Today In Silver

what numbers are looking at to sense a thawing in lending?

Today Larry Edelson put forth his take on a possible action to the international debt situation. His piece is pasted below. I agree with Edelson that the world mucky mucks will address the problem as a “debt vs asset” problem rather than a more fundamental questioning of fiat money, central banking and deficit-spending welfare states. His idea sounds plausible. Can anyone here poke some holes in this scenario?

Assuming they do reprice gold with a revised monetary scheme, wouldn?t it more likely happen quickly, unexpectedly, before word gets out and while asset prices are down hard and people are hiding in cash?

There is so much downplaying of this G20 meeting in the media now ? we are told that little can be expected in one short meeting. Only complex and meaningless fiddling measures are said to be under discussion. Heck, these guys have been meeting and talking for a while now. They might be stupid, but they?re not stupid. Certainly they realize we are all dead if we only fiddle around the edges and delay. It doesn?t take a genius to see that debt relative to assets is way too high and assets are crashing. It’s also a simple concept to sell the public. Could a plan be nearly ready to throw in front of Bush?

The G-20’s Secret Debt Solution
Larry Edelson

If you think this weekend’s G-20 meetings in Washington are only about designing short-term fixes to the financial system and regulatory reforms for banks, hedge funds, brokers, mortgage companies and investment banks … think again.

Behind the scenes, a far more fundamental fix is being discussed ? the possible revaluation of gold and the birth of an entirely new monetary system.

I’ve been studying this issue in great depth, all my life. And given the speed at which the financial crisis is unfolding, I would be very surprised if what I’m about to tell you now is not on the G-20 table this weekend.

Furthermore, I believe the end result will make my $2,270 price target for gold look conservative, to say the least. You’ll see why in a minute.

First, the G-20’s motive for a new monetary system: It’s driven by and based upon this very simple proposition …

“If we can’t print money fast enough to fend off another deflationary Great Depression, then let’s change the value of the money.”

I call it …

“The G-20’s Secret Debt Solution”

It would be a strategy designed to ease the burden of ALL debts ? by simultaneously devaluing ALL currencies … and re-inflating ALL asset prices.

That’s what central banks and governments around the world are going to start talking about this weekend ? a new financial order that includes new monetary units that helps to wipe clean the world’s debt ledgers.

It won’t be an easy deal to broker, since the U.S. is the world’s largest debtor. But remember: Debts are now going bad all over the world. So everyone would benefit.

Fed Chairman Ben Bernanke … Treasury Secretary Paulson … President Bush … President-elect Obama … former Fed Chairman Paul Volcker … Warren Buffett … and central bankers and politicians all over the world agree a new monetary system is needed.

So they’ll start hashing out the details to get the new financial architecture deployed as quickly as possible.

If you think I’m crazy or propagating some kind of conspiracy theory, then consider the historical precedent …

To end the Great Depression in 1933 Franklin Roosevelt devalued the dollar via Executive Order #6102, confiscating gold and raising its price 69.3%, effectively kick starting asset reflation.

Only this time, it won’t be just the U.S. that devalues its currency. The world is too interconnected. Instead, the world’s leading countries will propose a simultaneous and universal currency devaluation.

This time, they will NOT confiscate gold. There would be riots all over the globe if they even mentioned the “C” word.

But they don’t have to confiscate gold. Here’s one scenario …

They cease all gold sales and instead, raise the current official central bank price of gold from its booked value of $42.22 an ounce ? to a price that monetizes a large enough portion of the world’s outstanding debts.

That way, just like in 1933, the debts become a fraction of re-inflated asset prices (led higher by the gold price).

And this time, instead of staying with the dollar as a reserve currency, the G-20 issues three new monetary units of exchange, each with equal reserve status.

The three currencies will essentially be a new dollar, new euro, and a new pan-Asian currency. (The Chinese yuan may survive as a fourth currency, but it will be linked to a basket of the three new currencies.)

The new fiat monetary units would be worth less than the old ones. For instance, it could take 10 new units of money to buy 1 old dollar or euro.

New names would be given to the new currencies to help rid the world of the ghost of a system that failed. Additional regulations and programs would be designed and implemented to ease the transition to a new monetary system.

The International Monetary Fund (IMF) would implement the new financial system in conjunction with central banks and governments around the world.

Keep in mind that the IMF is already set up to handle the transition, and has had contingency plans allowing for it since the institution was formed in 1944.

Included in the design and transition to a new monetary system …

A. A new fixed-rate currency regime. Immediately upon upping the price of gold and introducing the new currencies, a new fixed exchange rate system would be re-introduced. The floating exchange rate system would be tossed into the dust bin along with the old currencies.

This would kill any speculation about further devaluations in the currency markets, and drastically reduce market volatility.

B. To sell the program to savers and protect them from the currency devaluation, compensatory measures would be enacted. For instance, a one-time windfall tax-free deposit could be issued by governments directly to citizens’ accounts, or, to employer-sponsored pensions, to IRAs, or Social Security accounts.

Income taxes may subsequently be raised to pay for the give-away, or a nominal global type of sales tax could be enacted to help pay for the new system and the compensatory measures.

C. Additional programs would be designed to protect lenders and creditors. Lenders stand a much higher chance of getting paid off under the new monetary system ? but with a currency whose purchasing power would now be a fraction of what it was when the loans were originated.

So programs would have to be designed to help lenders offset the inflationary costs of their devalued loans, probably via the tax code.

Naturally, all this is a bit more complicated than I’ve spelled out above. But that gives you a big-picture outline of what the plan could look like. And I think major changes like these are going to be set in motion at this weekend’s G-20 meetings in Washington.

Would they work?

Yes. They would help avoid a repeat of the deflationary Great Depression. But don’t expect even a new monetary system to put the U.S. or the global economy back on track toward the high rates of real growth that we’ve seen over the last several years. That’s simply not going to happen. Not for a while.

Instead, I’m talking about a massive asset price reflation, negative real economic growth in the U.S. and Europe ? but continued real GDP gains in Asia.

The Big Question: What gold price would be legislated to reflate the U.S. and global economy?

I can’t tell you what gold price the G-20 would ultimately agree to. But here’s what they will be looking at …

* To monetize 100% of the outstanding public and private sector debt in the U.S., the official government price of gold would have to be raised to about $53,000 per ounce.

* To monetize 50%, the price of gold would have to be raised to around $26,500 an ounce.

* To monetize 20% would require a gold price a hair over $10,600 an ounce.

* To monetize just 10%, gold would have to be priced just over $5,300 an ounce.

Those figures are just based on the U.S. debt structure and do not factor in global debts gone bad. But since the U.S. is the world’s largest debtor and the epicenter of the crisis, the G-20 will likely base their final decision mostly on the U.S. debt structure.

So how much debt do I think would be monetized via an executive order that raises the official price of gold? What kind of currency devaluation would I expect as a result?

I would not be surprised to see the G-20 monetize at least 20% of the U.S. debt markets. THAT MEANS …

* Gold would be priced at over $10,000 an ounce.

* Currencies would be devalued by a factor of at least 12 to 1, meaning it would take 12 new dollars or euros to equal 1 old dollar or euro.

The return of the Gold Standard?

“But Larry,” you ask, “how could this be accomplished when we no longer have a gold standard? Further, are you advocating a gold standard?”

My answers:

First, you don’t need a gold standard to accomplish a devaluation of currencies and revaluation of the monetary system.

By offering to pay over $10,000 an ounce for gold, central banks can effectively accomplish the same end goal ? monetizing and reducing the burden of debts, via inflating asset prices in fiat money terms.

Naturally, hoards of gold investors will cash in their gold. The central banks will pile it up. At the same time, other hoards of investors will not sell their gold, even at $10,000 an ounce. But the actual movement of the gold will not matter. It is the psychological impact and the devaluation of paper currencies that matters.

Second, I do NOT advocate a fully convertible gold standard. Never have. There isn’t enough gold in the world to make currencies convertible into gold. It would end up backfiring, restricting the supply of money and credit.

BarbarianWho…i totally agree.

The Global Monetary System must be rebuilt with a sound foundation utilising Gold for the devaluation as i see no end to deleveraging, liquidations, hoarding of capital,debt defaults,etc.
This never-ending dynamic is gaining more momentum by the day and its just killing the economies of the world.
And i also believe no SILVERAXIS reader’s wishes for either,CHAOS,SOCIAL UNREST,REVOLUTION,FASCISM,WAR and so on.
Lets hope something positive comes emerges from the G-20 Summit.

Guess what, I had exactly the same thought just before reading BarbarianWho posted it. Reflation by sudden devaluation wrt gold. No need for confisication.

How would other commodities be priced? How about silver?

Here in the U.K. Bullion coins continue to sell out like hotcakes.
My local dealer below is almost out.

http://weightoncoin.com/coins/index.php?main_page=product_info&cPath=2_3&products_id=1304&zenid=ee4d18a15567ba8ac2cfce202175189a.

France’s Sarkozy and Russia’s Mevedev ar holding a conference at EU-RUSSIA SUMMIT as i write………Bernanke and Trichet are speaking later at another meeting …….. interesting times to say the least.

Sarkozy just stated…”that we are all in the same ship”

Looks’s like the motto is “United We Stand….Divided We Fall”

Cooler heads need to prevail at these summits and conferences or as Silveraxis contributer SrSrocco states….. DISINTIGRATION is what will unfold.

isn’t this problem all about wanting to eat our cake and have it too? it seems like all the efforts of the fed and hank are to keep the debt levels and keep monetary levels at close to their current ratios. If they let either inflation take hold or deflation, that would wipe out the imbalances, but would also wipe out much of the so called wealth that is currently under the control of the friends of hank.

the one problem with trying to reflate in one day, is that if i were selling a house for 200k and then my dollar was devalued 12 to 1, i would relist the house at 2.4million, and go ask my boss for a raise. only the people too slow to change prices would get even more stolen from them. further lenders would be wiped out and savers too. if you tried to rebalance through tax breaks etc. it would be just resetting the system back to what it was.

finally even if this occurs, it’s not that the US has 50trillion or whatever in unfunded liabilities, but that there are millions of baby boomers going to retire and are expecting to be taken care of. whether the debt is wiped out or not, you still have the same people with the same expectations and they don’t care whether it’s 10$ to wipe their butts, or $120, they just want it wiped. am i missing something?

oh yeah, one more comment. wouldn’t we see this in the USD as well as the equity markets? wouldn’t the smart money rush out of dollars and into equity? it wouldn’t matter about gold, since oil would be repriced as well as all stocks, to the tune of around 12 to 1.

Tim,
If the devaluation occurs, I would think it would be in relation to gold only as the article seems to indicate. So for your 200k house it would be business as usual. The gold holder however would be sitting pretty. Where before the devaluation I needed say 200 ounces of gold to buy your house, I now only need 20. The individual or the nation who holds the gold would benefit with the increased purchasing power.

What it really comes down to is perception of what is the ‘real’ or reality. I no longer play the paper game. I no longer choose to save my wealth in ‘currency’ but in tangible money. Currency is obviously needed for day to day living and the reconciliation of existing debt, but whatever is left over is saved in real money. This money is not meant to be traded, it is there as a foundation, as protection, as legacy to be passed on to my heirs as I choose. Under my control without the need for anyone’s permission.

This leads me to consider the 401k concept. By now I’m sure most have heard of the article concerning possible ‘confiscation’ of 401ks. This 401k concept is just another way to separate you from your wealth and have it placed under someone else’s control. First you don’t really control it because you need ‘permission’ to do anything with it, with always the threat of penalties. Second, it is somewhat twisted that in order to be less taxed on your income that you worked so hard for you must put it under someone else’s control.

An ounce of gold is an ounce of gold. They can tell me all they want how much it is worth in currency, but it is up to me to believe it or not.

No need to devalue 12:1 vs gold as suggested. Just 2:1 or lesser would do the trick. Bond market would get the message & panic. Result is devalued dollar correctly discounted by market forces.

I’m guessing they’ll avoid the Amero label for any dollar replacement currency, given all the negative publicity the NAU attracted.

Maybe they’ll call it the Uh-Oh?

Wow Tom, 6 days till expiration? $11 call options still going for $500, and that would need a 20% move in silver to pay off, right?

How exactly do you calculate the silver basis? Is it front month futures contract - spot price?

JB - if i have silver and gold, which i do and they revalued gold to that large extent, i would not sell my silver until it was revalued, or my oil for that matter, or my stocks. what i am saying is that revaluing 12x would unleash unholy inflation that i believe would rock the markets even more.

keseri - i am no expert on the bond markets, and certainly it has behaved more consistently than equities, but i wonder how the market could rebalance, again without massive disruption. i do think it was bernanke’s plan to devalue the dollar since 2001 down to the .5 level but over time, which was working well, until the commodities started getting out of their control (i’m a tinfoil hat person in this aspect) which spoiled their plans. in the end, a USD at .5 or somewhere would be beneficial i think.

Ron Paul’s reaction to Obama and his thoughts and timeslines for the G20 meeting…I found this VERY interesting…

http://www.youtube.com/watch?v=3AmjvfD3g7U

Part II ?

http://www.youtube.com/watch?v=uo29Oa-e61I

I don’t know what Larrys been smokin, but thats got to be one of the biggest loads of doodie I’ve heard yet. The fascists might do something that extreme AFTER the starving commoners start rioting in the streets, but not yet.
Alf Field’s commentary yesterday http://www.kitco.com/ind/Field/nov132008.html is the most likely tack the fascist will take. They will most likely fail though.

If this revaluation was coming wouldn’t all the bullion banks be backing up the truck before hand? Sure we may have a G20 meeting but there is so much talk going on about revaluation that the chances of it happening (in my humble opinion) are about zero- for now. For that matter I would also be very surprised if there is anything remotely interesting that happens in the December futures contracts for the same reason. I am happy to be wrong and if I am I will eat my tin foil hat.

I’ll eat a bug if the word GOLD is spoken by those fiat loving bastards.

If gold were revalued to such a level of purchasing power then a bi-metallic standard would have to evolve since there is a physical difficulty in fabricating pieces small enough for everyday commerce. If a bi-metallic standard were effected then silver would also be re-valued and the question becomes at what ratio to gold.

forwill

they will not utter it. you don’t utter your private life in public. it is what you will do. They know after the great depression the DEVALUATION VERSUS GOLD IS THE ONLY SOLUTION THAT ENDS DEFLATION QUICKLY. Read Bernanke’s Helicopter speech.

I reapeat:

DEVALUATION VERSUS GOLD IS THE ONLY SOLUTION THAT ENDS DEFLATION QUICKLY. The emphasis is on QUICKLY. And they know it.

They tried quantitative easing with Japan and failed. Cutting interest rates futher would introduce more moral hazard and counter-party risk.

I would not be surprised if the Chinese or some Central bank decides a month later to buy gold. That would be the quick hyperinflationary spike that Ackerman was talking about. Or is it what Tom has hinted in this post? Probably his basis analysis is telling him that.

Just for info purposes:

http://en.wikipedia.org/wiki/London_bullion_market

LBMA is the clearinghouse for MOST WHOLESALE OTC PHYSICAL deals in gold. Most of the participants are banks, bullion banks & Central banks. Average daily volume cleared is ~15 million ounces for gold & ~100 million ounces for silver. These represent nearly 5-6 day mine production for the entire world.

An absolute gem is “Unlike many commodity markets, the forward market for gold is driven by spot prices and interest rate differentials (similar to foreign exchange forward markets) rather than underlying supply and demand dynamics. This is because gold, like currencies, is borrowed and lent by central banks and in the interbank market.” GOLD is a CURRENCY !!!!!! That was an eye opener since I had previously held it as only a store of value.

Which gives me the idea that it is possible to revalue currencies wrt only gold & silver alone and NOT wrt other commodities or assets. Also, if daily trading volumes at LBMA are any indication then silver should be reprices @ 100:15 or ~7:1. Am I dreaming or what?

The darling piece of a writeup comes at the end “While the digital gold currencies have not acquired widespread adoption they are extremely efficient and may become a dominant currency in the future.” Dream world & some. Come.

An expanded role for the IMF is being sought at the G20 summit. If there is going to be any gold backing then it is likely to be together with a basket of currencies as part of the Special Drawing Rights.
This from Wikipedia:

“SDRs basically were created to replace gold in large international transactions. Being that under a strict (international) gold standard, the quantity of gold worldwide is relatively fixed, and the economies of all participating IMF members as an aggregate are growing, a perceived need arose to increase the supply of the basic unit or standard proportionately. Thus SDRs, or “paper gold”, are credits that nations with balance of trade surpluses can ‘draw’ upon nations with balance of trade deficits.

So-called “paper gold” is little more than an accounting transaction within a ledger of accounts, which eliminates the logistical and security problems of shipping gold back and forth across borders to settle national accounts.

Joseph Stiglitz has argued that usage by central banks of SDRs as foreign exchange reserve could be viewed as the prelude to the creation of a single world currency. It has also been suggested that having holders of US dollars convert those dollars into SDRs would allow diversification away from the dollar without accelerating the decline of the value of the dollar.”

Increasing the physical gold backing of SDR’s could help return confidence in currencies and get world trade moving again. A revaluation of Gold must accompany this process (simple maths), and it is too late to avoid a global depression, I fear.

We could soon have the following exchange rates:
£1 = €1 = $1
This would be ideal for conversion to a single currency, backed by SDR’s. Possible?

That should say 1 Pound = 1 Euro = 1 Dollar.
Tom must sort out the character code tables!

Tme to bring on STABILITY and DISCIPLINE…

Gold at $14,172 an ounce?

http://www.financialsense.com/fsu/editorials/bloom/2008/1114.html

The Only Cure for a Bubble…:(Doug Noland PRUDENT BEAR)

I commend Judy Shelton for her insightful op-ed piece, ?Stable Money is Key - How the G-20 can rebuild the ?capitalism of the future.?? It was published in this morning?s Wall Street Journal, a day ahead of ?The G20 Summit on Financial Markets and the World Economy.? As Ms. Shelton noted: ?One thing is guaranteed: Most attendees will take the view that Wall Street greed and inadequate regulatory oversight by U.S. authorities caused the global financial crisis — never mind that their own regulatory agencies missed the boat and that their own governments eagerly bought up Fannie Mae and Freddie Mac securities for the higher yield over Treasurys.?

She continues: ?At the bottom of the world financial crisis is international monetary disorder. Ever since the post-World War II Bretton Woods system — anchored by a gold-convertible dollar — ended in August 1971, the cause of free trade has been compromised by sovereign monetary-policy indulgence. Today, a soupy mix of currencies sloshes investment capital around the world, channeling it into stagnant pools while productive endeavor is left high and dry? If we are to ?build together the capitalism of the future,? as Mr. Sarkozy puts it, the world needs sound money. Does that mean going back to a gold standard, or gold-based international monetary system? Perhaps so; it?s hard to imagine a more universally accepted standard of value.?

As much as I find the notion of sound money and a new gold standard international monetary regime appealing, neither will be part of any solution coming out of Washington or the G20 this weekend or anytime soon. Fundamentally, our nation has only a sliver of bullion available to back tens of trillions in financial claims that are the crumbly bedrock for the entire global financial system. But this is a moot point. The world may today disagree somewhat on how to parcel out blame for the international monetary disorder, resulting in the worst financial crisis since the Great Depression, but there exists a consensus that concerted reflationary measures are the only possible solution.

There is little prospect that the direction of global policymaking will engender the return of stability anytime soon. As Ms. Shelton adeptly notes, ?In the absence of a rational monetary system, investment responds to the perverse incentives of paper profits. Meanwhile, price signals in the global marketplace are hopelessly distorted.? To be sure, the market pricing distortions that for years empowered Wall Street finance and GSEs these days ensure that the U.S. Treasury borrows and spends in egregious excess.

I think often of the great economist Dr. Kurt Richebacher. My analytical framework was over the years heavily influenced by his writings and mentoring. He would always say, ?The only cure for a Bubble is to prevent it from developing.? Today?s crisis confirms the brilliance of Dr. Richebacher?s work. At the other end of the spectrum, conventional economic doctrine is revealed as shallow and fatefully flawed.

I have repeatedly pointed to Milton Friedman?s analysis of the causes of the Great Depression as the keystone for our nation?s deeply flawed economic perspective. By the 1960s?, there was an eagerness to cast blame for the Depression on policy mistakes made in 1929 and subsequent to the crash. The depression, it was determined, was not due to any weaknesses or vulnerabilities associated with the Credit system and market pricing mechanisms. Instead, the 1920s were conveniently recast as the ?golden age of Capitalism.? Over the years, Dr. Bernanke has repeatedly excoriated the ?Bubble poppers? for their principal role in instigating the thirties downturn.

Those of us who have studied the nature of the financial and economic maladjustments engendered during the rampant Credit excesses leading up to the ?29 crash take serious exception. Indeed, the Friedman/Bernanke/conventional view of that historical Bubble and bust has been a most dangerous case of historical revisionism and flawed analysis. I am more interested today in working to change failed economics than fingering blame for the crisis on our public servants working desperately to avert collapse.

It is in this spirit that I am compelled to defend Hank Paulson and his team at Treasury. The severity of today?s crisis is not the result of policies ? good, bad or otherwise ? implemented over the past few months. The greatest Bubble in the history of mankind ? nurtured by decades of flawed economics, flawed finance, flawed policymaking and irresponsible behavior throughout ? is bursting and there is little our authorities can do about it. Everyone was content during the boom to buy into the notion of all-powerful Fed reflation and Washington stimulus, and we must now come to grips with the reality that the entire framework advocating post-Bubble ?mopping up? strategies was specious.

Secretary Paulson has been criticized for ?making up the rules as he goes along.? Well, there is no rulebook for resolving this crisis. His policymaking has been faulted ? perhaps not undeservingly ? for lacking transparency. Yet a more substantive policy issue goes back 15 years: regulators looked the other way and didn?t demand transparency as the leveraged speculating community borrowed trillions and accumulated massive holdings. Paulsen and Bernanke likely believed that an unprecedented $700 billion government program to acquire securities would provide the backstop bid to help restore market confidence, securities prices, and lending throughout the economy. It simply didn?t work. Yet the system was heading toward collapsed had they not moved aggressively.

The Treasury, Fed, and the marketplace now appreciate that the system faces a multi-Trillion de-leveraging problem - not to mention the issue of new Credit creation necessary to avert economic collapse. The focus has, rightly, turned away from the issue of impaired securities markets to a primary focus on stimulating lending. The hope now is that the economy will receive a much bigger bang for $700 billion bucks if it is used to recapitalize the financial system rather than to acquire securities from distressed sellers. With the securitization markets now essentially lost causes, the last hope rests with a recapitalized and, supposedly, resurgent banking system. The expectation is that $700 billion of additional capital can be multiplied into the Trillions of new loans vital to bolstering the economy going forward. It?s not Paulson?s fault if it doesn?t work.

We are witnessing policymaking out of desperation. Treasury has very limited time, few alternatives and faces dire problems. It has become popular to point out that the marketplace has lost confidence in Mr. Paulson and his team. I believe, however, that it is more aptly stated that the market has lost faith in the prospect of policymaking generally having much influence on developments. This is a consequence, as Ms. Shelton reminds us, of upwards of forty years of ?monetary policy indulgence.? Regrettably, G20 policymakers will this weekend focus efforts on global stimulus and pay only lip service to monetary system reform.

Fundamentally, individual participant discipline is the nucleus of any stable international monetary regime, whether it is the classic gold standard approach or Bretton Woods system type of arrangement. The global abandonment of any semblance of monetary or fiscal discipline is a hallmark of this extraordinary period of bursting Bubbles. Stable ?money? may be the key ? but it?s also nowhere to be seen.

Also on a side note how will the global geopolitics play out? ….War in Iraq, Afghanistan….Iran…….Russia-Georgia situation….. US Missile Defence System in Poland…NATO influence in Europe…etc.
Certainly seems Pres -Elect Obama has his hands full.

BarbarianWho, keseri, AnitFiat, and Freddy Krug….all good points and posts. Barbarianwho…..it would be interesting to see an GOLD backed currency at some fraction…this would jump the price of silver just on that news. Freddy Krug….even if there was a REVALUING or DEVALUING of the US DOLLAR…..does not change the Fundamentals for the MASS EXODUS out of SUBURBIA. That is still in the cards. Not that I am a CHEERLEADER FOR IT…but its the FUNDAMENTALS.

REVALUING the currencies will not change the fact that the USA is still a LEECH and SPEND ECONOMY. Its PHYSICS.

Even though we can PRINT DOLLARS or REVALUE THEM….we can’t PRINT BARRELS or OIL….GOLD BARS…or SILVER ROUNDS. The DISINTEGRATION of the USA is still on TARGET with or without a new world CURRENCY or a ASSET BACKED DOLLAR. It comes down to SUPPLY and DEMAND of OIL.

In that vein….I am still RUBBING my LUCKY RABBIT FOOT…the one with one of ALAN GREENSPANS 8 COMB OVER HAIRS in it….for the end of the FIAT DOLLAR. I am patient….and my LUCKY GREENSPAN RABBIT FOOT has plenty of fur on it….I don’t think it will run out anytime soon.

What I wanted to say at the end of that Post was this:

I BELIEVE my LUCKY GREENSPAN RABBIT FOOT will be around a lot longer than the US DOLLAR.

word……………..

SRS

Revaluation of the dollar wrt gold DOES change the fundamentals. It means a fundamental shift to sound money with policy framework aligned accordingly. It means an inescaple return to the gold standard - admitting the keyneisan blunder of “demonetising gold”. Tongues would start wagging. Prof Fekete & Tom would takeup loudspeakers. Tom for President et al.

If all that happens, we would have a quick transition to the gold standard utopia of local governence & local habitation - in other words, a shift from suburbia that you have been eulogising.

The U.S. will not accept a renewed gold standard, ala Bretton Woods, for a number of reasons, among them: (1) It doesn’t have much gold. Ft. Knox is relatively empty; and (2) J.P. Morgan, which has great influence in Treasury and in the administration(s), whether old or incoming, is massively short in the paper gold and silver markets. A re-valuation of gold to a level necessary to make a difference in the present situation would pretty much clean out J.P., as it deserves to be cleaned out. But it will not happen. You will not hear a peep about gold from the current meeting. I’m hoping some Arab financier (or any financier, for that matter) buys up the available December silver or a large part of it and demands delivery. If they want to bring the U.S. crashing to its knees, that would be a far more effective way than pursuing guerilla wars in far of remote parts of the world.

What are the crooks doing at G20 - 9 hours ago. Here is a sneak preview.

FUNDS HAVE STARTED TO BUY AHEAD OF THE MEETING. This explains the surge in the gold price by $50. This also explains the backwardation & basis recording some siesmic activity. If next week, the gold price does not fall below $750 or the basis does not normalise we can expect some pretty decent fireworks in the SPOT gold. Buy with both your hands in case of such an event.

http://www.reuters.com/article/vcCandidateFeed2/idUSTRE4AE1BU20081115

Bretton Woods gold/dollar peg unlikely at G20
Sat Nov 15, 2008 2:18am EST

By Frank Tang

NEW YORK (Reuters) - Gold surged on Friday as world leaders gathered to battle the economic crisis, amid talk of a new Bretton Woods agreement to shore up the financial system, but calls to revisit the gold standard are unlikely.

The gold standard, a monetary system of fixed exchange rates in terms of gold, had been the cornerstone of Bretton Woods, which created the International Monetary Fund and the World Bank, until President Richard Nixon took the U.S. dollar off the standard in 1971.

Bullion, seen as a safe haven in market turmoil, has staged a $50 per ounce rally from Thursday’s intraday low, as funds bought heavily ahead of this weekend’s meeting, which includes leaders of the Group of 20 advanced and emerging economies.

“I think the anticipation of something from the G20 meeting is helping gold,” said George Gero, vice president of RBC Capital Markets Global Futures.

World leaders, including British Prime Minister Gordon Brown and French President Nicolas Sarkozy, have recently vowed to change the international monetary system created at the Bretton Woods, New Hampshire conference in 1944, which helped draw up the post-war financial order.

Shaken investor confidence amid a bear stock market and the prospect of a protracted global recession have prompted some corners to call for a return to the gold standard.

The standard had been in place with minor modifications since Bretton Woods fixed the conversion rate for one troy ounce of gold at $35.

However, fund managers and commodity analysts said that the G20 meeting would not result in any agreement that resembles a new Bretton Woods agreement or the gold standard.

“That’s basically a 19th century device that was repackaged in Bretton Woods, where the dollar was linked to a physical gold price,” said James Steel, chief commodity analyst at

HSBC.

“I don’t think that’s happening at all because the gold market is far too small to be able to play any role in that dimension. That is not to say, though, gold won’t reflect changes in the economy and currency value,” Steel said.

OBAMA: NO GOLD STANDARD

But it seems that central bankers and governments around the world have already put a stop on a comeback of the gold standard as they prefer monetary policies without being restrained by gold reserves.

In August, then presidential candidate Barack Obama said he did not think a return to the gold standard was a good idea and noted that the U.S. currency was strong in the 1990s, even though there was no gold standard.

Obama was speaking in response to a question about if he thought the country should return to the gold standard, given that the weak dollar is exacerbating the rise in oil prices.

“I don’t think they want to do that. I think that would panic the world,” said COMEX gold options floor trader Jonathan Jossen.

Jossen said that gold could receive a boost if news out of the G20 meeting would stem the dollar’s resurgence.

“Everybody wants the dollar to be weakened. A lot of people think the dollar has moved way too fast,” Jossen said.

Caesar Bryan, portfolio manager of the GAMCO Gold Fund, said that funds have bought gold to position for possible favorable outcomes from the G20 meeting.

“There has been some talk about the Far Eastern countries increasing their gold holding. We have that speculation from time to time,” said Bryan, who manages $280 million in mutual fund assets.

Bryan, however, said that he did not expect any substantial agreement from the G20 meeting that was only prepared in weeks and without the participation of the U.S. president-elect.

“I have been positive on gold because of the extraordinary measures that central banks have been taking. I would expect gold to do better without any G20 meeting,” Bryan said.

(Reporting by Frank Tang; Editing by Marguerita Choy)
—————————————————–

OK what are the arguments against gold -

1. Oh, it is not fashonable anymore (19th century thing).
2. There is not enough gold in the world (which means there are too many dollars)
3. Obama has a gem of an argument -we used to have a strong dollar. (once upon a time is good for story telling & children)

Iran switches reserves to gold -report

http://www.guardian.co.uk/business/feedarticle/8025778

TEHRAN, Nov 15 (Reuters) - Iran has converted financial reserves into gold to avoid future problems, an adviser to President Mahmoud Ahmadinejad said in comments published on Saturday, after the price of oil fell more than 60 percent from a peak in July.
Iran, the world’s fourth-largest oil producer, is under U.N. and U.S. sanctions over its disputed nuclear programme and is now also facing declining revenue from its oil exports after crude prices tumbled.
“With the plans of the presidency…the country’s money reserves were changed into gold so that we wouldn’t be faced with many problems in the future,” presidential adviser Mojtaba Samareh-Hashemi was quoted as saying by business daily Poul.
He gave no figures or other details.
Before oil prices plunged by more than 60 percent from a peak of $147 per barrel in July, Iran made windfall gains from its crude exports and in April estimated its foreign exchange reserves at about $80 billion.
Iranian officials in July denied reports Iranian banks were moving funds from Europe, with one report suggesting as much as $75 billion had been withdrawn and converted into gold or placed in Asian banks, because of a threat of tightening sanctions.
The International Monetary Fund said in August that if the price of Iranian crude fell to $75 a barrel, Iran would face a current account deficit in the medium term that would be tough to sustain due to Tehran’s financial isolation.
On Friday, U.S. crude fell $1.20 at $57.04.
Gold futures ended more than 5 percent higher on Friday and bullion ended the week about $10 higher compared with its last Friday’s close of $735.95 as investors covered short positions. (Reporting by Zahra Hosseinian; Writing Fredrik Dahl; Editing by Jan Dahinten)

Rumor mill is grinding.

