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How Your Bank Account Could Disappear ~ Jeff Nielson
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Today's Gold/Silver Ratio: 53/1 DN

Issue 136

Gold: $1681.80/ Silver: $31.26

SGS Notes: You may have guessed by now that one of my favorite commentators is Jeff Nielson, Senior Precious Metals Analyst for BullionBulls Canada. I'm featuring several of his articles this week because he has always been so 'spot on' with regard to this market…and I love how well he is able to articulate these concepts so that anybody can understand without having their eyes gloss over!

How Your Bank Account Could Disappear
Jeff Nielson

On the same morning we hear that ¼ of Wall Street executives think that fraud is a necessary part of "doing business" in the financial sector, we hear of a second "MF Global". The U.S.'s so-called regulators are now reporting that somewhere around $220 million in customer funds is "missing" at a financial institution known as PFGBest; once again closing the barn door after all the cows have run off.

With at least one out of every four bankers at U.S. Big Banks (that's how many admitted to being crooks in the survey) thinking that stealing is part of their job descriptions, it's very important for people to realize how little protection there now is between these thieves and your bank accounts. Based on the writing of a number of other individuals with more expertise in these markets, it is apparently an inherently fraudulent banking process known as "rehypothecation" which is allowing the mass-plundering of accounts at U.S. financial institutions, with other Western financial regulatory authorities also rubber-stamping this relatively new form of bankster crime.

Rehypothecation is a heinous practice permitted by the pretend-regulators of Western markets, where financial institutions are allowed to pledge their clients' funds as collateral to cover their own gambling debts. I say "inherently fraudulent" since few of the clients of these financial institutions would ever knowingly enter into contracts with these gambling-addicts where their cash could be used to cover their bankers' gambling debts.

Instead, what is happening here is that the rehypothecation clauses are being buried in the "small print" of these contracts and (obviously) never properly explained to these clients: seemingly textbook fraudulent misrepresentation. The only "advantage" to a client into entering into such a contract is a slight reduction in fees, or slightly improved interest rate - certainly not near enough to entice people into risking some near-100% loss insuring someone else's gambling debts.

So we have our "regulators" (i.e. the only protectors of our funds in the hands of these admitted thieves) giving these fraud-factories the green light to enter into these inherently fraudulent contracts, putting any/all funds of these clients in permanent jeopardy. Thus it's important to outline how this could happen with ordinary bank accounts.

First it must be noted that the Corporate Media (loyal friends of the Big Banks) are referring to this as a "brokerage" problem. Understand that a brokerage is nothing but a legal "bookie", an entity which takes (and makes) bets, and which must hold the funds of its "customers" in order to do business. Apparently the principal difference now between a "legal" bookie and an "illegal" bookie is that an illegal bookie is much less likely to use his customers' funds to cover his own bad bets.

What people must also understand is that the world's biggest bookies, indeed, the biggest bookies in the history of the world are the Big Banks themselves (specifically U.S. Big Banks). Most of their gambling is done in their own, rigged casino: the $1.5 quadrillion derivatives market.

Note that you won't see that number quoted by the Corporate Media (any longer). As concern about the size of the bankers' mountain of bets grew; the bankers asked the Master Bookie - the Bank for International Settlements - to change the "definition" of this market, and instantly the derivatives market shrunk to 1/3rd its former size.

As many know, the BIS is known as "the central bank for central banks". What a smaller number of people know is that this is the world's great money-laundering vehicle, an entity created just before World War II specifically to allow Western industrialists to continue to do a vast amount of business with Adolph Hitler. In other words, it's not exactly a reliable source for information. So I choose to use the same numbers that the banksters previously used themselves, before they started getting defensive about the insane amounts of their gambling.

We are being led to believe by the Corporate Media (another unreliable source) that this problem is only a risk for all individuals with "brokerage" accounts, however as we piece together all the pieces of the puzzle (already revealed) this is what we see before us:
1) Our banking regulators knowingly allow financial institutions to engage in recklessly misleading (if not outright fraudulent) contracts with their clients, through the use of complex "small print" in their account contracts with clients.
2) The three largest U.S. "banks" by deposit (JP Morgan, Bank of America, Citigroup) have made bets in their own rigged casino, which total well in excess of $100 trillion, an amount which completely dwarfs their total, combined deposits (and assets).
3) A large portion of those bets occur in the $60+ trillion credit default swap market. Pay-outs in these markets can (and do) exceed 300 times the amount of the original bet. It is bets in this market which "blew up" AIG, requiring more than $150 billion in immediate government aid.
4) Following the Crash of '08; these same banks mooched a package of hand-outs, tax-breaks and "guarantees" (i.e. future hand-outs) from the Bush regime in excess of $15 trillion, the last time their gambling debts went bad on them - and all of these banks have been allowed to dramatically increase the total amount of their gambling since then.
5) It would take only a minor change in the gambling contracts in which these bankers engage to allow their creditors to seize funds out of ordinary bank accounts.
6) The existing language for the bank accounts of these U.S. banks is possibly already so vague (and prejudicial to clients) that it would allow these banks to reinterpret the terms of these bank accounts - and allow rehypothecation to be used to rob the holders of ordinary bank accounts, people who themselves make no "bets" in markets whatsoever. Alternately, customers could be blitzed with an offer for "new and improved" bank accounts, where terms allowing rehypothecation are slipped into the contract, with the banks knowing that the "regulators" will do nothing to warn account-holders of the gigantic risk they are taking.

The same media apologists who would scoff at this suggestion are the same shills who claimed "there could never be another MF Global". Meanwhile we have the biggest gambler of them all, JP Morgan, just confessing to having made more of these bad bets - which continue growing larger by the $billion.

When we add-in the fact that the U.S.'s mark-to-fraud accounting rules mean that these banks are easily able to hide the level of their insolvency, the pretend-regulators apparently don't have the slightest idea of the level of risk to which account-holders are being exposed. This is the charitable explanation for these facts. The alternative interpretation is that these "regulators" are direct accomplices of the criminal banking cabal.

I have consistently referred to the U.S. financial sector as a "crime syndicate" for several years now, often drawing considerable criticism for supposedly hyperbolic rhetoric. Obviously I have been completely vindicated here. One quarter of these bankers are now confessed thieves. The pretend-regulators (notably the SEC and CFTC) on a daily basis rubber-stamp the banksters' acts of fraud (where they are caught red-handed) - handing out totally trivial fines, and not even requiring these thieves to admit their guilt.

If there are any substantive differences between how the U.S. financial sector is allowed to operate versus any generic definition of a "crime syndicate", it would be enlightening to hear what those (supposed) differences are. And now these thieves are closer than ever to simply reaching into peoples' bank accounts and grabbing every dollar they can steal.

The principal reason why I and others have urged people to convert their banker-paper to gold and silver in the past was the 1,000 year track-record of these bankers' paper, fiat currencies always going to zero (through the bankers recklessly diluting these currencies via over-printing). However, we can add to that a much more basic reason: every ounce of gold and silver which you purchase (and store in your own home "safe" or other secure location) is wealth which cannot be stolen by the banking crime syndicate. This is what commentators are really referring to when they speak of "counterparty risk": placing your future financial security in someone else's hands.

What the large financial institutions of the 21st century have taught us (through the cruel "lessons" of their serial crimes) is that there is no one in the world whom you can trust less with your money than a banker.

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Lindsey Williams Interview 8-24

Gold, Silver, A Collapsing Global Economy & Panic
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Investors Assets To Be Stolen In The Coming Collapse
Egon von Greyerz

How To Survive The Coming Chaotic & Catastrophic Markets
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Silver Doctors

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BeforeItsNews


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Silver: Supply & Demand

Silver: Part 2: Investment Demand
Endeavor Silver

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Silver Metal Now and a Golden Traveler's Check ~ Dr. Jeffrey Lewis
 
Today's Gold/Silver Ratio: 58/1 UP

Issue 133

Gold: $1584.20/ Silver: $27.37

SGS Notes: Lots of items of high interest in the ongoing LIBOR scandal...just the tip of the iceberg… see this week's major article on US Marshalls Expose Biggest Scandal in History for all the details…
Also, Bill Murphy of GATA in this week's video references connections between the JP Morgan/LIBOR scandal and silver… Keep your eyes open out there!

