are the only American silver coins allowed in individual retirement plans. For small investors, they are an accessible way to get into the metal boom.

“Unlike gold, these coins can be bought by regular citizens,” says J.R. Roland, a Brownsville, Tenn., judge who recently began buying the coins — and trading them on eBay. “In these economic hard times, silver coins are a great way to invest.”

In March, sales of silver eagles surged more than ninefold from the previous month, to 1.85 million. This year, the mint has sold 6.8 million, representing more than twice last year’s pace. Still, numismatists are clamoring for millions more as the price of silver soars. It has more than doubled in the past three years and now trades at around $17 a troy ounce, which is slightly heavier than a traditional ounce.

Linda Wood, a 57-year-old Pittsburgh accountant, scours eBay, coin shops and flea markets in search of silver eagles. One by one, she has accumulated about 300 in the past few months and stores them in a bank safe-deposit box.

Traditional coin collectors may be impressed with the government’s written description of silver eagles as “one of the most beautiful coins ever minted.” But Ms. Wood isn’t in it for aesthetics. She became a silver bug after she and her husband saw the value of their individual retirement accounts decline by $2,500 — a “significant” chunk. “I just need bullion,” she says. “I wouldn’t care if the coins were ugly.”

Amid the mint caps, shady silver-eagle hawkers are thriving. Some coins are priced at $25 and higher. Mr. Roland says that he had to wait a month after ordering some on eBay recently, because the sellers didn’t even have the goods. “I can’t wait long, because you never know what’s going to happen with the price,” he says.

In Manitowoc, Wis., Dan Zirk, owner of Manitowoc Card & Coin, has sold twice as many silver eagles as he did last year. So he has stashed away his remaining handful of 2008 coins, betting the price will rise. “I want $22 apiece,” says Mr. Zirk. He says customers, meanwhile, are asking for earlier years and other forms of silver.

Lady Liberty

The government began producing silver eagles in 1986, basing its design on Adolph Weinman’s 1916 “Walking Liberty” half dollar. The front features a flag-draped Lady Liberty striding toward the sunrise, carrying branches of laurel and oak symbolizing civil and military glory. On the reverse, a design by John Mercanti features an eagle with a shield, olive branch, and talon and arrows.

The coins are made at an armored facility in West Point, N.Y., alongside the military academy. Dealers say they heard the mint had run out of planchets — round metal disks ready to be struck into coins. The disks are used for various coins, and the companies producing the blanks also are busy, limiting the mint’s ability to increase production. The mint won’t comment on the planchets.

Coins Divvied Up

Each Monday morning now, the mint divides its silver coins into two pools. It divvies up the first equally among authorized purchasers. The second is allocated proportionately, based on the buyer’s past purchases. The mint limited purchases once before — in the late 1990s, when investors loaded up on silver, wrongly anticipating that a failure by the world’s computers to adjust to the new millennium would cripple the economy.

Jim Hausman, head of the Gold Center in Springfield, Ill., one of eight companies in the U.S. authorized to buy silver eagles, estimates that the rationing will cut his expected annual sales of four million silver eagles in half.

And the result, he says, is almost un-American. Increasingly, investors are taking a shine to alternatives. The Royal Canadian Mint saw its sales of silver Canadian maple-leaf bullion coins rise 40% last year, to 3.5 million, according to a spokesman.

Some investors expect the craze to end badly. They draw comparisons to what happened to silver in the 1970s. A rich Texas family poured billions of dollars into silver, and prices surged above $50 an ounce in 1980, only to plunge again after government intervention.

“It’s akin to what happened when the Hunt brothers tried to corner the silver market,” says Wendell Curry, who owns McAllen Gold & Silver Exchange in McAllen, Texas. “The silver hawks are now trying to corner silver American eagles. And it’s making it harder for mom and pop to buy these for their grandchildren.”

