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Why Are Silver Sales Soaring? by Jeff Clark
June 26 , 2010  

Why Are Silver Sales Soaring?

By Jeff Clark, Senior Editor, Casey’s Gold & Resource Report

April, 2010

The U.S. Mint just reported another record, but this time it wasn’t for gold. The Mint sold more Silver Eagles in March and in the first quarter of the year than ever before. A total of 9,023,500 American Silver Eagles were purchased in Q110, the highest amount since the coin debuted in 1986.

While this is certainly bullish, there’s something potentially more potent developing in the background. Namely, how this matches up with U.S. silver production. Like gold, the U.S. Mint only manufactures Eagles from domestic production. And U.S. mine production for silver is about 40 million ounces. In other words, we just reached the point where virtually all U.S. silver production is going toward the manufacturing of Silver Eagles.


This is especially explosive when you consider that roughly 40% of all silver is used for industrial applications, 30% for jewelry, 20% for photography and other uses, and only 5% or so for coins and medals.

To be sure, mine production is not the only source of silver. In 2009, approximately 52.9 million ounces were recovered from various sources of scrap. Further, the U.S. imported a net of about 112.5 million ounces last year. (Dependence on foreign oil? How about dependence on foreign silver!) So it’s not like there’s a worry there won’t be enough silver to produce the Eagle you want next month.

Still, why so much buying? The silver price ended the quarter up 15.5% from its February 4 low – but it was basically flat for the quarter, up a measly 1.9%. We tend to see buyers clamoring for product when the price takes off, so the jump in demand wasn’t due to screaming headlines about soaring prices.

I have a theory.

For some time, silver has been known as the “poor man’s gold.” Meaning, silver demand tends to increase when gold gets too “expensive.” The gold price has stubbornly stayed above $1,000 for over six months now and spent much of that time above $1,100. You’d be lucky to pay less than $1,200 right now for a one-ounce coin (after premiums), an amount most workers can’t pluck out of their back pocket. But Joe Sixpack just might grab a “twelve-pack” of silver.

What would perhaps lend evidence to my theory is if gold sales were down in the face of these higher silver sales.

The U.S. Mint reported a decline in gold bullion sales of 20.8% this past quarter vs. the same quarter in 2009. Further, other world mints have seen sharp declines in gold bullion coin sales as well: the Austrian Mint reported an 80% drop in sales for the first two months of the year and the Royal British Mint a 50% decline in gold coin production for the first quarter.

What’s even more dramatic is the difference in the dollar value of the sales. Gold Eagle sales in the U.S. dropped $10,263,500 from a year earlier – but silver sales increased by $61,855,290. So, not only did silver sales make up the drop in gold sales, they exceeded them by $51,591,790.

Is the rush into “poor man’s gold” underway?

Why the answer to that question is significant is that a shift toward silver for this reason could signal we’re inching closer to the greater masses getting involved in the precious metals arena. And that – for those of us who’ve been invested for awhile now – would be music to the ears. Because when they start getting involved, the mania will be underway, and from that point forward, it’s game on.

I’m not saying the mania is starting, and I actually think we could see another sell-off before things take off for good. Gold could dip to $1,000 and maybe even $950, with silver going to the $14-$15 range. But as clues like these begin to build up, we’ll know we’re getting closer. (And any drop to those ranges would clearly be a major buying opportunity.)

Everyone talks about gold, myself included, but a meaningful portion of one’s precious metals portfolio should be devoted to silver. The market is tiny, making the price potentially explosive. Remember that in the ‘70s bull market gold advanced over 700%, but silver soared over 1,400%.

Don’t be a “poor man” by ignoring gold’s shiny cousin.

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Quote of the Day

" By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a manner which not one man in a million is able to diagnose."

--John Maynard Keynes

Father of Keynesian Economics




This Week's Video


Miner Bets on Silver
Dennis Wheeler, CEO of Coeur d'Alene Mines, explains why silver is a win regardless of the economic environment.

Ted Butler Weekly
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Fifty Years of Suppressing Silver by Jeff Nielson
June 19 , 2010  

Fifty Years of Suppressing Silver
By Jeff Nielson

July 16, 2010

Sophisticated precious metals investors are well-aware of the rampant manipulation of the gold and silver markets. They are also generally aware of the reason for such manipulation. A rapid rise in the price of gold and silver is like an economic "warning siren" - alerting savers that their wealth (i.e. the purchasing power of their currency) is being rapidly eroded by the monetary depravity of bankers.