Silver Metal Now and a Golden Traveler's Check
Dr. Jeffrey Lewis

One of the main advantages of buying silver versus more costly precious metals like gold and platinum is that silver's relative cheapness allows you to buy more metal for the money.
Furthermore, inflation is a reality that eats away at the value of all paper currencies, while boosting the value of hard currencies like silver.

Given the likelihood of ongoing paper currency devaluation and debasement, despite short term perceptual fluctuations in the basket of floating currencies, the U.S. Dollar you are holding today is more valuable in terms of its purchasing power today than it will be tomorrow or a year from now.

Putting Things Into Perspective

If you are skeptical about holding silver or need a way to determine what time frame you should be holding silver for, you can consider the following question:
Given the at least 95% loss of purchasing power in the U.S. Dollar seen since 1913, with the vast majority of that loss of value occurring over the last 40 years, what would you rather be holding one year from now: An ounce of silver or the amount of U.S. Dollars that can currently purchase an ounce of silver?

Now ask the same question over a three, five and ten year time horizon. If your answer is consistently silver, then you really should be stocking up now that its price has retraced substantially from its recently made long-term highs.

This type of analysis allows you to put things into perspective and tolerate the short-term noise as the silver market fluctuates with less anxiety.

Why Choose Silver Over Gold?

Silver is currently preferable to gold for a variety of reasons. One of the most compelling is the price to supply ratio. The current supply of investment grade silver is 1 billion ounces versus 5 billion ounces for gold, while the ratio of metal in the ground is below 20 to 1.
Furthermore, both metals are well below their inflation-adjusted highs, especially when you calculate inflation based on an older, simpler methodology. In fact, silver is even more attractive than gold from this perspective.

Another factor is that silver is actually a more strategic and necessary commodity than ever. Its growing use in electronics, health applications and solar power production assure strong industrial demand for years to come.

Traveling With Silver's Bulk in Emergencies

Some investors who like to hold precious metals as an emergency get-out-of-town card are concerned about silver's extra bulk compared to gold when traveling. Basically, a given dollar amount of silver is much heavier and bulkier than the equivalent dollar amount of gold - so silver is just not as portable as gold.

Nevertheless, silver is not really that bulky relative to its value since a bowling ball made of pure silver would be worth well over $20,000 at $30 per ounce. What else can the average person readily accumulate and store in their house with the equivalent size and value?

Still, if you really need to 'get out of dodge' in a hurry or on foot, it would admittedly be a lot easier to carry only 15 ounces of gold - until you can switch back to silver of course!

Fortunately, investment grade silver and gold share enough properties to make them easily convertible into each other in emergencies. Silver is also easier to spend in small quantities to pay for the necessities of life while traveling.


$1 off SALE ON BULLION ROUNDS !

 

Buffalo, Morgan, Walking Liberty, Divisible Prospector & Civil War Rounds on sale
through July 28th.
No other discounts applicable during sale
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Preparing to mint the Divisible Tea Party Rounds soon.
Please let us know of your interest to purchase and what quantity.
These are a custom minting, and we want to be sure to get enough for everyone.

email us at: admin@silverandgoldshop.com

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48 Tons of Silver Recovered From World War II Shipwreck
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The Return Of The Gold Standard?It Lies Ahead
Seeking Alpha

The LBMA Gold Price Fixing Scheme Is Over
King World News

Silver Undervalued
SilverSeek

US Marshals Expose Biggest Scandal in History
DivineCosmos

House to vote Tuesday on Paul's Fed Audit Bill
Reuters


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What Good is it if you Can't Spend It? ~ Jason Hommel
 
Today's Gold/Silver Ratio: 54/1 UP

Issue 130

Gold: $1644.40/ Silver: $30.44

 

What Good is it if you Can't Spend It?
Jason Hommel

This article is more valuable than a Harvard Education!

Buying silver and gold today will likely be better than buying Microsoft or Apple stock way back when they first came out, and this article addresses the fundamental reasons why.

People often ask, "What good is silver or gold if I can't spend it?"

But that's exactly why we all should buy it! Low monetary demand means silver and gold are still cheap and undervalued liquid assets that investors should crave.

And crave it, they do. But 99% of silver investors are duped into buying the wrong kind of "silver", the kind that is not silver at all.

"Investors" have "bought" up to 200 billion "dollars" worth of "silver" in "accounts", which would be 15-20 years of annual mine supply. Clearly, that silver was never bought by the "brokers" who "sold" that much "silver" in "accounts" to "investors".

Source: http://silverstockreport.com/2012/morgan-silver-manipulation.html

Every word in quotes above needs clarification and/or translation. Each word is quoted to highlight the fact that while I'm trying to tell the story in the silver market, it's difficult to do, because there so much fraud all over the place that if I stopped to define each word as I went, it would be so distracting that I could hardly write a single sentence. Here's how those lines should read, if the discussion were a bit more truthful:

"Misinformed greedy gamblers" have "gambled on the paper currency value" of up to 200 billion "units of paper currency" worth of "paper promises of silver" in "computers", which if it were actually what it was supposed to be, would be 15-20 years of annual mine supply. Clearly, that silver was never bought by the "broker / casino operator / thieves" who "took money for" that much "paper promises of silver" in "computers" for "the gamblers".

Getting back to the point of why people should want real physical silver (outside of brokerage accounts) especially when you can't spend it.

The point is that without monetary demand, gold and silver are cheaper than they otherwise would be.

Also, as long as 15-20 years' worth of mine supply worth of investor demand is siphoned away from the real silver market into "computer" accounts, then silver prices will not go up as fast as they should.

Lower demand means a lower value. Investors know that they want to buy things that have a low value, knowing that the value will likely go up. But investors are still not understanding what silver is, since they continue to be satisfied with "paper silver", or perhaps "computer silver".

So, here's the fundamental reasons why gold and silver will continue to gain in value. Gold and silver are true money, even if they can't be used to buy groceries yet.

What makes gold and silver good at being money?

Many people are beginning to re-learn why gold and silver are the best money, and have been money for thousands of years. They seem to be able to recognize some of the self-evident and obvious truths that those metals have certain unique features making them essential and especially good at being money.

But these need to be listed, because sometimes people have funny ideas about money, because we live in a society that must convince us that paper is the best money.

There is a lot more here than I can remember all at once. I need a list I can refer back to and update, and you just can't find the truth about this stuff anywhere else. So you might want to keep this for future reference, too. None of this is "news", but it will be news to some, because they just don't teach this stuff anywhere.

I have a Harvard Textbook, "Principles of Economics", 4th ed., that defines the three functions of money, the medium of exchange, the unit of account, and the store of value.

http://www.amazon.com/Principles-Economics-Gregory-Mankiw/dp/8131503127/ref=sr_1_4?ie=UTF8&qid=1335397369&sr=8-4

It has a 5 star rating! So, it must be one of the best. But how can it be, when it is filled with so many lies?!

The book encourages the reader to "examine" the three functions of money on page 643, (and that's also the only page that mentions the gold standard!), but the book just defines the terms -- but they don't even explain what makes an item good at being one of the three functions of money; the medium of exchange, the unit of account, or the store of value. Furthermore, the textbook is full of lies, misinformation, and false innuendo about money.

It's propaganda of the State. Propaganda works best if you have to pay to learn it. Nobody would believe it if they strapped you to a chair, tied you down, and shouted at you, "believe our lies about the usefulness of paper money and the stupidity of gold, or else!" No, it only works when they make the kids have to pay to learn their propaganda, and then reward those who have the best memories for the lies, with high paying wall street jobs whereby they fleece the rest of the public.

The "Harvard" textbook actually suggests in two ways that only criminals have a large need for cash, because bank deposits leave a "paper trail", and because cash does not earn interest.

But paper is not the only form of "cash". There is also gold. Is all the gold owned by criminals, too? Nonsense. And why does gold have to earn 1% interest, when gold and silver have been going up in value by 15-30% per year for the last ten years? Interest on gold is nonsense.

Precious metals are a great store of value:

To be a store of value:

  • It should be long lasting, durable, it must not be perishable or subject to decay. Gold does not decay, not even in seawater. Silver may tarnish and react with sulfur, but the tarnish is very thin and acts as a protective patina that prevents further decay. This is why food items, expensive spices, or even fine silks or oriental rugs, are not generally suitable as money.
  • It should have a stable value. Gold and silver values do fluctuate, but their value has never gone to zero value, like paper money often does.
  • It should be difficult to counterfeit, and the genuine must be easily recognizable. Paper money is rather easily counterfeited, and good counterfeits are very hard to detect.

