There Goes Gold via ZeroHedge.com

There Goes Gold
Submitted by Tyler Durden on 07/12/2011 13:39 -0400

http://www.zerohedge.com/article/there-goes-gold
There probably is a reason for the sudden move higher in gold, but we don't know or care. At this point the end of Ponzism is a given. Just a matter of time. Next stop for gold $2,000, then various multiples of $1,000 after. But first, the all time nominal high of $1,577 from May 2.

Stunner: Gold Standard Fully Supported By... Alan Greenspan!?

Stunner: Gold Standard Fully Supported By... Alan Greenspan!?
You read that right. After such establishment "luminaries" as World Bank president Robert Zoellick, Warren Buffett's father Howard, Jim Grant, and, most recently, Kansas Fed president Thomas Hoenig, all voiced their support for a return to a gold standard, the most recent addition to the motley group of contrite voodoo shamans is none othe than the man who is singlehandedly responsible for America's addiction to cheap toxic credit, who spawned such destroyers of the middle class as the current Chaircreature, and who currently is the chief advisor in John Paulson's crusade to gobble up every ounce of deliverable physical in the world: former Fed Chairman - Alan Greenspan! In an interview with Fox Business, the man who refuses to go away into that good night: "We have at this particular stage a fiat money which is essentially money printed by a government and it's usually a central bank which is authorized to do so. Some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or a currency board, because unless you do that all of history suggest that inflation will take hold with very deleterious effects on economic activity... There are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard." And a further stunner: Greenspan himself wonders if we really need a central bank. Now our only question: why couldn't the maestro speak as clearly and coherently during his tenure which resulted in our current near-terminal financial state. And as a reminder, courtesy of Dylan Grice, if and when we do get a return to a gold standard there would be a need to reindex the monetary base to a real time equivalent price of gold, putting the price of the precious metal at about $6,300: "The US owns nearly 263m troy ounces of gold (the world's biggest holder) while the Fed's monetary base is $1.7 trillion. So the price of gold at which the US dollars would be fully gold-backed is currently around $6,300." And here you have people worried about day trading volatility...



h/t Mike Krieger

Mike Krieger Explains Why Fiat Money is Immoral - ZeroHedge.com

Mike Krieger Explains Why Fiat Money is Immoral

At the Sanford Bernstein conference several years ago Joseph Stiglitz spoke and said a good and healthy financial system is a small financial system. I couldn’t agree more. This is especially the case in a purely fiat money system. Money is too important to allow greedy children in expensive suits on Wall Street and dangerous academics at the Fed to play around with. I do not claim to know what the ideal money system is but I want to be very clear on this point. If we have a fiat system like today the banks should be the most regulated industry on the planet and operate like utilities. They are supposed to help the productive economy innovate and create wealth. They are not supposed to be parasites that suck the lifeblood out of the real economy and compose 16% of the weight in the S&P500 (only technology is bigger at 17%). Something is VERY, VERY wrong here.

Silver Spreads: Contango Crush Update - ZeroHedge.com

Silver Spreads: Contango Crush Update

A Continuation from Yesterday’s Story: Silver Contango Crushed – Short Squeeze Imminent or Position Limit Ruling Fall Out? (below)

Courtesy of FMX Connect

Silver spreads continue to sell off on Thursday. So far, any theories that weaker spreads are ultimately bullish for the physical metal have to be viewed suspiciously. We spoke with a couple of traders on the topic and our revised possibilities list is as follows:

Points

Silver spreads are being sold because..

1. There is a physical short squeeze coming.
2. The appearance of a short squeeze was manufactured as an exit strategy for a long to get out.
3. Spreads are being messed with in light of the CFTC position limit ruling.
4. Two-year silver rusts and spot silver doesn’t.

Counterpoints

1. Why is the market lower?
2. It’s an awful lot of money to spend to camouflage your selling. Millions,upon millions of dollars.
3. This theory remains entirely possible but the kind of sophisticated funds affected by the new regulation probably wouldn’t puke that way unless they were blowing out.
4. We’re no chemists, but we suspect this statement is somehow inaccurate.