Buy Gold and Silver Bullion

Silver Shortage gets Worse, Price Drops Again!
(If you don’t hold it, you don’t own it)
Silver Stock Report
by Jason Hommel, March 20, 2008
Three more major silver dealers are reported to be out of silver today: The U.S. Mint, Kitco, and Monex. This, on top of the major dealers yesterday, Amark, Perth Mint, CNI Numismatics, and APMEX, all reported sold out. Further, nearly all of Canada is reported to be out of silver, from Vancouver to Toronto.

This is unprecedented, and is a perfect case of market manipulation in the paper market at COMEX and other futures exchanges to see silver prices continue to drop down to below $17/oz. today. Paper promises can be created endlessly, but real silver cannot.

This is NOT a case of the dealers getting spooked, and selling out to the refiners just in time, at peak prices. This is a case of the public buying up the stock at coin shops across the world ever since gold hit $1000/oz.. That event finally sparked a little of the public’s buying of silver and gold. Thus, the typical coin shop flow of silver to the refiners just stopped in the last few weeks, and especially the last two days.

This is NOT a case of the public creating a top with ‘everyone’ in silver, because nobody’s in silver yet. In 2006, only $1 billion was spent on investment silver, which is 0.007% of the $13.5 trillion of money in the banks. As I have long reported, the silver market is so small, there is no room for new investor demand, not even 0.1% of money could be spent on silver, because that would be $13 billion, which would push silver prices to $200/oz., and we are seeing only the tiniest beginnings of that.

$13 billion would be almost enough to buy all the silver produced by the mines in one year, which would leave nothing for industry. It would essentially double demand, but supply would remain the same.

Furthermore, this is not a top because the public continues to get to the coin shops, and is now getting on waiting lists for silver. The public is not yet in, so how can the price drop?

This is a case of price fixing and manipulation, like communism. Sausage is reported to cost 1 link per ruble, but there is no sausage. Silver price is quoted, but there is little to no silver.

Shortages are evidence of price fixing. Price fixing results in shortages. They are price fixing silver at a below market price over on the paper exchanges in New York and around the world.

How long can it go on? Until people stop trusting the paper exchanges, which could be after they default and fail to deliver silver. Or we could see a severe backwardation, as people refuse to trust and buy futures contracts, which would thus sell at a discount to real silver. Then, the spot price will really go up, maybe about double or more very quickly.

Regarding Monex and Kitco:

Monex has a shortage of 100 oz bars and silver eagles. They say that they are 5-7 days behind on orders for 100 oz bars and at least 10 days behind on silver eagle orders.

“This message has been placed on KITCO’s buying board in large red letters. TT

IMPORTANT: Due to the volatility of the market, we are experiencing a significant increase in the volume of products that are being sold to Kitco. Although Kitco and HSBC Bank are working hard to stay on top of this, you may experience a delay in your package being processed. We apologize for any inconvenience this may cause, and appreciate your patience and understanding.”

bulliondirect says:

High Activity Market Alert
The precious metals industry is experiencing a substantial surge in activity which may increase the possibility of logistical delays; including customer service response time and product processing (incoming and outgoing). Our goal is to keep our prices competitive while still delivering an exceptional transaction experience.

I now have 4 pages of reports that I posted to my member’s forum, from people saying that dealers around the world are out. Here is a summary of their comments:

Apmex out.
CNI out.
One in the UK.
One in New Port Richy, Florida.
Ebay is selling silver over spot.
Toronto out except overpriced Eagles and Maples.
Kitco in Montreal is out of Silver Maples.
Local shop in Victoria BC is out of all bullion.
Mexico City’s “Consultoria casa de cambio” is out of bullion.
There is no silver for sale in eastern Canada.
Perth Mint is out.
A world class gold and silver bullion dealer in Dubai, Lakhoo Jewelry, is almost out.
Most Utah coin shops say there is a critical shortage of silver available for purchase in Utah.
(Johnson Matthey, the largest refiner, is in Utah!)
www.argentarius.de , there where 637 Mexican Libertad still left. Now, two hours later: nothing.
We could not find silver in canada from two days now.
Conejo Coin and Stamp run out of 100 oz silver bars too.
I just cleaned out the last 25 oz. of silver at my local coin shop.
scotia bank told me that they have no silver for about 2 days now.
Camino Coin of Burlingame, CA says, There seems to be a silver shortage.
In the Detroit, Michigan area, very few coin shops have any, I got the last 2 bars at one shop.
Bulliondirect having trouble mostly with Silver Eagles and Canadian Silver Maple Leafs.
The US Mint has said they are out of silver eagles – at least for a few weeks.
Portland, OR, Alder Gold Exchange., just a few bars, bought them out.

