Today In Silver

About 6 years prior to the 1979/80 PM events I prepared myself & my dad for it. We watched it unfold and shortly after Volker raised the Fed rate, we sold all our silver (@$39) & gold (@$838). I subsequently caught gold twice on the way down with puts (which at that time was a new instrument). We did a lot better than just preserving our purchasing power, and it was NOT rocket science. Anyone who paid attention could have see it coming.

About 6 years ago I saw a similar event coming and once again prepared myself and a few friends who were listening. I warned others but most of them didn’t want to hear it? they still don?t want to hear it.

I feel extremely fortunate to be witnessing this for the 2nd time in one lifetime!
But this time it’s different: every currency in the world is fiat & inflating; the US is the biggest debtor nation in history; ad infinitum… (waste of time singing to the choir).

As I predicted, and is now obvious, the government(s) will inflate their way out of the present crisis.

Coming soon (not in order):
Paper silver & gold delivery defaults.
Bank holiday(s) probably reopening with withdrawal limits.
Currency restrictions.
Seizure/nationalization (especially Mexico) of PM mines.
US seizure/nationalization of silver mines (national defense? need about 20lbs to build a cruise missile etc?)
Inflation rates rarely seen before.
The collapse of the world?s fiat money system (ALL the governments of the world will fight this one, cause it ends their control/games).

There are many other possible events; I?m just mentioning the ones I?m sure of.

The bill is due for many years of “free lunches” and it’s going to be ugly for the sheeple. Ayn Rand got it right on the nose in Atlas Shrugged: “?the people get what they deserve”.

I think we are not there yet. The subprime morgage crisis is just the beginning. How about commercial real estate? That’s #2. And last but not least: the Sovereign Debt Crises, #3.
Iceland is practically bankrupt, which country is next?

No rest for you Tom. Keep up the good work. You add unique expertise and insight. As well as the posters too.

dieuwer,

What about # 2b Credit card defaults ?

Isn’t it a bit late for central banks to start worrying about counterparty risk? I have been corresponding with someone who has been watching the markets and gold over the past 20 years and their view after analysing different reported data sets is that Central Banks are holding closer to 10,000 tonnes than 30,000 tonnes.

I haven’t reviewed his analysis to confirm those numbers, but my guess is that the ounces needed by manufacturers is no where near the amount that is lent out, therefore the balance must have been lent to bullion banks who have ultimately used it to finance short sales and other gold derivatives. With gold interest rates around 2%, the carry trade doesn’t that good anymore.

I find it interesting that some gold advocates get hot and bothered about central bank lending/selling. I don’t see the problem. Hopefully the central banks will sell the last 10,000t into the market in an attempt to support their banking mates. This will supress the price - great, allowing individuals to buy a cheap prices. Then that part of central bank lending which has been short sold has to be bought back (a short is a future buyer, just as a long is a future seller). If that is not possible, then the lucky ones are those to whom it was short sold.

The end result will be gold in the hands of individuals and what I call “the decades long privatisation of gold” will be complete. As per Professor Fekete, the power over the money “supply” will then be in the hands of the average person, where it should be. Certainly this current crisis has shown that individuals couldn’t be any worse than central banks in managing money?

Do you really think that a govt. without any gold will let the people keep theirs? Not the U.S. or most others I’m afraid. Be careful what you wish for. I’m praying the U.S. still has their 8500 tons. that will be our only way out if everything goes to nothing. What do you think Obama will do if we are bk with no gold????
Anyway CBs are wising up about au and are holding on to what they have and making it harder for people to accumulate.

TOM,
Could the governments take over or nationalize the gold/silver mines
if according to GATA central banks have leased/sold gold over the years.
The Bank Of England is running on empty after selling in 1999 whe the Washington Agreement was signed.
How much gold in Fort Knox or at West Point ?
India is largest holder of physical gold on the planet…20000tonnes in the hands of public in the form of jewellery.
US MINT suspends eagle,buffalo one ounce ,half ounce till the end of the year then it looks likely the public will have no other choice but to get to their local jewellers as soon as possible.
JPmorgan is largest gold deivatives player….. will the House Of Morgan takeover Barrick Gold because the time to pay up has drawn closer!
If the US TREASURY gold is not just GOLD PLATED LEAD BARS then there l a way out!……Prez Bush should come out of office all “Gunz Blazin” and order US MILITARY firepower to take over all gulf/middleast oil fields.
“Going Out In A Blaze Of Glory”

Tom: Are those numbers percentages over the POS?Is this the first time you are in public with your basis analysis? good for you.

How does CB lending affect the POS? This lending should only make the gold market more liquid (you might say, thereby widening the basis). ECB gold sale should make a diff since it is a genuine sale & rumor mill has it that ECB is now less than willing to oblige you by selling.

So, CBs leaving the gold markets to itself?What next? CBs buying gold?

those who are afraid of govt. confiscation :

1) dump your PM into your septic tank.
2) buy kruggerands or art-work
3) buy religious symbols
4) buy guns & be willing to use them.

many gold owners are aware of the possibility of confisication & they have probably taken adequate steps, some of them original - wanna share your strategy for the benefit of others?

The LMBA rates seem to be sharply back up today. Due to the co-ordinated rates cuts..?

rob, bron and keseri, only oppressive gov’ts such as the US gov will terrorize its own citizens. The US gov has done it once before and will do it again; that much you can bet on once the USD is hyper-inflated into oblivion!

