by The Mogambo Guru

“As for the apparent disrespect for silver, it’s the vector you get from history…and the suspicion that comes from an enigma, wrapped in a mystery, wrapped in a corrupt, stinking, filthy Comex/Nynex/government mess, so that now we are freaking doomed.”

JMR Andrew H. has a question about silver. He starts off saying, “Most everyone agrees that silver has a monetary value, yet it seems no one can agree on how to determine it. If silver will have a greater value over time, why are so many people looking at it as an industrial need and not a monetary one?”

My answer to that is that silver does not have any monetary value, and I say this with complete assurance, since no country or economy has a currency tied to silver (except the Liberty Dollar folks!). You can buy silver and sell silver using official “money” to effect the transaction, but silver is not “money.” Ergo, silver has no monetary value. It’s as simple as that.

Hugo Salinas Price seems to agree with that, and says, “Today, not a single currency in the world has a valuable content; all of the one hundred and eighty or so currencies in the world have absolutely no intrinsic value at all.”

As for the apparent disrespect for silver, it’s the vector you get from history (it’s been low for a long time), bias (the silver cartel and government interests), real industrial demand met through dis-hoarding government stockpiles, zero real monetary use, and the suspicion that comes from an enigma, wrapped in a mystery, wrapped in a corrupt, stinking, filthy Comex/Nynex/government mess, so that now we are freaking doomed.

In short, I dunno why silver is selling at such a discount. I only know 4,000 continuous years says it can’t last, the problem is huge, without an explanation it can only be explained in retrospect, and thus it qualifies as a looming, dooming Black Swan event, and people who buy silver now are going to make a lot of money!

This brings up Bernard Baruch (1870-1965), who was an arrogant, dictatorial, fascist creep of the first order, sort of like The Mogambo without a mustache. Nevertheless (according to Wikipedia.org), he made a fortune in the stock market, most famously by going massively short against companies that he thought were overpriced, and “he amassed a fortune before the age of thirty via speculation in the sugar market. In 1903 he had his own brokerage firm”, and “By 1910, he had become one of Wall Street’s financial leaders.”

In short, he knew what he was doing and had the guts to risk it all.

I bring this up because a quote of his appeared in a Cryptoquote puzzle in my local newspaper, and it is what seems to be the precursor to George Soro’s famous dictum to “Identify the trend whose premise is false, and then bet against it.”

Mr. Baruch is quoted as saying, “I am a speculator. The word comes from the Latin ’speculari’, which means to ‘observe’. I observe.” Hahaha! Perfect!

So, putting these together, observe what in the hell is going on, find the error, and bet real money that errors and stupidities cannot last very long. Case in point: silver is selling at the lowest ratio to gold, or anything else you can name, in 4,000 years of history. It should be selling – at a minimum – for $40! Right now! Can this trend continue?

And it’s not just silver, but gold, too, because when you read between the lines, you can see that both of these guys – both of them! – are saying to buy gold, as Alan Greenspan’s enormous blunder in letting Congress spend all that excess money and credit for all those years is now beginning to reap its just desserts, which sounds really nice, bringing up visions of pies and cakes like it does, maybe with a little ice cream on top, until you look it up in a dictionary, and then made even more remarkable since Bernard Baruch has been dead for more than 40 years! Yet he knew! What a guy!

Antal Fekete, at Memorial University of Newfoundland, writes, “gold is good”, even if huge new finds of gold are found. It will not change things, as, “It is not the absolute change in mine output that has an impact on the value of a monetary metal, but the relative change as a percentage of existing stockpiles. For this reason gold is more valuable than silver: the huge stockpiles of gold make the impact of a change negligible. Ergo the value of gold is more stable. In technical language, the marginal utility of gold declines more slowly than that of silver.

“As a consequence,” he continues, “the specific value of gold is higher. This means that the value of the unit weight of gold is higher than that of the same weight of silver. The monetary metal with the higher specific value is more portable both in space and time.”

In other words, if I was going to loot the employee pension fund and run away to start life afresh, I would be best served by converting the traceable money into gold, because I could carry that much gold, but not into silver, which I can’t.

Mr. Fekete, obviously taken aback by my sociopathic corruption, agrees with me, however reluctantly, and says, “In more details, the cost of transporting the unit of value as represented by gold is lower. For example, if the bimetallic ratio is 15, then the cost of transporting the unit of value as represented by silver is about 15 times higher. Roughly the same rule applies to the cost of storage as well. This makes gold superior to silver as a monetary metal. It is more suitable as a vehicle to transfer value over space as well as over time.”

I held up a finger to indicate that I wished to add that since silver is selling as a stunning, amazing, historically low percentage of the price of gold, then silver has more upside potential! But, as usual, like everybody, he didn’t want to hear what I had to say, and he left, but he gave me a finger on his way out. Just like they all do.

And I am buying silver to see who laughs last!

Richard Daughty, the angriest guy in economics
The Mogambo Guru

Safe Haven

by Darryl Schoon
October 8, 2007

It’s the last day’s last hour of the last happy year
Bob Dylan, lyrics from Cross The Green Mountain

As we collectively move towards the economic disaster awaiting us, the investment community is hoping the world’s central banks will be able to save them from the crisis set in motion by this summer’s credit collapse.

If the truth be known—and someday it will be—central banks are at the very center of today’s problems. Indeed, they caused them. Today’s disintegration of capital markets based on debt-based paper began in 1913 with the creation of the US Federal Reserve Bank, the central bank of the US.

Why Save When Money Is Worth Less And Less

It was the US Federal Reserve Bank that first “fed” debt-based paper money into the previous savings-based economy of the United States. This substitution of credit for savings has led us to where the US is now—the world’s largest debtor along with having a national negative rate of savings.

Central Banks Paper Mills And Effluence

Unsustainable levels of debt and economic cycles of expansion and contraction are now everywhere. The spread of central banking—the paper mills of credit—has also caused the spread of central banking’s attendant problems, mounting debt, inflation, recessions, deflation, etc. The US, and indeed the world, is now addicted to a constant and growing infusion of debt-based paper money provided by the world’s central banks.

The paper money is not gratis; it comes in the form of debt with compounding interest attached. This debt-based paper is then released into the economy by commercial banks which profit by loaning funds they don’t actually have and charging compounding interest on those loans. (see my article How To Make Millions By Loaning Money That’s Not Even Yours That You Don’t Even Have)

Debt-based paper money has led nations and the world down a very dangerous path. Facilitating expansion by encumbering future revenues with compounding debt inevitably indebts individuals, businesses, and governments beyond their ability to repay.

