Sunday, August 9, 2009
An Explanation of the Federal Reserve Leviathan
A excellent video explaining the deception of the Federal reserve. Support Ron Paul's Audit the Fed bill.
James Turk and the NH Gold Currency Bill
James Turk, the founder of Goldmoney.com was instrumental in the formulation of the original New Hampshire Gold currency bill. His system is to be the backbone of the e-currency part of the parallel currency, if it ever passes.
Silver is your means of preserving your wealth. Monex is the low-cost Silver retailer. Jump on the 500% rise in Silver over the next two years. 800-949-4653 x2172
use Kevin from Goldmoneybill as referral to help support this site.
Saturday, August 1, 2009
Why I would manipulate Silver? If...
By Jason Hommel SilverStockReport.com
Goldman Sachs has admitted that they have a computer program that can be used to manipulate markets.
“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,”
For over ten years,GATA has gathered information and admissions from central bankers and major bullion banks that the price of gold on the world market is manipulated lower than it should be. Well, one more admission is close enough for me to be counted as one more proof.
Many people are paid to deny such manipulation of course, because the people who are doing the manipulating are earning a lot of money from their ability to print money at will, without it showing up in a rising gold price.
One of the more preposterous denials of manipulation is that keeping silver down in a rising market would simply cost too much, as nobody could afford the losses.
That's just propaganda, of course. Losses on bad trades, such as being short the silver market, must be taken by somebody.
But my strength lies in running the numbers, using estimates, and exaggerations, to prove the point.
At the most, I've seen the silver market with a total open interest of up to 800 million ounces. This is a rare top, of course, but it can be used to determine a hypothetical maximum of "total losses" for being short silver during the entire bull market.
Silver has moved from a low of about $4.15/oz. in early 2003. Since then, silver topped out at about $21/oz. in the spring of 2008.
Using those three figures can give us a maximum total estimate of COMEX paper silver losses, assuming 5 unreasonable and exaggerated things.
1. That the short position was all put on, and initiated, entirely, at $4.15 -- which it wasn't, it was put on starting at the former top in 1980 of $50/oz, and major bullion banks have always been short, ever since.
2. That the short position was completely covered at the top of $21 -- which it wasn't, and it got much bigger at the top, and again, after that top, around $16/oz, as the banks sold 41 times more paper silver as was purchased by physical silver investors in a month, which helped to push the price down to $8/oz, which was very profitable for part of their position.
See: A Tribute to 7th Grade Math August 31, 2008
http://silverstockreport.com/2008/7thgrade.html
3. That the short position was one size, and held the entire time with no trading -- which it wasn't.
4. That the short position was always held by entirely one entity -- which it wasn't.
5. That the short position was always a maximum of 800 million oz. -- which it wasn't.
So, given the real facts, the losses on the short position would have been much smaller, but we are not interested in the smallest possible cost, but the largest possible cost, to utterly refute and ridicule the notion that it would be "too expensive" to manipulate the silver market in a rising market.
So, the difference between $21 and $4.15 = $16.85
The loss of $16.85 x 800 million oz. = $13.48 billion
Even with all the exaggerated figures, exaggerated in 5 ways, still brings the total losses in silver manipulation to a theoretical maximum of $13.5 billion. Clearly, the real loss, being short on silver at the COMEX, must have been much less.
But I would guess that they might even have profited along the way, instead of taking losses, for several reasons.
First, they have those "manipulation trading programs" admitted by Goldman Sachs at the start of this article.
Second, their positions are so large, that those who are short, ARE the market, and I'm sure they use their computer programs to only sell "just enough" to move the market price nearly at will.
Third, they know their own clients' books, and stop losses, and can run the price of silver to trigger those stop losses to take over client long positions, so their clients lose money.
Fourth, the COMEX positions are smaller than their OTC positions, which are a much bigger liability.
Fifth, rigging the silver price aids the rigging of the gold price, and both allow the continued existence of a falsely strong U.S. dollar, which they have printed up over $1 trillion of this year, with no new "inflation" showing up in the prices of gold and silver.
And that fifth reason is so profitable, that a $13 billion loss in COMEX trading is just "the cost of doing business", and anyone who can't see that, is either blind, or paid off, and you don't need a sophisticated computer program to realize that, but only the willingness to perform 7th grade math on 3 numbers, as I just went over.
The reason for me doing this simple math exercise is to show by comparison how that maximum figure of $13 billion, is so very miniscule, so very tiny, compared to that other figure listed as my fourth reason above, a very important figure, the BIS OTC silver numbers.
