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Why Increased Demand for Silver Will Have a Leveraged Effect on Its Price ~ Jeff Clark, BIG GOLD
February 18, 2011
Issue 92
Today's Gold/Silver Ratio: 42.5/1

Issue 96

Gold: 1389.10 / Silver: $32.66

Why Increased Demand for Silver Will Have a Leveraged Effect on Its Price
Jeff Clark, BIG GOLD

How Much More Demand Can Silver Handle?

The numbers for silver demand are starting to make some market-watchers nervous. The U.S. Mint sold over 6.4 million silver Eagles in January, more than any other month since the coin's introduction in 1986. China's net imports of silver quadrupled in 2010, to 122.6 million ounces, roughly 13.7% of global production. Meanwhile, mine production can't meet worldwide demand; the only way demand gets fulfilled is from scrap supply.

That is some very hungry demand. Which raises the question, how long can this pace continue?

This is important for various reasons, starting with how demand contributes to price. If demand falls off, our investments could, too.

While I've discussed the concern regarding the lack of supply before, which has its own implications for the silver market, let's focus on investment demand. Frankly, is there room for it to continue to grow? After all, how long can investors continue to set records?

There are a number of ways to measure this - the amount of money available to invest, its percent of total financial assets, its contrast to demand in the last bull market, etc. - but I think the bottom line to answering the question is to compare the biggest silver investments to some popular equities. If they rival that of the stocks we always see on the news and analysts constantly talk about and every fund manager wants to own, then it might be reasonable to assume demand could be nearing its pinnacle.

So how do the world's largest silver ETF and one of the biggest silver producers compare to the more fashionable equities?

The largest silver ETF, iShares Silver Trust, has net assets of $9.6 billion (as of February 4). This pales in comparison to the more popular stocks trading in the U.S. In fact, SLV has roughly 3% the market cap of Apple. It would have to grow over 43 times to match Exxon Mobil.

Pan American Silver, the largest pure silver producer trading on a major U.S. exchange, has a market cap of $3.72 billion. This is 4.7% the size of McDonald's. The market cap would have to increase more than 53 times to match Walmart. It is over 62 times smaller than Microsoft.

This isn't to suggest SLV and PAAS will match the market cap of these other companies, but clearly the masses are still demanding much more of them than the biggest of silver's investment vehicles.

So how much more demand can silver handle? As much as it takes to make it the household name I'm convinced it will be before this is all over. When SLV is a favorite of fund managers. When Silver Wheaton is a market darling of the masses. When Pan American is Wall Street's top pick for the year.

Imagine what those bars on the right will look like when most everyone you know is talking about poor man's gold. The rise could be breathtaking.

Remember that silver rose over 3,646% from trough to peak in the last precious metals bull market; it's up about 630% in our current run. A return matching the 1970s advance would push the price to $152. This price level is further supported by the fact that this is about where it would be when inflation-adjusted for its 1980 peak.

When you look at the potential growth in market cap of the world's biggest silver investments, it becomes easy to view any downdraft in price as nothing but a buying opportunity. I know I do.

ACH Debit Now Available             

We now have the ability to do an ACH debit for auto-recurring or regular orders.

On checkout, simply select the 1) Offline Payment option, and 2) tell us your preference in the Comments box, 3) then complete authorization form and 4) fax to us at 480-275-3284 (or if you can scan it and eMail it that works to) . If you have set up an automatic monthly order, please just call/email us to change your payment option.

Quote of the Week                               

"If workers struggle for higher wages, this is hailed as 'social gains,' if businessmen struggle for higher profits, this is damned as 'selfish greed.'"

-Ayn Rand  

Other Articles      

Gold Climbs, Silver Touches 30-Year High Amid Inflation Concern
Bloomberg

Silver Prices Hit 31-year High As Coin Sales Rocket
Los Angeles Times

The Rally in Gold and Silver is Not Over Yet
SafeHaven

Egypt: Placebos, Protests and Precious Metal Breakouts
SafeHaven

Silver Still Looking Good!
MarketWatch

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Resources      

New Preparedness
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Audio/Video      

How To Sound/Tone
Test for Pure Silver

Other Tests for Silver

1. Weight - 1 oz of pure .999 silver should weigh 31.1 grams

2. Sound - Pure silver has a 'ring' to it when you strike it with another metal object, or drop a handful of coins together

3. Dimensions: a Silver American Eagle should be 40.6 mm in diameter and be 2.9mm thick.

4. Magnet: If there's iron in the item, a magnet will be drawn to it. A magnet will not be drawn to silver.

5. Tarnish: Pure silver will tarnish over time, especially if you handle it. Sometimes it will get 'milky' spots on it.

6. Use an acid test kit - 'Google'
'precious metals test kit' to find a vendor.

Note: If you are getting duplicates of the S&GS Newsletter, please eMail us and let us know.
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Sound Money ~ Pending Legislation - 6 States to date
February 4, 2011
Issue 92
 
Issue 94

SGS Notes: We've been seeing a lot more on this issue lately across the news articles…and we get asked about this a lot… so this week we're focusing in on the various pieces about Sound Money.