The dealers in Vancouver are offering 100 oz bars at $1875 preorder, but we wont get them for months.

==============

Paul Mladjenovic, author of Precious Metals for Dummies, said to me today, the following about the current price manipulation and shortage of real silver:

Outside of Oil, there is no other commodity with more diversified uses. Silver will probably hit $50/oz. within 3 years, and exceed its all time high on an inflation adjusted basis ($150-$350/oz.) and hit tripple digits by the early part of the next decade.

Everything has a natural and artifical price, and an artificial low price stimulates demand, and creates shortages, but the false appearance of plenty, which will blindside those in the paper markets.

Artifical intervention only works in the short term, whereas natural supply and demand forces always triumph in the long term.

==============

I want you to be able to buy on this dip, and not be discouraged by sold out coin shops. This is why I asked people to report to me who had silver in quantity, ready to sell.

“If you don’t hold it, you don’t own it” (And can’t sell it!)

Yesterday, Robert Mish was slammed by my mention of his shop in my report. Next time, he says he can only handle orders for $10,000 or more at one time.

Here are a few more sources:

bulliondirect.com has silver available, up to 400 x 100 oz. bars.
Bulliondirect is like the ebay for large silver orders.
They do have 100 x 100 oz. bars available, in several categories.

But they now post a warning:
High Activity Market Alert
The precious metals industry is experiencing a substantial surge in activity which may increase the possibility of logistical delays; including customer service response time and product processing (incoming and outgoing). Our goal is to keep our prices competitive while still delivering an exceptional transaction experience.

===============

FideliTrade Incorporated in Wilmington, Delaware is reported to have silver inventory available for immediate delivery.
http://www.fidelitrade.com/

===============

http://www.delawaredepository.com/
is an NYMEX/COMEX and CBOT licensed and CFTC approved depository for silver.

===============

Mike of Gulfcoast Coin and Jewelry (239) 939-5636, In Florida
1 800 465 3909
www.gulfcoastcoin.com
Keeps a large inventory of bullion and rare coins. 90% bags, .999 silver, is a market maker.
Sells gold at 1% over costs, silver at 3%.
Self-reported that he has 50 bags of 90% now. — but others report he “drop ships” from other sources.

===============

Jason, I was forwarded your blog regarding silver. I’m a major precious metal dealer and have sold 25,000 yesterday. I still have plenty left. We have been selling plenty of pure silver dealer to dealer at spot + .50 cents.
Thanks,
Don Herres
Dollartowne
Bellbrook, OH
937-848-6231

I was unable to confirm.

===============

It was reported to me that:
In Austria, Europe, there are plenty of sources where you can get massive amounts of silver:

www.oegussa.at – this is the largest smelter in Austria, with an office for individual, private party walk-in customers in Vienna and they have lots of silver bullion available all the time. Silver bullion is not too interesting for Austrian citizens, because they have to pay V.A.T. on silver bullion purchases – VAT is the European equivalent of sales tax.

But if any American or other non-EU-citizen purchases silver bullion and keeps the receipt, they get the VAT back at the airport when leaving the country.

You can also purchase lots of silver at Austrian banks and coin shops – no shortage here! And if you go for coins, denominated in any current currency and not bullion, there is no VAT to pay for anyone. The Austrian Mint is currently offering the Silver Philharmonic coin, weight is not metric, but in troy ounces, the coin is denominated in Euros, so no VAT to pay – and you can purchase tons of it! They distribute them through all Austrian banks.

Yes, metric tons of these coins are available now. .

