Sunday, November 28, 2010

Bits of News

Korea Tensions send Gold to a 27 Year High (quoted in Yen)
and what does China say? --It warns the U.S.
China calls on the U.S. to sell its Gold Reserves (China wants all it can buy!)
Russia & China agree to using Yuan/Rubble in bilateral Trade (a step towards ending Dollar Supremacy in International trade)
Russia wants a trade Zone with Europe, even hinting they'll join the Euro, this will only happen when they can agree on the 'value' of a 'Euro' no doubt backed by a combination of Gold, and/or silver or other hard assets
China can't keep its currency pegged to the dollar without stoking inflation, as the USD depreciates in value, prices rise in China.
Japan Passes a 5.1 Trillion "Stimulus" package
The Ireland 'Bail Out' by the EU and IMF should be concluded tomorrow, and bonds are pricing in that Portugal and Spain, and Italy may follow suit. This all money printing.

Monday, November 15, 2010

Public sector now 53% of economy as record 6.09million Britons work for the state


The public sector has ballooned under Labour to make up more than half of the economy.
State spending now accounts for 53.4 per cent of gross domestic product (GDP) compared to 40 per cent when Labour came to power in 1997.
Britain's public sector is now bigger than the European Union average of 50.4 per cent, according to the Organisation for Economic Co-operation and Development figures.

Wednesday, November 10, 2010

The Fed's Foreign Policy Misstep -Excerpt from the CFR (Council on Foreign Relations)

    The Fed's return to quantitative easing threatens to create a glut of liquidity reminiscent of the mid-2000s savings glut. It is likely to inflate bubbles, notably in the fast-growing emerging world.
    As well as harming the U.S.’s ability to take the high ground with China, quantitative easing will test the world's commitment to an open international economy. Already, countries from Brazil to Thailand have responded to the flood of incoming capital by imposing controls and taxes, retreating from the idea of financial globalization. To make capital controls stick, these countries may find they need to intervene heavily, policing the activities of multinational companies that are suspected of funneling capital illicitly between subsidiaries. Likewise, the new capital controllers may demand the right to police trade invoices, since over- or under-invoicing is a time-honored method for circumventing capital controls.
     None of this might matter if next week's G20 summit were on track to succeed wonderfully. But the Fed's super-loose policy is straining the international monetary order at a time when the spirit of international cooperation looks particularly limp. Across the rich world, leaders have been weakened by a sluggish economy that has dragged down their poll ratings, undercutting their appetite for making unpopular concessions to foreigners.
     Even before the Fed's action this week, there was much loud talk of currency war. This now seems sure to intensify, and the United States has lost its moral authority to broker currency peace.
    Full Article Here:

Tuesday, November 9, 2010

Grant Says Quantitative Easing Is Just Money Printing

Great Video! Intellectual Hygiene; its Money Printing --drop the QE PHD Approved Euphemism

Oct. 8 (Bloomberg) -- James Grant, editor of Grant's Interest Rate Observer, and Neal Soss, chief economist at Credit Suisse Holdings USA Inc., talk about the outlook for Federal Reserve monetary policy, the labor market and the dollar.

2010-11 Updates

The banks have still not heavy reduced their short positions, they are still holding them, but at about a $300 Million loss per $1 rise in silver price.

574 Silver Contracts (each 5,000 oz) posted for delivery in November.

This shows the details of how much is left at the exchange ware houses

From now on I'll divide all of these into the four different categories
1. Regulatory Changes (Manipulation, Law Enforcement, Law Suits etc)
2. Investment Demand (Paper Vs Physical, Global Precious Metals ETF etc)
3. Industrial Demand
4. The Future

 1. Regulatory Change

JP Morgan and HSBC Face RICO Charges in Silver Futures Class Action Lawsuit  Banks alleged to have used naked short-selling to rig market NEW YORK, Nov. 3, 2010 /PRNewswire/ -- JP Morgan Chase & Co. (NYSE: JPM) and HSBC Securities Inc. (NYSE: HBC) face charges of manipulating the market for silver futures and options in violation of federal commodities and racketeering laws, according to a new lawsuit filed Tuesday in the U.S. District Court for the Southern District of New York.

Kaplan Fox Sues JP Morgan and HSBC on Behalf of Investors
for Silver Futures and Options Contract Losses Caused by Market Manipulation

NEW YORK -- On November 2, 2010, Kaplan Fox & Kilsheimer LLP (, a leading plaintiffs' firm, filed a class-action complaint in the U.S. District Court for the Southern District of New York on behalf of an individual investor against JP Morgan Chase and HSBC in connection with their alleged conspiracy and manipulation of the market for silver futures and options contracts traded on COMEX.

