Tuesday, April 29, 2008

The HUI Is Looking Good

Right now the Amex's HUI index of 30 gold/silver stocks is looking good for buying.

By the end of this week, things can be looking a lot brighter with the HUI and gold and silver. The final shake out of the **week** longs (the traders / speculators, those that do not get fundamentally what is happening) should be finished.

Only some tiny percent of people can go against the crowd. That is one of the reasons so few people will make the huge percentage gains in the gold and silver bull markets, ***or any bull market***. They do not use reason, Aristotelian logic, particularly in the States. Most in the States, and even most of the English speaking world make emotionally based financial decisions. Because of that they are screwed. Don't be one of them. You can in fact defend your self from the intellectual dark ages that the West, the English speaking world, is in, which is called a lack of using reason, using emotion in place of reason.


"Richard Davis is part of BlackRock’s natural resources team in London, which has $48bn in assets under management and runs the Merrill Lynch Gold and General Fund, renamed from today as the BlackRock Gold and General Fund.

Below is a link to a Financial Times question and answer session with Richard. He covers a lot of good points."

Questions and Answers with Richard Davis


This is a great time for buying the components of the HUI (a no brainer), or any other shares that are good but not in the HUI. In financial markets the crowd is always wrong.

Monday, April 28, 2008

Gold Double Bottom

Gold and silver prices could be putting in double bottoms for this temporary reaction / correction.

Ideally, the second bottom on a double bottom should be slightly lower than the first, for an extra strong shake out of the weak longs. We should know whether gold and silver prices are finalizing their bottoms in short order.

Sunday, April 27, 2008

Silver Certificate

The world's financial system is in the process of breaking because there was too much fraud built into it, particularly since 1913 (start of the Fed) and even more since 1971 (Bretton Woods US government renunciation of its promise to redeem dollars for gold) and big time fraud can not last for ever. Maybe we will see silver certificates again. Definitely private ones if currency competition is allowed by governments.

(open image in a new tab for a larger view)

This Silver Certificate is series 1957 A and says:

"This certifies that there is on deposit in the treasury of the united states of america one dollar in silver payable to the bearer on demand"

No identities, IDs required. Just a legitimate certificate. This is how it should be; "payable to the bearer on demand".

"...as we transfer our whole being to the data bank, privacy will become a ghost or echo of its former self and what remains of community will disappear"...Marshal McLuhan

"If a nation values anything more than freedom, it will lose its freedom, and the irony of it is that if it is comfort or money that it values more, it will lose that, too." - Somerset Maugham

"Government is the great fiction through which everybody endeavors to live at the expense of everybody else." - Frederic Bastiat, 1849

"Civilization is the progress toward a society of privacy. The savage's whole existence is public, ruled by the laws of his tribe. Civilization is the process of setting man free from men."--Ayn Rand

"Socialism prevents capitalism by consenting adults." --Robert Nozick

"There are two methods, or means, and only two, whereby man's needs and desires can be satisfied. One is the production and exchange of wealth; this is the economic means. The other is the uncompensated appropriation of wealth produced by others; this is the political means." --Albert Jay Nock

"If it is now believed that my fellow men may sacrifice me in any
manner they please for the sake of whatever they deem to be their
own good, if they believe that they may seize my property simply
because they need it -- well, so does any burglar. There is only
this difference: the burglar does not ask me to sanction his act."
- Ayn Rand 1957

1957, not all that long ago. The US used to be substantially more free back then and particularly prior to that time. Basically the '50s was the end of the **rapid** advances in people's living standards in the US. Economic prosperity requires freedom. It is impossible to have one without the other. Since most people in the US have given that up, their economy is heading down the tubes a huge amount and rapidly. Too bad. Sad.

It seems just about all governments now a days do not want their citizen units to have ready access to safe stores of value such as a silver currency (a redeemable financial instrument) or silver money (the metal itself). A currency redeemable "on demand" for metal. The metal and the redeemability aspect of a silver certificate puts too much of a restraint on the supply of dollars, Yen, etc. that banks of any type (private, central, government, semi-government) can create.

