Saturday, June 4, 2011

Considering GLD & SLV

In case you missed it, earlier this week I felt that it was important for all of us to begin to look for the telltale signs of Comex default so that we can consider strategies to cover our individual rear ends. What I wrote can be found here, in case you missed it:
http://tfmetalsreport.blogspot.com/2011/06/what-i-think.html

I'd like to use this thread to prompt a discussion among Turdites. First, please take a moment to read this email that I received earlier today. It is from a loyal reader "H.M.". H.M. posits that the recent activity within and depletion of SLV indicates a growing shortage of physical silver. He makes a compelling case:


Hi Turd:

My name is H.M. I enjoy reading your posts regularly. Your practical, objective, to the point, no non-sense, no BS approach is refreshing in today's investment world. It vindicates the real, main-street people.

Cutting to the chase, I would like you to comment, if possible in a specific post, on an observation that seems to indicate that, due to the extreme shortage of physical silver currently in the market, the bullion banks/Comex seem to be using desperate alternatives to attempt to meet their delivery obligations.

One such alternative is the redemption of physical silver through the SLV ETF (yes, it is possible! - if you have about $1.8 million).

SLV is not actively managed. It is designed to track the price of silver bullion held in the trust (supposedly). So, when you buy or sell shares of SLV you are not necessarily putting or removing pressure in the price of silver, it is not analogous to buying or selling the physical stuff. 

And, contrary to what many people think, it is possible to take physical delivery, redeem silver from the SLV trust, in bullion equivalent to baskets of 50,000 shares, through an Authorized Participant.

On page 24 of the SLV prospectus, found on the iShares website:

"Authorized Participants, acting on authority of the registered holder of Shares, may surrender Baskets of Shares in exchange for the corresponding Basket Silver Amount announced by the trustee. Upon the surrender of such Shares and the payment of the trustee’s applicable fee and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees), the trustee will deliver to the order of the redeeming Authorized Participant the amount of silver corresponding to the redeemed Baskets. Shares can only be surrendered for redemption in Baskets of 50,000 Shares each."

As of last Friday, 6/3/2011, the SLV closing price was $35.34, which means that the redemption basket of 50,000 shares at that instance in time amounted to $1,767,000  (plus applicable fees, expenses, taxes and charges, as it is stated in the prospectus).

The Authorized Participants are listed on page 23 of the same prospectus:
"As of the date of this prospectus, Barclays Capital Inc, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, EWT, LLC, Goldman Sachs & Co., Goldman Sachs Execution & Clearing L.P., Intrade LLC, JP Morgan Securities Inc., Knight Clearing Services LLC, Merrill Lynch Professional Clearing Corp., Newedge Group USA, PruGlobal Securities, LLC, RBC Capital Markets, LLC, Scotia Capital (USA) Inc., UBS Securities LLC and Virtu Financial BD LLC are the only Authorized Participants."
So, one can think of a plausible scenario, one can presume that, in order to meet the delivery demands from clients, the Comex and the bullion banks are redeeming baskets of SLV through their buddies, the Authorized Participants.

To wit: in the Historical Data section of the SLV ETF website, it shows that, on 4/25/2011, the trust held 11390 tonnes of physical silver in the vaults. Merely 39 days later, on 6/3/2011, that tonnage had been reduced  to 9885 tonnes.

A drop of 1505 tonnes in just over a month! This equates to a 13.2% drop in the stock of silver bullion supposedly then held by the SLV trust. (Incidentally, this begs the questions: was all this physical silver sold in the market? how and to whom all this selling was done?).

And, if I am not mistaken, this drop is also equivalent to one full month of the entire world silver production. 

So, it seems someone is plundering SLV for a lack of better options to obtain physical silver in the marketplace. It may even be the cheapest alternative at this point in time for an institution under pressure to meet delivery commitments.

The above observations certainly seem to point in the direction of a growing premium in the days ahead in the price of physical over paper silver. In fact, this premium could explode higher in the not so distant future if this trend continues and the Comex is proven to be indeed in dire straits.

I would appreciate if you could comment on the above thoughts. Thanks in advance.

Be well…H.M.

PS: And, just to make it crystal clear, that 13.2% drop in the tonnage putatively stored in the SLV vaults is actually bullish in my opinion. It shows stronger hands, I assume, are taking delivery of the metal, that is then taken out of circulation, stored away as a safe haven, in preparation for rainy days ahead.



Reading this reminded me of something that FOFOA wrote back in January. I did some googling and managed to find it. In the context of H.M.'s email, please take 5 minutes or so to read this:

http://fofoa.blogspot.com/2011/01/who-is-draining-gld.html

In the end, there are several questions to ponder and discuss:

1) Are GLD and SLV being plundered for deliverable metal?
2) Are GLD and SLV being plundered by high net worth investors, seeking large quantities of metal?
3) Are we in a physical supply squeeze? If so, are we early in the event? The middle? The endgame?
4) If you own GLD and/or SLV, does this make you want to re-position out of them?
5) What are the best ways to diversify away from paper or synthetic metal?

Thank you all for participating in what has become the best precious metal blog and forum on the internet. Yes, I suppose that I have some input but it is you, my dear reader, who have made this site what it is. The new site now has its servers up and running and final preparations are being made. I really, really hope to have it ready for you by late next week.

Have a great and relaxing weekend! TF

206 comments:

  1. Take a look at this interview, some information applies directly to this issue.
    http://maxkeiser.com/2011/06/04/ote113-on-the-edge-with-j-s-kim-of-smartknowledgeu-com/

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  2. My thoughts are as follows:

    If you don't have it, you don't own it.

    If you have a claim on it, you don't own it.

    If it's in a bank safe, you don't own it.

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  3. I too have read the fofoa article. My first impression is, of course this is happening. But maybe it would be even easier to settle futures contracts in SLV shares (even SLV shares with a 25% premium). The recipient, who wants physical, then simply sells his shares and buys physical with it. The bad news (or good news depending on who you are), is that the selling of these SLV shares applies downward price pressure to the spot price. Under these circumstances the COMEX might never go bust. Just brainstorming, thoughts?

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  4. Have comments on this post, but was composing this for the last thread so first things first:

    Awesome intro, Eric #1. I've been reading up on this a little since it was mentioned earlier and came across this gem: Dow vs. Gold by Gary North on 10 Jan 2007. http://www.lewrockwell.com/north/north501.html

    This part really stands out...

    "In August 1929, your grandfather sold one unit of the Dow and bought 18 ounces of gold. Three years later, when the Dow/gold ratio bottomed at 2:1, he sold 18 ounces and bought 9 units of the Dow.

    Those 9 units reached another peak in 1966 when the ratio hit 28:1. Now your father exchanged those 9 Dow units for 252 ounces of gold.

    In January 1980, the ratio got to an almost unprecedented 1:1 ratio, so he converted those 252 ounces of gold into 252 units of the Dow.

    Come 1999 with the ratio at an unprecedented 43.85 to 1 level, the prudent family converted those 252 units of the Dow into 11,050 ounces of gold!

    No trades were based on the price of gold or the level of the Dow . . . it's just a simple question of how many ounces is the Dow trading for in the market.

    This little fictional fable started with 1 unit of the Dow at a peak in 1929. Two tops, two bottoms, and 5 trades later it's 11,050 ounces of gold, in 70 years."

    Now those are some looong term trades...

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  5. Interesting question.
    consider. the same people who got their own comex registered vault approved in 4 days, who have been presumably paying premiums to settle short contracts at expiration, who have been holding the largest numbers of short positions in silver recently, who have been ostensibly leading the cabal of silver manipulators, and who have ex-employees policing the commodities markets--these are the people who manage the SLV fund.

    Do you trust them to facilitate the redemption of YOUR physical silver via SLV holdings in the event of a comex default?

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  6. It would seem to me that this means comex inventories mean nothing. Delivery can be taken from any partner bank through SLV and GLD. Comex is used mainly to set and manipulate price.

    If you are looking for a shortage, you need to look at a much larger combined inventory and see how it is changing in size. If comex wants people to think they don't have much silver, they simply reduce their holdings of it. If comex thinks that price will decline before they need to provide silver for delivery, they would keep a low inventory since they will be able to purchase it cheaper later.

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  7. Now on to this post...

    It's been my suspicion that TPTB know that "The end of the Great Keynesian Experiment is upon us" and are "preparing accordingly." They're not stupid; they know that history hasn't treated fiat currencies kindly and that sound money will return whether they like it or not. As such, they're accumulating now so that they can be in control of the transition back to a bi-metallic standard.

    From what I'm reading, the plundering of GLD and SLV didn't start until just before the JPM ruling was handed down in Aug '10 (which, coincidentally, is when silver took off...) With JPM getting their vault so easily and the regulators turning a blind eye to the blatant, ongoing manipulation, I can't help but think that the fedgov and the big banks are so tied together that JPM, et al, are acting on behalf of the gov't, kinda like a financial black-ops division.

    Maybe they realized that the tricks they counted on when deciding to take the QE path would get neutered by the ruling, saw the writing on the wall and started this off-the-books accumulating?

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  8. Wouldn't it make good business sense for the COMEX to get rid of all available silver and gold and essentially outsource all of the logistical and security problems of handling that much silver/gold to SLV/GLD?

    The COMEX is supposed to provide a mechanism for producers and consumers to agree upon a future price for delivery, right? Does it matter, legally or financially, who actually owns the warehouse containing the silver or who does the fulfillment on the physical transfer? If not I don't really understand the claim that using SLV/GLD to settle a claim is "desperate."

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  9. This sounds shockingly like how things play out in my Hitler spoof. If you haven't seen it, it's only 4 minutes long. Enjoy.

    http://m.youtube.com/index?desktop_uri=%2F&gl=US#/watch?v=cmxE7ydkaI8

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  10. Eric#1

    Thank you for posting that article in the last thread. I had not seen that website before. It is a real eye opener and a source to read between the lines of the MSM disinformation.

    Here's another article http://www.globalresearch.ca/index.php?context=va&aid=24956

    with a quote from it:

    "As these events and problems unfold many nations, corporations and investors are reaching for gold and silver investments for safety, as they have many times in the past. The availability of physical metal is acute, as backwardation occurs in paper investments. That is spot markets are trading higher than outside months in a desire by former sellers to take delivery of gold and silver they previously sold. Those who are biding at spot are also offering those who want to take delivery a 25% to 30% bonus not to take delivery. That highlights how difficult it is to get delivery of silver. The same is true with gold, but delivery of physical is not quite as difficult. Control of the paper markets via frauds and manipulation is always present. Regulators, as appendages of the government, are in place to protect certain Wall Street insiders, harass the rest, allow the naked shorts to do as they please and try to put as many small brokers and firms as possible out of business, no matter what the cost. Then there are the frauds of front-running and flash crashes. The big question today is how do you stop fraud when it is institutionalized and Wall Street and banking are run by a crime syndicate in league with Washington? Just look at the trillions the Fed and the Treasury spread all over the US and Europe, which they were forced to divulge after their court appeal failed. The TARP funds episode was another example - $700 billion in free money for Wall Street’s Illuminist friends. That was one of the greatest frauds in history. A new movie is being released depicting Hank Paulson as having saved financial America, when in fact he and his friends were looting the American people.
    As these events worsen the situation deterioration continues unabated, wars rage as distraction and for geopolitical positing. The costs of which are totally outrageous with the cost to the American taxpayer in the trillions of dollars."

