Sunday, February 20, 2011

Silver Default Looms?! (It's about time!) Silver Stock Report by Jason Hommel, Feb 20th, 2011

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Silver Default Looms?!
(It's about time!)
Silver Stock Report
by Jason Hommel, Feb 20th, 2011

I apologize in advance that this essay is entirely without humor, completely sober, and deadly serious.

As I write on Sunday evening, Feb. 20th, silver prices are up another 40 cents to $33.10, another 30 year high, going back to the previous high of $50 from Jan. 1980. In the last two trading days, last Thursday and Friday, silver prices increased about a dollar per day.

What's going on?

As I read on the blogs, about 53,000 silver contracts for 5000 oz. each are nearing the first delivery day on Feb. 28th. At that time, each contract must be fully funded to await delivery in the following 30 days, or sold before then. By the way, 53k x 5k = 265 million oz.

The crazy thing is that the four COMEX approved warehouses have only about 100 million oz. of silver in them. So, in essence, a default looms.

Will this be it? If so, what will happen?

Usually, all but a very few contracts roll over to the next months. The futures contract holders rarely stand for delivery, as in their view it is too difficult, and too costly; they are in this game for the leverage. They usually only put down 10% of the money, so that if silver gains another 10% in price, they double their investment quickly. And if silver moves down 10%, they lose everything!

But here's the kicker. COMEX just raised margin requirements 50% on Friday, meaning that the longs had to put up something probably like 15% instead of the usual 10%. (I have no idea of the real figures, as I have never traded futures, I have never had a futures broker, and don't know where to go for that data.) This means that the longs were not scared out of their positions, as the silver price went up, not down, as the manipulators had intended.

What I do know is that usually, the majority of futures contracts stand about 3 months away from delivery. But not now.

Tonight, 53,000 contracts are looming for either close out, or they will stand for delivery. Out of about 150,000 to 200,000 contracts!

Harvey says 150,000 contracts in open interest. says 200,000 contracts in open interest.

The current situation will be resolved in 8 days, and again, in another 30 days after that. Both deadlines are worth watching closely.

Either way, this situation presents several problems.

Clearly, if the longs stand for delivery of 265 million oz., when there are only 100 million oz. in the warehouses, there will be a short squeeze, and the price can go ballistic to the upside, perhaps prices could go up by 5 times higher in a few days.

However the longs don't seem to realize that the shorts can cap the price by several other manipulative methods. They can deliver paper cash, or SLV shares as well. The shorts and COMEX can also limit total physical silver deliveries to as little as 1.5 million ounces to any individual, or 7.5 million ounces total, if my memory of the rules serves. If they do that, the shorts can delay a short squeeze at the COMEX.

But this would create another problem.

A cash settlement, or settlement in SLV shares, or a limit on physical silver deliveries, would be recognized as a default, or a "failure to deliver".

If any such kind of default would take place, it could cause a run on any remaining silver at any other location, such as directly at the refineries, or bullion wholesalers, or bullion dealers like myself.

I hope no such default takes place, as I don't want to go out of business for a few days, or a few weeks, or a few months, while I wait for my suppliers to get re-stocked.

In any event, I think it's important to realize several fundamentals.

1. The dollar itself -- is fraud.

2. Silver futures contracts -- are fraud.

3. Fractional reserve banking -- is fraud.

4. Fractional reserve silver selling -- is fraud.

5. The nature of paper money and all frauds is that they tend to collapse rather suddenly, with little warning, especially when their ability to pay debts is called into question.

6. Argentina maintained a peg of their peso to the dollar, and it lasted until they could no longer make interest payments in dollars. Then, their peso collapsed in value nearly 75% overnight. Even Americans, with American dollars, in American banks (in Argentina) had their dollars forcibly converted into pesos, and their ability to withdraw money severely limited.

7. The same thing can happen to the dollar.

8. Silver prices must be seen to have the potential to explode by about a factor of 4-10, literally overnight. This means we might see silver prices at about $33/oz. on one day, and silver prices from $130 to $330/oz. the next day.