Wednesday, April 23, 2008

Silver Price Timing

Reminder on silver price timing:

The beginning of May, about 7 - 9 days from now, has good odds of being a significant point in time for the silver price.

Monday, April 21, 2008

The Golden Bull Market

This is one heck of a golden bull market in gold and silver.

Since there is a down side to higher gold and silver prices, the increasing steepness of the slope of gold and silver prices is on the unnerving side. Unnerving as in Great Depression unnerving. It's definately feasable to have a Great Depression with hyper inflation happening at the same time. In some countries, particularly in the US, a shortage of gold and silver can develope between anti-mining crowds, and federal treasuries / central banks not wanting their citizen units having safe stores of value.

It is not just the US dollar that is being devalued. It is happening with most government fiat tokens.

That means demand for gold and silver is increasing in most places in the world. Thus their higher prices, thus demand being higher than supply, thus the metals being harder and harder to get your hands on. From anecdotal reports this may already be happening with silver in the US. Do not wait for a default in the silver futures contracts trading on the COMEX in New York.

The financial mass media basically do not talk about this 7 year old golden bull market that is in progress. At least they mention gold once in a while which is different than mentioning the bull market that it is in.

Unlike gold and silver, what "The Street" will not even mention is the golden bull that the mining stocks are in. HUI up about 800% in about 7 years, and not a peep out of CNBC or the Wall Street Journal. Gee, wonder why? The powers that be do not want people having value stored in a medium that the government and The Street can not steal from.

In regular business, if you want to increase your annual absolute profits as much as possible, work to drive down the price of your good or service. The lower you can get your price, the more people will buy from you, the more units you will sell. Think Henry Ford's model T car, computer chips, memory storage and TVs that even most of the "poor" in some countries can afford. Assuming the same profit margins, the lower your price can be, the higher your absolute profits should be.

However in financial markets, it works the opposite way. The higher the price of something, the more people will want it. In financial markets, the crowd is always wrong when it comes to buying low and selling high. So, right now, ** still ** the crowd doesn't know that this golden bull market exists, yet; but they will one day. And, it will be a site to behold when they catch on to what is really happening which is their digital bits on someone else's hard drive being devalued like they're going out of style.

Don't wait for the crowd to catch on. Don't let 'em put a ring in your nose.

"Gold still represents the ultimate form of payment in the world...." Alan Greenspan (May, 1999)

Wednesday, April 16, 2008

Gold Tidbits

Some miscellaneous gold related tidbits while we are waiting for gold to punch up through USD 1,000.

Maybe "they" are worried about bank runs

Tidbit from The Privateer:

"What Are "They" So Worried About?:

Here "they" are again! The Privateer has reported on this one before, and now the issue has revived. In Australia's splendid capital city of Canberra, the proposal that the government should "guarantee" up to $A 20,000 of each bank account has revived. Clearly, if this happens it will be done to try to reassure the general public that their deposits in the banks and the financial system are "safe"."


Pictures can be worth thousands of words. Open in new tabs for larger views.

This is the Dow with a gold price instead of a dollar, yen, gallon of milk, or carton of cigaretts price.


Some interesting fun reads:

Happy Bread
"There are some very, very evil f*ckers manipulating both the supply of the essentials of Life and the money used to pay for that supply."

Survivalism Goes Mainstream As Middle Class And Wealthy Fear Breakdown Of Society

Just some of the tidbits related to gold. Money affects sooooooooooo many aspects of life, which is why governments should not have any control over it at all. In the US, the Fed is illegal due to the constitution but nobody there cares, so their party is over, despite most not knowing it, yet.

Tuesday, April 15, 2008

Plata and Mexico

In Spanish, and by extension Mexico, plata means both money and silver. Mexico may value silver more than people in other locations in the Western hemisphere.


Hugo Salinas Price has been trying for years to "monetize" the Libertad silver ounce. It seems the movement is not going away anytime soon. Makes sense considering the state of the world's financial system particularly since the Bretton Woods agreement in the state of New Hampshire in the US in 1971 when the US reneged, broke its promise to redeem USD, the world's reserve currency, in a specific weight of gold.