Precious metals are a great unit of account:

To be a unit of account:

  • It should be divisible into small units without destroying its value; precious metals can be coined from bars, or melted down into bars again, with a low percentage cost. Actually, gold gets more valuable when made into smaller tenth ounce coins, which carry a higher premium, or price percentage over spot. Furthermore, gold, when distributed to the people, creates monetary demand, and a higher value for the remaining gold in the world. Animal skins, or live animals, are not suitable as money, because they are not easily divisible, nor can they be put back together when taken apart. If an item can be divisible, it can be fungible, which is the next point.
  • It should be fungible: that is, one unit or piece must be equivalent to another, which is why diamonds, works of art, or real estate are not suitable as money. If an item is fungible, then it can be countable, which is the next point.
  • It must be a specific weight, or measure, or size to be verifiably countable. You must be able to weigh, measure, and count, your unit of account! And this is why paper dollars are not suitable as money any longer. What are you counting? What are you measuring? Dollars are nothing but promises to pay in more dollars.

Precious metals are a great medium of exchange:

To be a medium of exchange:

  • It should be cheaply and easily tradeable, with a low spread between the prices to buy and sell, in other words, a low transaction cost, and be able to be quickly and easily bought and sold anywhere in the world. Land is not transportable. Even US cash is not accepted everywhere in the world anymore.
  • It should have a high value to weight ratio, and thus be easily transportable, and cheap to store away. Precious metals have a high value to weight and size ratio. This is why oil, coal, or water are not suitable as money even though they are valuable. It's why real estate is not money, it's not portable at all. It's why copper is not money, nor is wheat, nor balloons. While even air is valuable and necessary to live more than 5 minutes, and while air can also fungible, air is neither rare nor valuable enough by any significantly measurable units to be useful -- unless perhaps you are a scuba diver under water.

    $300 of gold is .15 of an oz., and can be easily hiding in any wallet.
    $300 of silver is just under 10 oz., and such a bar easily fits into your back pocket.
    $300 of copper is 33 pounds, which is a major strain to lift.
    $300 of oil is 3 large barrels, and is too heavy to be lifted by a person's own strength.

  • It should be durable. Gold does not decay. Silver tarnishes a bit, but it's negligible. Coins are often mixed with 10% copper to improve hardness and durability, and coins are made with ridges around the rim to prevent coin shaving or debasement. Paper money, surprisingly, is actually expensive as money, because paper wears out quickly, and it costs money to have to re-print the paper.

These fundamental reasons why silver and gold are true money, help to answer the top ten excuses why our friends have not bought silver and gold, which are listed here:

http://silverstockreport.com/2009/bashers-say.html

EXCUSE IN CAPS, followed by my answer/rebuttal.

TOO HIGH NOW. No, Gold and silver can never be valued "too high" against paper money. Paper money is by nature fraud, and always will be. It's interesting that people thought gold was "too high" at $1000/oz. back in Dec. 2009. Clearly, with gold at a stable $1600 just over two years later, we can see more clearly
that they were all wrong who called gold "too high" a few years ago.

HOW TO SELL? Gold and silver are easier to sell than US "dollars", which are not accepted in many nations these days.

CRAZY GOLD BUGS: No, we who understand gold are not crazy. People who pay hundreds of thousands of dollars to go to Harvard to be taught lies might be crazy.

I'M CLUELESS ABOUT GOLD: Well, if you went to Harvard, I can see why. And I hope this article helped to change that for you and your friends.

SHUT UP: Well, this is written, not oral.

PRICE CHANGES: As you can see, it's paper money that is changing in value, far more than gold and silver, but silver and gold will continue to gain value during this time.

GOVERNMENT WILL FIX: As you can see, government cannot change a single fundamental nature or property or feature of silver and gold. Gold and silver expose the lies of excess paper money printing by governments.

SILENCE: Yes, I know, the nay sayers are once again speechless. Hey, gold also doesn't talk, but that does not mean gold and the nay sayers are useless. Gold, if you examine it, reveals its properties to you. Similarly, by examining the arguments, or silence, of the nay sayers, we can see we are on the right track.

I'M BROKE: Hey, gold is not for every man. It's really just for those who would be kings.

BAD BROKERS: Now you can see why the brokers, and their lackeys, the "financial advisors", talk people out of gold and silver. They would go bankrupt if people bought the real things, because their short positions are 15-20 years of mine supply. Furthermore, brokers don't earn commissions on gold that you hold in your own possession and keep in your own vault, and neither do we. We only earn our commission one time, when you buy it from us.

Getting back to the fundamentals.

Gold is easily transportable. This means that the brokers really have no excuse to not send it to you when you buy it. Assays are free. Shipping and insurance for the shipping costs are less than 1% of the value. Thus, the only reason to not send you your gold or silver when you buy it, is because the sellers are running a scam, or are bankrupt.

And there you have it. You now know more about the essential nature of gold than 99.9% of people in the world.

http://www.silverbearcafe.com/private/04.12/whatgood.html

 

Other Articles              

Silver: The harsh realities behind diminshing supplies
Gaia Vince

Currency Debasement and Social Collapse
Ludwig von Mises

Why Did Gold Become Money?
Tyler Durden

JP Morgan Silver Manipulation
Jason Hommel

Why Silver Is Money
Jason Hommel

This is What I'm Doing with My Own Money Right Now
John Embry

A Return to the Gold Standard, or Gold Behind Currencies

Part 1
Part 2
Part 3
Part 4
Part 5

 

 


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Silver is Money

This is fascinating… how silver is mined… and why it SHOULD be much more valuable! After you watch this, you will understand why everyone has been saying that silver is grossly UNDER priced… and… Why this price manipulation is causing a depletion /extinction of this metal in the marketplace.

Why Silver & Not Gold

The Silver Suppression Scheme
Is Ending
David Morgan


Note: If you are getting duplicates of the S&GS Newsletter, please eMail us and let us know.
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Where a Nation's Gold and Your Gold Should be Held - Part I
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Today's Gold/Silver Ratio: 52/1 UP

Issue 128

Gold: $1651.60/ Silver: $31.75

 Where a Nation's Gold and Your Gold Should be Held - Part I

Julian Phillips
Proprietor at Global Watch - The Gold Forecaster

Purpose of Holding Gold
Most central banks hold their nation's gold in the vaults of the world's leading financial centers' central bank vaults. These include New York, London, and Canada among others. In a peaceful, cooperative world, this is sensible as one of the prime purposes of central banks holding gold is to cover the nation's international trade payments when their own currency becomes unacceptable and their reserves of foreign exchange are depleted. By positioning the gold outside the country, it's instantly accessible for payments or guarantees of payments.


Dangers of a Nation Holding Gold in Another Nation's Central Bank
In the last week we have heard the announcement that Iran has (according to them) 907 tonnes of gold. The developed world has just outlawed Iran dealing in gold and silver (there are other places, where if they wished to do so they will be able to trade). With their gold inside Iran, it is outside the reach of the developed world though. If they had held their gold in the world's main, developed world vaults that would have been frozen along with Iran's other overseas assets. We may not agree to Iran's politics and attitudes, but there is a lesson to be learned here.
Ownership implies the freedom to do what you want with an asset. In this case we are talking about a nation's assets. The handling of Iran's assets by freezing of their assets shows that other nations can interfere with that freedom. Governments feel free to impose restraints on other people's assets within their jurisdiction. It is this concept of a right to restrain the rights of ownership that will prove a growing issue.


With the world changing from an under-developed world with a developed world to an emerging world drawing down power and wealth from the developed world, there are many changes taking place which will lower the levels of international cooperation in the days ahead as political, religious, monetary and economic pressures rise.


One nation that has foreseen these pressures coming is Venezuela. Their 160 tonnes of gold was held in Canada, the U.S. and European vaults and out of their full control. Their policies -including the nationalization of gold mining and export-have proved unpopular in the developed world too. With Venezuela being an oil exporter primarily, the unpopular President (outside the nation) felt it prudent to ship his nation's gold back home. The process began a few months ago.


Venezuela's Gold Comes Home

Venezuela has now succeeded in bringing its 160 tonnes of gold from the developed world's central bank vaults (i.e. Canada, U.S. and Europe). There's no doubt that such a move does secure the nation's monetary sovereignty. Now, Venezuela's gold cannot be subject to the political wishes of the U.S., Canadian or European governments.