    Sounds just like what Turd on this thread and what he and others here have been saying all along.

    Thanks again Eric

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  11. For what it’s worth, the idea that somebody would trust in what is essentially a gold or silver certificate, issued by JPM – goes beyond my comprehension. Furthermore, I don’t trust the inventories of COMEX, Fort Knox, SLV, GLD, or anything else. I know what’s in my safe, though. One day, it will all go boom, or fizzle, or maybe not.

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  12. couple things to add to this.

    1) Sprott is setting up a new silver fund
    2) Hong Kong will begin trading Silver futures in 2-3 months.

    Assuming both of these items take 30Million ounces, where do they come from if COMEX has 29M ounces, and demand is so high

    Silver produced from worldwide mining totaled 667 million ounces last year - but total demand hit 986 million ounces.

    http://www.silverbearcafe.com/private/06.11/quiz.html

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  13. The Perth Mint says they face no shortage of physical silver. What they face is a product manufacturing bottleneck. If you persist in betting on a physical silver shortage, you will get decapitated by the EE. BTW, I own some physical silver and I believe that TF is right when he says we will need some to buy the necessities while the world sorts itself out after Monster Crash Day. However, physical gold is the best holding because it is a pure monetary metal that central banks around the world are accumulating.

    http://www.perthmintbullion.com/blog/blog/11-05-17/Mint_Gears_For_All_Out_Production_Of_1oz_And_1_Kilo_Silver_Bullion_Coins.aspx

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  14. We can't be arguing simultaneously on the one hand that GLD and SLV are paper ponzi frauds, who don't actually have any metal, and on the other hand that someone is out there "plundering" them by redeeming baskets of shares for delivery of the actual metal.

    These two views seem to be poles apart. You can't have both.

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  15. TF,,,What a great blog!
    I've often wondered from afar, why doesn't some Silver Patriot type with the deeper pockets walk us through an actual CRIMEX Silver Delivery or an SLV trade for Physical?
    We've heard of people having problems getting their hands on actual metal from pooled and allocated accounts but those are just regular folks.
    How about Mr. Organ or Mr. Sprott {or whomever}actually go through the process and keep us updated daily until the deed is done. Delays, comments,problems obfuscation, success, the whole 9 yards.
    I believe in the CRIMEX drawndown and also the SLV scam but it would be nice to get some "horse's mouth" info.
    Just my thoughts from the cheap seats.

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  16. Have to admit I've never understood the conventional wisdom that paper and physical prices will drastically de-couple from each other when Comex defaults.

    GLD and SLV are both designed to track the spot price, because they both purportedly hold physical metal "in trust". Physical gold and silver pricing (ignoring premiums) is also based on the spot price.

    Since ETFs and physical derive their dollar denominated value from the prevailing spot price and since both "represent ownership of physical metal", why would one go to zero while the other goes to the moon? And if that were to happen, which one continues to reflect the spot price?

    Seems like the only way they de-couple is if/when it's proven that GLD and SLV don't have the physical metal they claim to. If that were to happen, the ETFs should go to zero, and Blackrock becomes the subject of massive lawsuits.

    The shock of a failure of GLD or SLV should roil all markets (other ETFs, futures, spot price, and therefore physical metal should all be impacted). But it doesn't necessarily mean that all paper becomes worthless, or that all physical becomes priceless.

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  17. @Eric

    I agree with you, it's not one or the other. Towards the end of the FOFOA article he writes,

    As of 2008, some analysts estimated there were still 15,000 tonnes of unallocated (un-spoken-for) gold floating around the Bullion Banking system. Of course some of that is still there, along with a decreasing supply from the mines and a scrap supply that, after rising since 2006, appears to have plateaued in 2010. You can continue to go after that diminishing flow "on market" by playing the paper game like Dan Shak. But one day soon, it will all be spoken for. And you don't want to be left holding only paper on that day. And if the BBs are raiding GLD like it seems, that 15,000 tonnes may be closer to 1,200 tonnes than you or I would be comfortable knowing about.

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  18. This comment has been removed by the author.

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  19. I also recall something in the SLV and GLD prospectus that say they can't be held liable in the case of default.

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  20. I’m under the impression that a big difference between iShares (SLV & GLD) and the Sprott Funds (PSLV & PHYS) is that iShares is supposed to buy or sell (accumulate or dispose) the physical metal based on participation demand in the funds. So the number of outstanding shares would rise or fall with demand. The Sprott Funds on the other hand have a fixed amount of metal and a fixed amount of shares. Both groups of funds do allow redemptions for the actual metal though so shares in all of them would be reduced when “baskets” of shares are redeemed.

    If that’s all true shouldn’t we not have to worry about being the last ones holding shares in SLV and GLD when the music stops, since all shares are supposed to be backed by metal? The problem is that I don’t trust the shares to have the actual metal they’re supposed to have.

    Wasn’t it the Asians making the news not too long ago since speculation was that they were buying shares of SLV and GLD just so they could then redeem them for the physical metal?

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  21. The thing I wonder/worry about is what a Comex failure would mean to the way silver spot prices are derived. From the silver institute:

    "Although London remains the true center of the physical silver trade for most of the world, the most significant paper contracts trading market for silver in the United States is the COMEX division of the New York Mercantile Exchange. Spot prices for silver are determined by levels prevailing at the COMEX"

    So if a commercial signal failure means that Comex ceases to be a valid price discovery mechanism for silver, the quoted prices of both SLV and physical silver should be equally impacted, since both reflect the Comex spot price. What would happen in this case?

    Seems like some new price discovery mechanism would have to be established, and once it is, the prices of both SLV and physical silver would reflect the "new spot price."

    The only thing that would cause SLV and physical silver prices to drastically decouple is if SLV is proven to be a fraud. In that case, SLV's price would be derived from the air it holds in its vaults instead of the physical silver people previously assumed it had.

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  22. Of course HM is right. I thought we all knew this was happening. I thought it took 100,000 shares instead of 50,000 but obviously I was wrong.

    The biggest drawdowns have been after silver gets a good beatdown. Obviously one of the reasons for the beatdowns in the paper mkt.

    Where are we in the game, about early mid way.

    Please becareful what you wish for. You might just get it.

    When the comex defaults, the ramifications for the entire international finacial system are dire. Don't believe me? Just wait, you will most likely have a front row seat.

    Keep buying physical and stop wishing for the system to fail. It will be a very ugly world for our children and grandchildren if it does. Yes you may be prepared but do you really want to live in a world like what may be coming?

    Honestly, I hope the game goes on and on. I really don't like canned bacon.

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  23. I yearn for our new home Turd...Great post.

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  24. It seems to me that there is a lot of disparate concepts that are getting mixed up here.

    First of all, It is NOT difficult to get physical silver, and this needs to be admitted. Just this week, this little part-time dealer, in the small Midwestern city where I live, offered me 2000 oz for 25 cents over spot. I have no doubt that I could easily buy $1M worth, if I so desired.

    The Comex thing has taken on a sort of Bogeyman quality here. While there is no doubt that it is manipulated, massaged, and messed with, it's just not that big a deal. The Comex is not the source of most physical silver! You're not going to "break" the Comex by "taking delivery", because there's nothing to break. A person wanting lots of physical silver will not bother going to all the trouble of buying futures, somehow redeeming them for shares of SLV, then trying to get the physical from the ETF, etc There's no need to--there is plenty of silver to buy, at least for the time being. Personally, I think some of the premiums I've seen for ASE is nothing more than good ol' price gouging by unethical dealers, preying on the public's fear and paranoia.

    Look, we all know PMs have come into their own, and will continue to do so--fiat is dying, and all to the good. We need to continue to transfer individual paper "wealth" to real, physical wealth. Don't get sidetracked by what is going on in the futures market--for the individual investor, it's just a distracting sideshow.

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  25. @ Dave T

    You bring up an interesting point. As long as the funds decrease the number of shares outstanding to reflect the metal as it's removed, seems like eveything should be fine. A unit of SLV should still represent the same proportional share of silver left in the trust.

    Where SLV could go completely south is if:

    a) it leases out its physical silver and can't get it back and/or

    b) it buys silver futures (or other promises) to replace physical metal that customers redeem, and/or

    c) it buys paper promises instead of securing physical metal when it issues new shares in response to new investor demand.

    SLV may have started out as a legitimate silver trust, but if exchanging physical for paper has become standard operating procedure over a period of years, it could have ended up in a situation where its traded away all of it's physical for a bunch of paper promises.

    Harvey seems to harp on this all the time as he points out that SLVs stated inventory of metal seems to swing massively every day, to the point that you can't have any faith that they could possibly move or acquire that much physical metal in a day.

    If you really believe SLV is a fraud, just buy some long dated out of the money puts against it and keep stacking physical. If it eventually collapses (regardless of whether or not it's caused by a Comex failure), you'll make money on the puts and still continue to hold your physical.

    In the interim, I'm a firm believer in range trading paper ETFs and plowing the profits into buying more physical. And using puts on the paper to hedge the value of the physical I already hold.

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  26. Spot Silver decreased $6 in 15 minutes the other day yet my bars were still shiny.
    The SLV could "lose" Billions in value in a mere 1/2 Hour or the whole thing could be shown a scam yet my physical will still be there.
    What's the upside of owning SLV over physical?
    It will fail in time.

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  27. I second Atlee......if you think the failure of this "sytem" will be enjoyable you are in for a very rude awakening.....You need to play the game and hope for scumbags to not kill us all off in the process.....gl all

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  28. @Dave
    According to this guy they can legally settle futures contracts not only with fiat but also paper (GLD/SLV). Therefore no one is guaranteed of their ability to receive physical through futures contracts.

    http://maxkeiser.com/2011/06/04/ote113-on-the-edge-with-j-s-kim-of-smartknowledgeu-com/

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  29. Atlee once again has said what I was thinking in a more eloquent and succinct way, I thought all this was common knowledge here in Turdtown, but I'd like to add

    1) comex default includes settling contracts that stand for delivery with cash premium (already happening)

    2) "shortage" should be defined not by inability to get physical metal, but by considerable delays. By considerable delay I mean 4 week lead time (also already happening)

    How far along in this process are we now? I refer to a source more credible than I;

    Let’s see the stages of a shortage.
    1) Pre-shortage – the users will have to wait 3 to 6 weeks extra for shipments. Then the prices can rise to $20-30/oz.
    2) Shortage – the users will wait an extra 6 weeks to 4 months for silver. Then the prices can rise above the old all-time highs of $50/oz.
    3) Super shortage – the users have to wait more than 4 months for their silver shipments. The price will range from $100 to prices you won’t believe.

    -Israel Friedman
    source of full article (must read folks)
    http://forums.silverseek.com/showthread.php?7294-The-3-Stages-of-the-Coming-Silver-Shortage

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  30. @kodiak, your silver bars may have still been shiny, but they were also worth $6 less at that point. And you could have gone to the coin shop and bought more shiny bars for $6 less to boot.