When bloomberg or the standard report something like this, better watch out: CHINA TO DIVERSIFY INTO GOLD.

Here are the links:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aO8E.6_D2tVo&refer=home

http://www.thestandard.com.hk/news_detail.asp?pp_cat=30&art_id=74335&sid=21457716&con_type=1

Strange action on Friday dollar chart. Perhaps just short covering going into the weekend.

http://quotes.ino.com/chart/?s=NYBOT_DX&v=s

Just remember we have op-ex on Thursday and the paper Gold pushers will do all they can to keep as many contracts out of the money as possible.

The following week it’s futures. It will be very interesting to see if we get a big stand for delivery. This is what can take Comex out.

Eventually, Comex will go the way of the London Gold Pool anyway.

Anti-fiat,

For your information

I had a short email-conversation with James Sinclair on SDR’s about a year ago. I asked if the IMF could use SDR’s to save the dollar. He was not positive on that and called SDR’s just another computer entry.

I’ll try to find that conversation and maybe post it here.

But anyway, the IMF itself will need money because one quarter of their reserves is already lend to eastern european countries in the last weeks. I think we all know here a lot of more countries will ask for IMF money. Darryll Schoon wrote the US could ask for IMF money. What a joke would that be.

There are 3 possibilities for the IMF to raise reserves:
1)recapitalisation of reserves by capital injections by members. Japan told this week it wanted to donate 100 billion dollar (IMF reserves are now 200 billion).
2)emissions of bonds (has never happened in history of IMF)
3)printing money through SDR’s

maybe there is a fourth possibility for the IMF to raise the reserves.

Sell the gold they have, or buy back gold. Depends on what direction the price of gold will take

It’s nice to dream of large official devaluation of a currency vs. gold, especially if you have invested a good fraction of your capital into the yellow (white) metal. Alas, it sounds more like wishful thinking.
My own limited experience in investing tells me hope hardly ever does anything useful.

G20 agrees to hyperinflation:

1) “…whatever further actions are necessary to stabilize the financial system”, A.K.A MONEY PRINTING
2) “…importance of monetary policy support and using fiscal measures”, A.K.A MONEY PRINTING
3) “…providing liquidity to help unfreeze credit markets”, A.K.A MONEY PRINTING

http://blogs.wsj.com/economics/2008/11/15/white-house-fact-sheet-agreements-of-g-20-summit/

HaHaHaHa! All the central banks buying gold on the sly while never telling the fiat sheeple they are about to get sheared. You gotta love these guys!!

The need to quickly address government, financial system, and institutional insolvencies in a world of crushing debt to asset and debt to income leverage means great WEALTH must be TRANSFERRED in order to reduce leverage and maintain the power status quo. Absent new and meaningful pre-collapse wealth-creation structures, we are left with only wealth transfer measures.

Eyeing sources of wealth..

Printing money is the easy first choice and will certainly be relied upon to some extent, but it is not enough. It is a confidence game with serious limitations ? one being the potential loss of control and destruction of the host body. An out-of-control hyperinflation is clearly undesirable to all. Even the parasites recognize this.

With an out-of-control hyperinflation, nations most in need of a wealth infusion would actually export their remaining productivity and wealth to other nations less in need. This is the exact opposite of what they want to do.

Once sources of wealth are identified there are other means.

Another tool our masters have to transfer wealth is by rewriting the rules. Wealth can be shifted quickly and more precisely with the stroke of a pen providing less time and opportunity for behavioral changes and economic damage to snowball. A ?Morning in America? change in reality would be a hyperinflationary process that our great leaders can anticipate, measure, prepare for and CONTROL to some degree with simultaneous changes in policies.

This approach can also target the wealth of nations who are not part of ?the club.?

To say that the nature of government and those pulling the strings is to want control over events is stating the obvious.

We?ve seen domestic government power and precious metal consolidation.
We?ve seen President elect Obama cast as the ?great messiah? conveniently distanced from this process, who will ?inherit? the responsibility of managing the effects of this wealth transfer with his ?we are here to help you? government pacification efforts.

Now we enter the international battle for survival between creditors and debtors.
Surplus creditor nations who possess relatively little gold (assuming that is true) might be in a lose lose situation no matter which way this thing falls.

@forwill

If you want to learn about how the sheeple get sheared read the following article.

http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom

Well, the goldbugs look kinda stooopid after the G20 non-event, don’t they?

Like Larry, or Jim, and many more……..how wrong can they be?

Larry needs to put the door back on the microwave, and start taking the pills his doctor gave him.

It is obvious we are in deflation right now, like I said before. No ifs, ands or but. The expansion in the Fed’s balance sheet does not outweigh the contraction of loss throughout the global financial system. Despite what inflationistas may dream about.

Certainly, nothing lasts forever, deflation will turn to stagflation or inflation one day, The key is when - and you don’t want to be holding precious metals during a deflation, only right at the end would you buy them, IMHO.

I’m sure you guys think I am a troll who comes here to piss you off. Actually, I get a great laugh from reading most of your comments.

I have traded precious metals since 2003. The key word is “trade”, I buy and sell. SELL - the word that most goldbugs don’t have in their vocabulary. It’s just a trade.

And that is the problem I have with the whole Goldbug mindset, it is always buy more and hold. I asked before, show me the goldbug analyst/newsletter writer who recommended selling precious metals short at the top and all the way down this year. I named 1 guy who went bearish shortly after the top, and he is still bearish. He was also correct, almost all others were wrong. No one gave up a name.

So I have to conclude most goldbugs would rather just buy more gold, than be profitable.

I have done well trading metals, and mining stocks, but I have made far more day-trading/very short-term trading options straddles on stocks, and some longer term put plays on select stocks (homebuilders, financials) etc.

So I simply look to where I can deploy some capital to make the most profit. With that frame of reference, there is absolutely no way I would put more than 10% of my trading portfolio into an asset class like precious metals, because it may not do anything at all, pays no dividend, and might decline substantially in value. It may shoot higher, but that is pure speculation with no clear time frame.

I look at the lost opportunity cost of deploying capital into unprofitable sectors, and I conclude trading on your sentimental bias may make you feel good, but you probably could have done much better trading something else. I use strict money management, if the position looks to lose 5% after I enter, I sell, and move on, not looking back.

Timing is everything. I am reality based, and trade on what I see, not what I think/want to see next year. If and when inflation looms as a pressing problem, I will adjust my trades accordingly.

The full text of the G20

http://www.sofiaecho.com/article/the-g20-summit-the-declaration-in-full/id_33000/catid_66

Forwill does not need to eat a bug. No mention of Gold. We should watch the spot gold & basis tommorrow for clues that there have been no gold discussions behind the scenes.

G20 is going to hyperinflate. Told you so.

The U.S. Dollar is Gonna be Around for a Long, Long, LONG Time
by Jack Crooks

http://www.howestreet.com/articles/index.php?article_id=7955

The synopsis:

And when it’s not, that usually means it’s conspiracy stuff … stuff predicting the imminent destruction of the U.S. dollar … announcing the immediate need to purchase gold, gold, and more gold … the impending launch of a new “currency-to-replace-all-currencies”.

Here’s what I say about that stuff …

The world operates on a U.S. dollar system. And because of the complexity of the global financial system, a gold standard isn’t a panacea; it is not the substitute for fiat currencies.

While I absolutely admit gold is worthy of appreciation during certain cycles, I feel that it is not the end-all solution to investors’ diminishing wealth.

Over the longer-term, it’s proven that global capital flow is wealth’s major driver. Gold’s price revolves around the U.S. dollar. And its safe-haven status is merely an interim side-note.

——————————–

My comments:

Another fiat loving sucker “trading currencies”. That is what Keynes used to do with his trades back & forth between sterling & and the mark. Until he burnt his fingers when the Mark succumbed to hyperinflation. And mind you, Keynes was a giant in value investing & finance. Keynes’ portfolio in stocks survived the great depression & thereafter generated excellent returns.

This crooked sucker believes that the dollar would survive a long, long, LONG [sic] time. And what is the logic - Oh my, dollar is the reserve currency (meaning the holy Quran)…blah blah…. gold standard is not fit for modern finance…blah blah…..gold safe haven status doesn’t matter…blah blah..

I want to give a piece of my mind Mr Crook. Keep your dollar long position for a long, long, LONG time. Then we will see.

Canada NonMetal

You are a “smart trader” aren’t you compared to us stupid goldbugs who just buy on dips & hold. What a stupid thing to do - no?

Just for starters, how much money have you gained with your earth shattering strategies? Let me guess - You have lost money in the crash that you call the deflation, if you had put money where your mouth is. Because I don’t believe you are smarter than Morgan Stanley, Citibank & hundreds of hedge funds that think daily like you. And if you are really really smarter than all of them and all of us, why don’t you start a bank of your own. Call it NonMetallic. That is a better use of your un-precious time instead of pissing at goldbugs on a goldbug site.

Now, let me tell you what all these stupid goldbugs like Jim, Tom & me have done crash and all. We have made money. Lots of it in fiat terms. Do we need to say more about our metallic strategies?

A shortage of smaller amounts of silver bullion is still very apparent on eBay, with buyers willing to pay premiums of 40% or thereabouts over the spot price.

In fact, here in the UK, I’ve noticed buers from Russia and Italy this weekend snapping up bulk old 50% silver UK coinage lots dated pre 1947, which is quite something, considering the postage costs from the UK to Russia and Italy.

This is a sure sign the retail silver shortage is not going away soon, in my opinion.

I am still anticipating that US investors will gradually deplete the stock of 1000 oz silver bars available for sale, on the Comex and elsewhere.

For UK investors Silver (and gold) has been a good investment in some ways lately as the UK pound has slumped against the US dollar and the Euro.

Some mining companies have actually begun bypassing the futures markets by directly producing and selling bullion items to the public:

“The Company is continuing to analyze various options to reduce its operating costs and to squeeze out the most optimum margins possible. One example which is proving to add substantial value is management decided to mint 99.9% pure silver into coins, ingots and bars which are actively marketed on the Company’s web site. Interest levels for these products are extremely high and are beginning to represent substantial revenues for the Company. These products tend to sell at substantial premiums to COMEX spot prices. It is anticipated that these sales of refined silver products will represent approximately 10% of the Company’s silver production by February 2009. The Company is also exploring other ways of selling its silver outside of the normal avenues of commercial sales.”

http://www.marketwatch.com/news/story/First-Majestic-Silver-Corp-Third/story.aspx?guid=%7B2B8F0D41-C057-41CA-9AFC-4E0E65F19C0A%7D

I am more and more convinced that the COMEX will default.

From the bloomberg article on china and gold the following made me chuckle.

Some Asian central banks may seek to build up gold holdings a little as the percentage in their reserves is rather low, said Dominic Schnider, commodities analyst at UBS Wealth Management Research. “But I don’t think they will go into the market and destroy the balance and push it to ridiculous prices,” he said.

I maintain that the current prices are rediculous.

Man, I’m glad I didn’t have to eat that bug. Certainly the monetary metals continue to be a great place to be for people like me who work full time+ and often miss the opportunities that a full time trader is presented with. I’ve had sell limit orders fail twice this year because price movements went too far too fast. I lost 10% of my gain on GLD due to a quick downdraft. It ruined my day when I got home from work!

Gold didn’t break and hold $350/oz till mid 2003. Silver broke and held $5/oz in late 2003. We’re still pretty close to 100% gains at todays prices even after the mother of all corrections. In five short years. Definately beat inflation or the dollar devaluation or whatever you want to call it. In short, the PMs produced as advertised. I’m sure more sophisticated people than me(most everybody really) traded along the way and made some much nicer gains.
I think its important to listen to the mainstream “buzz” because they are the ones who drive the market. Folks who tell unpopular truths and counter conventional mainstream thought(Keynes,Friedman) are always told they are stupid or crazy. The study of human nature has a better chance of telling us what is coming next than any charts or TA.
Nobody wants to be the one without a chair when the music stops, so some of us just don’t play the game.

Hi Canada Metal.

I like to collect so called junk silver, the 90% silver coins we minted pre 1965 when we were a creditor nation. In 1964 a silver quarter bought a gallon of gas. Today the silver melt value of a 1964 quarter is $1.81 and it still buys a gallon of gas. To be honest junk silver is selling for at least 30% over that $1.81 melt value and some are paying 50% over melt. As you know the silver has not really gone up it is the purchasing power of the dollar that has gone down. As an asset class the mineral stocks have done even better with GG starting at $3 a share back in 2001 and trading now 800% higher. Timing is very hard to do in this business and the best strategy may be picking your spot and staying there. I cannot imagine a better spot than the metals and the stocks here and although I do the timing thing also I find it can be very challenging to beat the picking the place to be and staying there strategy.

CanadaMetal/Paper,

In MAY 08 i have no idea what YOU or SILVERAXIS readers were thinking , but here’s what my outlook was regarding which STAGE of the GAME we were:

SHORT-TERM PROJECTION AND COMMENTS ON 22ndMAY08 AT RESOURCE INVESTOR…and i placed trades accordingly……..,

from some of my printed charts (stockcharts.com)MAY08 CHARTS shows where a select group of commodities,etc,were trading.

DOLLAR INDEX:73

CRUDE OIL: $120

GOLD:$925

SILVER:$17

CRB:420

VIX:18

HUI:400

USD/YEN:105

DOW:12750

SPX:1410

PLAT:$1950

COPPER:$370

http://www.resourceinvestor.com/pebble.asp?relid=42992&t=11

APOLOGY…..full article link…

http://www.resourceinvestor.com/pebble.asp?relid=42992

Let me respond to the article

http://www.gold-eagle.com/editorials_08/bloom111508.html

Gold At $14,172 An Ounce?

Brian Bloom
15 November 2008

There are those who have been arguing vociferously for some years now that the world will be better off under a gold standard.

These people may or may not be correct, but we need to understand the implications of what a gold standard will bring with it.

Some years ago, the Bank Credit Analyst published a chart of the actual gold price relative to the theoretical gold price as derived from the USA’s “Net Liquid Liabilities”.

Theoretically, the BCA argued, if all the liquid assets of the sovereign USA - excluding gold bullion - were sold and the proceeds applied to pay off all the liquid sovereign liabilities, then - because there would be a shortfall - this net number would be the “Net Liquid Liabilities”. For the USA to remain a solvent entity, they argued, the price of gold per ounce would need to be the net liquid liability number divided by the number of ounces of gold held in the US gold reserves.

(It should be remembered that a US Dollar Bill is a promissory note issued by the US Federal Reserve. It is therefore a liquid liability)

For a period leading up to the late 1970s, the BCA tracked the theoretical price of gold relative to the actual price and found a tight correlation. That’s when the world still believed in a gold standard and that’s also when the US Fed (and other Central Banks) began to interfere in the gold markets with the objective of deliberately obfuscating/severing this relationship.

So let’s take a leaf out of the BCA’s book. Just for the hell of it, let’s assume that the USA’s liquid assets today equal its liquid liabilities excluding US Dollars in circulation. It would follow, therefore, that the price of gold would need to be the number of dollars in world currency reserves divided by the number of ounces of gold in the official US bullion reserves. (This assumes that the gold is still there. No verification audits have been done for decades.)

Okay, it’s a simple calculation:

Step 1: Quantifying the US’s Gold Reserves

According to the World Gold Council, the US’s Official Gold Reserves as reported in 2008 were 8.133.5 tonnes (Source: http://en.wikipedia.org/wiki/Official_gold_reserves)

1 tonne = 2,200 lbs; and 1 lb =16 ounces. Therefore, the number of ounces of gold owned by the USA is 8133.5*2200*16

= 286,299,200 ounces

Step 2: Quantifying the number of US Dollars in world currency reserves

According to the IMF, Global Currency Reserves have been made up as follows: (Source: http://en.wikipedia.org/wiki/Reserve_currency )

Total Global Currency Reserves in 2007: $6.4 Trillion

Total Allocated Currency Reserves in 2007 (where the makeup is known): $4.1 Trillion

Total Claims in US Dollars in 2007: $2.6 trillion

$2.6/$4.1 = 63.4% (Close enough)

Source: http://www.imf.org/external/np/sta/cofer/eng/cofer.pdf

Step 3: Calculating the Theoretical Price of Gold

(Price of gold required to allow all US Dollars in Circulation to be backed 100% by gold, assuming all other liquid sovereign assets equal all other liquid sovereign liabilities)

$2.6 Trillion/286.3 million ounces

= $ 9,080 per ounce

Of course, this assumes that the “unallocated reserves” in the world’s central banks have no US Dollars in them.

If Total World Currency Reserves have the same dollar proportion as Allocated world currency reserves, then the theoretical price of gold would be:

$6.4 trillion X 63.4% = $4.0576 Trillion

$4.0576 Trillion/286.3 million ounces

= $14,172 per ounce

Of course, this assumes that the gold which the US Government claims is in its bullion reserves is still there.

Clearly, what can be argued in respect of the USA can also be argued in respect of all other countries in the world. A world-wide gold standard would give rise to a fixed relationship between the US Dollar and all other currencies - which would also need to be backed 100% by gold.

And the pragmatic question one needs to ask is therefore: If all the gold in the world was being used for the purposes of currency backing, then how would industrial demand for gold be satisfied? Alternatively: What will happen to world industrial demand for gold if the gold price rose to over $14,000 an ounce?

And this, finally, raises a very important philosophical question: Why do we insist that the most important role for gold is currency backing? What if it is discovered that gold has a far more important role to play in, say, ensuring the viability of all biological life? If the gold price rose to a level which became prohibitively expensive, would this not block the development of alternative - and arguably far more important - applications for gold?

The definition of ignorance is when we don’t know enough to know how much we don’t know. Why does humanity, in its arrogance, keep taking decisions which are calculated to keep us ignorant of our potential? Why does humanity keep insisting that the most important yardstick of measurement of the quality of life on earth is our “material standard” of living?

The financial world is imploding around us as these words are being written. Some might see this as a problem. The author hereof chooses to view it as an opportunity - because the best time to implement change is when the old ways are obviously not working. From my perspective, we are being presented with an opportunity for humanity to evolve beyond our Neanderthal thought paradigms, to a higher plane of co-existence amongst ourselves and relative to other living beings. My reaction: Wow! What an opportunity! Carpe Diem! “Seize the day!”

One way forward is outlined in my novel, Beyond Neanderthal, which can be ordered via http://www.beyondneanderthal.com . One alternative application for gold is described in some detail in the novel. The source of this information is a combination of the Old Testament and the latest scientific discoveries. The evidence suggests that religion and science are converging.

Is gold valuable? You betcha! It’s pricelessly valuable. That’s why it became so desirable in the first place, back in the mists of time. But let’s not zig when we should be zagging. A move back to a gold standard will be a giant leap backwards for all of humanity.

Brian Bloom

————————-

My comments:

The author says that the move to a gold standard is a giant leap backward. What is his argument?…..gold is very valuable/priceless/indispensible…blah blah…for humans, nay all biological survival. So it should not be expensively priced. What will the guy suggest next - Make gold free so that it could be used for chicken feed ? Does he use his gold for cleaning the cow’s udders?

What he doesn’t understand is alternatives. There are always alternatives. The free market will has always & will always spring up alternatives. It is a matter of pricing. Earlier Platinum was used in auto catalysts, then palladium came as the alternative. Now people are talking about silver for the same function.

Look Mr Gloom Boom or whatever, do you realise that all the big, ugly problems of today that you read in the papers stem from the fact that we don’t have a proper, honest currency? Do you want to save all the gold so that mankind/life of earth is saved at a later date - when today your world is burning in hell?

If you re-introduce gold as currency you would be in a position to save mankind from the bottomless pit situation that we are today. What more noble function can the yellow metal serve ….pseudo religious-scientific theories apart?

Silveraxis readers

I recommend the following article

http://arabianmoney.net/2008/11/15/what-does-the-35bn-saudi-gold-rush-in-two-weeks-mean/?321

LIQUIDITY TRAP!…… SPELLS… “You can lead a horse to water,but you cannot make it drink”

http://market-ticker.org/authors/2-Karl-Denninger/P3.htmlhttp:

http://krugman.blogs.nytimes.com/2008/11/15/macro-policy-in-a-liquidity-trap-wonkish/

Keseri,

I’d like to know which dumb b******… sold the 145 tons or so to the GUTLESS ARAB SHEIKS ?

Let me guess - “gold leasing” from CBs?

Does anybody remember this classic Milhouse article on gold eagle about gold leasing. Just for nostalgic purposes let me reproduce the article.

http://www.gold-eagle.com/gold_digest_99/milhouse012699.html

GOLD LEASING ? CONSPIRACY OR ECONOMIC REALITY ?

The leasing of gold is simply gold being used as money. Like all money, there is a large above ground stock of gold that increases over time (although the rate of increase in the quantity of gold is generally much lower and more stable than the rate of increase in the quantity of fiat currency). This means that the current year’s supply of gold is far less important to the gold price than the supply that can potentially come from the existing above ground stock. As such, gold leasing cannot be likened to the leasing of apartments or cars (when you lease an apartment you cannot return a different apartment at the end of the lease). It also cannot be likened to the leasing of soybeans or oil or any other commodity (other commodities are consumed, whereas all mined gold remains in existence and is therefore a potential source of supply). It can be likened, however, to the lending/borrowing of Dollars, Yen, Deutschemarks and Euros. In fact, the mere use of the word ‘lease’ conveys the wrong impression when we are discussing the gold market. Therefore, for the remainder of this article let’s dispense with this word and use terms that correctly reflect gold’s use as a form of money.

The essential pre-requisite for the large-scale lending/borrowing of gold is a bear market. The reason is that, irrespective of how much gold is made available for lending and how low the interest rates are, if there is a general perception that the price of gold will be higher in the future than it is today then gold borrowing will be minimal.

As the bull market in credit and financial assets progressed during the 1980s and accelerated during the 1990s, investment demand for gold correspondingly reduced. Since the primary long term driver of the gold price is investment demand, the gold price continued to move downwards throughout this period. As the belief that this trend would persist indefinitely became firmly entrenched in the investment psyche, so the perceived risk of borrowing and lending gold became less. Gold producers became eager to ‘insure’ their future earnings and obtain cheap financing through forward sales, secure in the knowledge that gold interest rates would remain low for many years to come. Speculators were keen to take advantage of the low gold interest rates, secure in the knowledge that they could borrow gold today and repay the loan at some future time with gold that had dropped in price. The entire situation was made possible by the willingness of central banks to lend a large amount of gold at low interest rates.

Why have central banks made a large amount of gold available at low interest rates? This cannot be known for certain, but there are two theories. The first possibility is that central bankers, like any other bankers, need to generate a return on their assets. The interest rate that can be earned through the lending of any money, including gold, is determined by the supply of the money, the demand for the money, the perceived inflation risk associated with the money, the perceived repayment risk associated with the borrower, and an opportunity cost. In the case of gold we have a large supply in the vaults of central banks, no inflation risk since the purchasing power of gold remains constant over the long term, minimal perceived repayment risk since it is believed that the price of gold will continue to trend lower, and a zero opportunity cost since the gold would otherwise be sitting in a vault earning no income. It could therefore be argued that interest rates for gold in the range of 1 ? 2 percent, about 4% lower than official US Dollar rates, constitute a reasonable return (particularly when you consider that the rate of increase in the supply of US Dollars is 10 percent per annum greater than the rate of increase in the supply of gold). The major assumption here is, of course, that the repayment risk for gold is approximately zero.

The second possibility is the conspiracy theory, that is, central banks are making large amounts of gold available for lending into the market at unreasonably low rates in order to suppress the gold price. Food for the conspiracy theorists was provided last year by Alan Greenspan when he stated that central banks stand ready to lend gold in ever increasing amounts should the price rise. Greenspan was, of course, talking about the ability of central banks to foil the attempts of anyone who sought to profit by creating a short squeeze in the gold market. He wasn’t referring to a coordinated approach by Central Banks to restrict a normal rally in the gold price, although many analysts have made this interpretation.

We cannot know for certain whether or not central banks are deliberately generating a below market return on their gold reserves in order to keep a lid on the gold price. Although the Greenspan statement does appear on the surface to be such an admission, this may be a misconception. If there really is a coordinated effort by central banks to restrain the gold price by facilitating low cost gold loans, then is it likely that the world’s number one central banker, a man who is noted for his careful choice of words, would openly confirm such a strategy?

Whatever the reasoning behind the large scale lending of gold by central banks, we do know the following:

* Gold lending/borrowing (often called gold leasing) is simply gold being used as money.

* Gold cannot be lent (irrespective of the interest rate offered) unless there are willing borrowers.

* The borrowing demand for gold will only remain strong as long as gold is perceived to be in a bear market and gold interest rates remain significantly below US Dollar interest rates.

* Gold interest rates will only remain at the current low levels as long as those who lend gold fail to account for any counter party risk (repayment risk). After all, no head of state would relish the task of publicly announcing something along the lines of: “You know all that gold that backs our currency? Well, we have lent a large portion of it to some bullion dealers and hedge funds in order to generate a 1% return and they’ve defaulted, so it’s gone. Sorry about that.”

One final note: Andy Smith, the much quoted perennial gold bear, has often reminded us that gold is a market which is perpetually in surplus. However, so are the US Dollar, Yen and Euro markets. The difference is that the gold money cannot be printed to overcome any short term reduction in lending and/or the failure of any highly leveraged parties to a gold loan transaction.

Milhouse
Hong Kong
26 January 1999

—————————-

Gold leasing or the famous gold carry trade progresses when

1. Gold is in a bear market
2. When the gold interest rates (GOFO) are low
3. There is no counter-party risk.

The carry trade has returned for the first two reasons although gold is in an intermediate bear phase and counter-party risk abounds. This along with hedge fund deleveraging is helping to keep a cap on the gold price. No wonder the rumor is doing the rounds that Richard Russel feels that gold price is being manipulated.

CanadaMetal Says:

Well, the goldbugs look kinda stooopid after the G20 non-event, don?t they?

Nope, just the folks who were programmed last week by the media to call it a non-event. Any mention by the media over the last two-weeks was slanted at dismissing any monumentous outcome. Call it pre-arranged damage control, if you want (as they didn’t want to disappoint, opening a new can of worms). However, that has absolutely nothing to do with the real outcome measured as the impact to the future, of which today we no nothing of. Just because they didn’t flip the world upside-down this weekend doesn’t mean they didn’t install the switch. Or a trip-wire might be a better analogy.

This meeting was a setup to enable the next meeting, and the next, and the next, as it all breaks apart along the way, and before you know it TINA takes the stage. And as they will tell you then, that they had to do
SOMETHING! It is these initial meetings though, that create the avenue for something to occur, all the while being dismissed as harmless.

Just like the WWF (”professional” wrestling), all events aren’t designed to be barn-burners. First, somebody has to build the barn.

What I fear out of the G20 meetings are not words, but the process of legitimization of the criminal banking cabal that empowers all who seek to destroy human liberty.

Which, short of becoming a political crony, also happens to be the only way for traders such as yourself to make a living. What value is there to being a trader in a socialist marketplace? Other than being a mark, ripe for exploitation by the new oligarchs, that is.

Paper is not wealth, but a claim upon it. Give a portion of society monopoly privilege to manufacture these claims with no backing and the only result is theft of wealth.

You may profit off of this system, CanadaMetal. Meanwhile, I recognize it for its destructive qualities, and as a matter of conscience, choose not to support myself via its plunder of others, who are unfortunate enough to believe that plunder is responsible way to self-govern.

If that makes me stooopid, then I stand proudly labeled.

(and no, I don’t see you as a troll, just another ego who measures success by shallow standards)

Taken from the above

* The borrowing demand for gold will only remain strong as long as gold is perceived to be in a bear market and gold interest rates remain significantly below US Dollar interest rates.

Lets see…..

From the period 1982 to the present Nominal 3-Month Treasury Bill Rates had a positive spread over 3-Month Lease Rates.
Today 3-Month Lease rate is HIGHER(Negative Spread) than 3-Month T-BILLS yield.

Short term interest rates 3 MONTH-1 YEAR for Dollar and YEN, are in Backwardation against short duration gold lease rates due to the quantative easing by the BOJ and now employed by the FED.
Both Japan and the US are in a LIQUIDITY TRAP.
It was the emegence of the Yen Carry -Trade which helped Japan out of its liquidity trap.
It certainly is going to be interesting to watch these dynamics going forward.

I just cannot see the return of the Gold Carry-Trade.

I also think its time for Tom to add to this.

Apology again…..meant to say from 1982 to 2007.

Also(8??, you let CanadaMetal’s comments get to you.
Listen up… any HERO’s comments are welcome on this site as one sided biased comments become boring……bring it on!

I see I have angered some here with my comment, which was not my intention. Sorry for that. It was not meant to flame you personally, I have read some good comments here.

My anger is directed against the usual “newsletter” writer suspects, that’s all. They have not cost me any money this year, but they certainly could have. All my subscriptions have long run out now. If Jim Willie or whomever has made you money, let’s hear about it, I am open to new ideas if they can show a good success rate. I read his commentaries and think he’s a little crazy, myself.

I am not an “anti-goldbug”, I used to be one of the faithful. I’m agnostic now, to me it’s just a trade now, and hedge against currency devaluation. I used to trade only precious metals, but in spot priced paper, not futures. I also have been in and out of various ETF at times. I am an average trader I guess, but I survived so far 6 years trading for a living. Silver has been a favorite, since I always thought it was under valued. Too bad enough others don’t share that opinion so far.

I had a long-term position in paper silver that I sold earlier this year at $18.60 (thought that was the top, close enough), entry $4.10, and I recently re-entered at $9.75. I had 20% of my investment capital in there, I broke my own rules, sentimental me. At times I have wildly over-weighted metals, for short term trades, without even hedging, I was just crazy and lucky like that. All part of learning to trade I guess, good thing luck was with me there. I just try to catch most of a trend. I could have stepped out again at $9 or whatever, but it is cumbersome to make the trade quickly due to the Bank I deal with (RBC), so I let it ride. I expect it to go nowhere really, but I’ll hold through year end probably, unless it starts deep diving again. It’s a 10% allocation now. Live and learn.

The last few month I have not traded much, some ETF action daytrades, that’s it. Nothing is what I do most of the time, waiting for the rare setup I can spot. This is an unprecedented market, unless you were around in GD1. I drink coffee and read a lot of sites mostly. I am doing OK, will probably end the year about +20% or so, give or take, which is fine. I got stopped out on a lot of trades with the volatility, many at around 4-5% loss or more on fast market days. Live and learn.