Ron Paul vows renewed Fed audit push next year

2. Investment Demand

Central banks in past were net sellers, now they are net buyers!
No need to gold imports for a decade, Iran says
TEHRAN, Oct. 30 (MNA) – Iran has changed some 15 percent of its foreign exchange reserve to gold stocks and there is no need to gold imports for the next ten years, Central Bank governor Mahmoud Bahmani said here on Saturday.

CHINA is a buying all domestically produced gold, encouraging their citizenry too as well.One alternative for China is to declare itself the buyer of last resort for gold, i.e. it will buy all that is offered for sale at their specified dollar price.  This is not going on the gold standard, but rather, it’s a hijacking of the valuation process for both the dollars and  gold.  To implement such a policy, they should currently be busy secretly buying all the gold they can.  When their buying finally attracts world attention, they would announce the new policy.  With the announcement would also be the setting of this month’s dollar denominated benchmark gold price.  As frequently as they need to, they can ratchet this price upward to preserve the buying power of their combined gold/dollar reserves or to gain other advantages yet to be discovered.


Cramer Is A Goldbug, Says His Retirement Fund is 'Almost Entirely Gold' (GLD, GDX)

November 4, 2010 3:12 PM EDT,+Says+His+Retirement+Fund+is+Almost+Entirely+Gold+%28GLD,+GDX%29/6078056.html

Hong Kong launches first local gold fund

HONG KONG (MarketWatch) — For Asians unnerved about a global currency war, a new weapon is about to emerge: a gold exchange-traded fund that stores its bullion in Chinese vaults. 

4. The Future
There will be more bailouts in the future, probably of the banks, most likely through the FED (in Europe the ECB) rather than through the legislative side. Right now they are walking a fine line with the all residential and commercial
MBS they hold on their assets sheets. FASB changed the accounting rules (Mark-to-Market) at the beginning of the crisis to allow the banks to 'value' these securities at what they wish.

Bank of America Edges Closer to Tipping Point: Jonathan Weil

Mortgage-bond investors are demanding untold billions of dollars in refunds. The foreclosure fiasco is metastasizing. A member of the Troubled Asset Relief Program’s oversight panel, AFL-CIO attorney Damon Silvers, openly worried at a hearing last week about the risk that Bank of America might need another bailout.

Irish banks, bonds hit as EU eyes survival plan

Irish bank shares hit new lows, bond yields new highs as EU eyes Ireland's survival plans

World Bank president open on the idea of a gold standard

LONDON (Reuters) – The advanced economies should consider adopting a modified gold standard to guide the exchange rate, the World Bank group president, Robert Zoellick, said on Monday in an unexpected proposal before the G20 summit.

* Urges return to gold standard

Wednesday, November 3, 2010

Pushing on a String: Fed Fires $600 Billion Stimulus Shot .

The 'debt' based economy is still the satus quo that is being protected. --receiptents of fixed incomes and savers be damned!

So here we have another round of QE (there will be more!)  $600 Billion more should buy some more time.

As long as the medicine of QE continues asset prices may inflate but look at this chart which shows the current rally in stocks (S&P index) quoted in Oz of Gold

There is a certain point of no return, where you get little return for the increase in debt; Saturation point;

Monday, November 1, 2010

COT/how many days Commercials have presold

Here is the updated numbers on how many days of the worlds annual production the commercials have 'sold' (gone short) to the worlds markets, notice the HUGE, disproportionate position they have taken in silver, the red line (4 Largest Commercials) is also part of the green line (8 largest).

CFTC Chairman Chilton lets loose: Fraudsters deviously rig silver prices".

Here is the statement from the CFTC website;

A Few other related articles;

 Oct 26 (Reuters) - There have been repeated attempts to influence prices in silver markets, Bart Chilton, a commissioner at the U.S. futures regulator, said on Tuesday.

Thursday, October 28, 2010

The Investment of all Investments

The purpose in writing this is to give an overview of the information that I have come to understand, and which has pointed me to accumulate silver over the last years over gold. (I do suggesting owning both). Making silver in my opinion the investment of all investments. All the information in here can be searched and confirmed, sorry I am not providing all up-to-date links for each of these points, CFTC chairman Chilton’s comments are what prompt me to write this today (and in a hurry, so I apologize for any possible errors in advance). These points are interconnected so it’s a bit hard to put them in point form. There are many reasons 3 main being; 1. Regulatory change  2. Investor demand   3. Industrial use. Each point could, and most likely will, set off the other points.

