Today In Silver

That’s interesting. I thought Ackerman scoffed at the possibility of hyperinflation.

Weimar …….Zimbabwe……most likely funny money …i.e. digital dollars.
So don’t bother to bring out those wheel barrows!

Yay, my 401 money market fund has been “saved” only to be devalued to zero due to hyperinflation???

I’ve reached a point where I’m starting to wonder if even matching employer funds are enough to make this “investment” pay off, as two times zero still equals zero.

After all, instead of matching funds in the form of worthless FRNs, I could be actually converting them to metal.

(8?:
Yeah, now all you have to do is quit your job in order to access “your” money.

For those that have 401k, here is an option that I might contemplate for the future. You can borrow against your 401k and basically pay your acct interest for the term of the loan. You can use this money to purchase physical metal and possibly hedge or profit from a rise in silver. Of course, you’re screwed if silver goes down. Something to think about as a hyperinflationary environment would basically crush the life out of a 401k.

SilverX what effect do you think if any. Will the fact that we are seeing more and more zinc and copper mines either stop production or curtail it, to the supply of physical silver. Some have been down for sometime due to falling zinc and copper prices. The reverse may happen in a global slow down or recession. Instead of a surplus of silver because of lack of industrial use and other uses. Sinking basemetal prices will cause mines to shutdown. Which is the case currently and that could inturn cut off silver supply. With invesment demand going through the roof, is there enough silver in the pipeline for whatever reason to feed the investment demand and industrial demand until mine production ramps back up. Seems to me we could hit a bottleneck in supply and demand real quick here. In a tight market a drop of say 25-35% in mined silver could have a big effect on the price and availability of physical bullion. Also we are just getting started with the seasonal strong period for PM, Novemeber through May. Anyone’s thoughts or comments are appreciated.

With 70% of newly mined silver resulting as secondary product
of base metal operations it is obvious that recessionary cutbacks
in demand for industrial metals will severly curtail silver production.
On the other hand, a continued high demand from China…
still growing at “only” 9% despite the financial collapse of the
West, would indicate a continued strong demand for metals
across the board, including of course silver.

It would be interesting to know how much small unit silver
has been stripped out of coin shops, bullion dealers etc. around the
world. They seem to be down to essentially zero inventory.
Even if they managed to fill all their backorders to eager
customers…how much more Gold/Silver would they need
to restock their shelves and conduct “normal” business?
Its unlikely that the Silver which has been soaked up by
the masses will come back to the shops short of a very
large increase in price. Surely there is nothing flowing back
to refiners through the coin shop network.

SilverX….I don’t know if I posted this in another thread, but according to this article, China has shut in 60% of its ZINC MINES:

Zinc price decline squeezes China smelters, mines

Shanghai 08 October 2008 07:28

Falling zinc prices have reportedly forced 60% of China’s zinc mines to close, as smaller smelters are driven out of action and bigger ones cut production. In Yunnan province, China’s biggest zinc-producing region, market participants said around four fifths of smelters with capacity of 10,000-20,000 tpy have already shut down. “They are already in debt due to lower zinc prices recently. Some have been closed for more than two months,” he said. The trader told MB the production cost for such smelters is around 17,000 yuan ($2,493) per tonne. The spot price of zinc in Shanghai was quoted at 12,650-13,650 yuan per tonne on Wednesday. “The fall in zinc price will help industry consolidation in China. The majority of Chinese zinc smelters are making a loss at current prices,” said Li Kun, vice-gm at Sichuan Hongda Co, a big smelter in Sichuan province. Li said that in contrast to weak zinc…

http://www1.metalbulletin.com/Article/2024496/NonFerrous/Zinc-price-decline-squeezes-China-smelters-mines.html

Also I found a Zinc Mine just closed in New Brunswick, one in Tennessee, and several in Bulgaria. And that is just by doing limited research on the internet.

This is extemely BULLISH for SILVER. There are just too many GOOD THINGS going for SILVER TODAY.

1)Closing of Base Metal Mines around the world including silver production
2)Exponential Demand for Physical Silver
3)Exponential increase of FIAT DOLLARS
4)DrawDown of Wholesale Silver 1,000 bars
5)Beginning pressure on the COMEX as Investors start buying contracts not for speculation, but for taking delivery
6)Morons like Bernanke, Paulson, and Bush doing their thing
7)Possible talks (Jim Willie source) of another global currency already in the works that would KILL the US DOLLAR
8)So many people…..so little Physical Silver

Furthermore, it looks like MINI HUNTS are starting to show up all over. This Fella named Bob Coleman wrote a letter to the CME/COMEX:

To Mr. Chilton,
Commissioner, CFTC
and
Ms. Troyke,
Director and Associate General Counsel,
Market Regulation,
CME Group:

In full and proper disclosure, I would like to ask the CME/COMEX and CFTC the following question regarding monthly delivery of silver.