    Seriously, I don't understand why the physicalistas on this blog constantly claim "Paper silver has gone down in value, but gosh I still have the same number of physical bars." It's a false comparison to make. It's as meaningless a comparison as "The stock market went down this afternoon, but I still have the same number of dollars in my wallet as I did this morning."

    On another note, the Comex defaulted on nickel contracts in 2006. Here's what happened to nickel prices since:

    The Comex defaulted on nickel contracts in 2006. Heres a 5 year chart on nickel.

    http://www.kitconet.com/charts/metals/base/spot-nickel-5y-Large.gif

    Any thoughts on why a silver default wouldn't follow a similar pattern?

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  31. Could it be that this is not a "plunder" at all, but by design?

    By using the COMEX to drive the price down by dumping 500 contracts in thin volume, banks can buy up shares of SLV, take some baskets out, and then charge $5 per ounce more at delivery time.

    Use your head, and don't assume the banks are losing. The banks seldom lose. The price is going up, but so what? Bernanke wants a weaker dollar. Now the public pays more for food, energy, soon to be rent, etc.

    Turd always speaks of winning. Just who do you think is "winning"?

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  32. crazy question here, putting shorts aside if comex slv etc are running out of physical silver wouldn't it actually be in their best interest short term that the price of silver rises dramatically so it makes it more expensive to take delivery???????? thanks

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  33. murphy

    I think you probably meant to say "I disagree with you", which is fine. I don't have a problem with that. But as written, your post makes no sense to me.

    Word Verif: muffe
    I've been known to muff a post or two myself...

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  34. SilverBleve: so by Friedman's calculus, we would now be pre-pre-shortage? That's not exactly an emergency. Also, why would the price change during the hypothetical wait? The price is fixed at order time, by the dealer

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  35. The only reason the contracts are being settled now with any premium is to buy the silence of the recipients....If necessary they can settle the contracts at whatever manipulated price they decide....gl playing the COMEX game

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  36. @SilverLeaf - it's all about utility. The price changed, but the utility didn't.

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  37. Silverleaf@
    My thought process looks at a 13% "correction" in 15 minutes and it looks to me like the whole shooting match could be over for SLV in about 2 hours.
    Still just a piece of paper.
    If we ever see a 13% upwards correction in 15 minutes I'll assume the game still has some legs, otherwise IMHO it's just a matter of time before the whole thing collapses.
    Again, just my opinion.

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  38. @ atlee – The whole financial system is going to melt down eventually anyhow. It’s just a matter of when. No fiat currency has ever in the history of mankind survived the test of time, and right now practically the whole world is running of fiat. You are right though, when it happens it will be dire. To be perfectly honest about it though, I’d rather it happen during this “generation”. My children and future grandchildren shouldn’t have suffer due to the sins and greed of past generations. I don’t believe in passing the buck.

    I do hope for a COMEX default, simply because I cannot condone fraud and that seems pretty clear that’s what it’s all about. I would hope that a default would require the regulators to start doing their job or go to jail with the others. I would also hope that enough of these defaults would open people’s eyes and make them realize that financial reform is a must. Can that happen before we run out of runway or are we already beyond that point? I fear it’s too late, but hold out slight hope that it’s not.

    BTW atlee, I want to thank you for a previous post that you made (pretty sure it was you). You alluded to the fact that some of the specific stuff discussed at this blog is directed towards the traders and not necessarily the long term holders, and that the LT holders should view those specific posts for their entertainment value (I’ll add educational value). I buy and sell Options for short term trades, but I have many core long term holdings and if I start short term trading those positions to avoid the dips I’ll probably wind up losing my shirt. Week one of May was tough to stomach though. That’s right around the time I discovered this blog.

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  39. @Eric

    I took the write up to mean that the BB's have access to 15,000 tons that SLV can borrow from but actually there is only 1200 tons to draw from. You said it can't be both ways, which is correct. I only interperted it as a grey area, SLV is not entirely paper nor physical.

    That said, I probably can't explain myself well. Too much reading today, time to go have a good meal and some drinks. Good time to all.

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  40. I don't know if this is tangent to the post or somewhat connected; but has anyone noticed that dealers are higher over spot than they were just 2 weeks ago? SGS said it might happen where the spot price was low but it would be higher to acquire. I think we're seeing the start of that, no?

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  41. First @Eric#1 from the previous tread regarding the Dow/gold ratio: Thanks so *much* for all the charts and information (which I got to print in color - we're B&W now.) I can see your point. I'm actually expecting the ratio to "eventually" hit 1:1 but of course don't know when. Despite QEXX I think we are going to see Au way out perform the Dow. If it takes longer than I feel comfortable with, I'll turn to 1x EFTs. But I'm not planning last minute exit, I expect that I will exit if I get a chance at 2.5 or so which will still be a killing (if indeed it happens.) My time frame is until I turn 65 which is 10 more years. "The Fourth Turning" indicates that the shit isn't going to be over until somewhere around 2025 so I think somewhere in there 1:1 will happen.

    Even if you get out now, you've made some nice green whether the ratio goes up or down.

    I'm taking a pass on questions 1 through 3 because I don't know enough to have an opinion. WTFK?

    4. IF I held GLD or SIL I would transition out of them and right away.

    5. I would re=position into either physical in my possession or into one of the Closed End Fund families that I have done due diligence on: Sprott (PHY (gold) and PSIL (silver)) or CEF (half gold/half silver) SBT (aka SVRZF on the pink sheets - silver) or GTU (gold).

    I personally consider the Closed End Funds and the physical in my possession equivalents with each haveing one or two small advantages over the other.

    If I were going to choose one of the named Closed End Funds, I would base my decision on what ratio of gold/silver I wanted to hold as well as the discount/premium to NAV.

    Disclosure: Currently Long CEF, PHY, LOTS of physical in the hand.


    OgĂșn Fumito

    ReplyDelete
  42. @ SilverLeaf – I so much agree with your opinion on the “physicalistas” comparison of paper to physical. If the paper price falls, the value of the silver bars falls as well. I can still buy physical silver at about 1% over spot (junk silver coins). Albeit, I couldn’t buy a literal ton of it that way…. but…

    Perhaps I’m just not clear on what all falls into the paper definition when we all talk about the de-coupling of the two prices. Are the ETFs considered paper for this purpose, or is de-coupling meant more in association with futures contracts?

    A couple points to ponder:

    Why would the major banking institutions and world governments sit by idly while COMEX blatantly de-values their precious metals holdings? Are they actually appreciative of the downward manipulation since they are still in accumulation mode and they know what’s in store for the future?

    ETFs are a relatively new concept, are they not? If several of them are proven to be frauds, could the regulators shut them all down? What happens then? Some of the price appreciation in silver is attributed to SLV since it gave so much more exposure to the silver market.

    ReplyDelete
  43. @eric#1

    Maybe SLV and gld have 50% metal in them pre-planned to allow "basket holders" to exit with metal and leaving non-basket holders empty bags. I'm not asserting this; I have no clue about either fund and am quite happy with Sprott and CEF.

    Best,


    OF

    ReplyDelete
  44. @Dave T

    Yeah, ETFs are "Electronic Traded Funds" and Trusts like Sprott and CEF are Closed End Funds.

    Even HARVEY didn't grasp this until I left a comment on his site after getting tired of reading him writing "And now for the ETFs we follow" and including CEF and Sprott.

    IMO it's a crucial part of due dilligance to know if you are buying an ETF or a CEF; they are two very different financial formats.

    Good luck trading


    OF

    ReplyDelete
  45. @Dave and atlee

    Thomas Paine said it best...

    "If there must be trouble, let it be in my day, that my child may have peace."

    ReplyDelete
  46. Is there verifiable proof of premiums being paid for cash settlement on COMEX contracts? I haven't seen anything beyond rumor.

    ReplyDelete
  47. Hi, Turd,

    When silver ran up to $50 during April, I had a friend monitor the situation in physical silver in India.

    There are two major silver refineries in India. Throughout April, both these refineries sat idle for lack of raw material. Yes, for all of April. The only silver available at the time in India was recycled metal. The price was constantly $3-4 above spot prices.

    I have been in communication with Bill Murphy of GATA regarding this as well. I even recall sending him a clipping from the Economic Times (a leading Indian business newspaper) towards the end of April.

    Since then, the situation has changed, and silver bars are available in India now.

    Hope this helps.

    ReplyDelete
  48. http://www.cnsnews.com/news/article/china-has-divested-97-percent-its-holdin

    China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills
    Friday, June 03, 2011
    By Terence P. Jeffrey

    (CNSNews.com) - China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.

    As of the close of business on Thursday, the total U.S. debt was $14.34 trillion, according to the Daily Treasury Statement. Of that, approximately $9.74 trillion was debt held by the public and approximately $4.61 trillion was “intragovernmental” debt.

    ReplyDelete
  49. Apmex has 90% for 10¢ over spot and 100oz Engelhard bars for $1.69 over spot, $1.59 over if you get 10. (As a percentage that premium is about the same it was when silver was half the price it is now.)

    I'm not saying that physical won't decouple from the paper price, just that it isn't happening yet.

    ReplyDelete
  50. Tristan:

    That subject was discussed earlier. Misleading headline. See earlier in this thread or the previous one---can't remember which.

    ReplyDelete
  51. thank you for the clarification, that's what I thought.

    ReplyDelete
  52. I have commented on this many times, but I will say it one more time. The people who are charged with custody of this bullion are NOT trustworthy. They (bullion bankers) are the same people who lease out the same bullion 100 times the actual amount (theoretically) in the vault. OF COURSE they will use the bullion to meet other needs, especially the SLV bullion. The custodian is JPMC (puleeeeze!).

    Michael Maloney made this point in his book in 2008. QUOTE:
    "Many of my colleagues in the precious metals industry believe the ETF's may not have all of the metals they say they do, and may be another tool for manipulating the price of gold and silver.

    This may or may not prove to be true. If it is true, and they're playing the same hanky-panky as Morgan Stanley, then the price of the metals will go ballistic when the manipulation is exposed."


    If you own ETF shares, you do not own metal. As H M explained, you can't redeem them for metal except in lots of 50,000.

    HOWEVER, SLV and GLD are THE best vehicles for trading options on silver and gold. They have high liquidity, low spreads, large open interest and high volatility. Perfect options vehicles - until they aren't. That's the dilemma. As soon as the market loses confidence in these ETF's, any options position open at that time will be instantly worthless. I have assumed from the start that that day is inevitably approaching, the question being how much longer can I safely trade SLV options before this happens.

    When I deem that day to be too close for comfort, I will switch my options trading to something else, probably mining shares. When the market decides there is no/not enough silver and gold in the bullion vaults, I believe the miners (especially silver) will become really hot.

    We'll see how it plays out month by month, but that is and has been my .02USD.

    ReplyDelete
  53. I think H.M. knows something of which he speaks.

    ReplyDelete
  54. Here's a scary thought: What if JPM never intend to having to cover their shorts? Is this possible that they'll default on their obligations and the positions will go un-resolved, or how will such a scenaro play out?