For the time being, we can not discount that there is a short squeeze coming but more information is needed before we can know for certain. If a bullion dealer is selling spreads because they anticipate making delivery we think we’d probably be the last to know, that’s why we are think it is more likely than not that this a charade. Whatever the message may mean, it is certainly expensive to send.

There is one other theory worth mentioning. The most important thing to know is that history does not repeat itself but it sometimes hums a similar tune. What happened in 1997 we do not think will happen again, exactly the same way. In 97 spreads collapses and the market screamed higher, there was no misinterpretation of the signal. We think someone is being fooled or making a mistake, we just don’t know exactly how yet. There may be a sap at the table, but his identity is unclear for the time being.




FMX Exclusive: Silver Contango Crushed – Short Squeeze Imminent Or Position Limit Ruling Fall Out?




Courtesy of our friends at FMX Connect.

Silver Contango Crushed – Short Squeeze Imminent or Position Limit Ruling Fall Out?

In silver, the contango was hit hard about 3 AM this morning with 2 year futures coming in as much as 15 cents relative to spot. The Z11/Z12 futures spread settled 21.40 yesterday and the market today is 13/15. The H/Z futures spread settled 19.2 The market today is 9/11.

What could cause this?

Factually speaking, 2 reasons cause contango to collapse. The first is interest rates and interest rates would have to decrease a large amount for this type of move in the spreads. The second is delivery concerns. When a producer, bullion dealer, or speculator is short the front month, come expiration, it has a a choice: make delivery or don’t make delivery. There are 2 ways to avoid making delivery, Reissuing, which is essential covering shorts, and deferment. Deferment involves leasing the metal from someone else or rolling your short to a back month.

Last time we saw a contango move this significant was in 1997 before Warren Buffet took delivery. While more information is needed, and this could be a fake out we think the spread’s move is important. It happened during Asian hours and the Asian market has shown strong physical demand. If this continues in conjunction with higher lease rates you will more than likely see a short squeeze. There is another less exciting reason it could be happening. Additionally, it could be related to the CFTC position limit ruling. Silver position limits will be implemented in 2 tiers. The first tier is a limit on front month contracts. The 2nd tier limits the aggregate number of contacts for all back months combined. Someone could just be moving their position around to deal with the new regulatory structure. Our conclusion is that we are going to have a short squeeze or increased volatility in the spread market as major players shuffle their open interest around. Stay tuned..

US Mint Reports January Silver Sales Hit 26 Year High -ZeroHedge.com

US Mint Reports January Silver Sales Hit 26 Year High


When we had last checked on the total silver sales by the US Mint earlier today, the amount given was 3,407,000 ounces, a number which we had earlier speculated would be a monthly record if sales were maintained at the current pace. And as the number had not been updated we assumed that "either buying interest has ceased overnight (unlikely), that the mint is not updating its numbers (likely), or, worse, that the Mint has now stopped selling any form of silver for reasons unknown." Indeed, the result was the likely one, and following a quick check today on US Mint sales confirms that sales have once again surged following the Mint's delayed update. As of today they stood at a whopping 4,588,000, or nearly 1.2 million ounces sold in a few short days. This represents the biggest monthly total sold by the US Mint going back to 1986 when the Mint disclosed its first monthly sales record... And the month is not even over yet. In other words in just the first three weeks of January, the mint has sold more silver than in any month in its history according to its public records going back 26 years.

So the bad news is that while the bulk of Scotia Mocatta's silver bars continue to be sold out (and just the Valcambi 1kg bar is shown as available), the good news is that the kind folks at BullionVault were good enough to advise us that their physical silver inventory is now back and is on line (and contrary to our previous notification, the firm's physical shortage was not in Germany but in England, where its vaults are located) so our England-based readers can go ahead and purchase at will from said location.