Furthermore, there's a potential 3,000 tonnes of gold under the ground in Venezuela and the likelihood that the government will take that into their vaults over the time it takes to mine it. They will then be in a position to take the U.S. dollars they receive for their oil and pay their miners for the gold, so diversifying their reserves away from currencies and into gold. If they do that, then this is one more source of supply that will be removed from the gold market.


Whatever the nation's politics, it is a central banker's duty to do all in its power to protect its nation's gold and foreign exchange reserves in terms of control and value. With dollar hegemony, a great deal of that power remains in the hands of the issuer of that currency. As sovereignty issues grow, it is becoming incumbent on central bankers to do more to protect nation's reserves. The most vulnerable nations are those whose politics differ drastically from the developed world or those whose international trading is not dependent on the major developed world. After all, if you are a kind of economic colony of a major nation it will exercise its influence far more effectively through other routes.


The conclusion that best suits vulnerable nations logically is to hold as much of its gold at home. Its dollars have to be held in New York and its euros in Europe -something they can do little about. But a nation like Venezuela with its reserves of gold at home and a 'natural' diversifier in the gold under the ground, is acting in that nation's interests in building up its gold reserves at home.


China Following the Same Path

China has outlawed the export of gold and vigorously broadened the number of banking import licenses for gold. The resulting flows of gold in with nothing coming out, is leading to the total national stock of gold in China rising fast.


" Last year saw around 360.96 tonnes of gold produced there with the government encouraging this growth of local production. But this figure may be a heavy underestimation as scrap and non-China Gold Association member's production is not included in that number.


" 490 tonnes of gold came into China through Hong Kong with more imports possible through other routes, not included in this total.


" At the start of 2012, demand for gold during the lunar New Year jumped over 50% pointing to much higher imports in 2012. These could lead to a jump of reported imports of 750 tonnes in 2012.
China is preparing Shanghai as the center for Yuan trading and as their leading financial center. Hong Kong is the current, financial center and has huge modern gold vaults already. We have issued an article in our newsletter Gold Forecaster giving our views on China growing to a second or first gold market hub in time. But we repeat that NO gold is allowed to leave the country! With privately held gold open to confiscation at some point in time, we consider the total gold held inside China as part of that nation's available stock of gold in their reserves.

Read Part II Here

New At SGS!

Introducing our new Silver Bullet !

Whether you are protecting yourself from Werewolves or Inflation, this Silver Bullet is for you! We are excited to introduce this Silver Bullet novelty item. This item includes a set of TEN 1/10 oz .999 fine Silver Walking Liberty rounds, contained in a semi-transparent 12 gauge shotgun shell.

 

This item is not only a great investment in precious metals, it makes for a great conversation piece. If your group or organization would like to customize this item, we will work with you to create a custom label with your favorite slogan or logo. (Additional pricing will apply)


We also have the 1/10 oz rounds available for purchase individually on our site now;

 

Quote of the Week

"Nothing is more important than balancing the budget with the least increase in taxes."

- Herbert Hoover, March, 1932

Other Articles      

Gold and Silver Manipulation and How They Do It
Safe Haven

BRICS Plan to Abandon U.S. Dollar Will Hurt U.S. and Help Gold
TradePlacer

IMF: Gold Is Scarce "Safe Asset" And "Growing Shortage of Safe Assets"
Zero Hedge

Eric Sprott: Financial Train Wreck Coming Soon! Got Gold? Better Yet, Got Silver?
Eric Sprot

Silver Heading to $80 an Ounce
Greg McCoach, WealthDaily

How The Silver Manipulation Game Works
Ted Butler

 


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Silver Shortage This Decade,
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The Coming Paradigm Shift in Silver ~ Steve St. Angelo
If you are having difficulty reading this, click here to view online
Today's Gold/Silver Ratio: 51/1 UP

Issue 127

Gold: $1630.30/ Silver: $31.79

SGS Notes: Our key article this week is quite lengthy but very informative … I hope you will take the time to click the 'Read More' to see the full article… we are only able to publish the initial portion of it below:

The Coming Paradigm Shift in Silver

Steve St. Angelo

The biggest problem for investors today in trying to forecast the future price of silver is the enormous amount of contradictory analysis on the Internet. There are bulls, bears, paper traders, physical buyers, technical analysts, hedge funds, commercial banks and silver manufacturers all trying to play a part in this highly volatile silver market. Trying to sift through the huge volumes of silver analysis on the internet can be extremely frustrating. In addition, some of this information is not meant to inform, but rather to confuse or mislead the investor.

There is a great deal of misinformation on the internet when it comes to silver. I find it ironic that one of the so-called "bullion specialists" seems to give bearish commentary whenever the price of gold or silver rises to new highs. This is akin to a CEO of a corporation telling the media and shareholders that the company's stock price is too high and needs to drop down to more sustainable levels. What CEO on Earth would say something as stupid as this with the best interest of the company and shareholders in mind? Furthermore, how many CEOs would keep their job if they repeated this over and over for the past several years, and got it wrong time and time again?

Unless you have been in the precious metals markets for quite some time, it is easy to be misled by this type of information. This is the very reason behind the motivation that I had to write this article. In it, I will attempt to give the reader-investor a more detailed and fundamental comparative analysis of the future price of silver, rather than the typical fly-by-night technical charting or bull-bear rant. This should give a more commonsense methodology in forecasting the future path of silver and its eventual paradigm shift.

Paradigm Shift: -n, a radical change in underlying beliefs or theory

The coming paradigm shift in silver will not happen due to technical analysis, fundamentals, or supply & demand forces, but rather due to a change in mass psychology of investors. Even though fundamentals and supply-demand forces will play a part in this shift, they will not be the ultimate cause. I believe technical analysis as it is used today, only charts the amount of manipulation and mass psychology in the silver market.

Throughout history, a paradigm shift occurs in rigged markets when the manipulation of the financial system and economy is no longer sustainable. This occurred in the banking and housing markets in 2007-2008 when we had what I call a "Negative Paradigm Price Shift"- a trend where prices or values are declining.

Negative Paradigm Price Shift in Housing and Banking
Prior to 2007, the real estate market was kept alive by the work of clowns and magicians in the mortgage industry and banking system. For several years everyone was having a great time. As housing prices and sales continued towards the heavens, bank profits hit all-time records. Everything was going along just fine until the market realized one day that there was nothing left after "Liars Loans" were levied to keep the Ponzi going. Once the housing market collapsed, so too did the banking system. Like two twins attached at birth, one could not live without the other.

In true waterfall fashion, investment banks, commercial banks, government-sponsored entities and insurance companies went bankrupt, were either taken over or became a mere shadow of their former selves.

Read Full Article Here

Quote of the Week

Thus, the fight over gold and silver as media of exchange is about more than mere money, let alone making money. For it is a fight with only two possible outcomes: either control of their own lives by the people themselves, or control of the people and their lives by political and economic elitists.

- Dr. Edwin Vieira

Other Articles      

Blythe Masters Speaks Out On JPM and Market Manipulation: Take Our Word For It
Jesse's Café American

Why Blythe Masters Is Telling The Truth
SilverDoctors

The [Recovery] Has No Clothes
Sprott Asset Management

You Can't Beat Silver as an Investment
FutureMoneyTrends

A Massive Spike In The Price of Silver Is Imminent
SilverSeek

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If Silver Goes Down All He** Will Break Loose
In The Physical Market

Silver is The Achilles' Heel to the Entire Economic System
David Morgan

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The Banker's New Gold ~ Jeff Nielson
If you are having difficulty reading this, click here to view online
Today's Gold/Silver Ratio: 53/1

Issue 126

Gold: $1570.70/ Silver: $29.09

The Banker's New Gold

Jeff Nielson
BullionBulls, Canada

In a fresh sign of bankster desperation, we recently learned that they have pushed lease rates for gold to the lowest, negative level in history - i.e. they are paying people more money to "borrow" their gold than at any other time. We know this is a sign of desperation, because back in the real world, buyers are paying premiums near record-highs to buy their (real) gold.
There are numerous implications regarding this latest bankster tactic to suppress the gold market, but before getting into those let's explore all of the reasons why bankers like "leasing gold" in the first place. The starting point is to note that it is with gold-leasing that we see the beginnings of the banksters' 100:1 leverage in the gold market.

