Friday, January 28, 2011

Rejoice!! Prices Have Dropped!!

This article below could be alarming to some of you but in all reality it, if it comes to pass, it should be a cause for joyous celebration.

I urge caution though; if you plan to purchase, timing the market can be dangerous. I try and get out as much quality information as possible to you on the mailing list and weed out the rubbish but at the end of the day we are all adults and must make our own decisions. (If you would like to be on the email list leave a comment below and I will include you).

Look at the 3 year chart below. I started buying silver around the August time from of ’08 at a little over $18.00. For the next YEAR prices fell. I bought all the way down to $8.87. Every month I couldn’t really understand what was happening because everyone was talking about silver shortages and the premiums were going up as prices went down and there was general panic. I kept learning more about the market and my faith increased and I just kept buying. Kept buying……

I promise you all that when silver hits $75 an ounce and falls back dramatically to $40 and ounce you will have this same thought process going on so gird yourself now. Don’t become discouraged, be wise and buy. 90% of successful traders learn emotional containment.

Now for those of you who want to graduate to the next level, and some of you have, you can get a BullionVault or GoldMoney account and protect yourself from some of the higher premiums. They do have a premium they charge and storage fees (minimal) but they have greater access to markets and you will pay less for ounce. Also you will have money outside of the banking system and more than an arm’s length away from particular entities that would rather you have your metal on US shores.

Personally I don’t see prices going to where he suggests but I would not be surprised. I certainly would NOT be disappointed.

And now for the's the original link.

Predictable Gold and Silver Correction A Half-Done Buying Opportunity

By: Peter Cooper, Arabian Money

-- Posted Friday, 28 January 2011 | Share this article | Source:

Gold has corrected in price by more than 20 per cent no less than 46 times since the present bull market started back in 2001, according to analysts at MidasLetter. Silver has always been even more volatile.

That is why ArabianMoney warned about a correction earlier this month (click here) while still expecting silver to deliver the best absolute price performance for any major asset class by the end of the year (click here).

Buy the dips

The smart investor will therefore use price weakness like the current correction to stock up on precious metals. Indeed, if observers want any confirmation that gold is still in a bull market then they need only consider this correction itself.

This is just more of the same up-and-down upward progress we have seen for a decade, with no sign of a parabolic blow-off or obvious spike – except for the short-term one in silver that is correcting.

Corrections are of course always shocking if you have just bought and have not had the experience of recent years in the precious metals market. The tendency is to panic sell, and that amplifies the downtrend.

Talk about investors selling out of precious metals and rotating into stocks is largely rubbish. If ever there was an over-extended trend it is the current rally in global stock markets, and emerging markets are leading the correction phase that has now started.

The real retail boom in precious metal ownership has barely started. From today visitors to the world’s tallest building in Dubai, The Burj Khalifa can buy gold from vending machines. But there are still only going to be six of them in the whole country.

Still falling

Gold and silver prices probably have some way to fall just yet. The normal pull-back from a gold high is $200 or 15 per cent, that would be down to $1,243, and it could go a little lower than that if the bears get louder, say to $1,150. Silver looks headed below $22 and perhaps as low as $20.

So if you want to get the maximum price gain for silver available this year then that will be the moment to pounce, and then you need to watch carefully for a price peak, although if past trends are a guide the second half of the year will just head higher and higher until the end of the year.

ArabianMoney newsletter readers have the benefit of actual, actionable investment ideas for precious metals while we can only offer general trends on this free website. How to ride this price trend is well worth considering in depth (click here to sign-up).

Friday, January 21, 2011

Greenspan Gives a Heads Up!!

From ZeroHedge

Stunner: Gold Standard Fully Supported By... Alan Greenspan!?

Submitted by Tyler Durden on 01/21/2011 11:58 -0500

You read that right. After such establishment "luminaries" as World Bank president Robert Zoellick, Warren Buffett's father Howard, Jim Grant, and, most recently, Kansas Fed president Thomas Hoenig, all voiced their support for a return to a gold standard, the most recent addition to the motley group of contrite voodoo shamans is none othe than the man who is singlehandedly responsible for America's addiction to cheap toxic credit, who spawned such destroyers of the middle class as the current Chaircreature, and who currently is the chief advisor in John Paulson's crusade to gobble up every ounce of deliverable physical in the world: former Fed Chairman - Alan Greenspan! In an interview with Fox Business, the man who refuses to go away into that good night: "We have at this particular stage a fiat money which is essentially money printed by a government and it's usually a central bank which is authorized to do so. Some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or a currency board, because unless you do that all of history suggest that inflation will take hold with very deleterious effects on economic activity... There are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard." And a further stunner: Greenspan himself wonders if we really need a central bank. Now our only question: why couldn't the maestro speak as clearly and coherently during his tenure which resulted in our current near-terminal financial state? (finn: because he would have been thrown from a building). And as a reminder, courtesy of Dylan Grice, if and when we do get a return to a gold standard there would be a need to reindex the monetary base to a real time equivalent price of gold, putting the price of the precious metal at about $6,300: "The US owns nearly 263m troy ounces of gold (the world's biggest holder) while the Fed's monetary base is $1.7 trillion. So the price of gold at which the US dollars would be fully gold-backed is currently around $6,300." And here you have people worried about day trading volatility...