In a world with a "gold standard", this isn't a problem. With currency which is redeemable in gold (or silver), the value of a currency (i.e. its purchasing power) is anchored by the gold and silver backing it. However, in a world of nothing but "fiat currencies" (i.e. money backed by nothing), a loss of public confidence in paper "money" is the worst nightmare of bankers.
This fear can be most easily illustrated by simply looking at the example of Alan Greenspan. In 1966, Greenspan was a respected academic, who wrote a famous essay extolling the virtues of a gold standard, where he simply stated the evils of "fiat money":

"In the absence of a gold standard there is no way to protect savings from confiscation through inflation."

I explained this concept of banker-stealing, in great detail, in a recent commentary - so any readers who are interested in a thorough discussion of this should refer to that piece. A quarter of a century later, after "Easy Al" had sold his soul to the bankers, and become Chairman of the Federal Reserve, he was asked directly what he would do if/when people lost confidence in their "fiat" U.S. dollars. His response to that question is even more famous:
"We stand ready to lease gold in ever-increasing amounts."

Several obvious, observations flow from this. Not only are fiat-currencies a tool which bankers use to directly steal our wealth, but this "tool" is, in fact, nothing but a scam by a bunch of con-men - and (like all scams) it collapses as soon as those being scammed "lose confidence" (i.e. understand that they are being 'conned').
What highlights the illegitimate (and ultimately illegal) nature of this scam is that the primary mechanism which the Chairman of the Federal Reserve would (and does) use to "restore confidence" to the world's "reserve currency" is to (illegally) manipulate the gold market. Put another way, because this is a scam, there is no way to directly "restore confidence" to paper currencies. Instead, all the bankers can try to do is to (temporarily) destroy confidence in gold - by suddenly dumping vast quantities onto the market, in order to cause the price to drop.

Manipulation of the gold market actually began (on a small scale) in the 1960's, while the U.S. (and the world) was still partially on a gold standard. The U.S. government was "cheating" with its accounting, to hide the obscene amounts of money it was borrowing (and squandering) in its doomed war-effort in Vietnam. Thus, this manipulation is a coordinated scheme by Western bankers which is now nearly 50 years old.

Like gold, the silver market has been manipulated for roughly the same amount of time. However, in keeping with silver's modern "identity" as an "industrial metal", the evolution of silver-manipulation, and the mechanisms used to manipulate the silver market are vastly different from the gold market. To begin with, back in the 1960's when we were officially said to be on a "gold standard", in fact, it was only silver money which was widely circulated in our economies, in the form of small-denomination coins. In other words, while our monetary systems were anchored by gold, it was silver which was used as money in an "industrial" sense - as an indispensable tool of basic commerce.

Indeed, at the same time that the bankers were trying to prop-up the U.S. dollar while on the gold standard (due to their reckless money-printing and debt-creation), these same bankers (and their allies in government) were making their first efforts to defuse a "silver supply crisis" - caused by pricing silver at only a fraction of its true worth.

In the 1960's, the U.S. government had kept the price of silver frozen at $1.29/oz. However, whenever an asset is under-priced, there will always be a group of investors who will identify such an under-priced asset - and then accumulate it. Thus, the U.S. (and other governments) were rapidly squandering their entire stockpiles of silver, as they had to dump ever-increasing amounts onto the market to maintain the artificially low price.

Ultimately, the bankers capitulated, and the U.S. government ceased its efforts to keep the price of silver frozen at $1.29. However, as is usually the case with any illegitimate scheme, every time the schemers take action to deal with one flaw in their plans, that produces unintended (and undesirable) consequences - which then require further acts of manipulation.

Once the price of silver was allowed to rise, very quickly the actual value of the silver contained in our small denomination coins (primarily the 10-cent and 25-cent pieces) greatly exceeded their face-value as legal tender. This created a huge incentive to melt-down these coins and make a very profitable arbitrage trade of "buying" these coins at their face value, and then selling them for their metal-content.

The U.S. government responded in two ways (and was quickly copied by the Canadian government). First, it changed the composition of all newly-issued coins - removing all their silver content. U.S. dimes had 90% silver-content up until 1964, while Canadian dimes contained just over 80% silver. The table below provides the evolution of the Canadian dime.

History of Composition

Meanwhile, the U.S.'s 1965 Coinage Act made it a crime to melt-down any legal tender coins (in order to profit on their metal-content), and a duplicate measure was passed in Canada. Consider the true dynamics of this measure.