So what do most people trade here, COMEX futures, or what? Aside from buying physical I mean. I am curious. To me, buying physical is not a trade, turn around time is too cumbersome, it is only for very long term buy’n'hold. And the premiums over spot are not attractive right now to me. I have some coins and small bars etc, but I won’t add anymore.

I came here a couple months ago thru a link from some other site, to see some silver price commentary (I was hoping), what with the name and subtitle “Dedicated to Investment Opportunities in Silver”. Some interesting articles and macro talk, but not much actual trading talk here. I would be interested in technical analysis of precious metals, is that sort of talk only for the paid side? I am bored with the usual gold bug Forums etc.

There is mention of a new site, but I have to say, Tom needs to put some links to some pages with explanations, examples etc, it all seems rather mysterious to a new visitor. What exactly is “The Metal Augmentor” and how does much it cost etc. I know he posted it previously on the Blog, but that was a while back. Give a good argument why it is worth subscribing to, for new people. I probably won’t subscribe, nothing personal, but good luck with the new service.

Tom - can we create a forum? i know you are busy with augmentor service (patiently waiting LOL), but we have a very good collection of insightful discussions here and could attract a lot more… Im sure someone would be happy to take on upkeep and mod duties…

I will try to reply to some individual comments, what the hey, in order:

keseri - I didn’t claim to be better than anyone else, you said I did. I related what works for me, my trading philosophy now. Upon re-reading my comment, I can see how my tone might make that sound insulting to you, sorry for that. I am glad you made some money. As to your metallic strategies, I have no idea what they are, maybe you can enlighten us.

freddy krugerrand - you linked to an article with this quote, I am not sure if you disagree with me, or not, LOL:

“But the trick in the business is to understand which ones are working. How do you know which one is working? Because it?s profitable. That?s how you know. This is a very clear and finite business. If you bought something at 20 and it?s now at 18, you?re wrong. Somebody knows something you don?t know. And for you to add to that trade is illogical. It is wrong. It is the only thing in this business that will be a carcinogen. It will kill you.”

Did Gartman recommend shorting precious metals back in late February or June this year, just curious, his calls in that speech weren’t that good from what I read, though his trading talk is good. China, not. He had Schiff disease. I don’t follow him closely. When did he send out the famous 2 word newsletter “Buy Gold!” again?

Doug Noland is a great analyst, but he falls down at the end with letting Hank’n'Ben off easy, that is crap. Hang ‘em all high on Wall St, no exceptions. GS is THE problem, can’t be part of a solution.

Peter G - great comment, I have not pursued junk silver, I hate eBay (got PayPal scammed, never again) and Craigslist, but it sounds like a good trade for the long haul. When you say “melt value”, how does that relate to the spot price in your experience. Don’t know much about it.

(8?>> - Read comment above. Sorry if you thought I was calling you stoopid. I have to say you seem a little touchy though, LOL.

“You may profit off of this system, CanadaMetal. Meanwhile, I recognize it for its destructive qualities, and as a matter of conscience, choose not to support myself via its plunder of others, who are unfortunate enough to believe that plunder is responsible way to self-govern…. just another ego who measures success by shallow standards” You forgot arrogant, uncaring, aggressive, rude and ignorant, some of my best qualities.

Just curious, how do you live then? You don’t participate in society at all, or just the “non-plundering” part? Which is what exactly? If you pay any taxes, you are in the Matrix too, aren’t you?

Yep, I’m a pirate with an eye patch, and I fly the Jolly Roger. Call me Capt Jack. Coming to plunder and pillage soon near you. Lock up your women and silver. Yeah, OK, I just got to lay off that rum in the hot sun.

If nothing else…you gotta hand it to CanadaMetal…he is right that most “newsletter writers” have cost everyone money this year…

As I new investor in 2008 to silver…I am currently one of those people. My first purchases was around $18…only to add more at $16 (when most newsletter writers were calling that the bottom). I have recently added a few more hundred ounces, but nothing substancial enough to think I will be ahead in this anytime soon. I invested in silver outside my normal course of investing…to get to that 10-25% of my portfolio there, but I didn’t have to…I scroundged up money to do so…and didn’t have to.

The disappointing part for me is that seemingly what I (we) bought silver for (banking crisis, etc.) has actually materialized only to see silver down 65ish% from the March highs. I never saw that coming because well, neither did the “experts”.

Now we pay ridiculous premiums (that is a huge rip off? as much of a rip off as I have ever seen) to try and “average in” a bit. As a side note, I am confused as to why we feel ?ok? or justify the fact that silver and gold are ?actually? trading higher based on premiums. As an investor, the value of 1oz of silver is $10 but I can?t buy for less than say $13?a 30% premium. All I know is if my management fees doulbled or tripled on the stocks or mutuals I have, I wouldn?t feel good about it!

Are the bullion dealers on side with this manipulation? They (seemingly) don?t care about the manipulation or do anything about it because when in history have they really been able to make a 30% premium?? Never I would imagine?so why would they want this to change? Do you think they are upset with 30% premiums and an indefinite delivery date? I wish I could run my business like that?And how many silver mining companies need to shut down before something is said by someone who matters? Why not shut ALL the taps off in protest? As a form of a strike? My guess is because they have too much to lose at the hands of the regulatory agencies who’s hand guide their every move.

I am not totally convinced this deflationary cycle is a true one as some seem to…I think at some point inflation has to rear it’s head…but how am I supposed to believe silver (and gold) will do what they are “supposed to do” THIS time when for all intents and purposes, from what I was reading in March to May of this year, gold should trading upwards of $1200 on ounce and silver upwards of $25 an ounce already! So now we just rally back to where we WERE already? The NEXT rally should have taken us to the all-time inflation adjusted highs of over $2000 for gold and $50 for silver (after the correction of hitting $21 silver and $1000 gold)…but here we are.

There no longer IS a ?free market??. The CFTC could care less about illegal activities in the market and are likely in on it?how could they not be?

Makes you kind of believe in being a trader…

CanadaMetal,

I too have never subscribed to any news letter and never will.But i can say this,i have learned a hell of alot over the past 4-5 years by reading the free stuff.

Regarding Dennis Gartman,……Mr Gartman runs for the hills when commodities gets clobbered, i.e “flees the battefield” so i put very little faith in him.
By the way I was refering to my comment “CRUDE REALITY”posted at RESOURCE INVESTOR and NOT Dennis’s article which i did not even bother to read at the time of my post.

Folks……something finally just came to my mind recently. When I started to get into Junior Mining stocks back in Nov 2007….I had a certain mindset. Many of us in this certain forum were talking about 10 baggers. Recently we laughed on how absurd that was and just how bad things have become. I don’t think anyone could have forcasted the degree of DELEVERAGING and HEDGE FUND LIQUIDATION.

Of course, I knew about the HOUSING CRISIS as well as the FINANCIALS…but never thought good Mines with ASSETS in the ground would be down 90% like HECLA for instance. I don’t BUY AND HOLD…thank god….and made a nice profit on HECLA…BUY at $1.05 and sell at $1.40…past few days.

The problem I see is in the MINDSET. My mindset along with most back in NOV 2007 saw great things for the PRECIOUS METAL STOCKS and BULLION in 2008. Yes, we did get good GAINS…but they were all CLOBBERED with the FINANCIAL CRISIS. I think the biggest problem most people and ANAL-LISTS on the BOOB TUBE have is the MINDSET.

I really think things will be much worse in 2009 and 2010. We know now many LARGE CITIES like ATLANTA, PHILY, and PHEONIX are looking for some of that BAIL OUT MONEY from the TARP. California which was $15 billion in the whole 2 weeks ago….is now an additional $11 Billion. My neighbor has not gotten her California Teachers retirement monthly check this month.

What I am trying to say is this…..my mindset was so WRONG ABOUT the future of 2008…that its probably wrong about 2009-2010…along with the majority of people. I think the ECONOMY is going to FALL OFF A CLIFF…and most people have no clue just how bad it will get. The United States can not pay for OIL from the exporting countries, with IOUS and TOXIC INSTRUMENTS anymore. Once the JENNIE is out of the BOTTLE…you can’t put it back in. The G-20 meeting was a WASTE OF TIME….and I believe CHINA, RUSSIA, SAUDI ARABIA as well as other countries are about to take care of themself first…and PULL THEIR FUNDS out of the USA while the US DOLLAR is HIGH.

I still think GOLD and SILVER BULLION will be worth a great deal more as the INVESTMENTS of NOW are worthless. Real estate is not going to EVER RECOVER in the USA…thanks to PEAK OIL….same with COMMERCIAL REAL ESTATE. After a while….you look around and find out…there’s not much left to INVEST IN. Treasuries and the Dollar will be toast at some point in time.

Things are going to be MUCH WORSE than people realize. TALEB and MANDELBROT know just how bad things can get…from their recent Oct PBS INTERVIEW:

http://www.youtube.com/watch?v=H3zZ6qNWeGw

That is my 2 cents. And there is nothing much from the future WHITE HOUSE ADMINISTRATION that will be positive. If Obama doesn’t become DREADFULLY HONEST with the AMERICAN PUBLIC…within 3 years…..widespread starvation is what America will be facing and not worrying about the LOSS OF PRESUMED WEALTH.

word…………..

For the past 3 months, I’ve been a daily reader here.
I decided in October that to be ?Au Ag Mentored? for $87 is a speculative bargain.

I want to thank you regular forum contributors for being, if anything else, excellent web crawlers
and consolidators of silver & monetary articles.

I’m amazed thought at those that claim to be successful traders getting happy about paper profits.
I personally would sleep much better with 10 coins in my pocket rather than $100 in a bank acct.
But why criticize each others risk levels? I want both!

As far as so-called premiums. No such thing.
The market price for physical is different than the paper promise price.
Ceci n’est pas une pipe … This is Not a Pipe. Get it?

Now, I have to share the best reading that I’ve found outside of this forum:
Blood in the Streets ? Investment Profits in a World Gone Mad
I’m constantly amazed that a book from 1987 can read like tomorrows headlines.
While they admit, like our friend CanadaMetal that hoarding metal will not make the most short term
profits, they also consider the longer term implications.

If you’d like to get away from the computer, but still cant stop thinking about AuAg
My favorite topics in the book are:
pg 213
OMINOUS PARALLELS

pg 224 .
It is therefore our prediction that the long run instability of money will eventually have to be corrected through a return to gold … as a general act of govt attempting to solve a deflation … remonetization may prove to be the ?politically practical? solution … to help authorities do something they need rather than when gold promises to keep govts in check … possibly coordinated through the IMF or World Bank.

Pg 318
The Bigger The Event, the Longer it takes to happen!!!

I’ll continue to enjoy and absorb this forum,
& I continue to wait patiently for the AugMentor site to be up and running,
I’ve already made a small investment based on the
Mining Equities Report
[thanks to Szabo and Zurbuchen for the $87 bargain]
& again, thanks to the rest of you forum contributors

pauper,

You reminded me of another excellent book having its plot replayed this year in the derivatives mess…

http://books.google.com/books?id=oYLUIwAACAAJ&dq=blood+in+the+water&source=gbs_book_other_versions_r&cad=0_1

This former Morgan Stanley derivatives salesman tells of parachuting into financial forest fires from Orange County to Japan, selling product to bankers and pension fund managers to put off disclosing losses for years. Wherever banks were imploding, him and his team were there to sell derivatives to hide losses.

Canada Metal: spot on mate, agree totally. Seems to me that everyone in the PM camp is concerned with only one thing, that is confirming their own confirmation bias. I have heard all the theories about why the metals are the only place to be but they are theories only, and guess what- ‘The tape is never wrong, opinions often are’. Thats a quote from Jesse Livermore and if we all were too pay attention to him maybe we would all be making money right now. I for one have been a sucker for all the PM hype, I am still a believer but am turning agnostic like yourself. The one great thing about this commodity takedown is that I am going back to my trading roots and will be ignoring all this economics tea leaf reading crap.

I agree that the current world economic system is unsustainable. I moved to the Midwest from the California desert in 1995. Things were looking dicey there even back then. Way too many people and a government controlled by a bunch of clowns who thought it appropriate to interfere in every aspect of the commoners lives. Stuff like free health care to illegal immigrants, an assault weapon ban that banned rifles because they had a black stock, special state car emmision requirements, millions of acres of public land that only select “tree huggers” were allowed to access, deregulation of the electric utilities(cost the taxpayers almost $80 billion) and the never ending boom/bust/boom/bust housing market, to name a few. I figured there was going to be some kind of meltdown in my lifetime.

Now I live 50 miles from a city with a fraction of the people on some land I can provide food and energy(wood) for my family if neccessary. I am surrounded by arable land and people who know how to produce food, even the old fashioned way. People in urban areas are screwed…they are too dependent on “the system” for everything they need to survive(food,water,energy). The governmental response to Katrina was a real eye opener for me…they just throw wads of money in every direction and pray that something positive will happen. Not much did. Sound familiar? Hell, Walmart did a better job of responding to peoples needs!

The wheels are in motion to dethrone the western world as the financial lords of the planet. The world knows that the ones(Wall Street Banksters) who promised to be responsible custodians of the fruits of our productivity were(and even more fervently are) quietly doing all they could to separate us from said fruits. The United States military presence/strength will probably keep us high in the economic pecking order for maybe another decade unless some major geopolitical event/events reveal that that power is a house of cards just like our economy.
Most Big Invesment Boys will never buy actual bullion because it is REAL and can’t be turned around fast enough to suit them and I think they know that(during a big spike in price) if delivery is requested on paper promises the chances of them getting stiffed by their brethren is near 100%.

The Treasury announced today that it is going to halt SFP lending, at least temporarily.

I can’t wait to hear your opinion on what this means in terms of the monetary base and its implications on the PMs markets…

The T-Bond market is the biggest bubble on the planet. Why? Because no-one sees it…

Yields on stocks are higher than on T-bonds. To construct your own bond and reap the dividens do the following: Buy stock, create collar.

Do you know why hyperinflation must follow deflation? I tell you:

Hoarding of cash creates economic contraction, creates higher unemployment, creates deminshed tax income but higher outlays, creates bigger deficits that need to be financed by Asia that also is running out of money. But because Asia can no longer finance the US deficit (also because of diminshed economics) T-Bond markets goes into the tank. Because T-bond market into tank, dollar into tank, THUS (hyper-)inflation.

MyKillK, Deutsche Bank quote on Japan style quantative easing:
“We think there is a decent chance that it can be avoided. In particular, the receptivity of global investors to financing the pickup in Treasury issuance over the next year is a crucial factor. If the government is unable to finance the debt through regular issuance, the temptation would rise to monetize it instead. However, our sense is that this radical path is less likely, particularly as we have seen lately that the US dollar currency, as well as Treasury securities, are increasingly seen once again as attractive global flight-to-quality instruments. The successful funding of the government?s rescue plan, combined with a revival in the economy, could mitigate the need for a shift to quantitative easing, in our view.”

Either foriegners continue buying up endless amounts of treasuries, or our gov buys them from itself and monetizes them. I think our neighbors have had enough. The dollar is srewed!

Old Ben boy is throwing the dice out of the copter with the cash. Betcha they come up snake eyes.

CanadaMetal

I am too much of a simpleton to “trade” PMs. I have no strategies but the simple - buy physical on dips & hold. I was lucky to be in the game early. Which makes me show a good positive performance till date. And if you compare it with others whose networth is in stocks & RE it is phenomenal.

And I can suggest the same to you. I will not suggest margin - too risky. Look at all the hedgies, what happened to them? One cannot be more smarter than them with some of them employing Nobel Laureates. Would not suggest ETF - Counter-party risk. Once/twice lucky is not the game. The game requires some gut. Why do CBs buy & hold physical for years? Because gold has a place in every portfolio.

I would not suggest TA for trading PM markets. Reason it is neither a free market nor a large market compared to the apetite of the participants.

I have already justified the reason for holding 10% in PM. Even in a bear market for PM. There are more fundamental reasons to believe that you should hold a more aggressive portion today.

I think silver will go a lot lower as we move close to Dec comex expiry date.

“There’s no way around the fact that the dollar will collapse. Either it falls because the Fed begins to monetize and rapidly inflate, or because the asset-price deflation continues and the US government is forced into default.”

http://www.minyanville.com/articles/gold-dollar-Credit-GLD–debt/index/a/19977/p/1

Another interesting post on FT alphaville regarding policy reflation options and Ben’s preferences given the choices. It seems sterilization via treasury (bills and bonds) is no longer necessary given that large bank reserve balances at the fed (which sterilize expansion of fed balance sheet in the same way that treasury issuance does according to the writer)… so it would seem issuance “glut” and crowding out worries might not be a problem after all… Another interesting conclusion from this is that dollar devaluation is a viable option - my concern is that devaluation worked in a world where exchange rates were fixed so that the dollar immideately benefited at the expense of other currencies (and economies)- today if sudden devaluation were forced, wouldnt other contries do the same thing to their currencies as well? after all, who would want to take the other side of US devaulation and have their currency crush export business (not the europeans and definitely not the japanese and chinese)… It seems to me if one (especially the most important one) devalued - the rest would immideately do the same - spurring a round of competitive devaluations that would only leave tangible assets in a relative appreciation… My conclusions seem logical - surely the brains at the fed couldnt have missed something like this… Am i missing something???

go to link for nice format… thanks for the comments - really informative discussion here…

http://ftalphaville.ft.com/blog/2008/11/18/18355/if-all-else-fails-devalue-the-dollar/

If all else fails, devalue the dollar
The Fed is mothballing its $559bn supplementary financing program. Or, to put it even more obliquely:
Washington - The balance in the Treasury?s Supplementary Financing Account will decrease in the coming weeks as outstanding supplementary financing program bills mature. This action is being taken to preserve flexibility in the conduct of debt management policy in meeting the government?s financing needs.
The SFP is the principle means by which the Federal Reserve has been offsetting - since September - its massively expanded liquidity operations.
It?s basically a Treasury bill issuance scheme: by issuing new Treasuries, the Fed basically drains capital from the system, offsetting or ?sterilising?, in Fed jargon, the excess liquidity created by its vastly expanded open market ops.
But there is a problem. What with the TARP, as well as a host of other government interventions, there is a huge financing need at the Treasury. One which will need to be funded through issuance of Treasury bonds and bills. There?s consequently then, something of a glut. One which would be - somewhat - alleviated by ending the SFP.
And the SFP can be unwound because the Fed is effectively sterilising its open market ops by another means: encouraging massive excess reserves. Banks have to post reserves at the Fed - normally around $7bn worth. But bank reserves deposited at the Fed are currently pushing $1 trillion. Part of the reason for this is that the Fed has increased the interest rate it pays on reserves (or rather, decreased the penalty to the target rate). Part of this is because banks are looking for somewhere safe to hoard cash. Depositing with the Fed, in the current market, is a competitive store of value.
And in terms of monetary supply, banks increasing their reserves with the Fed acts just like the SFP does, because it is a drain on liquidity in the system.
But as Michael Cloherty at Bank of America observes in a note today?
?there are costs: The Fed funds market will be massively distorted as bank reserves climb well over $1T ($7bn is a normal level), so banks will never get caught short of reserves and need to borrow in the funds market. In addition, excess reserves are likely to climb to roughly 10% of total bank assets. Ratios like net interest margin and return on assets will be weighted down by all of those reserves-look for some crowding out effect on bank balance sheets.
There is another cost too. As interest rates move to zero, the Fed?s becomes less and less effective: low-yielding treasury bills are barely distinguishable from cash.
The answer to this is to expand the balance sheet: the Fed has to grow larger and larger to allow it to continue to affect rates.
This is all remarkably similar to the policy of quantitative easing adopted by the Bank of Japan in the 1990s. It?s odd really that the Fed is not giving much clarity on its actions. Odder yet that people aren?t looking to Ben Bernanke?s numerous papers on fighting deflation to see the germ of current policy.
We reprise the below, from 2002:
So what then might the Fed do if its target interest rate, the overnight federal funds rate, fell to zero? One relatively straightforward extension of current procedures would be to try to stimulate spending by lowering rates further out along the Treasury term structure?that is, rates on government bonds of longer maturities. One approach, similar to an action taken in the past couple of years by the Bank of Japan, would be for the Fed to commit to holding the overnight rate at zero for some specified period. Because long-term interest rates represent averages of current and expected future short-term rates, plus a term premium, a commitment to keep short-term rates at zero for some time?if it were credible?would induce a decline in longer-term rates. A more direct method, which I personally prefer, would be for the Fed to begin announcing explicit ceilings for yields on longer-maturity Treasury debt (say, bonds maturing within the next two years). The Fed could enforce these interest-rate ceilings by committing to make unlimited purchases of securities up to two years from maturity at prices consistent with the targeted yields. If this program were successful, not only would yields on medium-term Treasury securities fall, but (because of links operating through expectations of future interest rates) yields on longer-term public and private debt (such as mortgages) would likely fall as well.
?
To repeat, I suspect that operating on rates on longer-term Treasuries would provide sufficient leverage for the Fed to achieve its goals in most plausible scenarios. If lowering yields on longer-dated Treasury securities proved insufficient to restart spending, however, the Fed might next consider attempting to influence directly the yields on privately issued securities. Unlike some central banks, and barring changes to current law, the Fed is relatively restricted in its ability to buy private securities directly. However, the Fed does have broad powers to lend to the private sector indirectly via banks, through the discount window. Therefore a second policy option, complementary to operating in the markets for Treasury and agency debt, would be for the Fed to offer fixed-term loans to banks at low or zero interest, with a wide range of private assets (including, among others, corporate bonds, commercial paper, bank loans, and mortgages) deemed eligible as collateral. For example, the Fed might make 90-day or 180-day zero-interest loans to banks, taking corporate commercial paper of the same maturity as collateral. Pursued aggressively, such a program could significantly reduce liquidity and term premiums on the assets used as collateral. Reductions in these premiums would lower the cost of capital both to banks and the nonbank private sector, over and above the beneficial effect already conferred by lower interest rates on government securities.
Bernanke then wonders why - if the policy options for fighting deflation are so varied - did Japan fail, through its quantitative easing programme? Tellingly, he concludes that the problem there was as much political as economic.
The question then, is whether the US quantitative easing program will succeed.
In the event it does not, one final deflation-fighting measure to consider, from Ben:
Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today, it?s worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt?s 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly. Indeed, consumer price inflation in the United States, year on year, went from -10.3 percent in 1932 to -5.1 percent in 1933 to 3.4 percent in 1934.17 The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt?s devaluation

i was just thinking a little more about this… it seems to me gold confiscation was a very important part of scheme in the 30’s… if people could not “profit” on devaluation of the dollar by moving assets to gold, then then “relative devaluation” became “absolute” and the reflation was achieved… given that “relative” today refers to other currencies (issuance and prospects of which is controlled by interests outside of fed control), there is no way to achieve “absolute” devaluation… so i guess what would have to happen is coordinated global currency devaluation and confiscation of “real return” assets by all governments so that “absolute” devaluation could take place… surely global coordinated devaluation is not possible in the current day and age?!?

Freddy kruggerand

Aren’t you confusing GOFO with the gold lease rates?

Lease rate = LIBOR - GOFO

LIBOR is the rate you earn when you lend dollars to bank
GOFO is the rate you pay when you borrow gold

Lease rate is the net return on gold carry trade. [Neglecting the gain/loss in selling & then buying back the gold by the borrower. This might be significant]

A high lease rate means that gold carry trade is more lucrative. The spike in the gold lease rate in Oct occured because of the sharp upward revision in Libor [1 month Libor in Oct was ~2.5-4.0%] and the sharp downward revision in GOFO [It was ~2% around 17 Oct, today it is ~0.03%] . The sharp downward revision of GOFO below the fed-fund’s rate is necessary to encourage gold borrowing.

IMHO, CBs were forcing GOFO down to v.low number for the resumption of the gold carry trade. This had the desired effect. Interbank lending resumed and Libor dropped eventually.

For a more indepth analysis of GOFO & lease rates I would suggest the following link

http://seekingalpha.com/article/100677-misinterpretation-of-gold-lease-rates-and-why-gold-could-rise

There?s no way around the fact that the dollar will collapse. Either it falls because the Fed begins to monetize and rapidly inflate, or because the asset-price deflation continues and the US government is forced into default.?

http://www.minyanville.com/articles/gold-dollar-Credit-GLD?debt/index/a/19977/p/1

http://www.youtube.com/watch?v=Q93xvNr0BEg

Ron Paul grilled Bernanke today on our broken monetary and the possibility of returning to a gold standard. Bernanke’s response highlights just how clueless the Keynesian trained economists are.

mike, when you write:
“I think silver will go a lot lower as we move close to Dec comex expiry date”

I’ll agree, but only if you’re talking about comex paper.
it stands to reason
“comex silver contracts” could go down to zero.
rather than thinking of physical as having a premium,
I consider the comex price to be discounted!

CanadaMetal, it wasn’t your stoopid comment so much that touched a nerve, but that it was part of a media-made-to-order reaction that I had been waiting for (since the first media dismissal by the G20). You fell into their trap so willingly that you even embellished it with a condescending attitude toward “gold-bugs.” I felt the need to reply, not as a gold bug, but as one who has noted here my distrust of the outcome of a predetermined non-event.

As for the stoopid label, I intentionally applied your to myself in order make it clear that I do not fear looking stupid, nearly as much as I fear pretending to know something I really don’t. Or those who do. You came into here with guns ablazin’, so I figured I’d shoot back, just to display the mootness of the technique. (I excel at providing the bad example of how not to do things.)

Since you asked, I survive the best way I know how, by being an honest criminal (a true pirate of plunder). I’ve spent my life, like many, trying to make the world a better place via the machinations of criminals parading as saints called “public servants.” Thankfully, I’ve learned the error of my ways (I refer to myself as a recovering do-gooder), and now spend the majority of my time at “work” in an effort to minimize the damage they cause to society, primarily in the area of reducing expenditures.

I know this doesn’t fully answer your question, but I’m still torn as to how to best function in a self-destructive society in a non-destructive way, when it appears that all the non-destructive choices have been successfully undermined by NY and DC (and IMF?). I only know that further support of, and dependence on it, is not the answer.

I return to the ideas of Mises, and his theory that there is no avoiding the crack-up boom preceded by unbridled credit expansion. For all I know, this may require the complete destruction of the modern economy, for as it stands today, it certainly isn’t a natural occurrence, but one of monopoly privilege, the hallmark of government influence. While I’m not looking at this outcome as a preferred solution, I certainly prefer it to making things worse in the future by ignoring it. This, BTW, is where my real nerve is exposed. I absolutely despise apathy, and how it engenders belief as knowledge, and wishful thinking as responsibility. You took the “G20 non-event” propaganda hook, line and sinker, without wondering just why anyone would bother to orchestrate a non-event.

It seems I am one of the few who would rather be alive than safely dead when the crack-up occurs, so that I may be there to help my family and others survive it without losing their remaining liberty in a totalitarian socialist state.

But that may be because I’ve always failed at being comfortably enslaved. Nothing unnerves me quite as much as the feeling that my beliefs adequately reflect reality, because every single time, reality comes along to realign them, fully exposing my ignorance.

Luckily though, I don’t need absolute knowledge in order to understand the failed logic of the system, just rationality, observation, and the study of those who’ve already tread this path.

Hopefully you don’t think I’m upset with you, as my emotional rant was a premeditated response. My only goal was to get past your mental defenses, in order that you might question your position. (Not that I believe I can do that either.) But I’m human, and sometimes act regardless, hoping that maybe this time, the outcome will be different.

(8??

Hey 8 send me a email at

worldskipper —-a—t—–yah00.c0m

I’ve got something you might be interested in reading, was written back in 1930’s, about the time the depression really got goin.

(8?

“I absolutely despise apathy, and how it engenders belief as knowledge, and wishful thinking as responsibility.”

Nicely said.

Thank you for that.

Hi dieuwer

Dollar will not collaspe…. it will just go down slowly ..like in the last 20 years …. 20 years later dollar will be alot lower… don’t expect the dollar to collaspe 20 to 30 pct in 1 year….
Just like when all these Guru say silver silver is going to the moon when it was $18-20 and that it will never see $15 again…and silver is a bargain at $15 ( Bulter ) and shortage of silver ( Jason Hommel…but he is auctioning his silver at depressed price)
…silver will go up but not tommorrow…

Hi Mike,

The U.S. has technically been in default on it’s obligations for the past 37 years. There is virtually zero chance that the dollar can avoid collapse. Whether its demise comes swiftly or over a number of years, the ultimate outcome is the same.

I came across this article from Antal Fekete from 2003 that I think is particularly insightful:

“If we really wanted to understand the gold-demonetization episode of 1971, then we would have to look for the teleological context. We would find it in the fact that gold-demonetization was just a hoax, designed to cover up the fact of default on gold obligations and so to save the face of the United States. It has never ever happened in history that the paper of a defaulting banker would go to a premium. Yet that is exactly what the economists predicted. They forgot that the dishonored paper would always, without exception, go to a discount. This would happen even if further issues of the paper were drastically curtailed. The circulation of the dishonored paper is definitely not governed by the laws of causality, the quantity theory of money, or the equilibrium theory of price. Rather, it is governed by the laws of teleology. Frightened holders of the paper would try to get rid of it at whatever price they could, as they expected the discount to widen and, ultimately, to go to 100 percent. Time has nothing to do with it. Depreciation can take days, but it can also take decades to run its full course. It is not possible to forecast how long. The only thing certain is that time will not cure whatever ails the dishonored paper. Once in default, always in default. True, the banker may not be at the end of his rope. He may still have tricks up in his sleeves. He could use bribery, blackmail, and other forms of coercion to keep his dishonored promises in circulation. He may even be able to expand circulation. By hook or crook he might slow the rate of depreciation, or even stall it. Sometimes he might succeed in reversing the trend temporarily through false signals to the market. No matter. The ultimate outcome is inevitable. The value of the dishonored paper will eventually approach the marginal cost of its production, which is greater than zero only by a negligible amount.

It is important to realize that the quantity theory of money has nothing to do with monetary depreciation. Like the equilibrium theory of price, the quantity theory of money is just another linear model that is valid only as a first approximation. But where causality ends, teleology begins and first approximations become useless. More sophisticated models such as the disequilibrium theory of price, and the depreciation theory of dishonored promises are called for. Value is not collapsing because paper money has been “over-issued”. It is collapsing in consequence of the original sin, the act of default. Monetarists and quantity theorists of all stripes, please pay attention. Regulating the rate of increase of the stock of high-powered money (e.g., by entrusting it to a “clever horse” on the tread-mill as once suggested by Milton Friedman) may postpone but will not avert the ultimate humiliation of the dollar, which is to join the assignats, mandats, Reichsmarks, and other dishonored promises in the garbage heap of history. From there, as from Hades, no currency has ever returned.”

http://www.financialsense.com/editorials/fekete/2003/0905.html

ABX & CMBX Go Parabolic - ?Carnage?
The mortgage backed derivatives market is close to collapse, taking many insurance companies etc with it, according to this article. It is now more important than ever to hold some PM’s.
http://mrmortgage.ml-implode.com/2008/11/18/abx-cmbx-go-parabolic-carnage/

“There are very few words to describe the action in the ABX and CMBX indices since it was made public that TARP would not be used to buy distressed assets. The pictures below are worth 1000 words. Today, Paulson argued that ?the financial markets are much more stable today than before the TARP?. These pictures argue the opposite. These pictures are as close to Armageddon as the financial markets and possibly system has ever been. -Best, Mr Mortgage”

China PBOC Mulls Raising Gold Reserve By 4,000 Tons - Report

This would be about 100 Billion Dollars worth if my maths is correct. Most would have to come from the central banks, ie West to East. This would be a test of whether the reserves actually exist or have been leased away.