On the other hand, here in Canada, the gov and CB has no PM at all; however, the canadian gov is encouraging canadians to take possession of PMs. Not just coin dealers, but Canadian banks, royal canadian mint, jewellery stores and wholesalers such as Kitco in Montreal are all pushing PMs any chance they get for since I can remember. Furthermore, importing any PM such as silver or gold that is graded .999 is tax (import duty, federal/provincial) exempt. PMs are also excluded from the tax code and federal tax exempt.
To my knowledge, Canada has no history of stealing from us; other than via high taxes to fund its socialistic programs and agenda similar to France’s, or worse. Needless to say, just because Canadian gov never stole from us doesn’t mean it wont in the future. Especially if the US gov bullies Canada into doing it. Canadians are generally spineless in this respect and let the US bully them every time. That is the reason why canadians don’t generally like americans - because we never muster enough national pride not to be bullied by the US gov.

keseri, you may have your guns but as a nation you have no willingness to use them to protect your liberties and/or constitution. Our guns were taken away long time ago as we canadians were more likely to hurt ourselves than use them (guns) to protect ourr rights.

In any case, from where I sit, I see that it is Goldman Sachs and JP Morgan that run the good ol’ US of A, not the “we people”. I should add that the canadian CB is also run by one of Goldman Sachs’ boyz so that means we are going down with you.

As far as hiding your gold/silver, the septic tank is too obvious in my opinion. If you have steel roof (i.e. steel shingles) or barn with steel roof, I would hide it underneath the steel to evade metal detectors. Also, if you have anybody you trust in Canada, you may want to store a part of your hoard in Canada as it will be relatively safer, at least initially, so you can buy yourself some time to react before Goldman Sachs and JPMorgan come here to steal from Canadians as well.

APF. I enjoyed your post about what has happened in the past, but I am curious how you are playing this time around to benefit. Being younger and seeing these events for the first time I have no idea how to play them. I hold physical silver and I am slowly adding physical gold. What other ways are there if the paper market is going to evaporate?

Tom,
Until we see the demise of Goldman Sachs, JPmorgan and Citigroup these financial alchemists will continue to have major influence over global finance / banking also the government.
The NM Rothchilds must feeling good.
By the way NM Rothchilds Bank exited LBMA back in 2004…….look it up!

Great article; I follow your perspective, because you are one of the few considering basis.

I think that governments taking over mines will be ongoing, yet dependent on location; specifically where socialism is taking root, e.g. South America. Although the danger exists here in the US, it seems less likely because of our drift toward the Authoritarian Business Model, as opposed to socialism. Consolidated control can be gained by simply buying them, especially when stock prices allow them to be acquired at such low cost.

Thanks chefjeff77 for the thumbs up.
You’re already light-years ahead by having physical silver and some gold.
Here is an ordered list of my actions (pretty much the same as last time):
1. Have enough physical silver in easily recognizable form (junk silver bags and/or Eagles) to get you through a possible currency collapse. Gold is ok too, but it won’t be as useful as silver in trading for stuff you need.
2. Buy other forms of physical silver/gold (more of the above, bars, etc) for purchasing-power preservation.
3. Buy junior mining shares that have ALL their mines in Canada (a bit hard to find but here are a couple of examples: ABMBF, SBBFF). These stocks are speculative and are very lightly traded, so get them ONLY as a long term investment. When silver/gold finally get going the juniors will give you HUGE leverage (100 to 1,000 times your investment).
4. Store your physical bullion where you can get to it… do NOT put it in a safe deposit box or any other financial institution.
5. The trick here is knowing when to sell. When silver/gold prices are headed up in a parabolic curve and suddenly everyone (the barber, the guy pumping your gas, the bartender, the grocery checkout person) is talking about it… SELL. That may be painful because it will be going up so fast & it will look like it might continue forever, but DO IT!
You will probably miss the top unless you are lucky (I was VERY lucky last time… NOT by design), but you will be “close enough”. And then buy the best stocks you can get.
ps: My information (lots of it) indicates that silver will give a far better return than gold.
pps: I got talking with the guy filling my propane tank today, and discovered, to my delight, that he had been accumulating silver Eagles for several years. He had started this without much research - just an uneasy feeling. Of course I filled him in on the current state of affairs, emailed him some links, and told him just how good he would be feeling soon.

Does anyone know if there is a way to track the SLV discount/premium to Comex silver? I’ve notice that the spread lately is close to 15 cents and used to be around 20 cents.

I’m still surprised that we don’t see SLV with actual silver in the vault trading at a premium to Comex and LME paper silver.

Any thoughts or ideas?

Look at this chart: http://www.geocities.com/WallStreet/Exchange/9807/Charts/SP500/Gold_Silv_0403.gif

Any comments?

dieuwer: I looked at the chart. I believe if you extended the
chart back beyond the 1800 start of the graph, back say to
the year 1000, you would find that the 11X ratio was pretty much
unbroken. 11X is also approximately the ratio of natural occurance
of silver relative to gold in the earth’s crust.

The age old ratio was broken by massive discoveries of silver
in the 1850’s . World silver supplies suddenly went up at
much faster rate than gold supply. Silver was a glut on the
market with little usage other than for ornamentation,
eating utensils, and coinage. Ironically, there was so much
surplus silver around that coining and putting it into
circulation was highly inflationary at the time.

The graphs show the ratio ballooning up to 100X plus as all
that excess silver was mined, bought (by government) and
warehoused. That glut went on for nearly a hundred years.

We all know how technology and ever increasing uses
of silver have eaten up that massive surplus. The idea
that there is always “plenty of silver” is perhaps the
collective psychological legacy of that century of surplus.
In fact, as most of us know, that surplus is gone.
It takes time for reality to sink into the mind of the masses.
When it does, the old 11X ratio will return…or somewhere near
it.