If that happens, I might close up the JH MINT for anywhere from an hour to a day or so, until I can guarantee a source of silver from my suppliers.

I will likely be able to remain in business though, because if there is a price quote, it means silver is available at such prices.

The most likely course is that the paper traders continue their game of "chicken". Both sides will swerve at the last moment and avoid a collision. Prices will likely go up to about $35 to maybe as high as $40 next month.

We will likely have another record sales of silver bars and coins.

The US mint will likely have another record of sales of 1 oz. American Eagle silver coins. They might run out for a week at a time, again.

We will likely have plenty of silver available at about 6% over spot, while all the physical silver ETF's trade at about a 8-12% premium over "spot" prices.

But then again, you never know. I can predict that the busses will likely run on time, and I will likely be right, until they don't. Better order silver now, while you still can.

My greatest fear is that silver will run out. When silver runs out, people will buy other things to protect the value of their dollars, such as food. If people start buying up food, in amounts of up to $100,000, food prices will soar, and that will cause food prices to exceed the values that most people can afford, and then, most people will begin to starve. The beauty of gold and silver is that you cannot eat them, and thus, there is no such thing as a price that is "too high" of a price for gold and silver. My wife and I stocked up on food this weekend at COSTCO. We spent only $700, the least we have spent in months. We filled up the back of our Ford Excursion. You can see what problems would be created if wealthy people begain to buy 50 to 100 truckloads of food at a time, in the event that silver became unavailable.

Further links for further study:

The Silver Institute -- for silver statistics

Eric Sprott (a billionaire) is very well informed. The 3 men he listed, Ted Butler, Dave Morgan and Jason Hommel are among the smartest guys in the room when it comes to silver.

ECB emergency lending jump persists
Traders ponder whether spike is result of bank error or renewed stress

CPM Validates Imminent Comprehensive Silver Shortage Predictions

$500 Silver, Max Keiser Explains His Price Target -- 19 February 2011

Bill Murphy: "Silver can double in a week, the price is held down with derivatives!"
May 11, 2010 (When silver was priced at $20/oz.)

Why no talk of $32,567/oz ? by Jason Hommel, Jan 2, 2003

Disclaimer: I am a bullion dealer. I sell silver and gold for a living. I'm not trying to cause any sort of panic buying. I believe it is rational and logical to purchase silver, and I have advocated buying silver since 2003. I have predicted a default in gold and silver metals futures contracts since 2002, after the palladium default of 2001, and it has not yet happened. I believe in God, honest weights and measures, and honest money. I believe men will prosper far more when they follow God's laws to use honest money in commerce, and avoid all kinds of futures contracts.

I'm proud to say that my teachings from the Bible on avoiding futures contracts have inspired a world-class programmer to create a new computer programming language that avoids the mistake of making futures contracts, which avoids creating problems in the programming world.

Further, continues to thrive as a place to buy and sell silver and gold.


I strongly advise you to take possession of real gold and silver, at anywhere near today's prices, while you still can. The fundamentals indicate rising prices for decades to come, and a major price spike can happen at any time.

Follow me on facebook!

Or Youtube!

JH MINT & Coin Shop, Grass Valley, CA -- minimum order $5000 for free shipping, USA shipping only.
Open 10AM to 5PM Pacific Time, Monday to Friday, closed weekends and bank holidays. (Also Closed from Dec. 25th to Jan 1st)
(530) 273-8175
Kerri handles internet phone orders:
(530) 273-8822


Jason Hommel

The Road To Roota by Bix Weir

It was January 2007 when I first discovered the information released by the Federal Reserve Bank, Boston that changed my understanding of the gold & silver markets, the financial markets, the energy markets, the monetary system as well as the true essence of my country, the United States of America. Interestingly enough it came in the form of a children's comic book.