In the beginning, production expands, needs are met and everyone goes home happy. In the end, everyone’s home gets repossessed. This is when the amount of debt has grown so large, governments, businesses, and consumers collapse under its collective weight.

That’s where we are today. We lived off tomorrow and tomorrow has arrived. What a surprise.

The $64 million question What do we do now?

For the United States, it is a $5 trillion question—US government debt now totals $5 trillion. For Japan, it is a $6.5 trillion question—Japan’s government debt is the largest percentage of debt per GDP in the world. These are troubling numbers, for the US and Japan are respectively the world’s largest and second largest economies.

The substitution of debt-based paper money for saving-based money (fully backed and convertible to gold or silver) lies at the foundation of the US and Japan’s continuing and about to worsen economic ills—though for different reasons (reasons discussed in How To Survive The Crisis And Prosper In The Process).

And central banks created money in the image of gold and silver and it was not good.

It was the substitution of debt-based paper money that allowed central banks to inflate their money supply beyond previously conceivable bounds. And, when debt-based economies were released from the need to convert or anchor their currencies to gold or silver, this allowed the US and Japan to further plunder their economies by indebting their citizens to levels of indebtedness beyond their ability to ever repay—EVER.

“The gap between future US receipts and future US government obligations now totals $65.9 trillion, a sum that is impossible for the US to reconcile, which means the US is now technically bankrupt.” St Louis Federal Reserve Review July/August issue 2006 Professor Laurence Kotlikoff

Once, US treasuries were deserving of the world’s top AAA credit rating; but the present US economy bears little resemblance to the US economy that was once the world’s most powerful, the nation’s economy that once owned 75 % of the world’s monetary gold and that had a positive balance of trade with the rest of the world.

That economy disappeared in the 1970s, replaced by one that had so squandered its gold that it could no longer back the US dollar. Now, the US is technically bankrupt, the world’s largest spendthrift, its largest debtor with the world’s largest trade deficit and a negative rate of savings.

But, amazingly the US still has a AAA credit rating on its US Treasury debt. Maybe they know someone at Bear Stearns who knows someone at S&P, Moody’s, and Fitch. Some things never change—until they do.

Subprime US Treasuries Not Yet Here But Perhaps Coming Soon

As autumn approaches, this summer’s credit crisis continues to spread through the global grid created by today’s financial wizards—wizards so adept they do not understand what they have set in motion. That this summer’s credit crisis surprised them the most is the most disturbing news of all.

The financial wizards of Wall Street and The City are hoping this summer’s credit crisis is a bad cold at worst, that perhaps a slight fever and time will heal the illness and they can return once again to the task of carving out billion-dollar bonuses from capitalism’s rotting carcass (sic capitalism, any economic system based on central bank issuance of debt-based paper money).

But the wizards of Wall Street and The City will be wrong this fall. This summer’s credit contraction looks increasingly less like a cold and more like cancer which has metastasized and made its way into the lymph nodes of our global economy.

We wait as the inevitable end of a debt-based paper money system approaches. But have faith, for after the fall a resurrection will occur; albeit, at the end of a long and very hard winter.

Financial Sense

Author: Monty Guild

We have all been hearing about sovereign wealth funds [SWF's] which are estimated to have $1.2 trillion US available for investment in the rest of the world. Countries like Singapore, China, the mid East and several other countries around the world have SWFs to diversify their national investments.

In addition to these funds, a more recent development is the advent of QDII funds from China (Qualified Domestic Institutional Investors).

This is money owned by banks, insurance companies and wealthy individuals that China allows to leave the country to be invested abroad. It is estimated that these QDII investments will total about $140 billion over the next 12 months.

We estimate that about half will be invested in Hong Kong and the rest in stocks throughout the world.

This equals about 11 days of trading volume of all Hong Kong stocks.

Obviously the other half represents increased demand for stocks, precious metals and currencies outside of China. Since the Chinese Yuan is only rising 5% per year versus the $USD while gold, commodities and many other currencies are rising faster, much of this money will find its way into gold and related investments like commodities and non US currencies.

Respectfully yours,
Monty

JSMineset

Alex’s Notes: I only have two words to add to this amazing article: Holycrap Batman!

———————————-
CHAPMAN: Gold, Silver, Economy & More
by Bob Chapman
The International Forecaster
Sunday, 7 October 2007

US MARKETS

We are sure all of you are anxious to know that the numbers of millionaire households globally grew by 14% in 2006 from 2005, and now control a third of the estimated $100 trillion in wealth. The 9.6 million households, comprising 0.7% of the world’s households, now control $33.2 trillion. Half are located in the US and Canada, 25% in Europe and 1/5th in the Asia-Pacific region.

In non-wealthy households, defined as those with less than $100,000 in financial assets, declined from 2001 to 2006. But, assets held by households with more than $100,000 climbed from $51.4 trillion to $84.5 trillion during the same period. The richest 0.1%, those with more than $5 million in assets under management own 17.5% of global wealth.

Planned layoffs fell nearly 10% in September as the slump in housing continued to hurt payrolls. More than 1/3 of the cuts of 71,739 came from mortgage lenders, construction firms and real estate firms. Thus far this year, about 1/6th is directly related to a collapsing housing market.

IMF data says it is mostly central bank flow of funds that is keeping the world economy afloat despite all the recent attention granted to sovereign wealth funds the central banks of the world’s emerging economies accounted for $320 of the world’s 340 billion in reserve growth in the second quarter and $283 of $303 billion in the first quarter. In the end central banks are financing the entire US deficit.

Twenty-seven percent of hiring managers said they planned to increase their staffs in the last three months of the year, down from 32% who said they expanded their payrolls in the third quarter and 41% in the second quarter. The job market has weakened measurably since the spring and will weaken further through the end of the year. Six percent said they expected to cut staff down from 9%, 63% will leave there staffs as is.

The Street is betting the FOMC meeting this month will bring lower interest rates. That is based on lower economic numbers, a continuing credit squeeze at banks and Greenspan’s comment that the real estate crisis and house prices will fall a lot further than people think. Cheap money is now history. The days of big leveraged buyouts are over because the CLO market is dead. Banks won’t lend to each other for more than a week. The current situation is more systemic than the crisis in 1998. It effects far more institutions and will have a far greater impact on the global economy. Those who believe we will get a recovery as in 1999 are mistaken. We are facing a property collapse and hyperinflation. This is also worse than October 1987. This time the dollar has hit record lows and gold and silver are rallying in spite of official suppression. This is January 2001 all over again or October 1929. The US is the biggest debtor in history with external liabilities reaching 35% of GDP. Foreigners are not buying our Treasury paper and that means the Fed will have to buy the bonds, monetize them, and we will have even more inflation. Dropping interest rates won’t work – only a purge will and the elitists do not want to face that. Thus, they will inflate until they cannot anymore.