The BIS (Bank of International Settlements) publishes a list of the notional value of outstanding OTC (Over the Counter) commodity derivatives. The category of interest is "Other precious metals", which is mostly all silver. The amount in Jan. 2008, was $190 billion.
That consisted of $86 billion in forwards and swaps, and $104 billion in options.
http://www.bis.org/statistics/otcder/dt21c22a.pdf
In Jan. 2008, the silver price was about $16/oz. Thus, we can see that the number of ounces short in that "OTC" market was $190 billion / $16 = 11,875 million ounces.
This comparison is extremely important, because the OTC market is much bigger than the COMEX, which had reported short positions of a maximum of only about 800 million ounces of silver.
Currently, COMEX silver open interest is 133,000 contracts for 5000 oz. each, which is 665 million oz.
http://news.silverseek.com/COT/1246909610.php
Clearly, a loss of $16.85/oz., during the entire bull market in silver from 2003, over 11,875 million ounces in the OTC market, would be a much bigger loss, as it would be $200 billion!
Yes, in "OTC Bullion Accounts", world bankers have a potential loss of about $200 billion, if they could even deliver 11,875 million ounces that clearly doesn't exist in their vaults, and doesn't exist in the world even to buy!
It is also extremely important to note at this point that the world's silver mines only produce about 600 million ounces, and world physical investment demand is only about 100 million ounces, or about $1.3 billion at the current $13/oz.!
So, if you were one of those bankers, and you had a potential loss of $200 billion wouldn't you rather lose $13 billion trading at the COMEX to save the $200 billion loss in the OTC market? I would.
That must be very near to how they rationalize it.
After all, if you can control the reported price on the open markets, then your losses in the "over the counter" market is much smaller.
And it's a great scam, as long as people continue to be convinced to hold paper silver other than real silver, which they are, as the numbers prove it.
With only $1.5 billion going towards the purchase of actual physical silver in a year, while $200 billion is sitting in OTC "other precious metal" accounts, it goes to show that the vast majority of people who own silver, or about 99% of assets in "silver" are really paper silver, most of which could not possibly exist as real silver.
And that still does not include all the other paper markets!
For example, another paper market is the silver certificates issued by Canadian banks, that the Banks are no longer redeeming. The refusal and inability to redeem Canadian silver certificates has continued without much notice, and no official reports or admission. It's like a silent bankruptcy, not even getting any press or much blog coverage, because, still, so few people even attempt to redeem them. But my point is that I have no idea of the size of that paper market, it could be in the billions, too.
And those BIS numbers also don't include the LBMA accounts that trade up to 30 billion ounces of silver per year, which is about 120 million ounces of silver per day, on a base of 75 million ounces of physical silver, which is another absurdity, of course! Those numbers were reported in the CPM Group's annual silver book for 2008.
And those BIS numbers don't include the ETFs either, since the ETFs are not an "over the counter" market, but a transparent one, and also don't likely have any silver, since the custodian is JP Morgan, who has also been identified as the key bank that is short in the silver market on the COMEX.
So, perhaps much less than 1% of people who think they have silver, actually have any physical silver.
Furthermore, those people who are blissfully happy to let their assets sit in "paper silver" accounts are nearly guaranteed to not make any significant money in silver, if only because when silver does soar past $100/oz., there's no way that those bankers would pay out $100 x 11,875 million ounces = $1,187 billion dollars to those paper silver holders.
And of course, 11,875 million ounces of silver does not exist in the world for them to buy, cover, and pay out, in any event!
Instead, the banks will do as they always do, and merely change the rules, or force a cash settlement (which is a quasi-"bankruptcy") at much lower silver prices. They will simply default, which means that they will fail to deliver silver that they don't have, of course.
Their danger, of course, in doing even that, is that people might begin to wake up, and demand real silver if they can't have paper silver.
After all, paper silver serves its purpose to manipulate silver prices downwards, only if it serves as an alternative to prevent people from buying real silver.
Here's an additional cost of the manipulation. Manipulation only works if they can actually deliver real silver, at lower than market prices. I have heard of offers to miners of up to 4% over spot for access to all of their silver. Isn't that kind of offer evidence that the "spot" price is manipulated lower than the real cost of real silver?
So, let's calculate the maximum potential cost of that. Suppose the world bankers bought 100% of world production this way, at 4% over spot, from the miners and refiners, and then turned it around, to sell it at what becomes "spot", for 4% less, at a manipulated "loss", a loss to manipulate the markets. With 600 million oz. of world mining production, at $13/oz., x 4% is a mere $312 million, a tiny cost of "doing business" to keep manipulation going, and to continue the COMEX rigging, and to prevent the bankruptcy and loss of $200 billion in the OTC markets!