The Road to Roota Theory postulates that there is a group of people in the United States as well as around the world that are working to remove and destroy the financial banking powers that have secretly controlled all aspects of our lives for hundreds of years. The original idea of this group sprang from the mind of Alan Greenspan and involved rigging markets with computer programs that he had invented in the 1960's. The original articles can be found here:
The Original Road to Roota
My understanding of the way the world worked was blown to bits and replaced with a more unified theory on all things monetary... all things that lead us down The Road to Roota otherwise known as the Road to the Gold Standard.
Greenspan's Golden Secret
The following concepts are the key support pillars in The Road to Roota Theory and I have linked the support articles as back up. Once you understand these concepts you will understand what is happening all around you as the world you once knew comes crumbling down to be replaced by a new and better system.
1) All markets have been 100% controlled by computer programs since the 1970's in order to steer and control prices thus prolonging the fiat monetary system.
2) A powerful cabal of the world's elite have taken over that market manipulation process and twisted it to enhance their own profits while pretending to service their nation's best interests.
3) In the early 1900's the United States embarked on a secret policy to hide all of its own natural resources and exploit the rest of the world's until resource scarcity was fully recognized.
4) In order to support the oil backed US Dollar and the world's petro-based economic system the "powers that be" have hidden new energy technologies that would greatly benefit the world's population as well as the environment.
5) Since 911 there is a group of people and governments that have decided "enough is enough" and are in the process of removing the banking cabal from their seat of power.
6) The planned destruction of the fiat monetary system is the type of "Creative Destruction" event that will force the implementation of a new Gold Standard within the United States.
You may argue all you want about my interpretation and conclusions but there will be no arguing the final results. When the final crash comes the facts will show that the Road to Roota Theory was the closest thing to a "correct analysis" of the gold market available at this time in history.
This is your peek behind the curtain of the Great and Powerful OZ!
As we read the papers today the events are unfolding before us. The real question now is what will happen in the future? Will we be cast into a deep and dark depression with no hope for future generations or will we survive and even thrive as we make this transition?
Here is my interpretation of all the information found in the archives:
These conclusions may sound way too positive and outrageously naive but everything I watch points to a very bright future…even if it takes a few bumps to get there!
1) The collapse of the fiat monetary system will be total and complete equalizing the playing field between the "haves" and the "have-nots".
2) All paper/electronic debt and assets will evaporate with the collapse of the fiat money system.
3) Those who have perpetrated the outrageous and monstrous crimes of the past 100 years will be hunted down and prosecuted (if they are lucky).
4) The US will issue a new gold backed currency (domestically) allocating it according to future social security payments due.
5) The US will allocate much of the new gold backed money to support the funding of schools, police, health care, infrastructure and other necessities for a fully functioning society.
6) Globalization will end upon the collapse of the derivative structure and all countries will end global trade concentrating on their own internal commerce.
7) All US overseas troops will return home to protect our boarders and ensure the safety of our citizens.
8) The US population will be fully employed working to replace all the overseas production lost in the reversal of Globalization.
9) The United States will tap into its VAST natural resources that have been hidden away for years in National Parks, Military Bases and sites deemed "Ecologically Sensitive".
10) A vast array of new energy technologies will be revealed since there will be no more need for the "oil standard" that has supported the US Dollar for the past 50 years.
11) The implementation of the new monetary system will usher in a glorious new "Golden Age" that the world will embrace after years of being lead around like "Sheeple".
We are on the cusp of something truly momentous in the history of the human race. With the full transition there is no need to lose the free markets system. Truthfully, a true "Free Market" system has never been given the chance it deserves with all the market rigging of the past 100 years.
We will be free again. We will resurrect our Constitution and we will make the United States of America the Land of Liberty that our forefathers envisioned.
Let's pray that the change is peaceful.
May the Road you choose be the Right Road.
Bix Weir

The Road to Roota Theory
Bix Weir

The Road To Roota Theory (2 Hr Interview)

SGTBull07 Interviews Bix Weir
Part 1
Part 2
Part 3

Feb 19, 2011
Bix Weir, author of the 'Road To Roota' Theory, and Board Member of

CHECK OUT! Bix Weir's Website

Tuesday, February 15, 2011

Hugo Salinas Price James Turk Interview about silver money
In this video silver advocate Hugo Salinas Price, President of the Mexican Civic Association Pro Silver, A.C., is interviewed by James Turk, Founder/Chairman of GoldMoney and Director of the GoldMoney Foundation. Hugo explains what led him to believe that silver coins should be money again. Hugo and James discuss the essence of sound money.