What economists and analysts do not want to see or are incapable of seeing is that we are facing a devastating global crash in the US dollar. This isn’t maybe, it is inevitable. Thus far the decline has been orderly, but in time it will get disorderly with grave consequences not only for those in dollar denominated assets, but also for the entire world. This is why owning gold and silver related assets at this juncture is so important, not only for profit but more importantly for the preservation of your assets. The problems we face today had a foundation in the 1960s, were officially kicked off on 8/15/71 and are been experiencing the final results today – the inevitable collapse of the dollar.

American could care less – most do not have any savings. Some 60% of our population is in debt up to their eyeballs. They have little to lose. That is why consumption levels are what they are, some 70% of our economy. That is in the process of coming to an end shortly. Whatever assets Americans have for the most part is in their homes and their values are plunging. The majority of Americans live in the 30 former hot area cities and those cities will experience losses of 30% to 60% off from the peak in real estate prices.

The only other time in modern history that Americans’ saw their personal savings fall below zero was in the 1930s during the “Great depression.” That is when the stock market and banks collapsed and unemployment was 35%. Considering that, you can see how vulnerable Americans are today. They have no idea the position they have put themselves into.

The only reason the US economy hasn’t collapsed is that foreigners who save 10% to 35% of their income have been willing to lend those savings to us, but that lending is in the process of diminishing. The reluctance to lend has been assisted by the subprime – ALT-A mortgage rating fraud that has caused over $2 trillion in losses worldwide. The falling real estate market has expedited a flight from the dollar as well. You should also keep in mind that as of 1/1/07, 64.75% of reserve assets of foreign countries were held in dollar-denominated assets.

What you are about to shortly witness is going to make 2000 and 2001 look like child’s play. This is going to be bigger than the 1930s. No one wants to talk about it. The pros are in denial, but that isn’t going to make it go away.

As open-ended consumption comes to an end we will head into an inflationary recession, into stagflation (stagnation and inflation).

The Fed has again responded to crisis by lowering the prime rate and discount rates and is prepared to lower them further as they increase money and credit by 14.1% or 48% a year. Yet these meatheads at the Fed, on Wall Street and in government and corporate America attempt to tell us there is only 2% inflation, what buffoons. All of America has now become subprime, along with the dollar. There will be a steady exodus from the dollar until it has dropped 30-55%, then as time goes on all currencies will become suspect and the flight to gold and silver will become a stampede.

GOLD, SILVER, PLATINUM, PALADIUM AND URANIUM

In a story reminiscent of the tall tales about Paul Bunyan and his blue ox, “Babe,” the cartel arranged for the greatest phantom creation of nonexistent jobs of all time, and no one believed them. Stocks rose anyway thanks to the PPT’s weakening of the yen, with the Dow gaining about 92 to close at 14,066.01. Stock market traders can kiss their derrieres goodbye as this means rate cuts are not very likely in the near term, so the cuts they have priced in may never happen until much later. Don’t worry yet though, because before the stock markets crash again in a cartel-orchestrated carry trade unwinding aimed at forcing liquidations of PM positions held by large specs to cover margin calls, these markets will be run up by a weakened yen to flush out yen calls and stock index puts purchased by large specs to protect their PM positions, and you can take that to the bank. We can already see them setting this up to happen just before the expiration of October options. This is how every gold rally this year has been stifled by the cartel. It is their MO. Always remember that gold suppression is JOB ONE at the Fed, and the cartel went all out to whip up another jobs phantasm that would have made Pinocchio’s nose grow into a telephone pole. In Wednesday’s IF we wrote, and we quote: “You will likely get some help from Friday’s upcoming jobs report which should put an end to the dollar’s dead-cat bounce, but remember that our government creates jobs out of thin air, so be ready for a disappointment if it comes.” Well come it did, and as we recommended, the currency and gold markets were ready for the beyond-belief jobs report, with gold and silver both gaining and the dollar dropping in an almost immediate reversal of initial dollar gains and PM losses that occurred just after the report came out.

For the totally gullible and monumentally naive among us, the government would have us believe that non-farm payrolls gained 110,000 jobs last month, and they even had the gall to revise the minus 4000 jobs for August to plus 89,000. The Fed finally came to the dollar’s rescue, but they had to lie through their teeth to do it, and the pros don’t believe them. Everyone is sick to death of the colossal falsehoods that are thrust at us daily by our government which lies pathologically, and will now move toward trading activity based on reality and ignore government statistics. Commodities traders could not be happier as they now have the perfect excuse to cause commodities to soar based on our now apparently “vibrant,” “no-recession-here” economy, so inflation will continue unabated as a deluge of money and credit drowns the economy in an attempt to break the credit-crunch and as inflation already in the pipeline comes home to roost. Perhaps even more incredibly, and despite the supposed job gains, the unemployment rate rose to 4.7% officially, which is yet another totally bogus statistic. Our subscribers know that the real rate of unemployment is now around 15%.

In another twist, the government claims they “accidentally” left off government jobs in the previous month’s report which is why the number turned out negative. So, does that mean that the Fed will now take the rate cut back, or does it mean that they left these government jobs out intentionally to justify a big rate cut to save their Wall Street buddies? We’ll let the reader decide.

If the truth were known, and the phantom jobs created by the birth/death model were removed, we would have had negative job growth for virtually every month over the past year or more. If you added in the hundreds of thousands of illegal aliens who have lost their construction jobs, who are not counted in labor statistics, the job situation would be even more negative. You might also note that although many illegal immigrants send some of their money home, a good portion gets spent here in the US and this is bound to have a very negative impact on communities that have foolishly become heavily dependent on the cheap labor provided by, and the consumer spending of, illegal aliens. The southwest especially will get creamed by this illegal alien unemployment situation, which is what they get for exploiting these people for decades.

