SGS Notes: We're sending out our newsletter mid-week this issue because there is so much going on right now we want you to be aware of. The JP Morgan news is HUGE… so we are featuring various articles this week about that and the implications for all of us.

There are also things happening in the Eurozone and in Greece that will affect us all dramatically. Hold on to your seats, the ride is about to get bumpy. We're looking for the end of the metals manipulation when physical silver prices detach from the ETC prices… should be soon. We saw silver spot dip below $27 this week, and, looking at the Gold/Silver ratio… it's up quite high - again. Remember: that ratio SHOULD be in the 16/1 range. Still a long way to go.

Dismal Metals Sentiment - Just What Bernanke Ordered
Jeff Lewis

Since the dramatic drops the silver market saw in May and September of last year, prices in the precious metals market have been suffering from an excess of negative sentiment. This adverse perception is weighing on metal prices and keeping investor demand at bay.

Furthermore, although investors have continued to buy physical silver, the overall quantity being purchased has declined significantly, resulting in reduced support for the metal's price.
Nevertheless, the supply of silver is naturally limited by the quantity existing in the Earth's crust, despite ever growing industrial applications for the metal and rising price inflation. This key combination of factors still provides a strong fundamental basis for continuing to hold silver over the long term.

Could Weak Silver Sentiment be Conveniently Manufactured by Central Bankers?
Interestingly, this depressed silver market sentiment picture seems to be the perfect political tool needed during a U.S. election year to lend much needed psychological support to an ever weakening U.S. Dollar in terms of its ability to purchase goods and services.

Keeping silver and other precious metal prices low by depressing market sentiment, and perhaps even engaging in covert market intervention, seems suspiciously convenient after such an excessive amount of liquidity has already been pumped into the U.S. monetary system by the U.S. Federal Reserve Bank's highly controversial quantitative easing measures promoted by Fed Chairman Ben Bernanke.

In addition, given the high amount of liquidity the European Central Bank needed to inject to deal with the debt troubled Eurozone countries like Greece, Spain, Italy, Ireland and Portugal, the increasingly obvious end result will be higher consumer price inflation, despite ongoing denials by central bank and government officials.

More QE Measures Likely as U.S. Economy Languishes in Election Year
Bearish for the Dollar, but very bullish for hard precious metal currencies like silver, is the view among many market participants that further rounds of quantitative easing or QE measures by the Fed are still practically a given during this election year to help lend support to a stubbornly struggling U.S. economy.

Nevertheless, allowing metals to trade higher based on their strong fundamentals would severely dampen the U.S. central bankers' ability to overtly increase the money supply in a substantial way.
EU Moves Toward Ratifying ESM to Provide More Permanent Bailout Mechanism
Another related development is that the European Stability Mechanism or ESM is expected to be ratified by July of this year, provided that enough of the 17 Eurozone member states approve of the bailout system to represent ninety percent of its capital commitments.

This new EU rescue program is expected to permanently replace the existing temporary European Financial Stability Facility within the Eurozone, thereby making meta-government bailouts an ongoing feature of the Eurozone's economy.

As in the United States, a reasonable person can only expect more liquidity increasing measures will soon also follow in the EU, thereby making an even stronger case for continuing to hold and accumulate precious metals like silver.

Does Jamie Dimon's Problem Actually Reside in SILVER DERIVATIVES?

Facts are facts. Since May 7th the price of silver has been mercifully driven down below $30 and on May 10th Jamie Dimon announced a $2B derivative loss. The price of silver is continuing to be driven down which in my mind means only one thing...JPM is losing the physical silver game and having to drive the price lower to get their hands on physical at a price that would reduce their overall losses. Never mind that the paper silver short will increase...this is now a physical game.
A clue lies in the COMEX data that shows that silver is in backwardization!