Sound Money Pending Legislation - 6 States to date

Here is a list of 6 states (4 in the last month) and (2 states today) that have pending legislation to authorize the use of gold and silver to settle debts with its citizens and to provide them the legal means to avoid the devaluing of the dollar by having a parallel currency in light of massive bailouts and to protect them in the event of the dollars failure.
New Hampshire (they started this in 2003)

Bill currently mired in their State Legislator's Commerce Committee:

http://www.goldmoneybill.org/goldbill.pdf

Indiana Senate Bill 0453 Authors: Walker, Kruse
Date Chamber Action
01/14/2009 S Authored by Senator Walker
01/14/2009 S First reading: referred to Committee on Tax and Fiscal Policy
01/27/2009 S Senator Kruse added as coauthor

Current version: http://www.in.gov/legislative/bills/2009/PDF/IN/IN0453.1.pdf

Read The Rest of the Article ...

ACH Debit Now Available             

We now have the ability to do an ACH debit for auto-recurring or regular orders.

On checkout, simply 1) select the Offline Payment option, and 2) tell us your preference in the Comments box, 3)complete authorization form, and 4) fax to us at 480-275-3284 (or if you can scan it at email it that works too). If you have set up an automatic monthly order, please just call/email us to change your payment option to ACH.

Special Orders____                              

For those wishing to purchase quantities of 100 rounds or more, we have the ability to do custom divisible coins with the following Obverse designs: Morgan, Buffalo, Walking Liberty, Honest Value & Constitution.

Custom Special Orders require payment via wire or ACH transfer, and are priced at discount. We suggest that you collaborate with friends and relatives to do a group order so you can take advantage of the special pricing and custom minting. Please call or email us if you want to take advantage of this opportunity.

New Shipping Policy                               

Since the 2010 holidays, we are seeing an increase in delivery incidents with our shipping vendor. For this reason, all FedEx shipping will be requiring ‘Indirect Signature’ upon delivery. Indirect Signature can be obtained from anyone at the delivery address, a neighbor, HOA manager, etc. This is not meant to present an inconvenience, but to ensure that if a loss occurs, it will be covered by the shipping vendor.

Quote of the Week                               

"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium."

-Murray N. Rothbard   

 

Other Articles      

Utah Could Use Gold Under Sound Money Act
By: Alex Newman

Virginia Eyes Switching Off Dollar
Kelly O'Meara

Money in North American History: From Wampum to Electronic Funds Transfer

Gold Money Bill Site
Many Links, Articles, Resources

Obama Needs Your 401K to Balance His Budget
By Bob Adelmann

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Audio/Video      

Why Gold & Silver
Are So Valuable

Hans Bocker,
German professor and author of
"Liberty through Gold"

Role of Gold In
Next Financial System

Hans Blocker

 
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Past Wisdom And a Return To A Reality-based Monetary System ~ Larry Myles
December 10, 2010 
Issue 88


SGS Notes: This week's video is important to listen to. We are seeing increasing delays in obtaining inventory. I had a conversation with one of our suppliers today who informed me that they are starting to see delays in getting the silver to mint...EVERYONE PLEASE UNDERSTAND : it's beginning to 'hit the fan'... there is a very real silver shortage... You may see some dramatic dips that happen in conjunction with the manipulations going on, but the duration is getting shorter and shorter... the prices are quickly returning to free market rates... Gold/Silver ratio is now down to 48:1... still has a long way to go...

Past Wisdom And a Return To A Reality-based Monetary System
Larry Myles

"Precious metals alone are money. Paper notes are money because they are representative of metallic money."

Samuel Jones-Loyd, 1st Baron Overstone. (1852)

We can thank Baron Overstone for his words of wisdom; although it appears many of our modern leaders have forgotten the foundation of true wealth - prosperity through production and fair trade, along with a value-consistent currency based on gold and silver. True wealth… sustainable wealth cannot come about through the printing of air-backed fiat currency, followed by sophisticated multi-layered financial scheming that makes the collection of fiat an end unto itself. Sooner or later the inflationary factor will erode the wealth right out of those air-backed paper notes.

Worth noting: Prior to 1914, each of the above mentioned in-country paper notes were representative of a certain weight of gold. The U.S. Dollar equalled 1/20th of a gold ounce. The British Pound Sterling was representative of ¼ of an ounce of gold. I for one am not interested in debating the alleged absurdity of returning to the gold standard; other than to say the fiat-only model is clearly not working.

Making the case is the frequency of the recent spate of (unsuccessful) G20 meetings. In 1944 the Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states. The agreement lasted almost forty years. In 1971 Richard Nixon removed the U.S. from the gold standard and commented on the success reached by world leaders (Smithsonian Agreement): "The greatest single monetary agreement in the entire history of world civilization and will guarantee global prosperity." A little over a year later, the agreement collapsed in total failure.

