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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Harvey Organ:
Get Physical Gold & Silver!
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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

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:

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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: :Yes, silver took it on the chin this week. What we have seen in the dramatic price drop for silver and gold has been a carefully orchestrated manipulation of prices by some powerful folks in high places… If you have been following the SGS newsletter for very long, you would know that we've been reporting on this faithfully from the beginning. It's been going on for several years now… and with all the exposé going on by some honest and persistent men in the industry, the fire is heating up under this issue. So this week I am devoting the newsletter to the various commentaries from these people who have reported the truth about what's happening. There's a lot to 'feast on' this week.

This is NOT a normal 'market correction' as some would have us think…Remember that investing in physical silver and gold is not the same as paper … yet the dynamics in paper have a dramatic effect on physical. (Also noteworthy this week… huge difference in Gold:Silver ratio… last week was 32:1

Bear in mind, that all of manipulation forcing prices downward have long-term effects on this market beyond the prices… it creates a disincentive for mines to produce and refine silver… a disincentive for research & development on new sources for silver. Consequently, there is a very real shortage of phyical metals in the market…

And, again, the warning is issue repeatedly: Hold on for the Long Haul. This is NOT the time to SELL… it is the time to ACQUIRE.

Silver Shield: The Final Fight

This is the final fight of physical and paper silver, so hold the line and get ready to take it to the enemy. The Elite have literally thrown everything they have at the silver markets to try to make silver investors weak in the knees and cry uncle. Like a bully trying to take your lunch money by twisting your arm.

This can only end one of two ways; you give up and the banksters laugh or you stand up and say enough! These tactics may work on some paper traders who are literally forced by margin calls. For those who have listened to me, and bought only physical, this recent manipulation is only a subsidized discount to buy more, for less.

The CME has raised the margin requirements an unprecedented 5 times in less than 2 weeks to force higher and higher costs on paper traders to force them to sell. The higher the costs and the lower the price of the underlying asset is a toxic combination in the paper market.

I saw this happen in the 2008 rout, where they took it down 60% in a matter of months. It was the worst time to be a silver holder, but I knew the real story and held on when everything in the world said get out. I held on and even added to my position to then see a return of close to 500% in the next 2 years.

Read Entire Article Here

Collusion by Fed Officials and Commodity Exchange Heads Has Its Intended Effect
Trader Dan

I find it amazing how effectively these people can coordinate their policies with the heads of the commodity exchanges and their pals at the big banks who are perennial shorts in the markets and have now managed to pluck the money out of hundreds of thousands of commodity trading accounts enriching the big banks (government sponsored hedge funds) in the process. Nothing like a freely operating financial system where the playing field is completely level and no one has an advantage over the next guy!

By their continued hiking of silver margins, the exchange effectively removed the liquidity in the silver market that the smaller specs have been providing. That left the market vulnerable to severe drops in price as these specs exited due to financial constraints which then removed a source of potential bids under the market as the CFTC commitments report has shown the small specs to be good buyers in the silver market. Even the bigger hedge funds are impacted by such a sharp hike in margins as their losses in silver then precipitate even more losses across other assorted commodity markets due to the cascading effect of mounting paper losses and margin calls and the need to raise cash.

As the silver market tanked the exchange officials could then warn about Clearinghouse integrity and have more reasons to drive margins even higher as they point to the increased volatility, volatility which I might add, they created themselves by hiking margins to such an extreme degree. Read Full Article Here

Quote of the Week                               

• Longer wait times for our inventory orders
  
  
• Higher Premiums, especially for Silver Eagles
  
  
• Product sell-out (from our suppliers)
  

Honoring All Our Mothers…

The Coming Retirement Trap...Has Started
Ron Holland

Mandatory IRAs just proposed by Obama Administration on 1/25/10 is the 1st step in stealth nationalization & forced investment of our retirement benefits to support the treasury debt market! Read the veiled report in Business Week.

