Tuesday, December 15, 2009

Inspiration for the Future


If your mindset never angles toward this possible future, you will be overwhelmed with shock while others around you take all you have...

Dmitry Orlov is an author with first hand knowledge of the collapse of the former Soviet Union.

Dmitry Orlov: Predictions for the Next 10 Years

By Dmitry Orlov, originally published at ClubOrlov.Blogspot.com

The decade will be marked by many instances of autophagy, in business, government, and in the higher echelons of society, as players at all levels find that they are unable to control their appetites or alter their behavior in any meaningful way, even in the face of radically altered circumstances, and are thus compelled to consume themselves into oblivion, as so many disemboweled yet still ravenous sharks endlessly gorging themselves on their own billowing entrails.

Governments will find that they are unable to restrain themselves from printing ever more money in an endless wave of uncontrolled emission. At the same time, rising taxes, commodity prices, and costs of all kinds, coupled with a rising overall level of uncertainty and disruption, will curtail economic activity to a point where little of that money will still circulate. Inflationists and deflationists will endlessly debate whether this should be called inflation or deflation, unconsciously emulating the big-endians and little-endians of Jonathan Swifts Gulliver's Travels, who endlessly debated the proper end from which to eat a soft-boiled egg. The citizenry, their nest egg boiled down to the size of a dried pea, will not be particularly vexed by the question of exactly how they should try to eat it, and will regard the question as academic, if not idiotic.

Distressed municipalities throughout the country will resort to charging exorbitant fees for such things as dog licenses. Many will experiment with imprisoning those unable to pay these fees in state and county jails, only to release them again as the jails continuously overflow and resources run low. The citizenry will come to regard jails as conveniently combining the features of a soup kitchen and a homeless shelter. Some towns will abandon the idea of having a fire department and decide that it is more cost-effective to just let house fires run their course, to save on demolitions. In an effort to plug up ever larger holes in their budgets, states will raise taxes, driving ever more economic activity underground. In particular, state liquor tax revenues will drop for the first time in many decades as more and more Americans find that they can no longer afford beer and switch to cheap and plentiful Afghan heroin and other illegal but very affordable drugs. Marijuana smoke will edge out car exhaust as America's most prevalent smell.

Several countries around the world will be forced to declare sovereign default and join the swelling ranks of defunct nations. There will be a mad shuffle to find safe havens for hot money, but none will be found. Investors around the world will finally be forced to realize that the best way to avoid losses is to not have any money to start with. Despite their best efforts to diversify their holdings, investors will find that they are all long paper, be it stocks, bonds, deeds, promissory notes, or incomprehensible derivative contracts. They will also find that, in the new business climate, none of these instruments make particularly formidable weapons: as the friendly game of rock-paper-scissors turns hostile, they will discover that rocks stave in skulls, that scissors puncture vital organs, but that the paper, even when wielded expertly, just causes paper cuts. Those formerly well-heeled persons who tend to believe that "possession is nine-tenths of the law" will find many extralegal exorcists eager to liberate their demons. In particular, organized crime rings will start using data mining software to identify lightly guarded cabins and compounds in Montana and other remote locations that are well-stocked with canned food, weapons and gold and silver bullion, and start harvesting them by softening the target with mortars, rockets and aerial bombardment, then sending in commando teams with grenades and machine guns. Once the harvest is in, they will expatriate the proceeds using the diplomatic pouches of defunct nations held in their sway.

While the bullion is expatriated, the Pentagon will attempt to repatriate troops from Iraq, Afghanistan and the numerous US military bases around the world, soon finding that they lack the wherewithal to do so, stranding the troops wherever they are, and forcing them to resupply themselves. Military families will be invited to donate food, uniforms, clean underwear and toiletries for their loved ones overseas. American weaponry will flood the black market, driving down prices. Some servicemen will decide that returning to the US is a bad idea in any case, and go native, marrying local women and adopting local religions, customs and garb. Although national leaders will continue to prattle on about national security whenever there is a microphone pointed at them, their own personal security will become their overarching concern. Officials at all levels will attempt to assemble ever larger retinues of bodyguards and security consultants. Members of Congress will become ever more reticent and will avoid encountering their constituents as much as possible, preferring to hide in Washington's hermetically sealed high-rises, walled compounds and gated communities. Meanwhile, outside the official security perimeter, a new neighborliness will take root, as squatting becomes known as "settling in," trespassing as "beating a new path," and fences, walls and locks are everywhere replaced by watchful eyes, attentive ears and helping hands.

Thursday, December 10, 2009

Silver and Gold Will Be Money

Legislation being submitted by Ron Paul. Familiarize yourself with it, or watch dancing with stars instead....


Statement Introducing the Free Competition in Currency Act

By: Dr. Ron Paul, U.S. Congressman

Before the US House of Representatives, December 9, 2009

Madame Speaker, I rise to introduce the Free Competition in Currency Act of 2009. Currency, or money, is what allows civilization to flourish. In the absence of money, barter is the name of the game; if the farmer needs shoes, he must trade his eggs and milk to the cobbler and hope that the cobbler needs eggs and milk. Money makes the transaction process far easier. Rather than having to search for someone with reciprocal wants, the farmer can exchange his milk and eggs for an agreed-upon medium of exchange with which he can then purchase shoes.

This medium of exchange should satisfy certain properties: it should be durable, that is to say, it does not wear out easily; it should be portable, that is, easily carried; it should be divisible into units usable for every-day transactions; it should be recognizable and uniform, so that one unit of money has the same properties as every other unit; it should be scarce, in the economic sense, so that the extant supply does not satisfy the wants of everyone demanding it; it should be stable, so that the value of its purchasing power does not fluctuate wildly; and it should be reproducible, so that enough units of money can be created to satisfy the needs of exchange.

Over millennia of human history, gold and silver have been the two metals that have most often satisfied these conditions, survived the market process, and gained the trust of billions of people. Gold and silver are difficult to counterfeit, a property which ensures they will always be accepted in commerce. It is precisely for this reason that gold and silver are anathema to governments. A supply of gold and silver that is limited in supply by nature cannot be inflated, and thus serves as a check on the growth of government. Without the ability to inflate the currency, governments find themselves constrained in their actions, unable to carry on wars of aggression or to appease their overtaxed citizens with bread and circuses.

At this country's founding, there was no government-controlled national currency. While the Constitution established the Congressional power of minting coins, it was not until 1792 that the US Mint was formally established. In the meantime, Americans made do with foreign silver and gold coins. Even after the Mint's operations got underway, foreign coins continued to circulate within the United States, and did so for several decades.