A banker is holding a quantity of gold in his vault. He "lends" the gold to a trader, and suddenly you havetwo parties both pretending to be the "owners" of that gold. Naturally, the banksters also like the fact that this is a totally opaque, unregulated/unreported transaction. The banksters can secretly lend out their gold, and since the transactions are never reported, we lack the absolute proof that none of this "loaned gold" is ever repaid.

There is certainly plenty of circumstantial evidence on which to base such a conclusion, however. In order to review this evidence, we first need to know what is being done with the bankers' leased gold. A detailed analysis by veteran precious metals commentator Frank Veneroso explains how and why "The ultimate borrowers in the gold lending operation are these shorts in the gold futures and forward market."

We immediately see a second reason the bankers love gold-leasing: all of the "leased" gold ends up being shorted onto the market. What this directly implies then is that in order for these gold leases to ever be repaid the short positions must be closed out so that the gold (supposedly) backing the trade can be repatriated to the bank. However, what we see in the gold market is a huge, permanent short position in the gold market - which has swelled enormously since Veneroso wrote the article above nearly a decade ago.
We now know that at least some of these gold leases have never been repaid, since the gold that was loaned out remains on the market. However, as a matter of simple arithmetic we can deduce that few if any of these leases are ever repaid. As I noted above, each gold lease creates "paper gold" (i.e. a "fractional reserve" gold market) and increases the bankers' leverage in the gold market.

READ THE REST OF THE ARTICLE

 

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New Product: CIVIL WAR EAGLES

150 years ago, 11 US southern states declared succession from the Union to form the Confederate States of America. We refer to this as the American Civil War. This .999 fine silver medallion has been specifically designed to commemorate that event and those soldiers who died fighting for what they believed in.

Other Articles      

Gold, Silver, Currency Swaps and QE3
Matt Welke

Sprott Calls On Silver Producers To Hold Back Inventory

JP Morgan Crashed MF Global to Avert COMEX Failure, European Derivatives Implosion
Jim Willie

China Quietly Introduces New Currency System
Benjamin Fulford

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David Morgan

 

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Gold & Silver Are The Currencies of the Free
If you are having difficulty reading this, click here to view online
Today's Gold/Silver Ratio: 44/1

Issue 124

Gold: $1813.40/ Silver: $40.73

SGS Notes: Our main article this week is one of several from the Cheviot Sound Money Conference that was held in the January. Clicking on the photo link will allow you to listen to one of the key speakers of the conference who gave this speech below. Don't miss the links in the right column of that page to other very informative other speeches...

Gold & Silver Are The Currencies of the Free

Dominic Frisby
Goldcore
 

The President of the World Bank, Robert Zoellick, called for a new post Bretton-Woods currency system involving gold, in November 2010. Zoellick said that gold was worthy of consideration as a reference point for modern currencies and as an indicator to help set foreign exchange rates.

At the end of January, the Cheviot Sound Money Conference held an excellent conference in London which examined the practical application of gold and silver as money within a modern context.

The context to these proposals is crucial as without an understanding of the modern financial and monetary system one cannot possibly comprehend the continuing importance of gold and silver.

We live in an era of surging trillion dollar deficits and surging national debts in the US and internationally.

The US recorded its biggest monthly deficit in history two days ago with a $223 billion deficit for February alone, the 29th straight month of deficits – a modern record. The US budget deficit in 2010 was over $1.45 trillion and is forecast to be of a similar magnitude in 2011. At the close of business on Feb. 28, the total federal debt stood at $14.195 trillion ($14,194,764,339,462.64).

We live in an era of massive creation of government bonds.

Foreign central banks hold $5 trillion in US Treasury bonds and agency debt alone. Chinese foreign exchange reserves alone are soon to reach the $3 trillion level.

We live in an era of of thousands of trillions of dollars, euros, pounds etc. of derivatives.

The enormous OTC sector of derivatives alone is worth nearly $600 trillion on paper, roughly 10 times world economic output.


We live in an era seeing the creation of and speculation with trillions of dollars (euro, pound etc.) of electronic currency.

According to the Bank for International Settlements, as of April 2010, average daily turnover in global foreign exchange markets was estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007 - soon after the financial crisis began. Some firms specialising in foreign exchange have put the average daily turnover in excess of US$4 trillion.

We are experiencing a scale of global currency debasement, the likes of which the world has never seen before.

We live in an era where thousands of millions of people live on less than a dollar or two a day in the "developing world". While millions of people in the "developed world" are now debt slaves - both individually and as citizens of increasingly bankrupt nation states.

Reformation or replacement of our debt-based fiat paper and electronic financial and monetary system is one of the most important debates of our times.

The modern monetary system of paper and electronic money is inherently unstable and unsustainable and there is a strong case for considering using gold and silver as money once again.

At the Cheviot conference, Money Week's Dominic Frisby gave an excellent talk in which he outlined why gold is the currency of the free.

Frisby eloquently outlined how the modern system of finance, banking and credit (or debt) impoverishes and enslaves. It has "made wars that should never have happened possible; its brought about a relentless needless commercial expansion and malinvestment that has raped the earth."

He points out how the world is cursed by monetary illiteracy and it is amazing how few people understand the modern monetary system, and how it is to blame for the huge inequalities in wealth we see in the world today.

"Money must be sound and true, at the moment it is neither and society is corrupted as a consequence."

Dominic Frisby's lecture can be watched here:
http://www.cheviot.co.uk/sound-money-conference/presentations/why-gold-is-the-currency-of-the-free

There were a number of other excellent talks all of which are worth viewing. The highlights include Chris Powell, the Secretary/Treasurer of GATA (Gold Anti-Trust Action Committee), lecture 'Gold price suppression purposes and proofs':
http://www.cheviot.co.uk/sound-money-conference/presentations/gold-price-suppression-purposes-and-proofs

There is then an excellent panel discussion and question and answer session on gold at the end which involved Max Keiser, James Turk, David Morgan, Ben Davies, Richard Cragg, Sandeep Jaitly. It is surprisingly entertaining and very informative:


http://www.cheviot.co.uk/sound-money-conference/presentations/panel-discussion-with-audience-q-and-a

GoldNomics - Cash or Gold Bullion?

Our educational video, 'Goldnomics - Cash or Gold Bullion?' complements the excellent interviews from the conference. It clearly shows how gold has retained value throughout history.

'GoldNomics' can be viewed by clicking on the image above or on our YouTube channel: www.youtube.com/goldcorelimited

The US dollar has been the strongest fiat currency in the world in the last 100 years and indeed it became the reserve currency of the world during the period (due to victories in the two World Wars and the accumulation of the largest gold reserves in the world).

Despite that the dollar has lost 97% of its value in 97 years. The massive loss of purchasing power of the preeminent currency of our age, the US dollar, clearly shows gold's importance as a currency, as money and as a store of value.

Individuals, families and societies can never be free as long as money is based on debt and compounded interest and as long as the money we use day to day is constantly depreciating and being debased.


Other Articles      

Once Upon A Time

The story of two different monetary conferences, two "committees of experts" that both met in Genoa, and changed the course of monetary history.

Advanced Q & A on the Silver Manipulation
Bix Weir



Donald Trump Confirms His Confidence in Gold
NY Magazine

Identities of JP Morgan Silver Manipulators Exposed
King World News

 

The New Bankster 'Weapon' Against Gold/Silver
Jeff Nielson

The Precious Metals Tsunami
Goldrunner


Run To Safety

Mary Anne & Pamela Aden
 

Central Banks Waging War on Gold At This Hour
Trader Dan


Gold-Backed Dollar Puts ‘Fair Value’ at $10,000 an Ounce
Bloomberg
 

The Case for Gold and Silver Investment Gets Stronger and Stronger
MineWeb

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Future Money Trends

 

 

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The Upside for Gold and Silver will Knock Your Socks Off ~ Embry
 
Today's Gold/Silver Ratio: 44/1 Up

Issue 122

Gold: $1833.70/ Silver: $41.85

SGS Notes: This week we can only say, there's a 'Whole Lotta Shakin' Goin' On!' Not just geologically, but in the markets as well... we've seen silver up over $44 this week, and gold broke through the $1900 barrier before heading back down. We see the big manipulators scurrying to cover their short positions and a lot of new activity 'out there'... The Warren Buffet Bailout of B of A is a big item...another is the Jackson Hole conference on the economy. This week's newsletter, like many, will try to cover the highlights...