Bix Weir,
www.RoadtoRoota.com

Other Articles      

Soros Quadruples Gold Holdings
Wealth Wire

Gold, Money, and the Parable of the Three Little Pigs
Lew Rockwell

The 2 Billion Dollar Loss By JP Morgan Is Just A Preview Of The Coming Collapse Of The Derivatives Market

Full Blown Bank Run In Greece

How The U.S. Dollar Will Be Replaced

This is Why World Markets are Incredibly Unstable
Stephen Leeb

Will See Three Digit Silver In The Next Couple of Years
Stephen Leeb

JP Morgan's Losses A Canary in A Coal Mine?
Bill Moyers

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Bix Weir
JP Morgan Derivatives Book
Blowing Up

Lindsey Williams Part 1
Derivatives Market Collapsing & JP Morgan

Lindsey Williams Part 2
Derivatives Market Collapsing & JP Morgan

SGS Notes: Okay, we've crammed a lot into this newsletter, we admit it! But, if you've been following the economic news and the precious metals market, you'll be aware that there is a lot looming on the not-too-distant horizon. We feel the urgency to get you as much information as possible so that you can be prepared.

Two Scenarios For Next Precious Metals Rally (Part I)
Jeff Nielson, Bullion Bulls, Canada

Let me preface this piece by first stating that my reason for writing it was not to induce people to guess which scenario they found more probable, and then to place their bets beforehand. Rather, my purpose was exactly opposite: to prepare people for either scenario so that when they recognized one or the other unfolding they wouldn't do something stupid in a moment of panic (or greed).

Sadly, in our markets to "do something stupid in a moment of panic" generally means doing precisely the opposite of what one should be doing. This also explains why the bankers like to start panics. First of all, as the cause of these panics the banksters are neither "panicked" nor (obviously) surprised themselves. So they continue to operate calmly (in this feeding-frenzy) while the sheep make themselves especially easy to shear.

As a result of this never-ending game being played in our markets by the bankers, there is genuine utility in looking ahead (something the sheep almost never do) so that when events do unfold we will be prepared to act (calmly) - as opposed to reacting in panic (as the bankers desire).
With that preface out of the way, the next task is to explain/define these two, looming scenarios:

• The crash-driven rally
  
• The event-driven rally
  

Putting aside the fact that gold and silver are the most undervalued assets on our planet today; despite this ever-present truth the sheep generally need a "reason" to jump on the precious metals bandwagon. The irony here of course is that simply by jumping on the bandwagon the sheep supply the necessary momentum to drive prices higher - meaning that no "reason" is every truly necessary for gold and silver prices to go higher, in accordance with their ultra-bullish long-term fundamentals.
So the Catch-22 of the precious metals market is that we always need some catalyst to break gold and silver free of the intermittent bankster-created "log-jams" which have occurred in this market over the course of its 10+ year bull run, even though there is never any reason necessary to bid-up these grossly undervalued assets. In the last several years we have seen (arguably) three such catalysts. Two of those catalysts were events and one was a "crash".

Taking these catalysts in chronological order, the first of the three was the Crash of '08. Critics will argue that a "crash" is precisely an example of an event-driven catalyst. However, as I alluded to previously a market-crash is a particularly unique form of event, due to the extreme and unusual sentiments which accompany that event. The second reason to distinguish this catalyst from an "ordinary" event which serves to drive the market higher is that the circumstances prior to a crash will be markedly different from the circumstances of any other event-driven rally.

To begin with, one very likely clue that we will be on the precipice of another banker-created crash is that gold and silver (and likely all commodities) will begin to rally strongly without any identifiable cause for their strong surge in prices. To be more precise, the mainstream media (i.e. the propaganda machine) will not supply us with any "reason" for these soaring prices (other than pointing to their favorite scapegoats, the evil "speculators").

They will not tell us that those price increases are nothing but playing catch-up for the previous $trillions in money-printing. Understand that what responsible precious metals commentators generally tell their audience is that we accumulate gold and silver merely to preserve our wealth - i.e. we're not doing this (greedily) looking to turn a profit. However, the fundamental truth is that the decades of suppression, and the even more extreme manipulation of recent years mean that gold and silver are more undervalued today than they were at the beginning of this bull market over ten years ago.
Similarly, with the banksters' paper grossly overvalued, this means that most commodities should be soaring to much higher prices, simply based upon the long-term ramifications of year after year of hyperinflationary money-printing. Here we come to the ultimate fear of the banksters, and the political stooges who serve them: they know that the end of their entire, paper Ponzi-scheme will be imminent when prices for hard assets (i.e. gold, silver, and commodities) begin to soar without any explicit short-term causes.