On the desk in my office I have a sign that says: "Don't steal – the government hates competition." Indeed, any power a government arrogates to itself, it is loathe to give back to the people. Just as we have gone from a constitutionally-instituted national defense consisting of a limited army and navy bolstered by militias and letters of marque and reprisal, we have moved from a system of competing currencies to a government-instituted banking cartel that monopolizes the issuance of currency. In order to reintroduce a system of competing currencies, there are three steps that must be taken to produce a legal climate favorable to competition.

The first step consists of eliminating legal tender laws. Article I Section 10 of the Constitution forbids the States from making anything but gold and silver a legal tender in payment of debts. States are not required to enact legal tender laws, but should they choose to, the only acceptable legal tender is gold and silver, the two precious metals that individuals throughout history and across cultures have used as currency. However, there is nothing in the Constitution that grants the Congress the power to enact legal tender laws. We, the Congress, have the power to coin money, regulate the value thereof, and of foreign coin, but not to declare a legal tender. Yet, there is a section of US Code, 31 USC 5103, that purports to establish US coins and currency, including Federal Reserve notes, as legal tender.

Historically, legal tender laws have been used by governments to force their citizens to accept debased and devalued currency. Gresham's Law describes this phenomenon, which can be summed up in one phrase: bad money drives out good money. An emperor, a king, or a dictator might mint coins with half an ounce of gold and force merchants, under pain of death, to accept them as though they contained one ounce of gold. Each ounce of the king's gold could now be minted into two coins instead of one, so the king now had twice as much "money" to spend on building castles and raising armies. As these legally overvalued coins circulated, the coins containing the full ounce of gold would be pulled out of circulation and hoarded. We saw this same phenomenon happen in the mid-1960s when the US government began to mint subsidiary coinage out of copper and nickel rather than silver. The copper and nickel coins were legally overvalued, the silver coins undervalued in relation, and silver coins vanished from circulation.

These actions also give rise to the most pernicious effects of inflation. Most of the merchants and peasants who received this devalued currency felt the full effects of inflation, the rise in prices and the lowered standard of living, before they received any of the new currency. By the time they received the new currency, prices had long since doubled, and the new currency they received would give them no benefit.

In the absence of legal tender laws, Gresham's Law no longer holds. If people are free to reject debased currency, and instead demand sound money, sound money will gradually return to use in society. Merchants would have been free to reject the king's coin and accept only coins containing full metal weight.

The second step to reestablishing competing currencies is to eliminate laws that prohibit the operation of private mints. One private enterprise which attempted to popularize the use of precious metal coins was Liberty Services, the creators of the Liberty Dollar. Evidently the government felt threatened, as Liberty Dollars had all their precious metal coins seized by the FBI and Secret Service in November of 2007. Of course, not all of these coins were owned by Liberty Services, as many were held in trust as backing for silver and gold certificates which Liberty Services issued. None of this matters, of course, to the government, which hates competition. The responsibility to protect contracts is of no interest to the government.

The sections of US Code which Liberty Services is accused of violating are erroneously considered to be anti-counterfeiting statutes, when in fact their purpose was to shut down private mints that had been operating in California. California was awash in gold in the aftermath of the 1849 gold rush, yet had no US Mint to mint coinage. There was not enough foreign coinage circulating in California either, so private mints stepped into the breech to provide their own coins. As was to become the case in other industries during the Progressive era, the private mints were eventually accused of circulating debased (substandard) coinage, and with the supposed aim of providing government-sanctioned regulation and a government guarantee of purity, the 1864 Coinage Act was passed, which banned private mints from producing their own coins for circulation as currency.

The final step to ensuring competing currencies is to eliminate capital gains and sales taxes on gold and silver coins. Under current federal law, coins are considered collectibles, and are liable for capital gains taxes. Short-term capital gains rates are at income tax levels, up to 35 percent, while long-term capital gains taxes are assessed at the collectibles rate of 28 percent. Furthermore, these taxes actually tax monetary debasement. As the dollar weakens, the nominal dollar value of gold increases. The purchasing power of gold may remain relatively constant, but as the nominal dollar value increases, the federal government considers this an increase in wealth, and taxes accordingly. Thus, the more the dollar is debased, the more capital gains taxes must be paid on holdings of gold and other precious metals.

Just as pernicious are the sales and use taxes which are assessed on gold and silver at the state level in many states. Imagine having to pay sales tax at the bank every time you change a $10 bill for a roll of quarters to do laundry. Inflation is a pernicious tax on the value of money, but even the official numbers, which are massaged downwards, are only on the order of 4% per year. Sales taxes in many states can take away 8% or more on every single transaction in which consumers wish to convert their Federal Reserve Notes into gold or silver.

In conclusion, Madame Speaker, allowing for competing currencies will allow market participants to choose a currency that suits their needs, rather than the needs of the government. The prospect of American citizens turning away from the dollar towards alternate currencies will provide the necessary impetus to the US government to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government's ability and incentive to inflate the currency, and keep us from launching unconstitutional wars that burden our economy to excess. With a sound currency, everyone is better off, not just those who control the monetary system. I urge my colleagues to consider the redevelopment of a system of competing currencies and cosponsor the Free Competition in Currency Act.

Thursday, December 3, 2009

We're sorry to inform you, you've been robbed...

Have you been wondering where we are in this economical cycle? Do you have any kind of insight at all what our country is "all about" right now....

Would it be helpful for you to know what the rest of the world thinks of the US? Do you care or do you assume that things will stay the way they are because for you anything else would simply be too inconvenient? Do you have any idea what's even at stake?

This article touches on it nicely....source.


“Just over a year ago, the United States underwent a seemingly radical change, seemingly overnight. Its financial system had been revealed as insolvent under the weight of huge liabilities and worthless assets. The government refused to allow all the bankrupt institutions to fail, and thus permit the market to do its job of purging the rot from the system.

Instead, the authorities saved their favorites, effectively merging bank with state. They did so under cover of a witches’ brew of subsidies, guarantees and quasi-nationalizations bearing bizarre acronyms like TARP; PDCF; TAF; TSLF; and my personal favorite, the ABCPMMFLF, otherwise known as the Asset-Backed Commercial Paper Money Market Fund Liquidity Facility.

And those were just the visible programs. The Fed, our central bank, dropped interest rates to zero and monetized additional trillions of dollars worth of problem assets, away from prying eyes. The nature and source of these assets remain matters of speculation, because the Fed to this day refuses to tell us what it bought and from whom.

When the smoke cleared, we Americans found ourselves the subjects of a gangster state, in thrall to a clutch of greedy, corrupt and incompetent banks which only days before had failed. We were now the guarantors of trillions of dollars in worthless assets that had generated billions in profits for those same banks in recent years. Their gains remained their gains; but their losses were now our losses. Our money, the reserve currency of the world, was now backed by toxic waste.

