I hope that this email finds you well, healthy and safe from the continuing earthquakes, tsunami! We are, as I'm sure everyone else is, praying that they can get the nuclear reactor in order ASAP! There is the huge 'human' side to all the pain and suffering going on, to be brief, I'm not going to write below about that though. -although I will say how wonderful it is to see the Japanese working together, this is one of the reasons why I choose to stay in Japan during the coming global depression.
I'm writing you as we are near the point in the month to make the monthly silver purchase but I'd like to explain that this may be the last time we are able to do this near these prices, and perhaps the last time that the Japanese yen is going to be strong against other currency's. I think this could be the 'black swan' that will change the financial landscape.
The full effect that this earthquake/tsunami has had to the Japanese economy is at this time is still unknown, but it is obviously huge! Whole cities will probably never be rebuilt! People are displaced, jobs, savings, homes, assets, cars, homes, lives & livelihoods have destroyed. These displaced people will need to be fed, sheltered by the communities and governments. Eventually relocated, and they will be looking for jobs in cities that already have high unemployment. I read an article that only 10% of Japanese households have earthquake insurance, those that do could easily bankrupt their insurance company's. Contrary to popular opinion destruction is not a good allocation of capital (see this link; http://www.youtube.com/watch?v=gG3AKoL0vEs )
The Japanese savings rate has been in steep decline, and I do not believe you will see the private sector have deep enough pockets to fund on the scale needed, (or if they do it'll be depleted) which also taking a hit to their own income by the proposed higher taxes (which has a negative multiplier though out the economy), rolling black outs that start tomorrow, will lower overall economic activity, thus the government will be called on to pay for this. The government has the highest debt to GDP levels in the world, --Japan's public finances have been the proverbial 'bug' in search of a window. I believe this is the 'window'! If the government can not fund they either look to overseas capital markets (at much higher interest rates) or have the BOJ monetize the debt (print it money to use).
For many reasons I believe we may have a temporary rise in strength in the Japanese yen, it could be the reversal of the famous 'carry trade', the Japanese government may sell their U.S. Treasury's, and still the Japanese currency is perceived to the one of the 'safe haven' trades, among other reasons, etc. --this could last a week, a month(s) or just days.
On the gold/silver side, the shortage looks like it has begun, the backwardation in the silver futures market is still in play, March futures contracts have still not been delivered around 1200 contracts left (highly unusual!!). Investor demand is continuing to pick up pace, both the U.S. Mint and the Canadian Mints have delayed shipping of all of their products, premiums on nearly all silver bullion has increased. The U.S. unemployment is not keeping up with the pace of those joining the job market, housing market is still in a free fall, the FED is still engaging in QE2, and although they are talking now about ending new purchase of U.S. Treasury's in June, they will continue re-invest their maturing debt back into the U.S. debt markets, thereby continuing while still being able to claim that they've stopped. The major bullion banks continue to exit their short positions, and on rising prices.
The geopolitical landscape has changed drastically with uprisings in Tunisia, Egypt, and Libya, the place to watch is Bahrain which hosts the U.S. 5th fleet, and is guard to Saudi Arabia and its oil, and sheiks (in exchange for denominating their oil sales in dollar). The U.S. plans to exit Iraq at the end of the year, and this will leave Iran the major player in the area, Iran no longer deals in U.S. dollars for oil, but gold, and other currency's.
Anyway, I'm writing this off the top of my head this evening, so it is by no means complete, could have some typo's etc, but I figure I'd let you know what I think at this time, and if you want to order please let me know, if I have enough people to make the bulk order I'll do it at bulk prices, if not I'll probably be going pretty much 'all in' at whatever price, over the next 48 hours.
Like you've seen on the news in Japan, food being snapped up off the shelves, the same thing is going to happen financially when people realize the paper they hold is not worth the paper is printed on, for people like me we've heard this since we were young so its almost cliché, but its worth considering if you have something to protect, you'll be doing Japan and you family a favor by being able to redeploy your assets at a later date.
This shows just the American Eagle Sales, one of the most popular forms of silver, however the Candain Maple Leaf, the Perth Mint series, Philharmonic, Panda also hold a huge percentage of global sales.
Silver has alot more to go, but its been a great month!
The rise in all these commodities has much to do with the 'reflation' program of QE
Here is another graph that shows that when the starting the 'printing presses' you've got a rise in equities. The converse lesson here, is that IF/WHEN they stop the 'printing presses' (QE) there will most likely be a sharp down turn, but what is on the line is the viability of the worlds fiat paper currency.
I do believe that there are limitations to how much they (FED) can 'print', without knowingly, deliberately, destroying the currency. I also believe there are limitations to how much the politicians and populace will create debt, which the FED buys, to run the government, and historically we are approaching those levels.
And now there is so much short term debt that needs to be rolled over, (see the graph below), that that time is nearby;
Lastly this chart puts the rise in the stock market into proper perspective, priced in Gold the Dow is headed lower;