Here is a list of articles that he has written: Hugo's articles



A new service for silver savers in Mexico.

Hugo Salinas Price
Banco Azteca, which has about 1,000 branches throughout Mexico, is about to launch a new service for those who like to save silver. It is the first bank in Mexico to offer this service; other banks are expected to follow suit, sooner or later. The new service is called “Silver in the Vault”. This service will provide savers with a safe place to store their one ounce silver “Libertad” coins, which Banco Azteca has been selling for some time now... more>>

There is some history of the effort in this one:


The silver bridge

Hugo Salinas Price
The monetization of the silver ounce, by means of the bridge which we have designed – a nominal value which cannot be reduced, but which can be readjusted upward – is a return to simplicity and to reality in the economic field. Its simplicity guarantees that the silver ounces will be in circulation and serving human beings for centuries after the collapse of fictitious money and even after the disappearance of the Central Banks of the world... more>>


Hugo's recent piece at Le Metropole Cafe:


The financiers and the monetary system are intoxicated. Their intoxication (with bad money) began on Aug 16, 1971, when everybody decided to go on as they had been doing up to Aug. 15, 1971; then things started real quick to get out of hand.

Now we are ALL trapped. Because if the intoxication is identified, the whole world's economy collapses. And if it is not identified, then we are headed for a world collapse anyway.

What was the intoxication?

Well, the dollar on August 14th 1971 was a means of payment and a means of exchange.

On Aug. 16th 1971, the dollar was NO LONGER A MEANS OF PAYMENT, only a means of exchange.

But, no one noticed the vast importance of the difference! Or did not want to notice.

As Dr. Von Braun says, the dollar (and the euro, yen, pound and every other currency in the world) is NOT A MEANS OF SETTLEMENT, and there has been NO SETTLEMENT SINCE 1971. For the simple reason that the dollar, irredeemable as it is, cannot be a means of payment - only a means of exchange.

A payment is the delivery of some thing in exchange for some thing. A redeemable dollar was a CREDIT INSTRUMENT, because countries believed that the dollar could be redeemed for some thing, namely, gold @ $35 dollars per ounce. Accepting dollars was therefore a credit given by exporters, to those tendering dollars - mainly the USA; a credit which could be cashed in for SOME THING - gold, as I have said.

Everything changed, when the dollar ceased to be redeemable. It no longer represented a promise to deliver SOME THING. There is therefore, no longer any international settlement of export deficits.

Now, the exporters are burdened with increasingly huge amounts of these dollar digits which promise nothing at all.

The reserves accumulated by foreign central banks and by foreign corporations and individuals, are only useable as "means of exchange". Witness of this fact, that the Sovereign Wealth Funds are trying to get their hands on some thing TANGIBLE, for their dollars. And the US and Europe are worried that the exporting countries will buy them out of house and home, with all the dollars they are holding. So, they are busy setting up obstacles to the return of the toxic dollars.

If dollars were truly PAYMENT, the exporters would not be trying to get rid of them. If they had gold, they would be quite content to sit on their gold reserves. But, dollars are not PAYMENT. You only "collect" payment, when you get rid of them and buy some thing! (And the same applies to the Euro and all other currencies.)

But of course, we won't read about this in the "Financial Times" or in "The Wall Street Journal". The subject is much too sensitive! I repeat, the world is trapped with an intoxicated monetary system and intoxicated finances.

This cannot and will not go on forever - but how it will end?

I don't know how, but I do know it will be very, very nasty.


"Gold still represents the ultimate form of payment in the world...." Alan Greenspan (May, 1999)

Of course plata is final payment also. Plata / gold are not going away anytime soon and will continue as a gangster bankster's worst nightmare.

Plata, Mexico and Hugo Salinas Price are worth keeping an eye on.

Monday, April 14, 2008

Fed Will Cause Outrageously High Silver and Gold Prices

The combination of the US Treasury and the Fed are going to cause outrageously high US dollar silver and gold prices if human nature, power lust and history is any guide.