I manage a physical gold and silver bullion fund. In order to stay within the “Model State Commodity Code” of many states, an exempt transaction by the purchaser (in this case the Dollars and Sense Growth Fund) must abide by the following code:

A commodity contract for the purchase of one or more precious metals which requires, and under which the purchaser receives, within seven to twenty-eight calendar days (varies depending on the state) from the payment in good funds of any portion of the purchase price, physical delivery of the quantity of the precious metals purchased by such payment, provided that, for purposes of this paragraph, physical delivery shall be deemed to have occurred if, within such 7 to 28 day period (varies depending on the state), such quantity of precious metals purchased by such payment is delivered whether in specifically segregated or fungible bulk form.

In this environment, it has become very difficult and expensive to buy physical silver from the physical dealer market. The difference in paper prices on the Comex and the physical dealer market have widened considerably. In addition, the overwhelming demand for silver has created delivery time delays of up to 4 months. These delivery delays create a direct violation with many Model State Commodity Codes.

My research has led me to the conclusion that it is much more effective and cost efficient to buy silver directly from the COMEX and take full delivery. The spot prices are much cheaper than the dealer market and the CFTC along with the CME/Comex have stated in reports there are ample supplies of silver available for delivery with no market inhibitions. For an individual or institution wanting to accumulate a position, these are ideal market conditions.

The question I have is this:

I would like to buy and take physical delivery of 1 to 5 million ounces of silver a month on a consistent basis. I am not interested in holding warehouse receipts but taking actual physical delivery from your approved depositories/warehouses. Would there be any obstacles or resistence from either the CME Group/COMEX or the CFTC when I begin to implement or during the ongoing process of this strategy?

I look forward to your reply.

Bob Coleman
______________________

Bob, wants to take delivery between 1-5 million ounces on a CONSISTENT BASIS……LOL. With Jim Puplava (Financial Sense News), telling his readers and listeners (tens of thousands all over the world) to start buying SILVER COMEX CONTRACTS and take delivery….looks like it just a matter of time before the COMEX BOYS are going to be BURNED to a CRISP.

Got ya BULLION, BULK FOOD, TIN FOIL HATS, and GUNS??

SRS: Welcome back. Seems the real SRS has finally woken up again after the Faber experience. Attaboy, we need you as YOURSELF and not as FABER SHADOW.

…North American Palladium has temporaily closed its Lac Des Iles Mine due to depressed prices…

Anyone care to comment on wednesdays lease rate figures? I’m no expert but they are at the lowest level for the year.

Sorry for my misinterpretation of terminology. Forward rates, not lease rates are at a low for the year. Todays dramatic drop takes the rate below the Fed funds rate.

Gold Forward Offered Rates

DATE 1 Month 2 Months 3 Months 6 Months 12 Months
21-Oct-08 1.65000 1.65000 1.63333 1.62500 1.64000
22-Oct-08 0.81000 0.81000 0.79000 0.98000 1.02000

Lone Ranger,
What we should look out for is the inverse ….. if the Federal Reserve keeps slashing rates even possibly to zero then Fed funds would definetly go lower than GOFO rates…..gold moving to backwardation? Should prove an interesting time going foward.

Freddy Krug….have you heard Jim Wille’s newest Interview? Looks like the US DOLLAR might have only MONTHS left, not years. He says foreign countries already have another GLOBAL CURRENCY in the works, making the US DOLLAR TOAST.

Here is the link to his newest interview:

http://www.contraryinvestorscafe.com/broadcast.php?media=141

ATTENTION Silveraxis readers….NEED TO READ THIS ONE.

Fiscal Cat 5 Hurricane Warning by Karl Denninger Denninger .

Yep SrSrocco, listened to Jim Willie’s interview last week…..very interesting.

Freddy Krug….interesting Warning by Karl Denninger. By the way that Jim Willie interview was dated yestereday….Oct 21. Are you sure you heard this newest one?

Silver Lease Rates Heading Higher:

http://www.kitco.com/charts/s_leaserates.html

SrSrocco,

Yep again that’s the one i listened to last week.

The HUI/XAU gold index is getting crushed again.

I own RandGold Resources and its gettin a beatin today.