European Silver Shortage Spreads To UK - ZeroHedge.com

European Silver Shortage Spreads To UK

On Friday we disclosed that major PM distributor, retailer and trading house BullionVault.com had run out of physical silver inventories in Germany (and possibly elsewhere) and was advising clients to seek the precious metal elsewhere. Today, we find that the UK joins Germany in what is now becoming the second round of the global silver shortage (the first one occuring in May 2010 when it was unclear just how the ECB would deal with insolvent PIIGS). Below is the warning by British BullionByPost notifying clients that the company currently has no silver bars in stock. Inventories are expected to be restocked later in February. In the meantime, as before, we urge customs agents to do a quick check of the cargo hold of all private jets (and time shares) registered to any banker making over $25 million. After all, surely the Tunisian president didn't come up with the idea to flee with 25% of Tunisia's gold entirely on his own.

BullionVault.com Runs Out Of Silver In Germany - ZeroHedge.com

BullionVault.com Runs Out Of Silver In Germany


With the US Mint selling silver at an unprecedented pace, it was only a matter of time before the silver shortage would be spotted across the Atlantic, where distributors ran out of both gold and silver on a daily basis during the first time Europe became insolvent some time in early May 2010. Sure enough, BullionVault.com has announced that it has run out of silver in Germany "due to high demand." In the meantime, the CFTC's actions have succeeded in allowing the JPM's suppression of precious metals markets to continue indefinitely, yet all its actions have really done is to provide a short-lived lower cost basis for the precious metals as there is no indication demand is subsiding. At some point the margin calls will come. Then not even Gary Gensler will be able to bail out JPM (we wish we could say the same about Ben Bernanke to whom JPM's role as head of the tri-party repo clearing market is irreplaceable in maintaining an orderly shadow liquidity market).

ZeroHedge - India Gold Imports Hit Record As "Price Is No Longer A Factor"

India Gold Imports Hit Record As "Price Is No Longer A Factor"


All those who continue ridiculing gold, saying it has no utility, tend to forget one thing: it just happens to be the ultimate status symbol (especially for the nouveau riche). And who these days wants to demonstrate status (and has a lot of nouveau richness)? Why, the 2+ billion consumers who are benefiting from the biggest growth story in the world, i.e., China and India. According to the World Gold Council, gold demand in India in the last year reached a record. Per Bloomberg: "Purchases were about 800 metric tons, compared with 557 tons in 2009, Ajay Mitra, managing director for India and the Middle East at the producer-funded group, said today in a phone interview from Dubai." But how is that possible? After all gold prices surged in 2010 compared to 2009: is gold demand supposed to be inelastic? Surely you jest? Well, no: "Our assessment is demand will continue to be strong,” [Mitra] said. “Price is no longer a factor.”" Re-reading the bolded sentence a few times just may explain why PM distribution centers with actual physical inventories have suddenly become rarer than hen's teeth.

ZeroHedge Articles of Interest

Cazenove's Griffiths: "Not Owning Gold Is A Form Of Insanity And May Even Show Unhealthy Masochistic Tendencies"


Whoever said CNBC does not have good content: the biased station's European division actually has some very informed and interesting guests. Of particular note is yesterday's interview with Cazenove's technical strategist Robin Griffiths. And while the chartist tends to not be too happy with the recent stock market action (who is), the most notable item on the docket was Griffiths discussion of gold. And it was quite memorable: "I think not owning gold is a form of insanity, it may even show unhealthy masochistic tendencies, which might need medical attention. Real assets hedge paper money being printed into oblivion, so you've got to own gold and you've got to own other commodity-related investments still. Gold is far from being an overowned trade at the moment, far, far from it. Although it's been a top performer for each of the last ten years, it's still in a linear trend. Eventually it will go exponential and make more in the last little bit than the whole of the ten year trend." That pretty much covers it.