A Personal Note from the Author

Dear Concerned American:
I begin with a quote from a politician who believed in an all-powerful central government and in using that power to achieve his vision for a nation. "He who has his thumb on the purse has the power." Otto von Bismarck, a statesman who created the modern Germany and known as the iron chancellor.

But however well-intentioned he might have been, he built the regulatory groundwork and government institutions for a centralized federal state that was later taken over by an evil political leader who created a tyranny seldom seen in the world before, or after. The tyranny started in 1933, 35 years after Bismarck's death, was National Socialism and the leader was Adolf Hitler. All of this came after Germany's military defeat in World War One and a national debt crisis, followed by hyperinflation and currency collapse.

I fear that today the control, nationalization and ultimate confiscation of trillions in private US retirement plan assets is on the horizon. Rick Santelli alluded to the possible nationalization and forced investment into treasuries on CNBC as recently as January 8, 2010. There was also similar coverage on Bloomberg and Business Week.

Reports out of Washington indicate that new retirement annuities may be promoted by Obama aides. This is just the beginning! The question every successful American with substantial retirement assets must ask is "what will you do if our retirement funds are forced to become the buyer of last resort for US treasury obligations?" Unless you believe Congress and Washington bureaucrats will do a fair job of allocating and distributing your personal retirement assets between yourself and others, you must begin now to protect your assets.

As the United States moves into a new decade of military overreach abroad and national bankruptcy at home, Washington is on a desperate search for more revenue and a solution to the future financing of the trillions in national debt obligations currently held by foreign central banks and investors. Economists, politicians and smart investors know the dollar's days as the world reserve currency are numbered, as is our ability to finance the national debt.

Although the historical government solution to unsustainable government debt loads has always been the destruction of the debts by currency depreciation and eventual hyperinflation, there is always an intermediate step used to buy more time for the politicians in power. This action, usually side-stepped and downplayed by the establishment historians paid to hide the real facts of history, is wealth confiscation. Napoleon had it right when he stated, "History is a state of lies agreed upon."

The largest source of liquid private wealth remaining in the United States is the $15 trillion in private retirement funds. The ultimate ownership, control and future of these funds has already been compromised and exchanged for the favorable tax treatment of private retirement plans. Congress writes the laws, so they can tax, penalize, hold your funds hostage and, although they'd never use the word "confiscate," use your assets at their discretion.

The retirement trap I'm writing about is only a proposal at the present time and since it may well begin in the latter years of the Obama Administration, assuming the Democrats can somehow maintain their majorities in Congress, I'm calling it the "Obama Retirement Trap." But make no mistake, the government need for current revenue and their frenzied search for liquidity to monetize their debt obligations is an unspoken quest of both political parties. The establishments of both political parties will do whatever it takes to stay in power, including the raiding and pillaging of your retirement funds.

Read rest of article here:

New Additions at Silver & Gold Shop                   

We announced this last week and are running it again for those who may have missed it: Please join me in welcoming David & Jodie Bowen to a new role with the SGS family. David and Jodie have been in a behind-the-scenes role with our order fulfillment department for the last year; but going forward, will be taking on a more active customer-facing role in sales, service, and handling special orders.

Mary Beth, who many of you are familiar with, will be changing her role to give attention to more of the behind-the-scenes administration and development of S&GS. Mary Beth, Jodie and David will be working together to provide a smooth transition in the coming weeks ahead. We believe these changes will only bring positive improvements to your ongoing experience at SGS.

Quote of the Week                               

SGS Notes: There's a lot that's happening this week in the silver market and in the coming 2 weeks for SGS… once again, it's been a difficult task to select only a few articles to share from the many excellent ones published this week. Those we can't fit in the newsletter are posted to our Facebook page… another good reason to 'Like' the SGS Facebook page!

We've recently re-designed the format of the SGS Newsletter and are now posting the gold/silver ration and closing spot prices. This is because as a silver or gold investor it is important to watch these two numbers. When we began SGS in 2008, the gold/silver ratio was 65:1. As of today, it has narrowed to 38:1. This week's article explains why this ratio is important.