SRSrocco, I also heard that same Jim Willie interview last weekend.

Tom why is the technical level of $730 so divine. You go to the 70s & you would have seen a massive 50% correction in the gold price. With even a little leverage you would have been wiped out to dust. And yet the gold bull moved.

Why don’t you guys consider that:

1) gold market is very small for meaningful technical analysis
2) gold market is not a free market. big govt decides the picture.

Tommorrow if Bill Gates/China/US govt decides to buy gold all chartists lose jobs. that is how Warren Buffet lifted the silver market from 4$ to 7$ not so long back.

Guys you must read some Peter Schiff. Real voice of sanity.

http://www.merkfund.com/money/authors/schiff/2009-09-12.html

I Love this guy’s calmness. Cool guy.

Joe, you’ve stated my 401K management plan to a tee. Ever since I discovered Austrian Economics 6 years ago, I’ve been cleaning out my 401 as soon as the balance gets above the minimum and investing it in myself (books, books and more books) or hard money. Problem is, now I’m putting more money into it than ever before.

There is one bright side however, other than my payments going into a money market fund, the remainder of my account assets are my own loans, completely safe from someone else’s risk exposure.

JEEESH….Jim Sinclair’s GOLD is down the same as SILVER today.

GOLD - 6.24% (GLD)
SILVER -6.32% (SLV)

Looks like the Bond Market is next to Implode in the near future.

Tom: Your $730 mark has breached as I type. Happy ???

Silver, it’s hard to arrive at a precise figure on the effect of closing zinc and lead mines on Ag production, but as near as I can figure it, we’re looking at something around a 140,000,000 ounce or 25% reduction. The cost of base metals is generally below the cost of production, and the inability to arrange financing results in the need for mining companies to make an immediate decision to close down production rather than burn cash by mining ore. Compounding the problem for the miners is the inability of the receivers of ore to arrange letters of credit for shipments, which means that ore is piling up at points of origin as we speak. Further compounding this problem is a generalized decision to sell off inventories of zinc/lead/copper by manufacturers who are attempting to monetize inventory in lieu of financing inventory. Short sided, perhaps, but reasonable under the circumstances. So, you have mines closing, ore not being shipped, and current inventories flooding into the market. When the last reaches its conclusion, which it will soon, and assuming that we are not one stop away from a Mad Max world, then industrial demand will exist that will not be able to be supplied. Silver is going to be particularly affected by this current cycle because while miners are closing down zinc mines because of low prices, silver investment demand will only be accelerated by people freaked out by financial uncertainty. Bottom line, reduced silver production should be swamped by increased or maintained silver demand. Where that silver comes from at these prices is unknown to me. With precious metals, the cure for low prices is low prices.

SRSrocco Says:
“JEEESH?.Jim Sinclair?s GOLD is down the same as SILVER today.

GOLD - 6.24% (GLD)
SILVER -6.32% (SLV)”

Looks more and more like the paper metals market is being
recognized as what it is…a paper market. When someone
buys a Comex contract, he is buying a derivative…not Gold
or Silver or whatever. In light of the market’s recent
judgement of the value of derivatives in general, it is suprising
that these Comex Gold and Silver derivatives are still going
at such high prices relative to the prices for the real thing.
Surely, a silver contract at $9.00 for 5000 “ounces” of paper
silver is outrageously overpriced….with real silver at something
like $18, these paper derivatives should be going for about
$3 bucks if the warehouse figures are correct for real metal
backing the contracts. The December contracts for Gold and
Silver may well tell the story when their expiration/delivery dates
approach.

If you want to now what a dollar tsunami will look like, you have to watch the iceland experience.

I really think foreign holders like china and russia will stop buying dollars at one time, just as foreign holders stopped buying icelandic krona. When the buying of US Treasuries ends, the dollar will end.

the result is now in iceland like this, from a bloomberg article:

“Iceland’s economy may contract as much as 10 percent, according to Lars Christensen, chief analyst at Danske Bank A/S in Copenhagen. The central bank on Oct. 15 cut the benchmark interest rate by an unprecedented 3.5 percentage points to 12 percent, indicating policy makers have given up trying to control inflation. Prices may surge as much as 75 percent in coming months, Christensen estimates. ”

A surge of prices of 75% in coming months!! And what then?? A surge of another 75% in 1 month.. and then a surge of 150% in some weeks.

PS: Hungary, Ukraine, probably the whole Eastern Europe, Argentina and some others will follow Iceland in the coming weeks. I think only a matter of months when US will follow

I have to say, that I could not agree with you completely, but it

Great job! You