Alex Wallenwein has written on the Fed's new desires from the US federal government since it has been selling assets on its balance sheet and is getting low on assets, or close to broke/bankrupt.

"Who will bail out the FED?

SYNOPSIS: The Fed is asking Congress to allow the Fed itself to determine how much Congress (meaning you) will end up borrowing from the Fed - leaving you on the hook for repaying massive amounts of new debt via new taxes!

The current crisis is so severe, and it has already forced the Fed to reach into its own balance sheet grab-bag so deeply, that a very legitimate question arises, and the question is this: when the Fed ploughs all the way through its own balance sheet and gets to the bottom of the barrel, who will bail it out?

The point: You will bail out the Fed because, once the Fed burns through its balance sheet of US treasuries with its current Term Securities Lending Facility (TSLF), it can only get more treasuries onto its balance sheet by having Congress allow the Treasury to borrow more money from the Fed than the Treasury really needs.

We are talking monetization of the debt on steroids, here! Mega-steroids, that is.

Fed Weighs Its Options in Easing Crunch

WASHINGTON -- The Federal Reserve is considering contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail.

Among the options: Having the Treasury borrow more money than it needs to fund the government and leave the proceeds on deposit at the Fed; issuing debt under the Fed's name rather than the Treasury's; and asking Congress for immediate authority for the Fed to pay interest on commercial-bank reserves instead of waiting until a previously enacted law permits it in 2011.

No moves are imminent because the Fed still has plenty of balance sheet.


The Fed bankers, whose progenitors have already bribed our Congress to un-constitutionally turn over Congress’ exclusive power to “coin money” back in 1913, are now trying to persuade Congress to turn over its borrowing power to them as well, thus allowing the Fed to virtually borrow money from itself and issue itself IOUs for that debt.

Once The Fed has the power to borrow from itself and leave Americans on the hook for the loan,

It’s as if you gave your bank the power to put you in debt at its own, free will, without even asking you for permission!

Naturally, when your bank does that, you will be on the hook financially to pay that balance back - with interest.

This is the utter and complete raping of the American public – and guess what? Americans by and large are going to go along with it.
... "


As always, Jim Willie has written another excellent article on the big picture of the US's situation.

Lessons from Japan: Prepare for 0%
Jim Willie CB April 8, 2008


A good article he wrote back in 2003:

Japan, Argentina, Weimar, or Muddle?

Jim Willie CB
Jim Willie CB is the editor of the "Hat Trick Letter"
Apr 30, 2003

" ...
Differences between the US and Japan are very unfavorable, relating to currency valuation, bankruptcy ease, saving propensity, foreigner debt ownership, financial engineering, monetization techniques, basic integrity, and intervention willingness:

a) unlike Japan, US Economy cannot tolerate a declining US Dollar
b) unlike Japan, US Economy permits bankruptcies as a regular course of business
c) unlike Japan, US Economy depends upon consumption & spending
d) unlike Japan, much US debt is owned by foreigners, with a trade gap widening
e) unlike Japan, US Structured Finance has created a megalith monster
f) unlike Japan, US Federal Reserve is a monetization machine on steroids
g) unlike Japan, US institutions harbor widespread corruption
h) unlike Japan, US maintains a pervasive interventionist attitude
... "


Good 'ol Aubie Baltin CFA, CTA, CFP, PhD. has written another goodie:



The problem stems from the general lack of understanding that there is a fundamental difference between Real Money (Capital) that can only come from savings and Fiat Money that is created out of thin air by the FED: Fiat Money that does not come from the non consumption (savings) of real goods and services must increase prices since there is now more money chasing the same amount of goods. As Interest Rates are artificially driven lower, savings drop. Who in their right mind will forego consumption in return for an interest rate that is lower than inflation and on which, they have to pay income tax. The proof is that the US has had for the first time in its history, a negative savings rate for more than 15 years. How can we ever expect to have a balance in trade when every major country that we trade with has a savings rate of between15% and 40% while ours is minus 1%? “You cannot change other people, you can only change yourself.”