Friday, February 11, 2011

Part 4 - Silver and Gold Manipulation Explained

This is Part 4 of the series. There are lots of things going on behind the curtains. Silver and Gold are being manipulated to the extreme now as the end of the currency cycle has arrived. The shift has begun, and it will come with some pain.

Tuesday, February 8, 2011

Keiser Report: Fiat Food (E119)

This time Max Keiser and co-host, Stacy Herbert, talk about fake rice and real inequality and about a 'new model' that looks a whole lot like an old model called capitalism. In the second half of the show, Max talks to Pierre Jovanovic, author "Blythe Masters," about credit default swaps, the Queen of commodities and Marie Antoinette.

Saturday, February 5, 2011

Alaska Gold Rush Part 11

When the going gets tough the tough seek new frontiers. Six recession hit patriots from Oregon become greenhorn gold miners.

King World News Interviews with Ben Davies, James Turk + Weekly Metals Wrap

GOLD, SILVER & MINING SHARES - Ben Davies: CEO of Hinde Capital - Rising star Ben Davies gives another great interview on the gold and silver markets in great detail. A must hear for all KWN listeners. Recently Ben appeared at the London Gold Conference on a panel with James Turk and others. Davies ran trading for RBS Greenwich Capital in London where he managed a macro portfolio. Ben Davies and Mark Mahaffey, former colleagues from RBS Greenwich Capital, established Hinde Capital in early 2007, primarily to focus on the precious metals and the commodity sector.

Chairman and Founder of - James has written “The Freemarket Gold & Money Report,” an investment newsletter since 1987. He has specialized in international banking, finance and investments since 1969. James subsequently joined the investment and trading company of a prominent precious metals trader based in Greenwich, Connecticut then moved to the United Arab Emirates to be appointed Manager of the Commodity Department of the Abu Dhabi Investment Authority, a position he held until resigning in 1987.

KWN Weekly Metals Market Wrap: We have added new segments to the KWN Weekly Metals Wrap covering gold, silver, trading and a plethora of other factors affecting the precious metals markets. I am giving King World News listeners globally access to what has long been my weapons in researching where gold and silver are headed directionally along with the COT Report. We Cover the Commitment of Traders Report in detail as well as a number of other factors which can influence the gold & silver market price action.

Thursday, February 3, 2011

Keiser Report: Silver Stick for JP Vampire (E118)

This time, Max Keiser and co-host, Stacy Herbert, talk about French President Nicolas Sarkozy going postal on JP Morgan CEO, Jamie Dimon and about the US Drug Enforcement Agency goes Village People with their big lipped rubber ducky for sale. In the second half of the show, Max talks to Sandeep Jaitly of about a gold standard, backwardization and the Austrian school of economics.

Wednesday, February 2, 2011

More turmoil in Yemen/Irish citizens remove massive amount of euros from bank accounts ie. your old fashion Bank Run) via Harvey Organ

More turmoil in Yemen/Irish citizens remove massive amount of euros from bank accounts ie. your old fashion Bank Run)

Good evening Ladies and Gentlemen:

Gold closed today at $1331.50 down $8.10 dollars. Silver also fell by 23 cents to $28.30. The banking cartel felt the need to whack these precious metals again as the world focuses on commodity prices which are rising everywhere on the globe.

First let us head over to the gold comex and see what transpired:

The total gold comex open interest fell by 793 contracts yesterday despite gold's rise. Obviously there was short covering by the bankers. However it looks like those who settled in cash did not buy any April or other gold contract. They may have switched into silver.

The front options open interest in gold saw its open interest fall from 4887 contracts to 2396 for a loss of 3294 contracts. Since the deliveries yesterday were 1699 then we must have lost a few more contracts for cash. The front delivery month of April saw its oi remain relatively constant, falling from 309,239 to today's reading of 307,686.