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=82afe43d-8d3c-494d-894d-113c196ed750

BEIJING (Dow Jones)–China’s central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country’s huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong.

The Guangzhou-based newspaper didn’t elaborate on the plan.

China’s forex reserves, at US1.9056 trillion at the end of September, is the world’s largest. U.S. dollar-denominated assets, including U.S. treasury bonds and mortgage agency bonds, account for a big proportion of the forex reserves.

Keseri,

Forget LIBOR for a moment as it is a inter-bank/counterparty interest rate which is flawed/unstable due to the financial crisis /derivatives implosion so….,

Here’s today’s GOFO from LBMA:

1m 2m 3m 6m 12m
0.03400 0.12000 0.18333 0.72143 1.01571

Here’s today’s Bond Yields on JGB:

3-Month 0.000 02/23/2009 99.88 / .46(price/yield)
6-Month 0.000 05/15/2009 99.78 / .45(price/yield)
1-Year 0.900 09/15/2009 100.34 / .48(price/yield)

Here’s today Bond Yields on USTreasuries:

3-Month 0.000 02/19/2009 0.11 / .11 0 / -.000(price/yield)
6-Month 0.000 05/21/2009 0.74 / .75 0 / .000(price/yield)
12-Month 0.000 11/19/2009 1.02 / 1.05(price/yield)

Take the following,

12-month GOFO is higher than 1-Year JGB.
(1YearGOFO-1.05171……1YearJGB-0.48)

3-month GOFO is higher than 3-month T-Bills
(3monthGOFO-0.183……3monthT-bill-0.11)

Gold which is the most stable form of money/payment should yield the lowest interest rate due to the fact there is no default risk/counterparty risk yet a positive spread exists.

http://www.bloomberg.com/markets/rates/japan.html

Forgot to add the following:

This interest rate spread is another indication of a liquidity trap.

I would welcome any additional commentary.

The demand for T-Bills continues…

http://blogs.cfr.org/setser/2008/11/18/you-know-it-is-a-crisis-when-the-trade-deficit-was-financed-by-selling-t-bills-to-china-and-european-banks/

On the GM ,Ford ,Chrysler,bailout……these auto manufacturers should consider building this car in the future below to avoid possible chapter 11!

http://www.virginmedia.com/motoring/galleries/love-to-hate.php?ssid=3

Freddy Krug

Since mostly banks are involved with the gold carry trade, Libor is important. With CBs guaranteeing interbank transactions Libor becomes relevant and the counter-party risk element is virtually negligible (if you believe that no counter-party risk exists with govt promises)

Targeted fed fund rate is 1%. Effective FF rate is probably 0.35% (got to check). Japanese overnite rate is 0.3%? 1-moth GOFO is still less than these.

Freddy Krug: Carribean “hedge funds” are buying about half the T-Bill issues. This is a form of QE.
From Yahoo:

“09:10 am - Hedge Buying?: The TICS came in significantly better than expected with an upward back end revision as holders of US treasuries kept buying. The numbers showed China continued to be the big buyer in treasuries at $43.6B in Sept, followed by the Caribbean, also know as hedge-funds coming in 2nd with $36.4B while Japan was a net seller at -$12.8B.”

Keseri,

FED FUNDS IS ZERO thats why the Fed is recently paying interest on reserves.

http://market-ticker.org/authors/2-Karl-Denninger.

I totally agree with Karl.

LIBOR IS/WAS ??? that why the CB’s have been recently backstopping/ guaranteeing interbank lending.

http://www.financialsense.com/fsu/editorials/kirby/2008/0417.html

I totally agree with Rob.

Check this:

DGS1MO, 1-Month Treasury Constant Maturity Rate

http://research.stlouisfed.org/fred2/series/DGS1MO?cid=115

Last Update
Date 2008-11-14
Value 0.06

Probably hit 0.00** today.

hi Antifiat ,

Don’t bet on the Chinese buying gold… non interest bearing instruments is not on their cards… If they they are that smart… they won’t increase their US treasury holding again last month surpassing Japan. Look at their most recent investment overseas by their Government investment funds..namely Barclays and Blackrock…
As most people know the Chinese government has been one of the largest silver seller in the market over the last decade..

Mike…..this time is DIFFERENT. There has been talk that at some point in time….FOREIGNERS will be selling off their US TREASURIES and DOLLARS….as this is the LAST GREAT BUBBLE TO BURST. Taiwan already did that a few weeks ago. Also, just announced today on CNBC….Q3 was the largest DEMAND GROWTH FOR GOLD even surpassing record high in the earlier part of this year.

Iran has increased its GOLD RESERVES, and there was a RECORD BUYING of GOLD in just two weeks in Saudi Arabia of $3.5 Billion. At some point in time the AVALANCHE will take place and the MAD RUSH out of the DOLLAR and into GOLD and SILVER will occur.

There is a NEW SILVER ETF in the works in DUBAI:

“Silver ETF for Dubai as they fly in bullion for the Hunts of Arabia”

http://news.silverseek.com/SilverSeek/1227016174.php

Lastly, yes….CHINA sells a great deal of SILVER….but remember….they also BUY a great deal of SILVER CONCENTRATE from other countries and process it to a pure silver product. In reality they are a PROCESSOR of SILVER CONCENTRATE….and not a large net seller of SILVER from their own mines. So their sales of silver are misleading.

SRSrocco

Don’t beileve everything you read on the net…. if the Saudi spent $3.5 billion on gold in 2 weeks… do you think gold will still be at $750 !!!! if so ,this is very worrying…

Yes and the Chinese play the game by shorting silver and buying back at lower prices, thus increasing the net number of physical ounces held. The fiat currency and paper silver exchange for physical has been played with great skill, possibly using the basis for guidance.

Mike…..Peter Cooper is a very RELIABLE SOURCE…he lives in the United Arab Emirates….so if you want to think this might be a LIE…as well as IRAN using RESERVES to buy GOLD….you are free to see it that way.

“Saudi Arabia buys $3.5bn of gold in two weeks”

There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 billion being spent on the yellow metal, reported Gulf News citing local industry sources.

Gold market expert Sami Al Mohna told the leading regional newspaper that this buying had substantially increased the gold reserves of the country: ?Many Saudi investors see this as the right time for making investments in gold as the price is the most reasonable one at present?.

He said gold was seen as a traditional safe haven at a time of global financial turmoil. Gulf regional stock markets have fallen very sharply since early October, leading to an exodus of cash which needs to find a safe haven.

Gold is currently trading at prices similar to a year ago, and 30 per cent off its March peak. Saudi investors clearly think this is the right time to buy and are piling into gold.

News about the Saudi gold rush is bound to fuel speculation about the alleged large physical gold transactions that have been taking place at prices will above the spot price set in the futures market. It is very unlikely that such a large hoard of physical gold could have been bought for the depressed current price.

Market analysts such as the legendary gold bug Jim Sinclair have pointed out that if less than two thousand millionaires insisted on delivery of physical gold at the end of their futures contracts, as is their legal right, then the spot gold market would jump to new highs.

Saudi Arabian investors have spotted a bargain, and it may be a much better one than they think.

http://arabianmoney.net/page/2/

I bet my GRANDMA that the gold sold to the Saudi’s bypassed the “Crock of S**t” COMEX and was sold for probably upwards of $1000 i firmly believe all gold transactions are being settled at much higher price than that bullshit ticker price you see on the screens.

Freddy Krug….I believe you are right. Looking at this part of his article, Peter Cooper states the same thing:

“News about the Saudi gold rush is bound to fuel speculation about the alleged large physical gold transactions that have been taking place at prices will above the spot price set in the futures market. It is very unlikely that such a large hoard of physical gold could have been bought for the depressed current price.”
—–

And now CHINA wants to increase its GOLD RESERVES by 4,000 TONS…I don’t think they can do it without affecting the price of GOLD on the COMEX….I am rubbing my LUCKY GREENSPAN HAIR RABBIT FOOT for a DEC COMEX DEFAULT.

Ain’t LIFE GRAND when you are on the RIGHT SIDE OF THE TRUTH.

SrSRocco,

Forget rubbing that RABBIT….hey, why not buy this figurine of
Alan”MR MAGOO”Greenspan…. and use it for target practice!

http://www.minimodelfilmstuff.co.uk/film-collectable/mr-magoo-mr-magoo-polystone-statue-electric-tiki-272

Pardon the incorrect link above….click below

http://www.minimodelfilmstuff.co.uk/list-film-collectables/&T=d1&C=Mr+Magoo

Freddy Krug….Hhahhahaa….I might do BOTH…I FEEL LUCKY LATELY. Unfortunately…your link does not work.

Let’s talk about this 4,000 TON addition to CHINA’S GOLD RESERVES. According to the WORLD GOLD COUNCIL…..total world gold production is running about 2,525 TONS a year. So….if China wanted to add to their reserves 4,000 tons…that’s about a 1.5 year supply.

Furthermore…..4,000 tons comes out to about 128.6 million troy ounces. If they could get that at $1,000 an ounce that would be about 128.6 Billion Dollars. With their Forex Reserves estimated at $1.8 Trillion…this is less than a ten percent of their FOREX RESERVES in the USA.

A 128.6 million ounce purchase or roughly $128.6 billion purchase at $1,000 an ounce gold…would be a FACTOR of 37 TIMES more than what Saudi Arabia purchased a few weeks ago. This is a STUNNING FIGURE. If people think only CHINA is going to add to their GOLD RESERVES….I highly Doubt it….I am banking on a CONTINUED INCREASE in COUNTRIES doing the same. My BET is TAIWAN soon to ADD as they have sold out of their US RESERVES.

DEC 2008 will be a very interesting time for the COMEX

Consumer prices record record drop in October. How much longer until the Fed allows the dollars to drop? Reserve balances are staggering.

http://www.federalreserve.gov/releases/h41/hist/h41hist1.htm

Gold is smashed by over $30 and silver over $0.50 once again at the same time as the usual drop everyday (around 12pm EST) in a matter of minutes.

Anyone else notice this on a consistent basis? Disgusting…

I do believe the stories of the Saudi’s buying gold contrary to Mike…but I DO agree with Mike that since the price is still below $750, that it is worrying…

don’t worry about the low price of gold. Isn’t that the cure for low prices?
Especially for silver-we just have to be patient and let things play out.
What is the possibility that the US will have to let the price of gold rise as a tool to fight inflation if all their current tactics don’t work?
I think they will and it could come soon especially if their hand is forced in Dec.
Other than the psychological effect from lower gold prices and the profit from fleecing the large specs I would think a higher gold price is in the best interests of the US govt. After all we officially have more gold than anyone else and it’s our only real CB reserve. The comex is in the best setup we’ve seen for many years for the commercials to reverse course and go long.
Maybe Obama is smart enough to realize this would be beneficial to the country and help reverse a deflationary market psychology and get people borrowing and spending. Hey maybe he’ll even ax the Penny from circulation-that would be a wakeup call and save the govt. $60million/year.
If we have enough deflation we might even get “inflation is good” buttons to wear.

Sideshow……the PAPER PRICE OF GOLD is not reality. I can’t remember the frim….maybe someone here can remember the article, but a firm in CANADA bought a large amount of GOLD and they paid $1050 an ounce I believe just a few weeks ago. People have to realize large purchases are being done OUTSIDE of the COMEX and LME. This will not continue though. The paper price of gold will either change drastically in the future or the COMEX EXCHANGE will be worthless as a medium for pricing gold.

You have to remember, we still have HEDGE FUND LIQUIDATIONS and etc. They are SELLING WHAT THEY CAN….and that is LIQUID INVESTMENTS such as Precious Metals, Energy, commodities and etc. No one is selling TOXIC GARBAGE as there is no BID FOR IT.

Silver is in the BEST PLACE out of all METALS. With the temporary decline of INDUSTRIAL METALS from a RECESSION-DEPRESSION….silver supply will be affected larger than anything else….as the majority of silver comes from a BY-PRODUCT of ZINC, LEAD and COPPER MINING.

In the future….and if we don’t have a COMPLETE DISINTEGRATION of COMMERCE in the world…..Commodities, Precious Metals, Oil and Natural Gas and their stocks will be the NEW BANKS of the FUTURE. As this is where the REAL MONEY will be located….and that is ASSETS in the GROUND. The Banks today are nothing more than buildings with DEBTS tied to them. There is nothing of value in these HOLLOW BANKS.

The Great Currency of China

http://ftalphaville.ft.com/blog/2008/11/19/18438/the-great-currency-of-china/

Join up the dots and see the big picture.

“China can use the present crisis to extend ?guarantees? to Indonesia and other weak foreign reserves nations serving multiple purposes: access to their resources, building co-depence on China reserves, secure military export, and align China interest with that on the linking currency. Truely if done it will catapult China status and have geopolitical implications not presently priced in.”

24hourgold is tracking ebay gold and silver auctions, showing the premiums on different PM products:

http://www.24hgold.com/english/buy_sell_silver_coins.aspx?co_id=0

innerestin

Say what you will about the price of the COMEX not being reality…because for now, it is. That is still what the price I can buy silver is based on, but more importantly, what I could sell silver is based on. Furthermore, it is also the price which reflects the prices of the shares in the gold and silver companies which we have money in is based on as well. Great if you wanna sell 100oz on ebay…ya fine, I can get $1600 for that, but mining shares are down 65-90%, and no rally there will ensue until the “not real” prices start rallying themselves. Same goes for all the oil, gas and ag companies that many of us in Canada are invested in because that is the basis of our economy. And oh yeah, there also goes the sales in my retail store because the oil, gas and ag industries just got lopped off at the knees…if not higher…and have now lopped me off at the knees as well. Maybe I should start charging “premiums”…

I understand the hedge fund aspect…but that is not what I am talking about. If it weren’t for the manipulation, hedge funds would not be faced with these types of margins calls, liquidation calls…nor would mutual funds which also enter the mix. Some of this liquidation is the g eneral public getting the heck out! Record number of people are also bailing out of mutual funds, so its not just hedge funds. The “general public” does not understand the COMEX price is phony…or what the difference between paper trade and physical trade is, and ignore it if you want, but there are still many more of them as there are those who do understand. When you look at the spreads of any stock, oil, ag, gas, gold, silver, whatever, there are huge spreads, with thin bids, so they are no bids for them either! That is why the fluctuations also happen intraday in these stocks as well, not just the banking sectors or whatnot. It’s everywhere….oil, gas, ag, gold and silver included.

Try telling my dad who worked all his life to be on the verge of retirement, that the COMEX is fake, that oil prices are fake and the assets in the ground are what matter. I can even type it to him in CAPS LOCK and he still won’t be able to sleep any better at night, even though he too started investing in silver this year.

I too remember the story of someone buying all that gold here in Canada for over $1000 an ounce…and I too see that Saudi Aria might be buying huge quantities, that Iran maybe have moved their reserves to gold, that China is thinking of 6x (at least) their gold reserves, but what difference does that make to me if Saudi Arabia spends $3 billion buying gold if the price goes down as they do it?? All I know, is that’s $3 billion that should have moved the price up, but didn’t! So that’s $3 billion wasted in my mind… to me and my investments. I was hoping that $3 billion would help, but didn’t….that’s the worry. What happens when the $3 billion is done being spent? What happens when that $3 billion is liquidated? Strike one..China has said they would buy slowly, over time so as not to affect the market…strike two.

The fact is, most of us can’t buy such huge amounts of silver to really revel a 10% rise in price, where as Saudi Arabia can. We need everything to move together, in tandem, oil, gas, ag, gold, silver to actually make an impact on out portfolios. Hey I’d love to buy $3 billion in gold and make $300 million when gold goes to $825 an ounce…but most of us can’t even get our hands on it for that price…never mind make anything. That $3 billion should have done that for me!

Silver is even worse…anything I buy now has to go up in value by 30-40% before I “make” anything…and that’s only on the stuff I buy today, nevermind the stuff bought along the way, be it at higher spot price or premiums, no matter…it’s all the same money out of my wallet. Once the price rises then the premiums will ease and I still won’t have made anything…

As I said, we need these things to start moving up in tandem, not be crushed down everyday at any sign of an impending rally. I am hoping this is consolidation we are seeing, because if this market is going to be manipulated continuously, there is no safety here because the result will be only what the result will be allowed to be. Knowing it’s true and having it come true seem to be far apart right now…and there is seldom huge comfort in just simply “knowing” something is true if the world around you doesn’t believe…

SRSrocco,

if the Saudi bought that much gold, it won’t be just in the saudi’s newspaper…I wish they have…I also want gold to go higher..all these about chinese buying 4000 tons are wishful thinking…remeber all central banks hate gold !!!If they buy gold now..it will creat a much bigger financial crisis…something they don’t want..

Mike it wasn’t just the SAUDI GOVT who bought the GOLD it was its PEOPLE as well.

Mike the idea that all CENTRAL BANKS HATE gold is not true. Yes, most Western Central Banks Hate Gold….but I would say many of the middle Eastern and Asian Central Banks don’t hate it…they just have to deal with the PAPER FIAT SITUATION like everyone else.

Also….just because Central Banks hate GOLD TODAY…does not mean they have hated gold in the past or will forever in the future. The reason why the CENTRAL BANKS of the world have had to go along with the US DOLLAR HEDGEMONY…is because …their hands are tied. The US DOLLAR being the world RESERVE CURRENCY comes with rules, guidelines and blackmail.

At some point in time…..PAPER MONEY run by CENTRAL BANKS will no longer be a VALID EXERCISE. The US GOVT is bankrupt….and soon the world will realize it in STUNNING FASHION. Gold will not be CONFISCATED because it is a GLOBAL MARKET…that means all GOVTs would have to CONFISCATE GOLD…there would be BLOODY MURDER in INDIA, RUSSIA, EUROPE and USA to name a few.

The PAPER CANCER is spreading….have you seen the CMB CDS…which is the COMMERICAL Credit Default Swaps for commerical loans…MY GOD they have gone from 100 basis points now up to 550 basis points. Commerical Real Estate is the next BUBBLE TO BURST BABY.

BUBBLE BURSTING CHECK LIST:

SUBPRIME MORTGAGES
PRIME MORTGAGES
INVESTMENT BANKS (now all gone)
CREDIT CARD-AUTO LOAN
COMMERICAL LOANS

next to go…….

INSURANCE COMPANIES and all those ANNUITIES
BIG 3 AUTOS

and lastly……

US TREASURIES
US DOLLAR

Just a matter of time…..GOT YOUR GOLD, SILVER, SHOT GUNS, and BULK FOOD?

On August 15, 1971, Nixon unilaterally imposed 90-day wage and price controls, a 10% import surcharge, and most importantly “closed the gold window,” making the dollar inconvertible to gold directly, except on the open market. Unusually, this decision was made without consulting members of the international monetary system or even with his own State Department, and was soon dubbed the Nixon shock.
Yes Martha, foreign government dollar holders have been stiffed before. Not too long ago either. This time they’re not only getting stiffed, they’re getting their place in power threatened by the “crisis”. They are PISSED at the US banksters/government who are one in the same. The greatest snake oil salesmen in all of human history. What to buy though?…risk is hidden off every balance sheet and in every paper promise from even the most “reliable” entities. The smart ones are turning to gold NOW. When the foreign competitive currency devaluation no longer has any effect on exports(no buyers), the dollar rally will turn into a rout.

Today the United States holds 8,133.5 tons of gold reserves…I’m sure its all still here, claim free. NOT

From one of Tom’s posts in October:

“At this point, however, the only option is to either (1) systematically wipe out all debts and start over, or (2) hyperinflate the money supply to the point where debt service becomes manageable in both the public and private sectors. It?s understandable that nobody wants to face this reality. Both choices are ugly.

This type of denial is similar to what I imagine is a common experience of people trapped in a burning high-rise building. Until the very last second before becoming engulfed in flames, there is always some small hope that a rescue will succeed. But once the flames are close enough, jumping out of a window becomes a preferred alternative. There is at least some exhilaration in the free fall that precedes the inevitable splat on the sidewalk below. In most cases, death comes quickly and is relatively painless. On the other hand, being burned alive is recognized universally as one of the most painful, if not the most painful, ways to perish.”

The flames are getting closer. I think we’re getting close to the point now where we jump out the window (ie hyperinflate).

Hi SRSrocco ,

It doesn’t matter whether its the Saudi government or the people buying that $3.5 billion worth of gold… ( almost 150 tons !!) in 2 weeks..plus Iran buying. If gold is not moving on this ,that means 1. the news is not true 2. there are more selling ( more than $3.5 billion) than buying in the market.

To clarify… I am long gold and silver too.

At some point Wiemar sure, but months, 3 years, a decade? If everybody is maxed out with debt and their net worth is halved or worse in six months time where are you going to find new buyers of more debt? If you continue to run the gas pump into a full tank the shit just pours all over the ground. It doesn’t end up in the system; it disappears. IMHO continuing to lower interest rates is the craziest thing these idiots can do. It shows they are desperately trying to save themselves at any cost because all the fuel is just running down the side of the car and onto the ground.

the private party purchasing of physical by Saudis & Asians could actually cause the london/comex price to drop.

like a form of backwardation.
paper pushers will gladly pay you tuesday for your hamburger today

As fewer people trust 3rd party promises, the risk of nondelivery makes comex price discounts worth-less

If the Saudis had bought $3b gold, or if the Chinese were buying, the price would have moved up. Instead, it has persistently declined recently, with minor bumps up. If there were a possibility of a COMEX default, as Jim Willie maintains, the PM price would be moving upward, since the powers that be in that corrupt exchange surely know what the score is. Prices continue, however, to drift lower. If there were legitimate fear of hyperinflation or if the fed’s issuance of money supply were exerting any impact at all on monetary behavior, PM prices would be correspondingly rising. They aren’t. The truth seems to be that deflation is taking hold, and despite arguments that even in a deflationary environment gold is the place to be, the price of gold is moving relentlessly lower. Will it dip as far as the $400 level some analysts predict? Seems hardly possible, given the fact that mining costs are probably well in excess of $600. But given all that has transpired in the past 2 months, I would no longer doubt any scenario.

Hi Kondor

I agree with you 100 pct

Today a spokesman from the WORLD GOLD COUNCIL spoke on CNBC this morning. He said that Q3 was a NEW RECORD BUYING FOR GOLD. Demand in Q3 was HIGHER than the previous record earlier this year. His answer why the price of gold as not higher….he remarked that it was due to HEDGE FUND LIQUIDATION and etc.

Don’t you folks get it….unless you BUY COMEX CONTRACTS the price of GOLD does not move up….if people BUY PHYSICAL it does not change the price of the COMEX. LARGE SCALE SELLING of GOLD CONTRACTS with no new buyers coming in….keeps the price LOW. No one wants to buy on the GOLD COMEX…they are figuring out it is a RIGGED MARKET.

According to BOB CHAPMAN from the INTERNATIONAL FORCASTER:

In a stunning new development, the Dubai Multi-Commodities Center is now putting the finishing touches on the formation of an exchange traded fund for silver with a launch likely next month as demand for silver has surged in the past six months. What may be happening here is that the OPEC nations, and possibly also Russia, are setting up a counterbalance against the collapse of oil prices. You may recall from past issues that we discussed at length how we thought that sovereign wealth funds in oil-rich nations were tweaking gold and silver upward every time oil was smashed by the Illuminist manipulators. The message was, you leave oil alone, or we will send gold and silver to the moon and expose your destruction of the US economy by killing the canaries in the coal mines, thus ringing the gold and silver alarm bells loud and clear. This makes the Illuminists rabid, and induces collective myocardial infarctions among them, because precious metal suppression, especially of gold, is JOB ONE at the Fed. The failure to cap the price of gold was Paul Volcker’s only regret as Fed Head during his handling of the inflationary crisis of the late 70’s and early 80’s, and the privately owned, Illuminist Fed does not intend to make the same mistake twice.

The Illuminati have made two major mistakes, and the Dubai exchange may be the OPEC solution to the oil takedown, which is the direct result of those mistakes. The first mistake is that the Illuminati gave OPEC a taste of 147 oil, and then pounded it down to 55. This will not be tolerated, especially after these nations got a chance to experience the huge profits generated by such lofty oil prices. The second mistake is the trashing of silver prices in the face of growing shortages at a time when the above-ground silver stocks are at an all-time low and headed even lower. The shortages are being caused by manipulated silver prices that are below the cost of production, thus causing a collapse in production, and the manipulation of base metals prices into the subbasement is adding to the loss of production because 70% of silver is produced as a by-product of base metal processing. Due to these criminal price manipulations, the gold to silver ratio is now 77 to 1, when historically is should be around 15 or 20 to 1. This huge price imbalance, growing shortage and all-time low levels of above-ground stocks has set up the greatest opportunity to corner a commodity market in the history of the world.

– ——————-

Why do many of you look at the PAPER PRICE of GOLD as a REALISTIC PRICE EXCHANGE. I believe as Bob Chapman states…..COMEX is going to lose this BATTLE manipulating the price of GOLD and SILVER. IF you think the PAPER PRICE of GOLD is REAL…you should be reading ROB KIRBY explaining the massive DERIVATIVE GOLD POSITIONS that JP MORGAN holds. JP MORGAN is using TAX PAYER money to push up the US DOLLAR and TREASURIES…while clobbering GOLD and SILVER.

Its only a matter of time when the UNITED STATES gets its US DOLLAR NECK SLIT. Foreign countries will need their FOREX RESERVES to pump up their own economies.

TIC….TOC….TIC….TOC….

I dont see what a private party sale of physical has to do with the comex price. If it did, there would be no talk of premiums.

the premium price of water in the desert doesnt raise the price of your tap water.

prices for physical, in fact, are not drifting lower
despite the comex price levels where the short sellers want to cover

“price” is being used for two different products.
“physical price” does not equal “comex price”
which some obviously see & complain about
why would anyone then question a purchase as nonexistent
just because it didnt raise the comex price?
if ebay prices rise as comex prices fall,
would you question whether the auction really took place?

peace out

Mike - My point exactly…I totally agree. All this alleged buying is more something to talk about than anything because it did NOTHING for the price of gold (or silver). So something is up…something is worry-some about that…because I too am long.

Pauper, Ask the mining companies or tell my shares that the price on ebay is going up…maybe the mining companies who are cutting or shutting down production would change their mind…and my shares might start going back up.

Then again…maybe not….

I don’t think inflation or deflation matters anymore. That debate is a distraction from the end game. We all need to prepare for the monetary collapse “SRS” style. The Professor’s capital destruction theory calls for asset price deflation. We are clearly seeing this all around us today. He has also written for years about borrowing short and lending long. Companies are now having difficulty rolling over short term debt. The next shoe to drop is the “Last Contango”. This will usher in the monetary collapse. He has clearly stated that the end game will not be a Weimar / Zimbabwe style collapse.

From the Professor…

“The competition of the superpowers to acquire gold will ultimately lead to an infinite escalation of its price. As unlimited amounts of Rubles and Yuans are printed to buy up the limited amount of gold available, the competitive devaluation of currencies will reach a frenzied stage in destroying the value of all currencies. Competitive devaluation is a destructive process. American, Russian and Chinese central bankers will find that their hands are forced by events. After all the false fits and starts they will hit upon the winning strategy: the constructive process of opening their mint to the unlimited coinage of gold. This is the only logical thing they can do, whether they like it or not, after the stage is reached whereby cartloads of paper currencies fail to fetch even one grain of gold#. Opening the mint will be the only way to attract all the available gold and silver in the world to their shores, benefiting their prostrate banking system that will be quick to issue gold instruments accepting in global trade.

# Note that I am not prophesying that cartloads of paper currencies will fail to fetch a loaf of bread. In fact it is perfectly feasible that the price of bread, along with other prices of consumer goods, will fall in the wake of deflation. The process herein described is not one of hyperinflation. It is one of competitive devaluation by the superpowers in order to corner gold.”

We have become paper cutouts in a paper world, blind to our fate.

You buy a paper certificate with paper money that somehow means you are an owner of the company, or of some commodity? Lets see how much all of this paper is actually worth in the grand scheme of things when the dam finally breaks.

The price of paper gold will never rise, because it is too easy to print more paper gold as needed.

SRSrocco

there are always day traders and funds trading in the comex … not investors.
Just like the FX market , you can go and buy some Euro and put it in your safe.. But it is the margin trading , Trading floor of banks speculating everyday that dictate the price of Euro… ( same in Comex), not investors who buy Euro and put in their safe…

Is buying silver as good as paying $140/oz for gold? An interesting perspective:

http://the-silver-oracle.blogspot.com/

“Anybody with a pulse would recognize that buying gold at an 80% discount to the spot price would be the opportunity of a lifetime. Immediately after buying, you could turn around and sell your metal for a 400% return. Unfortunately I don?t know where to buy gold at $140/oz, but for an investor with patience there may be an opportunity to earn a return that is 5X greater than what you would make buying gold at today?s prices. The opportunity that I speak of is in silver ? the monetary metal that is often overlooked by gold investors.

How do I conclude that buying silver could be as good as purchasing gold at $140/oz? I come to this conclusion by examining the historical value of the price of gold divided by the price of silver (i.e. the gold/silver ratio). For most of recorded history, the gold/silver ratio has averaged about 15:1. This ratio seems to have arisen naturally and is fairly close to the relative amount of the two metals naturally occurring in the Earth?s crust. As I write this article, the gold/silver ratio is nearly 80:1. This is an historical aberration and the ratio is likely to revert back to the long-term average at some point, as it did at the end of the last bull market in precious metals in 1980. If gold were currently trading at 15X the price of silver (as history tells us it should) the price of gold would be only $140! Now I am not claiming that gold is only worth $140 ? in fact I expect gold to appreciate significantly over the coming years against the U.S. dollar. My point is that silver is extremely undervalued at the current spot price of $9.30/oz. Buying silver at today?s prices is like paying only $140 for an ounce of gold! . . . .”

Mr Z - That’s exactly my worry…The price of paper gold will never rise (if the Illuminati don’t want it to), because it is too easy to print more paper gold as needed.

So let’s say I buy actual physical gold and or silver (not paper certificates, etc.) to put in my RRSP (401(k)), what’s it worth, ebay price or Comex price?