Here is the specific page at their website: www.austrian-mint.at/silberphil?l=en

Sources sent by the owner of:
www.alchemianova.com
Jason Hommel

This reminds me of what one of my mentors has said to me; “When the common man is buying, the generationally wealthy are selling, and when the common man is selling, the generationally wealthy are buying.” The wealthy have been buying gold and silver for a half dozen years, because they know where this is heading. One only need study the cycles of history to know what will happen. Short trends of two, four, even five years do not tell the story. But if you study gold over fifty years…a hundred….several thousand…a pattern will emerge that is shocking.

Gold will continue up, yes we will see sharp pullbacks, in fact those pullbacks will frighten a great number of investors out of their holdings just as they did in the last bull market, but the long trend here is going to be up. We have a long way to go until the Dow / Gold reaches parity. Exciting times indeed.
Russell: Gold, the great drama

Richard Russell
Dow Theory Letters
Mar 5, 2008

Extracted from the Feb 29, 2008 edition of Richard’s Remarks

The Great Drama Unfolds — Gold coins can be a bit difficult to handle. They are heavy, they are visible, and must be stored in a safe place. But for most people, gold coins (actual gold in one’s possession) has one great advantage — you’re not tempted to sell your coins on every decline or correction in gold. For this reason, many people have done better holding a smaller number of Krugerrands or American Eagles than have larger traders who have moved in an out of gold in an attempt to “beat the market.”

Some History — In January 1980 gold topped out at a price of 850 US dollars per ounce. Down goes gold — down and down, year after year until gold reaches a low of 256 in August of 1998.

There, despised and ignored, gold sinks to its historic bear market low. From its ignominious low of 256, a new primary bull market is born. But 28 years of decline has soured the US public on gold. If they are interested at all, they abide by the wise men of the government and the Federal Reserve. “Gold is history,” they are told. “Gold is a story whose time has past.” “Gold is a relic from another era, a useless metal used in fancy dentistry and in jewelry.

Under a cloud of disinterest and false tales, gold starts up again. Slowly, almost surreptitiously, gold rises to 300, then to 400, to 500 and 600. Nobody is interested. Some of the old gold mining stocks move higher. They pay no dividends. Nobody is interested in them. Names from the past appear and are taken over. Dome Mines, Homestake and Campbell Red Lake. Skeletons dancing into view and then disappearing.

Gold works its way still higher. A few people remember that gold is money, and they suggest that gold be purchased. But frequent sharp declines and occasional deep corrections frighten the early buyers of gold. They take their profits. Nevertheless, the metal reaches the 700s. A small group of admirers known facetiously as “gold-bugs” urge their followers to buy gold. “It’s cheap,” insist the gold-bugs, “gold is as cheap as dirt — buy it.”

Then, in January 2008, gold does the impossible. It breaks out above its old 850 peak-level of 1980. After 28 years of being held back, gold bursts is chains and breaks free. Gold pushes above 850 into space never seen before by the yellow metal. It’s like a prisoner who, having been held in a dungeon for 28 years, suddenly escapes from the darkness of his cell and emerges into the glare of sunlight.

Twenty-eight years of compression has been released. The advance above the 850 level is still quiet, almost eerie — but relentless. “It’s speculative nonsense,” growl the analysts, “it’s manipulation by a crazy element that is living in the past.” But gold continues to work higher. By February gold is nearing the thousand-dollar-an-ounce mark.

In the meantime, silver, the other monetary metal is pushing towards twenty dollars an ounce. Silver, that sold as low as 23 cents an ounce in 1932, is now selling close to twenty dollars an ounce. “Lowly silver at twenty bucks a pop, I don’t believe it.”

In the meantime, the US is dealing with an incredibly difficult situation. The nation is straining under the onus of a potential housing collapse. The new Federal Reserve Chairman, Ben. S. Bernanke, is fearful that the housing disaster will send the nation into recession and worse — deflation. Bernanke is well aware that the two thirds of US families own their own homes, and that consumer buying is responsible for 70 percent of the Gross Domestic Product of the US. On top of everything else, the great banks of the US are in trouble. Bernanke must save the banks and he must hold back the forces of deflation.