The engine of economic growth, contrary to popular thinking, is not money but real savings. If the pool of real savings is declining or stagnating, then the economy will follow suit. Economics 101 says: If you want to increase the supply of anything, increase the price (if you want more savings, raise interest rates). However, if the Fed resumes its policies of lower interest rates, which entails the creation of massive amounts of “out of thin air money, galloping Inflation must be the end result. If the pool of real savings is falling or negative like it is now, bubble activities dominate the scene raising the likelihood that the commercial banks' expansion of credit must eventually come to a halt. As is now happening. Bernanke's policies will only do further damage to the stock of savings and sound capital investment and plunge the economy into a severe and prolonged crisis.


There is no stopping this powerful gold train for some years.

This all adds up to the Fed / US Treasury creating huge amounts of USD that will jack up the USD price of gold and silver to highs that will stun people.

Friday, April 11, 2008

Wiemer, Germany Gold and Silver Prices 1919 - 1923

German Mark prices of Silver and Gold went from:

Silver 12 / Gold 170 in January 1919 to
Silver 543,750,000,000 / Gold 87,000,000,000,000 in Nov. 30, 1923.

(The numbers were taken from an article at Le Metropole Cafe a number of years ago.)

The biggest gains were in the last year of that period. The complete set of numbers can be seen at an older post in this column at Wiemar, Germany Gold and Silver Prices. The big payoffs come by buying the beginning of any bull market and riding it all the way to the very end. The period near the end provides the biggest percentage gains. This works for all bull markets in all parts of the world since markets are made of humans and human nature has not changed in thousands of years.

If you do buy the beginning and ride it all the way to the end, you will beat about 90-95% of "professional" "money" managers, since they are humans also. The "professionals" can not, will not, or have a problem going against the crowd at the beginning of bull markets. Plus they simply do not understand Austrian economics, and the difference between money, currencies and tokens. Thus, "professionals" are easy to beat if you can go against the crowd. Heck, the Amex's HUI index of gold and silver shares are up up about 800% in about 7 years.

Will all the "professionals" out there that are up about 800% in about 7 years please stand up to be counted?


[Bernanke] "and Greenspan together will probably bring [about] the end of the Federal Reserve," - Jim Rogers - Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.


The US is in worse fundamental economic / financial shape than it was before 1930, the start of the Great Depression. Since it looks like the US Treasury and the Fed are going to do more of what caused the problem to delay the results of the problem, only making the final results worse, here is some food for thought:

Closing the Collapse Gap

New "money" pump being built for the Fed:

"It'll work. It has to work. WE WANT IT TO WORK!" - a government financial official in Atlas Shrugged.

It is going to be interesting to see how close to Wiemer, Germany hyperinflation the US Treasury and the Fed get.

Wednesday, April 09, 2008

Bullish Outside Day in Gold

Wednesday produced a bullish outside day in gold and an almost one in silver.

IMF puts cost of credit crisis at $945bn

[If the IMF is putting the cost at just below 1 trillion dollars, it will probably be more like in the tens and tens of trillions. They could not see the problem untill recently instead of years and years ago when the problem was first starting. So, how come they can all of a sudden see how much the problem will cost in total? Where was the IMF just last year in 2007 when almost all of Wall Street was saying the US was in a Goldilocks economy. The IMF was silent.]

"It's puzzling why bankers have come up with these new ways to lose money when the old ways were working so well." --Wells Fargo CEO John Stumpf

The "Mother of all Crises," - Paul Volcker, former head of the Fed, April 8, 2008

Good to see this gold outside day and the silver almost outside day.

Monday, April 07, 2008

M3 and MZM and Gold Price

Shadowstats.com updated their reconstructed M3 supply of US dollars on April 5th. It is growing at an annualized rate of just under 18%:

Nowandfutures.com's latest reconstructed M3 growth rate of supply of US dollars is about 19 1/2%:
The Fed stopped publishing the numbers early 2006. They must have known how bad they would be making the growth rate.