The events of last fall were, to all appearances, a bloodless coup, taking us from freedom to fascism virtually overnight.”

Viva la Restoration

Remarks of Robert K. Landis, finews.ch Gold Conference

Zurich, Switzerland, November 17, 2009

Friday, November 20, 2009

Are You Oblivious or What?

Everyone would serve themselves well to read the latest report by GEAB N-39..source


As anticipated by LEAP/E2020 last February, in the absence of major reappraisal of the international monetary order, the world is now entering the phase of geopolitical dislocation of the global systemic crisis. In 2010, as protectionism and the economic and social depression will gain momentum, a large number of States will be compelled to choose between three brutal options: inflation, high taxation or defaulting on their debt.

Tuesday, November 3, 2009

Perceptions of Reality & The Markets

It’s been very interesting to me lately to read all the articles pertaining to silver and gold bullion and stocks right now. There’s a flurry of charts, graphs, predictions, opinions and multitudes of other data that are trying to get a grasp of the “reality of gold”.

When I say “reality”, what I’m trying to get at is that most folks, including research analysts, stock analysts, pundits, news letter writers, chartists, etc., etc., simply don’t understand the “reality” they are all in. And to try and clarify further, I’m really talking about where we are at a place in time. Where we are as a people, race, collective organism in a vast, changing world with so many intricate parts and complex systems of economy, ecology and sociographic dynamics.

Now do understand that I’m not claiming that I have a firm grasp on all these things but I know one thing for sure, no one understands the total, complete dynamic of all the intricacies of the world, markets and really life as we know it. Some do have intimate knowledge of what they write and speak of and work with on a daily basis but we can truly get lost in what we think “we know”.

I have a friend, G.B., who once told me something I never forgot and I actually refer back to from time to time to gauge whether or not I really know what I’m talking or thinking about. He said, “It’s not what you know, it’s what you know that ain’t so.” What he meant by this of course is that if you simply stick to the same old paradigm because it’s familiar you can really get yourself off course in life and really every microscopic decision that you make.

So here’s where I’m going with all this. When things get very complicated for me I simply try and eliminate as much “noise” as I can. And by noise I mean charts, opinions, technical analysis. Whatever. The minutiae. What I do is go to the long term fundamentals that will hold true and guarantee certain outcomes based on decisions and actions done today.

Let’s start here. This is a gold chart for the past 30 years.

What do you see? I see a gold price continuously climbing. Now what do we know about the world today? We know that the US, whose dollar is used as the reserve currency of the world, is currently in it’s worst financial crisis ever. We know that there is NO WAY that we can meet all of our debt obligations without drastic measures. Those obligations being consumer debt and government debt. Consumer debt including mortgages, credit cards, car loans, student loans and personals loans. Government debt being (where do I start, and end may be a better question!) Social Security, Medicare/Medicaid, etc, etc. How will they meet all these obligations?

Well it’s very simple. You either default or you devalue the dollar. If you default or devalue the dollar it is going to be a very negative situation for the dollar. So why in the world would we believe that gold and silver would do anything but go up in price? Simple as that. No degree required.

What else is it going to do? Stabilize? Now I don’t generally pick on individual writers but there was an interview done recently by The Gold Report with Richard Grey from Blackmont Metal and Mining Analyst. He says the following, “I believe there are two real drivers behind the gold price: the fear trade vs. the U.S. dollar, and the potential for inflation.” He goes on to say, "I don't think gold's going to take off and go to $1,500 or $2,000. I think the upside scenario is maybe $1,100 or $1,200 and then somewhere in a range between $900 and $1,100 is probably where the gold market is healthy and where the economy, as it compares to the gold market, is also reasonably stable.” And then later, “I think the silver market at $17 or $18 an ounce is quite healthy.”

Ok, now these statements are really the whole motivation for this blog piece.

Understand that Richard Grey works for a company and is expected to give reasonable analysis using historical data that people will use to make investment decisions. What he writes and what he thinks I believe may diverge. I would hope so anyway.

Let’s start with his inflation comment. “Potential for inflation”. HELLO! Did anyone inform the writer that we have a Keynesian economy. The only way it continues to survive is through inflation. That’s why it exists. INFLATE the currency. It’s 101. First grade economics. That being said, if you inflate the currency gold will rise. Simple. No need for charts or commentary. That’s it. Ahhhhh, I can already feel the stress reducing knowing that little fact. Already the confusing world has just become more understandable. Why does he not mention this? I don’t know really but there are a lot of people in the world who really believe that government is going to “figure it out” and bring fiscal responsibility into the picture. If you believe that then stop reading now and I apologize for wasting your time up to this point. I would also suggest you get some therapy. Yup, I said it.

What else does he say….”…upside scenario is maybe (not guessing are you?) $1,100 or $1,200…is healthy and where the economy, as it compares to the gold market, is also reasonably stable.” Ok, first of all, what in the world in this market right now is stable? The stock market? The S&P has a p/e ratio of over 140. If you call that stable you’re fired. And what is the gold market right now? It’s one of the most highly rigged markets (along with silver) due to the highly unstable world market.

So to try and determine an upside to the price of gold in a deteriorating currency market and a crumbling housing market in an inflated stock market is a fool’s errand. I posit that all we can summarize from this situation is that gold and silver will continue to rise in price, indefinitely, until we have a complete paradigm shift from the current economic and cultural system we have built up around ourselves.

Enough with Richard, I bore with that sorry analysis.

What else can we look at that will bring clarity to our understanding of an insane world full of analytical trite. How about a paradigm shift underway? What paradigm shift you ask? How about an event that takes place with all fiat currencies and markets over time? Here's a chart from ZeroHedge for you to ponder....

As it pertains to fiat currencies: Fiat means, “by government mandate”. They print a currency, in the case of the US, the dollar. They assure the rest of the world that they can tax the citizenry who will continue to work and be productive and subscribe to this system and therefore guarantee that the dollar will now be worth something. Time and labor and “stuff” at least. You could include oil as well and our military’s assurance that they can “secure” it but that’s a topic for another day. Ever heard of the “Petro Dollar”?

Well, except for the fiat currencies in existence today, not one currency in over 540 has existed the inexorable temptation of governments to print the currency “to death”. Over time, governments have spent their currencies into non existence. And every time, as they spent more money the price of gold and silver has risen. Why would this time be different? Why? Because someone thinks that a “healthy” price is $xx. I’m not buying it. Feel free to yourself, but not I.

At this point I would like to recommend a book: The Guide to Investing in Gold and Silver by Michael Maloney. It’s one of the Rich Dad series and it’s an excellent overview of the way money, gold and silver are all intertwined.