SRS and others,

Jim Willie has been talking about off -market gold transactions:

http://www.financialsense.com/fsu/editorials/willie/2008/1023.html

“The gap between the physical gold market and paper gold market is widening. An example bears this out. In Toronto this week, a major off-market gold transaction took place. The price paid was $1075 per ounce on the physical transaction. Its volume was in the multi-million$. There was no US involvement in the transaction, and the settlement was in euros. Enormous repositioning is ongoing by the groups that will participate in the new, partially gold-backed currency. My take is this movement is from a large financial entity with global activity, and ties to central banks. It might be tied to the upcoming split in the euro, into a Nordic Euro and trashed Latin Euro. The Nordic version might contain a gold component. This and other transactions are taking place with European settlement. They are being satisfied in the alternative market, far from the distortions of COMEX. This was a physical transaction with the real metal being moved. Big shifts occur behind the scenes. A couple of months ago, 400 metric tonnes were moved into storage with the Royal Canadian Mint by a sovereign entity. ”

My take: If Comex is not a fraud, it must be a joke.

With regards to inflation, I have asked on here a couple times why there is absolutely going to be inflation when so much money is being lost or destroyed…and I never really got an answer that made me completely understand. How can funding defaults lead to inflation when it seems to me they are simply replacing “lost” money in the market?

Well, maybe I still don’t understand but, in Jim Willie’s latest article REFLATION CHALLENGE & GOLD, he seems to acknowledge what I have asked about several times here. This was his take on the bailouts and inflation…

“Actually, the ugly truth is that the USFed has actively been REMOVING money from the system in order to fund its swap facilities. See the chart below, which is somewhat mindboggling. Balances have tripled in less than one year. The image of Weimar Factor seems to come alive. The USFed has actually drained vast amounts of money from the mainstream USEconomy and its banking system in order to create USTreasurys in sufficient volume to offer them to big banks in swaps of soured and impaired mortgage bonds. Here is a fact. In October alone, the volume of Cash Management Bills sold into the bond market by the USFed totaled $515 billion, with another $70 odd billion in the first week of November. That constitutes a massive drain. The USFed is actually trying to fund the banks, but to drain the economy, in order not to trigger price inflation. INSTEAD, THEY ARE LIKELY TO SEE ECONOMIC RECESSION ACCELERATE DOWNWARD, OR WORSE.”

http://www.gold-eagle.com/editorials_08/willie111908.html

from sideshow: “…the USFed has actively been REMOVING money from the system…”

this is why gold along with all other commodity prices is low …..gold will always react to the fed currency insertion / extraction processes….it is moving currency around to manage some bubble or black hole which it created.

“…in order to create USTreasurys in sufficient volume to offer them to big banks in swaps of soured and impaired mortgage bonds….”

i believe that this is tarp which the liar paulson said he was abandoning….as such money supply should stabilize or resume its upward climb….the liar basically said that he wants to save his banking buddies…that is where the money is going next…

this in no way devalues gold’s value as money. it is *always* a good time to buy gold if you do not have anything else better to do with your currency.

Gold’s Still “HOLDIN” while Berkshire’s “IMPLODIN” !

Even though many of you were expecting higher gold and silver paper prices news like the one below should more than make up for your PM misery as the “ORACLE” of OMAHA Mr Buffets Berkshire Shares CRASH……’music to my ears’.

Nov.19
6:32 PM ET
Berkshire Hathaway Plunges 12% For Worst Day Since 1987’s Black Monday
Posted By:Alex Crippen
Topics:Stock Market | Warren Buffett
Companies:General Electric | Goldman Sachs Group Inc | Berkshire Hathaway Inc.

Berkshire falls to three-year low
Warren Buffett’s Berkshire Hathaway fell just over 12 percent on Wall Street today (Wednesday), its biggest one-day percentage drop since 1987’s ‘Black Monday’ over 21 years ago.

Berkshire lost $11,550 today at close at a three-year low of $84,000. That’s a 12.09 percent decline, the second-largest daily drop ever for Berkshire, trailing only its 18.51 percent plunge on Monday, October 19, 1987. It closed that day at $3170, down $720.

Berkshire shares have dropped 43.7 percent from their all-time closing high of $149,200 on December 10 last year.

The benchmark S&P is still doing worse this year, but Berkshire is closing the gap. The S&P is down 45.1 percent compared to Berkshire’s 40.7 percent drop.

Just two days ago, when Berkshire closed below $100,000 for the first time in two years, the S&P was ‘winning’ the mad dash lower: -42.1% to -32.5%.

Buffett’s been getting some negative press lately, amid declining earnings for Berkshire’s insurance operations and big paper losses on its stock holdings and long-term stock index derivative contracts. The stock has dropped for eight consecutive days since the third quarter earnings report was released on November 7.

Credit-default swaps protecting against a Berkshire default have more than tripled in price over two months and some are even asking if Berkshire could lose its triple-A credit rating.

Buffett points out that Berkshire has been paid almost $5 billion now for writing option contracts that wouldn’t require any payouts for at least another 10 years, and would only be future money-losers if global stocks don’t recover by then.

There’s also been criticism of Buffett’s timing, since shares of both have dropped in the weeks since Berkshire made multi-billion dollar investments in the two companies.
Go to Berkshire Hathaway Portfolio Tracker

While Berkshire did get the right to buy common stock in GE and Goldman at prices that are now well above market, its primary investment is in the form of preferred shares, which still pay dividends of 10 percent a year, despite the common stock declines. (James B. Stewart writes today that Goldman’s stock decline has created a Buffett-style opportunity for individual investors.)

Bloomberg quotes YCMNet Advisors president Michael Yoshikami as saying, “There’s nothing fundamentally wrong with Berkshire. What’s really happening is people are wondering if there’s something fundamentally wrong with the economy, and Berkshire is in some ways a bit of a proxy for that.”

And while the ‘Gospel According to Buffett’ preaches that bad economic times often create buying opportunities, it appears that some Berkshire shareholders are losing the faith and selling instead.

JVD….thanks…that was the article. For those who don’t believe the $3.5 billion bought by investors in Saudi Arabia….this is what Peter Cooper had to say about it:

“$3.5bn Saudi gold deal huge against $6.5bn consumer record”

The revelation of the purchase of $3.5 billion worth of gold by a group of Saudi Arabian investors over the past month is a huge gold deal when you consider that total record third quarter spending on gold by consumers was $6.5 billion.

Since the story broke on this blog I have received an email from an individual claiming to have personally handled the Saudi deal and confirming its veracity. But nobody appears to have a clue where the gold came from or who actually bought it.

Public sales of gold coins and bars reached their highest levels for more than a decade in the third quarter while gold exchange traded funds saw record inflows as revealed by the World Gold Council in its latest Gold Demand Trends report.

Record demand

The WGC said consumers spent $6.5 billion in buying 232.1 tonnes of gold coins and bars in the third quarter of 2008, an increase of 121 per cent in volume terms over the same period a year ago, and the strongest growth since the mid 1990s. In the first nine months of this year, net retail investment in coins and bars reached 443.6 tonnes, 10 per cent more than all of 2007.

Germany and Switzerland saw a surge in demand for coins and bars in the third quarter with net retail investment of 19 tonnes and 21 tonnes respectively, up 533 per cent and 500 per cent compared with the same period a year ago.

Exchange Traded Funds also saw record buying interest with inflows of 150 tonnes in the third quarter, up 8 per cent over the same period last year, with investors spending more than $4.2billion accumulating holdings in ETFs. Lehman?s implosion in September led to a jump in ETF inflows, which surged by an unprecedented 100 tonnes in just five consecutive trading days.
———————–

Folks….I am not here to try to CONVINCE anyone that the PHYSICAL PRICE of GOD will win over the PAPER PRICE….its something I know that will happen. People are worried about DEFLATION….and I hate to tell ya…that is not going to happen. Not because I want it….ITS IN THE CARDS.

As soon as the US DOLLAR REPATRIATION is over…there is nothing to keep the US DOLLAR UP. The TARP failed….all programs have failed. Credit Spreads are widening everywhere. As of today…CREDIT SPREADS for GM BONDS are 7,000 basis points. Yes….more credit is being destroyed than money is created….that’s true….but thats the short term outlook.

The thing that many FORGET is the ILLUSION of PLENTY in the UNITED STATES. The USA has been able to LIVE a LIFE OF LUXURY, by driving around in large SUV’s, going to STARBUCKS, going to the PARTY STORE…basically doing nothing of VALUE….on the backs of FOREIGNERS. This is coming to an end.

When the DOLLAR and the US TREASURIES start their COLLAPSE…..so will the IMPORTS……OIL being number one. This will spark off the INFLATION that will turn into HYPERINFLATION because……AMERICANS are using 19 million barrels of oil a day….and only PRODUCE 6 million. This is the PROBLEM. Virtually OVERNIGHT the OIL SPIGOT will be turned off.

Lastly….if many of you folks are still worrying about INFLATION or DELFATION….this might be the least of your worries…..being able to get enough FOOD when the TRANSPORTATION system starts to collapse will be the REAL CHALLENGE.

SRSrocco ,

Say Saudi bought $3.5 billon of gold is like Bush saying Iraq has WMD.
Just talking…. Then there is big gold deal in Toronto..
as for the US DOLLAR REPATRIATION , I think the dollar strength has a lot to do with this FX Accumulator investors bought. At least in Asia there are alot of these deal done over the last year. Sold by Goldman and Morgan .When currency falls below a certain level , investors have to buy double amount of currency. A Hong Kong blue chip company took on a $9 billion ( !!!!!) Aussie contract with strike at 0.8500 , lost huge amount of money , thats why we see 500 to 800 pips a day on GBP and Aussie..A lot of investors still have this FX accumulator contracts outstanding. They have Accumulator in stocks as well. These investors have to sell double amount to cut lost and thats why we see so much volatility.

http://whereiszemoola.blogspot.com/2008/10/david-webbs-time-bomb-warning-on-citic.html

unfortunately silver getting crush again!! and $ is soaring.

PAPER SILVER is down…..that’s okay by me….it doesn’t mean anything…but what does is this:

JP MORGAN -17%

The day that PIECE OF SHEET goes belly up will be a great day FOR AMERICANS and FOREIGNERS.

Like it or not… JP Morgan will not disappear… I agree with you JPM is PIECE OF SHEET …But Citi will disappear very soon… maybe the good old JPM with take over Citi as well…

Mike….I know…..but I have hired someone PART TIME to rub my LUCKY GREENSPAN HAIR RABBIT FOOT. I just might get someone to steal one of JAMIE DIMON’s Hairs to add to it. We have to have dreams in LIFE…it makes life worth living sometimes. As MARTIN LUTHER KING SAID:

“I HAVE A DREAM”

and….along with Mr. King….I have a dream as well.

word………..

Gold in backwardation: +$2.40
Silver slightly in contango: -$0.02

Srs…..I agree

Watching “Slaughter House Of Morgan” stock price getting slayed is far more pleasing than seeing the gold and silver paper price rise i have too say.

On another note….,

If you manage to get hold of Jamie Dimon’s hairs i think you should create a VOODOO DOLL……place it in a VICE…… and SQUASH the HELL out of the SUCKER!

For those who got in the SRS trade at 130, I have just exited the trade.

Thanks for replying guys> I am glad that a good debate can occur. No need to apologize to me, I know I am an aggressive asshole.

I am just looking for some realism and flexibility. Which is why I stopped looking at the usual precious metals Forums I use to follow so avidly. They are just an echo chamber where like-minded people gather to reinforce each others bias, try pointing out some inconvenient facts, and they just flame away.

Everyone is entitled to their opinion, but falling into a rigidity of thought so tight you can’t accept that maybe your investing theory was wrong, will lead you to zero in your investing account sooner or later. A good trader (not me) should not care if it is bear or bull, up or down, just concentrate on making some profit, long or short, and cutting the losses. Live to fight again another day.

The markets have kicked me in the head often enough that I finally realized this stuff a couple years back. I read lots of trading books before then, but it didn’t sink in, it took some big losses on what I thought were “sure” bets to do that.

I still see deflation gripping the economy, like the blizzard of a cold K-Wave Winter. I adhere to the Austrian School definition, and it sure looks to me like credit contraction and losses from malinvestments gone wrong total maybe a $50 Trillion (guess) or more decline in total money supply, globally, by the time this sorry episode is done. That is far, far more than all governments and central banks can pump in to try to re-inflate the bubble. It’s burst, and can’t be repaired by pumping the same old policies.

At some point (when is the $64M question?) deflation will run its course, and then we may well flip over to inflation followed by hyper-inflation. I just don’t see that happening any time soon, the process of working all the losses through the system may continue for another year yet (guessing).

The collapse of currencies is a wild card here, but unless it is the US $, precious metals priced in $ won’t go far till deflation dies off. Looking at GD1 and Japan, not exact comparisons, but similar, deflation can last 20 years or more. I doubt it will last that long, the markets move so much faster now than they did even 10 years ago.

In a deflation, precious metals may hold some of their value, but they will probably still decline some. Not as much as other asset classes, but holding cash is looking a better choice in the short term. When the deflation tapers off, then you buy the metals with both fists, that should be a bottom that won’t leave you looking like you were way too early.

Certainly, to me, the metals deserve an allocation of 10% right now, as a currency collapse and WWIII hedge. If you go higher than that, you just have to be ready to hold on tight for some stiff price declines until we get past this deflationary episode. But if your holding drops 33%, you then need a 50% rise in value to get back to even. That’s why I say just buy and hold is a bad idea right now.

I’d be happy to be wrong on all this, inflation/boom periods are way easier to live through, and to trade on. Best of luck to all, we’ll all need some to get through to the other side of the dark tunnel ahead.

deflation, stagflation, inflation then hyperinflation
all tools that have & will be used
thats the problem with fiat blown bubbles

when they start talking about deflation on the news, people will scream for inflation to save our exports, pay off our debts &
buy us all new cars, homes & toys

regarding silvers paper price drop,
if you are selling paper silver & stocks for other assets
real estate, fuel & food are cheaper too = little loss in buying power
but if you only bought stocks & contracts,
you dont hold silver anyway

wow, only 10% in PMs?
I’m 75& silver, 10% gold, 10% agriculture & 5% US$
anyone holding dollars waiting for a bottom just might get their legs knocked out.
how exactly will you source your metal at the bottom?
how will you make your trades if the power goes out for 3 days?

tin foil warning:
if you want to stock up on food,
bodybuilding shakes are nutritionally balanced,
very inexpensive per pound, & can fuel an adult for up to two weeks per 5lb container. also, 3 year shelf life. lighter to carry & better tasting than canned soup.

I’ve been thriving by supplementing my diet with bodybuilding shakes since 1992 I’ve tried most of the major brands & found that these chocolate dymatize products are some of the best tasting as far as balanced mixes.

the megashake is good for normal activity levels, the mega-gainer for high energy meals. just dont follow the serving directions.
1 scoop per 8oz milk/water is all I need per meal.
so, even if it says its a 1000 calorie shake, just make a 1 scoop serving. the gainer is similar in price to the mega shake, but has less balance & more carbs, so dont just base it by price per lb.

[I dont have anything to do with this company or brand]
here is where I’ve been ordering,
best prices I’ve found for this shake & low/free shipping.
if anyone finds dymatize mega shake cheaper, please let me know

http://www.supplementmarket.com/dymatize-mega-shake-5-lb-2270-g-compare-to-muscle-milk-p-50.html

http://www.supplementmarket.com/dymatize-mega-gainer-8-lb-3629-g-p-55.html

Rob Kirby Describes the CONTROL OF INTEREST RATES by JP MORGAN since mid 1990’s by the INTEREST RATE SWAPS on an interview by the Contrary Investors:

http://www.contraryinvestorscafe.com/broadcast.php?media=153

CanadaMetal,

Any Silveraxis reader/commentator who posts an article or oppinion/outlook is much appreciated and also if no one replies or adds to the comments does not mean the contributor is being ignored.
Too many of you are becoming way too emotional these days.

As to your deflationary outlook, these endless inflation/deflation debates will continue exactly as Prof. Fekete stated in many of his essays.
Personally i think the hybrid scenario will play out i.e. inflationary/depression and collapsing world trade/competitive currency devaluations, possiblity of war.

PauPer …yes 10% allocation to the PM’s is too low.

Freddy Krug….you might be right about the EMOTIONAL PART….but I don’t have a BEEF with CanadaPaper one bit. He makes some good points. But I will add…..if PUSH COMES TO SHOVE…I see nothing wrong with the SORT of EMOTION the FRENCH PEOPLE had when they CHOPPED THE HEADS of the KING and STAFF during the FRENCH REVOLUTION….sometimes in life you just need to GET IT OUT OF ONES SYSTEM….know what I mean?

CanadaMetal….Who knows anymore what the HELL is going to happen. This last past year has been a SHOCKER to the BEST MINDS. Regardless….the reason why I…and I did say I, see INFLATION and HYPERINFLATION is due to the fact that we do not PRODUCE MOST of the STUFF that we CONSUME. China is closing 100,000 plants before the end of the year and AUTOMOBILES are starting to STACK UP at the PORTS across AMERICA as well as other things.

FOREIGNERS are going to need their US PAPER INVESTMENTS to SHORE UP THEIR OWN ECONOMIES at some point. Just like what CHINA is doing with that 600 BILLION dollar infusion in their markets….and that’s for STARTERS.

As soon as IMPORTS stop coming into this COUNTRY…..INFLATION will hit as SHORTAGES will become widespread from GASOLINE, HEATING OIL, JEANS, CLOTHES, FLIP FLOPS and whatever you can think of. This indeed is the HYPERINFLATION STAGE. If this was 1970 were we still produced a great deal of our own stuff….I would say….MAYBE DEFLATION….not today…BABY….we have a 10 YEAR US TREASURY Credit Default Swap rate heading upwards to the MOON. Two months ago the Spread for 10yr US TREASURIES was ZERO or BELOW….today..its 120 BASIS POINTS….its heading in the RIGHT DIRECTION FOR A DEFAULT my FRIEND.

Regardless of how we get to INFLATION or HYPERINFLATION…..I have time on my side. It pays to be DEBT FREE…..and have ones own supply of FOOD. Anything after that is GRAVY.

Right now, silver in backwardation: +$0.16

FroggyDude,

I just went back to your post about the US TREASURY SPREADS on NOV 12. What I would like to ask is how you charted and figured the spreads. I went to Stockchart to do it myself….but I am not getting the numbers….can you give me a lil help in how you came about these spreads as well as well as the (TIMES) factor after the BAILOUT of AIG.

The first spread from $UST2Y:$UST3M, was 6.61 on NOV 12….again..how did you chart these to get that figure….did you do them seperately then figure the spread or did you put them on the same graph.

thanks,

steve

sideshow:

The value of anything is what you can sell it for. If you can sell your silver for $20 an oz, then it is worth $20 an oz. It is where the buyer and seller meet that determines the value.

People get hung up on the spot price of paper contracts because that is what gets touted. How can the comex be considered the true price of PM’s, when 80% of the trading never involves an actual exchange of the physical metal?

I maintain a dual balance of my PM. I look at TradeMe (New Zealands equivilent to ebay) values for items which sell, as well as the current spot price. I only started aquiring PM’s in the last 18 months, so based on the spot price my silver has lost 21% below cost. However at current physical market value I am up 6.17%

any thoughts on Hecla or Coeur ? HL CDE

for all bewailing deflation, some perspective should accompany the cries of henny penny. ignoring the policy factors behind the recent inflation and then deflation, one should realize that the deflation we see is a retreat from large, unsustainable, artificial price increases (c. 2003-8) caused by unsound fed policy and nefarious political goals….

now everyone is yelling that he wants his inflation back because those bloated prices were really a nice thing after all…..actually a return to pre bubble price levels is not a bad thing per se…all things being equal.

all of the crying about about declining prices is like the clintons who cried that congress was decreasing entitlement spending when all congress was doing was decreasing the rate of the growth….

there is legitimate concern about government manipulation of markets to achieve lower prices although that is certainly not the current policy goal - just an unintended consequence…..

inflation and deflation will occur in various sectors simultaneously as the government sees fit - bonds, equities, commodities, and general economy. the liar paulson has stated that he wants to enrich his banking buddies and concentrate wealth and power in that industry. the equities sector will thus be the next area of growth.

follow the money.

the wealthy have achieved revenge for all of the wealth distribution the executive and congressional branches have accomplished over the past 80 years. the empire strikes back.

“any thoughts on Hecla or Coeur ? HL CDE”

any equity of a company that has to go to the market for capital anytime soon (screw it - EVER) is not worth owning in this environment… What should be sought is free cash flow (no i dont mean earnings - http://en.wikipedia.org/wiki/Free_cash_flow)… waiting for tom’s cash flow kings report - should shed some light on the investment universe… IF you can find a company that is producing FCF and is actually growing (and is set to make produce FCF if gold/silver take another 30% haircut) it is that much better…

FroggyDude….I got it…..I just put in ending dates of NOV 12 and it was .18 for the 3M and 1.19 for the 2Y….dividing the 3M into 2Y comes up with the 6.61.

Today the 3M is .07 (yesterday) and 2Y was 1.09 so that is 15.57…WOW what a change in SPREAD.

FroggyDude….I did the rest of the calculations for the other TREASURIES:

TODAY:

2Y-3M = 15.57
5Y-3M = 29.71
10Y-3M= 48.28
20Y-3M= 59.57
30Y-3M =56.57

Your last figures for NOV 12:

2Y-3M = 6.61
5Y-3M = 13.17
10Y-3M= 20.83
20Y-3M= 24.67
30Y-3M =23.17

As you can see the SPREADS have DOUBLED in a little more than a week. What are your thoughts?

I already have 3 of the Cash Flow Kings top 16, and yes, I’m waiting for the full report to maybe buy others. as far as Hecla & Coeur, I already own some too, the reason I would add to HL & CDE is volume. While I’d prefer to only own the best companies, I also understand the herd mentality. if the masses ever wake up and jump into the silver stocks, the volume in Hecla & Coeur could make for a faster rise than the fundamentals of the Cash Flow Kings. Thanx RbFishing. any other thoughts on HL or CDE ?

cheers pauper - havent done the proper work, so any comment would be a waste of your time… i agree with you though - if “world down the tube” scenario does not pan out some of these companies are incredibly cheap on a cashflow basis… better yet the convertible debt is definitely worth a look…

December silver settled @902.5 and July @9.07 so the contango still exists but it’s certainly unusually small.
This next week should be interesting, what with a hundred thousand December gold contracts open interest outstanding as well as China looking for 4000 tonnes. Morgan Futures are on the hook, or should I say the American taxpayer? Looks like Hanky Panky’s fingerprints are all over it. Major black box buying today as the algorithms turn from red to green.
Crosstown traffic, I don’t need to run over you, Crosstown traffic, all you do is slow me down and I got better things on the other side of town. -JH

S&P500 just closed below 800. VERY BAD.
Next Fibonanci retracement (61.8%) at 600 - 700.
If that level is breached we get a Nikkei-style meltdown to ~ 100.

Citigroup down 50% in last 2 days. Looks like they may be toast

DOLLAR INDEX =88 +.22
DOLLAR/YEN=94.83 -1.81

If DOLLAR/YEN starts breaking the 90 handle things will really start to get VERY UGLY.
I wrote in previous commentary that the The Japanese Finance Minister stated the MoF and BoJ will not allow dollar/yen below 90….line in the sand?

Also, Randgold Resources CEO Mark Bristow said earlier today that as
as many 40% of the Junior Gold Mining Companies will go bankrupt.

Captain Hook at Treasure Chests has the same outlook.

http://www.gold-eagle.com/editorials_08/captainhook101308.html

DISCLOSURE: I have a small stock holding in Randgold Resources.

PauPer,

I have a little problem with Hecla and that is their gold mine in Venezuela. Chavez just announced the nationalization of the Crystallex property. I don’t doubt other countries will nationalize mining properties too. Next on line may be Equador (almost bankrupt) that could nationalize the Aurelian gold mines.

I like First Majestic & Silvercorp. First Majestic also sells some beautiful silver coins (1 ounce, 2, 5 & 10 ounce.) The selling is with a little premium on Comex price (14$ per ounce First Majestic annouced today that this business made some nice profits (5% of their earnings) and expects it to become 10% of earnings in 2009.
To order their coins, just go to: http://www.firstmajestic.com/s/OrderForm.asp
They have a marketcap of 80 mio with some 40 mio in the bank. CEO has proven to be good manager (First Quantum)

I think Tom will report on Silvercorp in the cash is king report. Silvercorp has a really low production cost.

I don’t believe a 30% haircut in silver could last for a long time here. The low price is already killing a lot of production. Also low zinc prices starts to affect a lot of zinc mines. Most silver is mined as byproduct. I am sure , as Ted Butler mentions, silver production could fall significantly because of shutting down of zinc mines, and others.
Low price kills low price, same will happen with other commodities like oil.

I am also looking into gold mines. For the following reason:
We are all discussing here about a major deflation scenario or a major inflationary scenario. I think everyone is ok with me when I say gold mines will soar when we have hyperinflation.

But what would gold mines do in deflationary scenario? For now, gold mines are crashing, together with DJIA. In 1929 the same scenario happened. Gold stocks, like Homestake Mining crashed in October & November of 1929, together with DJIA, but suddenly after that happened the gold stocks decoupled from the broad stock market and started to rally. They rallied till 1936 or so. Homestake rose with 600%, 700%.
Could the same happen to the gold mines now if this deflation would hold on?

Could we have a win-win?

(I am currently looking into Yamana, Northern Minerals, Minefinders, Aurizon Mines, maybe GoldCorp and others) Regional diversification will be key because of nationalization possibility…

CDE, which I have followed off and on for 20 years and have owned in and out over the same time (it was about $16 in 1992 or so when silver was $3.00 and up as far as $7.00 in the past 4 years), owns a lot of gold in the ground, perhaps more than any other company in the world. It has appeared to me to have been poorly managed, to say the least. 5 years ago, Barrons ran an article on it, just before silver began to rise. But a bunch of bad project selections and a lot of stock dilution ensued, leading to the present price of 36 cents a share. The shorters have also attacked it with avengeance over the past 4-6 years. It actually makes a small profit (with silver over $12 or so I would guess) and is reasonably solvent, though I would like to see a good professional analysis of its book. Point is, if it can hang on, at this price it would really make investors a lot of $$$ should silver return to just $12-$15 (in my amateur analysis). I think I’ll try several thousand $$$, What the hell, I’ve lost a lot more than that in the past month.

CDE still has a large SHORT POSITIONS even though it has dropped a great deal since last month…it is still 10% of its Float:

Coeur dAlene Mines Corp. $ 0.36
CDE -0.05

Short Interest (Shares Short) 54,304,400
Days To Cover (Short Interest Ratio) 4.3
Short Percent of Float 9.90 %
Short Interest - Prior 71,889,700
Short % Increase / Decrease -24.46 %
Short Squeeze Ranking? -38

% From 52-Wk High ($ 5.18 ) -1338.89 %
% From 52-Wk Low ($ 0.41 ) -13.89 %
% From 200-Day MA ($ 2.05 ) -469.44 %
% From 50-Day MA ($ 0.84 ) -133.33 %
Price % Change (52-Week) -89.60 %

Shares Float 548,529,300
Total Shares Outstanding 551,335,009
% Owned by Insiders 11.31 %
% Owned by Institutions 46.70 %
Market Cap. $ 198,480,603
Trading Volume - Today 13,083,980
Trading Volume - Average 12,697,400
Trading Volume - Today vs. Average 103.04 %
Earnings Per Share 0.03
PE Ratio 13.70
Record Date 2008-NovA

HECLA also has a large short position a larger percentage short of 15% to its float than CDE:

Hecla Mining Company $ 1.10
HL -0.01

Short Interest (Shares Short) 19,028,900
Days To Cover (Short Interest Ratio) 5.3
Short Percent of Float 15.00 %
Short Interest - Prior 22,309,600
Short % Increase / Decrease -14.71 %
Short Squeeze Ranking? -72

% From 52-Wk High ($ 13.14 ) -1094.55 %
% From 52-Wk Low ($ 0.99 ) 10.00 %
% From 200-Day MA ($ 6.56 ) -496.36 %
% From 50-Day MA ($ 2.71 ) -146.36 %
Price % Change (52-Week) -90.00 %

Shares Float 126,859,300
Total Shares Outstanding 169,502,734
% Owned by Insiders 13.28 %
% Owned by Institutions 67.50 %
Market Cap. $ 186,453,007
Trading Volume - Today 3,891,776
Trading Volume - Average 3,611,200
Trading Volume - Today vs. Average 107.77 %
Earnings Per Share -0.15
PE Ratio
Record Date 2008-NovA

Lets look at SLW-Silver Wheaton…which I like better than CDE or HL….Tom also includes this one as a CASH COW…it only has a 2% short postion of its FLOAT:

Silver Wheaton Corp. $ 2.57
SLW -0.15

Short Interest (Shares Short) 4,972,000
Days To Cover (Short Interest Ratio) 0.9
Short Percent of Float 2.00 %
Short Interest - Prior 4,164,100
Short % Increase / Decrease 19.40 %
Short Squeeze Ranking? -1

% From 52-Wk High ($ 19.54 ) -660.31 %
% From 52-Wk Low ($ 2.56 ) 0.39 %
% From 200-Day MA ($ 10.47 ) -307.39 %
% From 50-Day MA ($ 4.53 ) -76.26 %
Price % Change (52-Week) -81.20 %

Shares Float 248,600,000
Total Shares Outstanding 223,802,000
% Owned by Insiders 10.49 %
% Owned by Institutions 46.50 %
Market Cap. $ 575,171,140
Trading Volume - Today 4,693,086
Trading Volume - Average 5,647,900
Trading Volume - Today vs. Average 83.09 %
Earnings Per Share 0.35
PE Ratio 7.80
Record Date 2008-NovA

Reserve balances up another $41 billion to $634 billion! Funds still caught in the helicopter updraft. How long till they fall?

http://www.federalreserve.gov/releases/h41/Current/

Finally, gold is holding its own against oil. I hope this is a trend and continues. If the stuff I buy on a daily basis keeps getting cheaper while gold flat lines I’ll be a happy boy. I just wish silver was at the party.

Here’s two new indexes that may indicate a flight out of cash. FOYS (forclosures on your street) and VHIYN (vacant homes in your neighborhood). When these indexes start trending down, everybody will feel its safe to gamble in stocks again.
You guys are awsome, keep the great posts coming.

JDV, yeah those FirstMajestic coins look sharp, I have 10 on order.

Kondor, I think that 1000 shares of CDE for under $400 could be a decent lottery ticket. thats all I plan to add

& SRS, besides you holding a 10% interest on Greenspans hair,
you also posted some very useful specifics, which is the main reason that I’m here. so thanks for your time. I also hold & prefer SLW

anyone have favorites in the pgms / platinum group ?
SWC [Stillwater] or PAL

moly ? I have some GMO General Moly
[used to be IGMI Idaho general mines]

I’m looking at Horsehead : ZINC [1.77 p/e]
but worried about their coal-fired plant w/ Obama

even in a real depression
if Obama starts a WPA works program,
we’re still gonna need zinc & moly for hardened steel
bridges, pipes & infrastructure

Thanks again

while I’m at it, anyone else own MOO ?

I bought some TC(moly) last week as well as SLW. These two looked like they are weathering the downturn quite well.
Some might think me crazy but my recent lottery ticket purchases are HBMFF,KGRZF,OZMLF and ARAFF. Canadian and Australian companies should have near zero risk of confiscation.