The MZM supply of US dollars at over 37% is looking terrible, too: http://research.stlouisfed.org/publications/usfd/page5.pdf

Here is the USD since 1971. The world gets/understands the increase in supply of the dollar thus it's decrease in value. Shorting the USD which is the equivalent of going long gold and silver: a no brainer.


The Assault On Free Markets
By Peter Schiff

Those blindsided by the recent financial meltdown are now loudly blaming the free market for its failure to police its own excesses, and are calling for greater regulation to prevent future disasters. But for those who clearly observed the problems developing (in high definition slow motion) the blame can be directed squarely at the policies of the Greenspan/Bernanke Federal Reserve. As has been the case countless times in history, the free market will now pay the price for government incompetence.
A perfect illustration of the Fed’s failure to take responsibility can be found in Bernanke’s explanations regarding inflation, which he solely attributes to the effects of the rapid increase in global commodity prices.
Rather than accepting the blame for creating inflation, Bernanke is shifting the blame to the free market. The Senators are happy to let him get away with it as it provides more evidence to support the “need “ for more government to save the economy from the disastrous effects of unbridled capitalism.
While Bernanke talked about the underlying strength of our economy, he claimed necessity in saving Bear Stearns from bankruptcy as it would have brought down our entire financial system.

[Then there could not have been underlying strength to the economy if one lousy investment house could bring down the whole economy and/or it is being used as an excuse for more government power/control over businesses and the economy. We know what that led to in the USSR; famine and self-implosion/break up.]

... as the Fed uses inflation to rob Main Street to pay off Wall Street."


Gold and silver are assets *** outside *** the financial system. They are relatively safe stores of value, unless a government makes it illegal to own gold and silver, which is something a president of the US did in 1933.

"... The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. ... This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights." - Gold and Economic Freedom, Alan Greenspan, 1966

The M3 and MZM supply numbers indicate much higher USD gold and silver prices.

Friday, April 04, 2008

Gold and the Federal Reserve

Gold and silver are at odds with the Federal Reserve. The Ludwig von Mises Institute explains the nature of banking in the video:

Money, Banking and the Federal Reserve

It is not a short down load, but if you get through it, you will understand just
** how ** the Fed and US Treasury will steal huge amounts, trillions of dollars worth, of value stored in USD and many USD denominated financial instruments.

For an idea of the ** amounts ** of value to be stolen:

Bear with Me
The mother of all government bailouts.

IMF: Worst Financial Crisis to Hit the US Since the Great Depression

The Nature of the US Financial Crisis

Paulson's 'Civic Robbery' To Finance Hyper-Inflation

Investment firms tap Fed for billions
Wall Street banks take advantage of Fed's emergency loan program, borrowing an average of $38.1 billion a day last week.

Money, currencies and tokens are:
1. Mediums of exchange
2. Units of measure/account
3. Stores of value

(Money, currencies and tokens also have differences which is another story.)

The Fed's and the US Treasury's main object is theft of stored value, in this case socialism for the rich. But, this will cause the USD to be used less and less as a medium of exchange, and will make it a worse and worse unit of measure for future personal and business economic and financial calculations.

Gold and silver are some of the best defenses against the plans that the Federal Reserve and US Treasury have for holders of USD. Gold and silver are good protectors against other fiat tokens also since there will be competitives devaluations going on amongst governments.

Wednesday, April 02, 2008

Good Silver Price Action - part 2

The silver price is trying real hard to bottom here:

It gapped down. That gap down will be closed/filled. Plus it made a hammer: intraday, in NY, it opened high, went low, and then made a comeback. The hammer is not perfect but basically, the open, the intraday high, and the close were all up there right around each other.

Jim Sinclair http://jsmineset.com/ yesterday due to the huge amounts of USD creation currently going on changed his tune slightly to "The side effect of all this money being thrown at the international investment banks is to produce an unprecedented degree of monetary inflation over the shortest time in economic history.". According to how he's put it in the past, he's now seeing the future worse than he imagined.

Silver is absurdly cheap right now. It should at least go to $2-300. Yesterday was bullish bottoming silver price action.