First the bankers abolish the gold standard, to allow them to rapidly accelerate the speed at which they steal from us through currency-dilution. This, in turn, requires them to (illegally) manipulate the gold and silver markets - in order to hide the true value of these metals from being expressed in the bankers' diluted paper. The government then makes it a "crime" for its own citizens to make a profit on their own money. In the bankers' scam of money-dilution, only the bankers are allowed to profit on their crimes.

It was at this point in history that the bankers were able to largely forget about manipulating the silver market (for many years), and to focus their energies on gold-manipulation - because basic market fundamentals created conditions which depressed the price of silver, with only minimal "assistance" from the bankers (and their servants in government).

In this respect, I'm indebted to Adrian Douglas of GATA, for drawing my attention to the true significance of silver as a modern "industrial" metal first, and a monetary metal second. While many media talking-heads erroneously state that "silver is an industrial metal, not a monetary metal", in fact silver is both an industrial metal and a monetary metal - while gold is almost exclusively a monetary metal. Since few mainstream pundits understand what is "precious" about precious metals (i.e. it is the best money our species has ever devised), they don't understand the simple logic that silver's enormous industrial versatility and importance can't make it less "precious", but only more so. Indeed, it is Mr. Douglas' position that silver has become too important industrially (i.e. too "precious") to be widely used again as money.

Putting aside that separate issue, clearly the price of silver has been driven in recent decades mostly by its industrial demand. And it is this industrial demand which (with a little help from the bankers) kept the price of silver well below its true value for more than thirty years (until early in this decade).

How does industrial demand depress the price of silver? Ironically, it is due to how the brains of bankers functions. If a mining company went to a bank for a loan to build a new silver mine with the sales-pitch that silver was grossly undervalued, and they wanted to produce this valuable commodity in order to capitalize on this investment opportunity, the reaction of the banker is totally predictable.

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"I believe...that this [Constitution] is likely to be well administered for a course of years, and can only end in despotism, as other forms have done before it, when the people shall become so corrupted as to need despotic government, being incapable of any other."

--The Writings of Benjamin Franklin, edited by Albert Henry Smyth




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Take Your Money Out of the Banks

From the Lew Rockwell Podcast:

Economist Joe Salerno explains that it is important to move your money from megabanks to less-unsound, smaller ones, and to stop using fractional banks at all, to the extent you can. As Joe explains, every time you take cash out of a bank, you hinder the bank-Fed-state combine, and perform a public service. Joe and Lew also discuss the problems of the current money and banking system, how shaky it is, and what a free market alternative would look like.

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ACH Debit
Now Available at SGS

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Contact us to get the sign-up form(s) if you'd like to use this method of payment for your orders.

Recurring Orders

ACH function also allows us to offer Monthly Recurring order capabilities. Many have inquired about this in the past.

APO & FPO Shipping

We can ship to APO & FPO address, even if they are overseas.  These addresses are considered 'domestic' by the USPS.  All items shipped to APO & FPO addresses will be send via Registered Mail and will require signature upon delivery.


The banker would burst into laughter, and (if he was polite) would warn the mining executives not to let the door hit them on their way out. While bankers see nothing wrong with taking our money which we deposit with them, and gambling it on any and every "investment" which tickles their fancy; these hypocrites would never dream of allowing ordinary people (i.e. non-bankers) to do the same thing with their money.

 Conversely, if this same mining company approached the bank for a loan, and provided them with statistics on the amount of silver being consumed in various industrial applications (old and new), the bankers would behave in a much different manner. Assuming that the mining company demonstrated that they could mine their silver at a cost below the current price, the banker would happily reach for his cheque-book.

This leads us to a fundamental "truth" in the precious metals sector: investment demand (i.e. "speculative" demand) does not stimulate mine production (except in a very belated manner - only after inventories have been exhausted), while industrial demand does stimulate higher levels of mine production, because the bankers will finance new mine-production based upon that level of industrial use. As an aside, it was because gold is not used to a great degree "industrially" that the bankers had to "persuade" the world's largest gold miners to enter into vast "hedging agreements" - which simulated the same market conditions for gold: maximizing production at the lowest, possible price.

In a true "equilibrium", this industrial production and demand would not cause silver to trade at a price well below its fair-market (equilibrium) value. However, the bankers ensured that the silver market could never reach such an equilibrium by continuing to dump their waning stockpiles of silver onto the market.