The estimated volume today on the comex was rather low at 111,308. The confirmed volume yesterday was normal at 162,617.

And now for silver:

The total silver comex open interest rose from 123380 to 125,287 for a gain of 1907 contracts. You would expect this is due to silver's rise yesterday.

The front options delivery month of February saw its open interest surprisingly jump to 118 from 35 as the bankers allowed some exercised options to surface for air and thus tell us that they have been exercised.

The estimated volume on the silver comex today was normal at 41,496. The confirmed volume yesterday was extremely good at 67,231.

to continue reading Harvey Organ's Daily Gold & Silver Report

Tuesday, February 1, 2011

Keiser Report: Dope Economy! Fecal Finance! (E117)

This time, Max Keiser and co-host, Stacy Herbert, talk about emails showing Bear Stearns cheated clients out of billions. In the second half of the show, Max talks to Nomi Prins, author of It Takes a Pillage, about Goldman Sachs' Facebook deal and more.

Richard Russell - Gold is in the Process of Building a Bottom

Richard Russell - Gold is in the Process of Building a Bottom

With gold and silver off of the recent lows and the US Dollar staying below key support at 78.50, the Godfather of newsletter writers Richard Russell asked this important question, “Will the dollar continue its fall, and will the Dollar Index break below its March 2008 record low of 72.165?”

Russell continues:

“A typical know-nothing article appeared in Saturday's Wall Street Journal. The title of the article was: "Is Gold's Golden Era Over?" The article was accompanied by a chart which shows gold matched with the sluggish Consumer Price Index (CPI). The inference is that since the CPI has hardly budged over the years and gold has surged, that gold is in a fairy-land world of its own.

Of course, we know that the CPI is just another phony government index, an index that fails to reflect the true path of price inflation. The WSJ article tells us, "The price of gold largely reflects sentiment rather than fundamental demand, which is one reason why gold kept rising the past ten years. But speculators already have cut their bullish bets on gold to the lowest level since 2009. Heavier selling, in turn, could beget still more selling."

This is the kind of utter nonsense we read in the media, week after week, month after month. Of course, ironically, the media is doing so-called "gold bugs" an enormous favor. The media has kept the US public out of, or afraid of, gold for years, thus holding back what otherwise might have been a panic by Americans to buy gold. In this way, the media has kept gold cheap, cheap enough so that the so-called gold bugs have been able to accumulate the yellow metal at bargain prices over the years.

The media today never asks why no fiat currency has lasted for long. In 1971 Nixon slammed down the gold window because the government feared that it was losing too much gold. Yet articles continue to appear in the US media, all suggesting that gold is a hyped-up relic of the past, and that even if you like gold, it is far too expensive at its current price.

Gold -- I believe that gold is now in the slow and often confusing process of building a bottom. April is now the active month for gold. The low for April gold on the sell-off was 1311.30. That should represent the extreme low for this consolidation. Sit with all your precious metal positions.

Ironically, the media seldom attacks the dollar or fiat currencies. The media never mentions that fact that most fiat currencies have died within 40 years of their original creation.

Yes, it's a strange, strange world we live in. And I expect the year 2011 will be a year when a great many questions will be answered. Stock market, the dollar, gold, interest rates -- we await your verdicts.

In the meantime, I believe the surest bet is as follows -- the US dollar will continue to lose purchasing power. All else will stem from that phenomenon.”

To subscribe to Richard Russell’s Dow Theory Letters CLICK HERE.

For all King World News readers and listeners globally, I hope you understand the importance of what Russell is discussing here. Should the US dollar continue its decline and take out the lows, you will see a move into gold and silver and a corresponding price rise that will be absolutely shocking to the investment world.

This would result in a panic into hard assets. So far this bull market has been very orderly, this would be a gold and silver market that would be disorderly to the upside, and one that would utterly destroy the gold and silver bears.

Eric King

POLITICAL & ECONOMIC CHAOS A SGTBull07 Precious Metals Report