h/t Mike Krieger


Et Tu, Alan?
This news really should surprise no one when it comes to Alan Greenspan…….let us go back in time…..

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.”

This was written by Greenspan in 1966. The original article is here……LINK

I assure you all that Central Banks of the world are fully aware of the history of fiat money and how it all ends (badly).

There IS a plan B and there always has been. All that’s happening in the world right now is countries jockeying for position, wealthy bankers and business owners and Central Banks themselves all buying gold. There are discussions on how the world’s debts will be handled, etc., etc…

A new monetary system IS being created as I type. You can count on it. The question is, ARE YOU READY? Will you be a participant or a bystander, waiting for another job?

I have long been of the opinion that between history and the actions of the government and the comings and goings of the Central Banks, the bankers, the actions on the COMEX and a myriad of other happenings were a direct telegraph to thinking men that a new standard was coming and that they should prepare. There is one thing they did not count on though: the internet.

Since the invention of the internet there have been a number of sites, articles, writers and analysts who have all tried to get this story out to regular people.

Also, since the invention of the internet there have been a number of different mechanisms to get ordinary people to NOT buy physical metals. Stocks of shell companies that do not exist, certificates that promise a portion of future production, derivatives, gold and silver pools, ETF’s and the biggest fraud of all, futures contracts.

Regarding the price of gold and it’s price under a gold standard, it would depend on the monetary measurement metric you used. M0, M1, M2, M3….. I’ve seen numbers bandied about anywhere from $5,000 to $53,000 to $100,000 an ounce.

The evidence is all around you. You will not be able to look back in time and say you were not aware. No one could possibly be that blind. Besides, you all have me tormenting you. Relentlessly, but only because I wish you the best. Most of you!!! LOL.

GDP Growth

This is so alarming as to be nearly unbelievable. Think long and diligently about what this means. When and how does the illusion end? How does it manifest itself?

This post is pulled directly from Karl Denninger's Market Ticker. My commentary follows.

To properly look at GDP in terms of actual economic progress one must back out all the borrowing that takes place during the same period. That is, the proper way to look at GDP is to subtract back out that which is paid for not with today’s output, but with promises to pledge tomorrow’s. The reason for this is clear – you may in fact only spend a dollar once. When looked at this way one gets a very different view of “growth” in the economy, and the depth of the hole we have dug for ourselves becomes clear.

There has been no actual positive GDP growth during the entire period from 1953 onward – until the 4th quarter of 2009, and since 1980 the true GDP numbers, when one looks at output (not what one “pulls forward” via debt) has been hideously bad. The spike upward in actual debt-adjusted growth that began in the 4th quarter of 2009 and peaked in the 1st quarter of 2010 was due to total systemic debt reduction – the very thing the government is trying to prevent, but which is necessary to bring the economy back into balance.

This, incidentally, is why median incomes haven’t moved upward at all in the last decade and why it seems to be harder and harder every year to maintain a middle-class lifestyle - and has been since the 1950s. The loss of purchasing power in real terms, the drive to “two income” households and finally the wild screams from the media, government, and lastly Bernanke’s recent assertion that “QE2” has been a “success” because the stock market has gone up all underlie the truth – we have not grown the economy at all during the last sixty years! Instead we serially pulled out the credit card and said “Charge It!”, continually rolling over the debt and adding more to it.

If you look at the stock market, one has to ask – when did it start to “take off”? In 1991 the S&P 500 printed 300 and the Dow stood at 2,500. That was the start of the monstrous "bull run" in stocks.

Exactly none of the alleged “stock market appreciation” has come from actual economic growth since that time. It has all come from ever-increasing amounts of leverage (debt) that, when subtracted back out of the change in GDP, show that on an actual output basis the economy of the United States has been declining at absolutely outrageous rates every single year since 1992, peaking at an astounding 29% at the end of 2007!

Nobody in the media – or government – will talk about this, despite the fact that the there’s little room for argument on the mathematical facts – they’re right there in the government data.