Both of those agreements came after months of careful planning and were trumpeted as a final solution to monetary stability. Fast forward to the present; we are now enjoying G20 meetings that are becoming almost monthly events, replete with wrangling and finger-pointing. Yet no amount of trickery or shadowy alliance-building is working. Why? Trying to sculpt a coherent policy based on the irrational printing of air-backed fiat currency is a fool's game. Again, the futility of the Glass Bead Game comes to mind; especially when a monetary formula for success and prosperity is readily available - but it would mean wresting control away from the world's bankers!

Basing the worth of any and all currencies on the weight of gold would bring much-needed reality to a world awash in worthless paper money. Believing in a gold-based system too hard to swallow? Okay, what is your solution? That we remain rooted in the world of Reductio ad absurdum? That is no solution and I think you know it.

A personal solution; and one being practiced globally, is the growing number of people who are shunning paper money and turning to gold and silver. China is one nation that is openly encouraging its 1.3 billion citizens to get out there and accumulate the currency metals. It is the same story in India where you can even buy or order gold from neighbourhood postal outlets. You do not have to tell the Europeans twice; they are buying gold like there is no tomorrow. America? Two years ago we did not succumb to the scandalous falsehood that 'buying gold is un-American'. That whisper campaign failed miserably. Last year, the 'phony gold bubble' story enjoyed even less success. In 2010, the current administration in Washington, has proven itself to be pathologically stubborn. I am certainly not expecting an endorsement from our Keynesian enamoured leaders to buy gold. They will go down with their ship; but that does not mean you have to join them.

If Washington attempts to outlaw gold and silver, we will respond with scoffing defiance, followed by anarchy and lawlessness. As I have stated many times, the collapse of currencies is coming.

Hopefully, out of the rubble, a system may emerge based on two radical ideas; we will embrace a monetary system based on gold, and the world governments will adapt a plan that includes a schedule of debt forgiveness. Think about it. This is not a position of destructive radicalism; more a case of remorseless logic and a valid attempt to at least move the dialogue in a different direction.

When it comes to the demise of fiat currency throughout the ages, I am not just talking through my hat. I do have history on my side. Debauching the in-country currency toppled Rome and lead to the French Revolution. The audacity to think our system cannot collapse is almost laughable.

In the interim, fasten your seat belts and prepare for the global carnival of madness to continue! Expect currency swings, sovereign debt defaults, the collapse of national governments, isolationism and trade wars becoming the order of the day. The carnival show is already in progress. For those in the know, some are comparing this to a fiscal Greek Tragedy. Please, do not take yourselves that seriously. Looking back over 2,000 years of currency default, we are merely watching a repeat performance of a not very original, hackneyed misadventure in Black Comedy.

Other Articles of Interest

2012 IRS Rules Change

David Nguyen Activist Post

Silver Supply Crisis Looms
Part I

Part 2

Jef Nielsen Bullion Bulls Canada

Bernanke: 60 Minutes,
2 Big Lies

Michael Pento
Euro Pacific Capital

News: Backwoods Home
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Silver in payment for
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SGS Volume Discounts

SGS has received several inquiries of late regarding our volume discount program. Our volume discounts apply only to non-numismatic rounds and begin with quantities of 200 ounces or more as follows:

200 -500 oz - $1.00 / oz discount
501 - 1000 oz - $1.50 / oz discount
1001 or more - $2.00 / oz discount

Volume orders will need to be placed by phone at present. We welcome individuals to enlist acquaintances to join them in a group order to take advantage of these discounts.

 



 

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Quotes

"Precious metals alone are money. Paper notes are money because they are representative
of metallic money."

Samuel Jones-Loyd, 1st Baron Overstone. (1852)

Recurring Orders At SGS

We are asked occasionally to set up recurring orders for customers who desire to place monthly orders on a scheduled basis. We have done that on a case-by-case basis with a few customers who have requested it.

 

If you would like to set up a recurring order, please contact us by phone or eMail. There is some paperwork that must be completed for us to do this for you.

888-203-2232 x1
info@silverandgoldshop.com

 

This Week's Video

NIA Interview with Bill Murphy
Note: Bill Murphy & Andrew Maguire testified at the CFTC Hearings in the spring regarding the
Fraud of naked shorting of precious metals. He is the world's top expert on the manipulation and price suppression scheme that has been taking place in the gold/silver markets.

By InflationUs

 

Ideas for Christmas Giving...
 
Silver makes a wonderful lasting and valuable gift!
Call us to arrange for a gift certificate !
 

LEATHERETTE GIFT BOX

Steel case wrapped with Leatherette, white satin interior top and Leatherette base. Available for Bars or Multiple Coins by Special Order

BLUE VELVET GIFT BOX

Sized to hold Airtite containers in sizes 39mm or 40.6 mm. Perfect presentation box for gift-giving. Available for Silver Bars by Special Order. Available in 3-coin size also by Special Order.

 

ALBUM STORAGE BOX

Album Storage Box by AirTite, in black. To be used with AirTite Storage inserts (In black, red, or blue sold separately) & Plastic Holders (sold separately)

And don't forget to get AirTite coin or bar holders to protect your gift...

Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1
Shock And Awe in Precious Metals ~ Jeff Nielson
December 3, 2010 
Issue 87


SGS Notes: I trust you all had a wonderful Thanksgiving weekend... If you've been following silver and gold pricing since the weekend, you know that there has been a rapid rise in price of both metals... silver is now pushing $30 per ounce spot and gold is almost at $1415 per ounce...

Shock & Awe in Precious Metals
Jeff Nielson
December 1, 2010

Earlier this month, precious metals investors witnessed arguably the most concerted take-down of the precious metals sector since the Crash of ’08. First, investors were lathered-up into a mania, after World Bank head Robert Zoellick planted a piece in the Financial Times where he feigned interest in having a gold standard re-instituted.

Then the ambush took place.

This time, China was clearly participating as the ‘tag-team’ partner of the U.S. government. It began by raising reserve requirements for its banks – a move always seen as restraining the growth of an economy (and reducing commodities demand). Then the Chinese government leaked word that it was “planning interest rate increases” (even more bearish for commodities), all within the span of a couple of days.

What launched the “ambush”, however, was the utterly unprecedented move by the CME Group (owner of the Comex exchange) to radically increase margin requirements for silver halfway through a trading session. Clearly, the intent was to get precious metals investors as over-extended as possible – and then to “drop the hammer” on them at literally the best (i.e. most-damaging) moment.

This was immediately followed by yet another increase in bank reserves by China’s government, mere days after the previous reserve-increase was announced. With the U.S. having already taken radical action to curb commodities markets, it is simply not plausible that the Chinese government suddenly decided that further tightening was necessary. Instead, this was a move purely intended to generate more downside momentum in commodities by China, the world’s largest consumer of those commodities (including precious metals). And when those moves still did not generate the downward momentum desired by these market-manipulators, the CME Group announced yet another reduction of “margin” – this time for both gold and silver.

In previous years, a premeditated, orchestrated take-down of precious metals of this magnitude would derail the market for many weeks, if not months. However, that era is over.

Following the inevitable plunge of these commodities markets (as margin players were driven out), gold and silver quickly bottomed and firmed. This epitomizes the entirely different attitude of precious metals buyers. Whereas before such ambushes would create fear among investors that a “top” had occurred in the market, today all that goes through the minds of investors when precious metals go lower is “gold and silver are on sale!”

Buyers gleefully soaked-up every ounce of cheap bullion which the bullion banks chose to bestow upon them (as an early Christmas present). And now, with the month over, and “delivery” due in the Comex, those buyers are saying “give us our gold and silver.” While the numbers bounce around day-to-day, at present these buyers are wanting to take delivery on a large portion of total, available gold inventories and nearly ¾ of all available silver in Comex inventories.

Though it was the bankster cabal which launched this ‘shock’ on the precious metals market (and precious metals investors), the only ‘awe’ that was experienced was that of the banksters, themselves, as buyers are now holding out their hands and demanding that the bullion banks deliver most of their dwindling supplies of real bullion. Much like pointing a bazooka at someone – and not noticing that you were holding it backwards – this ambush has now blown up in the faces of these bankers.

If these manipulative buffoons had the slightest understanding of these markets, the spectacular failure of their attempt to (once again) “cap” precious metals would have come as no surprise. As I write regularly, anything under-priced (like precious metals) will be over-consumed. Push the price even lower, and inventories will disappear that much quicker.

The example I have used previously is chocolate bars. Price chocolate bars at 10 cents each (which was their price before 40 years of banker-produced inflation destroyed the value of our currency) and store shelves will be quickly stripped bare. Yet in the convoluted fantasy-world of the bullion banks, if they saw store shelves being cleaned-out with chocolate bars at 10 cents apiece, their “strategy” would be to attempt to kill demand by pricing them at 5 cents.

In previous years, the banksters could avoid being punished for their total ignorance of commodity fundamentals. Armed with countless tons of bullion which Western central banks had foolishly leased to them, when the cabal drove down precious metals prices and buyers stepped in to load-up, they would simply drive prices even lower (by dumping yet more bullion onto the market) – until even the most ardent bulls capitulated.


Other Articles of Interest

The Dumping Begins:
Chinese Reserve Managers Notified That Any Non-USG Guaranteed Securities Must Be Divested

Zerohedge

China, Russia Quit Dollar
China Daily

Why Governments Will
Buy Silver

SilverSeek


 


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SGS Volume Discounts

SGS has received several inquiries of late regarding our volume discount program. Our volume discounts apply only to non-numismatic rounds and begin with quantities of 200 ounces or more as follows:

200 -500 oz - $1.00 / oz discount
501 - 1000 oz - $1.50 / oz discount
1001 or more - $2.00 / oz discount

Volume orders will need to be placed by phone at present. We welcome individuals to enlist acquaintances to join them in a group order to take advantage of these discounts.

 

Quote of the Week

“The future prosperity of everyone – including the needy – depends on encouraging persons to become millionaires.”