Watch The Gold/Silver Ratio
James Turk (February 12, 2011)

In precious metal bull markets, silver outperforms. Its price climbs at a faster rate than gold's price. The reverse happens in bear markets. Silver's price drops at a faster rate than gold's price. The following chart of the gold/silver ratio illustrates this phenomenon.

At the peak of the last precious metal bull market in January 1980, it took 17.4 ounces of silver to buy one ounce of gold. Thereafter, the ratio turned and started climbing higher. By February 1991, 101.8 ounces of silver were needed to exchange for one ounce of gold. Silver was trading at only $3.50 per ounce, down 93% from its previous bull market peak.

Silver back then was "dirt cheap", but it would not get any cheaper. Silver turned the corner as value oriented buyers recognized a bargain. Since then the price of silver has been generally rising, and has been doing so faster than the spectacular rise in the price of gold. The result is a long-term downtrend in gold/silver ratio. In other words, since 1991, silver has outperformed gold.

Last week, the ratio touched 45.0 and ended Friday at 45.3. It was the lowest weekly close for the ratio since February 1998, which is a significant date. That is the month Warren Buffett announced that he had acquired 130 million ounces of silver. His footprint is visible on the above chart.

We know from his disclosures that he began buying silver around $4 in July 1997. The ratio then was in the mid-70s. But note what happened to the ratio as Buffett accumulated his hoard over the next several months, culminating with the announcement of his purchase. The gold/silver ratio fell by nearly 50%, so that only 41.3 ounces of silver were needed to buy one ounce of gold. Silver was clearly outperforming gold, just like it has been doing over the last several months - as shown in the above chart by the remarkable drop in the ratio.

The ratio has now reached an important point. It is breaking through support, which is illustrated by the lower red line on the above chart.

Several previous attempts to break through support have failed, with the result that for many years the ratio has continued marking time within a trading range bounded by the parallel red lines. That trading range now looks mature and 'ripe for picking'.

One never knows of course how the markets will unfold in the future. But I expect that the ratio will finally break through support, which is an event that I have been looking and waiting for patiently over many years.

If I am right and the ratio knifes through the low 40s and below the Buffett point, there is no clear short-term target. Given the momentum evident in the above chart and the bullish fundamental factors impacting silver at present - like its unprecedented backwardation - a drop to at least the low 30s seems highly likely, but I don't rule out the possibility of the ratio falling even lower.

My long-term target for the ratio is 17. It is approximately the average level at which the two precious metals were exchanged for hundreds of years prior to the arrival of fiat currencies in 1971. It has been my view that a 17-to-1 ratio is attainable by 2013-2015, but given what seems to be shaping up, we probably won't need to wait that long.

The unprecedented backwardation in silver has one clear signal. The potential for a massive short squeeze is building. If one occurs - as I believe is becoming increasingly likely - there is no telling how quickly a 17-to-1 ratio could be achieved.

Transitions at Silver & Gold Shop                   

Beginning this week, please join me in welcoming David & Jodie Bowen to a new role with the SGS family. David and Jodie have been in a behind-the-scenes role with our order fulfillment department for the last year; but going forward, will be taking on a more active customer-facing role in sales, service, and handling special orders.

Mary Beth, who many of you are familiar with, will be changing her role to give attention to more of the behind-the-scenes administration and development of S&GS. Mary Beth, Jodie and David will be working together to provide a smooth transition in the coming weeks ahead. We believe these changes will only bring positive improvements to your ongoing experience at SGS.

Quote of the Week                               

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.

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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  

Silver Rush: Investors Pile Money Into Silver
LONDON (Commodity Online):
January 12, 2011

Gold has been the hottest commodity that people from India to the United States are piling their money into. Gold's poor cousin silver is emerging as the most luring investment option for traders and common people these days.

What is driving the silver boom? What is it that fascinates investors to silver that used to be the first currency in China centuries back?