UBS Sees Silver Hitting $35 On "Physical Interest In The Metal"

It took just three months (and a 50% spike in price) for UBS to do a 180 on silver. In the firm's most recent Silver update from Dominic Schnider of Wealth Management Research, the author now says "Silver prices remain well supported and have been able to trade repeatedly above USD 30/oz." More importantly for those who are concerned that the recent all time high just north of $31 was a one time fluke, fear not: "Temporarily, prices could even hit USD 35/oz on physical interest in the metal due to firm economic activity." Bottom line: "Investors should make use of silver volatility for yield enhancement strategies At levels close to USD 25/oz, we are willing to pick up the metal." Then again, none of this should come as a surprise or even lead one to make investment decisions: after all it was just in September that the same person, in a report titled: "Price strength not on firm ground" said "We expect industrial demand to show some weakness and advise investors to avoid the metal" and concluded "We therefore prefer to be sellers at present levels and would reopen a position at or below 17.5/oz." Merely another confirmation that virtually every sellsider on Wall Street is merely a momentum riding, backward looking, chart monkey, and all those who seek original, contrarian thought are advised to stay very, very far from Wall Street "analysis."

3 New Articles at ZeroHedge Regarding Precious Metals

Virginia Creates Subcommittee To Study Monetary Alternatives In Case Of Terminal Fed "Breakdown", Considers Gold As Option


In what may one day be heralded as the formal proposal that proverbially started it all, the Commonwealth of Virginia introduced House Resolution No. 557 to establish a joint subcommittee to "to study whether the Commonwealth should adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve System in the event of a major breakdown of the Federal Reserve System." In other words, Virginia will study the fallback plan of a "timely adoption of an alternative sound currency that the Commonwealth's government and citizens may employ without delay in the event of the destruction of the Federal Reserve System's currency" and avoid or "at least mitigate many of the economic, social, and political shocks to be expected to arise from hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System." Most importantly as pertain to the currency in question, "Americans may employ whatever currency they choose to stipulate as the medium for payment of their private debts, including gold or silver, or both, to the exclusion of a currency not redeemable in gold or silver that Congress may have designated 'legal tender'." Whether this resolution will ever get off the ground, and actually find that the world is at great risk should gold not be instituted as a backstop currency, is irrelevant. The mere fact that it is out there, should provide sufficient impetus to other states to consider the ultimate Plan B.

We urge all legislators to carefully read this resolution.


Judge Sides With GATA, Orders Fed To Present Her With Its Classified Gold Records For Private Review

Our friends at GATA report an interesting development in its multi-year confrontation with the Fed, namely that the organization has "scored a small but perhaps auspicious victory over the Federal Reserve in our lawsuit seeking access to the Fed's secret gold files. The judge presiding over GATA's federal freedom-of-information lawsuit in U.S. District Court for the District of Columbia, Ellen Segal Huvelle, granted GATA's motion to order the Fed to produce in complete form for the judge's private review 20 gold-related documents the Fed has sought to keep secret. The judge ordered the Fed to deliver the documents by Friday." While this does not mean that the Fed will actually publicly announce that its gold vaults are in fact filled with GLD stock certificates, it does put the Fed in an unpleasant position to have to escalate its defense of its secrecy in an increasingly more sensitive topic, i.e., precious metals price manipulation with or without JP Morgan, and is a definite setback for Bernanke in his pretend push to make the Fed appear more transparent.


India Offers To Pay For Iran Oil With Gold

It appears that gold isn't really a currency... until it is. The Economic Times reports that India is attempting to ensure steady crude oil supplies from Iran. In doing so it is doing everything it can to pay Iran in a way that avoid loopholes associated with recent US sanctions. And the stunner: "India could settle crude oil import transaction using gold in the short term, while efforts to resolve the deadlock continue." But does Iran realize they can't possibly eat all that gold? Or that The Fed has no way of diluting to oblivion? Or that, unlike the dollar, it is currently not involved in a global race to bottom in which every central bank will have no choice but to print ever more of its linen-infused currencies? Something tells us that the answer to all three is yes.