1. Regulatory Changes & the coming ‘Short Squeeze’ in the Futures commodity markets
-the COMEX has been the epicenter of metals trading, on the COMEX the commercials (bullion banks) hold the largest ‘SHORT’ (selling) position in silver than any of the commodities markets, much larger than world production and present deliverable inventories. They either BUY to close their trade for a profit (at lower prices then they first SOLD) or they are forced to buy at higher prices for a loss (at higher prices than they first SOLD). Either way there is buying pressure.
-Even if they don’t liquidate, as long as the commercials don’t add to their SHORT trades, the price will rise (as seen over October). If they are forced to sell (for reasons listed below) then there will be panic buying, and the ‘short squeeze’ of these commercial banks. See the COT Chart here
-The Dodd/Frank financial reform bill requires position limits; by all accounts the Commercials bank’s positions need to be brought to a much lower level.
-The CFTC will determine/enforce position limits. Silver specific; there is presently a 2 year ongoing investigation, on which CFTC Chairman has finally commented; 'There have been fraudulent efforts to persuade and deviously control that price. Any such violation of the law in this regard should be prosecuted.' Its only a matter of time now.
2. ‘Paper Silver’ Market vs ‘Physical Market’; Investor Demand
-Over the decades precious metals held by central banks, earning nothing by storing the metal, have been ‘Leased’ and sold to the worlds ‘paper markets’ and the amount of ‘paper precious metals’ certificates does NOT reflect actual silver/gold inventory’s. All of this ‘leased metal’ will not be available to return to those who ‘leased’. When this becomes fully understood an avalanche of Physical redemptions by banks would begin. See GATA for lots of info
-There are some institutions that issue ‘paper silver’ certificates, that because of the above mentioned leasing (and other reasons), has led many to question their backing, and the obvious counter-party risk. Because of this many are taking delivery of their metal, thus pulling it out of the present system (thus straining present inventory further).
-As world silver inventories have decreased (for last 70yrs), fiat money, and credit has expanded to historic proportions. Investors & Central Banks of the World have historically low exposure to precious metals. Central banks of the world are now reversing decade’s long trends and becoming buyers of precious metals rather than sellers. 
-The Worlds population continues to increase, and a portion of this population will always turn in their fiat money into precious metals, with or without crisis’s. This pattern will only be accentuated as people’s faith in central planning & in their fiat decreases, which we are witnessing today.
-‘Quantities Easing’ (money printing), Currency Intervention (BOJ in Sept), Currency Pegs (Yuan), Bail Outs (US & EU), all expand the money supply, diluting the fiat money’s value already in circulation (inflation). Promises made by Governments of the world (Social Security, etc) are unfunded liabilities that will have to be papered over again, meaning more dilution of your purchasing power.
-If silver were to hit its 1980 nominal high it would be at $50 per oz, if it reached the same high in today’s inflation adjusted dollars it would somewhere near $130.00 per oz.
            -The Gold to Silver ratio is stretched to historic levels, meaning silver has a lot of catch up to do. See this video

3. Industrial Use
-Besides Petroleum, Silver is the most used commodity in the world, (thousand of applications) and when it is used for industrial purposes it is for the most part, destroyed & unrecoverable.
-It is estimated that over the last 70 years 95% of the world’s entire inventory has been consumed, this is roughly 10 Billion ounces accumulated over hundreds, if not thousands of years, consumed in the last 70 years.
-Industries that use silver will continue to purchase silver no matter what the price, as for most products it used in, the amount is a small percentage of the total cost, however if they don’t have it they cannot produce their product, and would have to shut down assembly.
            -When panic buying begins, industries will join in buying to secure inventory to secure future production.

4. Future
            -One of the results of unfolding debt, currency crisis, will be governments of the world being forced to deal in something more tangible than fiat paper and their ‘promises’, which currently require ‘faith’. Market forces will dictate this result (Gresham’s law)
-Money should have (as Aristotle pointed out) a store of wealth quality; be durable/consistent, divisible, portable/convenient, & with intrinsic value, historically Gold/Silver have been used, those who see the paper mess unfolding, and the inability of governments to fund their promises, would do well to put their fiat money into real money.
            -The Collapse of Bretton Woods with Nixon cutting the Gold connection the USD (1971’s), has been the sole cause of many of the worlds problems (War!), fractional reserve banking & debt financing increased money supply, assets values rose, all was well, this great experiment, gone global, has gone on for decades now, and has finally exhausted itself & is coming to an end, as all fiat money has come to an end. In the western developed economy’s there are no more ‘assets’ to inflate to allow the ‘consumer’ borrow against to continue his ‘consuming’ (Think HEW Home Equity Withdraws), and now the great de-levering ensues. See this video that debunks that we can continue indefinetely having 'growth'
            -With the Bailouts (& FED, Treasury deals) much of the private sector debt (there is still much more) has now moved to the sovereign level, temporarily buying time before the next leg, there are political, fiscal & monetary limits to how much can be borrowed & monetized ("Quantative easing", running the printing presses) by governments, as Greece showed it can all transpire in a very short period of time. With silver if the economy's of the world continue without a hitch it'll do well, and if there is a hitch it should also do well.