    ReplyDelete
  55. Jimmy wrote:

    "What if JPM never intend to having to cover their shorts? Is this possible that they'll default on their obligations and the positions will go un-resolved, or how will such a scenaro play out?"
    _________________________________________

    why should they cover, they have a vault with metal on deposit

    it's all legal and everything

    ReplyDelete
  56. hey folks what's up?!
    @ Eric#1
    No I have yet to get the bike out... :/
    Not for lack of good reason though!
    had an unexpectedly lucrative passed 2 months, harvesting baby "glass" eels for live shipment to Asia. World's highest priced Seafood. Not sure what final market price is as sushi, but as the harvester (low man on the pole) we received from $900, to $1200 dollars per pound. ( 2200 individuals per lb, less then 3 inches long) anyway, only 435 licence harvesters in the country! Price had opened strong due to high demand and low yeild for passed 2 seasons. Then in mid of our season... FUKUSHIMA... Asian buyers grow eel for up to 7 years prior to sale so I think they were protecting there supply, as the entire concept is the purity/ no toxins in the eel. That may become hard to come by parts of Japan, China, Russia, and Korea's coast may be seeing some nasty sh*t.
    I just read where a local Kelp hervesting company's demand has gone through the roof. ( due to events in Asian waters.)
    Cause and effect are crazy... never would wish such disaster upon any nation, but their devastation has bouyed up price and demand for our local resources. Cool.
    what scares me is if an environmental issue of any magnitude occurs here... well, Short end of the stick type stuff for us.
    Anyway the Asians threw some SERIOUS fiat @ the eels, I converted some of that into PHYSICAL PMs
    What was the question...? oh yea, the bike! HOPEFULLY!! really thinking of listing it and putting $ into another Plow Truck. Have decent amount fiat saved and selling the bike would open up more options.
    wow sorry... thinking out loud!

    ReplyDelete
  57. Think as if you are the financial elite, have been for generations and view yourself as better than all other human beings like some kind of royalty.

    (the richest families in the world still control the worlds money)

    Your better/more powerful than everyone else and you intend to remain such during a world wide currency crisis. If you could print all the paper currency you wanted (because you control the central banks) but knew it would be worthless in a decade wouldn't you endeavor to strip the peasants of their real assets in order to assure your wealth, elite/royal status and power over the shape of things to be in the world to come ?

    Wouldn't you (if you where a heartless greedy bastard piece of used dog food) look to accumulate huge amounts of land, and durable commodities, and precious metals from the 'sheep' before they get wise to what is coming?
    (they're just peasants after all)

    There is no safety in paper - not currency nor equities. Some may have a better chance of standing longer than others, true. But in an all out free for all tangible asset grab, which seems to have already begun, in real estate, base materials / metals and precious metals you'll find yourself at the end of the line with the financial elite at the front.

    Whatever is going on behind the scene in GLD/SLV is probably beyond knowing for certain today. But what is going on with the CFTC, COMEX, LBME and The worlds largest central banks is pretty evident in the broader sense: screw the people, the law, morality, fair trade etc...

    Are the markets manipulated?
    Does the mainstream media lie?
    Do you trust the government to take care of you?
    Do dishonest douche bags suddenly become honest douche bags?

    WTFK for sure, but the evidence and past track record say a lot.
    If it benefits the powerful to rape the SLV/GLD and COMEX of physical at the expense of your trust - sure they may hold off doing so as long as they think they can take you for more than they already have - but thats about it IMHO.

    The JP Morgan is the bad guy theory doesn't hold water because JP Morgan is simply a pawn and is not big enough to be the real puppet master. (again IMHO)

    Links:

    here is a documented evidence regarding the Federal Governments participation in PM's price control since the late 60's to present...
    (it's a sales pitch, after the first 5 minutes I would exit as I'm not trying to endorse these guys, just the information they reveal)

    The Dirty Rotten Federal Reserve


    Here is one that details the influence of the banking elite upon early America and how they repeatedly, forcefully and crookedly enslaved us with the central banking system. It's long, but it will blow your mind!

    History Of US Monetary System

    *both of the above links have been circulated here before by others - I found them quite enlightening and hope you will too.


    Don't flame me to hard here - I'm a simple man and this is my simplistic view only.

    ReplyDelete
  58. Don't know if it's been posted but interesting article by hommel.

    basic info on silver (for the tea party)

    ReplyDelete
  59. I do not know the true effect of withdrawing physical silver from SLV affecting the SLV price and its future viability of SLV as a whole. But I would have think that if the system were to work properly, it would make silver to be less available, hence the price should reflect it accordingly. But we are in an era of manipulation, hence there is always the element of unknown concerning any paper trading mechanism.

    A bit off topic for this thread. I realize that most in this forum, do not want to talk about the astrology approach that deal with the market forecast. But this recent weekly update might interest you of the things to come ahead. I do not proclaim to know how all things will manifest itself with these cycles, but it is worthy of a casual read.

    http://www.mmacycles.com/weekly-preview/mma-comments-for-the-week/mma-comments-for-the-week-beginning-june-6,-2011/

    ReplyDelete
  60. nice email, thanks for sharing.
    great questions.
    looking forward to the new site...

    ReplyDelete
  61. @All

    There is no question the SLV is being raided to make good on the long futures contracts. The SLV does not impact Ag prices unless they go into the futures market to replace redeemed shares. Physical ETFs are supposed to be just a reflection of the commodity prices as determined on the futures markets. The silver market is one of the tiniest and therefore its easy to drive the futures price to where you want it and buy/short the SLV shares. Great gig if you can get it!

    This is bullish in my opinion however, here's why:

    The SLV has to sell one share for every 1 oz of Ag they supposedly hold. Even if they are being raided to deliver on Ag futures price manipulations, the SLV would need to itself replenish its own stock. Because, no matter how much Ag is taken from the SLV, the SLV would need to replace the equivalent number of ozs taken from it. Furthermore, the SLV intends to add another 50 million shares/ozs this year as they did last year.

    The question I ask is: How much time does the SLV have to replace redeemed Ag? Meaning can they trade unbacked shares for several months/years? Or are they legally obligated to a specific timeline? Because if the SLV needs to replace the Ag in 30 days, well then….

    Phantom

    ReplyDelete
  62. Your blog is cutting edge Turd, I follow it religiously. With the help of people like yourself sharing knowledge, insight and experience, blue collar schmucks like myself can learn and prosper. I remember reading that same article and think it's very cool you bringing it up again as it's so relevant right now.

    Stay well and thanks for everything.

    ReplyDelete
  63. The market topped on May 1.

    Watch while support after support breaks.

    Don't know the final stopping number yet.

    ReplyDelete
  64. The Late night Business report in Australia, Things you would never hear in the USA.

    Silver market manipulation in the news


    http://www.youtube.com/watch?v=FXv1IauLKqU&feature=player_embedded

    ReplyDelete
  65. It is not safe to assume slv is being raided for the purposes of satisfying comex delivery requirements.

    Backwardation at the lbma indicates counterparty risk at one of the bullion banks, not the futures exchange. So it could very easily be draining to the bullion bank that is overextended.

    Additionally, the paper fraud that is of the most concern is also in the bullion banking system. In fact, Fofoa has stated that he believes fractional reserve bullion banking to be the worst problem with the international monetary system.

    Read victor the cleaners wordpress blog for more info about bullion banking. Its over the counter derivatives which lack transparency that are the root cause of our economic problems imo.

    ReplyDelete
  66. nothing really exciting will happen with gold or silver until after the BILDERBERG satan fest. for now hohum holding pattern

    ReplyDelete
  67. And good evening everyone. Hope you all are having a great weekend...I know I am! ;)

    Interesting discussion here and I'm reading with interest. Regarding next week, I've decided taking a punt at an XAG market order on Asian morning with a stop at 35.

    Ok so no avatar theme this new week but I propose a game and ur welcome to participate and challenge the inner linguist in you. It also keeps the mood light so that we remain clear-headed despite the heavy talk.

    GAME: construct a short-sentence using the word verification given to you at the time of your post no matter how ridiculous it is. It can be used as part of an existing word, just identify the Word Ver for the rest of us. You are allowed only very minor modification of the word and the sentence should try to be as coherent as possible (though it helps!)

    Ready? I'll start first! :)

    Word ver: Mousl - I bet Eric's got big mousls carrying all that Gold in his underground bunker vault. But not as big as the mousl I needed to style my Elvis hair. :D

    ReplyDelete
  68. Totally OT: If you're looking for a good staple crop take a look at quinoa (kwin-wah). Its what fed Incan & mayans. Nutritionally, is a super grain...breakfast lunch and dinner. Easy to grow..April-may planting...if it's too warm..freeze the seeds then plant. Can be grown in multiple conditions hence it's appeal. Raised beds are the highest yield producing option for me.

    ReplyDelete
  69. ya, for sure, big mousls!! :D

    ReplyDelete
  70. There's been so much validation for your average pm investor re: gld, slv vs. Physical that unless you had a gambling addiction you'd have already steered clear...with that said loved the lowering of margins for bonds and equities..more confirmation that the ngm want your average Joe in stocks and bonds exclusively....

    ReplyDelete
  71. lol!!!! hhahaahhhahaah!!!! :)-~

    JoeKa | GREENBOY said...
    Word ver: Mousl - I bet Eric's got big mousls carrying all that Gold in his underground bunker vault. But not as big as the mousl I needed to style my Elvis hair. :D
    ..................................
    Thank you JoeKa for starting my morning w/ a good laugh!!!
    ......................................
    Ok, i had prior post last night that was way off Turd's discussion Topic. (sorry!)
    I will be the first to admit I know very little about the COMEX, SLV, GLD, and the like.
    BUT, i tend to do alot of reading, underlying pattern in the markets shows Physical Gold/Silver stand the test of time. That is the motivating factor for me.
    @ 32 years old, the economy causes me much anxiety, as my generation has not even seen an economic down turn... till now.
    I guess a bit of PM stacking is acting like a relief valve, helping reassure future economic uncertainty.
    ~~~~~~~~~~~~~~~~~~~~~~~~
    oh yeah, my VER. word... of course I get a toughie...
    VER word- APHELE- Don't be tempted like Snow White, and take a big bite of the shiny APHELE handed to us. (paper holdings)

    ReplyDelete
  72. Revolutionary workout program

    Take all your shiny, and carry it up and down the stairs, to and from your secret underground lair! Oh, yeah, and bring up another can of bacon while you're down there. haha

    ReplyDelete
  73. is it a good thing, or a bad thing when your back goes out moving a stack of PHYSICAL!!
    I grabbed on and lifted and my back did not agree! HEY, i'm ok w/ it.

    VER. word- GLENHEP- all I can think of is Glen Beck and Hepatitis... =/ so, i'll leave it alone!

    ReplyDelete
  74. Gramps...darn you!! I suddenly laughed out loud at your aphele.

    As for for glen beck it could be an STD rather than hep. Sorry glen! :P

    And Eric...you are not playin? ;)

    Looking forward to some real zingers. LOL


    Word ver: Cocter - if my quack STD prognosis on beck is true, he might need a Cocter. Nurse...3 liters of lube...Stat!!!

    ReplyDelete
  75. Turd,

    What do you think of this guy's pattern anlyisis between 1980 and 2011 silver prices?

    http://pragcap.com/silver-is-tracing-out-1980-post-bubble-pattern

    ReplyDelete
  76. JoeKa

    I've been doing Word Ver jokes since day one around here! As a matter of fact I had one earlier on this very post. BUT, I need a word ver that brings something to mind. Not good at making something out of nothing, sad to say.