Part 3 - Silver Manipulation Explained

http://www.zerohedge.com/article/silver-bears-are-back-round-three-explaining-two-key-recent-developments-world-silver


http://www.youtube.com/watch?v=Gl47z2g2EvI&feature=related Part 1

http://www.youtube.com/watch?v=uPg4qTNTP-E&feature=related Part 2

Guest Post: A Brief History Of Silver Manipulation - ZeroHedge.com

Guest Post: A Brief History Of Silver Manipulation
Submitted by Tyler Durden on 01/06/2011 19:59 -0500
http://www.zerohedge.com/article/guest-post-brief-history-silver-manipulation
In the early 80’s the attempt of the Brothers Hunt, Nelson Bunker and William Herbert Hunt, to fully clamp down the silver market was one of the most spectacular but at the same time also one of the most unsuccessful financials plans within the then fair world. Despite that the brothers failed in their attempt to clamp the silver market, they have succeeded to make a outright mess of the precious metals market and lose one of the largest fortunes in the world in no time.

CFTC To Vote On 10% Position Limit Proposal Next Week

CFTC To Vote On 10% Position Limit Proposal Next Week

Submitted by Tyler Durden on 01/06/2011 15:52 -0500

http://www.zerohedge.com/article/cftc-vote-10-position-limit-proposal-next-week



Just crossing the wires now. If this passes, Blythe is most likely toast.

Guest Post: How High Will Gold Go in 2011? ZeroHedge (Jeff Clark Casey Research)

http://www.zerohedge.com/article/guest-post-how-high-will-gold-go-2011
Guest Post: How High Will Gold Go in 2011?
Tyler Durden's picture
Submitted by Tyler Durden on 01/05/2011 17:37 -0500

Since CNBC has been issuing a non-stop barrage of its own version of reality vis-a-vis gold and other precious metals, it may be time for some counterpoint. For all those who believe that the drop in gold from levels which were virtually all time highs on Monday, is the equivalent of the apocalypse, we urge that you sell: volatility will be a key part of the game, and it may be prudent for timid elements to run into the levered safety of 5x beta stocks, trading at 100x forward P/E multiples, which are guaranteed to never go down. It will also likely shake out the weak hands, and certainly provide some cheaper entry points (something which we are confident Cramer's endless prattling on gold will do on its own sooner or later). That said, here are some amusing observations by Jeff Clark of Casey Research on how high gold could go in 2011. Keep in mind that just as all the program content on CNBC, this is nothing but pure abject speculation. In a world of central planning, none can predict the future with any does of certainty.

By Jeff Clark, Casey Research

How High Will Gold Go in 2011?

After stellar years for both gold and silver, what prices will precious metals hit in 2011? Here's an analysis based strictly on their price behavior in the current bull market.

First, take a look at the annual percentage gains that gold has registered since 2001 (based on London PM Fix closings):

Excluding 2001, the average gain is 20.4%. Tossing out the additional weak years of '04 and '08, the average advance is 24.8%.

So we can make some projections based on what it's done over the past 10 years. From the 12-31-10 closing price of $1,421.60, if gold matched…

* The average rise this decade, the price would hit $1,711.60
* The average rise excluding the three weak years = $1,774.15
* Last year's gain = $1,858.03
* The largest advance to date (2007) = $1,875.09


But what if global economic circumstances continue to deteriorate? What if worldwide price inflation kicks in? And what if government efforts at currency debasement get more abusive? If Doug Casey is right, a mania in all things gold lies ahead – what if that begins in 2011? Here's what price levels could be reached based on the following percentage gains.

* 35% = $1,919.16
* 40% = $1,990.24
* 45% = $2,061.32
* 50% = $2,132.40
* 1979's gain of 125.7% = $3,208.55


It thus seems reasonable to expect gold to surpass $1,800 this year, as well as reach a potentially higher level since the factors pushing on the price could become more pronounced.

Here's a look at silver.

As you can see, silver had its biggest advance in 2010. The average of the decade, again excluding 2001, was 27.5%. And also tossing out the '08 decline, the average gain is 34.3%. So, from the 12-31-10 closing price of $30.91, if silver matched...