We ask how there can be any job gains whatsoever what with constant outsourcing and off-shoring of jobs, businesses that are frozen in place due to a deadlocked commercial paper market, banks, investment banks, hedge funds, bond brokers and stock brokers ripped by an ongoing CDO/ABS/MBS/CP/ABCP/SIV debacle of unprecedented proportions which threatens to take down the world economy and financial sector, record losses and layoffs in the automotive industry, an ever-shrinking and now virtually non-existent manufacturing sector, a terrified transportation sector which is being torn to shreds by a relentlessly rising price for oil and fuel, cutbacks in all types of employment due to rising business costs caused by runaway inflation and a tanking real estate market that is devastating our economy with colossal employment losses in construction, real estate sales, mortgage origination, banking, title insurance, home inspections, home appliances, hardware and building supplies and who knows what else as that ripple quakes through our economy.

And of course you never hear about underemployment where people lose $25/hr. jobs and pick up $10/hr. jobs in slave labor camps, which the government calls the service sector. Heaven forbid that we should dare to count the hundreds of thousands out of work who have lost their unemployment benefits and have given up trying to find a decent paying job in our increasingly decimated economy which has been flooded by slave labor in the form of illegal immigrants who our government has intentionally let in to line the pockets of big business which chews them up and spits them out while our citizens live in poverty, unable to compete with people who live 20 and 30 to a house and whose home countries have comparably low costs-of-living, allowing for a much lower living wage level.

Welcome to our new corporatist fascist country, the new United Goldilocks Matrix where the sheople sleep in their pods while the government creates a fantasy world where everything always seems to turn out just right, while in reality the sheople are being eaten alive by the Big, Bad Inflation Wolf and they don’t even know it, because they have been given body-numbing anesthetics in the form of whopping government lies about economic statistics like the Jack-in-the-Beanstalk story we got today from the Bureau of Lying Statistics. You may have noticed our many references to fairy tales, because that is the picture of our economy that the Illuminists and their bought and paid for dingbats, which some refer to as our mainstream media, present to us – a fairy tale. As people are about to find out, the Cinderella story presented by the idiots and morons in the media and by our tall-tale-telling government will soon turn into a Grimm fairy tale.

Well, the large specs did us proud again this week. In fact the message they delivered to the cartel on Friday made our week. The arrogant cartel of course thought that PM’s would buckle and that the dollar would soar on the much-better-than-expected jobs report. They were hoping upon hope that this would allow them to get out from under the commercial-short-annihilating, mountainous wall of shorts which they created in a futile attempt to stop gold, the size of which was accentuated by yet another all-time high in gold futures open interest set on Wednesday with a total of 443,912 contracts. Boy, were they in for a surprise! After digesting the preposterous, egregious lies about jobs data, gold bared its teeth in disgust and lashed out at the cartel, striking its arch foe with a reverberating backhand that knocked its teeth out and left it seeing stars. When the jobs data hit, gold was trading in the 736-737 range, silver in the 13.39-13.40 range, and the spot USDX in the 78.35-78.40 range. The data initially took gold down to the 727-728 range, silver down to the 13.23-13.24 range, and the spot USDX up to a lofty 78.819, all things considered. Then something very strange and wonderful happened. Everyone paused and said, hey, wait a minute, what on earth are we doing? We all know these statistics are being made up by the BLS as they go along like they were writing some fiction novel. Are we out of our minds? Are we going to cave in to the cartel based on a bunch of ridiculous hogwash made up by a bunch of thieving reprobates? No freaking way! After this stunning revelation dawned on traders, gold went ripping like it was shot out of catapult, rocketing to 744 before settling in at 741.30, UP 4.20. Silver did the same, launching itself up to 13.48 before settling in at 13.38, UP .02. The spot USDX plummeted, skydiving to close at 78.308, DOWN .173, and DOWN a whopping .511 from its intra day high. Incidentally, open interest on the USDX has been at the very lofty 39000+ level for 11 consecutive trading days and they have not even managed to attain 79 again before faltering in yet another failed dead-cat-bounce rally. So much for the best-laid plans of cartels and men. The XAU and HUI vaulted forward also, pressing up against their all-time highs, closing at 171.27 and 393.99, respectively.

http://news.goldseek.com/InternationalForecaster/1191791012.php

Alex’s Notes: I have been searching for a picture of this for a while now.

This is a picture of a US “Silver Certificate”. These are what our money used to be based on, silver and gold.

Why is this important? Is this some kind of nostalgic, old mans wierd collection item?

No, the reason this is important is that the vast majority of Americans do not understand our own money.

Money is simply a form of exchange that we use on a daily basis to expedite the exchange of our services and goods to one another.

What gives money its value, is simply our collective agreement that it has value. If we did not agree it had value, it of course would not be useful as money.

With todays “Fiat Currency”, this is especially true, because the only thing that says our money has value is the government.

Look closely at this certificate. Note that it says “This Certifies That There Is On Deposit, In The Treasury of The United States Of America, One Dollar In Silver Payable On Demand”.

Now why would we have had money that certified that there was something of value on deposit in the US Treasury?

Maybe because generations ago we knew that if there was nothing backing the dollar, then the government could make as much of it as it wanted?

It used to be that we KNEW our dollars had value, because you could walk up to the United States Treasury, and demand the Silver or Gold that backed the money, and the Treasury was required by law to cough up the precious metal in exchange for the Certificate.

This is what our money looks like today:

Notice anything different?

Yes. Now it says “Federal Reserve Note”.

What is a “Note” you say? A “Note” is an instrument of debt, meaning if you have a “Note” from me, it means I owe you something of value, and you can come collect it from me later.

Let me ask you what may seem like a strange question: If you took your “Federal Reserve Note” to the Federal Reserve or the Treasury today, and demanded they pay you what is owed on the note, what do you think would happen?

I will tell you what would happen, they would call the police and have you carted off for being some sort of whacko.

So basically this means the government can print up as much money as it wants, and says ‘Trust Us, This is Valuable!”

Now I ask you, does something seem fishy with this scenario? Or am I just being silly?

Diversify Your Income

– FREE Report “10 Reasons Gold Has Farther to Run”

Alex’s Notes: We havent seen a housing market drop like this in a long time. If we lose 20%, we are going to see a 40% drop in the stock market.

Simon Heapes teaches me “Buy when everyone else is selling, sell when everyone else is buying”.

The continued bull rally in the stock market today tells me its time to get out.

Energy, Gold, Silver.

————————

Thursday, October 4, 2007

Although the stock market is giddy, the dire fundamentals have hardly changed. Housing is continuing its freefall and is beginning to impact the rest of the economy. A hard landing or recession that has not been discounted by the stock market remains a strong probability.