And even that $312 million "loss" could be mitigated, by moving the price of silver lower, at will, on the "spot" futures market, precisely on those days that miners or refiners sell to the bankers "at 4% spot". I've always wondered why miners always seem to report sales prices lower than average for the quarter, while often claiming to be using some sort of price protecting hedges to get "above market" prices. That must explain it, in part.
And so, that's why I would manipulate silver, and gold, if I were a blood-sucking vampire of a central banker, who had no conscience, and no knowledge of the importance of honest dealings.
One of my goals is to fight such wickedness in high places, as I strive to expose those evil ones to the light of truth to end their evil oppression.
I believe the manipulation can end suddenly, at virtually any time, as any one of nearly 1000 billionaires, funds, or nations, could decide to buy silver at any time, causing delivery defaults, and market failures, and major price dislocations.
I believe the manipulation usually ends when they run out of silver to deliver, and then, people begin to stop trusting in paper promises, such as happened to gold in 1933 and 1971. If the failure to redeem Canadian silver certificates is any indication, the world is scraping the bottom of barrel for silver.
I believe that when the manipulation ends, with delivery defaults, precious metals prices will rise with shocking speed, and even my own re-supply sources will likely dry up, and you might not be able to buy silver at any price, for an extended time, until the market price is much, much higher.
Goldman Sachs has admitted that they have a computer program that can be used to manipulate markets.
“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,”
For over ten years,GATA has gathered information and admissions from central bankers and major bullion banks that the price of gold on the world market is manipulated lower than it should be. Well, one more admission is close enough for me to be counted as one more proof.
Many people are paid to deny such manipulation of course, because the people who are doing the manipulating are earning a lot of money from their ability to print money at will, without it showing up in a rising gold price.
One of the more preposterous denials of manipulation is that keeping silver down in a rising market would simply cost too much, as nobody could afford the losses.
That's just propaganda, of course. Losses on bad trades, such as being short the silver market, must be taken by somebody.
But my strength lies in running the numbers, using estimates, and exaggerations, to prove the point.
At the most, I've seen the silver market with a total open interest of up to 800 million ounces. This is a rare top, of course, but it can be used to determine a hypothetical maximum of "total losses" for being short silver during the entire bull market.
Silver has moved from a low of about $4.15/oz. in early 2003. Since then, silver topped out at about $21/oz. in the spring of 2008.
Using those three figures can give us a maximum total estimate of COMEX paper silver losses, assuming 5 unreasonable and exaggerated things.
1. That the short position was all put on, and initiated, entirely, at $4.15 -- which it wasn't, it was put on starting at the former top in 1980 of $50/oz, and major bullion banks have always been short, ever since.
2. That the short position was completely covered at the top of $21 -- which it wasn't, and it got much bigger at the top, and again, after that top, around $16/oz, as the banks sold 41 times more paper silver as was purchased by physical silver investors in a month, which helped to push the price down to $8/oz, which was very profitable for part of their position.
See: A Tribute to 7th Grade Math August 31, 2008
http://silverstockreport.com/2008/7thgrade.html
3. That the short position was one size, and held the entire time with no trading -- which it wasn't.
4. That the short position was always held by entirely one entity -- which it wasn't.
5. That the short position was always a maximum of 800 million oz. -- which it wasn't.
So, given the real facts, the losses on the short position would have been much smaller, but we are not interested in the smallest possible cost, but the largest possible cost, to utterly refute and ridicule the notion that it would be "too expensive" to manipulate the silver market in a rising market.
So, the difference between $21 and $4.15 = $16.85
The loss of $16.85 x 800 million oz. = $13.48 billion
Even with all the exaggerated figures, exaggerated in 5 ways, still brings the total losses in silver manipulation to a theoretical maximum of $13.5 billion. Clearly, the real loss, being short on silver at the COMEX, must have been much less.
But I would guess that they might even have profited along the way, instead of taking losses, for several reasons.
First, they have those "manipulation trading programs" admitted by Goldman Sachs at the start of this article.
Second, their positions are so large, that those who are short, ARE the market, and I'm sure they use their computer programs to only sell "just enough" to move the market price nearly at will.
Third, they know their own clients' books, and stop losses, and can run the price of silver to trigger those stop losses to take over client long positions, so their clients lose money.
Fourth, the COMEX positions are smaller than their OTC positions, which are a much bigger liability.
Fifth, rigging the silver price aids the rigging of the gold price, and both allow the continued existence of a falsely strong U.S. dollar, which they have printed up over $1 trillion of this year, with no new "inflation" showing up in the prices of gold and silver.