* The average rise this decade, the price would hit $39.41
* The average gain excluding 2008 = $41.51
* Last year's advance = $56.22
* The 1979 gain of 267.5% = $113.59


So, $50 silver seems perfectly attainable this year. And that's without monetary conditions worsening.


It's titillating to ponder these advances for gold and silver, especially when you consider we might be getting close to the mania. And if we are, that should do wonderful things to our gold and silver stocks, too.

I would add one caution: the odds are high that there will be a significant correction before gold begins its march to these price levels. In every year but two ('02 and '06), gold fell below its prior-year close before heading higher. And here's something to watch for: in every year but one ('08), those lows occurred by May.

In other words, a buying opportunity may be dead ahead. And if you buy on the next correction, your gains on the year could be higher than the annual advance.

Comments
by Freddie

Where is Blythe and The JP Morgue? My silver is going down with my gold. Should I "buy the fucking dip?"

by Turd Ferguson

Yes.

With Bart Chilton Suddenly On Board, CFTC's Position Limit Plan Is Now A Go - via ZeroHedge.com

http://www.zerohedge.com/article/bart-chilton-suddenly-board-cftcs-position-limit-plan-now-go


With Bart Chilton Suddenly On Board, CFTC's Position Limit Plan Is Now A Go
Submitted by Tyler Durden on 01/04/2011 18:17 -0500

Was today's broad and very much coordinated selloff in commodities a result of the just announced news that the CFTC's position limit plan may, contrary to prior expectations, be enforced very soon? It appears that outspoken CFTC commissioner has flipped in his stalling tactic and instead is now endorsing the position limit plan. Per Reuters: "Under the system, if a trader's holdings in a commodity reaches a certain threshold, it triggers a new level of heightened regulatory scrutiny by the CFTC where commissioners could vote to require the trader to reduce their positions." This means that JPM's accumulated holdings in various precious and industrial metals are not only about to likely become public, but that the CFTC will be mandated to very shortly enforce a break up on those positions which are deemed too concentrated. It is unclear how foreign entities, to whom the recent accumulation in various precious metals has been attributed, will be impacted by the proposal which now appears may be shortly enacted.

World’s Richest Man Entering Silver Gaining Momentum via King World News (KWN)

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/4_KWN_-_Worlds_Richest_Man_Entering_Silver_Gaining_Momentum.html
(Click the above link to read the entire story)
KWN - World’s Richest Man Entering Silver Gaining Momentum
From Neil Hume at the Financial Times, “Carlos Slim, the world’s richest man is looking to enter the silver market in a big way. And that big way, according to KingWorldNews, is a bid for Fresnillo, the Mexican based mining company that is poised to become the world’s biggest silver producer...All of which could be contributing to this morning’s spike which has carried Fresnillo to the top of the FTSE 100 leaderboard.”

http://ftalphaville.ft.com/blog/2011/01/04/447746/slim-%E2%9D%A4-silver/

http://www.zerohedge.com/article/worlds-richest-man-carlos-slim-entering-silver-fray

Matterhorn Closes The Year In Style: “Hyperinflation Will Drive Gold To Unthinkable Heights via ZeroHedge.com

Matterhorn Closes The Year In Style: “Hyperinflation Will Drive Gold To Unthinkable Heights”

Silver will go to unthinkable heights as well...

Recent ZeroHedge.com Articles Regarding Precious Metals

ScotiaMocatta Sells Out Of Silver Bars
Submitted by Tyler Durden on 12/31/2010 15:22 -0500

And an appropriate story to end 2010 with: ScotiaMocatta, one the world's biggest bullion banks, is now sold out of all silver bars.