 

– Dean Williams



 

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This Week's Video

The Day The Dollar Died

By InflationUs

 

 

 

Those days are gone, because the bullion is gone. Today, when bullion prices are driven down, and buyers step in to buy, it is the bullion banks who are now forced to capitulate. Much like a thug who points a revolver at someone – after the sixth shot is fired – the banksters now frighten no one in the precious metals market.

In the case of silver, the only “gun” now pointing at anyone is the gun which the bullion bankers are holding against their own temple (with a “silver bullet” in the chamber). As regular readers know, most of the total global stockpiles of silver (accumulated over roughly 5,000 years) are now gone. Used-up (in tiny amounts) in an infinite number of consumer and industrial goods, that silver can now never be economically recovered – unless/until the price rises to many multiples of the current price. Put another way, with gold now priced at roughly 50 times the price of silver, at some point before silver reaches $1400/oz, it will finally become valuable enough that industrial users will take measures to recover this silver, much like virtually 100% of all gold is recovered/recycled.

At the present time, the only message being sent (by the bankers) to silver’s multitude of industrial users is “silver is cheap”. With the bankers ensuring that silver is grossly under-priced, industrial demand is predictably soaring – up 18% year-over-year.

Readers must realize that these industrial users can obviously never be “frightened off” by cheap silver, but instead will simply increase their buying (as they have done). Having gotten industrial users ‘addicted’ to cheap silver, it is now up to the bullion banks to produce enough real bullion to satisfy the rabid appetite for industrial silver – or face the consequences: their own economic annihilation.

“Short” 100’s of millions of ounces of silver, JP Morgan is already facing $billions in losses on that part of their holdings, alone. However, after squandering their bullion inventories, the banksters turned to the derivatives market to use paper leverage to continue to manipulate prices.

Thanks to the CPM Group’s Jeffrey Christian, we have a rough idea of precisely how leveraged is that short position: about 100:1. So when JP Morgan starts with $billions in losses, and leverages that 100:1, the bottom-line is bankruptcy. And the harder these knuckle-draggers push-down on the market (thinking they are limiting their losses), the sooner the last bar of silver is gone – and with it, JP Morgan.

With available silver now nearly gone, we are very close to (if not already at) the point in time where industrial users make a frantic effort to buy and hoard every ounce of silver that they can lay their hands on, and soaring prices will only make them buy faster. Understand that the pretext of raising margin requirements in the silver market was to restore “order” to that market. Instead, because this move was motivated by corruption and malice rather than market fundamentals, raising margin requirements (and creating a “sale” for silver) is creating much more disorder – and rapidly setting the stage for an actual default (a fail to “deliver”) in the silver market.

It is because of this total reversal in attitudes (and the depletion of bullion inventories) that I continue to urge investors to “think like the big buyers”. They want to see bullion prices fall, because they know inventories are depleted, and any pull-backs will be shorter and shorter.

When bullion prices fall, gold and silver are “on sale”. Period. And as we are always reminded when any retailer advertises a sale, buy now – because quantities are limited.

 

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Quantifying Quantitative Easing ~ David Morgan
November 5, 2010 
Issue 84

S&GS Notes: Talking about Quantitative Easing in today's newsletter…it's all over the news.

There's been QE, QE1, and now the Fed has announced their plan to embark on QE2. With that announcement we've seen the prices of gold and silver rise dramatically in just hours/days… What exactly is QE? Why does it have this affect on silver and gold? What other affects will we see in other markets? I'm no expert on these things… I read, I listen, I learn… here's what the 'Guys That Know' have to say….

Why should you care about this? Well, for starters, it has a tremendous impact on your silver/gold investment...and it will have a BIG IMPACT on your budget in the coming months, food prices, and the prices of other basic necessities.

And… regardless of what you think of Glenn Beck… don't miss his 2-part Video on the subject of QE… explained as only Glenn can do it...

Quantifying Quantitative Easing

From David Morgan…

Many investors are struggling to understand the ramifications of the recently announced QE2 plan. Quantitative easing, or more simply known as money printing, is a dilution transaction similar to issuing more shares for a stock. The dilution has two primary affects: a decrease in the value of the initial shares and a redistribution of wealth from the original owners to the new owners.

The most significant difference between stock dilution and currency dilution is of course that publicly traded companies tend to use the funds raised through dilution to add value by investing those funds - whereas governments don't add value by diluting a currency.

In this case, $900 billion will be diluted to purchase US treasuries so the primary benefactor of the quantitative easing will be the US federal government and the financial institutions selling that debt. However, capital flows can rarely be controlled and the newly created money will find its way into other markets and asset classes.

Interestingly, the $100 billion per month figure that has been mentioned as the target rate for QE is almost exactly what is needed to rollover maturing treasuries coming due - so it could be argued that the plan is to effectively finance the US Federal debt which would eventually lead to a complete monetization of the treasury market. Supporting this argument is the recent projection made by ZeroHedge that the Federal Reserve will own more treasuries than China by the end of November.