Well, as this post is getting rather lengthy I’m going to follow up with Part II shortly. What I’ll cover is the Dow/Gold ratio over the past 100 years and we’ll also cover currencies and the metals more.
Stay tuned and Happy Halloween.

Friday, October 30, 2009

Thursday, October 29, 2009

Rally Played Out?

Looks like the dollar may roll over off the top line of the trend channel. Too bad. I was hoping to get some cheaper silver. May have to move sooner than I thought....

Wednesday, October 28, 2009


This today from Bloomberg....

"Oct. 28 (Bloomberg) -- Senate Democrats plan to extend an $8,000 tax credit for first-time home buyers and allow benefits for some people who already own residences, a spokeswoman for Majority Leader Harry Reid said.

The proposal would let homeowners qualify for a $6,500 credit if they have lived in their residence for five years."

Ooh yes, widen that net boys, but they cover that....“The compromise we have now would expand the credit beyond first-time home buyers,” Lachapelle said."

When will people learn?..sighhhh.

One thing we'll be left with from all this madness is a fond sense of the ridiculous when it comes to today's media....

I love it, .....“Already we’ve seen the impact of this credit in jump- starting the housing sector,” Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said on the Senate floor."

What the hell is that? Jump-starting!? No, this motha' needs a defibrillator. Perhaps they had something else in mind....

One more reason to buy silver and gold. Oh and do read the article; there are other fascinating ways your government plans on squandering our future slave wage tax. Stay tuned.

By the way, Peter Schiff is running for the Senate against the Outlaw Dodd. You can support him here...

Tuesday, October 27, 2009

There's the Rally

Well, it was a little faster than I thought but I'm glad I reacted as quickly as I did. I know some others did as well. Now we wait for our next buying opp. My target for silver is $15.50. If it hits that, I buy irregardless of what the market is doing.

Friday, October 23, 2009

Mea Culpa!!!

Any of you who read this blog and have listened to my ramblings should know that I have long touted that another stock market crash cometh. I have even posted how it would happen. One of the reasons I believe this is that if the dollar comes under too much pressure an intervention would be needed.

Last fall, before the market crashed the Fed had been pulling liquidity from the markets. This, for many reasons I will not get into was a key factor in the crashing of the market. This process takes 6 months or so to manifest. The Fed started pulling liquidity from the markets back in March. Now, new information has come my way that you must be aware of.

Here is a post by Karl Denninger at the Market Ticker…..I’ll have comments throughout and comments that follow.

Possible Credit Dislocation: Be Warned
I have reason to suspect that the "monetary transmission mechanism" is full of rocks (again), and we are about to have another instance of what could colloquially be called "fun." (Yes, that's sarcasm.)
Here's what we know and what I can deduce from it:
• JP Morgan's "cash position" was analyzed by a writer who published on SCRIBD, which showed that actual cash held has deteriorated radically. By more than half in the last year. The deterioration is continuing, not slowing.

• I am hearing repeated anecdotes from multiple areas that foreclosed property held by banks with multiple full-price offers that include a financing requirement are being sold instead to people with actual cash at radical reductions from that price. This implies that these financing contingencies are regarded as not only potentially no good but factually no good, as if the banks know for a fact that the credit pipeline will (not might), within weeks or months (in the time required to close), disappear. There is no other rational explanation for this behavior.

• Citibank's credit-card terms change implies a willingness to accept and even provoke a complete and intentional destruction of their credit card business as a very high probability outcome, given that nobody in their right mind will accept a 30% interest rate who has an alternative. The obvious implication is that only those who can't transfer balances out will remain and if your credit is that impaired there's a good chance you will default - either intentionally or otherwise. This too implies foreknowledge of a near-complete impending freeze in the credit markets. (From SP: this means there will be a mad dash to cash. That’s why the market crashed last year, everyone moved to cash. It also caused the dollar to rally and gold and silver to get hammered! It’s very important for the Fed to crush gold and silver even though they give a rip about the currency. Capiche?)

• The change in terms on credit accounts is NOT confined to Citibank. I have received a fax from a customer of Infibank with substantially identical terms, in which both the standard and penalty rate was adjusted to 29.99%. This strongly implies that whatever Citibank smells the problem is not confined to them.

• Both of these credit card "adjustment" letters are of course marginal rate changes. That is, they are both based off the PRIME rate. The importance of that is missed by many. Don't be one of them (more on that below.)

• I recently received a back channel communication indicating that The Fed is aware that this has been and still is a solvency problem and has so briefed certain members of Congress. This from a source believed reliable, but which cannot be independently confirmed.

This data is not conclusive. But - if you are dependent on credit access and these anecdotes are in fact indicative of actual knowledge of an impending lock-up you are at grave financial risk.

Note that "margin" type rates that are based on the PRIME rate could hurt you far worse than you believe. With PRIME at historic lows should any such dislocation spike the prime rate your interest rate could go much higher with little or no notice or ability to do anything about it.

IF this is going to manifest as a dislocation of some sort it will probably occur within the normal closing window for real estate transactions (30-45 days, sp), since the anecdotes related to that have the best-defined "reach", and the discounts being accepted to avoid this risk are massive to the point of denoting near-certainty of this event in the minds of the market participants who are electing to accept these cash-discounted offers.(Money talks, sp).

Therefore, if you are dependent on such credit access I would take immediate action to do whatever is necessary to mitigate, to the extent you are able, the consequences of such a dislocation.

Consider how you survive returning to what essentially amounts to a cash economic posture in your business and personal life.

Note that the indications above are far stronger than what we saw going into last fall before the wheels came off. As a consequence if these actions are those of people with real knowledge (and this is not a guess on their part) I would expect the outcome to be worse than what we saw last fall in terms of economic impact.

Those who are short dollars (synthetically or in the actual market) need to beware - if I am reading this correctly you're about to get a really ugly surprise.
If you want to speculate on this outcome levered bets on radical dollar appreciation look like one of the best choices out there, followed closely by bearish levered bets on commodities. I would not consider such a speculative play that is not characterized by defined risk, as this analysis is based on nothing more than observation of behavior by market participants that all point toward their foreknowledge of an event that might happen in the reasonably-near future and is not, at present, backed up with actual significant credit-spread widening or other objective criteria.
Disclosure: Initiated a small speculative, defined-risk play LONG the US Dollar (UUP CALL options for March 2010)

From Finn: If you’re confused you need not be. It’s simple. The dollar is in its death throes and it can be manipulated highly on a short term basis but the long term trend cannot be altered. The easiest way to cause a dollar rally is to force contract settlement. The easiest way to do that is to take down markets and call debt due. Everything is pointing to this outcome and I have been saying it for months.