Here I am sure there are a few astute readers who will question my characterization of the "demand model" for silver. They will point out that most of the world's silver is still produced as "by-products" of other mining. In other words, it is a secondary product of mines which primarily extract gold or copper or lead/zinc. Thus, others will argue that industrial demand for silver could not directly stimulate silver mining, and therefore total silver production.

In fact, while that argument has theoretical merit, in practical terms it is incorrect. To begin with, if silver was properly priced, many of the mines where silver is currently produced as a "by-product" of other metals would instantly become "silver mines" - with the other metals becoming the "by-products".

Regular readers know that the long-term gold/silver price ratio averages roughly 15:1 (over a period of nearly 5,000 years). Given that silver occurs in the Earth's crust at roughly a 17:1 ratio versus gold, there is obvious, objective validation for such a ratio. In addition, given that most of the world's stockpiles of silver have (literally) been consumed, any rational valuation of silver would have to be at a ratio of 15:1 or less.

With the price of gold currently at $1200/oz (and with that price being the result of market-manipulation), clearly the fair-market price for silver would have to be a minimum of $80/oz today. In addition, in mines where silver is currently produced as a "by-product", the industrial demand for silver (i.e. the silver "credits") is still fully considered in determining whether any particular mine will be financed to go into production - but with those decisions also being based upon demand for the other metals.

Given that the price of silver has been highly correlated with most of those other metals, my analysis still holds true. However, even in a world where the gross under-pricing of silver means that there are few (official) "primary" silver mines, there are still "mining companies" able to obtain financing only for silver, but based upon polymetallic mines, where silver is officially a by-product.

Silver Wheaton (SLW) is officially classified as a "silver mining company", however what it is really is a "silver marketing company". What Silver Wheaton does is to buy-up the future production-streams of silver from other miners (where silver is a mine byproduct), and then as that silver is produced, it sells this silver onto the market at the prevailing "spot" price. Apart from the ingenuity of this business model, what is relevant is that Silver Wheaton goes to a bank for financing, to buy-up the production-stream of a particular mine - and Silver Wheaton obtains that financing based upon industrial demand fundamentals for only silver.

Thus, even in a market which has been horribly distorted through manipulation, the principle which I articulated earlier is still applicable: the industrial demand for silver is an important factor in helping the bankers suppress the price of silver. Obviously, the limiting factor in the bankers' game of market-manipulation is the amount of bullion they have to dump onto the market.

As I have pointed out on many occasions, between 1990 and 2005, official silver inventories plummeted by approximately 90%. It is simple economics that any good which is grossly under-priced will be grossly over-consumed. Faced with the abrupt end to their silver-manipulation (which would make it much more difficult to continue to manipulate the gold market), the bankers fell back upon their oldest and most-favorite swindle: they sold paper to people, and pretended that the paper represented actual silver - and thus "SLV" was born.

This is such an obvious sham that I simply lack the space to go until all of the clearly fraudulent implications of this fund, so I will restrict myself to just a couple of facets. From 2005 to the end of 2008, after silver inventories plummeted by 90% in just 15 years (due to being grossly under-priced), we are supposed to believe that inventories suddenly 'made a U-turn' - and tripled over the course of just four years.

Regular readers will be familiar with the following chart, which shows the progression of "official" silver inventories - along with the small caveat attached to the graph. These official inventories include every ounce of ETF-silver, and SLV (by far the largest silver-ETF) was created at the beginning of 2006. As of the beginning of 2009, ETF-holdings represented roughly 2/3 of total "official inventories".

Anyone with even a slight understanding of markets should recognize the obvious sham here. An "inventory" is the amount of a particular good warehoused and ready-for-sale. Conversely, the units of SLV (and all other bullion-ETF's) represent privately-owned silver which has obviously been taken off the market. As a matter of elementary logic, it is impossible for even one ounce of silver to be both an "inventory" and an "ETF". It can be one (silver-for-sale) or the other (privately-owned) but not both.

Thus, at the end of 2008, two-thirds of official, global inventories of silver were nothing but an obvious paper-sham. Of even greater interest, I have been unable to find any more-recent statements of official inventories. Apparently the quasi-official "consultant" (none other than the infamous Jeffrey Christian and The CPM Group) who produced this data has decided that it's better to simply hide all inventory data - rather than to attempt more clumsy shams of this nature.