Pending home sales plunged 6.5% in August and 21.5% year-over-year to the lowest level since the inception of the series in January 2001. Nation Association of Realtors (NAR) economist Lawrence Yan stated “The impact was greater in the high-cost markets that are now dependent on jumbo mortgages. In some areas as much as thirty percent of signed contracts were falling through in August. The volume of activity we are seeing today is below sustainable market fundamentals because some credit-worthy people are trying to buy houses and they cannot.” The Case-Shiller home price index dropped 3.2% year-to-year in the second quarter (before the credit upheaval), the largest drop in its 32-year history. Moreover the quarter-to-quarter decline has accelerated in the last three quarters to a 6% annualized rate in the second quarter.

The rest of the economy is deteriorating as well although it has not yet fallen off a cliff. Chain store sales have dropped 2.2% since late July with a large number of retailers indicating disappointing sales. A leading retail organization is forecasting the weakest holiday season since 2001. Although many observers are pointing to a strong labor market, this is certainly not the case. The year-to-year rise in payroll employment has steadily declined from 2.2% in April 2006 to 1.2% in August. In the past 50 years whenever the yearly rate of increase dropped to 1.4% or less, a recession has resulted in six of seven occasions. Tomorrow morning’s jobs report for September cannot change this trend as even a job increase of as high as 239,000 would still leave the yearly growth rate at a paltry 1.2%. Furthermore the outlook for capex is under pressure as well. Core factory orders were down 0.5% in August and off 1.8% for the year-to-date.

We see more trouble ahead as delinquencies on subprime mortgages are still rising, defaults are increasing at record rates and home prices are falling. Last year subprime and Alt-A mortgages accounted for 40% of the housing market, and few new ones are being issued today. With this much of the market demand virtually evaporating, the outlook is for even higher inventories and lower house prices in the period ahead. In addition rate resets, which have not yet been a big factor in subprime delinquencies, will be a major factor in coming months. Subprime loans are becoming due for resets in huge numbers at a time when restrictive regulations will severely limit refinancing possibilities. This means more distressed sellers and rising foreclosures. Since the typical subprime mortgage holder is paying almost half of his or her gross income on mortgage payments even at the teaser rate, restructuring these loans will be extremely difficult. In our view, therefore, the economy is faced with a continuing negative cycle of higher delinquencies, tighter credit and lower home prices.

We believe the market is basically ignoring the potential impact of the housing situation on the rest of the economy just as it ignored the impact of the dot-com collapse earlier in the decade and the subprime crisis itself as recently as a few months ago. Alan Greenspan, in his autobiography, admitted that he failed to see the impact of the housing boom while Bernanke and the Fed staff didn’t realize what was happening as recently as two months ago despite the fact that the Fed employs about 250 Ph.d economists, the largest such group in the world. The Fed along with the vast majority of economists and strategists has been consistently behind the curve in grasping the negative implications of the housing boom and its consequences. It is indeed puzzling why anyone would believe that they are suddenly ahead of the curve today.

http://www.comstockfunds.com/index.cfm/MenuItemID/152.htm

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Alex’s Notes: Interesting trend here. Anyone who thinks the world is not offloading dollar backed paper at breakneck pace perhaps needs another cup of coffee.

But what does that mean?

Could mean a number of things:

1. Continued upwards pressure on gold, silver, oil, and food commodities.
2. If we get to the point where foreign governments are unwilling to continue financing our ridiculous $2billion a day in loans we have to take just to keep operating our government, then of course our government could go bankrupt, and boy wouldnt that be a fun ride.
3. Dollars keep getting shed around the world and all of those $4 Trillion in greenbacks that are floating around the world could come home. For those of you who have spoken to me about this issue you already now what that means. Get ready for $9/gallon for gas.

This is just an excerpt, link for the entire article is at the bottom.

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Another story that caught my eye this morning concerned the diversification of assets by Middle Eastern governments. The Qatar Investment Authority has lowered the amount that its $50 billion fund has invested in the dollar to around 40% from around 99% over the past two years, according to the CEO of the Authority – who is also Qatar’s prime minister. We have been talking about this diversification of currency reserves for some time, and while Qatar’s fund isn’t large enough to move the markets, it further reinforces our views. Foreign governments will continue to diversify their holdings out of the U.S. dollar, putting more downward pressure on the greenback.

The Daily Reckoning

Yi-Chang Wang

During the past few weeks of summer respite, I had been reading The House of Medici: Its Rise and Fall by Christopher Hibbert. Precious metals naturally take a relatively important part in the history of such an illustrious banking dynasty. The fiorino d’oro, or florin, was minted in 1252 at Florence. The florin was already internationally known and well respected during the fifteenth century. This coincides with the heyday of the Medici’s as the most powerful banking and political family in Florence and possibly the wealthiest family in Europe during that time. Their wealth, combined with their passion for art, turn them into generous patrons of many Italian artists during that time. This effort fostered a period of proliferation of artistic achievement, later known as the Renaissance.

The florin is the focus of this article. It’s a coin containing fifty-four grains of fine gold. The coin has the city’s Latin name, Florentia, stamped on its reverse side and the city’s emblem, lily, stamped on its obverse side. In terms of purchasing power, here is what the florin can buy in about 1430’s:

A “handsome palazzo” can be bought for a thousand florins.
A maidservant costs about ten florins a year.
A man can live very comfortably with an income of 150 florins.
A “cashier” in the Medici bank is paid with forty florins a year.
An “apprentice” in the Medici bank earns twenty florins a year.
The Medici Palace was worth about five thousand florins.
One troy ounce in weight equals to 480 grains.

Assuming that gold has been remonetized and that gold’s remonetized value is calculated in the manner proposed by Jason Hommel: equating current M3 value with current official US gold, one gets a value of approximately $35,000/oz (= $9 trillion divided by 261 million ounces; see Hommel’s “Im Insanely Bullish on Silver”)

This is an outrageously high value for gold!

But consider first, a “handsome palazzo” can be bought for a thousand florins. One thousand florins has a gold content of 112.5 ounces (= [1000*54]/480). Remonitizing that amount of gold would equate to $3,937,500 (= 112.5*$35,000) of purchasing power today. Today’s equivalent of handsome palaces (“palazzo” is the Italian for palace) would be luxury estate, which is usually defined in the real estate profession as single-family residences in excess of $1,000,000. But many would be in the range of several million dollars.

Ten florins, which was a maidservant’s yearly salary back in the days of the Medici’s, would equate to today’s $39,375 (= {[10*54]/480}*$35,000). This roughly equals to CIA’s estimate of US GDP per capita: $37,800.