Gold Trading Closes: Returning 29.7% For the Year, Doubles S&P 2010 Performance
Submitted by Tyler Durden on 12/31/2010 14:48 -0500

Some time in mid/late 2009, after becoming convinced that the stock market is a broken topological nightmare, with feedback loops that are so unpredictable to be virtually "skyNet" self-aware, and is in essence broken, we urged readers to pull all their capital from the stock market. This happened even as we grew increasingly concerned by the Fed's ongoing ruinous actions which anyone but the staunchest propaganda foot soldier realized were going to mean ongoing pain for all dilutable assets, including stocks and fiat currencies. As a result it became abundantly clear that hard assets such as gold, silver, non-nailed down park benches, bananas, hard liquor, stripper poles, and of course strippers, would outperform paper assets. Sure enough, with regard to the first, in May 2010, our skepticism about stocks was confirmed, and anyone who had limit sell orders likely ended up losing up to 40% of their capital with no recourse. Since nothing has changed in stocks, we repeat our warning that the market is at all times a few stray millisecond algos away from total meltdown. And as for gold: the 29.7% 2010 return is double that of the S&P. Which means those who did not play stocks and bought gold did ok. And even those who shorted stocks and bought gold, are still up about 15%. As above, little has changed to weaken our long-term conviction that gold (and silver, for those who can handle the added vol) is the natural antithesis to central banker lunacy. And that we will have a lot more of in 2011. Guaranteed.



Read Ted Butler's Prophetic Letter Warning Of COMEX Silver Manipulation... In 1989
Submitted by Tyler Durden on 12/31/2010 14:05 -0500

After precious metals market manipulation finally came out of the tinfoil hat closet and was officially recognized in 2010, subsequently becoming mainstream, following various whistleblowing disclosures which led to a long overdue investigation by the DOJ, and CFTC commissioners such as Bart Chilton admitting that there is in fact open market manipulation in the silver futures market by large short position holders, nobody is more relieved than Ted Butler. As the attached letter written by Butler shows, the PM expert wrote with excruciating detail everything that would subsequently be proven true. A key excerpt from the letter: "the true sorrow in this whole affair is that, in addition to the unnecessary financial punishment, the producers and owners of Silver (including the U.S. government) have experienced over the last six years, there are tens of thousands of contracts held short by innocent and unsuspecting speculators who are in for a ruinous shock. Do not be surprised, when this manipulation is attacked, to see the price of Silver open $20 per ounce higher at that time. Since that would represent a $100,000 loss on each contract held short, the current $2,000 COMEX margin will provide scant protection against the inevitable massive bankruptcies for those shorts not holding real Silver." The kicker: the letter was written on April 25, 1989.




Will Silver Be Worth More Than Gold? Perspectives On A Coming Silver Shortage
Submitted by Tyler Durden on 12/31/2010 10:35 -0500

While hardly news to regular readers, most of whom have ridden the 80%+ wave in silver in 2010, the following video from Future Money Trends explains some of the key basics about why silver, which is unique in the precious metals basket in that it is also an industrial metal (and has thus sparked much debate over whether or not it, like gold, is "money"), and provides some perspectives on why silver just may one day be more valuable than gold. Some facts: while there are 10 ounces of silver, for every ounce of gold mined, the most of it is not "free flowing" and is locked up in industrial uses; for every $1 in SLV investors still pile $7 in GLD; above ground silver has declined from 10 billion ounces in 1950 to 5-700 million ounces in 2010 (compared to an increase in above ground gold from 1 billion to 7 billion ounces); the gold to silver ratio is at 50x while the average long-term is 15x, industrial demand for silver is up 18% in 2010; and much more. Of course, there is no reason why one has to pick one or the other. Historically both have been tiered stores of value, with the Roman empire going so far as to succumb its silver currency when the going got tough. The simple fact is since global deleveraging will likely continue and since the US government will need to print trillions, most of it monetized by the Fed, the ongoing currency dilution will continue to result in increasing P prices: pretty simple. The only downside case to gold and silver holdings would involve massive asset liquidations a la September 2008, which also would mean that the Fed has lost control, that the US dollar is no longer the reserve currency, and that after the smoke settles, non-fiat currencies will rise again. And that includes both gold and silver.