Conclusion: Nearly everything seems to point to a silver shortage in the near future, based on present inventories, industrial use, and Investor demand, meaning substantially higher prices. Get some exposure now, use lower prices (and expect this volatility) as an opportunity to buy more, hold positions that you can't be forced out of (Not on Margin, unless your prepared for volatility with deep pockets) for these reasons and more I believe that this will be the investment of all investments.

For those in Asia, where countries have Current Account Surplus your fiat money purchasing power is eroding slower than the USD (but all fiat currency’s buying power is eroding), now while it is strong is a good time, in my opinion to move a good portion into metals. Every fiat currency ever issued in the history of the world has come to its intrinsic value of 0.

            -There are 2 positions one can take in a market 1. Buyer (Long/Bull/Bullish)  2. Seller (Short/Bear/Bearish).
            -In order to close the trade, you have to 1. Buy back if you first Sold, or 2. Sell if you first Bought.
            -All trades on the futures market are required to post a deposit, if a market moves significantly against you (if you BUY and it goes down, or if you SELL and it goes up), at some point you are required post more of a deposit to keep your trade (Called a MARGIN CALL), if you don’t post additional funds your position will be liquidated for a loss). When this happens en-masse it is a called a ‘SHORT SQUEEZE’.

Thursday, October 21, 2010

U.S. is currency war's "tomb maker" -China economist

 Oct 14 (Reuters) - The United States fired the first shot in the currency war and the rest of the world must be on guard for its deliberate strategy to devalue the dollar, a Chinese economist said in an official newspaper on Thursday.

JPMorgan Sells $4 Billion of Debt Amid Loan Scrutiny

Why the U.S. Has Launched a New Financial World War -- and How the Rest of the World Will Fight Back

Should Germany worry about leaving its gold with U.S.?

They should be, the U.S. because of its Gold Reserves is able to play chicken with the rest of the worlds Fiat money.

South Korea's central bank looks to gold

Silver Exports From China May Slump by 40% This Year

"Silver Exports From China May Slump by 40% This Year". Customs data show [that] exports plunged almost 60 percent to 970 tons in the first eight months of 2010.

Mortgage Buybacks May Cost Lenders $120 Billion, JPMorgan Says

But guess what kind of liquid capital (cash reserves) they have?

Some Older Photo's that I've saved.

Here is the real reason the ECB Stepped in with their own 'Trillion Dollar Bailout' to buy Greek Debt, the house of Fiat Cards would crumble.


See for the way they've changed HOW they calculate statistics, and updates.

Comparison Chart for 1937 to 2010, of course they didn't have Helicopter Ben or PPT (Plung Protection Team)
Houses were overpriced in all cents of the word.

Why do they keep low interest rates, punish savers? The answer is below;

Banks/Investors are already shifting away from Fiat Money, as they continue to shift to more historical proportions it will put more pressure on prices, to be higher! 
Silver has much farther to go than Gold, wait till investor demand really kicks in as it as in Gold.

This is NOT an ordinary recession, it is a depression, based on a delevering private sector, and soon a delevering of the public.

Dilution of the present Fiat money in circulation, wait for velocity of money to increase and its only a matter of time for all of this money creation to come home to roost.

Banks are sitting on this money right now, getting it basically for free from the Federal Reserve, and lending to the Treasury, while they write down losses on their 'assets' which courtsey of changes in FASB accounting rules (Mark to Market was thrown out) they have some breathing room. Velocity of Money is the key to when hyperinflation breaks out, then all this money will come pouring out, either because they are scared to hold, or economic conditions have improved, or ......

Soon, Japan, France, U.S., the U.K. to follow in Greece, Portugal, Ireland, Spains foot steps.

The private sector continues to take money out of the market, que PPT

CFTC will be putting position limits on commodity's (courtsey of the Dodd/Frank reform laws), these sellers (Bullion Banks) will have to become buyers, they either do this by forcing the price lower for a profit, or are forced out for a loss, either way they have to buy it back to exit, which they must at some time.

See the dates on these pictures.

Worried about buying gold/silver now? -thinking it may be a bubble, check some of these charts.


Here are some Charts on Japan. The Yen is high now, but lots of data points to weakening, and the adjustment could be painful.

Insider Selling compared to Insider Buying 




+700,000 Oz of Gold as the Russian Central Bank continues to purchase

Update on CBRF continued move moving out of Fiat into PM (precious metals)