If the QE2 funds went into the currency market, its value would fall in half. However, $900 billion is roughly 6 percent of US Federal Debt. Inflation is defined by the growth in the money supply. If using M2, the QE2 plan would dilute the money supply by 10 percent. $900 billion represents 36% of the world's gold supply, so an equivalent move upward in price could be seen if the money finds its way into the gold market. QE2 is 37 times the size of the world's estimated silver supply so a flow of capital into the silver market could be explosive.

A dollar on November 1st is now worth 92 cents if measured in treasuries or 91 cents if measured with the money supply. It can be seen that inflation as measured by the growth in money supply is projected to increase by 10 to 20 percent on an annualized basis.

The result will be a double digit real negative interest rate and a carry trade opportunity to sell treasuries and other US dollar secured paper at a cost of near 0 percent while accumulating real assets such as precious metals and other resources that cannot be diluted.

Glenn Beck Explains Quantitative Easing
Part I & II

 


Other Articles of Interest

Not A Good Time To
Be Short Silver

Tradeplacer.com

Why The Price Of Gold
Soared After the QE Announcement

Bill Bonner, Daily Reckoning

How High Would Gold & Silver Prices Go if GS, JPM and HSBC Were Barred from Participation in Gold/Silver Markets?
JS Kim - SmartKnowledge

Gold Jumps $50 in 21 Hours As Fed Prints Money
Adrian Ash

Silver Blasts Through
To 30 Year High

Mad Hedge Fund Trader



Free Service

SGS Volume Discounts

SGS has received several inquiries of late regarding our volume discount program. Our volume discounts apply only to non-numismatic rounds and begin with quantities of 200 ounces or more as follows:

200 -500 oz - $1.00 / oz discount
501 - 1000 oz - $1.50 / oz discount
1001 or more - $2.00 / oz discount

Volume orders will need to be placed by phone at present. We welcome individuals to enlist acquaintances to join them in a group order to take advantage of these discounts.

 



 

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"I doubt we will ever see sub $1300 gold again for the duration of this secular bull. Now that the HUI and silver have broken to new all time highs we have a rare condition in that the entire precious metal sector is trading in a vacuum with no real overhead resistance. This is the only sector in the world in this position. That is the recipe for an incredible move higher in a short period of time as funds begin to chase the out-performance in the precious metal sector."

Toby Connor
Goldscents


 

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Phone: 888-203-2232 x 1
Will the CFTC Actually ACT to Protect Silver Investors? ~ Tradeplacer.com
October 29, 2010 
Issue 83

S&GS Notes: There has been more developing this week on the issue of manipulation of the gold & silver markets. While we've covered this topic in the past, we felt it best to devote this week's newsletter to an update on what is happening on this scene to keep our subscribers informed.

What does this have to do with silver investing you may well ask? Well, it's been driving the price points for some time now; and the more pressure is brought to bear on the guilty parties, we may well see significant spikes in the pricing as they try to cover their short positions, and the downward manipulation of price ends due to public pressure and possible CFTC regulatory activity. Grab your silver and hang on for the ride…

Will the CFTC Actually ACT to Protect Silver Investors?
from Tradeplacer.com

The silver market has seen a lot of surprises this year, and the statement today made by CFTC Commissioner Bart Chilton is probably the most unexpected yet. After more than two years of "investigation" into the silver market with no acknowledgment of structural issues, Chilton gave a public meeting in which he was quoted as saying "There have been fraudulent efforts to persuade and deviously control that price... the public deserves some answers to their concerns that silver markets are being, and have been, manipulated." He went on to state that the CFTC would be introducing new regulations to curb manipulation in the precious metals markets. Silver rose nearly 80 cents from its intraday low on the news.

Silver analyst Ted Butler has been writing letters and warning the CFTC of the consequences of manipulation in the silver market for more than 20 years. Not many people would bother to warn of these issues when ignored and ridiculed, however Butler persisted with his call for action to remove manipulators from the market. Up until recently, these warnings have been completely ignored.

As Butler and others have documented, a concentrated group of four to eight traders have been responsible for nearly 70 percent of all short positions in silver on the COMEX. These traders have consistently traded in unison to move prices while collecting large profits along the way. It is suspected that JP Morgan holds the majority of these short positions; however the CTFC has refused to acknowledge this and trading positions are not publicly disclosed.

Why Now? What does the CFTC and the short commercial banks know that we don't?

It doesn't take 20 years, or 2 years for that matter, to realize that there are obvious structural problems with the silver market - especially when the issues are spoon fed by letters from thousands of individuals. Given the reactive nature of the CFTC, it is unlikely that Chilton is acting preemptively to protect the small investor. It is more likely that the CFTC position is changing due to the structural change in the silver market. In 2008 weak long speculators were categorically replaced with blood thirsty hedge funds, wealthy investors, and developing nations who buy in cash.