Zinc was one of the leaders down…maybe a leader up?

forwill, I’m gonna tiptoe into TC tomorrow.
along w/ ZINC, MOO
& CDE [cost averaging on the way down, lol]
crazy is as crazy does, oh well
I’m really trying to diversify into something other than silver
but the more they fall, the more they keep pulling me in

forwill ,

I am starting to think that gold is always better than silver , more liquid .people always say silver under value to gold… when you have 2 stock , A fallen 95 pct , B fallen 50 pct… doesn’t mean A is better value.As for gold , volatilty is much smaller than silver and a safer trade..when u win ,you win less but if it drop, you also loss less than silver..

Pauper, I have to admit, I’m not a very good individual stock picker. Many times I have broken the rule of not getting in until an uptrend is well established and paid with alot of extra wrinkles. Getting into those two last week has already proven to have been premature. Where’s our bear market rally? More pain ahead it appears. Yeah, double down again?

Mike, I agree. My gold holdings are all bullion now. Its a great feeling.
I decided some time back to put 80% of my silver holdings in the new SLV ETF and to try to trade the relatively spikey moves its known for. I could always convert to bullion at a small premium right?! Hahaha! Did anyone think silver would behave so differently from gold during a “crisis”? Alot of smart people were wrong, but over time, I still believe they will be right. How much time is the scary part.

Listen up folks….. i know your into HEAVY METAL(S)

This i dedicate to the USDollar…R.I.P.

http://www.last.fm/music/Bloodsimple/_/Dead+Man+Walking

Disclosure:

My Randgold Resources stock trade is paying off nicely …up 10% in U.K.trading ….may sell later…justa watchin and tracking the charts/technicals/indicators and daily financial news flow.

Where is Tom Szabo?

Just for the record, I said goodbye to him a week ago in Canberra, Australia, at the end of the Gold Standard University Live conference, when he drove off, with a fellow named Christopher who lives on Norfolk Island and his female companion, headed for Sydney.

Hopefully, he made it back to California. But why have we not heard from him since?

Guy’s,

Watch this video it was broadcast on CNBC Morning Exchange today.On the panel is Mr Hugh Hendry of Eclectica Asset Management .This guy has been consistently correct predicting our present situation for years.He also is a good friend of Dr Marc Faber.
I can clearly recall his comments on JPMorgans Gold derivatives and strange activity on TOCOM on CNBC back in the last bear market in 2002.He fears not one bit from speaking the truth.

http://www.cnbc.com/id/15840232?video=935472423&play=1

forwill

silver is a gold derivative. It is designed that way so that you may accumulate more gold. At the start of the gold bull market when the GSR is ~80, you should be more into silver. Towards the end,when the ratio falls to single digits you “book profits” not into fiat but into gold. Then when the gold price crashes in fiat you should reverse the trade.

This is the trade I understand, not the trade that Canada Nonmetal & others advocate. Guess I have an extra chromosome - which makes me biased, one-side, moronish and an uncurable goldbug. You can call me a Crank.

Check this….

http://dshort.com/charts/bears/four-bears-large.gif

The “TURD” Bank of England has been busy behind the scenes…..they too have a copy of the FED’s playbook.

http://www.bankofengland.co.uk/statistics/m4/2008/oct/m4SA.GIF

The GOLDRUSH continues……..Perthmint is suspending all orders!

http://www.theaustralian.news.com.au/business/story/0,28124,24687337-643,00.html

Freddy Krug….first off….are Freddy Krug and freddy K one in the same? I bet so. Excellent chat with Hugh Hendry…..I love his line..”I SEE DEAD PEOPLE ALL OVER THE PLACE”. That’s my line…LOL. Looks like Hugh is going to make a few more BUCKS in BONDS then sell it all, BUY GOLD and head to the CARRIBEAN.

So the PERTH MINT suspends sales. I have to agree with JASON HOMMEL on this one….I don’t think they have the metal they are supposed to have in these POOL ACCOUNTS. Regardless…..the largest buyers of Gold this 3Q were RUSSIANS, MIDDLE EAST, CHINA, and USA. Just a matter of time before GOLD and SILVER become the ASSETS that people talk about in the LAUNDRY ROOM or at the LOCAL BAR. The days of talking about how much money one made on their HOME or their 401k’s are OVER.

You will know when to start to SELL when the SENIOR CITIZENS start talking about TRADING GOLD and SILVER at their BRIDGE CLUB.

Freddy Krug…one more question or comment for ya. Look at these STOCKS..

JP MORGAN -13.5%
CITICORPSE -16%

Do you think FOREIGN COUNTRIES through BROKERS could be SHORTING or PUTTING SELLING PRESSURE on these BANKS? I know if I was an Oil Exporter who got SCREWED by MORGAN SHORTING OIL…I would do whatever I could to DESTROY that BANK.

comments??

SrS…….THEY ARE INDEED THE ONE AND THE SAME,by the way did you manage to listen to that song “Dead man walking” by the musical artist Bloodline.

Gold inversely related to JPM now???

http://finance.yahoo.com/echarts?s=JPM#chart2:symbol=jpm;range=5d;compare=gld+spy;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Is it possible that the talk about JPM/Comex delivery default could be neutralized by IMF sales Jim Rogers has talked about?

Is it possible Al Qaeda has striken again, this time through short sales of C/JPM/GS with help from gold backed countries like Iran??

Freddy…I will listen to it now…..but I have to say….THIS IS A NICE DAY….A NICE CHANGE…..my GREENSPAN HAIR RABBIT FOOT has paid off…for at least TODAY:

JP MORGAN -14%
CITICORPSE -22%

GOLD +$42
SILVER +.55

Just like Mike stated in the above POST….it looks like the is a INVERSE TRADE TO GOLD-MORGAN. I still think its RUSSIA, SAUDI ARABIA, CHINA and etc buying GOLD and SILVER while SHORTING MORGAN….of course thats just PURE SPECULATION…but if I were PUTIN….thats EXACTLY what I would do.

rocco, I thought China and Russia had big long positions in US banks…at least in FNM so it stands to reason the brokers too. You say shorting but do you also mean liquidations?

Thanks for the links, Freddy. Always refreshing to see the lovely Maria B. Love her comment that the safe business is booming. Hahaha! We’re not buying them to put bonds in, though. It’s heavy metal time. The stampede has started and JPM has a problem, unless (and even if) they’re covering right now.

Krug……all I can say is this:

“I AM A DEAD MAN WALKING….PUT ANOTHER NAIL IN THE COFFIN”

Thats our NEW JP MORGAN SONG…..and I have to say…during tough INTRDAY TRADES…..I imagine if you turn up that SONG….it just might HELP.

GOFO is still negative, gold is officially in backwardation for the first time since 1999. We are up 47 dollars right now - the short squeeze is back on but can JPM knock it back down? Silver is still +0.53.

http://www.minyanville.com/articles/gold-dollar-currency-3M-bull-gofo/index/a/20079

Mike…..maybe I don’t know what the HELL I am talking about….but if you remember AMARANTH….they were the HEDGE FUND that was LONG NATURAL GAS……JP MORGAN was their BROKER…who was also on the OTHER SIDE of the TRADE. Thus, JP MORGAN took down their own CLIENT and AMARANTH went BANKRUPT.

RUSSIA was in big trouble when OIL went below $60….now Anal-Lists are talking $40. This would give me MOTIVATION to DESTROY those who DESTORYED ME. JP MORGAN started the BANK of IRAQ in DEC of 2003 and started to trade Medium length OIL CONTRACTS. Since then, they have taken it to a NEW SCIENCE. They DESTROYED many HEDGE FUNDS who were their CLIENTS.

I have no IDEA of what kind of MONEY RUSSIA has in JP MORGAN…but I would say the amount of MONEY they are LOSING from OIL….is starting to ADD UP. I believe their last reduction of EXPORT TARIFFS was to $39 a Barrel. If Russia Exports 4 million barrels a day….thats about $156 Million Dollars a DAY REVENUE for PUTIN. In a Month thats about $4.7 BILLION.

Unfortunately…many of the companies in RUSSIA EXPORTING OIL can’t do it…if OIL is $50 and the TARIFF is $39 that leaves the company with $11….below COST OF PRODUCTION….Thus a great deal of OIL is sitting in RUSSIA and GOVT REVENUES are dropping.

My analysis may be ELEMENTARY….but common sense tells me…the US DOLLAR and HEDGEMONY with its BANKING BUDDIES is over. FOREIGNERS have gotten CRUSHED from these BANKS and REVENGE is coming. Russia could be selling its STOCK in JP MORGAN…thats good enough for me.

Hey, your comments appear almost faster than I can read them. Thank you, SRSrocco, Freddy etc., for your interesting thoughts. Maybe the Russians gang up with the Arabiens and take some nasty monster(s) down. Tom should add some comments since something really hot seems to be going on.

There may be other reasons for Au&Ag to raise. Citigroup is in the news and GM. If GM takes the chapter 11 then (all?) respective CDSes will come due. It may turn out that the whole CDS industry is a fraud and that the counterparties of the CDSes simply cannot come up with the amount of $$ necessary to meet all obligationes. This means further bankruptcies and others CDSes to come due. Lots of dominos are going to tumble.

Even if the counterparties have enough liquid means these probably would be raised by sales of (US) bonds and be very bad news for the bond markets.

The fallout of such an event could even hit the (US) government via AIG and other parties it took over. The total fallout may be too large to handle by governments and central banks. Let’s see what nasty things the future will bring.

SrSrocco and the rest of you…..am a openin ma most expensive bottle of LIQEUER and celebratin…….ITS FRIDAY NIGHT AND EVERTHING IS JUST TURNING OUT RIGHT.

From kitco, concerning gold lease rate (explains the chart they post on their website):

There are two factors that determine the going lease rate which is determined by market forces alone. One is the difference in demand between gold for immediate physical delivery ( spot ) and gold contracts for later delivery ( futures ) . The other being the current interest rates for borrowing $US dollars.

Translation:

The gold lease rate is the combination of Gold Forward Offered Rates (GOFO) and LIBOR. And here they are: http://www.lbma.org.uk/?area=stats&page=gofo/2008gofo

If you look at the GOFO alone, you can see that the 1- and 2-month rates have gone negative, which is backwardation. The trends for the longer lease terms all point toward imminent backwardation.

I assume this is what Fekete has written about in his articles. Interesting how the kitco gold lease information masks backwardation because LIBOR is a factor. Strip that out and apparently there is some very important information in the GOFO numbers alone.

Bing! Is the GOFO what we all should be paying attention to? Is this the concrete manifestation of Fekete’s writings on backwardation in the gold market?

Edumacate me, someone.

Thanks

Freddy Krug,

I got a WONDERFUL CHART for ya…Yes…thats right…it’s a CHART of CITICORPSE:

http://stockcharts.com/h-sc/ui?s=C&p=D&yr=0&mn=4&dy=0&id=p10408895590

CITICORPSE -33.5%

WHAT A DAY….GOLD up $50 BUCKS…silver up $.65….TIME to give my HIRED HAND a BREAK from RUBBING my LUCKY GREENSPAN RABBIT FOOT.

ONE MORE THING……..How on earth could I forget……KRUG….this just makes FRIDAY NIGHT even BETTER.

GUESS WHAT??? YA’LL never GUESS….go ahead and GUESS WHAT??

JP MORGAN is no longer the largest BANK in CAPITALIZATION….

WELLS FARGO $75 BILLION
JP MORGAN $74 BILLION

AH HAHAHAHHHHhaHAHAHhhahahHAHAHAHAHAH

What a FRICKEN DAY….JP MORGAN is WORTH LESS THAN WELLS FARGO.

Time to SHORT MORGAN and GO LONG WELLS FARGO….

Let us hope the above writers are correct and that the countries and funds and institutions that JPM has screwed for so long, including honest investors in gold and silver, are taking their revenge. I think there is a direct correlation between the sinking fortunes of JPM right now and the upsurge of PM prices. We may find out for sure Nov 28, the first delivery date for COMEX December futures. Anybody in the know out there who can add to this?

CURRENT LARGE FINANCIAL CO’s laying/residing at THE FED MORGUE

Bear Stearns….. The UN.B-E-A-R-i-e-d…..at the FED MORGUE

The Fabulous Funnies…. Undead Freddie Mac & Fannie Mae…..at the FED MORGUE

Lehman Brothers……..R.I.P……. flesh consumed before reaching the FED MORGUE

AIG…..A-llmost I-s G-one…at THE FED MORGUE

Citi-Corpse…..R.I.P-EICES… not gonna make it to THE FED MORGUE

GM,FORD,CHYRSTLER… begging/awaiting for membership at FED MORGUE

GE……slow death……????

Slaughter House Of Morgan(JPM)………OWNS THE FED MORGUE

Am a still celebratin and raisin a toast to y’all……EAT…DRINK…BE MERRY…FOR TOMORROW WE DIE!

I just threw away that bottle of LIQEUER as this news just hit….New York Fed Pres.Tim Gietner is to become US Treasury.
Gietner has just been promoted from his previous post at the FED (MORGUE)MORTUARY.

fwiw, larry kudlow showed in a column today the adjusted base money graph with its huge meteoric rise which we have seen here and interprets it as easy money…..mark another vote for inflation….i say this will happen once bank reserves start to decline….yesterday they were up….if the gold increase is sustainable then it too signals a return to the inflation which halted in august…..

kudlow was dishonest in suggesting that the base was low for the past couple of years - it has been at that level since time immemorial….the massive runup since september is unprecedented…the choke point holding back inflation is the banks…my advice is buy silver with a vengeance….

once the banks are unclogged silver will rise dramatically….as markets have a chance to operate freely gold/silver ratio will return to historic levels of 15-20:1…not sure on the timing of this…keep an eye on gold backwardation….if sustained, gold and silver will sky rocket in order to correct although it may be too late….if it does not correct the dollar is dead and rigeur mortis takes over on the usd and bonds….

kudlow lost my respect a long while back but his interpretation on the trend is correct….today’s movement on gold - if sustainable - suggests a v-turn against deflation….if gold maintains at 800 then asset prices get a modest/moderate boost….the stock market increase today had little to do with geithner.

I wouldn’t get too excited about today, it might have been a ton of short covering because an insider was named as the Secretary of Theives. I hope thats wrong thinking, but possible.

Tom sent me a message saying that he has been recuperating from his visit ‘down under’, and will post something soon.

I guess I didn’t realise what an intense experience we all had down under here last week!

In response to Tzo, the answer to your query is ‘YES’.

If the gold and silver backwardisation holds for a week, then the chances are that it is all over for fiat currencies.

Perhaps Tom will elaborate on that.

I see November gold had 60 new contracts Friday and thinking somebody is trying to jump in front of December to ensure delivery.

Rocco I get what you are saying about lost oil revenue but do you think it is really in Russia’s best interest to mortally wound their best customer? Unless they are positioned for this by having stockpiled massive amounts of gold, could it be that their only outlet for frustration towards the US is to refuse a handshake?

Gold seems to be trading close to a tipping point for JPM. It must be getting expensive to keep hammering COMEX gold down every morning and possibly JPM resources are becoming limited, particularly with TARP money dump trucks currently held up in traffic. Silver, because it hasn’t risen, does not pose a problem to JPM massive short position but it will. Looking more and more like it will be gold spiking first, maybe to 100:1 before silver snaps back. Silver and gold charts have really diverged this week.

http://finance.yahoo.com/echarts?s=GLD#chart3:symbol=gld;range=5d;compare=slv;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Mike R,

The United States is not RUSSIA’s best customer. Their best Customers are the European countries where they export a great deal of Heating oil and Diesel for heating that ICE CUBE during the winter. Russia Exports are about 7 Million barrels a day…little less now. These figures come from 2007.

According to the EIA…the break down in IMPORTS from OIL EXPORTING NATIONS into the United States as of AUG 2008 is as followings:

MONTHLY FIGURES IN THOUSANDS OF BARRELS

CANADA: 68,160
SAUDI ARABIA: 48,759
MEXICO: 43,385
VENEZUELA: 40,440
NIGERIA: 36,137
IRAQ: 20,543
ALGERIA: 16,416
ANGOLA: 15,346
RUSSIA: 15,185
VIRGIN ISL. 9,235
———————————–

As you can see from the TOP 10 OIL EXPORTERS into the United States, Russia comes in at number 9…right above the VIRGIN ISLANDS?? LOL…

Russia exports about 6.5-7 million barrels a day and only consumes about 2-3 million barrels. This is certainly a GREAT REVENUE source. The United States produces about 6 million barrels a day and CONSUMES about 19 million. Do you see the PROBLEM HERE.

Regardless….the OIL that RUSSIA sends to the USA is only about 12-13% of their TOTAL EXPORTS. Also you have to remember, RUSSIA is right behind SAUDI ARABIA in largest OIL EXPORTERS in the world. If Saudi Arabia is number one and it is our 2nd largest source of imports and Russia is our 9th….you can imagine that Russia is sending a great deal of oil to other countries besides the USA. According to the IEA, Saudi Arabia is only producing 250,000 more barrels a day than Russia.

If you notice that Saudi Arabia is our 2nd largest source for OIL at 48.7 Million barrels a month and Russia at 15.1 Million Barrels a month this is only 1/3 of Saudi Arabia’s supply.

Furthermore….according to the WORLD GOLD COUNCIL, 3rd Quarter Gold sales hit another record of $32 Billion dollars. For those who think the record amount of gold being sold is not affecting the paper price…your right. The article states that ONE INVESTOR in EUROPE bought 30,000 ounces of GOLD from the PERTH MINT for $33 million. If you do the MATH that is $1,100 an ounce….that was probably about $350 more than the PAPER PRICE.

Lastly, the article goes on to say that the LEADING COUNTRIES BUYING GOLD WERE:

RUSSIA, UKRAINE, MIDDLE EAST and USA.

http://arabianmoney.net/2008/11/22/perth-mint-stops-taking-new-gold-orders-amid-huge-demand/

I would IMAGINE next quarter we will see CHINA pick up in its BUYING OF GOLD. So as you can see the United States is SCREWED. When the SOVIET UNION COLLAPSED in 1989….it had enough SURPLUS of OIL to EXPORT itself out of its problems…..but the USA has a LARGE DEFICIT of OIL….it can’t do it.

GOLD and SILVER are going up much higher…..

CORRECTION: It was $1100 Australian dollars…my BAD….so it was probably $700 USD. That was my ERROR.

Rocco, I should have been more clear. Direct or indirect trade doesn’t matter IMO. At 20 Million bpd the USA is the best customer for ALL producers of oil driving the price up for european purchases of that Russian oil. So I’d say that if someone is a major oil exporter it is in their best interests to prop the US up as long as fiscally possible, but not SO long as to make the paper they exchange for oil worthless….which really is where we are today. Maybe the russians will try to muscle in on some country the US cares about to achieve a spike in crude.

At some point down the road (pretty soon!) like you say, nobody will give the US oil for anything other than real money, be it gold, wheat, aircraft or technology. OIL for FOOD Iraqi style!!

The rout in the bond market

http://www.nytimes.com/2008/11/23/business/23safe.html?_r=1&ref=business

Seeking Solace? You?ll Find Little in the Bond Market

By JEFF SOMMER
Published: November 22, 2008

WHEN your safe haven comes under attack, you?re really in trouble. But that?s what has happened this year to many investors, as some bond portfolios have taken enormous hits.

It?s bad enough that the stock market has plummeted. Even with a late-day rally on Friday, the Standard & Poor?s 500-stock index is down more than 45 percent for the year to date. Stocks have not declined that much in a full year since 1931.

But bonds? They?re supposed to be the Steady Eddies of a well-diversified portfolio ? safe, boring and a necessary part of an investor?s diet, like spinach. The excitement ? and risk ? in a portfolio should come from stocks. If bonds fluctuate at all, they are expected to rise in value when stocks decline, buffering a portfolio?s returns in a rocky market. That, at least, is the common expectation, said Robert L. Rodriguez, chief executive of First Pacific Advisors and co-manager of the FPA New Income mutual fund.

But the global credit crisis has shattered the expectations of many investors in fixed-income as well as equity markets. With forced liquidations of bond holdings still under way by major institutions in the wake of the Lehman Brothers failure in September, even the slightest whiff of risk in a bond has put off investors, resulting in big losses. And bonds are certainly not a sideshow: Much of the turmoil in the financial sector and the overall economy has emanated from the credit markets.

So far, only the most unimpeachably safe fixed-income securities ? for the most part, those issued by the Treasury or otherwise backed by the United States government, directly or indirectly ? have generally held their value. ?Investors are confused, and they have a lot of misconceptions,? Mr. Rodriguez said. ?You have to get to the basic question, and that is, which bonds do you actually own??

Long-term corporate bonds, for example, declined in value by more than 18 percent, on average, through October, according to Ibbotson Associates, a Morningstar subsidiary. That?s worse than any full-year decline on its records going back to 1926.

The rout in corporate bonds, particularly high-yield or junk bonds, has been worse, by some measures, than even the distressed market of the Great Depression, said William H. Gross, co-chief investment officer of the Pacific Investment Management Company. Junk-bond yields ? which move in the opposite direction of prices ? recently soared above 20 percent.

?These are unheard-of, unseen yields that have never taken place in anyone?s lifetime,? said Mr. Gross, who manages Pimco Total Return, the country?s largest bond fund. ?Even during the Depression, corporate bonds did not trade at these particular yield spreads,? or premiums over yields of comparable Treasuries, Mr. Gross added.

On the positive side, long-term government funds tracked by Morningstar were up 9.2 percent for the year through Thursday.

But in many parts of the market, the returns for bond mutual funds are sobering, with performances that would be abysmal even for stock funds in a typical year. High-yield bond funds were down 29.6 percent for the year through Thursday, emerging-market bond funds were off 26.5 percent, and bank loan funds were down 24.7 percent. Even intermediate-term bond funds, a middle-of-the-road category often used as a core holding for portfolio balancing, were down 9 percent.

This is no typical year, however. Not by a long shot.

?Never before, in 25 years, have I seen conditions like this,? said Mary J. Miller, the director of T. Rowe Price?s fixed-income division. ?It?s not just credit risk,? she said. ?Some parts of the market are liquidity-impaired ? there just aren?t enough buyers out there.?

Municipal bonds have been ?considerably punished,? she said, because of a lack of buyers and the ?acute risk aversion? that has permeated the market. Most municipal bonds are, in fact, creditworthy, she said, but their prices have gone down anyway. The loss of independent firms that functioned as market makers ? like Bear Stearns, Lehman Brothers, Merrill Lynch and Wachovia ? has disrupted markets, she said, and so has the continued unwinding of leveraged bets, often packaged as complex derivatives, taken by hedge funds.

Mr. Gross of Pimco described the wave of selling by hedge funds as akin to ?a margin call? in which bond holders are forced to sell securities at lower and lower prices.

Still, some bond funds marketed as core holdings for buy-and-hold investors have held their own this year. In the current market, that means not losing much money, and, in some cases, maybe gaining just a little. These funds include Pimco Total Return, which was down 0.3 percent through Thursday;, the Vanguard Total Bond index fund, up 0.9 percent; the T. Rowe Price New Income fund, down 2.3 percent; and FPA New Income up 3.7 percent. All of these funds are highly rated by both Morningstar and Lipper.

This modest performance was possible because these funds did not dabble much, if at all, in risky areas of the market, said Jeff Tjornehoj, senior research analyst for Lipper. ?Funds that did well in up-markets by taking on risk have been punished now,? he said.

There are many ways of minimizing risk. The Vanguard Total Bond index fund is passively managed, and mirrors what until recently was known as the Lehman Aggregate Bond index ? and is now called the Barclay?s Aggregate Bond index, as a consequence of Barclay?s absorption of Lehman?s bond analysts and indexes. Treasuries within the index gained in value while corporate bonds fell, and the results have been ?about what you might have expected from a core holding,? said Fran Kinniry, who runs the investment strategy group at Vanguard.

FPA New Income has taken a different approach, holding large quantities of cash and Treasuries, and keeping the average duration ? essentially, the time before a security matures ? down to about one year. Reducing duration cuts down on the risk of shifts in yields and inflation expectations.

Pimco has taken another tack, by buying Treasuries and investing in fixed-income securities of Fannie Mae and Freddie Mac, the mortgage giants that have been bailed out by the federal government. ?We?ve essentially made ourselves partners? of the government, Mr. Gross said.

Mr. Gross is taking a similar approach, he said, with investments in the preferred shares of bank holding companies in which the Treasury is injecting capital. With a shortage of liquidity, and an epidemic of risk-aversion, he said, it makes sense ?to buy something where you can partner with Uncle Sam as opposed to being left out in the cold.?

With commodity prices declining and the Consumer Price Index dropping in October by the greatest amount on record, there are signs of disinflation, perhaps even the possibility of a cycle of declining prices, known as deflation. Bond strategists caution, however, that the current outlook for inflation has been made murky by the attempts of the Federal Reserve, and of central banks and governments around the world, to pump money into the financial system in an effort to strengthen the global economy.

For Mr. Rodriguez, this is a major concern, and further reason to minimize all of his bets. ?We may be facing deflation first, and then inflation down the road,? he said. ?This is a very difficult time.?

Mr. Gross said that for months to come, he expects the bond market to be struggling to evaluate the risks of both deflation and inflation. ?It?s a legitimate debate,? he said, ?and we don?t have any clear view as to which one wins.?
———————————

My comments

NY Times is reporting your bonds are in trouble. As SRS points out the spreads on long bonds vs short ones are widening. Is there a trend?

interesting theory…

http://www.businessspectator.com.au/bs.nsf/Article/A-tsunami-of-hope-or-terror-LHRJP?OpenDocument&src=sph

KESERI,

Nice article….it looks like nothing is really SAFE anymore except GOLD and SILVER. Looking at the action on FRIDAY of the PRECIOUS METALS and their stocks I noticed some interesting trends. When the DOW JONES would start to head down GOLD and SILVER (and their Stocks) would not drop much. But when the market would head back higher…they would increase each time a little more in percentage.

On the Other Hand….when JP MORGAN and CITICORPSE reacted to the Downward trend of the DOW they would FALL HARDER and would not really head higher on the DOW RALLY. This might be an interesting trend to watch next week.

About the US TREASURIES….looks as if the SPREADS are even getting wider. On Friday the 3 Month TREASURY Yield Fell to 0.02. Even though the longer Treasuries have come up a bit from their lows…..compared to the 3 Month…the SPREADS are really WIDE.

SPREADS on NOV 21 (FRIDAY):

2Y-3M = 54.5
5Y-3M = 101.0
10Y-3M= 160.0
20Y-3M= 196.5
30Y-3M =185.0

SPREADS on NOV 20

2Y-3M = 15.57
5Y-3M = 29.71
10Y-3M= 48.28
20Y-3M= 59.57
30Y-3M =56.57

SPREADS on NOV 12

2Y-3M = 6.61
5Y-3M = 13.17
10Y-3M= 20.83
20Y-3M= 24.67
30Y-3M =23.17

Just from Nov. 12 the 3 Month-2 YR Treasury has spread increased 8X. When you compare the others…they are running close to 8X spread since Nov 12. Some interesting articles to look at:

Will the Saudis buy gold and silver shares next?

http://arabianmoney.net/2008/11/23/will-the-saudis-buy-gold-and-silver-shares-next/

Gold and Silver Bullish Fundamentals- Keep Your Eye on the Prize

http://www.marketoracle.co.uk/Article7436.html

Geez, have you guys seen the call volume for GLD on Friday for December?

Hard to say if this is bullish or bearish short term.

http://finance.yahoo.com/q/op?s=GLD

Rocco how do you interpret these widening spreads?

Mike R,

I started to really look at the spreads when FroggyDude made a reference to it in a past post here in the SilverAxis Blog. I have to agree with his assessment of the SPREAD. This is his quote from his Nov 12 post:

“This tells me that the bond market is requiring significantly greater spreads to hold long term USGov’t money since the AIG bailout. Why? Since all US debt is considered “default risk free” then the only difference must be expectations of inflation over those periods. So since the 2 yr spread has increased by over 300% since Sept 16 the bond market is that much more fearful that the dollars that they will receive from the treasury will have a lower purchasing power than the dollars they invest today.”
———————-

Also Peter Schiff says the same thing when he was on BLOOMBERG on FRIDAY….most of these guests who take the other side of Schiff are SHMUCKS in my book. The same kind of MORONS who were debating him back 2-5 years ago. Its quite FUNNY to see his ANSWERS compared to the other two guests. He does explain that the US TRESURY BONDS are the last big BUBBLE to BURST right along with the SUBPRIME. He says not only will the US BONDS start to lose VALUE….but the DOLLARS they get when they sell the US BONDS will be worth a great deal less….THUS getting SCREWED from in FRONT and BEHIND at the same time:

Peter Schiff on BLOOMBERG Nov 21:

http://www.europac.net/Schiff-Bloomberg-11-21-08_lg.asp

Mike R…..one more thing in reference to your reply to the “US BEING THE BEST OIL CUSTOMER”. This is not about SEMANTICS…you bring up a good point that in PROPPING up the US MARKETS has brought about an increase in the price of WTI (West Texas Intermediate). That statement at first glance seems true. If there is more demand….than a price of a commodity goes up.

But on the other hand…..the IEA (International Energy Agency) just came out with a new STUDY of the 400 largest OIL FIELDS in the world. Back in July of this year they REVISED their ANNUAL WORLD DEPLETION RATE from 4.5% to 5.2%. When the new study game out in NOV….the NATURAL RATE of DEPLETION is 9.1%!!!!! This was a shocking number. By that we, need to find a new Saudi Arabia every 1 1/2 to stay FLAT.

The reason why OIL has been so cheap is due to the PETRODOLLAR MONOPOLY as well as the PROPPING UP of the US ECONOMY. People need to understand…..demand has not really fallen 65%. The price of OIL heading towards $200 was being determined on REAL FUNDAMENTALS.

I will explain more later on a future POST why OIL DEPLETION will be far greater in the next several years than most economists expect. These are the same ANAL-LISTS that were calling for $5 dollar Oil in 1999 when Oil was $10 a BARREL…..only 6 months later did the price head up to $30.

Regardless….the rise in price of OIL does not need to be tied to the PROPPING up of the US ECONOMY….as the OIL EXPORTERS were getting to trade OIL for WORTHLESS US DOLLARS and TOXIC FINANCIAL instruments. So in that VEIN…..the price of OIL was very EXPENSE for these exporters…as they stand to lose a great deal of their INVESTMENTS on that RELATIONSHIP. Soon these exporters will be getting a REAL TRADE for their OIL…..REAL GOODS, GOLD, SILVER, etc.