Considering the IRS’ highest income tax bracket in the recent years is in the range of $200,000 to $300,000, a man can certainly live very well with amount of gold contained in 150 florins. If remonetized, 150 gold florins would have the purchasing power of $590,625 (= {[150*54]/480}*$35,000).

The Medici Bank was considered the bank in the fifteenth century. It was the most profitable organization in the Europe during that time. Certainly the bank’s cashiers and apprentices should be relatively well paid. An apprentice’s 20 florins roughly correspond to $78,750 (= {[20*54]/480}*$35,000) today. Goldman Sachs, arguably the most prestigious investment bank on Wall Street today, pays its analysts $55,000. In addition, in good years the entry-level analysts of a typical Wall Street “bulge-bracket” firm can easily be rewarded with approximately $10,000 of bonus (as some of my friends who worked there informed me). This would add up to $65,000.

While I don’t know what a typical Wall Street investment bank associate’s annual salary is, I do know that top MBA programs are such banks’ favorite recruiting destination. Therefore, the average starting salary of, say, a Harvard MBA, should be a fair proxy of an associate’s first-year income. Since an associate is the next employment level of an entry-level analyst in an investment bank, an associate’s salary should roughly reflect the Medici bank cashier’s 40 florins annual salary. For the class of 2002, a Harvard MBA’s median first year total compensation is $125,000. This amount approximates 40 florins current purchasing power of $157,500 (= {[40*54]/480}*$35,000).

Finally, the ultra-luxury real estate market routinely sells at $38 to $75 million dollars as reported by a recent Forbes survey of Most Expensive Homes in America. The price of Medici Palace, 5000 florins, represents today’s purchasing power of $19,687,500 (= {[5000*54]/480}*$35,000). This is lower than the low-end of recent ultra-luxury estate price range. But considering the Medici’s purposely built their main residence “far from grandiose” to avoid jealousy, this “undershooting” of purchasing power should not be surprising.

So, while some may have expressed objection at Hommel’s projection of gold’s remonetized value of $35,000 per ounce, such a price actually has some validity if one uses it as a proxy for comparing the purchasing power of gold between today and the Italian Renaissance. Put it the other way, if we were to go back to the tradition of using gold and silver as money, an ounce of gold can buy up to $35,000 of goods!

What does all this mean for silver?

Others can and have written better articles than I do on why silver is a better investment than gold, such as silver’s supply deficit, industrial use, etc. But the bottom line is, there may exist less above ground inventory of silver than gold, thereby, making silver potentially more valuable than gold if both are monetized. Assuming GATA is right, which I think so, that the central banks have already leased out as much as half of its 30,000 tons of gold, which implies 15,000 tons, or roughly 480 million ounces, of gold remain in the Central Banks’ vault. However, the above ground silver inventory is estimated at 200 million to 600 million ounces, with the average estimate at 400 million ounces. And due to silver’s supply deficit, this 400-million ounce inventory is shrinking!

Do you see how silver can have the potential to exceed even gold’s fabulous $35,000 per ounce projection?

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Rosen Blasts my Short Term Thinking
Silver Stock Report
by Jason Hommel, August 1, 2007

This month, I was honored to be interviewed by Maurice Rosen who publishes the Rosen Numismatic Advisory. It was a very good and comprehensive interview, with hard questions, and provides me a good occasion to send out an email, my first in over a month. Here it is: (with clarifications in parenthesis)

The Rosen Numismatic Advisory
–CONFIDENTIAL REPORT–
IN-DEPTH ANALYIS FOR THE RARE COIN INVESTOR
VOL. 32 NO. 5 AUGUST/SEPTEMBER 2007
Special Report, $25
WE INTERVIEW: JASON HOMMEL

“I think silver will head beyond $8000 an oz. in less than 15 years!”

LAST YEAR I INTERVIEWED JAMES TURK who talked about $8,000 gold. Now, I present you with a bizarre forecast of $8,000 silver. What’s going on here? We’ll have to read Jason Hommel’s reasoning to find out, but I’ll tell you upfront he’s from the School of Hyperinflation Forecasting, not an especially enviable place to have learned how to manage one’s money or to forecast the economy since the 1980s. Some of that institution’s graduates have told their stories in these pages and been proven dead wrong — so far. This latest graduate, all of 37 years old, goes a big step farther than James Turk who, by comparison, looks to have presented the far more moderate forecast. Turk talked of $400 silver. Hommel says $8000+.

You see, I need to challenge Hommel’s prediction of hyperinflation engulfing the U.S. and the world for fear that you believe I joined the hyperinflation camp. But, what if he’s right? Even partially right? Go back to the early 1970s when silver was $1.29. Who would then have believed that silver would soar to $52.00 in less than ten years, 40-times its starting price? The inflation we experienced then peaked at about 13%. I tremble to think of the inflation rate required for silver to go from $13 now to $8000. Can you imagine a $1000 face value bag of 90% silver coins valued at $5.70 million? A roll of silver quarters at $57,000? A lowly silver dime at $570? I can’t. I assume you can’t either. But Jason Hommel can. Let’s read what he has to say.
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MR: Jason, please give us a brief background of yourself and your career.

JH: I have a BA in Psychology from University of Colorado at Boulder. I developed an interest in gold and silver and made extremely successful investments in silver stocks. I started a newsletter in 2003 and now have 51,000 website subscribers. (55,000 now, on this free email list, and about 800 subscribers who pay for a monthly look at my portfolio.) I was the first analyst to regularly publish comprehensive reports on silver stocks. By the way, I am not solely immersed in silver. I analyze other metals and stocks, such as copper, nickel, zinc, molybdenum, and of course, gold.

MR: Let me start off by asking you why you insist that silver is so undervalued?

JH: Going back a century, virtually every major country in the world was using gold and silver as currency. Today, no country uses either metal as currency, yet gold has been hoarded by the central banks of the world, but not silver. In all of history nearly 5.0 bilion ozs. (155,000 tonnes) of gold have been mined with over 90% of that gold still existing. On the other hand, of the total 45 billion ounces of silver ever mined, about 9% remains, the rest has been consumed. Doing the math, the total value of existing gold equals about $3.3 trillion, yet for silver only $52 billion!. At the end of World War-2, total known stocks of silver amounted to about 10 billion ounces, with the U.S. government holding 4 billion ounces. Now, total stocks are down to well under one billion ounces, a reduction of about 95%, with the U.S. government’s stockpile virtually gone. Silver’s growing use in electronics since WW-2 has helped to dwindle those once-huge silver supplies. In this regard, looking to the future of China and other once-underdeveloped nations, their use of silver should expand greatly as their populations prosper and they join the “consumer age.”