Unlike the brainwashed sheep, they know their history. They know that the ultimate cause of all hyperinflation is a general loss of confidence in (worthless) paper - just as the Dutch "lost confidence" in their precious tulips 400 years ago. Thus when prices begin soaring (i.e. the paper begins to crash) "for no reason", the real reason will be that people are losing confidence in the paper and dumping it in favor of hard assets.

This precisely describes circumstances in the spring and summer of 2008, and explains why the bankers decided that nothing less extreme than a "crash" would suffice to put the brakes on the looming hyperinflation. What this means is that unlike an ordinary event-driven rally for the precious metals sector we will be tipped-off prior to the next crash being manufactured: we will see another instance of spiraling gold, silver, and commodities prices with charts showing a clear exponentially-rising pattern.

The banksters will not sit back quietly and allow their $100's of trillions in Ponzi-paper to evaporate. Inflicting severe economic hardship on 100's of millions means nothing to them. Indeed, the bankers have an even more extreme "solution" for dealing with a pending hyperinflation scenario: starting a war.

Hitler started World War II to cope with the aftermath of Germany's hyperinflation from the Weimar Republic. However Hitler wasn't a banker. He had no mountains of worthless paper to protect. His only motives were to create a smoke-screen for the economic ruin from the preceding hyperinflation and to cover-up his own economic mismanagement, which is an inherent aspect of all Fascism.
With the bankers (and the ultra-wealthy Oligarchs) being firmly in charge of our governments today, war would be a tool that they would use undoubtedly before any hyperinflation reduced their mountains of paper to what it really is: "Monopoly money". Thus should we see another repeat of the explosion in gold, silver, and commodities prices which took place in the spring and summer of 2008, many would suggest that we should hope for a market crash.

Those with the inclinations to be "traders" (i.e. the greedy) will be sensing opportunity at this point. They will note that we will have a clear warning before the next crash is manufactured. They will note that such a crash will occur when we see a distinctive repeat of what occurred in gold, silver, and commodity markets in the spring/summer of 2008. They will look at the charts for gold and silver for 2008, and they will think to themselves "sell".

This would be a colossal failure of analysis, and another triumph for naked greed. Simply because identical circumstances cause the bankers to use an identical "tool" (i.e. a market crash) does not mean that the consequences of their reckless intervention in markets will be identical.

Our economic circumstances in 2012 are enormously different than in 2008. Today our economies are all much weaker. Today our economies are all much less solvent. These two different dynamics both have significant implications in any crash scenario. Create a crash in a (relatively) strong economy and there is resistance; that is, that residual economic strength will push back against the downward economic pressure of a crash - slowing the descent and stretching-out the length of time of that downward slide before "bottom" is hit.

Conversely, create a crash in a weak economy and all you have is free-fall. We would (will?) see a crash which is much faster, and much more severe. This alternately means that anyone attempting to "time" this event by selling their gold/silver and then (assuming they can) buy it back it cheaper could miss badly in either direction.

The fact that a 2012 crash would tend to be a much faster event would mean that it could be over before all the would-be traders are expecting. They are sitting-and-waiting (for even cheaper prices) with their pile of depreciating paper, while prices have already began bouncing back. And as with the Crash of '08, the rebound in gold and silver prices will be at least as rapid as their plunge, and likely even more rapid - leaving all those greedy "traders" still waiting at the station.
On the other hand, with a crash in 2012 undoubtedly a much more severe economic event, would-be traders could easily jump back into the market too soon - and do their buying with prices about to plunge much lower. We can assess those relative probabilities by looking at our other different dynamic for 2012: much less solvent governments.

The Crash of '08 sparked the Money-Printing of '09, which in turn has directly led to the Debt Crisis of 2010-to-present. The "64-trillion-dollar question" today is this: if a crash in 2008 caused a debt-crisis (when our economies were relatively strong), what would a crash do in 2012 - with our economies all weak, and all of Europe already in a debt-crisis. The answer to that question is really simple. Everybody is Greece.

The combination of an even worse crash, with much weaker economies, already in the midst of a debt-crisis means that either the money-printing would have to be much, much more extreme (i.e. guaranteed hyperinflation) or it would fail to halt our economic crash despite the extreme money-printing.