SRSrocco, I agree that oil is the center of the world economic universe. The exporting countries are going to get “SCREWED from in FRONT and BEHIND at the same time” unless they unload their $ reserves before the $ fall. What better place is there than silver/gold, base metals, farm land, and the shares of companies that mine, produce,and deliver REAL goods. Its a buyers market for sure and these nations need to take the cue from their citizens who are going on a buying binge. Thank you guys for your work on the treasury spreads.

forwill….I agree with your last post:

ONE ADDITIONAL POINT:

I tend to write quite fast….most of the time I do a quick SPELLING and GRAMMER check. But….I have to say….when I went back and read my last post ….there are SEVERAL ERRORS in it. My appologizes. But at least you all get the SUBSTANCE of the POST. I plan on TIGHTENING up on the ERRORS in future posts.

word………

Can someone explain why the Feb gold and March silver has no premium to the dec contract ?

test

The Monetary Rocket continues its upward trajectory……

http://research.stlouisfed.org/fred2/series/WSBASE?cid=124

Velocity of money still flatlining…(Adobe Acrobat Reader needed to view)

http://research.stlouisfed.org/publications/mt/page12.pdf

Mike….Gold Contango contracting…fall in the Gold Basis.. further out 12 month Dec 09 flat:

http://www.visionfinancialmarkets.com/(S(tq4kuvbdmvj31pnsp3ynmeya))/Quotes/quotescharts2.aspx?page=quote&sym=GCZ8&mode=i

Type in the links…looks like URL links have been banned by Tom

The Monetary Rocket continues its upward trajectory:

research.stlouisfed.org/fred2/series/WSBASE?cid=124

The veloctiy of money still flatlining:

research.stlouisfed.org/publications/mt/page12.pdf

Mike….gold contango shrinking(Gold Basis contracting)Dec 09 futures $798!

Nov ‘08 (GCX8) 791.7 +43.1 771.3 791.7 771.2 748.6
Dec ‘08 (GCZ8) 817.8 +26.0 802.0 820.2 786.2 791.8
Jan ‘09 (GCF9) 817.2 +25.1 803.6 820.0 788.7 792.1
Feb ‘09 (GCG9) 817.5 +25.1 802.5 820.4 787.2 792.4
Apr ‘09 (GCJ9) 817.2 +23.8 803.3 819.2 788.8 793.4
Jun ‘09 (GCM9) 817.4 +22.6 810.0 822.3 790.5 794.8
Aug ‘09 (GCQ9) 796.5 +43.1 796.5 796.5 796.5 753.4
Oct ‘09 (GCV9) 798.4 +43.2 798.4 798.4 798.4 755.2
Dec ‘09 (GCZ9) 800.0 -0.4 800.0 800.0 800.0
800.4
Feb ‘10 (GCG0) 802.7 +43.7 802.7 802.7 802.7 759.0
Apr ‘10 (GCJ0) 805.0 +44.0 805.0 805.0 805.0 761.0
Jun ‘10 (GCM0) 807.3 +44.3 807.3 807.3 807.3 763.0
Aug ‘10 (GCQ0) 810.7 +0.8 810.7 810.7 810.7 809.9
Dec ‘10 (GCZ0) 815.4 +45.3 815.4 815.4 815.4 770.1
Jun ‘11 (GCM1) 826.3 +46.6 826.3 826.3 826.3 779.7
Dec ‘11 (GCZ1) 838.8 +48.0 838.8 838.8 838.8 790.8
Jun ‘12 (GCM2) 852.4 +49.4 852.4 852.4 852.4 803.0
Dec ‘12 (GCZ2) 867.0 +49.4 867.0 867.0 867.0 817.6
Jun ‘13 (GCM3) 883.5 +49.4 883.5 883.5 883.5 834.1

Oh forgot…..

Website address, copy and type manually:

visionfinancialmarkets.com/(S(qcvmwu45uwo0fy455ztslynr))/Quotes/quotescharts.aspx

also check crude oil futures ……crude still in contango going many months out.

If the 1 month GOFO rate is an accurate proxy for the gold basis, then today is the third day in a row that gold is in backwardation. Not coincidentally, I imagine, the gold price has been rising for the last couple of days without getting whacked.

The last time gold was in backwardation (2 days) was in 1999 just after the Washington Agreement limited central bank annual gold sales. You see a spike in the price of gold on the historical chart in response to this backwardation, which represents the short squeeze.

That was a short term event. The long and gradual descent of the basis this year past zero and into negative territory seems like a longer trend that is reflecting the lack of gold in the market and the loss of confidence in future gold delivery.

Is the basis predicting problems with December deliveries? First Notice Day Friday will give us a bit more news.

If the basis stays negative until then and the delivery demand looks like it’s going to be high…

bam

Citi effectively nationalised ???? Wall street Journal reporting

http://online.wsj.com/article/SB122747680752551447.html?mod=yahoo_hs&ru=yahoo

U.S. Agrees to Rescue Struggling Citigroup

Plan Injects $20 Billion in Fresh Capital, Guarantees $306 Billion in Toxic Assets

By DAVID ENRICH, CARRICK MOLLENKAMP, MATTHIAS RIEKER, DAMIAN PALETTA and JON HILSENRATH

“Under the plan, Citigroup and the government have identified a pool of about $306 billion in troubled assets. Citigroup will absorb the first $29 billion in losses in that portfolio. After that, three government agencies — the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. — will take on any additional losses, though Citigroup could have to share a small portion of additional losses.”

“Despite the unprecedented scope of the rescue plan, it’s not clear whether it will be enough to stabilize Citigroup. The roughly $300 billion pool of assets that are included in the rescue plan represent only a sliver of the company’s more than $3 trillion in assets, including its holdings in off-balance-sheet entities.” ( I LOVE THIS GEM, LOL)

“Jitters about such “hidden” assets helped trigger the nose-dive in Citigroup’s stock last week. Among the off-balance-sheet assets are $667 billion in mortgage-related securities.” (THIS IS THE NECK BREAKER!!!!)

———————
At the end of the article you have a real treat - chart of Citi’s share price decline. 87.2% ytd. Great Work Vikram Pandit !!!!!!!

Mike:
The lack of premium in the deferred contracts is called backwardation( see tzo’s post following your question). Its a topic that’s been discussed backward (no pun intended) and forward on this forum and will generally be present in a market advance where CURRENT demand puts pressure on CASH and NEARBY FUTURES as opposed to back months.

Usually a pretty good indicator of a strong upmove as shorts run to cover for lack of product to deliver. I NOTE today’s market action as exemplary.

Wow, I wish I could be a cheating crooked scuzbag and still have the government limit my losses to less than ten percent. Why didn’t they make the shares worthless like they did to FM/FM? Sorry, but this is getting old.

Ok - the fed announced a new program to buy up MBS this morning - one for $500B in MBS and one for $100B in GSE paper (this is all on top of citi bailout yesterday)… Dollar getting creamed again…

http://ftalphaville.ft.com/blog/2008/11/25/18688/tarp-lives-fed-buying-mbs/

We are not sure if the fed is sterilizing all of this (which seems impossible no matter how high the demand for treasury paper or how veracious the flight to quality will be)…

I think everyone will agree if things return back to some kind of normalcy there will be a whack of liquidity on the table, and to prevent hyperinflation the fed will have to drain it out as quickly as possible before it is used to purchase all kinds of real assets… It has been said here that kind of drain will be almost impossible and inflation is a given. But wouldnt the excess liquidity be in the form of excess bank balances with the fed? Couldnt the fed sremove these excess balances with a stroke of a pen? In japan the quant easing resulted in exactly that - huge reserve balances with the banks and it hasnt created any kind of inflation (they wish it did though)… Im just trying to think through how this could all play out, and it seems to me the assumption that things would work out as they normally would (in a normal environment) ignores the uniqueness of the situation… any thoughts?

Ahh yes - here is another facility “TALP” … Buying up ABS now … Up to $200B on non-recourse basis… Let me guess - AMEX has no place to dump credit card receivables…

http://www.treas.gov/press/releases/hp1292.htm

“Under the new facility, the Federal Reserve Bank of New York will lend up to $200 billion on a non-recourse basis to holders of newly issued AAA-rated ABS for a term of at least one year. The Federal Reserve will lend an amount equal to the market value of the ABS less a haircut and will be secured at all times by the ABS. The U.S. Treasury Department will provide a $20 billion of credit protection to the Federal Reserve in connection with the facility, using its authorities in the Emergency Economic Stabilization Act of 2008. The attached term sheet describes the basic terms and operational details of the facility.”

Great.

The LBMA posted the GOFO rates today as being identical to yesterday (to 5 decimal points). Obviously not correct.

Innocent mistake, I’m sure. Just so happens to coincide with a possible 4th day in a row of backwardation.

http://www.lbma.org.uk/?area=stats&page=gofo/2008gofo

Is there another source for this index?

Anglo-saxon gold exchanges cannot be trusted.

ratherbefishing, I think companies and individuals are avoiding new debt like the plauge. As you say, the bail-out money may sit on bank balance sheets for a long time if it isn’t all lost.
While all the big boy crooks get to finance everything at near zero percent, responsible companies and individuals are being asked to pay six to ten percent. The company I work for just had to refinance some short term(4yrs) debt and the best they could get was 9.75%. It appears the banksters want their cake and eat it too.
Supposedly, GDP was kept positive for the last four years only because of the “housing ATM” where folks were constantly pulling equity out of their overvalued homes. Obviously the GDP numbers didn’t represent real growth in the USA, just more debt.
The Japanese debacle looks mighty good to the elites when compared to a total collapse. I’m to the point now where I believe in the long run a collapse would be better for the majority of us. I’m tired of getting dragged along in this ruse…lets get it over with and start over.

forwill - i hear you my friend. that is the main worry of my investment thesis in investing in precious metals. If the inflationary effects of monetary stimulus dont materialize, gold and silver investments would stagnate along with the rest of financial assets. Worse yet, there is no potential for income along the way. It seems one must consider a drawn out period of mild deflation a distinct possibility. TIPS offer some deflation protection because the principal is guaranteed by the govt (although you are taking on sovereign risk) and they are a source of income. PMs have none of those features… I enjoy reading James Montier form Socgen (he wrote a good book called behavioural investing) - hes advocating a portfolio of deep value equities and TIPS and PMs as insurance (against both inflation and deflation)…

Hopefully in just a couple months time we’ll know if this spread between physical and paper is the new “way it is” or not. The worldwide retail demand looks like the real deal and ETF holdings are staying strong.

Look at gold’s buying power now compared to its peak. Compared to oil for example. At peak prices (G $1031, O $147) you could buy 7 barrels of oil with 1 OZ . Today (G $811, O $51) you can buy 15.9 barrels of oil. Even if oil was priced more reasonably at say $80 your buying power is still better today. So far, owning PMs is a winner either way.

All it takes for PM holders to have a postive outlook on this “crisis” is to look at the dead and dying banksters. The ONLY way left for them to bilk the populace with paper snake oil is through the bond market(the mother of all bubbles). As PM guys, we can just sit back and comfortably ride it out.

One of the best Geo-Politic/Geo-Economic Analysts sums it up below….listen to the interview:

http://www.engdahl.oilgeopolitics.net/print/20081013_alexjones_fwilliamengdahl.mp3

http://www.engdahl.oilgeopolitics.net

Some more on Global Middle East Situation:

US to Israel: No Iran war before Obama

Press TV
Tuesday, Nov 25, 2008

Israel has reportedly been warned against launching a military strike on Iran in the twilight days of the George W. Bush presidency.

The US warning against the launch of an Israeli strike on Iranian nuclear installations was relayed to Israeli officials by their senior US counterparts at a time that Israeli Prime Minister Ehud Olmert is in Washington to discuss Iran.

The revelation comes months after a report by The Guardian confirmed that Olmert sought a green light to launch air strikes against Iran in his previous visit to the United States ? on May 14. An outgoing Bush, however, had reportedly rejected the May request.

?We have been warned off,? an Israeli Defense Ministry official told TIME.

The recent rejection is expected to be confirmed at Olmert?s upcoming valedictory meeting in Washington with President Bush.

(ARTICLE CONTINUES BELOW)

Israel had earlier suggested that should a military strike on Iranian nuclear facilities become inevitable, Tel Aviv would do it before President-elect Barack Obama takes office in January.

Earlier in November, an unnamed senior European Union diplomat said that the bloc is concerned that ?a possible Israeli strike against Iran is not completely off the radar?.

The official suggested that the perfect time for Israel to strike Iranian nuclear installations ?is between now and January 20? ? when Obama takes office.

The US ?call for restraint? followed the Sunday leaking of a security assessment drawn up by Israeli military chiefs that calls for the preparation of contingency plans for an attack on Iran.

The intelligence assessment indicated that Israel has a ?limited? window of opportunity to act against Iran, raising fears that an Obama administration might lead up to the restoration of Washington-Tehran relations.

Israel alleges that Iran, a signatory to the nuclear Non-Proliferation Treaty (NPT), has plans ?to build a nuclear weapon?. Under the allegation, Israeli officials have long argued that the use of military force is a legitimate option in retarding the country?s nuclear progress.

Since the 2007 National Intelligence Estimate (NIE) report dimmed the likelihood of Washington taking military action against Iran over the country?s nuclear activities, Israelis have been quietly urging the White House to militarily confront Tehran.

Iran insists that its nuclear activities are solely directed at the civilian applications of the technology, adding that under the nuclear Non Proliferation Treaty (NPT), it is entitled to uranium enrichment.

This is while the UN body responsible for investigating Iran?s nuclear activities confirmed in its latest report that it has ?been able to continue to verify the non-diversion of declared nuclear material in Iran?.

More on my post above where i wonder how easy it will be for the Fed to take all that printed money off the table (sterilize) when the money multiplier increases, threatening hyperinflation. It seems the conventional wisdom is that the treasury would just flood the market with t-bills and drain all those unsterilized injections (which up to this point there is ~300B or so - see discussion here on this http://ftalphaville.ft.com/blog/2008/11/26/18724/the-pictorial-quantitative-easing/#comments )

Well, here is a statement from the ECB on this (once again from the link above)

?But such a tightening would induce a substantial re-pricing of risk and a potential downloading of these risky assets from investors? portfolios. The more agents have accumulated risky assets on the expectation that rates will remain low, the more the decision to finally increase policy rates will produce some disruption in asset markets. The experience of 1994 is quite interesting in that respect. There is thus a natural tendency to postpone the decision to tighten until the evidence that the recovery is solidly taking place is clear cut. Raising rates too early would be feared as jeopardizing the recovery. On the other hand, the more the rate increase is delayed, the sharper it should be, to catch up with the lost ground. But a similar problem to the one just explained would emerge. To avoid creating turbulence, the tightening tends to be conducted at a measured pace, which inevitably leads policy to be behind the curve.?

….Pretty much along Tom’s previous writings - immideate sterilization is impossible since the threat of deflation will still be on the table… Hmmm - screwed if you do and screwed if you dont type of problem…

I see Kitco is showing a spike down to $6.41 (!) spot price Nov 26 AM, then it went right back up to $10.30 area.

No confirmation at other precious metals sites, that I can find.

I can’t see any news on this, it was at around 9 AM, lasted about 10-15 minutes. I can’t recall seeing a spike like that so fast down then up, that’s almost an $8 move total.

Fat finger keyboard error? Massive dump of tonnage? Anybody?

SrSRocco……..,

Here’s a nice outlook you can add to your DISINTIGRATION MENU

Iceland Riots Precursor To U.S. Civil Unrest?

Demonstrators call for government to resign in wake of financial collapse

Paul Joseph Watson
Prison Planet.com
Tuesday, November 25, 2008

Riots and protests in Reykjavik calling for the government of Iceland to resign have increased following a financial catastrophe that has wiped out half of the krona?s value and put one third of the population at risk of losing their homes and life savings. Could similar scenes of civil unrest be repeated in the United States as the economy continues to implode?

?It was the latest in a series of protests in the capital since October?s banking collapse crippled the island?s economy. At least five people were injured and Hordur Torfason, a well-known singer in Iceland and the main organiser of the protests, said the protests would continue until the government stepped down,? reports the Scotsman.

As crowds gathered in the drizzle before the Althing, the Icelandic parliament, on Saturday, Mr Torfason said: ?They don?t have our trust and they are no longer legitimate.?

(ARTICLE CONTINUES BELOW)

Hundreds more gathered in front of a local police station, pelting eggs at the windows, using a bettering ram to force the doors open and demanding the release of a protester.

A banner hung from a government building read ?Iceland for Sale: $2,100,000,000,? the amount of the loan the country will receive from the IMF.

Gudrun Jonsdottir, a 36-year-old office worker, said: ?I?ve just had enough of this whole thing. I don?t trust the government, I don?t trust the banks, I don?t trust the political parties, and I don?t trust the IMF.

?We had a good country and they ruined it.?

These aren?t the actions of unwieldy mobs in third world countries, we?re talking about a country that had one of the highest living standards in Europe and a relatively wealthy and sedate population, the vast majority of whom are now in revolt over mass redundancies and the fast disappearing values of their paychecks and savings.

More peaceful protests against the Federal Reserve during the End the Fed events over the weekend were largely ignored by the U.S. corporate media, but the potential for wider chaos exists should the dollar finally cave in to the hyperinflationary bubble that is being created by the ceaseless printing of money to fund the multi-trillion dollar bailout.

Those who continue to assert, ?It can?t happen here,? only need to look at the scenes in Reykjavik to realize that similar events could unfold across the U.S., where the reaction of militarized riot cops and even the military itself may be a little more heavy handed to say the least.

With top Russian analysts predicting the breakup of the U.S. into different parts, allied with people like deadly accurate trends forecaster Gerald Celente warning of food riots and tax rebellions, the scenes in Reykjavik may be amplified in the U.S. should a significant portion of the public wake up to the monumental fraud of the bailout and begin to feel the impact of its consequences as we enter 2009.

FINALLY TOM HAS DUMPED THIS SITE. SOMEBODY SHOULD CLAIM OWNERSHIP OF SILVERAXIS SOON BEFORE COMEX DEFAULTS.

Here is what Tom has to say on this site

Retail Market Survey

http://www.24hgold.com/news-gold-silver-Retail-Market-Survey.aspx?langue=en&articleid=325663&contributor=Tom+Szabo&lastpublishingyear=2008&filter=latest

By : Tom Szabo

Silveraxis.com

It?s been a while but I?d like to hear from you about recent experience or success purchasing physical gold and silver. I?ll get the ball rolling by relaying my conversation earlier today with Mr. Hannes Tulving of http://www.tulving.com. They have good quantities of silver Eagles, silver Olympic Maple Leafs, and gold Eagles. The premiums are substantial but that is precisely why there is inventory. As Jason Hommel of http://www.silverstockreport.com has been hammering home for weeks, the only way dealers can keep any inventory in stock is buy raising premiums to account for the excess of demand over supply.

I?d be careful buying at these premiums especially if this will be the first or single purchase in the past few months (or for many months into the future), but those who have substantial new money to commit to bullion can buy in moderate quantities and be just fine. If you do have $20,000 or more to invest, I would definitely go with wholesale bars of 1,000 oz. silver or kilo gold which Tulving and others are selling at very small premiums (near historical norms). No longer do you have to take delivery of COMEX contracts to get wholesale metal; the dealers are now bringing it to you (see more discussion below). Some of you may want to let Jason Hommel, Ted Butler, David Morgan and others know about this development, which could turn out to be pretty huge in the scheme of the gold and silver markets.

Otherwise, one way to deal with the premium issue is to perhaps split the investment into two and place one half into bullion and the other half into an ETF, or other metal-backed investment vehicle, such as GLD or SLV. Make sure there is true metal backing and adequate legal protection for investors. GLD, SLV, the Swiss ETFs from ZKB, and the physical metal ETFs from ETF Securities in London offer adequate protection. If you are considering others but you are unsure of their safety, please get in touch with me.

Note that while Central Fund of Canada is a perfectly fine outfit (I still owe you my report on them and the fact they are not experiencing ?delays? as alleged by Ted Butler) and may be a great way to invest in precious metals, the shares now carry a very sizeable premium (11%) so that would not be an appropriate substitution for physical purchases. This is especially true in the case of gold Eagles which can be purchased from Tulving and others for about $70/oz. (8%) over spot. Yes, this is steep premium but if you put half your intended investment in the gold ETF GLD and the other half in gold Eagles, the average premium is only $35/oz. This works even better in the case of silver, where the premium on silver Eagles is currently $4/oz. (35%). Put half in SLV, however, and the average premium is reduced to $2/oz. Indeed, the large premium on silver bullion products is probably a main reason why Central Fund itself is trading at such a high premium considering it holds approx. 50% of its assets in the form of silver bullion.

If and when retail premiums subside somewhat (or premiums on ETFs rise), the second half could then be moved into bullion. Don?t believe the anti-ETF hype, the ETFs I discuss above have the metal and are among the safest alternatives to bullion held in your own secure possession. I suppose the cost of disagreeing with me on this is that you will pay $4 over spot for silver that you can buy at spot now (through the ETF). Should the rampup of retail bullion manufacture eventually catch up with demand, which is highly likely, I promise that you will see a steep opportunity cost attached to your tinfoil-hat-tinged disbelief.

In addition, the allocated account programs at Perth Mint, FideliTrade and others are passable alternatives for larger accounts where metal deposits are in the form of wholesale bars and where you are provided with bar numbers or a warehouse receipt specifying the exact bars that you own. Despite the negative press and hand-wringing, it might also be acceptable, though only as a last resort, to consider the unallocated program at the Perth Mint. This is only because the Mint is fully backed by the Government of Western Australia in case of insolvency.

Along these lines, I would consider it imprudent to consider new investment in unallocated accounts or pool accounts offered by private entities such as Kitco, banks and dealers. Normally the fact that you pay no storage fee or premium might be an acceptable tradeoff against the default risk, especially if these accounts are used for trading in and out of the market, but given the current circumstances of the world?s financial system the risk of default is way too large. If you are currently in one of these pool or unallocated accounts, please look for opportunities to get out soon.

One more thing. I have noticed a very large increase in the quantity of wholesale bullion offered by retail dealers, and in the case of at least Mr. Tulving, wholesale bullion being sold. For example, note that http://www.tulving.com has ?over 200? 1,000 oz. COMEX acceptable silver bars in stock. And for delivery by the week of October 13, Mr. Tulving has ?over 100? of kilo (32.15 oz.) Johnson Matthey COMEX acceptable gold bars. He has apparently been selling these like hotcakes. Where are these bars coming from? Mostly from the refiner. This is nothing less than the beginning of retail investment demand sucking wholesale metal out of the industrial market. I?ll have more on this later to the extent Jason Hommel, Ted Butler and others do not start to adequately cover the topic now that I have let the cat out of the bag.

———————————

SRS why dont you take over where Tom left????LOL.

Silver Wheaton at $2.82 yesterday.
251.5 million shares outstanding,
each share as roughly equivalent to
2.44 ounces of silver in the ground.
just over $1 per ounce of silver in the ground.

http://www.fool.com/investing/value/2008/11/25/silver-selling-for-1-per-ounce.aspx

Jim Willie again says there may be a COMEX delivery defauilt, beginning Friday. Today’s action suggests something amiss. The bullion (priced on COMEX) got hammered. Of course, that could have resulted from JPM manipulation. On the other hand, PM stock prices (look at HL, SLW, CDE), which are not controlled by JPM, rose in the neighborhood of 18-20 percent, as of 2:30 pm EST. It has been my empirical observation that stock price changes anticipate bullion price changes.

ratherbefishing ,

At the moment all these printed new money is not getting into the system, they just for buying (netting off ) the bad non performing debts. It will take alot more printed money to get it into the system ( banks lending again).Until then don’t expect any inflation….therefore don’t have too high hope on price of PM in the near term…..

Gentlemen…..excellent posts. I am away visiting…..will be back next week.

steve

Canada Metal —-I saw that too. No other site caught it. I think it was just a glitch. Their is no way that happened. About a month ago…I saw Silver on the Kitco site at $740 an ounce………another glitch. I would be a full sell at that point.

Keseri— You are right about the ETF’s. I have been playing them recently. I dumped about 80% of my silver on Ebay at $21 an ounce…..and now I am playing with the ETF SLV. I buy at $9.40 or below and then sell at $10.40 or above…….with all of this sideways movement, I just keep making 10% at a time. It is so simple if you are patient…….You can call it what you want…..Free market…or manipulation, I will just keep making 10% at a time.

If I get caught outside of a big rally….Oh well…..and if it declines…..I will just pull the trigger for more. I do think we will come into a Hyper inflationary scenario….but that is like trying to call a bottom on the DOW….you can’t.

This guy says gold is not in backwardation.

http://www.greenfaucet.com/technical-analysis/gold-in-backwardation-not-so-fast/12187

Gold in Backwardation? Not So Fast…..
By Brad Zigler - Nov 26, 2008

There was a lot of excitement among gold aficionados last week. A $34-an-ounce end-of-week rally did a lot to brighten their spirits. Monday’s $28 follow-through punched spot COMEX gold above the $800/ounce mark for the first time since October 20.

Gold rallied because … because … well, just what was the reason?

Some among the chattering classes would have us believe the spike was foretold by gold tipping into what they dubbed “backwardation.” Well, not gold per se. Rather, gold forward rates.

Backwardation? Forward rates?

Maybe a little explanation’s in order.

Backwardation, as described in several Hard Assets Investor articles (see “The Battle Against Contango” for one), exists when the price of a commodity for immediate delivery is higher than its price for later delivery. For a storable commodity like gold, backwardation implies scarcity of supply. Ordinarily, COMEX gold is a carrying charge market- sometimes ascribed as a “contango” market - in which contracts for later delivery are priced higher than spot to reflect the costs of storage. Because gold isn’t consumed and supply is so visible, there’s usually enough metal to carry forward.

Forward rates are the interest charges levied by dealing banks for borrowing gold. These rates are calculated for various maturities on a swap basis against U.S. dollars. A brief explanation of forwards can be found in “Gold Liquidity Play A Setup?”).

Normally, the forward market looks like any other yield curve, with near-term rates lower than those of longer maturities. Those rates, too, are ordinarily positive. What was noted as backwardation last week was the quotation of negative forward rates in the London dealer market for one- and two-month gold loans.

That sent the discussion boards buzzing. “Does this mean banks will pay us for borrowing gold?” asked more than one denizen.

Don’t you wish.

Sense can be made of negative forward rates once you understand how the metal is traded in the lease market. Just as changes in supply and demand affect metal prices, so, too, do changes in borrowing demand and lending affect lease rates. If gold is readily available, lease rates will be low; if the supply of borrowable metal is tight, rates will rise accordingly. Remember, though, we’re talking about gold in the lease market here, not the cash metal marketplace.

A negative forward rate does not automatically create a backwardation in the price of gold. The forward price of metal, reflecting its cost of carry, is determined on the basis of the spread between an available investment rate, such as LIBOR, and the gold forward rate, which yields a positive value unless LIBOR falls below the forward rate.

On November 20, for example, spot gold was fixed in the morning London round at $745.25. The one-month forward rate was quoted at -0.08%, but LIBOR was set at 1.40%, making the spread 1.32%. One-month forward gold was thus priced at $750.76, still a contango.

In a gold swap or loan, spot’s at one end of the transaction, the forward price at the other.

The current lease market reflects central bank stimulus at work, much like that your neighborhood bank employs when it wants to fill gaps in its asset-liability book. Have you ever seen certificates of deposit advertised with special rates by your bank? Certain maturities may be offered at high rates if the bank has a funding need in a particular time bucket. It’s the same thing in the gold market, save for the fact that the bank here is advertising a cheap asset rather than a high priced liability (from the bank’s perspective, that is).

Bullion lenders are trying to encourage gold borrowing now, particularly in the short maturities. Central banks are liquefying their gold reserves to stimulate aggregate demand. Rates have gone negative at the short end because demand for gold shorting has dwindled (since gold borrowing necessarily results in the short sale of metal to raise investment funds for the borrower).

The chart illustrates that the gold “carry trade” has become more profitable as the financial markets have melt down. The spread between LIBOR and forward rates widened by nearly 200 basis points (2%) in just one month’s time at the front end of the crisis. This goes a long way to explain why gold didn’t reach new highs during the crisis.

So, now what?

Well, let’s see if we can take a lesson from the past. Only on two previous occasions have forward rates turned negative. One-month forward rates went negative on two days bracketing a weekend in March 2001, less than a month after gold bottomed in London around $257. At the time of the inversion, gold was fixed around $269. Not much happened pricewise by year’s end, though ultimately, that was stage-setting for gold’s current bull market. Previously, forward rates - at all maturities ? -went negative on two days in September 1999, which did presage a significant rally above the $300 level.

Not the strongest of bullish indicators this lease rate business. With that in mind, you’re better off looking at other fundamental and technical signals for buying cues.

——————————-
My comments:

1) In 1999 GOFO went negative for 2 days “which did presage a significant rally above the $300 level” . The author is referring to the CBGA agreement gold rally of ~40% in 1999.

2) In Mar 2001 again the lease rate turned negative for 2 days. “….. that was stage-setting for gold’s current bull market”

Ironically, the author does not see the connection….”Not the strongest of bullish indicators this lease rate business.” You should go elsewhere for a more bullish indicator.

OK, 2 data points don’t draw a curve. Does that mean we cant draw conclusions? Hardly. CBs try to pound the SPOT hardest at the bottom. There is a convoluted logic behind it - call it incompetence or just malice. CBs sell at the bottom & buy at the top. CBs are trying hard to pound the spot with a double hammer. A high LIBOR & a negative GOFO. High Libor comes naturally from credit crisis & negative GOFO implies an extraordinary willindgness to lease gold. The result is a large lease rate and a large driving force for banks to short gold.

good to have another way to look at this backwardation….that explain a lot better than we heard from the others.

Has anybody noted the very narrow trading range of the PMs the past few days? It feels like the prices are being kept in a very narrow trading range. Related to option expiration perhaps?

Look at Kitco now!!

very strange plunge of silver to 7.89$ Must be a mistake…

gold showed no volatility at all..

next trading days will be interesting to see if anything can blow up.

silverseek.com is showing normal silver price around 10.3$ …

Kitco continuous chart is normal….

Re $7.89 Kitco Silver bid which lasted from 5pm thru approx 5.30pm EST on Thanksgiving day —- a familiar number which got me agitated for by happenstance at circa 4pm the same day,whilst looking at Barchart weekly futures chart, I thought I saw a triangle originating at$9.40 low and awaiting the usual downthrust from E at $10.68 with 100% of the widest of the triangle suggesting $7.895 as a target.
Strange indeed.

english?

Tom

Scrolling for new comments is becoming a big chore. Why don’t you post? Agreed that you aren’t attached to the comp by ball & chain……

During the week of GSUL the basis was tightening further toward zero, but not yet in backwardation as it did the following week. There was talk during GSUL of tightness in the physical market and possible Comex defaults. The question was asked is this it, the last contango? It was Tom’s opinion that this was a dress rehearsal of sorts. Pretty good dress rehearsal since the Perth Mint is now out of metal. Anyway Tom has recently said that central banks may have been less willing to lease gold in recent months hence the tightening basis. The miners de-hedging and Washington gold agreement were strong positive fundamental reasons for this bull market starting. Now central banks appear to have slowed their sales and may even be slowing their gold leasing. The lone standers now holding the majority of outstanding leases in this market are certain bullion banks. This scenario is also outlined at the golden sextant website. I asked Tom the question that the triennial survey showed 50 thousand tonnes of outstanding gold derivative positions last year. The triennial survey apparently captures positions that are not reported in the annual surveys, ie off balance sheet. Tom said that the amount of 50 thousand tonnes outstanding does not matter since the need to unwind a much smaller position of say one thousand tonnes could turn the market upside down. It is thought that this is a very bullish fundamental scenario developing. It could also be part of the Professors “corner in the gold market theory”, one of these days. After all he did say that the writing is on the wall for those that choose to read it.