And that fifth reason is so profitable, that a $13 billion loss in COMEX trading is just "the cost of doing business", and anyone who can't see that, is either blind, or paid off, and you don't need a sophisticated computer program to realize that, but only the willingness to perform 7th grade math on 3 numbers, as I just went over.
The reason for me doing this simple math exercise is to show by comparison how that maximum figure of $13 billion, is so very miniscule, so very tiny, compared to that other figure listed as my fourth reason above, a very important figure, the BIS OTC silver numbers.
The BIS (Bank of International Settlements) publishes a list of the notional value of outstanding OTC (Over the Counter) commodity derivatives. The category of interest is "Other precious metals", which is mostly all silver. The amount in Jan. 2008, was $190 billion.
That consisted of $86 billion in forwards and swaps, and $104 billion in options.
http://www.bis.org/statistics/otcder/dt21c22a.pdf
In Jan. 2008, the silver price was about $16/oz. Thus, we can see that the number of ounces short in that "OTC" market was $190 billion / $16 = 11,875 million ounces.
This comparison is extremely important, because the OTC market is much bigger than the COMEX, which had reported short positions of a maximum of only about 800 million ounces of silver.
Currently, COMEX silver open interest is 133,000 contracts for 5000 oz. each, which is 665 million oz.
http://news.silverseek.com/COT/1246909610.php
Clearly, a loss of $16.85/oz., during the entire bull market in silver from 2003, over 11,875 million ounces in the OTC market, would be a much bigger loss, as it would be $200 billion!
Yes, in "OTC Bullion Accounts", world bankers have a potential loss of about $200 billion, if they could even deliver 11,875 million ounces that clearly doesn't exist in their vaults, and doesn't exist in the world even to buy!
It is also extremely important to note at this point that the world's silver mines only produce about 600 million ounces, and world physical investment demand is only about 100 million ounces, or about $1.3 billion at the current $13/oz.!
So, if you were one of those bankers, and you had a potential loss of $200 billion wouldn't you rather lose $13 billion trading at the COMEX to save the $200 billion loss in the OTC market? I would.
That must be very near to how they rationalize it.
After all, if you can control the reported price on the open markets, then your losses in the "over the counter" market is much smaller.
And it's a great scam, as long as people continue to be convinced to hold paper silver other than real silver, which they are, as the numbers prove it.
With only $1.5 billion going towards the purchase of actual physical silver in a year, while $200 billion is sitting in OTC "other precious metal" accounts, it goes to show that the vast majority of people who own silver, or about 99% of assets in "silver" are really paper silver, most of which could not possibly exist as real silver.
And that still does not include all the other paper markets!
For example, another paper market is the silver certificates issued by Canadian banks, that the Banks are no longer redeeming. The refusal and inability to redeem Canadian silver certificates has continued without much notice, and no official reports or admission. It's like a silent bankruptcy, not even getting any press or much blog coverage, because, still, so few people even attempt to redeem them. But my point is that I have no idea of the size of that paper market, it could be in the billions, too.
And those BIS numbers also don't include the LBMA accounts that trade up to 30 billion ounces of silver per year, which is about 120 million ounces of silver per day, on a base of 75 million ounces of physical silver, which is another absurdity, of course! Those numbers were reported in the CPM Group's annual silver book for 2008.
And those BIS numbers don't include the ETFs either, since the ETFs are not an "over the counter" market, but a transparent one, and also don't likely have any silver, since the custodian is JP Morgan, who has also been identified as the key bank that is short in the silver market on the COMEX.
So, perhaps much less than 1% of people who think they have silver, actually have any physical silver.
Furthermore, those people who are blissfully happy to let their assets sit in "paper silver" accounts are nearly guaranteed to not make any significant money in silver, if only because when silver does soar past $100/oz., there's no way that those bankers would pay out $100 x 11,875 million ounces = $1,187 billion dollars to those paper silver holders.
And of course, 11,875 million ounces of silver does not exist in the world for them to buy, cover, and pay out, in any event!
Instead, the banks will do as they always do, and merely change the rules, or force a cash settlement (which is a quasi-"bankruptcy") at much lower silver prices. They will simply default, which means that they will fail to deliver silver that they don't have, of course.
Their danger, of course, in doing even that, is that people might begin to wake up, and demand real silver if they can't have paper silver.
After all, paper silver serves its purpose to manipulate silver prices downwards, only if it serves as an alternative to prevent people from buying real silver.
Here's an additional cost of the manipulation. Manipulation only works if they can actually deliver real silver, at lower than market prices. I have heard of offers to miners of up to 4% over spot for access to all of their silver. Isn't that kind of offer evidence that the "spot" price is manipulated lower than the real cost of real silver?