 

The Upside for Gold and Silver will Knock Your Socks Off Embry

Geoff Candy Mineweb


With no easy solutions to the globe's debt problems visible, Sprott Asset Management's John Embry expects gold and silver to be significant beneficiaries but the road ahead will not be easy.

 

With no easy solutions to the globe's debt problems visible, Sprott Asset Management's John Embry expects gold and silver to be significant beneficiaries but the road ahead will not be easy.

For many commentators, gold is considered not only a constant store of value but, also, a barometer for the health of the global economic system and the currencies that pump through its veins.

For, John Embry, chief investment strategist at Sprott Asset Management, the current parabolic rise in prices, which have beat even his optimistic performance expectations this summer, is indicative of the unsustainable debt situation in which the world now finds itself.

Speaking on Mineweb.com's Gold Weekly podcast, Embry explains, "We've reached a stage in the debt cycle where it doesn't appear we can move forward and on that basis you need more and more debt creation to generate the same dollar real GDP growth - and I don't think we can get that kind of debt growth. So to keep these systems stuck together they [governments] are going to have employ quantitative easing in massive quantities, and if they don't, the current softness in the economy is going to turn into a rout."

Given the current levels of growth, Embry says, any halt in the funds propping up the banking system will result in significant deflation in "fairly short order" because the deflationary pressures within the West are huge.

But, he says, it is not just the West that is likely to suffer. "The Chinese miracle is grinding to a halt, they've dined out in the West for years and they paid for it by taking back our crappy paper but the fact is that they kept their economy going at breakneck pace and I would also say it is probably one of the most unbalanced economies I have ever seen.

"They have depended so heavily on exports and capital spending and now the export markets are weakening at the same time they have massive over capacity. So those two engines are coming to a halt and the hope is that they can do lateral arabesque into consumer demand to keep the thing going. I think that will be a hard act in the short run and consequently China faces some fairly difficult economic problems going forward.

What this means for prices?

While this rather bleak scenario does not bode well for the financial system as a whole, gold's performance over time [as well as that of silver] is likely to "knock your socks off", Embry says. But, he adds, especially after this latest move, he would prefer to see a correction in prices before that happens.

"I don't want to see this thing just scream away and become out of control and conceivably if you got a strong effective action in either Europe or the United States - that might be the catalyst for a significant correction of a couple of hundred bucks - but having said that I don't see the easy solution."

Embry points out that it is also important to note that, "It's not gold and silver that are doing anything. There have been constant stores of value for centuries. It's the value of the paper money that they are being denominated in that is at risk here and you know every attempt in history, fiat paper currency has always ended in tears and this one has been going for 40 years since Nixon closed the gold window and it's probably in its terminal stages."

Indeed, he is of the belief that the world will ultimately see a return to some kind of a gold standard.

"When we do have to recast the currency system, just to restore confidence there will have to be some backing that maintains discipline - and gold has traditionally filled that role. So I can see gold being introduced as a maybe fractional reserve like there was before 1971 in the United States. but to do that given the amount of paper out there and the limited amount of gold, they would have to mark the gold price up dramatically."

And, while he cannot put any kind of timing on such an event, he does think that gold could move as high as $2,500 within the next twelve months.

 

Quotes  ____________     

“Gold, unlike all other commodities, is a currency,” he said. “And the major thrust in the demand for gold is not for jewelry. It’s not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating.”

Alan Greenspan

For Full Article, Click Here

SGS Note: Perhaps Mr. Bernanke needs to confer with Mr. Greenspan...

 

Other Articles      

 

Living Through A Currency Devaluation

 

Warren Buffet Injects $5 Billion into Bank of America

 

Think The Buffet Investment In BAC Is Investing Savvy?

 

JP Morgan May Take Over Bank Of America


Currency Devaluation and Revaluation

 

British Government Begins Stealing its Peoples’ Bank Deposits Ahead of the Global Financial Collapse

 

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Buffetoon – Implications of silver remonetization
Response to
"A Wolf In Sheep's Clothing"

The Wolf Invests in Bank of America

The World's 30 largest banks by market capitalization

 

 

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Gold, Silver And 'Leaky Buckets ~ Jeff Nielson
Issue 92
Today's Gold/Silver Ratio: 43/1 Dn

Issue 121

Gold: $1872.60/ Silver: $43.80

SGS Notes: These days, events are happening almost daily in the precious metals market. The latest big news this week is the move by Hugo Chavez, dictator of Venezuela, to Nationalize the Venezuela gold industry, and to repatriate the country's gold holdings around the world. See links in 'Other Articles' about this.

 

Gold, Silver And 'Leaky Buckets
Jeff Nielson, BullionBulls, Canada

 

To those of us who have "found" precious metals, their (financially) life-saving properties are blatantly apparent. Indeed, apart from explaining the 5,000 year heritage of gold and silver as premier financial assets in our civilization, most of the arguments in favor of gold and silver are straightforward, simple arithmetic.

Because of this reality, one of the great frustrations for all precious metals bulls are the thankless (and generally fruitless) efforts we make to try to enlighten friends/relatives/associates. The pattern of such attempts is maddeningly similar.

Some friend or loved one mentions how "inflation" is hurting them financially. So the gold/silver bull begins to explain what inflation really is, who is causing it, and how it is done. So far, so good. However, as soon as we move on to explain how we protect ourselves from this "inflation" (i.e. through accumulating gold and/or silver), a subtle metamorphosis inevitably takes place with our subject.

A bland/placid expression creeps over their face, and is frozen into their features. Through years of experience with this phenomenon, I know exactly what that expression translates to in terms of the person's thoughts: "I'm trapped with this dangerous lunatic. How can I escape?" At that point, any attempt at "conversion" becomes purely an exercise in futility.

After each such failure, I inevitably review the process which has taken place, and ask myself where I could have gone wrong. The reality, of course, is that the fault does not lie with ourselves, nor with the individual whom we have failed to convince. Rather, the "blame" belongs to the propaganda machine of the bankers, which for the past century has blared out one message above all others: paper currency = money = wealth.

It is the fact that this simple, but totally erroneous equation is embedded in the "programming" of most of us which prevents the precious metals message of financial salvation from penetrating the psyche of those so afflicted. Thus, the initial step in being able to re-program the minds of these propaganda victims is to de-program them first. It starts with repudiating the bankers' odious "equation" (above).

First of all, paper currency does not equal "money". This is actually an entire discussion in itself. I could abbreviate it by listing the four qualities which all "good money" must possess. However, without expanding on the reasoning behind those traits, such mere assertions will not sway the brainwashed mind. Readers can review my own previous discussion on this, or the many similar efforts of other commentators, however the conclusion is unequivocal: paper currency is not money.

Now let's examine the third element in this propaganda-chain: wealth. The more cumbersome way to refute this equality/equivalence would be to explain why paper currency does not equal wealth. However, the better way to do this would be to simply point out the basic difference in the properties of these three elements. Paper currency is tangible. Money is tangible. Wealth is intangible.

This can be easily demonstrated anecdotally. Many people (including myself) often go days at a time carrying out all of our commercial transactions without ever once using "money". Thanks to the credit card (which is simply an electronic cheque-book), we no longer need money to convey our wealth to a vendor to make a purchase. It can all be done electronically because of the intangible nature of our wealth.

In similar terms, if we get up in the morning to discover that interest rates have been raised or lowered, this immediately affects property values - and the wealth of each/every property owner. Our properties have not changed in any way. We have not done anything ourselves. However, our level of wealth has gone up (or down). In fact, countless exogenous events affect our precise level of wealth at any given moment. Clearly, if wealth was not intangible than its exact level at any moment in time would not be so fluid.

Our equity markets leap higher or plunge lower (affecting the wealth of any/every equities-holder) often based only on "sentiment" or "expectations" - purely intangible drivers themselves. Obviously anything which can be altered by mere attitudes is intangible. As with any "intangible" (in our material world), we often find it helpful to adopt a (tangible) metaphor to allow us to have a better conceptual grasp. In the case of wealth, the obvious metaphor is a liquid. Indeed, the very frequent use of the term "liquidity" as a synonym for wealth is proof of such suitability.

Once we have conceptualized wealth as a "liquid", then it becomes equally simple to conceptualize "money" and "paper currency" within the same metaphor. They are containers for this liquid. Now let us make our metaphor even more tangible and precise.

Instead of "money", let us divide this into two "containers": gold and silver - the best/most-preferred forms of money in the history of our species. And instead of "paper currency", let's call that container "U.S. dollar". Finally, let's simply refer to these containers as "buckets".