Making this massive fraud potentially much more egregious, the supposed "custodian" for most of this silver is JP Morgan, which holds the world's largest "short" position in silver, the most-concentrated position in the history of commodities markets. In what is obviously not a "coincidence" the total size of the global short position has stayed roughly equal to the (supposed) total holdings of "bullion-ETF's". However, those massive short positions are never audited, meaning that JP Morgan (and the other bullion-banks) have never been able to show they have more than half the silver necessary to cover both their short-positions and "custodian agreements" with the ETF's.

What this directly implies is that as of 2009, as much as 2/3 of total global inventories of "silver" was literally nothing but banker-paper - and we can only assume that their massive fraud has expanded in the time that has since elapsed. While industrial demand for silver helped the banksters in their nefarious (and illegal) schemes for many years, it is now industrial demand which is certain to destroy the bullion-banks.

While a gold-investor might be capable of being duped into buying banker-paper, and mistakenly believe that the banker-paper is "as good as gold", you can't use banker-paper to make silver bearings, or silver mirrors, or silver batteries, or silver solar cells, or silver anti-bacterial products. The bankers market-manipulation has progressed from merely dumping the silver which they held, to the much more fraudulent practice of passing off their worthless paper as "bullion".

In doing so, they have eliminated the possibility of the price of silver merely "correcting". What has become totally inevitable after 50 years of constant manipulation of the silver market is that this market is poised for the most spectacular default in the history of commodities markets - even more so than in the gold market. Companies which require silver to continue the existence of their businesses will be ready to bid-up the price of the commodity to multiples many times greater than an investor merely making a discretionary purchase.

We can only assume that when a silver default occurs that it will bankrupt JP Morgan. Keep in mind that while the nominal value of JP Morgan's silver, short position is in the billions of dollars, thanks to the testimony of Jeffrey Christian at the CFTC hearings we know that this short position has been leveraged by somewhere around 100:1. Furthermore, the potential loss on any/every short position is infinite - since there is no "maximum price" which silver could not (theoretically) surpass.

As the old saying goes, "For every winner in a trade there is a loser." There must be a few investors out there who would like to get on the "winning side" of a trade with JP Morgan?

Is Silver Money? by David Morgan
June 7 , 2010  

Is Silver Money?
By David Morgan

July 10, 2001

SGS Note: Bold and highlights are those of SGS

I took out my Black's Law Dictionary and looked up money. Interesting when will look at the legal aspects of things. I will admit I have an old version 1968 to be exact. The reason is bias on my part. It seems the definition of things keep changing as we move forward in time. To quote Blacks Law Dictionary, Money." In usual and ordinary acceptation it means gold, silver, or paper money used as circulating medium of exchange, and does not embrace notes, bonds, evidence of debt, or other personal or real estate. Lane v. Railey, 280 Ky.319,133 S.W. 2d 74, 79, 81."

Reading further we find:
In its strict technical sense "money" means coined metal, usually gold or silver, upon which the government stamp has been impressed to indicate its value. In its more popular sense, "money" means any currency, tokens, bank-notes, or other circulation medium in general use as the representative of value. Then under that several more sites are named.

Silver has the six aspects of money in a classical sense. It is divisible, durable, convenient, consistent, has utility value, and cannot be created by fiat. Silver is used as a medium of exchange and as a store of value.

Before we get into a big argument about whether silver is money or not, I need to point out a couple of details. First, it is a recorded fact that silver has been used in more places and for longer periods of time for money than gold. Secondly, I would like to quote Nobel Laureate Milton Friedman, who stated "The major monetary metal in history is silver, not gold."

Quoting from the web site: It is impossible to write about silver without evoking emotions, although it is my goal to be as objective as possible. There are very strong views about this metal both positive and negative. One such area involves the silver as money issue. The facts are that precious metals are rare, fiat currencies can be printed at will, and have always been abused.

My projection for the ultimate price of silver would be meaningless, but the facts surrounding the value can be objectively studied. In the end we all have a vested interest in the monetary system holding together. Precious metals are a barometer of world financial health. If gold and silver start moving up in a manner similar to 1979-1980, then the paper money game is essentially finished . Will this happen? Objectively, I do not know! However, I do know, throughout all of recorded history when a country has adopted a monetary system founded on edict (fiat), the nation has had a financial collapse. As we enter the next Millennium, remember the gold window was closed in 1971 and for the first time in history, the reserve fiat currency is worldwide phenomena.