    Word Ver: aornac
    Um...I got nuthin.

    ReplyDelete
  77. Ron Paul supporters, please contribute whatever you can today (June 6) during the "Ron Paul Moneybomb" at

    www.ronpaul2012.com

    ReplyDelete
  78. This comment has been removed by the author.

    ReplyDelete
  79. I am going on vacation, gonna try to avoid silver and have some fun.

    ReplyDelete
  80. Below is a webinar hosted by a prominent silver bull. This was ripped from his premium subscription service.

    It's a lawyers breakdown of the GLD prospectus.

    http://www.zshare.net/audio/91039906b719a64b/

    This is a VERY interesting listen. An absolute must listen if you trade GLD or SLV.

    ReplyDelete
  81. torx
    I always find those kind of analyses interesting, but not really definitive in any way. The monetary situation is entirely different now than it was then. Back then, Paul Volcker was raising interest rates very aggresively. By demonstrating the will to provide a positive real interest rate, recession be damned, he broke the back of the precious metals bull. We have nothing of the sort today.

    US Gov't debt is so fantastically high today that higher rates are not a policy option.

    ReplyDelete
  82. @ Torx1953’s post 1980 bubble chart

    The market cornering back in 1979-1980 was driving the price up. The market cornering today is the cartel suppressing the price. So when the lid finally blows on this new cornering shouldn’t we see an inverse of the post 1980 graph? + what Eric#1 just said above.

    Word Ver – ummmmm… no offense but I come here to try to educate myself on the financial markets and to perhaps debate some issues with the PMs. I’ll save my games for the play sites and my backyard. So much to sift through here as it is.

    ReplyDelete
  83. @Eric: yeah I noticed that you've been playin from the start...so let's make it viral next week. :)

    Spent a good 10 minutes on 'aornac' and the best I could come up with is kinda related to my previous word ver:

    "I wonder If Cocter's are allowed to speak to aornac members. Pre-operative scandals could break out!"

    Sounds like ORNAC - Operating Room Nurses Association of Canada

    Word ver: Jilipodg - the amount of Jilipodg used in Asian cooking will freak Ginger out!

    ReplyDelete
  84. aornac
    break your back
    add some shiny to your stack!

    ReplyDelete
  85. aornac - what a dyslexic train spotter wears to protect themselves from rain.

    GOOD MORNING! (well afternoon)

    imatio - Did I MATIOn it was my birthday the other day?

    ReplyDelete
  86. @Dave: you need to take a chill pill dude. This is a community...not just an education site. Talking 'crap' is completely balanced with talking sense...and you can do both, like a lot of others do.

    ReplyDelete
  87. That's the spirit!

    Keep it goin...I bet I'm gonna be banned on the new site, well at least if we get stiff necked mods on the new site. Good thing I've got two other personas as backup!

    Oh stiffies, I apologize in advance if the off-topic convos offend your sensibilities. I'll try and amp it up even more to see how much I can irritate you while I still can before you click IGNORE greenboy on the new site.

    Word ver: Boomsith - yeah I've succumbed to the dark Boomsith side of the Force. Booya!

    ReplyDelete
  88. hey Dave T....
    Understood, and agreed...
    But the point was missed...
    Laughter is a good companion in times of distress, Lighten up! :)
    Keep an even keel, not saying laugh problems away, but that if they are the only focus... manifest destiny bro!
    Jumped online this morning read JoeKa's post laughed my ass off, and has helped set the tone of my entire day!!
    Each to his own!

    ReplyDelete
  89. Eric#1 said...
    aornac
    break your back
    add some shiny to your stack!
    --------

    Whoa! I bow to you my Boom'word'sith metal master of rhyme! ;)

    @Gramps: you spoke exactly what was on my mind. Good on you my friend. Life is all about balance. Feelin relaxed at home now. So I think of nut job games like this. LOL

    ReplyDelete
  90. Torx:
    IMO, it's pieces like that which give TA a bad rep. The comments below the piece only begin to touch on why.

    FWIW, I do believe we have not seen the end of the silver pullback, just not for the reasons put forth in that article.

    ReplyDelete
  91. Morning All =]
    I'm with the JoeKa - especially after the week we just had!
    I say we pool all our money and stand for delivery! FUBM/EE

    But first let me build my Mad Max underground Armageddon shelter and stock it with some canned bacon and seed - Eric with the big mousl can you help me dig?

    w/v ation

    Locked and loaded ready for ation!

    ReplyDelete
  92. Richard, whats your take on next week? Do you see the pullback you mentioned going into next week?

    ReplyDelete
  93. Hey Tes buddy, how's it goin? Man if we really could pool our resources, it'll be the classic David v Goliath. We know who won that battle. ; )

    ReplyDelete
  94. Yeah Buddy!
    And it truly is David vs Goliath.

    .*#! POW !#*.

    Look forward to the giants demise but I agree wholeheartedly with Atlee's post above - 'be careful what you wish for' It won't be Mad Max-ville prob but it won't be easy watching what happens to those who are not prepared/hedging with tangible assets either =\.

    w/v scetio
    The scetio's in Alaska are HUGE and ravenous - beware!

    ReplyDelete
  95. I am not sure if anyone will ever know exactly what the ETF's have in physical inventory.

    For the sake of the families of those who are trustees of the physical bullion it would be preferable if they have been true trustees of the Gold and Silver. I have my doubts, though.

    The price of Silver and Gold is up almost tenfold since the beginning of the bull market. The price has been going up despite documented efforts by the Central Banks to keep the price of "real" money such as Silver and Gold and suppressed that has been thoroughly discussed on this board.

    Prices go up when demand exceeds supply. Does it really matter where and how much Silver or Gold exists in the vaults of the ETF's or COMEX? Silver and Gold will continue to be in high demand the world of debt based fiat currencies flounder. Expect to see continued suppression of price of the Silver and Gold by those who have an interest in protecting the status quo of the badly flawed fiat money system the world currently is operating under.

    For every success they have in price suppression, it remains a buying opportunity for those of us who are trying to protecting our store of value by accumulating physical.

    Turd reminds us that the truth is on our side. It certainly is. Unfortunately, in one manner or another, this will not turn out well for those who have trusted their financial future on the ability of CB's and politicians to protect their store of value in fiat currency.

    ReplyDelete
  96. You know sometimes I wonder how long more the larger specs are gonna bear with the shenanigans of manipulation in metals before they turn their attentions elsewhere because they've lost their patience.

    Wordver: acedecks - physical stackers hold the acedecks.

    ReplyDelete
  97. total virgin innocent question...
    So why has the $ price of PM's gone up as it has in the past 10 years? Is it greater global demand, emerging markets diluting supply?
    Or dollar devaluation?
    Or my main thought was about Buyers Of Size... What effect are they having on the Physical market/ spot price? Are these people stacking, and that is lending pressure on prices? ( would the University of Texas Gold investment be an example?)
    Is it all of the above? Some ? None?
    VER. word -EXOBURDR-
    "I fear western culture has spent/borrowed an EXOBURDR amount of money, and profits generated have gone into hands of the Puppeteers"

    ReplyDelete
  98. Ha! JoaKa, I was typing that post asking about BOS, and then saw your newest post was along the same line of thought. What Do the BIG boys think about current U.S. economic situation? Where is big money going? have they been sliding into PM's all along, or is it just now as we keep reaching economic "tipping" points that BOS may start to turn to PM's? have they already been there done that? or will they not participate, viewing Gold/silver as an archaic investment, looking else where?
    Ver word- PROFO-
    If I was a PROFO I would b "answering" these questions, instead of asking! ;)

    ReplyDelete
  99. am I even asking the right questions, or am I chasing my own tail? =]
    Ver word- UNINEXPI-
    yeah, i know I am UNIEXPI, that's why I ask so many questions!

    ReplyDelete
  100. 42 Armed Texans Head To Nation’s Capitol, Intentions Unclear..article on site

    ReplyDelete
  101. Hey, Gang.

    Wife is out of town today and I decided to skip church, so here I am, catching up on my reading and planning my week.

    Anyway, this is a good place for spiritual sustenance, right? And I am humming hymns in my head as I write...

    Here is a slightly off-track question to ponder, but that's what weekend threads are for, right?

    One of our fundamental assumptions here is that hyperinflation is all but inevitable because of the FED's economic stimulus and the government's inability to control spending. But we also know, or at least I believe, that the Bernank and his bankster pals' biggest fear is DEFLATION, or at least that's what they SAY. If we are manufacturing and pumping into the economy so much money that can never be recalled, how could they even think deflation is possible?

    Here is a potential answer. All those trillions of dollars the FED pumps into the economy via the purchase of government debt pass through the government and into the checking accounts of individual citizens, the cash accounts of corporations and, as we know, into the stock market when they get converted into shares. But here's the thing, THE DOLLARS EXIST ONLY IN THEORY.

    Unlike the Weimar and other inflations where currency was so plentiful it littered the streets, there are no physical dollars being created, just electronic data, pixel dollars (or pixie dollars I call them, imaginary like pixie dust). If XYZ Corp. has $10B pixie dollars and XYZ Corp. fails and becomes bankrupt, do those pixie dollars still exist? Or do they instantly evaporate? If they are used to pay for write-offs, do they still exist in the economy, or did they just get cancelled out of existence? If people default on their VISA and MasterCard debt, those pixie dollars are GONE.

    Until 2008 I did not realize that virtually all business in our economy functions on credit. When the debt crisis hit, companies everywhere were dangerously close to not making payroll and other operating expenses. What happens if trillions of pixie dollars suddenly evaporate as they have in the housing bubble (when a mortgage is written down or written off, those dollars cease to exist)?

    The answer - massive DEFLATION.

    Harry Dent, whose economic predictions are based on demographics and cycle analysis, has been predicting a deflationary depression, starting about now, for some time. Everything else he says seems to make sense, but I have been thinking that the FED money creation has invalidated Harry's prediction of deflation. However, we must remember, as I observed to my banker brother-in-law a few years ago, THERE REALLY IS NO MONEY in the system. It only exists in theory. Could it all go "POOF" overnight?

    I do not know the answer to my question. I would be interested in anyone else's thinking on this.

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  102. @All,

    Poster Robert Leroy Parker has linked to Victor the Cleaner before and cites him again on this thread.

    I've read Victor's material. (thank you for linking the blog RLP.) Victor's views are in opposition to what most of us here in Turdtown have constructed to be reality regarding the paper bullion markets. As such, there is value in reading his blog to maintain a well rounded perspective, even if the result is to dismiss him as a paid shill of the EE.

    @Turd,
    He addressed you directly in the comments on this blog last week (on Thursday, I think). Did you see his comment?

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  103. Gramps so glad u got profo instead of mofo. Trinity B already has dibs on that.
    Goodnight all.

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  104. @OldNavy
    please correct me where I may be wrong in my understanding:

    Banks loan based on a multiple of cash on the balance sheet.
    (fractional backing - just like the bullion banks do with paper PM derivatives) So in reality willingness to loan on not loan creates ebbs and flows in the currency supply and therefore is at the heart of the boom and bust cycles.

    w/v foutly
    the system if foutly...
    or those foutly rats are tryin' to screw us !