So in short, the market will crash, the dollar will rally and gold and silver will get beat down providing us with an excellent opportunity. GIRD YOUR LOINS. This is the biggest market you have ever participated in. These events happen every COUPLE OF HUNDRED YEARS! This will test all of your mettle.

Here is what I am going to do next to immediately even if it does cost me a little bit in gains over the short term, and again, read my disclosure below.

1) I am moving to cash over the next few days or a week. I’m going to try and get a few more cues from the market place and will then liquidate all my stocks and sell my gold and silver in my GoldMoney.com account.
2) I WILL NOT be selling ANY of my bullion. It is in my belief that after this next crash faith in the markets and currencies will be shaken to the core. The potential rush to metals could be staggering. It may not happen immediately but it will cause shortages and trying to pick up bullion after such an event could be nigh impossible.
3) After a crash, I will move back into my positions and buy back my silver and gold in my GoldMoney.com account.

I do believe any rally in the dollar would be short lived. In currency terms that could be from 1 week to a month or two. I will of course keep you all updated on this scenario and will also provide what I believe to be some decent investment opportunities for this play.

In closing, I’m going to post a chart you should all be familiar with. Keep in mind that after the market crash of ’29, Hoover and many prominent economists said the recession was over. There was nothing more to fear. Good times are upon us again. Then, shortly after, the markets crashed again for a full 90% loss of their 1929 highs. The situation today is far more grim than 1929 and ’32.

One other note, I do believe that there will be one last push for a short dollar trap. One last chance for the banks, currency traders and the Fed to suck people into the belief that the dollar will “collapse” any day now. I don’t believe it. That means you could see gold and silver go a little higher in the short term. This is the cue I am going to look for and will then liquidate everything. If I don’t believe that will happen I’ll move beforehand.

If any doubt this info read my previous blog post and then go do your own due diligence. I always appreciate information as well.

Good luck and do remember, this is all speculative based on mine and others research. But if you invest, you speculate and you must live with the consequences.

You Bought Silver at $8!!! Fool!!!

It was October of last year, silver was around $8.90 or so. I ran into someone who is an aspiring financial advisor. He asked me how I was doing and I told him fine and that I was buying as much silver as I could. He started shaking his head at me and told me the silver play was over.....how amusing (I'm used to people shaking their head at me).

Now, I guess when you see silver go from $21 an oz to less than $9 an oz you would think that play was over, right? Just like the play was over for Goldman, Bank of America and Citi, right? Wrong. Oh but they're mainstream....and when you buy their stock advisors get commissions. I digress.

So now, here we are and all the buzz is precious metals (if you're paying attention). Had I taken his advice I may have made some returns in the stock market, true. But how much risk will I have subjected myself to? The S&P has a P/E ratio of over 140. 140!!!!! Not only that but the validity of the rally is in serious doubt. Where is all this growth coming from? Earnings? Sure I could show earnings too if I laid off half my workforce. The growth wouldn't be from the Fed and banks intervening and speculating in the markets would it? Check out this chart from James Turk's website .

He wasn't sure of the author of the chart and I'll give props if that person contacts me. Looks a little suspicious doesn't it? How long can that go on? Will you still be in the market? If it crashes will you sell in time? Will you keep all those gains? Good luck. You probably never saw the last shellacking you got coming did you?

The reason I have been buying silver and have been telling everyone I know to do so as well and did not take my friend's advice is because I had the AUDACITY to conduct my own research. Much of it. Many, many hours. While most folks were watching American Idol I studied. Rigorously. And for my efforts, this is what I get, read an email I recently received (but first read my disclaimer at the bottom of the page)...

"I have been buying Gold & Silver for about 18 months. I moved my 401k Plan completely into gold stock mutual funds last June. Last fall my portfolio was crushed, as was most of the world. I stayed in the game and continued to buy at very attractive levels. I have made a lot of money (on paper) this year. My 401K plan is actually about 5% higher now than when I moved everything into gold last June. Of course in hindsight, if I had the foresight to move out of gold before the crash and back into it after the crash I would have about 150% return on my money. No one is that good, but when I read someone saying there is going to be a large correction, I listen because of the potential opportunities.

In the last 12 months I have been buying gold and silver at every dip in the road. Based on some of your recommendations in the Spring, I bought a number of Silver stocks that are up 125 to 175 % since I bought them. (Thank you, Steve)"

That folks is why I do what I do. That is exactly why I write this blog.

Thank you R for writing that message to me.

Wednesday, October 21, 2009

Silver Will Outperform Gold

As I previously posted, I was a little chagrined that gold had reached all time highs but silver has yet to approach it's all time highs, even though in my view, it's more important to society than gold in many ways.

Homework: why do you suppose silver has the highest number of short contracts of any commodity against it's yearly production even though it's one of the smallest markets on the COMEX?

If you can answer that, I'd be mightily impressed.

Silver has a lot of catching up to do and it's in this bloggers opinion, that one day, the price of silver will surpass the price of gold. Don't simply disagree because you an opinion, try and figure out why I believe that (hint: start by watching the videos on the right).

Now on to an article that inspired these thoughts today from Bloomberg...

Silver, ‘Bullion’s Bridesmaid,’ May Outpace Gold: Chart of Day
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By Kim Kyoungwha and Lee J. Miller

Oct. 20 (Bloomberg) -- Silver may outpace gold through mid- 2010 as a recovering global economy increases industrial demand, said Citigroup Inc.

The CHART OF THE DAY shows the ratio of gold to silver. An ounce of gold bought 59.4 ounces of silver on Oct. 14 when gold for immediate delivery jumped to a record $1,070.80 as investors sought an alternative to the weakening dollar and a hedge against inflation. That compares with 48.5 ounces when gold first exceeded $1,000 on March 13 last year and 43.6 on April 19, 2006, the lowest level in the past 10 years.

“Silver is set to benefit from stronger gold, but also the improving outlook for global industrial production,” said David Thurtell, a London-based analyst at Citigroup, in an interview. “I think the gold-to-silver ratio can get to the low 50s.”

When gold reached $1,000 for the first time, silver traded above $20 an ounce, compared with $17.82 now. Silver has already climbed 56 percent this year, more than double the 21 percent advance in gold. Gold is on course for its ninth straight annual gain while the U.S. Dollar Index, a gauge against six major currencies, has fallen 7.4 percent this year.

“The dollar’s decline has been pushing gold to a series of record highs,” Harjas Wadhwa, vice president for New Delhi- based AUM Capital Market Private Ltd., said. “If gold moves higher from here, you’d expect silver to outperform,” he said. “It has a lot of catching up to do” since “bullion’s bridesmaid” was more than $20 an ounce when gold first surpassed $1,000, he said in a report.