The price of silver is a function of the understanding of the market itself. When the market understands that money based on unsound principles cannot help but fail eventually, then the true value of silver will be determined. Until that time arrives it is prudent to prepare some savings in the form that best retains value.

It would be of tremendous importance to everyone if I were able to predict one event in the investment world that had a 100% certainty of being fulfilled. I cannot, however here is something to ponder. All fiat currencies have eventually reached their intrinsic value of zero. This implies that the dollar will reach zero as well. Now, we currently are under the influence of a "strong" dollar. We must ask ourselves; strong relative to what? If the Federal Reserve admits that today's dollar is worth the equivalent of five cents in 1913, we have lost 95% of the purchasing power. So I ask how strong is today's dollar? Is the dollar's strength based upon the restraint of the printing press, the rate of return ( interest rate), the productive capacity of the people, or faith?

Now, take the time to look at your "money" be it coin or currency. You will notice that all have the statement "In God We Trust". Are we to put our trust in Mr. Greenspan, the Fed, or any political affiliation? Or are we to trust the source? Before, I am accused of going religious on my readership, let me make my point. The source of all wealth is land. If you believe God created the Earth fine, if not fine, we all can agree we live in a physical universe and land composes part of the Earth's character. Let me repeat myself, the source of all wealth is land. That is an interesting concept is it not? Gold and silver are mined out of the earth, many foodstuffs are grown in soil, houses , apartments , and shopping centers are built on it. In fact most of the list of commodities are derived from the land in one way or another, from soybeans to cotton, from sugar to copper. However, there is one subset that trades on the commodities exchanges that are the sole creation of man- fiat currencies, bonds, notes, and bills. (Not money according to Black's).

The world has entered into a great economic shift from paper assets to hard assets. This cycle repeats itself and now is the time when investors should be or should have liquidated their stocks and bonds and begun to accumulate physical commodity type assets. This is the real thing, commodities cannot and will not go bankrupt, there is real tangible value and most commodities are required by mankind.

Now we have some insight into where we are in the economic cycle between paper assets and physical assets. What takes place at the end of great inflations? What does history teach us? Actually, at the end of the inflation two interesting things happen. First, real money as defined above begins to appear in the market for everyday transactions. Almost anyone on the internet is aware gold can and is used for transactions through e-gold, GoldMoney and a few others. Once a person or business has enrolled with an internet gold holding company transactions over the internet can be made using gold. There are also some actual warehouse receipts being used by NORFED and Millennium Money. These warehouse receipt are exchangeable by the bearer on demand for actual silver or gold. The receipts themselves can also be used to purchase everyday items.

The second issue is that man made instruments are exchanged for real wealth at an accelerating rate.Those that have saved U.S. "dollars" decide to buy something with them. The problem is that once this transfer begins there is not many places to find safety. Because money represents something that can be use presently or stored for future use this shift becomes very intriguing. Although the major shift is into commodities, which of the commodities are able to fulfill the ability to be spend presently or store value for future use?

Yes, land and real estate can and will be used, but land is not very liquid. The only real places to transfer the financial asset class is into the metals.

What would happen if one of our foreign exchange partners running a balance of trade surplus decided to use some US dollars ( bond holdings) to buy real wealth? It would have to funnel money into the area slowly because too big a buy at one time would move the market a great deal. Once this shift was seen by the market the tendency is for others to follow.

Mexico is considering using its silver as a financial store of value. Some banks actually offer their customers money as defined above. This is a noble and valiant act. Some economists in Mexico have argued that the Mexican people have imported about as much U. S. paper as ever need and it might be wise to recycle this paper.

Grupo Elektra, quoted on the NYSE under symbol EKT, and Banco de Mexico, Mexico's Central Bank, have signed a contract authorizing Grupo Elektra as a distributor of Banco de Mexico's "Libertad" one ounce silver .999 coin, which has no face value and is legal tender under certain circumstances.

Grupo Elektra operates 550 stores throughout Mexico. It will initiate operations in silver sales and repurchases from the public at five stores in the Cuernavaca area, for the purpose of gathering experience in this field, which is new to the company. National expansion will follow shortly thereafter.

An interesting question to ask yourself is "When or under what circumstances would silver ( or gold) be the most valuable? This question poses some interesting aspects because it tests your own belief system. Do you trust the government or the source? The most important time may be when the man made asset class loses value and is shunned in favor of something real. Since there are too many paper claims outstanding versus the amount of silver or gold available not everyone will be able to shift into a financial asset that has stood the test of five millennia.