    Currency can be removed from circulation or injected by the central banks mandating bank 'currency reserve policy' or setting the ratio of the fractional backing to credit / loan limits. (it might be 10:1 give or take)

    Re money just disappearing ...

    If I loan you a 1000 dollars and you go bankrupt - true I loose the ability to collect the 1000 dollars, but you can still (if you haven't already) spend that 1000 dollars - it's real and still exists.

    If you ring 1000 dollars on your credit card and the bank / cc company pays your bill in good faith ...and then you default on the credit card instead. The bank looses 1000 dollars AND from the credit market 10x that amount of liquidity is removed from the credit 'float' (or whatever the fractional backing inverse ratio is removed - whatever that ratio is)

    Correct?

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  105. I'm no economist or market expert by any means. I work a day job and run a small family owned beef cattle operation on the side.

    All this talk of inflation, deflation, and safe harbor investing (buying physical PM's for example) has me somewhat confused. Make no mistake, I've been trying to put away a little gold and silver for future insurance. But OldNavy's post adds a twist I hadn't thought about.

    Bottom line, I think our monetary system (theUSD) has gotten so screwed up there's bound to be some rough times ahead. How it will play out I have no idea. All I know is people will always have to eat, and to do so they gotta make a living. Prices at the livestock auction yards in my area have gone crazy -- we used to finish our steers and sell locker beef directly to the end consumer. But this year, seems our usual customer base is reluctant to spend the significant cash outlay to purchase a 1/2 or 1/4 beef. But with the auction price so high, we may do alright (however we still come out ahead selling direct to the consumer, even at prices lower than the grocery store).

    I guess where I'm headed with this overly wordy post, is that to me, it makes sense to put one's money into something necessary and tangible, that you have physical control over. That way, one has at least SOME control over their own destiny. Although right now, I'm still subject to the "spot" price if I want to sell some gold or silver, or (this year at least) the market price at auction if we want to sell some beef.

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  106. oldNavy, great question and thoughts as usual. I'd like to hear responses as well because nobody has a crystal ball.

    However, I do believe after pixie dollars have gone "poof" is when FOFOA's fear-driven political will would kick in. Fear of loss of control, food riots, plasma tv riots, I'm talking JG Wentworth anger. "It's MY money and I want it NOW!" LOL

    That fear will make Congress and Bernanke to "Damn the torpedoes, full speed ahead!" I think this is the human element which deflationistas are not factoring. A similar variable which Keynes didn't factor, greed. Fear and greed, the true market.

    But perhaps there will be time in your scenario where cash will be king for a brief period and all kinds of opportunities will be available on the cheap. However, to afford and get thru that you must first make sure your basic needs are covered with food, shelter, security.

    Then again, like ScottJ said, they can't afford to lose control at this point and may preempt any deflationary scare.

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  107. @chris
    "it makes sense to put one's money into something necessary and tangible, that you have physical control over. That way, one has at least SOME control over their own destiny."
    ___________________

    Right on brotha!

    If you have a retirement account or a big pile of cash earning negative interest (compared to inflation) in the bank - put it into tangible assets to protect yourself and your family's future against the fool hardy and reckless monetary policies of the Federal Reserve and the insanity of the current system. (Gold / Silver / Beef / Land - anything but fiat currency and paper assets!)

    Just my .02c

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  108. @ Prize Fighter

    Sent you this yesterday but you missed it I bet...

    http://boss.blogs.nytimes.com/2011/06/03/reaching-your-limit-as-a-business-owner/

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  109. JoKa: re next week, I really think it's impossible to predict. Certainly, silver is stuck in a trading range, and there is no upside energy to push it over resistance at 38-38.5. If the current parlous state of the world fiat economies can't do it, I don't know what can.

    OTOH, if we break above resistance, then we must re-assess, but I think the charts favor continued testing of downside support, over the next few weeks, in the following order: 33, 30, 26, and if that breaks, full capitulation to the low 20s. At that point, there will be MASSIVE buying, and going long futures at that point could turn into a life-changing trade (I'm not kidding).

    Therefore, for now, GOLD is the headline act. It's in a classic bull pattern. Gold is where you want to BTFD, and the next pullback to 1525 (if it even happens) will propel it to 1575-1600. At that point, if the macro still looks fugly (how it can't is beyond me), I can see a real moonshot starting Labor Day and beyond--1700, 1800, and up.

    In sum, this is a fascinating market, certainly unique to my experience, and while caution/risk management should always be #1 on any trader's list, I am patiently waiting (the hardest thing!) for the fattest possible pitch, which I KNOW is coming.

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  110. @Tesla

    If the bank loans me, or XYZ Corp, or another bank, $1B USD it does create that "money" out of thin air. It did not exist prior to signing the loan document, but after the loan is granted it does. You are right, if I spend that money it goes into the economy and becomes part of the "currency" supply. It is helpful to think of currency here not as paper dollars, but as electrical current, flowing through the economy, that's basically the meaning of the term.

    In the past, this currency was a physical thing. For whatever it was worth, it was tangible. Now it is not. It exist ONLY on balance sheets in electronic data bases. It exists as an asset on the banks balance sheet. It exists as a liability on mine, or on the borrowing bank's balance sheet. When I or that borrowing bank go belly up and default on that debt, it also cancels out the asset on the lending bank's balance sheet. The "money" ceases to exist.

    This is what the credit crisis of 2008 was all about. The massive amounts of "toxic assets" that the government decided to rescue were debt derivatives that were suddenly deemed to have lost their value. Aside from the rescue and some tentatively toothless "regulations", we have done very little to prevent something like that from occurring again.

    What I am asking is, can we imagine a scenario where most of the "currency" the FED has been pumping into the economy simply disappears from balance sheets around the world? If so, that would mean a massively deflationary environment, right? When the government debt instruments that comprise much of the FED's balance sheet get devalued, is that not a deflationary event? We now know that the FED's biggest borrower was that Belgian/Dutch bank (I can't think of their name ATM). How much of their balance sheet is Greek debt? It could start any number of places.

    The housing bubble is the primary example of this. Trillions of USD have been wiped out by it - so far. When the equities markets crash, if they do, trillions more will evaporate in a matter of days.

    Could it be that those paper FRN we all love to scorn will become very precious in such a scenario? I don't know. WTFK?

    I am not necessarily making an argument that this is what will happen, I am posing a question for us all to ponder.

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  111. Hey pbfurn, thanks for that article. Very timely and I can totally relate to it. Living thru that barrier made me realize it isn't solely a fiduciary responsibility which is to blame for growth-for-growths-sake. It's a survival mechanism for any business to provide stability for itself. But at some point Dr.Frankensteins monster becomes it's own entity. It's alive!

    Soooom, anyone want to buy a business? :-)

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  112. @OldNavy

    It's all about CONfidence. Once people lose that, all he'll will break loose. We are a long way from that moment but it's coming.

    In your post, iI'm not clear how those dollars get into the accounts of the individuals and corporations but there's two sides to the balance sheet so dollar creation, while asset creation, also creates a liability. If you magically bring the dollars into existence, you create both assets and liabilities. When the asset gets spent or magically disappears, the liabilities (assets to the lender) do not. They have to take a hit on that asset and write it off. Hence valueless paper on the books of the banks that are being marked to some fictional value which, if they ever got marked to their true value, would bring the house down.

    Owning money in the form of gold and silver is owning an asset with no liability, I.e. Counter party risk.

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  113. @Richard & JoeKa (if you're still up)

    I have come to the same conclusion as you, Richard. In the near term, gold is the horse to bet on. Silver is spooked for now.

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  114. SilverIsKing

    No argument on any of your points. However, if this happens on a massive scale, it does not spell hyperinflation as we tend to assume will happen. It spells just the opposite, a sudden decrease in the "money" supply.

    BTW, when we measure the money supply, I presume we only count the assets created when loans are made because that's the money that was created. We don't deduct the borrower's liability ffrom that figure, do we?

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  115. OldNavy,

    Fofoa has made extensive arguments rebutting all of your points against hyperinflation. He also believes hyperinflation is born from deflation rather than inflation. He even converted rick ackermam, a hard core deflationist with a subsciption service.

    People go from being fearful of losing what they have (hoarding - deflation) to fearful what they have is worthless (crisis in confidence - hyperinflation) on a dime. All it takes is the right trigger event.

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  116. hey all...

    since the general conversation on here right now is the Fed and FRN's, I just wanted to see if anyone had any good opinions or facts about the renewal of the Federal Reserve that's coming up in December of 2012.

    Would this just be a Congressional vote?
    Does anyone think there's a snowballs chance in hell their charter won't be renewed?
    I'm wondering who will stand up against this other than Ron Paul, Rand Paul, Demint, Bachmann, and maybe the freshmen Tea Party types.
    I'm wondering if Alex Jones will hold any massive demonstrations in D.C. as he's done in the past against the Fed as we get closer to this decision.
    Couldn't this be one of the biggest decisions in all our lives? And how sick is it that probably 95% of Americans will have no freakin' clue what any of it will mean!!??

    I'm really hoping that by that time next year enough Americans will be woken up about it to make a major effect on the decision...is it too much to hope that the Fed could be abolished at that time!!?? Or would some people be assassinated for even daring to suggest that the Fed not be renewed or should be replaced? Wasn't Kennedy possibly taken out for wanting to go back to a silver monetary standard (among other things)?

    Just wanted to see if anyone wanted to chime in on this and get more cool posts going on the thread about it while we chill today watching golf, racing, having some coldies, studying info on the internet non-stop, etc., like I'm doing, lol.

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  117. http://goldsilver.com/news/big-banks-cash-in-on-commodities/

    Blythe has been a huge winner in commodities.

    "J.P. Morgan has emerged as one of the biggest beneficiaries of the commodities boom sweeping Wall Street. The bank's commodities unit—which employs about 1,800 people, more than any of its rivals—made more money during the first quarter than through all of last year, according to people familiar with the matter. So far this year, the unit has earned roughly $750 million and is on course to beat its 2011 internal target of $1.2 billion, these people added. The J.P. Morgan unit earned just $514 million for all of 2010, falling far short of its goals."


    So Max Keiser needs to really come out and admit he was dead wrong about the Crash JpMorgan campaign? Even worse could our beloved Max be a shill for the Morgue?

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  118. A new war would distract rationality and could be a case for more stimulus...

    http://news.yahoo.com/s/ap/20110605/ap_on_re_us/libya_russia

    Some big events are coming. The timing is such a crapshoot to guess when...

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  119. Thanks OldNavy!
    It would be a much more stable (but less profitable for the bank) system
    if we went back to a 1:1 ratio on moneys held and loaned by banks I think.

    The reverse leverage of the fractional backed lending policy coupled with the massive debt default in the housing market collapse has increased the severity of the wider market impact by many multiples - ie for every dollar that 'evaporated' many times more potential lending dollars in future loans were 'removed' from the system and created the credit crisis due to the 'evaporation of funds backing loans.

    The liquidity injected by bailouts and quantative easing then is apparently replacing the bankers losses and replenishing their currency reserves so that they can go back to screwing us with more bad business practices (fractional backed lending).. and profit.

    Seems like the real power in this country belongs to the banks then?