We now have a very specific metaphor, and a very clear choice for each of us. We each have our own quantity of liquid (wealth), and we can store/hold that liquid in the "gold" bucket, the "silver" bucket, or the "U.S. dollar" bucket. Now let's examine the quality of each bucket.

Why have gold and silver been the preferred forms of money for our species for 5,000 years? Because they perfectly preserve (i.e. contain) the wealth of the holder. Look back 2,000 years to ancient Rome, and a stylish Roman could adorn himself in the finest toga, sandals and accessories for the cost of 1 oz of gold. Flash ahead to today, and any gentleman could obtain a top-quality suit, shoes and accessories for the cost of 1 oz of gold. Clearly, the gold bucket does not leak.

Now let's look at the U.S. dollar bucket. In the less than 100 years since the creation of the odious Federal Reserve, the U.S. dollar has lost approximately 98% of its value. Obviously the U.S. dollar bucket does leak. Hold your liquid in the U.S. dollar bucket long enough and you will lose all of it.

A (literal) "Devil's Advocate" would argue that a bucket which takes nearly 100 years to lose all of its liquid is "good enough". The rebuttal to this is as frightening as it is simple.

In the 40 years since Nixon severed the last connection between the U.S. dollar and gold, the dollar has lost more than 75% of its value. In other words, the hole in the bucket has gotten much larger. Today, as the price of food soars, and the price of gas soars, and the price of gold soars, and the price of silver soars none of these items have changed in any way, rather it is the value of the U.S. dollar which is plummeting. The hole in the bucket is rapidly getting larger.

Throughout history, all paper currencies which have not been backed by gold or silver (i.e. "fiat currencies") have failed. The most common means of failure is through the destruction of these paper currencies via hyperinflation: the value of the currency plummeting to zero. We can describe "hyperinflation" in our metaphor very easily: it's when the entire bottom of the U.S. dollar bucket has disappeared. Liquid (i.e. wealth) pours out the bottom as fast as we can funnel it in.

Looking at the first two buckets provides us with a crystal-clear picture. We have the gold bucket which never leaks. Not in 100 years, not in thousands of years. We have the U.S. dollar bucket. Not only does this bucket "leak", guaranteeing the loss of all liquid/wealth over time, but the hole in the bottom is getting larger every day - and soon it won't be capable of holding any liquid at all.

Given this stark illustration with just two buckets, some might presume that my inclusion of a silver bucket in this metaphor is redundant. However (as we shall see), the silver bucket is actually quite distinct from the gold bucket.

Obviously the silver bucket is just as leak-proof as the gold bucket, but silver buckets cost much less. After decades of being impoverished by our own, elitist governments (primarily through storing our wealth in 'leaky buckets'), many people can no longer afford gold buckets - however virtually everyone can still afford silver buckets.

This makes silver the "People's Bucket", a leak-proof container to store our "liquid" (wealth) which everyone can afford. However it gets even better. In continuing with our metaphor, we must all understand that the bankers have their own "Magic Bucket". How magical? Every drop of liquid which leaks out of the U.S. dollar bucket ends up in the bankers' Magic Bucket. That's pretty "magical"!

It is because the bankers have their own Magic Bucket that they hate silver buckets with every fiber of their evil beings. For the last century, and especially the last 50 years the bankers have made a concerted effort to destroy all of the world's silver buckets. How? Through manipulating the price of silver to a ridiculous low (in real dollars, the price of silver hit a 600-year low in the 1990's), they simultaneously destroyed "supply" (by bankrupting more than 90% of the world's silver miners), while causing demand to explode. Global inventories and stockpiles have been obliterated.

The result of this is that in relative terms there has not been this little silver in the world (above ground) in thousands of years. This is true both in relation to the quantity of gold and on a per capita basis. This means that in relation to gold buckets, silver buckets are now very rare - some might even call them "magical" too.

Not only is silver a leak-proof bucket to carry our liquid (wealth) which is still affordable for the average person, but it has become extremely useful in countless industrial applications - meaning that "everyone" wants silver buckets. Because of this high scarcity and soaring demand, it is a matter of elementary supply/demand analysis that the price of silver must rise to many multiples of its current price.

To translate this back to our metaphor, when we put liquid in our silver bucket, not only does the silver bucket prevent any leaks, but it actually increases the amount of liquid in our bucket. The silver bucket is also a Magic Bucket - but not an "evil" Magic Bucket like the one owned by the bankers. The bankers' liquid increases through leeching all of the liquid out of the U.S. dollar buckets, while the silver Magic Bucket increases the liquid of the holder without stealing any liquid from anyone else.

Let us review (one last time) the three "buckets" we can choose from to store our liquid/wealth. We can choose the gold bucket, a leak-proof bucket guaranteed to hold every drop of our liquid over the long term. We can choose the U.S. dollar bucket: a leaky bucket, with a hole in the bottom that gets larger every day - and which is guaranteed to lose all the liquid contained over time.

Lastly there are the silver "Magic Buckets". These marvelous devices not only ensure against leaks, but actually cause the liquid contained to increase in volume. The only down-side to these Magic Buckets? There is a very limited supply.

It can be virtually impossible to explain to a brainwashed mind how/why U.S. dollars are just scraps of worthless paper - just as it was impossible to convince the Dutch 400 years ago that tulips were mere flowers. It can be equally difficult to explain the concept of "saving our money" (i.e. wealth) in the form of gold and/or silver - despite the fact that 100's of millions of Indian peasants understand it and have been doing it all their lives.

Conversely, even the most brainwashed mind should still be capable of understanding the difference in "utility" between a 'leaky bucket' guaranteed to fail in its sole purpose, and buckets which have demonstrated themselves to be leak-proof over thousands of years.

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John Embry - Silver About to Roar Through $50 All-Time High

Ben Davies - Expect $2,100 Gold by the End of December

Richard Russell - Expect Mass Entry Into Gold By Retail Public

Eric Sprott - The Price of Silver Should be $110 to $120 Today

Note: If you are getting duplicates of the S&GS Newsletter, please eMail us and let us know.
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Dorothy's Silver Shoes or The Re-monetization of Silver Currency ~ Hugo Salinas Price
Issue 92
Today's Gold/Silver Ratio: 44/1 Up

Issue 120

Gold: $1751.10/ Silver: $39.18

SGS Notes: This week the GATA Gold Rush 2011 Conference was held in London. GATA is the Gold Anti-Trust Action Committe (http://www.gatagoldrush.com/ ) ... and we've seen material in the past from Andrew Maguire, Bill Murphy, and Ted Butler and others who have been actively involved in fighting the precious metals' manipulation over the years. Speakers this week at the conference include such big names as James Turk, Eric Sprott, Hugo Salinas Price, John Embry, Jim Sinclair... you've read articles by these folks and others in the SGS Newsletter since we began it.

The issue of the possible re-monetization of gold and silver is a hot one as we watch fiat currencies around the globe crumble into ruin. It's been on our radar screen at SGS since we began in 2008. There are many credible experts that believe it is coming faster than a speeding freight train... Bix Weir, of Road To Roota, is one such person. He has long been associated with GATA. As the world wakes up to the fiat schemes of the central bankers, there will be a rush... supplies will be in limitation... prices will skyrocket...

 

Dorothy's Silver Shoes or The Re-monetization of  Silver Currency of the United States of America

Hugo Salinas Price

President, Mexican Civic Association Pro Silver

www.plata.com.mx

Download article + bonus article, Gold Standard Generator & Protection Of Jobs

Why not re-monetize the silver dollar? Re-monetization could put the silver dollar and its subsidiary silver coinage into circulation in parallel with FRNs – “Federal Reserve Notes”.

There are several reasons that make this action possible, and only one that might be considered as an unimportant material obstacle.

In favor:

The silver dollar is the money that is still the Constitutional “coin of the realm”, defined by Act of Congress as 371.25 grains of pure silver. (The Troy ounce contains 480 grains.)

The silver dollar is familiar or at least known to almost all Americans.
A considerable quantity of these silver dollars is owned by Americans.

The silver dollar is a cherished symbol of a great past.

The monetized silver dollar would ignite a desire to save such as America has perhaps never seen before. The very first thing that must be done, to encourage people to save, is to give them something worth saving. As the US government gallops toward the abyss of bankruptcy by unlimited spending, the American people desperately require a refuge for their savings!