Sooner or later, nearly everyone everywhere will catch on to the fact that the currency game is drawing to a close, that all fiat currencies are doomed. Action in the marketplace, suggests this recognition is spreading; using gold back internet currencies, and the potential for a major silver producer (Mexico) to encourage its people to obtain value based money. A flight from all national currencies into real values is developing and will gain momentum. Ultimately people not government determine what money is and what money is not.


Other Articles of Interest

Peter Schiff

David Morgan

Aubie Baltin

Ruth Emory


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"Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked: 'Account overdrawn."?

Ayn Rand in 'Atlas Shrugged'


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A Silver Shortage?
Money manager predicts the price of silver to skyrocket on industrial growth.

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Gold and Silver Price Manipulation Efforts Failed This Week by Patrick Heller
June 2 , 2010  

Gold and Silver Price Manipulation Efforts Failed This Week
By Patrick Heller

Again I remind you that the price of gold is actually a report card on the value of the US dollar, and the American government and economy. A rising gold price indicates growing mistrust in the safety and stability of the dollar, falling confidence in the competence of the US government, and heightened fears about the strength of the private financial sector.

Such concerns were certainly not allayed when it was recently widely reported that, for the first time in history, the majority of Americans now depend on payments from government as their "income" rather than obtaining their sustenance from the private sector.

Because of this inverse relationship between the price of gold and public confidence in the value of the dollar, the US government can derive huge benefits if gold's price is suppressed. Among the benefits are lower interest costs paid on Treasury debt and lower payments on entitlement programs tied to the official inflation rate.

As federal government documents have been declassified and released to the public, it has been confirmed that the US government has intervened to manipulate gold prices starting as early as the end of World War I. In a letter to the Gold Anti-Trust Action Committee, Inc. (GATA) dated September 17, 2009, Federal Reserve Bank governor Kevin M. Warsh confirmed that the Fed has gold swap arrangements in place with other central banks, one of the means by which gold prices can be manipulated.

The tactics used to suppress gold prices have long become so blatant that professionals in the gold commodity trading pits can easily identify the times when prices are being manipulated.
One event where gold prices are regularly suppressed is at the monthly expiration of gold and silver option contracts. There are two different expiration dates each month. Normally, the COMEX options expire on a Tuesday followed the next day by the expiration of Over The Counter (OTC) options contracts. The larger options market is on the COMEX, though there are ten to fifteen banks and brokerages in New York, London, and Zurich that make markets in the OTC contracts.

Up until they expire, call options give the owners the right to demand delivery of the gold or silver at the contract's strike price. Should the price of gold rise above that level (referred to as being "in the money"), owners of call options can pay the strike price and other expenses and demand delivery of the physical gold from the party who sold them the contracts. Should this occur, that would squeeze gold supplies as the gold inventories on the COMEX are only sufficient to cover a small percentage of outstanding contracts. A supply squeeze likely would have the impact of pushing up prices.

The COMEX options expired this week on Tuesday. As I had predicted last week, the prices of gold and silver were suppressed below the strike prices where there were the largest number of call options-gold at $1,200 and silver at $18.00.
The pattern for the past several months has been for gold and silver prices to be suppressed until after the OTC options expired upon the close of the COMEX the next day. Once the monthly options have expired, the pattern has been for a quick recovery in both gold and silver prices.

That is not what happened this week. The first part of the manipulation to keep gold below $1,200 and silver under $18 through Tuesday's COMEX close was successful. However, almost as soon as the COMEX closed, gold and silver prices climbed above those levels.

On Wednesday, it looks like the US government, which largely acts through its US and foreign trading partners, was unable to push down gold and silver prices below the critical $1,200 and $18 at the COMEX close! Where this manipulation tactic has worked for many months in a row, this time the surge in demand for physical gold and silver overcame the resistance.
The failure this week of these manipulation efforts is a huge signal that we are closer to the day when the floodgates will give way and we see gold and silver prices surging more quickly and by greater percentages than we have seen in decades. Once again, I recommend that you not wait to protect your assets with some physical gold and silver. Most forms of bullion-priced physical gold and silver are still readily available at attractive premiums. I don't know how long I will be able to keep saying so.