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  120. I am still eating with silver knives, silver spoons, silver forks.. there is plenty of silver.. plenty.. silver is a sideshow.. to keep you out of gold... gold hurts the FED, not silver.. there is no silver in central banks, none

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  121. Great question oldNavy. As you said, the “printing presses” don’t create physical money anymore. It’s all pixie dust. But I would think the only way to wave it away with a magic wand would be by incorporating accounting rule changes – which the government has done. I couldn’t put my finger on an article with a quick search, but I remember a year or so ago they changed the accounting rules so that the Federal Reserve can basically show bad debts as an asset now instead of a liability... something like that… Anyone know what I’m talking about with that?

    Money “printing” equals more dollars equals devalued dollars which all equals inflation. But would the destruction of wealth via bad debts (vanishing money) result in a strengthened dollar? I can see how it could lead to deflation though since there would be less money circulating to chase the same amount of goods. The government has truly backed themselves into a corner with all the money printing.

    My cousins are home builders and they’ve received letters from several of their suppliers telling them that they (the suppliers) can no longer absorb all of the continuing increasing costs of their raw materials and they have to now raise their prices and pass those costs on to their purchasers (my cousins and everyone else). Deflation? Doesn’t sound like it to me. Fuel has recently touched $4/gal. What does a box of Wheaties cost now compared to a couple years ago…

    As for my checking account, I haven’t seen my balance go up directly as a result of this money printing. Oh I take that back. A couple years ago I did receive a stimulus check (bribe) from the government. They wanted me to spend it on a new flat screen TV or something to stimulate the economy. Did they even bother to tell people at the time that they were going to have to report this money in their tax return come the following April? I wonder how many people had to take out bank loans (more credit) just to pay their tax bill as a result of that.

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  122. The more I think about it, the more I get pissed off... the Fed gives imaginary "money" to the banks at 0% interest, they in turn loan it out to people who want to buy a house (@5% interest) and then because the Fed just keeps handing out free money to the banks, the poor schmuck who just bought a house has less and less buying power on his fixed wage/salary, which makes it harder and harder to make that mortgage payment over time, as well as driving down the value of the schmuck's house. And at the same time those same banks are driving up the cost of commodities (gas for the working schmuck's car, and food for his family's table). Who wins? The banks. Why? Because they have an unlimited source of imaginary "money". And if the banks ever extend themselves too much, our beloved Fed steps in with even MORE imaginary "money" and bails them out. And we, the taxpayer, are stuck holding the bag.

    I'm sure I've oversimplified things with my elementary analysis here. But wouldn't it make more sense if we had a system where money had real value, and the supply was strictly limited? Of course the standard of living Americans have come to expect wouldn't exist (no more iPads and shopping trips to the mall - hell, there wouldn't BE any malls) but we would all have a more reliable economy, grounded in realistic fiscal policy.

    Tell me where I'm wrong with this rant from my soapbox. I'm happy to accept criticism - how else will I learn?

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  123. lots of comments on slv. Any talk or ideas about sivr and it it in the same shape?

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  124. Re: Fractional Reserve Banking

    IMO, subj. is not a problem, in and of itself. In a free market, where competition ruled and Too Big To Fail was not possible, abusers of the system would be punished. I'm not sure where the root of the problem lies, with the anti-free-market Central Banks or with the lack of sound money, but IMO those are more of a problem than just subj.

    Word ver: micry

    You cry "Left" and another cries "Right", micry "Up, To Freedom!" :)

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  125. I kicked in for the Ron Paul money bomb.

    If you are so inclined, don't forget to do it today.

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  126. Okay, in between posts I'm working in the garage and the back yard. Ain't the internet age great?

    Tesla - On you last point, there are many, including, who say yes, the bankers run America and the world. If you have not read "13 Bankers" by Johnson and Kwak, it would be worth your while.

    To Others - Let me restate my question another way. I agree prices are going up on commodities which is a symptom of inflation in the money supply. However, I believe the vast majority of the money created by the FED has not reached the average person or small business. It is on the balance sheets of big corporations, especially banks. If it was actually circulating on the world economy we would already have hyperinflation, IMO.

    I will read FOFOA to see what their take is on all this. For the sake of this discussion, I simply wanted to raise the possibility that, rather than an inevitable hyperinflation, we could face a sudden contraction in the money (credit) supply, just as threatened three years ago, which would be beyond the ability of the government or the FED to stop. When/if big European banks begin to fail, the dominoes could fall very fast. The value of the dollar might become secondary to the ability to find any.

    I'll go read FOFOA for the counter argument. I claim no particular knowledge or insight on this, just engaging in an intellectual discussion.

    Thanks!

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  127. Did that first thing this mornin', Titus... :) Been sending in the symbolic $20.12 each of these last few bombs for the Pauls...

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  128. "including ME" I meant to say.

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  129. Interesting new (ish ) post from London Banker
    http://londonbanker.blogspot.com/
    He reckons the '08 crash was triggered by margin calls.
    He rarely posts but always good when he does.

    And regarding FOFOA and his masterpiece on inflation/deflation that convinced so many, I note that even Mike Shedlock in his recent attempt at justifying his arguments, is beginning to say we are now in an inflationary environment.
    from http://www.marketoracle.co.uk/Article28325.html

    More tellingly, we had deflation based on numerous conditions that one would expect to see in deflation: falling asset prices, falling treasury yields, rising junk bond yields, a rising US dollar, falling commodity prices, reduced speculation, etc.

    The question now is whether or not we will see deflation again, and if so how quickly.

    Inflation vs. Deflation
    The Us is certainly in a period of inflation now by my model. Home prices are making new lows and credit is in a funk, but most conditions appear inflationary at the moment.

    Indeed if you believe the US will be in periods of inflation more often that deflation you may very well be correct, especially if your measure is the CPI. However, credit is a better measure than prices.

    rbl

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  130. BTW, I will kick in on the Ron Paul money bomb as well!

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  131. @ Chris

    I think You got it partly wrong. Yes, the Fed is giving the banks 0% interest money. But the banks are reluctant to lend that money back out to potential homeowners. Instead they’re just investing most of it in U.S. Treasuries and collecting interest payments on our money, at our expense.

    I’m sure that doesn’t make you feel any better. I’m right there with ya in that pissed off category.

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  132. Dave T, you're right. We bought a house pre-2008, and it was a smooth and easy transaction. We refinanced the same house post-2008 to capture a lower interest rate, and it was the most difficult and exhausting mortgage transaction I've ever experienced.

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  133. oldNavy, I remember reading that a symptom of hyperinflation is actually a lack of physical cash as people race get rid of them for real goods. This is a counter-intuitive point as we have visions of Zimbabwe wheelbarrows.

    Admittedly though, I am having trouble reconciling how it all works out. I think it's the initial scramble for cash and it's scarcity which fuels the fear which fuels the physical printing. Then again, they are trying awfuly hard to digitize and track everything. Smells ripe for a black market for anything off the record. Best laid plans and all that.

    Anyway, it made sense at the time I was reading it. Maybe it was FOFOA as well. Hope someone can pick up this point of 'lack of cash' as being the driver or symptom of HI and set me straight.

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  134. I’m gonna get back to the SLV/GLD intent of this thread for a moment, then head out to trim the back field with the telescoping trimmer… hope I don’t come back covered in poison sumac.

    I use SLV & GLD for options plays and I use PSLV and PHYS for long term holdings. OK.. I still have a wee bit (100 shares) of SLV in my IRA since I like seeing that 100+ gain %. I also have a wee bit in non-retirement account because I don’t feel like paying the capital gains tax at the collectible rate. As oldNavy said, SLV and GLD are great for Options plays – until they aren’t. We just don’t know exactly if and when that time will come. BUT, I would assume the options would crash faster than the underlying securities if the fraud is disclosed. If that’s the case, if we’re comfortable with using them for options, should it also be OK to own actual shares? I watch my LT holdings as closely as I watch my options. PSLV and PHYS just cause me less stress though.

    I do own quite a bit of physical, but I also have a lot of money tied to PMs in my IRA. Paper forms such as the Sprott funds offers an extremely easy way for me to hold metals in that IRA. How do I know a bullion bank wouldn’t just rip me off just like the ETFs potentially could? As others have said, unless you can actually hold it in your hands….

    Long term I definitely don’t trust SLV and GLD. The question I would have is can I trust PSLV and PHYS or will an ETF crash bring them tumbling down as well? Even good companies get pulled down in a crash. So how do I invest long term in PMs in the IRA? And the non-retirement account for that matter?

    Turd – I mentioned that I’m not quite seeing the big decoupling of paper vs. physical yet. Doesn’t mean I want to bet against you though. You’re the shark in these waters and I’m just a humble guppy. Assuming no unearthed ETF fraud, would you see the Sprott Funds and iShares ETFs tracking the paper price or the physical price? If only we had that crystal ball.

    I’m hoping you’re taking it all in, all that we’re saying, and that in the end you’ll give us your $.02 once again. I haven’t “fed the Turd” yet. But assuming you read all this and don’t call me a troll, I’ll go ahead and donate. You do deserve something for all the sharing that you do.

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  135. @oldNavy

    The deflationary scenario AFAIK is based on what happened when the US was on the gold standard. So I would ask you, what would happen if the gold backing the dollar in this situation were to turn into sand, and you knew about it? You'd be dumping your dollars as fast as you could.

    And take a look at this graph:

    http://research.stlouisfed.org/fred2/series/EXCRESNS

    The only thing keeping this money from flying into this markets is record low interest rates. If the discount window/treasury spread goes negative, it will be used to buy up absolutely anything that isn't nailed down.

    Mind you, I think we could get 2-3 months of the worst market collapse in the history of the country. But after that, the only thing that will buy any goods in quantity will be hard money and foreign currency.

    Gold has just a matter of time before it makes an appearance back in markets as money. Silver is more speculative, but I'll keep stacking it up because at least I can be sure it will never be worth zero.

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  136. From ZH

    Goldman now anticipates China's May inflation to hit 5.5% Y/Y, the highest such increase in years, and the Stagflationary economy continues overheating, this time due to surging food prices as a result of the record drought previously discussed.

    Sounds like a bull

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  137. On SLV -
    regardless of whether or not you think the silver's really there, paper silver is not holding up with the return of a crashing equities market.
    silver will go down a bit this week, then bounce at our friendly 33ish resistance areas. the dow is touching its bottom bollinger and is going to retest friday's lows and bounce from there.
    that bounce is your chance to get out of the equities and paper silver.
    save your money and buy physical. or short that mofo and use the proceeds to buy physical.
    I love silver as much as everyone else on here but have been short since $38.

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  138. Legalize Gold and Silver Money Bomb :)

    http://legalizegoldandsilver.com/

    For live radiointerviews, includin Rand coming up, Peter Schiff, and of course Ron Paul...

    www.RonPaul2012.com

    There is no life if there is no liberty :)

    Tossed in some, but have bigger plans to help spread the RP message when it comes time :).

    ---
    And, for what would be comic relief if it was not the sick reality we live in...

    Mitt Romney relates to black people... see here...
    Hint... "who let the dogs out..."

    http://www.youtube.com/watch?v=0H8Nq7BglIg

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  139. Im trying to find a way to attempt to answer Turds opening question regarding the possible failure of the Comex.