(click to enlarge)

As previously documented on Tradeplacer.com, the commercial banks began to cover their short positions in a rising market about four weeks ago which is highly unusual. While silver has oscillated between $23 and $25 over the last month, the banks have continued to quietly cover. Perhaps Chilten means what he says and the banks began to cover in anticipation of further regulation by the CFTC.

Is it too late?

As of October 19th, the commercial traders were still net short 58,150 contracts - roughly 290 million ounces of silver. There are currently only 52 million registered ounces and 59 million eligible ounces held in COMEX warehouses. It would not be possible to remove the short commercials from the silver market in an orderly fashion. The majority of contracts would have to be settled in paper at much higher prices. As pointed out by Butler, the worst case scenario - and increasingly likely - would be a closure of the paper precious metals markets. If that occurs physical silver would likely trade in multiples of its previous paper price and would be unavailable to most buyers. The apparent choice by the CFTC to act is most likely no choice at all. It is a desperate move to maintain the status quo and a reaction to an eminent emergence of either physical shortages or dollar devaluation instigated by a wave of quantitative easing.

Jeff Lewis, of Silver Coin Investor, has the following perspective on this week's announcement by Bart Chilton:

"Almost every major financial media entity ran the story about CFTC regulator, Bart Chilton's statement regarding silver manipulation.

This is quite a remarkable event for our small, yet growing community. 

But given the fact that governments have little incentive to prevent a crisis, I believe this was a very well-crafted and strategic announcement.

Yes, I'm feeling a bit cynical about it.
 


Other Articles of Interest

Commercials Begin To
Cover Silver Short Position
s

Tradeplacer.com

Could This Be It?
David Bond, Publisher

Traders Accuse HSBC,
JP Morgan
of Silver Manipulation

Forbes Magazine

Silver to 30 In 18 Days
James Turk

The Return to Good Money
Jeff Nielson


Free Service

SGS: We saw a 'correction' briefly this past week in the price of silver/gold… this was more likely the combination of manipulative activity plus the drop that usually accompanies the gold/silver options expiration date each month (Oct 26). We see this over and over… when these dips happen, buying RETRACTS… it is the old 'loss of confidence' phenomenon… wise investors don't let themselves get caught by this…. BUYING SHOULD SURGE on the price dips…

SGS Volume Discounts

SGS has received several inquiries of late regarding our volume discount program. Our volume discounts apply only to non-numismatic rounds and begin with quantities of 200 ounces or more as follows:

200 -500 oz - $1.00 / oz discount
501 - 1000 oz - $1.50 / oz discount
1001 or more - $2.00 / oz discount

Volume orders will need to be placed by phone at present. We welcome individuals to enlist acquaintances to join them in a group order to take advantage of these discounts.

 



 

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"This fiat currency experiment will end badly in a currency crisis, and when that happens, as it surely will, gold will go parabolic and silver along with it but even more so as the gold/silver ratio adjusts itself to a more historical correlation. The wealthiest people in the world will be those who put 10% to 15% (or perhaps more, much more!) of their portfolios into physical silver today."

Lorimore Wilson
Editor Financial Article Summaries today


 


 

Dollar, Silver, GDP, QE2, elections
Peter Schiff - Schiff Report

 


On the surface, The Wall Street Journal's 'C1' article provided one of the most compelling and in-depth accounts:

http://online.wsj.com/article/SB10001424052702303341904575576203310056046.html

There was mention of the concentrated short position.
They named the major players -- HSBC and JP Morgan.
Many of the other reports were phrased in such a way that it almost sounded like prices were being manipulated higher, not lower.

But not this one.
And to top it all off, we are now considered 'manipulation theorists', rather than 'conspiracy theorists' - which has a more credible sounding ring….
I don't mean to diminish the significance of this event, but...

Below the surface of this news, I believe we are witnessing a political announcement meant to create the sense that we are being protected by regulators.

If and when the price of silver explodes, the noise from this statement may serve to position blame in such a way that the call for more regulation will once again have the political will of the people behind it.
Recall the politics surrounding the formation of the Federal Reserve Act.

The bill was presented as a way of protecting the people from a crisis caused by banks.
Look what that got us.
I want to believe this is a step in the right direction in terms of the general awareness created in the mainstream.
However, the reactionary nature of governments to form committees after the fact leaves me suspicious.
And the natural laws of supply and demand will come to pass, despite efforts to interfere - for or against. "

Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1
The Precious Metals Roller Coaster ~ Exerpts from Ted Butler, Larry Edelson, and John Embry
The Precious Metals RollerCoaster - From The Experts
Summary of information from Ted Butler, Larry Edelson, & John Embry
 
SG&S: With the high volatility in the precious metals market this past week, I thought I would provide you with some good resources to help you understand what this has been all about, and what forces are impacting the price of precious metals right now.

Larry Edelson - Financial Advisor, Weiss Research & Uncommon Wisdom Publisher.