Besides all this, we have strong evidence of government manipulation in the gold market that has been going on since the 1990s. It is strongly suspected that the world’s central banks have sold about one-half of their combined “reported” 33,000 tonnes (1 billion ozs.) of gold into the market to depress prices. Were it not for this selling, the gold price could well be $2,000 to $3,000 now!

MR: Here we are with silver at $13. In a report of yours dated 9/21/06, you state that silver will head beyond $8,000 an ounce in less than 15-years. To me, that’s an unbelievable, even a potentially reckless, forecast. How in the world do you justify it?

(Report of reference: “Silver Summit Speech”, September 21, 2006 http://www.silverstockreport.com/email/speech.html)
(Report of original $8000/oz. silver forecast: “Future Gold and Silver Prices”, December 21, 2005 http://www.silverstockreport.com/email/Future_Gold_and_Silver_Prices.html)

JH: I’ve done a lot of work on how high the price of silver could go in terms of dollars. Considering how bullish I am for silver, it is actually reckless for me to be conservative with my forecast! Otherwise I would allow people who bought silver at, say $12, to sell at $25 and be happy that they doubled their money when, in fact, I am confident that silver will be going much higher. It’s important to analyze not only the silver market but the market for dollars as well. That’s what we are really talking about here — the ratio between dollars and silver.

Many trillions of dollars have been created in just the past few years, but there is a time lag when those new dollars begin to affect the purchasing value of the dollar. We have had tremendous inflation since 1914. Yet, despite the higher prices we see today, inflation’s full impact has yet to express itself. When you take into account all these trillions of new dollars and the trillions more that will most certainly be created in only the next several years, you begin to see the awesome potential of inflation’s impact on the dollar and the price of silver.

Looking at gold, the price today would have to be about $45,000/oz. to fully back all the M-3 created money supply. If you include all bonds, then maybe there’s only enough gold held by the U.S. government to back every $100,000 with an oz. of gold. Look at it this way, all the gold that exists in the world is worth about $3.3 trillion today. That is about the same amount of newly created paper money that was created worldwide just last year! China could easily buy over 2,500 tonnes of gold (which is one year’s mine supply)–(78 million ozs.) by a diversification of about 5% of their U.S. dollar reserves. Add to this the U.S. government’s enormous $70 trillion in unfunded liabilities (mostly Medicare and Social Security) and eventually this fraud of paper money will collapse, as all frauds do.

MR: Are you saying that this dollar collapse will occur within 15 years, hence $8,000 silver?

JH: The collapse has already begun since about the year 2001. Look at the value of M-3, a very broad measure of the nation’s money supply. Today, that total is $12 trillion. Divide this by the price of gold and you will see in theory how many ounces of gold M-3 will buy. The point here is that the value of the dollar is declining faster than the rate at which it is being printed — the very definition of hyperinflation! We’ve been in this situation for the last six years but almost no one recognizes or talks about it! People are still debating whether or not we even have inflation!

People are being defrauded by the government’s phony inflation statistics. The actual inflation is at a rate of 10-13%, mirroring the creation of new dollars by the Fed. During this period, gold and silver have been rising in price at a faster rate than which these dollars are created — the definition of hyperinflation. Therefore, what I did in that article where I talk about $8,000 silver is project that if silver appreciates at a rate of 50-60% per year for the next 15 years where will its price be.

MR: How realistic is it to expect silver to increase at a 50+% annual rate for 15 years?

JH: What I’m projecting is not a true growth rate but a decay rate for the dollar. The real, inflation-adjusted rate of increase for silver will be less than 50%, the difference will constitute the decay, or inflation, rate. Another way to look at this is that by the time silver is $8,000/oz., it will have the purchasing power of about $200/oz. today. So, it is a combination of those two forces — the deflation of the value of the dollar plus the incrementally higher rate of the rise in the value of silver–that are at work here. That is actually the opposite of what we’ve seen for the 21 years from 1980 to 2001 when the price of silver went down while inflation continued to erode the dollar.

MR: But how realistic is it to use the period since 2001 to make your case that silver has to rocket to $8,000? I’ve seen too many projections like yours fall apart when made by gold and silver “experts” who used limited periods of study.

JH: That’s a very good question. I haven’t used only the experience of those seven years to make my case. Actually many commodities have risen greatly since 2001, some rising by ten times or more, for instance: molybdenum, uranium, cobalt, selenium, manganese and indium. Even lead has gone from 20 cents to $1.56. These are harbingers of monetary destruction, exactly what occurred during 18th century France under John Law, and 1914-1923 Germany.

I’d like to refer your readers to two interesting Internet articles. One shows some fascinating comparisons of the purchasing power of gold in 1430’s Florence, claiming that gold now should be valued at $35,000+. Go to: http://www.gold-eagle.com/editorials_04/wang090104.html

The other is a 600-year chart showing silver historically vastly undervalued today. Go to: http://goldinfo.net/silver600.html

MR: How much investible silver exists?

JH: The vast majority of the estimated existing 4.0 billion ozs. of silver is in the form of jewelry, flatware, tableware, etc. The world consumes more silver annually –about 900 million ozs.– than is mined each year, which is about 650 million ozs., the difference is made up by scrap recycling. What’s left for investment amounts to some 300-600 million ounces which includes all pre-1965 dated silver coins and all the various silver medallions, bars and ingots made for investors.

MR: Much is made of the gold to silver ratio. Some analysts see the current 50-1 ratio falling to the so-called “historic ratio” of 15 or 16 to one, even less. What is your opinion?

JH: I absolutely agree. Decades ago when the ratio was comfortably in that 15 – 16 range, the world had some 15-16 times more silver than gold. That was when gold and silver were used as money. However, now there is far less silver around compared to gold, a fact not yet factored into the current silver price. Today the ratio is actually closer to five or six to one based on the amount of silver mined compared to gold. As the true scarcity of silver becomes known, and we are well on the way towards the public’s recognition and understanding of the hyperinflation in progress, it is possible that in a “silver mania” stage for the silver-to-gold ratio to fall close to a one-to-one ratio, perhaps even to the point where silver is worth more than gold! I know this sounds incredible but history shows that great economic chaos can produce incredible market results.

MR: What forms of silver do you recommend for investment?