Crimex Supply Update
by Greg Maurer
June 2, 2010

Harvey Organ's - The Daily Gold (see link in side column) released updated June Gold delivery numbers today. The Gold warehouses at the CRIMEX may be in far worse shape than suggested in my post yesterday:

There were 665 delivery notices issued in the JUN gold contract. The JUN gold delivery notice total for the month is 18,230 notices or 1,8230,000 ozs. (The Comex report on Friday apparently was not a typo there is truly a massive amount of OI standing for delivery!). Deutsche Bank issued none and stopped 46, JPM issued 66 and stopped 297, Barclays issued 408 and stopped none, while BNS issued 0 and stopped 17.

Now Ladies and Gentlemen, I can put the puzzle together for you.

On Friday, the OI announced at the conclusion of trading was 1.3 million oz of gold standing. The only thing left out was options exercised. These extremely smart players receive a futures contract and then they make a decision as to stand or roll to a future contract. Generally if you exercise an option you stand for delivery.

Also, you will recall that gold OI dropped by a massive 24,000 contracts. Most commentators thought it was massive liquidation. I did not buy this as demand for gold is going through the roof.

So why would intelligent traders cash in the newfound gains in gold. I thought that maybe the longs were offered a premium and roll to the next big month of August.

However the volume was just not there.
I had a lot of trouble figuring out the data.
Now I know what happened:
The big drop in OI in June was due to the massive standing of longs for physical gold:

1. The Friday OI of 13,000 contracts or 1.3 million
2. The exercise of options by gold holders. They were not fooled by the lowering of the gold price by the cartel banks...and then the subsequent loss of 24000 OI gold contracts due to the fact that these guys stood for and received their delivery slips. Only the almighty will know if these delivery slips have real gold in them or they are just a piece of paper with no gold behind them.
Thus so far, 18,230 contracts of gold have been served upon. If this is not a typo then this is a massive amount and my bet is that this will surely bust the Comex.

Other Articles of Interest

Harvey Organ The Daily Gold

Greg McCoach
Gold & The US Dollar

"Ownership of gold and silver - along with the quality precious metals mining shares - will become one of the hottest investments on the planet."

Gold and Budget Deficit

"America's Founding Fathers were great men. They put America on a gold standard and made her rich. But the leaders of the early-to-mid-20 th century were liars and frauds. They are a group of counterfeiters who rob from the poor to give to the rich. Are you going to listen to them or their minions telling you to buy stocks? Or are you going to listen to me and my fellow gold bugs telling you to buy gold?

Gerald Celente
No Time To Gamble Now

"The only safety you will find over the course of the next 5 years will be in hard, tangible assets like precious metals, energy and food."

Lew Rockwell
Guarding Your Money from Government Onslaughts

"Hey! Maybe that Horse's Butt Mogambo (HBM) was right about that buying gold thing that he was always yammering on about! And it looks like he may be right about silver and oil, too!"


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We post additional articles of information
as they come up throughout the week

Quote of the Day

"If, from the more wretched parts of the old world, we look at those which are in an advanced stage of improvement, we still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping the spoil of the multitude. Invention is continually exercised, to furnish new pretenses for revenues and taxation. It watches prosperity as its prey and permits none to escape without tribute."

Thomas Paine-Rights of Man


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Clarke and Dawes ask the million dollar questions ABC News Australian Broadcasting Corporation


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This is not all the story:

There are 6497 contracts still remaining to be served or 650,000 oz of gold:

The open interest in JUN gold is 6,497 contracts or 0.65 Mozs.

Thus total amt of gold standing for June is 650,000 oz (left to be served) + 1.823 million oz (already served) + 204,000 oz from options exercised in May = 2,677,000 oz of gold.

Adrian Douglas comments on the deliveries with respect to gold:

The open interest in JUN gold is 6,497 contracts or 0.65 Mozs. With the delivery notices issued the total gold standing for delivery could be 2.5 Mozs. BINGO! This is 77% of the dealer inventory of gold! We have never seen anything like this before. This is stunning. I don't see how the dealers are going to handle this demand. They will be left with almost nothing. This could be the breaking point for the Comex. Watch this space.


This is about as serious as it gets now for the bullion banks. The potential for a MAJOR short squeeze in Gold may be looming. With the potential now to wipe out 3/4 of the CRIMEX Gold, it will be impossible for the CRIMEX goons to keep up the charade they call a Gold market. It's bad enough that they have been allowed by government regulators to continually sell Gold they do not own under the pretext that less than 1% of the contract holders stand for delivery. With virtually no Gold in the CRIMEX warehouses, even the appearance of a legitimate market in Gold will be impossible. Let the countdown begin!