Like gold, silver is topping the investment charts these days. In the US, sales of the silver bullion coins have recorded historic high in 2010. A latest commodity report says that silver is the most attractive investment proposition for the people in Australia. In fact, in Australia, people are buying more silver coins than gold coins.

In the last one year-in fact from 2009 onwards-silver price has more than doubled. Silver has boomed to the current $30 level from the $13 level in 2009.

Why is silver booming? Why are investors piling their money into silver?

In this following lucid write up, precious metals analyst Dr. David Eifrig provides some fascinating inputs on silver:

Surging Silver Investment is changing the nature of this market. A couple of years ago, I shared two shocking silver charts with DailyWealth readers.
These charts showed how governments around the globe have abandoned silver as money. They've decided it's easier to expand a nation's credit with fiat paper money than to mine more silver. They've sold off their silver stockpiles to industry and investors.

This trend is decades in the making. At first, much of this silver was used up in industrial manufacturing and processes like photography. That silver is gone forever.

But starting around 1997, silver began flowing into private hands. Folks concerned with wars, investment bubbles, and mismanaged economies were buying it up. They turned to silver as a safe form of savings that can't be debased by a gang of spend-happy politicians.

It was a modern day "rush" into Silver Investment. And Buying Silver back then was a smart move. The metal is up sixfold over the last 14 years...while stocks and real estate have struggled to do anything...and while paper currencies have depreciated in value.

The thing is, the silver rush is still on.

Demand for silver coins is taking off. It's up almost sevenfold from the mid-1990s. The public is catching on to the value of silver, and I expect this trend to continue for years.

Since my first essay back in 2009, the price of Silver Bullion has soared more than 100% - from $13.50 to about $29 today. But over the long term, there's much more to come.

Here's how I explained it in 2009:

"Governments around the world are behaving absolutely stupidly right now. Our vice president just said with a straight face that the government has to spend more money in order to save the nation from bankruptcy. That's crazy...but it passes for conventional wisdom these days.

"In my 30 years of investing, I've never seen so many risks in the financial system. That kind of 'patriarchal thinking' is producing those risks."

The stupid thinking I saw in 2009 hasn't gone anywhere. Governments across the globe are spending with abandon and creating big risks for savers and investors.

That's why it's a good idea to keep a portion of your assets in "chaos hedges" like gold and silver. You should know, I'm not the kind of guy who lives in a concrete bunker. I don't think the world is about to end. I'm not anyone's idea of a "gold bug". I buy this stuff just like I buy car insurance.

You should think of gold and silver as insurance against calamity. You should think of it as a safe store of wealth. And as I've just shown you, many people are catching onto this line of thinking. I expect millions more will over the next few years.

Traditional Tea Party Rounds Coming Back…
 

We will be minting the Traditional version of our
Tea Party Round very soon.
These will be available in quantity
(see discount rates at right) as well as
smaller individual orders.
Please call or eMail us if interested in
placing a quantity order.
 

Silver & Gold Shop is now officially
a member of the Better Business Bureau.
 

2011 Silver American Eagles…

Each year the US Mint's production of new Silver (& Gold) American Eagles is released late in January. We can special pre-order these right now, but will be carrying 2011 Silver Eagles in stock once they are available. Please call or eMail us if you would like to pre-order now.
 

Other Articles of Interest

US Mint Reports Unprecedented Buying Spree Of Physical Silver
Zerohedge

Silver: From $30/oz to
Over $500 by 2020
Jason Hommel

Virginia Offers HR 577 and Alternative Currency to Protect Itself from "Likely" Federal Reserve Meltdown
Before It's News

Ongoing Battle for the
Silver Market
Silver Coin Investor

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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.

With the recent price drop
This is an excellent time to
take advantage of
volume discounts

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This Week's Videos
 

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
Magazine now accepting
Silver in payment for
subscription.

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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.

Become a Fan on Facebook !

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

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 Positions
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.

Become a Fan on Facebook !


 

"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. "