In this writer’s opinion, a large majority of the American people can see themselves as owners of silver money and, if a poll were taken, one can imagine that most Americans would express themselves in favor of silver money. Not so with gold, towards which the American people have little emotional attachment: gold is seen as the money of the élite. William Jennings Bryan exploited this fundamental attitude of the American people with his “Cross of Gold” speech. (Note: this should not be taken as disparaging gold; it is simply the statement of an opinion about the attitude of Americans regarding gold.)

Against:

The silver dollar bears a value stamped upon it: “One Dollar”.

***

The branch of government which the Constitution has designated as the agency “to coin money [and] regulate the value thereof” is the Treasury.

If the Treasury were to monetize the silver dollar coin by attributing to it a monetary value in terms of FRNs - “Federal Reserve Notes” - the public would very probably ignore the inscription of “One Dollar” upon the coin and accept it as legal tender money for the amount of the Treasury quote given to it. It would not be necessary to explain that twice, to anyone owning a silver dollar coin! In a short time, people would regard the term “One Dollar” as the name of a coin, rather than as a numeric indicator of legal tender value.

Determining the value of the silver dollar falls quite nicely into the Constitutional mandate to the Treasury: “To coin money [and] regulate the value thereof…”

How would the Treasury go about determining a quote to regulate the value of the silver dollar? Let bureaucrats and lawyers write books about how it should be done; here it is in a few words:

Suppose the price of silver bullion is $35 per ounce.

The silver dollar contains 77.34166% of a Troy ounce.

$35 X .7734166 = $27.07, the value of the silver in the silver dollar.

The Treasury will quote the silver dollar’s value in FRNs, with a margin of 15%, and round the figure to the next highest multiple of four:

$27.07 X 1.15 = $31.13, rounded up to $32.

The silver dollar as a legal tender coin worth $32 FRNs. The American public would eagerly purchase these silver dollars, worth $32 FRN dollars, and which could be used for all transactions without any haggling. The silver dollar worth $32 FRNs could even be deposited for that value in banks, if anyone had a mind to do such a thing.

If the price of silver rose to $37.61, the margin of profit of the Treasury, or seigniorage as it is formally known, would be reduced to 10%; at that point, a new and higher quote would be issued, to restore the 15% profit of the Treasury:

$37.61 X .7734166 = $29.09 value of silver in the silver dollar X 1.15 = $33.45, rounded up to $36 FRNs - 36 being the next highest multiple of four.

Why “the next highest multiple of four”? Because by doing so, the result would be the re-monetization of the entire silver currency system of the United States as it existed up until the Sixties of the last century.

In the last example, the silver half-dollars would automatically be worth $18 FRNs, the quarter-dollars would be worth $9 FRNs, and the dimes would be worth one-tenth of the silver dollar: $3.60 FRNs.

As pointed out in many articles at www.plata.com.mx, in the section in English, the last quote of the Treasury would remain firm and not subject to reduction, just as if the value in FRNs had been re-stamped upon the coin. The Treasury quote would simply take the place of a stamped quote, which cannot be reduced. The Treasury quote would only be raised, to follow the rising price of silver. In this way, the silver dollar would be a coin that would remain in use permanently.

This program would return the silver dollar and its subsidiary silver coinage of half-dollars, quarters and dimes to the American people in such a way as never to disappear again: all rises in the price of silver would be matched with rises in the quoted monetary value of the silver dollar and by derivation, of its subsidiary coinage: the silver half-dollar, the quarter and the dime.

This program would not cost the Federal Government – or the taxpayers that support it – one single cent! And yet, it would constitute the greatest gift to the American people that any US Congress could possibly invent, next only in importance to the return of the Gold Standard. The restoration of the silver currency of the United States to circulation, in parallel with the fiat FRN, can be considered the prelude to the revived Gold Standard.

By paying the Treasury a premium of 15% over the bullion price of silver, the American people would actually be subsidizing the Treasury’s work of monetization. This cost would be a one-time cost of obtaining real money of permanent value and utility, independent of the Fed and the banking system.

The re-monetization of the silver currency of the United States would create a new, vast market for physical silver and drive the price of silver very much higher. Those who might not be able to afford the purchase of monetized silver dollars could purchase half-dollars, quarters or dimes, which would provide the same security: they too, would rise with the rise in the price of silver. The rise in the price of silver would affect gold, which would also rise in price.

In order to facilitate larger transactions in silver, the Treasury could once again issue “Silver Certificates” attesting to the existence of silver held in its vaults.

With regard to the present faux-silver coinage in circulation, the American people are too intelligent to be deceived by it; this coinage may remain in circulation until the Treasury issues new coins for the purpose of making change in small transactions.

Though the restored silver currency may legally circulate, in practice it will be saved in its entirety and only be used in cases of emergency. Its “velocity of circulation” will be effectively close to zero.

******

Dorothy wore silver shoes, in L. Frank Baum’s classic book. Silver shoes on the yellow brick road! Dorothy symbolized then and still does today, the American people. Dorothy was unaware of the magic power of her silver shoes – and the American people are still equally unaware of the magic power of the re-monetized silver dollar: the power to recover America as the land of Hope and Opportunity!

What are the obstacles to regaining the silver dollar as money which can circulate in parallel with Federal Reserve Notes? The main obstacle will be the weapon of fear wielded by the entrenched interests of banking and the Federal Reserve, the intellectual centre of the banking cartel. These fiat money-mongers will rely on generating fear of the consequences of silver money so that they can maintain their huge fraud of fiat money FRNs; the Fed and the “Too Big to Fail” Banks are deathly afraid of the competition of silver. They know that the slightest crack in their monopoly of issuing fiat money will expose their scheme.

The Fed and the banking system will without doubt claim that “silver money is very costly”, but they will certainly not mention that the American people will fall over themselves to acquire it and even pay a premium of 15% to the Treasury, for the blessing of owning real money. Nor will the Fed and the banking system ever mention the gigantic costs that the depreciating FRNs have inflicted upon American savers; nor will they wish to recognize that the fiat FRN and the Fed are directly responsible for the present financial and economic destruction of the once great United States of America.

Another objection which will be put forward forcefully is that what the American economy requires is more spending on the part of the public. They will argue that more savings on the part of the American people spells doom for the economy: “More drink for the drunkard” is essential, according to the prevailing Keynesian thinking.

However, the humbug wizard has already been exposed and the Fed has lost its prestige forever. Toto has drawn the curtain! The State of Utah has already voiced its dissatisfaction with the present monetary system, by legislating in favor of gold and silver as legal tender money. If this project - monetizing the silver dollar by the Treasury’s giving it a numeric monetary value in FRNs, which immediately places it alongside the Federal Reserve Note as money – if this project comes to the notice of the several States of the Union, they together may force the issue.

The present policy is to “kick the can down the road” and postpone the final reckoning. But, the end of the road is already in sight! The condition is one of utter helplessness. The re-monetization of the silver dollar is the first step toward regaining health for the economy of America. Paper, fiat money will probably remain in use for some time, but the presence of the monetized silver dollar will force the Federal Reserve, the banking system and the US Government itself, to a more prudent financial course. It will be possible to regain financial health, because an alternative is available. Savings, the foundation of prosperity, will bloom as Americans opt for massive voluntary austerity by saving monetized silver dollars, half-dollars, quarters and dimes.

The banking system in the United States will be anxious to receive the massive savings in silver of the American people as deposits, but this will only be possible when the price of silver bullion has stabilized. Thus, the American people will have the upper hand; they will bend the banking system to their will by refusing to deposit their silver in the banks and thus force the banking system to reform itself to prudent monetary practice and desist from inflating by expanding credit out of nothing. After a stabilization of the banking system, the way would be open to a resumption of the Gold Standard.

Americans are today caught in a financial calamity with no parallel in history. They are being told this every day by every medium of communication. But they watch their crumbling economy in utter paralysis, because there is no alternative to which they may turn. The whole world is a mirror of their plight.

The restoration of the silver currency of the United States of America by the very simple procedure outlined here can provide the life-saving alternative. There is, at present, no other practical proposal for a viable action in the field of money. Perhaps there can be no other practical proposal? Perhaps a return to silver money is the only path out of the present crisis of civilization?

Let us hope that a political leader in the United States understands this message. The popular appeal of silver is universal; “silver shoes” will take that leader far – and the American people will follow him on that road!

Other Articles      

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Silver Money For Americans

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