From Finn, a note:

You might read the above and say to yourself, “Well, isn’t debt reduction good?” It is of course however, our entire economic model has been based on GDP growth. The main source of growth has been the expansion of debt. Example, you get a new car and take a loan for $15,000. That loan is debt and is representative of GDP. If the government borrows $1 million it’s GDP. If they spend that same million it is again counted as GDP. If some guy gets laid off and stops spending all money, the Gov counts as GDP a percentage of his NON-income that he WOULD HAVE spent on imports as GDP. Completely ridiculous.

The reason GDP HAS to keep growing is because it proves to the world that Americans are able to keep servicing their debts. How do you service debt? Well you work, get paid and pay your bills. If this perception changes in the minds of foreign investors (including Central Banks) and they start to believe that we have hit the wall, they will scale back in their purchases of our Treasuries.

What if they discover that America has a chronic unemployment problem? (They know we do)
What if they discover that our GDP growth has all been debt based? (They know this too)
What if they discover the Fed has been buying all the Treasuries and America will likely default on their debts? (They know this)

What foreign nations and investors are dreading, and indeed anticipating is the Awakening of the American people to our own situation. When Americans figure this stuff out and realize that their whole “prosperous” life has been nothing more than an illusion the lid on the boiling pot will fly through the roof. The reaction of the American people will be totally unpredictable except for the flight to value. Debt will be shunned. Things of “value” will be in vogue.

Imagine the ire that Americans felt towards Japan after Pearl Harbor except this time around the anger will be isolated within our own borders. It will be directed towards bankers, politicians and even each other. Think national L.A. riots, and hope it never happens.

Buy silver, buy gold.

Wednesday, January 19, 2011

Quote of the Day

I have often said that after all my studies I am beginning to believe that silver is more important to the world than gold. I started to think along these lines when I realized that silver, which dollar wise is one of the smallest markets on the commodities markets, has the largest outstanding short position against it, larger than gold even.

Also, the number of days it would take to cover these short positions is the highest of all the commodities as well, nearly 160 days of production.

A brief description of the above is this……If you go “long’ a contract you expect the price to go up. If you go “short” a contract you expect the price to go down. This “sentiment” affects which way the price moves. It has NOTHING to do with physical supplies. It's much more complicated than that but this is the Quote of the day post.

Anyway, the Quote of the day…..

"SILVER MONEY IS MORE IMPORTANT TO THE WORLD THAN GOLD." - Congressional Digest, November 1931, page 286.

Peculiar that, no?

Anyone who wants to go deep down the rabbit hole, read the following…..

The Silver Stealers series of articles……read for yourself the drama surrounding this metal for nearly 100 years….. that's where the quote was drawn from.

I urge you all to increase your positions with more zeal and fervor than I have ever conveyed. Ignore the price, eat one less meal a day, sell some of your personal belongings, whatever it takes. I strongly believe that after 5 years has passed you will NEVER be able to afford it or even find it ever again. Its production will be completely controlled by the governments of the world due to its scarcity and the difficulty they will have in mining new supply due to the price of oil and credit constraints.

Ignore this advice and be impoverished. Heed it and thrive.

And who says I don’t have a sense of humor through all of this?

The end of the silver price suppression that is! LOL


Sunday, January 16, 2011

Prediction for 2011

My own prediction for 2011....

When we look back in time, I think that 2010 will have been the highest producing year for silver that we will have ever seen.

Peak silver is on like Donkey Kong!!!!

Read this article and draw your own

Friday, January 7, 2011

An Apologist Describes the History of Gold

This is terrible analysis in my view from the Khan Academy. Watch this video and read my response to it...


Interesting video on history but flawed logic on what money actually is.

Austrian economics talks about these things extensively: the definition of money, the value of it, what is its marginal utility, why do we even have it?

He’s correct in that gold was a transition from getting people to understand that what backs a “money” is some value of some sort. The process he describes is not new. It has happened repeatedly for a very long time and usually for nefarious reasons. Not because some sort of enlightenment was reached about what money is.

The problem, and Ludwig Von Mises addresses this in his book, “Human Action”, is that governments have never been able to restrain themselves from printing more money than their economies can provide for. Always the debt issuance and the interest that must be paid back grows at a faster pace than the labor of the people can provide for and they end up hyperinflating their currencies and what is there to provide the safety net? Gold and silver.

Watch this video:

James Turk talks about how technology has evolved and how our understanding of HOW to use gold as money must evolve also.