Industrial applications such as electrical switches and batteries accounted for 50.3 percent of silver demand in 2008, compared with 40 percent five years earlier and 51 percent in 2007, according to The Silver Institute. Use in jewelry comprised 18 percent, followed by photography with 12 percent. “Net investment” about doubled from 2007, to 5.7 percent of demand, according to the Washington D.C.-based institute. The world economy will expand 3.1 percent next year after shrinking 1.1 percent in 2009, the International Monetary Fund forecasts.

To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.netLee J. Miller in Bangkok at lmiller@bloomberg.net

Friday, October 16, 2009

Dollar Rally, Blink You Might Miss It

Ok, so the dollar's gonna show up briefly. Don't get used to it.

Here's an excerpt from one of my favorite writers on silver, David Morgan. The source is listed below.

"The easiest thing to say with conviction is, if you’re not in this market you absolutely need to buy physical gold and silver here. Whether it stays above a thousand or drops below is a moot point. When gold goes to 2,000 or 3,000 or more, if you bought it as it broke through 1,000 and then went back under 1,000 for a while, it might make you sad for a day, a week, maybe a month . . . but it’s going much higher in the longer term. So that’s one thing to keep in mind."

Any dip in silver and gold now is a gift. Take advantage of it.


Thursday, October 15, 2009

Off the cuff call

Ok, we see headlines today like this...

10/15 Gold futures fall below $1,050 an ounce as dollar rebounds...source

Gold has come down from the $1,070 level on dollar strength? Nonsense. Who writes this stuff, first graders? I guess since the dollar's rallying that explains why oil went over $77 today. No, the dollar is worse off now than when we hit $1070.

In all likelihood there was simply some profit taking. Surely there's a whole schlew of people thinking they've seen the top. Really they just don't know where it is and since we've never been here before they're ascared. That's right. Ascared. I guess there's nothing wrong with locking in profits but trading in this type of environment, to me, is just silly.

So here's the call, simply: we rebound in Asian trading. Nothing fundamentally has changed and I expect no divine intervention so a brief pause then we carry on. That's that.

Wednesday, October 7, 2009

Recurring theme...silver shortage

Excerpt from source......

Because of unprecedented demand for American Eagle Gold and Silver Bullion Coins, the United States Mint suspended production of 2009 proof and uncirculated versions of these coins. All available 22-karat gold and silver bullion blanks are being allocated to the American Eagle Gold and American Eagle Silver Bullion Coin Programs, as mandated by Public Law 99-185 and Public Law 99-61, respectively. Both laws direct the agency to produce these coins in quantities sufficient to meet public demand. The proof and uncirculated versions of the American Eagle Gold and Silver Proof Coins are not mandated by law.

Tuesday, October 6, 2009


Why Your World Will Be Turned Upside Down...

Surely most folks will not even ATTEMPT to understand how these events will effect your life. And that's too bad really, because surely we are all (partially?) responsible for each other.....

The demise of the dollar

In a graphic illustration of the new world order, Arab states have launched moves with China, Russia and France to stop using the US currency for oil trading

By Robert Fisk

Tuesday, 6 October 2009

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars.

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.

Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.

China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.

Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.

Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.

The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."

Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.

The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.

"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.


Friday, September 18, 2009

Keeping Silver in Perspective...

With the run up in silver lately surely traders must be nervous. I am not a trader and I am far from nervous. Look at these charts, courtesy of SilverSeek.com

The 5 day looks like it might roll over but when you look at the 1 year it appears we're just warming up! Be diligent and stay faithful.

Besides, this could gain .50 by the end of the day.

Thursday, September 17, 2009

The Fed's New Mouth Piece


Greenspan Sees Threat U.S. Congress Will Hamper Fed.....source

Sept. 16 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said he’s worried that lawmakers will hamper U.S. central bank efforts to rein in its monetary stimulus, and that inflation might “swamp” the bond market.

“It’s the politics in the United States that worries me, whether the Congress will basically feel comfortable” with the Fed withdrawing its stimulus, Greenspan said.

So what do we make of this? I'll tell ya' what I make of it. The Fed has Congress by the sack and there's not much they can do about it. Have you ever heard the quote, "Evil turns in on itself"? At the end of the day when this all falls in on itself the politicians and bankers will be at each others throats. Politicians will blame Wall Street for being irresponsible. Wall Street will blame each other first, then the Fed for not providing proper oversight. The Fed will blame politicians for spending too much.

But can't Congress take away the powers of the Fed? Can't they abolish them? Yeah, right!! The heroine addict always pushes away their pusher. The political fallout would be intolerable. If they do that they better be ready for a new currency and Marshall Law. Nope, they're married and the bickering will continue until it falls apart. At the end of the day.

Lo! The sun sets!

Wednesday, September 16, 2009

Silver and the Raw Deal

Gold closes today at it’s all time high, $1,020.20! Incredible, no?


What's incredible is that silver is no where near it's all time high. There's a couple of interesting points when one thinks about this.

1) There's a lot less silver in the world today then there was back in 1980 due to industrial demand burning through reserves, literally in some cases.
2) Investor demand as a percentage of total supply has skyrocketed.

So what's the difference today? I'd like to know myself. Perhaps some speculation is in order.

First off I'd have to say that back in 1980 gold had just recently been legalized to own. That's right, since 1933 until 1975 it was illegal for citizens to own gold. Silver on the other hand was/is still in circulation as money although Johnson had declared silver would no longer be used for monetary purposes due to silver shortages. That's right, shortages. That's for another time. What's important to think about is that silver was freshly thought of as money then, not an industrial metal (segue, if you gave someone a silver quarter today who believes that silver is not money I wonder if they'd reject it? They'd say it's make a great spoon or something and take it anyway, dorks).

So, what do we see after gold is legalized to own? It zooms up to $875 an ounce slightly surpassing the official value of gold compared to the US money supply. Neat huh? Silver also shoots up to the traditional historical ratio of about 16 to 1 in relation to gold. Soon thereafter as the world realizes that fiat currencies are here to stay both gold and silver fall out of favor with the masses and drop precipitously. Silver then evolves into a highly desired industrial metal and still is to this day.

I guess it's that simple then. Silver is more typically thought of as an industrial metal and not money although people will gladly accept silver quarters for spoons. I love logic.

Well after the PUMMELING that silver took last year I guess people fear owning it as much since if the market tanks again silver will get smashed again, right?

But hold on! Presently there's record investor demand. Also, the number of short positions on the CO(N)EX against silver is simply staggering. There's more open short positions than there's silver to back up the contracts with! Now that makes sense right? It's always legal to sell something you don't have.