Notes: Larry talks about how the markets are all in 'chop city', which means that when they are moving up and down quite violently they have a 'tendency to chop up short term traders with a lot of losses and a lot of sideways action'. He says this is due to the fact that many of the important cycles are now in a transition phase; indicating that the next big move, while certainly around the corner, is just not yet here yet. So all the major markets-all of them-- are floundering and swinging wildly trying to find their next positioning for their next big moves. This market could continue to be choppy for another 4 weeks.
 
He believes that gold on the short term will hold above its floor position swinging between the $1060 mark and the $1160 range…with wild swings. On the other hand, if it breaks through the support level of $1000, there will be no long term trend change. He is still very bullish on gold. On the flip side there is mounting evidence the gold will hold its own, and rise above the $1160 range and take off again.
As for the dollar, it's been 'rallying' lately because of the imminent threat of sovereign debt default in Greece, Italy, Spain & Portugal, which are valid concerns. So many European countries holding these currencies are being driven into the dollar… pushing it higher. However, the long term trend for the dollar is substantially lower. So this short-term rally for the dollar is not so much of a real 'rally' in the strength of the dollar, bur a reflection of the weakness of other world fiat currencies.

Ted Butler Butler Research
 
Notes: The Big Commercial Bank Shorts (i.e. JP Morgan) in silver have begun covering their short positions in the last few weeks. They have reduced their net short position by about 20,000 contracts (100 million ounces). This is the largest 2 week decline in the net short position in 2 years and represents about 80% of the total short position.

The good news, is that it's really improved the situation; they've liquidated just about as much of the technical accounts as they can liquidate. It's a very exciting development, and very encouraging because while painful, when they are done, they are unlikely to short again, paving the way for a price explosion.

And, from his recent newsletter,
"Silver is not money, it is Super Money, a kind of money that's different than any of us has ever experienced. It's sort of like there is ordinary man, but then there is Superman, who can bend steel in his bare hands, has x-ray vision and can leap tall buildings in a single bound. The main characteristic behind Super Money is that it is outside any government's edict. The value isn't based on what a government says. Simply stated, there is less silver available as money or investment to the world's citizens than at any point in history. Silver's rarity is unlikely to change in the relative near future. And remember - rarity is the first determinate of value.

As long as there are far more efficient mediums of exchange, like cash and electronic payments, silver or gold can't function as a realistic medium of exchange. This is Gresham's Law ; bad money will drive good money out of circulation. Here's a corollary to that law; Super Money drives itself out of circulation. As people start to realize the great difference that exists between money and Super Money, more demand for Super Money is certain.

Silver, more than gold, is the true Super Money. That's because, as time has evolved, there is less of it, relative to total world population. There is less above ground silver bullion in the world than there is gold bullion. Due to relentless industrial consumption over the past 70 years, there is 90% less silver bullion in the world than there was back then. This is something that cannot be said of gold.

Super Money is money that can't be created at will; it only comes from blood, sweat and tears, and at great expense. It is money that can't become worthless. It is money that can be passed to future generations without fear of what the future may hold. It is money whose value will be determined by the collective judgment of the world's citizens. One of the main factors that guarantees that silver is the Super Money of the present and future is how few people are aware of the facts surrounding silver. As those facts become increasingly known, the demand for silver must grow. The next time someone tells you that silver is money, please correct them. Let them know it is Super Money, and make sure you own as much as you can."
 
John Embry - Chief Investment Strategist at Sprott Investment Management
Notes: John talks about what he considers to be the final death throes of paper currency market.

On gold detractors: There is a lot of angst among mainstream commentators fearing a drop of $300 or worse… these are the same individuals trying to frighten the public with prophecies of falls in the gold price. Despite this ongoing aggravation John is even more bullish on the prospects for gold than he was a year ago.

On how price affects psychology: This is a classic example of where gold has moved nicely higher but people are still afraid. Psychology is a big part of the arsenal of the anti-gold group. Price action creates commentary and if you can knock gold value you can come up with all sorts of reasons that are false which does keep people away from the metals. He says, "I think that's part of the plan".

He says, "I still have the strong feeling that the vast majority of people have no clue about gold and aren't aware that gold is experiencing an historic bull market with much, much further to go. What we have seen today is merely a prelude to the appreciation we are going to see in future years which is going to greatly exceed what we have seen today. "

On Gold re-establishing itself as money: If you go back and look throughout 6000 years history, gold has always been the mainstream currency . It always tends to come back and re-establish itself when fiat money founders or comes under suspicion. We're in a period right now with a lot of debt problems, and sovereign debt is becoming strongly suspect (TP Notes: with just this past week several European countries in danger of default having a dramatic volatile affect on the market). I believe gold is really going to come back to the forefront, because people aren't going to be able to trust any paper currency on this planet.
 
Parting shots: Most of the experts are saying this: Use this short term down-trend to buy as much as you can.
The Dollar Bubble ~ National Inflation Association (NIA)

The Dollar Bubble
National Inflation Association

 
HyperInflation Nation ~ Part 1 ~ National Inflation Association (NIA)
 
HyperInflation Nation, Part 2 ~ National Inflation Association (NIA)

Hyperinflation Nation Part II
National Inflation Association

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