The apologists will always try and downplay the value of gold by saying it does nothing. That guy’s demonstration of a plane landing was ridiculous. Make believe doesn’t work in the real world. I could make a drawing and create any number of instances and lead you to the decision I wanted you to make by creating scarcity. Of course I would choose food over gold. But given an option I would choose gold over fiat. He could just as easily have put a big pile of money on the one island and you still would have landed on the other island. Why did he choose gold? Paper currency or gold both can represent taxes, labor, land, intellectual property, etc. The only difference is that getting gold takes labor and time and capital. With paper I can print a 1 or 1,00,000,000,000 on a piece of paper and the cost is no different.

The next transition for gold is that its price has to be allowed to trade freely. Governments don’t want this because they then have to keep adding gold supply to the reserves in order to grow their spending budgets and how can they buy votes if this is so? Fiat was created as a matter of convenience. Gold was heavy and clanged around when you walked announcing your wealth like an alarm bell. Gold can now be traded digitally in infinitesimal amounts.

And let’s be realistic, the socialist in everyone’s heart WANTS government to overspend. They want a redistribution of wealth and they want other people to pay for it. Especially if they are overseas and don’t look like us or talk like us and we won’t see if they die or not from our actions. Many will resist the truth of that but that’s only because they want to resist evolution. That evolution is the evolution of the mind. Evolution of the mind is a recognition that you are not in communion with God and being in communion with God is THE most difficult thing anyone will EVER achieve in all of their lifetimes. Therefore: paper money!

The possibilities that we can achieve on this Earth are staggering but we are having great difficulty getting there because at one end of the spectrum there is a class of people overcome with a sociopathology where they must have more than everyone else and liken themselves to demi-gods, the “Masters of the Universe”. And at the other end of the spectrum you have a class of people who are overcome with apathy and laziness who would feed off their host and take, take, take and do no work. Most in the middle are confused. But it’s the middle way that can set you free.

Tuesday, January 4, 2011

Voltaire-Of Hope and Silver's 2011 Price Prediction

This directly from Voltaire......

There is Hope

Millions of people out there looking for the truth about what is wrong with our economy, our political system, our corporate ecosystem, have found a black hole of despair on the internet.

Yes, the world is messed up. You already know that. What you need to understand is that there is a solution. As this drama plays out, the people who have brought this mess down upon our heads will grab for the same solution as everyone else.

In order to keep the world operating, we simply must have a functioning electronic based currency system. The currency system that we have now has been undermined by fraud and must be replaced. Trust has been destroyed. Only a 100% gold backed currency system can replace the current system. This means two things:

1) The price of gold must rise to the point where the working capital of the world all resides in gold. We are talking about a price of gold equivalent to one year’s wage for an ounce of gold.

2) The banking system must provide a smooth mechanism by which depositors can convert their gold and silver into electronic form and back into physical form. Only this will restore confidence.

The world can limp along with the current system for a while longer, but this change is coming. Collectively, we have no real alternative except to restore confidence to the current electronic transaction system. Those who have power now have more to lose than the rest of us.

Monday, January 3, 2011

Silver Historical Chart and the Future

Here’s a neat chart to reflect on from time to time…..If any of you had watched that video I sent out over the weekend you would know that there is about 5 times more gold above ground than silver……

There is about 10-15 times more silver than gold in the ground however industry uses about 650 million ounces a year of which very little is recovered. The rest goes to investors. Also, the USGS has published a report stating that silver reserves will be depleted BEFORE gold, in about 10 years. Think about that, in 10 years (+-), no more silver will come out of the ground (for the most part).

When industry discovered that rhodium had 14 years left to be mined the price was run up from $300 an ounce to $10,100 an ounce. The difference between silver and rhodium (other than if rhodium disappeared life would go on) is that rhodium is NOT traded on the futures exchanges. If/when the silver paper manipulation of prices ends, God only knows what the upper limits of the price will be.

Personally, I view silver as my retirement. I can see selling 1 ounce of silver a month to cover my living expenses. Keep in mind that this will most likely be in an environment where the price is higher than the month before, averaged out over the year. I believe silver will cross the $1,000 mark, perhaps within the next 4-6 years. How many months will you "buy" in advance? View it as a time saver.

If sanity were to come back to the planet we live on and supply/demand fundamentals mean anything, silver could surpass the $5,000, $10,000+???? mark. Sound unbelievable? When gold crossed $700 analysts were calling for it to fall back to $250. It’s doubled since.

When rhodium was $5,000 an ounce (from $300), an analyst, Jack Lifton, said it was a good time to buy!!!!!! Many sold. Who could believe that? It doubled from there.

Anyway, the chart.

Link to larger chart...

Starting off 2011