Ah well. On and on I could go. But one thing is for sure: silver and gold have always been money and the world is currently realizing once again that it is. And slowly but surely those dollars, dinars and dongs will all flood back into the metals. And when they do even the industrialist will learn to appreciate silver for it's monetary qualities. At that point the price will be so high most won't "buy" it anyway. Silver is so cheap now it's practically free.

I remember the first time I bought silver from the Toledo Coin Exchange. I plopped some cash down on the counter and said, "Give me that much in silver". I actually felt bad. I felt like I was ripping someone off buy hey, they were selling it!

I've often wondered at what point I would stop buying silver. I think soon I may be put to the test!

Wednesday, September 9, 2009

Is Gold Money?

Is the world flat, still....?

At one point in time people did believe this (actually still do). They also believed that the sun revolved around the Earth.

They believed in the Easter Bunny, Santa Claus, the Tooth Fairy and every other preferred hobgoblin of the mind.

But to wonder if gold is money? Why that just stinks of conspiracy! George Bush would be ashamed! So would Captain Hook, "For shame, for shame!"

Apparently Alan Greenspan would also disagree as he was recently quoted as saying, "What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment,” Greenspan said....source.

In all actuality, the majority of folks who state that gold is not money simply have a great desire for it to be true, though they know it is not. For example, if I owned a bank and the Fed gave me a bunch of free "money", i.e., currency, a.k.a., Federal Reserve Note, I would not want people to think that gold was money. They might keep it at home and then I couldn't lend it out. Or take it home, as say, a bonus! Yeah baby!!!

If I were a professor of economics and had told students year after year that federal reserve notes were money and not gold and then gold ended up being money, boy would I look like an ASSSSSSS!!!!!

There are many other reasons why this would be happening but I shall spare you here and direct you to the GATA website where you can learn more about it than you ever cared to. GATA has exposed many of these players and their motives, which simply is to suppress the price of gold so people think that currency is money. As you look into this, keep one quote in mind.....

“Any rational person who continues to dispute the existence of the rig after exposure to the evidence is either in denial or is complicit”. Robert Landis, Harvard trained attorney.

So I guess it is true that there are people out there that believe that gold is not money. They would be called, "idiots".

Thursday, September 3, 2009

The future portends what?

Take a look at the chart above (click to see full chart)...source

Gold price has been keeping pace with the money supply introduced in the market. Today's price action deviated from this relationship so is a correction in gold and silver likely or will it continue upward based on a different set of fundamentals?

You can bet your sweet azz today's price action got the attention of the Fed. What are they to do? Well, what did they do the first time gold broke $1,000? They withdrew credit from the market causing a collapse of the Dow. By limiting the amount of money introduced into the system the Fed is basically pulling credit from the markets. Banks have simply been speculating with the freebies from the Fed so the result of this will be the imminent collapse of the Dow.

The strategy of course is to cause a mad dash to bonds and the dollar and take down silver and gold which will probably work since the trading lemmings and sheeple can't fathom silver and gold as money. If the Dow crashes and silver and gold hold their own, it may be the dawning of a new era we have all dreamily yet anxiously anticipated (dreaded?). The day must come when silver and gold go off on their own. What will that day look like?

Then and now

Have people changed this much or has the perception of the people changed by our leadership??? Why?

Did they promise too much or did we expect too much? Both?

Peruvian riot police.

Wednesday, August 26, 2009


"Desperado, why don't you come to your senses......" The Eagles.

If you think the economy is fine, ponder this....

Got cash for your clunker? Now it's cash for refrigerators!....link
Let's go garage saling, California style! Arnold signs cars for sale to pay his salary...link
Rhode Islanders need a vacation, so the gov is shutting down for two weeks! Who do they think they are, Congress.....?....link

Don't lose sight of the reality facing us simply because you WANT to believe what you are hearing from the MSM (main stream media).

Tuesday, August 18, 2009

Schizophrenia in the marketplace

You all saw the price action in gold and silver yesterday, owie! All the silver and gold stocks on my portfolio watchlist were down nearly 10%.

Now fast forward into the far, far distant future, today and look at the headlines:

Gold rises as investors' doubts about recovery rise once more
Gold tipped to glitter again
Gold, Silver and Platinum recover, FTSE 100 poised to snap losing streak

What a difference a day can make. Invest in Big Pharma; surely their sales are up.

Friday, August 14, 2009

Make sure to check out this interview with Trace Mayer and John Rubino regarding digital gold currencies and the collapse in the value of the dollar.

Link: here

John Rubino co-authored "The Collapse of the Dollar" with James Turk.

James Turk is the co-founder of GoldMoney.com (link). An organization located on the Jersey Islands that stores silver, gold and platinum for clients in Zurich or London. It's a digital currency system that can be used to settle transaction and trade metal. It's pretty slick. You can sell your metal into any currency you wish, swap metal for metal and swap currency for currency.

And in a jam, you could hop on a speed boat, go to Panama, open a bank account and wire funds to yourself from your GoldMoney account. If you don't understand why you'd do that you may eventually. But doesn't that sound fun anyway. Order a martini when you get there; shaken, not stirred! And get a hat.

Friday, July 31, 2009

Thursday, July 16, 2009

Something to watch for!

Dusting off the crystal ball today I see a few things forming in the mist of the future.

We've seen oil rising in tandem with inflation expectations and the weakening of the dollar even when there is a glut of oil on the market due to the SHELLACKING that consumers pocket books have been taking. Investors have been using oil as an inflation hedge as oil being priced in dollars is the only thing that is providing value to the dollar. This of course confuses many consumers who wonder why oil and gas are priced so high if there's so much of the stuff.

Two critical points to be aware of when considering oil:

1) Academic and former U.S. government adviser Philip Verleger states that crude will drop to $20 a barrel due to deteriorating economic conditions and a vast surplus of oil on the market....source. Typically as the dollar rallies the price of oil will go down. Or as the price of oil goes up the dollar declines. Which is it? That's important to understand but that's for another time. The point here is that hedge fund managers and investors use oil for their inflation speculation and it causes illogical price gains. On a side note, when/if the price of oil does drop people will say, "deflation, deflation". That will not be the case. It will be a supply/demand issue.

2) The CFTC recently announced that they are going to seriously consider placing limits on contract speculation in oil and other energy commodities and silver and gold as well. This is very important to consider. If oil's function as an inflation expectation is diminished the logical recipients of the inflation play will be silver and gold, as it should be. The only reason oil is used as a hedge now is because of its inherent usefulness. The stale old thought of silver and gold being impractical because it doesn't pay interest or dividends and sometimes has storage fees associated with it is soon about to change. This thinking persists though even as silver's uses as a commodity keep rising. Silver, as with oil, is fundamental to our way of life but who knew?