Tom abandonment of this site is disappointing.. so is lack of augmentor updates… the initial fee paid could have been used to purchase silver maples that were recently available… Thanks to all posters!

Where is the best place to buy physical silver or gold?

Antal Fekete is now calling for people to take to the streets as in Revolution. He sees this as the only way to force the elimination of the FED and bring Gold/Silver back into the US Mint as soumd money.

In other words, we are now in desperation mode.

Excerpt:

“Labor’s finest hour

The only remaining hope the country has is that labor will not tolerate the ongoing destruction of capital. It will not take it lying down any more. It will take to the streets and confront the small reactionary elite running our monetary regime, including Geithner. This is the most destructive system ever devised: the regime of irredeemable currency. Every time it has been tried in history it failed miserably. As the current crisis clearly shows, this time is no different. What is different is that this time the entire world is on irredeemable paper money. That has never happened before. Accordingly, the stakes are immeasurably higher as irredeemable currency is getting ready to self-destruct.

Labor must take the initiative and demand that Congress put an immediate end to the mindless destruction of capital. Congress should stop the Federal Reserve from pursuing a monetary policy of open-ended deliberate interest-rate cuts. The economy is now like a runaway train with brakes disabled, entering a downhill section of tracks. Crash is certain. At the end of the run the country could be completely denuded of capital, with a large part of its labor force idled.

Labor could be the savior of the country in forcing a return to constitutional money at the eleventh hour, by demanding that the Obama administration open the U.S. Mint to gold and silver. That measure would enable the brakes on the money-train. It would stabilize foreign exchange and interest rates and stop the shredding machine, now spinning out of control, from destroying capital. This would be labor’s finest hour: saving the United States from financial ruin and ignominy.

This country has an intelligent, dedicated, and industrious labor force. The best in the world. It should step into the breach. Time for street action has come, if we want to prevent blood from flowing in the streets later.”

Forgot link.

http://www.321gold.com/editorials/fekete/fekete112708.html

Evidence of a global deflationary financial collapse is growing; here are some news stories from this morning that contain some truly startling numbers.
?Japan’s industrial output fell 3.1 percent in October, more than expected, with a drop more than twice as big predicted for November, while household spending fell 3.8 percent from a year earlier, also more than expected.?
?Oil fundamentals remain weak, with demand in the United States falling in September to its lowest level for any month in more than a decade. Total U.S. product demand over the past four weeks was down 6.6 percent from year-ago levels, while September oil demand fell by 12.8 percent versus a year ago to its lowest point in 12 years, the U.S. Energy Information Administration said earlier this week.?

From Al Martin at Conspiracy Planet(farfetched?)
?You can not decrease rates ad infinitum to break the back of deflation because that number (zero) gets in the way.
There is only one thing to do and that is what the Bank of Japan has done and what the Fed has intimated that it may be prepared to do — to post a negative interest rate.
If people get desperate enough, they’ll be prepared to pay to own US Treasury securities at a negative yield. It would be a huge money-maker for the US Treasury. Because the FDIC finally signed off on it last week, we saw that banks were given permission to charge negative interest rates on bank money market accounts.
Public opinion polls have shown that 80% of the American people who have any cash left are prepared to pay — to own US Treasury securities — or to otherwise have some sort of government guarantee.
Now when you deposit money, instead of getting a dividend, you are effectively paying the bank $25 a month.
That’s what a negative yield means. It means that instead of being credited with interest, you are debited. That $25 a month becomes a defacto insurance premium for an FDIC-guarantee. In the minds of the unwashed, paying $300 a year is a pretty good deal because what they are effectively paying for in this case is the FDIC insurance.?

If people are asked to ?pay? for FDIC protection on their electronic deposits, then FRNs will return to their rightful level in Exter?s pyramid, right?

This mornings Gold/Silver Ratio is 80.11. Could Gold plummet to around $500 returning the ratio to 50? Are geopolitical events the only thing propping up the COMEX gold price? Will failed deliveries free the precious metals and usher in the destruction of the dollar? Will bullion become impossible to acquire at ANY price and for how long?

Debt monetisation has begun.

http://www.safehaven.com/article-11941.htm

The Financial Fire Trucks Are Gathering
by John Mauldin

Excerpts …….

“Yesterday the Treasury announced yet another huge $800 billion bailout, but this one has a different flavor. Much of the previous bailout money has come from the Treasury either borrowing money and buying assets (which does not create new dollars) or simply taking assets onto the national balance sheet, guaranteeing the debt. With this latest move, the Fed is going to buy $600 billion in mortgage bonds by monetizing, or creating, new dollars.”

“Normally this would set off more alarm bells, over worries about inflation. But these are not normal times. With the twin bubbles of the credit and housing crises still imploding, we are seeing a massive deleveraging and the disappearance of multiple trillions of dollars from consumers and businesses. And the bond market clearly expects more softening and maybe even deflation. The 10-year bond is below 3%. I wrote 10 years ago that we could see the 30-year US bond below 3% by the end of this decades-long cycle, which we began in the early ’80s with Paul Volker.”

“As I wrote last April, the velocity of money (how fast a dollar moves through the economy) is slowing rather dramatically. It could fall another 10% and just get back to the average for the last 107 years. Given the growth in population, inflation, productivity, and other factors, the money supply will need to grow by 7% annually for the next several years to keep the economy at equilibrium. Remember, GDP (gross domestic product) is essentially the velocity of money times the supply of money. If the velocity slows down, the money supply needs to rise just to stay even.”

“The Fed is going to have some room to pump up the money supply without seeing inflation rise precipitously. I think this is the first of what will be several large injections, as they will keep it up until the economy begins to recover. They will especially do more if it looks like we could roll over into a deflationary environment next year. I will be writing more about this in the coming months.”

———————————————-
My comments

The Fed will print like there is no tommorrow as the “velocity of money” slows down. Initially, the inflation number will not move forward as treasuries will rally & the dollar will strengthen. This is because the bond market sees deflation. The Fed will then put forward another large dose of money which the bond market is going to suck. This process can go on ad infinitum.

The only way to end this deflationary juggernaut is revalue gold upwards. And they know it. Playing with QE is the not the way out.

I checked stockcharts for $UST10Y - the yields have indeed crashed below 3%. This is a very big signal.

This is the clash of the titans reaching epic proportions. Gold is holding up because of Comex delivery default expectations during Dec. I hope the default indeed delivers. Otherwise we could lots of pain.

Hooha! Totally agreed…disappointing indeed….I should stop there.

Pretty good volume on first day delivery for December. I went back through my records to see what 2007 and 2006 looked like:

Silver, 2006, 2007, 2008; in contracts (5000 oz) respectively

1465, 3516, 3040

Gold, 2006, 2007, 2008; in contracts (100 oz) respectively

6866, 6728, 8600

2.13, 5.23, 3.53 are the ratio’s of silver to gold ounces for first delivery day for the past 3 years. Now these are combined paper and real metal ounces and ratio’s since the Comex does not publish (for public consumption) how many contracts were settled in real metal. So at most this appears to indicate a combined sentiment number. {I’m sure someone with the raw data might have a better indication of sentiment for the 2 groups and potentially a trading advantage, but the Comex is not known for creating a level playing field}

What I did find interesting is the ratio’s are no where near what the price ratio was for those years. And it is not even close to historical ratio’s (say 16 to 1 for America’s middle years). I’d love to see how this ratio as moved since the Comex inception, but I do not have the data. All I can really tell from these 3 data points is the range of interest between the 2 metals is between 2 and 5 ounces of silver per ounce of gold for early December for the last 3 years. And with silver inventories declining/gold inventories climbing during that time, the ratio does not seem to trend with the reality of the underlying metals.

Perhaps someone else sees something in this or has some data going back further.

I hope everyone is having a wonderful Thanksgiving being with family and friends and remembering those who can not be with us. My thoughts are with the people of India who are the latest victims of man’s inhumanity to man.
Hey Tom. Thanks for putting up the site and spending the money to do so. I know there are some conspiratorial types about who blame this or that but it is a nice thread with some thought provoking comments and we are smarter for the input of many.
Thank you Lone Ranger for posting comments about GSUL for those of us who could not attend. I paid the modest fee to join the Augmentor to support the site as I own a business and I do not enjoy working for free for I am not a slave. I kick myself for not knowing about GSUL when they were here in Dallas earlier as I had never heard about the basis…
Jeff. The best place to purchase Silver and gold is Apmex.com I have done a fair amount of business with them and have no affiliation other than as a customer. For small purchases live.com has a great program where by you receive 25% off when you use their search engine to find product on Ebay. It is free money and I used up my quota ($2400.00 per year 12 transactions total ) rather quickly and still feel like I have done something wrong.
We appear to have made a intermediate bottom and have had two confirmations thus far so here is hoping for a nice move notwithstanding that naysayer Nadler.

Don’t bet on a Dec Comex default..otherwise just another disappointment…

keseri

In a newsletter Jason sent out 2 weeks ago he mentioned how hard it is to find silver in CANADA. It is quite hard to find anyone who has it but it isn’t hard to find some dealers saying they have it, even advertising it on their web sites and quoting a price but when one asks them if they have any in stock one well known Vancouver bullion exchange told me that he hasn’t seen much silver in months and that estimated time of delivery is 4 to 6 months. They don’t mind tying up your money for months though by taking a deposit.

Jason mentioned a coin and stamp chain in Richmond BC and Burnaby BC named Western Coin and Stamp currently has a supply. I have bought there in the past and recommend it. Apparently he has an arrangement with a refiner and is getting 100 ounce bars every week or so at a reasonable price. Last week (silver was a dollar lower) he was selling them for 1575.00 CAD

In the USA I believe that the very best company is Certified Mint in Phoenix run by Bill Haynes and his son Mike. These guys are superb for customer service and Bill loves to talk and so usually spends time helping people understand the world of silver like no other can.

Michael Randallbard

Thanks for the info. Do you believe that the Comex default is coming with so much of a silver shortage?

Britain’s nosediving into bankruptcy.

Unfunded Pension liabilities ~1 t pounds.
Public sector net debt ~1 t pounds by 2010
Loans to bank & capital inhections ~1 t pounds by 2010

If BoE acts to guarantee bank liabilities ~5 t pounds by 2010

Then the public debt would rise to 7-8 times the GDP similar to Iceland. Sterling then has the fate of the krona.

http://www.marketoracle.co.uk/Article7526.html

Bankrupt Britain Trending Towards Hyper-Inflation?
Nov 28, 2008 - 10:59 AM

By: Nadeem_Walayat

This is the conclusion by the author….

“Britain is Not bankrupt and not likely to go bankrupt in the immediate future, however Britain is on the path towards Bankruptcy if it goes on the projected borrowing spree that lifts real debt to ?3.2 trillion and is forced to take on banking system liabilities of ?5 trillion, under such a situation the country would be bankrupt as the currency would collapse, and we would not be able to service the debt much of which would be denominated in foreign currencies given Britain’s position in the global financial system. Though the more probable outcome of stagflation for many years (low economic growth, high inflation and interest rates) that erodes the value of domestic debt and savings would in itself be a bad outcome for Britain. The only real solution is to limit the growth of real public debt by cutting back on public spending and bringing public sector pensions inline with the private sector, both of which will be positive signals to the UK debt market and banking system.”

Nobody is printing money yet. There is a lot of negative association with that word, and it makes everyone think of inflation, currency collapse, etc… Although devalued currency is the next step, money printing has not taken place - will elaborate below

At the moment the fed has elected to pursue quantitative easing by expanding its balance sheet via unsterilized purchases of these assets. The latest initiative to buy $200 of ABS and $600 of MBS and GSE paper is part of that scheme. mbs and other crap on the asset side of the balance sheet - bank’s deposits with the fed on the other. Before these purchase would get sterilized via treasury bill issuance - now the money is not being drained out of the system, but now its just piling up in the form of reserve balances with the fed.

Ok, so the fed is creating money (creating a bank reserve balance with the fed to pay for the assets) - but to this point there is no actual printing since that money is going nowhere - its piling up at the fed.. Normally the banks wouldnt want to have any more reserve balances than is needed to comply with reserve requirements - they would much rather lend it out and make profit… But at the moment they are much happier not being exposed to credit and live another day. This is what is refered to as liquidity crisis. Folks this is exactly what in Japan when they pursued QE - its meant to save the banking system…

…And they can keep on buying assets - a lot more assets… The fed is only up to 3-4% of GDP, while in Japan the central bank B/s got to mid teens as a % of GDP (off the top of my head from recent BCA report on this subject).

So when does that money creation become problematic (in terms of inflation) - when it starts being lent out… When the banks start lending again (using the reserves), that is when there could be inflation - but not before… In other way of looking at it is through the money multiplier - its collapsed…. Until the money multiplier has increased again, we will not have inflation… But the fed can take away those reserves once the multiplier improves - the did this after 9/11 when they realized the economy was in a better shape than thought…

Another thing - yes there is a limit to monetary policy - you can force the rate only to zero. Thats where fiscal policy comes in.

it seems to me the short dollar bet is going to be as good as any if capital market conditions improve and the fed is successful at increasing the multiplier…

It seems the weird prices were data errors, though wide spread. My online broker was reporting the LME spot price at $7.05 on the day Kitco had the same sort of problem.

I called them, and they insisted the spot price of $7.05 was correct…I said I was watching the price all day, it never went below $10 as far as I can see…they said, that’s the price we have and that’s what we would have to sell it for. Total no minds. They later e-mailed me to say it was a data error. I hope anyone who sold at $7.05 got the difference to the actual price refunded later. OTOH I would have liked to buy at $7.05, I am sure they would have come back looking for more money afterwards.

Data error, or something more sinister, I am not sure. No explanation has been provided, most precious metals trading websites have not mentioned problems with pricing feeds. Go figure.

This Blog does no seem to update much at all. If I was going to start a Trading Blog, I would want to update daily on market trading days, not necessarily a long post, but a few paragraphs describing the daily trading action in both spot and futures markets, and a nod to sector specific headlines of the day. Then maybe a once a week chart and technical analysis post. You don’t have to make specific trading recommendations, save those for the paid service. But you should publish the paid service for free once in a while, just to show people who don’t subscribe but are interested in exactly what you do, and may subscribe.

For example, ‘Across the Curve’ Bond Market Blog, gives you a feel for the daily pulse of the Bond market, in 4-6 short posts a day, that add up to one page per day on average. Yet it is an invaluable source for outsiders to get the feel of what is happening in the Bond market without having to visit the trading floors.

http://acrossthecurve.com/

That’s why I came to this Blog, to find out about the ins and outs of the silver market, and precious metals in general. I like gold too, but silver may have a higher return in the medium term, looking at the gold to silver ratio, so I am more interested in silver right now as an investment.

Are there going to be new posts?

Peter Cooper has a good way of seeing the current state of things.

http://seekingalpha.com/article/108103-enjoy-the-strong-u-s-dollar-while-you-can

Enjoy the Strong U.S. Dollar While You Can
By Peter Cooper November 26, 2008

Let me try to explain my thoughts in language that is understandable while not trivializing what is a very serious issue. We all know that the U.S. dollar has been rallying sharply in recent months. Huge sell offs in global capital markets have created huge demand for the dollar and so its value has gone up.

At the same time interest rates have been falling on Fed funds, and the interest rates paid on T-bonds have headed to record lows. That in itself ought to be a warning to dollar bulls.

For most savers T-bonds are not attractive any more. They pay low interest rates, while banks are paying much higher rates on deposit accounts and in many countries there is now a state guarantee on those deposits.

Bond conundrum

Why would you hold a fixed-rate instrument like a bond - which can both fall and rise in value - when you could be earning more on a simple deposit account with a state guarantee, and have your capital at zero risk?

Individual savers have made this calculation and dumped bonds. Institutional investors and sovereign wealth funds have so far not done so, perhaps because bank deposits of this size would not be accepted.

However, the same investment logic applies to sovereigns as individuals. And this argument moves to being acutely important as soon as the T-bond?s currency starts to devalue.

Devaluation coming

Now with all these trillions of dollars being thrown into the global economy - and I saw $7.2 trillion as one figure for the total U.S. bailout which I don?t think included yesterday?s $800 billion - devaluation cannot be far away. Just as soon as these notional trillions enter the money supply as real trillions the impact will be huge.

That $7.2 trillion is half the annual GDP of by far the world?s richest country - how can you possibly inflate that much without impacting the currency?s value? Obviously you cannot - and surely that means a strike by the buyers of T-bonds can not be far off. Who wants to buy a share of an asset that is collapsing in value? And once the T-bond buyers go on strike this is self-fulfilling.

So enjoy the strong U.S. dollar while you can, it cannot last and its fall will compound an already dreadful global economic situation. I hope that is understandable. I hardly need to add that the only currency of choice in such an environment is precious metals.

——————————-

Good work Peter. He argues that bank deposits are better than US bonds today since they have the same govt. guarantee while the yield on bank deposits are higher. Simple & Brilliant. I wish I had seen that. Thus, only institutions & sovereign countries would hold USTs. And when all the trillions of new money comes home to roost, there would be nowhere to hide except PMs.

I’ve been trying to figure out why silver has performed the way is has recently and also what might be the trigger for a positive change. The guys here have helped educate and enlighten me. Certainly the common thought is PMs rise in an inflationary environment and fall in a deflationary one. It is also thought that the recent deleveraging and sales to cover fund redemtions was a big factor in silver’s decline. I’d say the root cause is the expectation of deflation. IMHO, this is why the mainstream has shunned silver and opted for treasuries instead. What will change the mainstream’s veiw and give an incentive to leave the vampire treasuries for silver? The good old CPI. This is the “data” that will trigger silver’s run to new highs. Here is the link to the BLS website http://www.bls.gov/CPI/. Our old freind crude is again playing a pivotal role in the game.

Jim Sinclair’s view on the 8.5 trillion dollar monetary injections: “Out of Control”. This is very bullish for gold and then silver as it plays catch up. The HUI is bouncing back fast - this often preceeds upward movements in bullion.

“Dear CIGAs,

$8.5 trillion is unthinkable in terms of paying back the depreciated value of financial and non financial business entity portfolios. Assume someone came to your door and asked you how your investments were going. When you explain to that person that a bad man in Toronto organized a group of really nasty people named hedge funds to naked short your shares and as a result you have lost 90% of your retirement fund, that person hands you a check to cover your loss.

Would you then characterize the money from that check as neutralized funds only filling a black hole in your balance sheet having no real economic impact on you?

That opinion, held by many, is so academic. The idea that $8.5 means nothing because it fills some black hole of losses is “form” over “substance” and simply too academic to believe. This is $8.5 trillion!

Now with that thought in mind contemplate $8.5 trillion dollars (for starters) before President Elect Obama?s fiscal stimulation for the creation of 2.5 million jobs, then a condition called, “Out of Control.”"

ratherbefishing

Fed has issued an unsterlised injection of $800 b - that is printing money. It is keeping this money close to its chest is no excuse. At some point when conditions ‘normalise’ if ever they do - fractional reserve banking would multiply this money many folds.

Now the question is whether so much liquidity can be sterlised in future with the issuance of new debt? As conditions normalise, money multiplication is going to force a high CPI number thereby making new debt issuance very tricky. Very tricky indeed. Bond yields would be itching to break to the upside. At that time the Fed would be between a rock & a hard place.

At that time, as you believe, shorting the dollar would be a good bet indeed. Better still would be to be LONG SILVER.

It is interesting to see that the bond market is predicting deflation despite $8.5 trillion dollars of bailout money. Whereas, the gold market is predicting massive inflation as the ultimate predictment. I guess the bond market is correct in the short term & the gold market in the intermediate term.

In the long run we are all dead.

keseri - i don’t think the 800 billion is high power money, since it is purchasing assets. therefore, it really is only about 80billion in high power money. which i think is why gold jumped the other week, but deflation is still the biggest concern of the bond market.

tim

does it matter that $800 b is not high power money? Or am i missing something here.

Ultimately, $800 b would be deposited with some bank(s). And fractional reserve banking would multiply it. Only a question of time.

Mark 1,

are gold contracts for delivery not 1000 ounces. (you mention 100 ounces)?

In the following article they mention 1/3 of gold comex got vaporized on friday… maybe vaporized is not the right word for the moment but it could become hoarded in personal vaults..

http://www.marketskeptics.com/2008/11/31-of-comexs-registered-gold-got.html

The only question is: where is the gold heading? will it be hoarded or placed on Comex again? (like in other years…)

JVD

Comex gold contracts are 100 oz; Comex Silver 5000 oz OR Mini CBOT silver 1000 oz (now traded on the Comex following the recent exchange merger.

Of significance is that after Mar 09 the mini CBOT silver is no longer a physical delivery market and a new mini silver contract appears to be on its way which will be 2500 oz but settles only in cash.

My understanding is that after March if you want to take physical delivery of silver from the Comex it will be available in 5000 oz increments only.

looking at silver ( 9.6 0 and gold (785) price now…the wishful thinking about a comex default has come and past….

silver (9.20) gold (780) now… comex default is not on the card anymore…

Check this out…

http://meltdown2011.wordpress.com/2008/11/29/vaporize-comex-countdown/

somehow I think the US with drive these emerging markets (Eastern Europe and Latin America) into defaults and create another huge amount of USD demand…..not good for PM

Prices of gold and silver are hammered to scare longs and relieve pressure on JPM. As long as longs are holding, COMEX will default and JPM need a rescue.

I remeber 6 months ago , a UK fund manager on Bloomberg TV said the Comex and CME will always win because they are the one who set the rules of the game!!!

..until Dubai demands the real thing.

Well…there goes the HUI bounce back! Gold -39, Silver -1, Platinum gapped lower -54. Currencies heading back as they were towards parity? Will the DI resume its climb to new highs?

And yes, the COMEX will do whatever it can to avoid default, flying gold in on jumbo jets or “borrowing” from the ETF’s if that is what it takes.

I agree, COMEX most likely will plunder the ETFs.

Thanks to “stockdoc” for that link. It is a graphical representation of the current delivery month at Comex, to be updated daily. This could be the event that will release Gold/Silver from their handlers.

I find it absurd that a few high-heeled boyz can control the whole PM mining sector worldwide. It is corrupt and it’s coming to an end very soon.

The drop in Au%Ag is a dirty trick almost everybody aware of the current situation should have expected. I did not post the possibilities of this attack because I feared that this could be used the basis of ideas how to further manipulate the market.

As long as you all [readers=investors] insist on taking delivery of your PMs regardless of where the futures are pointing to the bust of the COMEX is going to happen. It is just a matter of nerves. The sooner that happens the better. JUST DON’T LOOK AT THOSE NUMBERS unless you want to buy more and more …

The Comex price is bogus. The black market price at 200 or more dollars per ounce proves that.

Everybody, let’s be patient and wait and look at the graph on Friday. Bookmark that link provided by “stockdoc”. We had 30% of available delivered on 1st day. Thai is vey encouraging.

By the way, did Tom run into the Mogambo Guru (e.g. http://www.dailyreckoning.com/Writers/MogamboGuru.html)? They both seem to have disappeared about the same time. Maybe we should start a conspiracy theory …

Stocdoc

That was a great graphical link. Thanks. You have done a great service to all goldbugs by posting this link. It will help us nail those bas***s.

Joe M

I couldn’t have said it better. 30% evaporation rate is very encouraging indeed.

dieuwer

You are damn right. The price is being driven lower to scare the longs. I believe we will see a lower gold price soon.

Guys

I checked stockcharts for $XEU thanks to Jim Sinclair. The Euro has indeed bottomed !!!!!

Need I say more?

Hi PJ,

Where did you hear that there will be a new 2500 oz. silver contract? Do you have a link?

Thanks,

Jeff

like the LME London nickel delivery defaults cash settlement penalty.

even if comex charged the [naked] shorts 10% for nondelivery,
todays drop in paper price just covered their ca$h penalty

LME 8/06
“Those with short positions in nickel falling prompt on Friday 18 August 2006, and on subsequent prompt dates until further notice, who are unable to effect physical delivery an/or unable to borrow metal at a backwardation of no more than $300.00 per tonne per day, shall be able to defer delivery for a day at a penalty of $300.00 per tonne. Those with long positions for prompt on those days who are subject to deferred delivery shall be entitled to compensation of $300.00 per tonne per day

Commenting on the announcement, Simon Heale, LME Chief Executive said:

“Nickel stocks are at historically low levels and we now have a genuine material shortage. Our first priority is to ensure that trading remains orderly and to prevent the risk of settlement defaults.”

Jeff:

I may have mispoken. Not maybe…there is a new 2500 oz contract. I’ve traded the cbot 1000 oz contract since befor 1980. It’s a nice size contract for taking delivery and storing silver at a very reasonable rate. Too bad it’s going away.

link:

http://www.cmegroup.com/trading/energy-metals/nymex.html

so much for the Dec COMEX default. I think JPM and the other shorts may have wanted to prove a point. Nadler must be gleeful to the extreme. The idea that the Russians and Saudis intended to buy Comex futures and demand delivery, as Jim Willie and others wrote, was just so much crap. Thing is, however, if they wanted to stick it to the dollar, it would be a very cheap way to do it. Couple hundred million would do the trick.

keseri - for the monetization of debt. i am not an expert. i just look at it this way as an example. if there was 1 fed and one bank, and the fed buys 800billion of debt from the bank to free up their lending, then the bank will only be able to lend out an additional 800billion, since the bank already has it’s reserves, and this doesn’t increase it’s reserves by 800 billion, but decreases it’s assets. now, if the fed gave a new bank 800 billion, and they had zero assets, then that bank could lend out 8 trillion or so. mathematically, and i use the idea that the existing bank is already levered out, which i believe they are.

100billion in reserves = 1 trillion ability to lend.

existing bank lent 1 trillion - 800billion to fed = 200 billion, so they have 800 billion they can lend again.

new bank 0 lent, fed gives them 800 billion = 8 trillion they can lend levered 10 to 1. (not including the original 100 billion)

could this delivery be just shifting gold from 1 account into another ??

The Floodgates Have Broken !
I’ve been watching this silver coaster for 5 yrs now, everyday, reading everything and LEARNING.
On both the USD and Silver, the triangles (Pennant for USD) closed out on the 21st of NOV, Broke pattern out of their converging triangles and have today (Dec 1 ) Kissed ther respective containment lines for a last touch before heading to their ultimate destinations. ( Perfect chart pattern read )
Game Over!
I’m calling it, Starting DEC2 it’s USD dump and Silver Rockets !!!
I hate to see this country go throgh this but the garbage man has to clean up some time. It will be closer to the USA we all know on the other side.

If you believe things are smoothing out look at the 3 month T-bill which pays zero. It’s flatlining into the basment interest rate floor.
$IRX on Sharpcharts. ( Check it out on weekly, landscape mode)
Blood is in the financial streets.. FEAR IS EVERWHERE !
Since August last year this chart tells you the financial markets are only getting worse.
Palsen and the bunch have done a great job of glueing it all together but it is not working. They have just lost control.

See you all on the other side.

Let me just add the alaignment of Jupiter, Mars ? and the moon in the eastern sky, I just saw tonight ( Very rare if your into that stuff) Uooooooo

PS: Where did Tom Go?

Ballsy call David, the dollar did look stuck today considering the huge drop in crude…$ shoulda hit freakin 94. I hope your TA is right. BUT, Demand destruction is confirmed in my book. Negative yield or not, people are going to hold on to those t-bills like a pitbull holds onto a t-bone; espescially after a day like today.
There’s 11months of unsold inventory in housing, the savings rate has jumped from negative to 2.4%, durable goods orders dropped 6.2% in October, consumer spending fell 1% in October, etc,etc. Weaker folks might have deep-throated a shotgun by now! I even overcooked the turkey Thursday. Lets see, where did I put those shells.

Not sure if anyone posted this as yet, but here’s a handy website that tracks the predicted December COMEX defaults in gold and silver. If you’re a skeptic like me - watching these graphics could be instructive. I don’t know if the creator of these graphics accounts for the fact that new metal flows into the COMEX vaults while other metal leaves. If not, then they would be misleading.

http://meltdown2011.wordpress.com/2008/11/29/vaporize-comex-countdown/

tim

I see your point now. Thanks.

I agree with Evenhanded…should include metals flowing into Comex too….otherwise misleading…also I heard ebay premium on silver is disappearing….anyone??

Looks to me like premiums on ebay are still between 35% and 60%.

Apparently APMEX put there silver eagles on sale for $3.50 over spot as a one day promo. They sold their all of their stock (over 200,000 ozs) in less than 24 hours.

http://apmexdealer.blogspot.com/2008/12/200000-silver-american-eagles-sold-out.html

usd chart looks eerily familiar to gold chart (9mths ago) and oil (when it was 147).

i think david has a good point, but gold stocks are still following the market in general, plus the premium for the price of gold. i believe you will need to see the gold stocks separate from the market and then you will see it’s go time. maybe that’s today?

is our russian friend still around? i wanted to ask him a couple of questions about domestic matters…

Kondor,

It would take 2 billion not 200 million. Even so, 2 billion is chicken scratch to the spark of the high heeled boyz.

Mogambo here:

http://www.atimes.com/atimes/Global_Economy/JL02Dj04.html

Hedge fund liquidations are going to continue for months, on and off. I read one estimate that only 25% of total possible large Fund liquidation has taken place so far.

No way to verify that, but in a universe of 11-14K Funds that is due to shrink by 50-75% (a guess), there will be many more huge dumps of precious metals holdings, and other commodities and related companies. This liquidation will be all over by next Summer (my opinion), but the next few months might not be very positive for metals, given the events of Dec 1.

I’ll stick with my silver allocation for now, but I really expect nothing from it. At least I won’t be disappointed either way.

Is this site ever going to update again? Has anybody reported Tom missing to local police?

Hi David, I am not a believer in charts, but I think that the attack on the price niveaus of the PMs at the start of a new period in the future trading is a strategic (or tactic?) mistake as it drives down the prices in the wrong moment.

Thus, this attack looks like a matter of last resort. Based on this assumption I agree with you that the price suppression soon will be over.

Any comments, anybody?

ratherbefishing,
if “russian friend” refers to yours truly, then yeah, I’m here… occasionally. Alas, it’s getting more and more annoying to scroll this thread down.
What domestic matters you would like to ask me about?

I have my family back in Russia and was hoping to get the details on bullion purchases back home. If you dont mind, could you please send me a note to ratherbefishing1 (at) gmail.com

Thanks in advance

Gold deliveries through 12/2: 11,473
December Gold Open Interest: 2,581

Silver deliveries through 12/2: 4,814
December Silver Open Interest: 2,042

The December Open Interest represents current contracts that are to be rolled forward into a future month or settled with delivery.

Not enough O.I. left to bust COMEX this month.

About two weeks ago, a week after I saw Tom leave Canberra for Sydney, during which there was nothing from him on this site, I asked around about him among GSUL organisers and attendees, and with a post on this site.

I also sent a couple of email messages to tom@silveraxis.com

The organisers of GSUL reported that he was back in California, and I received a response to my messages.

So, I stopped worrying. Maybe it is time to start again?

Larry

this thread is so over.