Understand that every new "dollar" of paper created is created with more debt. Understand that our interest rates are already as low as they can go, and still we see the debt-dominoes going bankrupt one-by-one. So doing much more money-printing means piling on exponentially more debt onto already insolvent economies while revenues are simultaneously plummeting lower. This precisely describes what just took place in Greece.

So when "everybody is Greece" (including the world's worst debt-sinner, the United States) what are the holders of $10's of trillions in Western bonds going to do? Will they stoically and nobly "go down with the ship" like the Captains of Finance that they are? Or will they all scramble for the nearest "lifeboat" like proverbial rats deserting that sinking ship? I'll let readers answer that one for themselves.

In the Crash of '08, it was only the gold-bugs (and silver bulls) who were thinking to themselves "paper is going to zero". The sheep were still all running towards that worthless paper. In any crash in 2012 (or 2013) it will be obvious to everyone that "everybody is Greece", and all that paper is going to zero.

What this means is that in any future crash event, any sell-off in gold and silver will end very quickly and very abruptly, when all of the "rats" from the bond-market (belatedly) try to swap (worthless) paper for (valuable) metal. Naturally, all of the extreme money-printing taking place means that the underlying paper currencies are just as worthless as the bonds.

This should mean that all the sheep would be dumping their paper currencies for gold and silver too. However, that would imply rational thinking. Since the panic of any crash event means the opposite of rational thinking, the holders of our paper currencies will undoubtedly do even worse than the bond-holders.

As I continue to point out to readers, it would take much less than 10% of these paper-holders turning toward the 5,000 security of gold and silver to cause precious metals prices to soar to many multiples of present prices (especially in the tiny silver market). This comes at a time when people are only holding about 1/10th as much precious metals in their portfolio as is the historic norm.
The question for the precious metals bears and skeptics is this: if gold and silver prices can go on a 10+ year bull-run while ignorant Western investors have under-owned this asset class to the greatest degree in history, what happens when all of the "stupid money" of the West belatedly rebalances their holdings?

As an aside, this raises a secondary question: how can the drones in the mainstream media continue to talk about "bubbles" in gold and silver while these assets have never been so under-owned by Western investors?

When thinking investors begin to ask (and answer) these questions for themselves, their strategy for any crash scenario should be clear: don't idiotically sell the gold and silver they are already holding, greedily hoping they can cash-in on some "obvious" short-term trade. Rather they should be buying more gold and silver in any crash, even in the face of rapidly falling prices. They would know that any plunge would be very short in duration, and will reverse higher very, very strongly, when all of the paper-holders finally begin to "see the light".

Naturally, the my hope and that of all other gold and silver bulls is that we can see gold and silver begin their next, inevitable rally from some event which inspires much less fear and economic carnage than an economic crash. In Part II, I will flash-back to two such events, and note both their significant similarities and significant differences.

To read Part 2 click 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. These are the size of a dime and a good alternative to junk silver which is only 90% pure.

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Alf Field

The Implications of China Paying in Gold
Jim Sinclair

Greenspan's Golden Secret
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Greenspan's Golden Testimony
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Gold & Economic Freedom
Alan Greenspan

Gold & Silver as Parallel Monetary Systems
Hugo Salinas Price

US Dollar VS Gold: Epic Money Battle
USA Watchdog

Gold "Bargain of Lifetime" As Gold Standard Inevitable, Possibly Within Year - $10,000/oz Looms
Goldcore.com

Golden Dreams & Global Nightmares
Alex Stanczyk

Harvey Organ:
Get Physical Gold & Silver!
Adam Taggart

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Why Gold & Silver?
Mike Maloney

The Golden Revolution

Bill Murphy Pounding Away at the Gold Cartel!

On the lighter Side… ; - )

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Quote of the Week

"Paper money has had the effect in your state that it will ever have - to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice."

- George Washington

 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,
Silver Will Be Worth More Than Gold

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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

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You Can't Beat Silver as an Investment
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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

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

DIVISIBLE TEA PARTY ROUNDS

The Divisible Tea Party Rounds will be available for purchase until Monday.
We will be minting a limited number of them next week.

If you would like to place your order, please go online to order before Monday.

Survival Podcast MSB Members Discount will apply. Find code after MSB Login on the Members Benefits page.

Take advantage of this offer while silver spot prices are low!