As I just stated, oil speculation may be curbed in the near future and silver and gold will be the beneficiaries of this. But I also just stated that position limits may be placed on silver and gold as well so what gives? Well, this is where reality kicks in, where the rubber meets the road. You see, the hedgies who are using oil as a speculative tool are buying contracts, not the physical oil. The same with silver and gold for the most part. So if investors are limited in their ability to buy oil and silver and gold contracts, why, they must buy the physical instead. But do you think they will go out and fill tankers up with a bunch of oil? JP Morgan might (is) but the typical investor will not. No, their attention will be diverted to the physical silver and gold, equities and ETF's.

Just recently a very interesting thing happened. Greenlight Capital just switched over all their gold holdings in the SPDR ETF to PHYSICAL bullion, 4.2 million shares. Think about that. If the big boys would rather hold physical, do you want to hold paper?

So what's a small fish supposed to do in a very big fish bowl? Well I think the answer is quite obvious, buy some silver. Buy some gold. If you're intersted in the oil play still I would personally recommend the USO fund. It follows the price of oil pretty closely and if oil is indeed going to $20, when it does, you will want to load up on USO. Oil at $20 is a real problem for humanity. I won't get into that too deeply here but suffice it to say that cheap oil is destructive to production and will cause a supply shortage in the future even though there's a surplus now. This WILL happen regardless of whether or not oil goes to $20. I consider $60 oil cheap.

So be very alert. There are many factors that are steering thinking towards silver and gold. This will happen naturally as the markets needs are met but it does appear that there will be some catalysts along the way. We can only speculate as to the motivations and intentions behind these catalysts and we'd probably be wrong but one fact is undeniable. Big money is moving into silver and gold. What will your money do? It's your decision and you will be responsible for action and inaction alike.

Tuesday, July 14, 2009

US Mint suspends sales, again....

Were it not for the COMEX and the various ETF's and different silver and gold certificate programs, the story about silver and gold shortages might be more pronounced. However, in the land of illusion that we live in today there is so much paper silver and gold we're led to believe that when the US Mint announces suspension of sales of Silver and Gold Eagles due to a lack of the physical blanks (i.e., physical silver and gold rounds ready to be stamped) for the second time in a year, this should be viewed as normal.

I think more people would be fascinated if the SLV ETF came out and announced, "We're out of shares, simply ran out of paper." I assure you the cost of paper would skyrocket even though the transactions can all be handled digitally. Such is the logic of the world today. But when silver and gold suffer different types of shortages, people instead turn to paper forms of said metals. Madness, simply put.

The following excerpt is from an article posted on Mineweb.com by Dorothy Kosich:

"Unprecedented demand, a shortage of blanks, and restrictive policies and regulations continue to exacerbate what is almost becoming a chronic shortage of gold and silver coins authorized by the U.S. Mint.

The U.S. Mint has again "temporarily" suspended sales of almost all of its gold uncirculated and proof coins, along with nearly all of silver uncirculated coins because of the limited availability of blanks.

The U.S. Mint Online Product Catalog says production of the American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended due to the "unprecedented demand" for American Eagle Bullion Coins for which all available 22-K gold blanks are being allocated.

In the catalog, the government says it will resume the American Eagle Gold Proof and Uncirculated Coin Programs "once sufficient inventories of gold bullion blanks can be acquired to meet market demand for all three American Eagle Gold Coin products."

Read more....US Mint

Thursday, July 9, 2009

Tuesday, July 7, 2009

Another Silver Shortage Loometh!

From Mineweb...

"Given the risk of central bank gold activity to the gold price, Deutsche Bank anticipates "the ongoing out-performance of silver relative to gold."

"Indeed we believe the production cuts that have occurred across the industrial metals complex may have important implications for silver," the strategists asserted. "We find that of total silver production, more than 60% is mined as a by-product with other industrial metals such as zinc, lead and copper.

"We believe silver production could face similar challenges to the ones likely to occur across the industrial metals complex as a result of the significant decline in capex spending that has occurred over the past two years," they said."

Intentional Currency Devaluation

Not long ago I wrote a post to Bill Bonner at The Daily Reckoning. I explained why I thought the Fed would devalue the currency into near nothingness. Of all the reasons for doing this, and there are a few, one sticks out to me the most. It has to do with power. And when speaking of money and power, we are speaking of the same thing. Would devaluing the currency give the Fed power? Wouldn't it damage their credibility as the "Defenders of the Faith" (i.e., wards of the con)? On the surface it would seem that yes, it would be harmful to their institution. However, what if it was necessary to preserve it?

Consider: The US is approaching nearly 400% debt to GDP. If you do not know someone wading in the quagmire of debt you probably do not want to know them. Sad but true. It happens to be our way of life. Not saying it's the best way but there it is. Don't like it? Change it.

Sometimes on my way home from work I see this guy stopped on the side of the road. He's wearing old, dirty clothes and his tired and worn looking truck (surely paid off) is not far behind. Certainly it's there to store the bags of yummy grasses and weeds and whatever other edibles he's picking up. He's been doing this for years. Looks like a nice enough chap. Perhaps he could invite you to dinner. You could feast on "vegetable" soup and imbibe copious amounts of dandelion wine. And at what price? FREE! The stuff's everywhere!

See what I mean? So back to the point. What if the Fed was devaluing the currency in order to preserve power, not gain it? You see, me personally, when I look at my debt situation and look at the situation of others, I don't possibly see how this can be sustained. If more and more people keep getting further and further in debt and keep looking out further into the future and there's nothing there for them but servitude, how inspired will you be to serve your debt masters? You need more debt just to keep up with inflation. When does this break? Perhaps now? Perhaps.

I suggest that the Fed is devaluing the currency in order to give folks a way out of debt and protect their own froggy, reptilian throats from the lynch mob's noose. How will you escape debt? Well that depends on how much Silver and Gold you own. It's being telecast everywhere. If you don't pick up on it you will stay in debt becuase you are not one of the ones the Fed is worried about. You won't do anything to protect yourself now so why should you ever do anything to put yourself in danger? Revolt with the others? Ha!!!! Nay you say, read this article by Howard Katz and see what kind of images it conjures up.

On to the article......

"Why The Fed is Depreciating the Currency", by Howard Katz.

Monday, July 6, 2009

Awaited transparency, wait where'd it go???

Of all the hype we got about more transparency and more regulation, this is what is born of such ideas....(link ).

This is exactly one of the reasons why I stopped investing and went to the metals for solace and refuge.

Read the latest outrage from Alternet regarding the new trading rules on the NYSE. And yes, Goldman Sachs is involved.