But good Lord, what about inflation? The Fed has made its decision. Their first task is to keep the US out of the grip of recession. This allows gold and silver to further express themselves. The lid is off 28 years of compression and imprisonment. The great bull market in precious metals pushes higher. In the background, twenty central banks from around the world print their fiat paper in an orchestrated effort to insure prosperity.

Meanwhile, the great gold bull has broken free of its chains. A strange and unprecedented union of forces has emerged. The US public is unaware of the great phenomenon that is playing out before their eyes. Somewhere ahead, the US public will enter the bull market. Will it be in 2008, in 2009, in 2010? The timing, as we might suspect, is known only to the mysterious gods of the market.

http://www.321gold.com/editorials/russell/russell030508.html

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Silver Stock Report

by Jason Hommel, March 3, 2008

What is a short squeeze?

A short squeeze is one of the most exciting events in finance, and could drive silver to $100/oz. very quickly! A short squeeze happens when those who manipulate the market begin to act according to old Wall Street rhyme,

“He who sells what isn’t his’n, buys it back or goes to prison!”

The silver shorts, who have been one of the key forces capping the price of silver ever since 1980, are buying back the silver they sold, the silver that they don’t have, the silver that may not exist, and they are buying “contracts for it” from people who might not have it either, in a rising market, because the shorts have begun to panic.

Another way to say it, is that the fat cats are beginning to wake up, repent and change, and realize the error of their ways! Perhaps we are seeing the inevitable failure of a 100+ year war of the international bankers, a war waged against an inherent property of silver. But silver is a monetary metal, and the failure to recognize that truth has consequences.

Dan Norcini reports at http://www.jsmineset.com/ that the commercial shorts in silver last week were “buying on the way up!”

http://www.jsmineset.com/cwsimages/Miscfiles/5830_Charts_for_2-29-2008_COT.pdf

The commercials are buying silver futures contracts from the category of traders that is labeled “non reportable” which are mostly small capitalized individuals, while the funds, or “speculators” have not changed their long positions much.

Short Squeeze definition:
http://en.wikipedia.org/wiki/Short_squeeze

“Short squeezes result when short sellers cover their positions on a stock. This can occur if the price has risen to a point where these people simply decide to cut their losses and get out. Since covering their positions involves buying shares, the short squeeze causes an ever further rise in the stock’s price, which in turn may trigger additional covering.”

See also:
http://www.investorwords.com/4559/short_squeeze.html

The reason why a short squeeze is so exciting is that in theory, there is no limit to the upwards price movement, especially if there is a shortage.

This is the kind of event that could drive silver prices to $100/oz. or higher very quickly. The chance of such an event is higher now than ever before, in my opinion.

As of Feb 26th, the commercials are long 53,358 contracts, and short 126,584 contracts, for a net short position of 73,226. Multiplied by 5000 oz. per contract, that’s 366 million ounces of silver that they might need to buy back, on the NYMEX alone.

But NYMEX only has 87 million oz. of silver in the warehouses, registered for delivery. http://www.nymex.com/warehouse.aspx

Thus, there is a shortage. And as they shorts pay up, the shorts are getting squeezed.

(The 366 million oz. that they need to buy back does not count short positions “over the counter”, nor does it count “pool accounts” or unallocated silver storage, nor silver certificate programs, nor does it count failed silver deliveries from corrupt coin dealers. )

Three hundred and sixty six million ounces is a lot of silver when the world mines only about 650 million ounces of silver per year, and when world industry consumes more silver than that each year. Thus, the shorts can’t get 366 million ounces of silver from the mines; as that silver, and more, is already being purchased.

A mere 50 million ounces of silver being bought by investors in a year caused the price of silver to double from about $7/oz to $14.

If the silver does not exist to buy, a real buying frenzy and panic could break out.

A short squeeze took place when the silver price hit $50/oz. in 1980. That squeeze was ended when they changed the rules to allow no new long positions! (And when the Fed allowed interest rates to rise above 20%!)