    What really impresses me with FOFOA's stuff, is how he takes us deeper and further back than anyone else I have been fortunate enough to read, except perhaps last century visionary, Buckminster Fuller.

    Theres a chapter in Bucky's book 'Spaceship Earth' where he writes about the origins of specialisation and the evolution of the Great Pirates.

    for some idea what he was talking about see -
    http://mediaecologist.blogspot.com/2010/04/great-pirate-bucky.html

    Anyway Bucky described how 'those who control' got started and how they discretely ran everything and while he thinks they died out as Great Pirates after WW1, we cant fail to notice how a few controlling families seem to have evolved their secretive structures around this time.

    Now these people are very smart and are able to effectively control all the institutions and politicians that we chatter about as we try to fathom out whats really going on.

    My conclusion is that they are still in control and if they want the Comex / market / fiat to fail, it will fail.
    Its failure ( or not ) will just be another way to shake us down and any attempt at revolution by us mere mortals will be aimed at their lower orders, whos job it is to take it on the chin in the event of unrest.

    So while we can huff and puff about how unfair it all is, we can proceed to take the steps that Turd and others suggest, to improve our odds of being a bit further up the food chain if / when they decide to 'let things go'.

    The trick must then be to remain below their radar, so that we can actually benefit from our current strategies.

    Doesnt really answer Turds question though )-:

    Just trying to say that the Comex, while it seems like a big deal to us, isnt such a big deal to those who control.

    I try to see it all as a spectator sport and through Turds blog, Im getting a ringside seat, which I consider to be an amazing achievement.

    Thank you Turd and all who contribute.

    rbl

    ReplyDelete
  140. My take on the whole inflation/deflation. I do agree with FOFOA and by the way, prepare yourself for a LOT of reading!

    Think of it this way: Deflation is what SHOULD happen. It would actually heal the economy faster, but the longer we delay it the worse the hurt will be. However, as you said, the banksters will do anything to stop it. They get first crack at new money. It is they who make the hyperinflation inevitable.

    ReplyDelete
  141. "Think of it this way: Deflation is what SHOULD happen. It would actually heal the economy faster..."

    That's pretty much why I'm in the hyperinflation camp. The Fed and fedgov have a long track record of doing the wrong thing. Until they prove me wrong (Fed ends QE's/raises rates or fedgov doesn't raise the debt limit/balances the budget) I'll be betting on them continuing to do not do the right thing.

    ReplyDelete
  142. http://www.cnn.com/video/?/video/politics/2011/06/05/sotu.ron.paul.6.05.cnn

    What a great interview... I'm not trying to turn this into a political discussion, but you can add a return to sound money and/or Ron Paul getting elected to my list of things that would get me out of the hyperinflation camp.

    ReplyDelete
  143. I think I should note that my favorite "paper silver" the family of CEF/GTU/SVRZF (AKA SBT) do not allow exchange of shares for bullion like Sprott does and like SLV does. I don't mind, I'm nowhere near enough close to having a basket.

    One more thing when speaking with the Secretary of SVRZF on the phone once and asking why the do not publish their bar lists she said, "It's not the shareholder's silver. We've thought long and hard about it and the silver belongs to The Trust and every share has a right to it's proportinate share of the silver in the trust, but the silver belongs to the trust." It struck me odd at the time but I did enough DD to make them OK for me. you do your own.

    OF

    ReplyDelete
  144. Hey fellow Turdites!

    Hope you all had a good weekend, and also that we get a better week this week after the EE's silver raids on wed/Thu. Hopefully we'll start getting a good upswing in prices from now on in till mid/late June.

    ReplyDelete
  145. Hope that this isn't a double post but SGS posted this on his blog - don't know if you've seen it already.

    http://goldnews.com/2011/06/02/fed-lawyer-alvarez-the-federal-reserve-does-not-own-any-gold-at-all/

    This sounded like BIG news to me?? If the Fed has no gold and the Treasury hold it what does this mean? My small brain can't figure it out and was hoping that someone of knowledge here might be able to shed some light for me.

    Thanks Turd for all that you continue to do

    Lou

    ReplyDelete
  146. I think GLD and SLV are paper investments. I stack physical because I don't have to worry about redeeming a piece of paper if the SH!T does happen to hit the fan.

    I don't think either has the metal that they are supposed to have.

    As far as inflation/deflation. The way I see it we have a period where the true value of things are coming to light. If it was deflation everything would be dropping in price, if was inflation everything would go up right?

    Instead we have stuff that is worthless going down in price (TV's) and stuff of value corn/gas/PM's showing to be of more value.

    Just my two cents worth.

    ReplyDelete
  147. Just gave a couple hundred to Ron Paul's money bomb. I love this guy.....

    Bought some silver today as well. My dealer hasn't had much for a month now. Today I got 37.50 of junk halves and 5 painted silver eagles. That was all he had. Last week I got 38 circulated silver dollars and a few back dated eagles which was also all he had.

    I have been buying silver from this source for ten years now and this is the worst it has ever been. He said that there aren't many sellers...all buyers

    ReplyDelete
  148. A silver shortage would be reflected in sold out silver dealers (like in 2008). No shortage now.

    ReplyDelete
  149. @ Endzeit

    from where i stand there is a shortage. have you tried to buy silver this week, month or year?

    Today I was able to leave the shop with physical. I have been waiting over a month for a few hundred rounds I ordered from a large silver dealer. If there was no shortage why isn't the silver readily available?

    ReplyDelete
  150. Lots of negativity in here the last few days.

    I will give an advice that you would be wise not to ignore:

    IF you are in the red investing in a bull market that is up 100% over the last 12 months, then you are not fit for investing. Just let it be, for your own good. Buy maybe a few coins, just a few, not a huge commitment, then most importantly, work on getting completely out of debt, and just ride this whole thing out. You will not get rich by doing this, but at least you're in a position where your livelyhood is not at risk, and you'll be in good shape for the years and decades to come.

    ReplyDelete
  151. Silver coming out of the gate making higher highs, in quick time. Looking at the 5 min graph, she looks poised to move up this week. My guess is that it will be on the back of gold moving up convincingly (wouldn't it be something to hit that 1600 by Friday as per Turd's original call), but %wise, silver may be the better play... but this should be no surprise to anyone, as we all talk about it's downside volatility when its underway.

    --
    Going away for the next couple days, but will probably be addicted and look at my phone at least a couple times...

    I have Turd Syndrome...

    And the only medication is a steady dose of tfmetalsreport.blogspot.com and zerohedge.

    ReplyDelete
  152. I'd also like to state: it's obvious that most of you are actually losing money trading the PMs. If only by the observation that every smackdown, suddenly a good number of participants here disappear and are never seen again. Obviously a lot of people get completely wiped out doing this.

    Trading/investing is not pleasant, it's not fair, and it's a zero sum game, meaning the losers pay the winners. There's got to be losers in there, even if only the very few admit it.

    The fewest here even follow the COT reports or know what they mean. Or open interest. Or the lease rates and backwardation. This is vital information, and 90% of you do hardly know what it means.

    If you are not made for this, and maybe even in addition not willing to put a lot of time into this, this isn't a very positive/constructive situation for you. You should probably cut your losses and get out while you have the chance. Do something you're good at - everyone has an area where he's really good. Concentrate on that and you will succeed.

    I'd also like to mention, and I will get attacked for this, that if Turd is really good at this, why did he repeatedly ask for donations, or even accept them? Now I appreciate that he runs this blog and gives his advice, but after fricking 30 years of trading, if he is just trading a few hundred or a few thousand ounces of silver, and give's a rat's ass about the few hundred bucks he receives in donations, he is just not very good at this. You need to be at least 8 figure heavy after 30 years to make your advice really worth listening to.
    If you're hardly successful doing this yourself, how in the hell do you come to the conclusion that your advice is worth listening to?

    So, in no case just follow him blindly (much to his credit, he himself has repeatedly stated this).

    I am here because I usually liked the atmosphere (but discovered it can quickly go south as the PM prices go south), and some good links get posted here. I have never taken anyone's advice off here, at least not PM-related.

    ReplyDelete
  153. IF you are in the red investing in a bull market that is up 100% over the last 12 months, then you are not fit for investing

    heh

    thanks Markus

    should we go long rope ?

    ReplyDelete
  154. @Markus,

    Why are you reading and posting to this blog after having made 8 figures large?

    Someone of your ilk is surely well above the peasantry that congregates here in Turdworld. It's a bad look for guys as rich as you to hang out here.

    ReplyDelete
  155. @Shill
    What I'm thinking too!
    This looks like a turn around (dragonfly doji) Friday and a move through prior resistance at the open... need a successful retest to confirm?

    @Troll: Maybe you should take PM advice instead of giving it?
    Guys that throw in the towel at the bottom - or CAPITULATE - never win
    but they do seek to justify their choice as right by trying to convince others to do the same.

    ReplyDelete
  156. I guess on this tiny volume it's better to wait and see...
    which markets are online this morning? Australia? Japan? ???

    ReplyDelete
  157. I'm interested in everyone's opinion on something I have noticed recently.

    Ever since the May 1st/BinLaden crash has "settled" a bit, I've noticed that gold and silver will often move in completely OPPOSITE directions. This seems odd.

    Usually, Au & Ag move in unison, even while Ag may be an "exaggerated" wave compared to Au.

    So what does this mean?
    Does this signal something nefarious or does it somehow reflect something with the Au:Ag ratio?

    I'm interested in your thoughts.
    What do YOU think?

    ~~~"The Jeepster"

    ReplyDelete
  158. yeah Markus is right... NOTHING of value here, nothing to see, move along people...
    total waste of time... why are we not watching American Idol, or Dancing w/ the stars?
    Watching that type of tv is like taking pain pills and not quite enough booze to get it done... just sit there in indifferent w/ your brain oozing out your ear.
    Ver. Word- LONSIVVV-
    People still have the cahones to go LONSIVVV?

    ReplyDelete
  159. Of course this is and has been going on for some time. They have thought this out well. We are being used to finance this buying now, as we are buying our own debt and paying the spread to profit the banks. We all know they are insolvent but they are using the fiat generated to purchase "real" money just as we are. The banks and elite are stacking in a rigged game. I have always thought this would end up full circle where the banks would in the end hold the majority of the gold.
    Look at Zimbabwe for example .....hyperinflation......then pegging to the dollar which stopped the HI........yet ultimately they have seen what is going on with Fiat and are now buyers of Gold.
    Look at Germany. The Weimar Republic taught them to keep watch over inflation.
    They were none the less brought into the system and have given up the ability to effectively fight inflation. You remember the discussions prior to union of some members financial conditions. Now the light shines brightly on all corners as those fears come true. All the firepower now wasted attempting to maintain the system at the expense of those with stronger balance sheets. Already hinted(gold as collateral)....watch as those gold reserves are stolen.
    Everything and everybody is now in play.

    ReplyDelete
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  164. e cigaretUnder 25 Car Insurance Rates Online
    I'm interested in everyone's opinion on something I have noticed recently.

    Ever since the May 1st/BinLaden crash has "settled" a bit, I've noticed that gold and silver will often move in completely OPPOSITE directions. This seems odd.

    ReplyDelete
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    Thanks Turd for all that you continue to do

    ReplyDelete
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    ReplyDelete
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    ReplyDelete
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