JH: My number one recommendation is to take physical possession of any silver you buy. That means not buying any contracts, storage receipts, papered “ownership” of silver of any kind. I can not overemphasize this requirement enough. I am certain that as this bull market progresses there will be many sad stories of good folks who will find out that they’ve been taken by bad firms. We are entering a potentially dangerous stage of the era of financial fraud. Don’t make the mistake of correctly making an outstanding and timely investment in silver only to later discover that the silver you thought you owned doesn’t exist! Those kinds of frauds happened in the 1970s and 1980s when silver rose from the $4/$6 level to $20, eventually to $50+. Imagine the awesome scope of fraud that could occur with silver going from $13 to $8,000!

For those with the means to buy a lot of silver, 1000-oz. bars are a good way to go. They weigh about 70 pounds and with the best hallmarks are very liquid. For less affluent buyers, 100-oz. sized bars of .999 fineness, also with quality hallmarks, are an excellent choice, as are the one-ounce rounds from various producers, and 90% pre 1965 dated U.S. dimes, quarters, and halves. I’d avoid the 1-oz. American Eagles because of today’s high premium required to buy them.

MR: What do you say for the possibility of government attacks on silver and gold speculators? This could take the form of higher taxes, intrusive transactions requirements, limits on ownership, licenses, and labeling us as unpatriotic profiteers and hoarders.

JH: Anytime the government wages war against precious metals owners, it’s the beginning of the end for that country’s currency, and the government as well. We enjoy in this country a strong history of gold and silver ownership. There are thousands of coin shops across the land. Maurice, when you think of how relatively small is the quantity of gold and silver existing in this country, I think the government won’t get involved. The $12 trillion in M-3 money supply that exists today will be soaring in the future, and even with the enormous gains I foresee for the prices of silver and gold the number of dollars will incredibly eclipse all the silver and gold that could possibly be confiscated or otherwise infuriate the politicians because some citizens own them. Still, if the government ever wages that war, silver will be well into the $1,000s, maybe $10,000/oz. and I wouldn’t mind letting them buy some of my silver at that price, still holding on to the rest!

MR: Let’s bring in the time frame from 15 years to six months. Where do you see silver then?

JH: I see silver easily at $30 by early next year. Gold should be over $1,000 maybe $1,200.

MR: $30 silver might not arouse the public, but won’t $1,000 gold be a big event?

JH: We tend to think that because we’re so isolated in our little world of precious metals and coins, but when the rest of the world sees gold going above the 1980 high of $850/$875, yes, it will be a breakout. It will cause some news and might push higher to that $1,200 area, but then people are going to back away from buying because gold will be as high as its ever been. They will feel they missed the boat, that the price is too high. The time when the public furiously buys gold probably won’t start to occur until the price is well into the many thousands of dollars. By then, silver’s price too will be measured in terms of four figures!

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Maurice Rosen: MY CONCLUSION What is it with the hard-asset community’s fascination with silver? Can it be that the “poor man’s gold” appeals to folks desiring a weighty investment in precious metals? Is it the memory of silver’s stellar performance in the 1970s that fuels their passions? Is it the work of the silver investment industry promoting a greedy allure for their products?

(more)

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Jason Hommel: To read the rest of Maurice Rosen’s conclusion on what I had to say, send your physical post mail mailing address, usually your home address, in an email, to MauriceRosen@aol.com, and ask for a hard copy of the “Hommel interview.”

As many of you know, I do NOT recommend buying any sort of numismatic coins for investment purposes. Sure, I’ve bought a few Roman coins, denari coins about the size of a dime, containing $1 worth of silver, for about $30 each, but only for the novelty, and as gifts. But I’d never buy $100,000 of such things, just as I wouldn’t buy $100,000 worth of silly putty or Rubik’s cubes.

So, why would I give Maurice some press? Well, his industry knowledge led to a good interview! Also, Maurice is not into hyping overvalued numismatics. His idea of a good numismatic coin for minor portfolio diversification purposes would be some 100 year old gold coins that might only cost about 15% above the spot price for gold, so you are not overpaying much at all. Also, Maurice admitted to me, quite frankly, that if the scenario that I suggest comes true, then people will not have much money left over for “numismatics” and that rare coin speculation will probably not be very affordable for anyone!

Maurice also suggested that if my readers wanted to sell their numismatic coins, to get the money to buy more gold and silver, he would be happy to help with that kind of request, and would give a good, fair price.

I also appreciated Maurice’s perspective that 15 years is “the short term”.

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As you know, this IS the Silver Stock Report. I apologize for slacking off on giving you silver stock picks in emails lately. I’ve been spending a lot of time working on our online database of mining stocks that now has over 600 companies listed (up from just over 250 last month). (For paying subscribers only at this stage.)

Besides, our market has been relatively quiet, and you have not missed much in the last few months. But I think the time is ripe for another major rise, where we could see gains of several hundred percent. But I don’t like any of the major silver stocks these days over $1 billion in market cap, such as SSRI, PAAS, SIL, CDE, HL, or Silver Wheaton. I don’t even like many of the mid-tier stocks in the $300 million range. Here are some company names that I do like. (Most of these companies are only explorers and still need to drill and discover something to put into a 43-101 resource study, and are nowhere near having a feasible mine.) But note they have such tiny market caps!
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Tumi Resources Limited
Market Cap: $25,133,946
TM.V TUMIF.OB
Price: $.85/share Cdn.

I especially like Tumi, because they hit 3000 grams of silver per tonne over 12 meters. Most silver miners are lucky to hit 1000 grams over half a meter!

Silver Grail Resources Ltd.
Market Cap: $7,846,306
SVG.V SVGAF.PK
Price: $.62/share Cdn.

I own about 10% of the company of Silver Grail. They have about 10 silver properties, and have a lot of upside, being so cheap. Part of the reason this stock is cheap is that all the properties were acquired by staking over the past 20 years, mostly during this bear market in metals. Since the company never had to raise a ton of money, it remains cheap.

Azteca Gold Corp
Market Cap: $41,871,722
AZG.V AZGFF.PK
Price: $.46/share Cdn.

Azteca is a potentially hot stock right now, and has the potential to quickly double or more because they just raised $8 million at $.40/share Cdn to acquire the Bunker Hill mine in Idaho, which has miles and miles of tunnels, silver, zinc, and a lot of lead. Lead prices are soaring, of course.

I own shares of Tumi, Silver Grail, and Azteca, and no company has paid me to produce this report.

Thank you.

Jason Hommel

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