The last time we saw a mini short squeeze in silver was around 1997, when Warren Buffet put an end to the squealing and panic of the silver shorts (and caused them to really worry) by announcing that he had invested less than 1% of Birkshire Hathaway’s net worth in silver. That caused the silver price to rise from about $5 to $7 very fast.

A short squeeze drove palladium prices up from around $250/oz. to $1000/oz. back in 2000, due to temporary failed Russian deliveries (that resumed). That short squeeze ended when the TOCOM paper exchange put limits on the daily price changes, and let contracts be settled for cash, instead of palladium.

A short squeeze drove nickel prices up to more than double, to $23/lb. in June last year. That short squeeze temporarily ended when they ruled that it was illegal for two of the largest holders of physical nickel in LME warehouses to own nickel, and had to sell!

But unlike the other two times in silver, there might not be any major billionaire for the shorts to falsely “blame.” And they might not be able to change the rules. This time, there might be a real shortage! They might have to blame themselves for being so reckless as to sell silver that does not exist to a world that consumes more silver than it mines.

We might see silver prices continue the parabolic move up. We might see failed silver deliveries with cash settlements. We might see further panic for real silver. We might see panic among industrial users who must buy silver or shut down their businesses. We might see the end of the NYMEX exchange itself. We might even see officials from the Commodities & Futures Trading Commission (CFTC) going to prison!

Why might the CFTC officials go to prison? Because they lied, and continue to point to the same lies to justify their inaction and incompetence. In May 2004, they lied, saying that manipulation in silver could not exist as long as there was unrestricted access to the market by longs (p. 5), but in the same report, they admitted that position limits prevent longs from entering the market (p. 8)!
http://www.cftc.gov/files/opa/press04/opasilverletter.pdf

Michael Gorham, author of that report, voluntarily resigned 3 weeks after writing it, in 2004.

That is why I continue to point out that there are position limits in silver contracts at the NYMEX. Position limits are the achilles heel of the world’s fraudulent paper and electronic monetary system. Position limits are trade barriers and unfair, and are clearly the opposite of free market principles. Billionaires who would take on the desperate silver shorts need to know about that obstacle, so they can figure out how to overcome it.
http://www.silverstockreport.com/2008/billionaires.html

Position limits were imposed to protect the silver shorts (but that’s not working, just like all trade barriers backfire), and they are bleeding money to the tune of $366 million dollars for every dollar that the silver price rises. And if they cannot or do not cover, then they lose $3.7 billion for every rise of $10.00/oz.! And in case we go over $100/oz., they lose $37 billion for every $100 rise in the silver price (if they can’t cover.)

Here’s a great article on the silver to gold ratio:
http://www.dani2989.com/gold/10aggb.html

A study of the silver to gold ratio shows quite clearly why the price of silver should be about $100/oz. right now, or more.

Right now is not a time period of business as usual. A short squeeze is a very unique event. It’s unusual and rare.

This is the beginning of what could be the event that has been long predicted by myself and many other physical silver investors. This is exactly why you need physical silver in your own safe, and why you should not trust any form of paper promises, certificates, or pool accounts, nor should you trust anyone to hold your silver for you.

You ought to get silver now. No delay. Not even one day. Get cash from your bank, and get yourself to your local coin shop before they close their doors to the public. I’m serious. No joke. Act now. This is the beginning of what could be the long awaited major panic crunch time.

Buying silver ought to be your top priority right now. In fact, the situation is so dire, that if I had a job and a 401k, that I’d seriously consider quitting my job to cash out the 401k to invest in silver; especially if the 401k contains more than a year’s salary.

If you order silver over the internet or mail, then don’t order all your silver at one time. Instead, spread out your orders among several dealers, or spread out over time, in case they begin to fail.

The conditions were so ripe for this short squeeze, that this is why I got my silver long ago, and this is why I prepared the following information, long in advance:

http://find-your-local-coin-shop.com/

Sincerely,

Jason Hommel
www.silverstockreport.com
www.miningpedia.com

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