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

SGS Notes: We're featuring a lot of material this week from Jeff Nielson, from BullionBulls, Canada... be sure to listen to the 3 Videos (which are really audio interviews)... We've had a lot of his articles in our Newsletter in the past... you can find them by searching his name on our Newsletter page on the SGS site.

In the past couple of weeks we have seen yet another bankster takedown of the precious metals prices... it is clear they are covering their short positions... see the link to the COT reports... and being allowed to do so by the very institutions that are to set position limits so that they cannot do this to the market. Wise investors should understand that this is an opportunity to BUY, because this activity will only create shortages in the marketplace which will drive prices to the moon...

Gold, Silver vs. 'Worthless' U.S. Treasuries

Jeff Nielson, BullionBulls, Canada

Two weeks ago, I wrote that volatility was "the new bankster weapon" in the gold and silver markets. In writing that this marked a "new phase" for these markets, I admit to never imagining that we would immediately see the bankers display this new phase with such a vivid "exclamation mark."

That said, it is now equally important to emphasize to investors that nothing at all has changed for gold and silver from a long-term perspective. What makes this current episode of market manipulation all the more surprising is that there wasn't even any serious attempt by the mainstream media to manufacture a "reason" for the plunge in gold and silver -- as "cover" for the banksters' actions.

With "competitive devaluation" still the mantra for the economically/intellectually bankrupt governments of the West, and with most of the rest of the world also being forced to play this game, we know that the banksters' fiat currencies will continue losing value at an increasing rate. Note the use of the word "competitive." It directly implies that these governments are driving down the value of their currencies as fast as they can.

Obviously, saying a currency is losing its value is exactly the same thing as saying that prices are going higher. As a matter of the simplest arithmetic, and the simplest logic, if most of the governments of the world are trying to push up prices (as fast as they can) then the prices for gold and silver can also only go higher over time.

Of course, some things are "different" in the gold and silver markets -- in comparison to where we were when this bull market started over 10 years ago.

Back then, the banksters had lots and lots of bullion to dump onto the market to depress prices. Now they don't. Back then, the governments of the world were not deliberately trying to drive up prices. Now they are. Back then, our governments were not obviously insolvent, and gold and silver were not viewed as "safe havens." Now they are.

In short, 10 years ago there were lots of reasons to worry about the "strength" and "stamina" of the gold and silver markets (as "long" investments). What happened at that time? The price of gold nearly quadrupled from under $300/oz to over $1000/oz. The price of silver more than quintupled, from under $4/oz to nearly $20/oz.

Another 'Must See' Video:

Other Articles      

Return to Good Money
Jeff Neilson

Extreme Times For Central Bankers - A Time For Gold
MineWeb

Big Hitters Very Sharply Reduce COMEX Silver Shorts
MineWeb

Currency Wars: Restricting Gold and Silver Sales In France
Jesse's Cafe American

Plan To Return America To the Gold Standard Set To Be Offered at Washington
NY Sun

It's Official: HFT Breaks Speed-of-Light Barrier, Sets Trading Speed World Record

This is the key to taking back our FREE MARKETS and until it is banned "they" will be behind the curtain pulling the strings of the market manipulation.This is the key to taking back our FREE MARKETS and until it is banned "they" will be behind the curtain pulling the strings of the market manipulation.

CFTC Facilitates Cartel Silver Raid
See also CFTC

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Bankers Have Lost The War
Part 1 Interview with Jeff Nielson

Bond Fraud & Brainwashing
Part 2 Interview with Jeff Nielson

Bullion, Mining Stocks & Hyperinflation
Part 3 Interview with Jeff Nielson

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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Silver Shortage This Decade, Silver
Will Be Worth More Than Gold
Future Money Trends

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

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.

Other Articles      

Eric Sprott Sells Gold Holdings to Buy Silver
The Globe Investor

As Chavez Pulls Venezuela's Gold From JP Morgan, Is The Great Scramble For Physical Starting?

Zerohedge

Chavez to nationalize Venezuelan Gold Industry

Reuters

Chavez Launches War Against US Dollar

The Daily Bell

What's Pushing Gold to New Highs
Jason Hommel

Honest Work For Honest Silver Pay

Silver Shield

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Bill Murphy : The Gold cartels have lost control over the market

King World News:

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

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!

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