So, let's calculate the maximum potential cost of that. Suppose the world bankers bought 100% of world production this way, at 4% over spot, from the miners and refiners, and then turned it around, to sell it at what becomes "spot", for 4% less, at a manipulated "loss", a loss to manipulate the markets. With 600 million oz. of world mining production, at $13/oz., x 4% is a mere $312 million, a tiny cost of "doing business" to keep manipulation going, and to continue the COMEX rigging, and to prevent the bankruptcy and loss of $200 billion in the OTC markets!
And even that $312 million "loss" could be mitigated, by moving the price of silver lower, at will, on the "spot" futures market, precisely on those days that miners or refiners sell to the bankers "at 4% spot". I've always wondered why miners always seem to report sales prices lower than average for the quarter, while often claiming to be using some sort of price protecting hedges to get "above market" prices. That must explain it, in part.
And so, that's why I would manipulate silver, and gold, if I were a blood-sucking vampire of a central banker, who had no conscience, and no knowledge of the importance of honest dealings.
One of my goals is to fight such wickedness in high places, as I strive to expose those evil ones to the light of truth to end their evil oppression.
I believe the manipulation can end suddenly, at virtually any time, as any one of nearly 1000 billionaires, funds, or nations, could decide to buy silver at any time, causing delivery defaults, and market failures, and major price dislocations.
I believe the manipulation usually ends when they run out of silver to deliver, and then, people begin to stop trusting in paper promises, such as happened to gold in 1933 and 1971. If the failure to redeem Canadian silver certificates is any indication, the world is scraping the bottom of barrel for silver.
I believe that when the manipulation ends, with delivery defaults, precious metals prices will rise with shocking speed, and even my own re-supply sources will likely dry up, and you might not be able to buy silver at any price, for an extended time, until the market price is much, much higher.
Wednesday, July 1, 2009
Housing Still Going down another 50% Silver going up!
Jason is one of the reasons that I have been investing all of my excess cash into Silver. It is the common man's safe haven. When Silver was money there was a 400% premium on Silver due to coinage from the government. Now there is about 10-15%.
(Sell your House and Buy Silver!)
Silver Stock Report
by Jason Hommel, July 1st, 2009
So far, out of 80,000 readers, nobody has asked me when the housing collapse will end. Funny. I might be regarded as knowing something about that, since I called it in advance, well before the peak, 5 years ago:
Overvalued Housing, Bonds & Stocks July 2, 2004
The lack of questions is a sign that the housing collapse has a long way to go, because, generally, people are still in the first stage of mourning the death of the housing boom: denial. Nobody can ask "When will the housing collapse end?" if they can't admit the phrase "housing collapse".
After Denial, next in the stages of mourning comes Guilt. Then Anger. Then Depression. Then Acceptance.
Unfortunately, people don't start asking questions until they get to the anger phase, and they don't start doing anything about it until the acceptance phase.
Let me help you get there more quickly.
Denial: Wake up! Housing prices will NOT soon stop going down, since in many locations, 10% of all properties are 90 days past due on their mortgages, and those foreclosures have not yet hit the market, and they will.
Guilt: You should have known! Government intervention into the economy always creates distortions, and government sponsored home loans through Fannie Mae and Freddie Mac and corruption at all levels gave everyone with a pulse and the ability to lie to qualify for a home loan, that extra and excessive buying power created the top, and this was easy for anyone to see. Why didn't you see it? Were you asleep?
Anger: But good intentioned democrats who wanted to help their poor constituents achive "the American Dream" of home ownership did nothing of the sort, they helped enslave poor people into debt, not true ownership, due to government meddling. It's the government's fault!
Depression: But what can you do about it? Nothing! No matter how much you work on your yard or keep your neighbors mowing their lawns, or no matter how much you write your congressman, and regardless of electing Obama, home values will continue to go down, and there's nothing you can do about it.
Acceptance: Well, there is one thing you can do. Sell your house! Get out of the way of this oncoming train wreck in motion.
The government is doing everything they can to stop it, but they will fail.
Everyone should know by now that the government is buying up the "toxic assets" of the banks, meaning, the mortgages that are worth more than the homes are worth. Government bought at the top, and they bought the worst of the "assets".
The housing crash will end when the government finally sells all of their housing, and "exits" the market.
That's what marked the bottom of the gold market. When the governments of the world were hell-bent on selling as much gold as possible, back in 1999-2001, when gold bottomed at $250/oz. They are still selling gold, but not as much, since they are running out of gold to sell.
Government intervention always distorts markets.
Housing topped, because of excessive government-backed loans. See, government was really buying housing on the way up, creating the top. The continued government buying, through bailouts, means we are still at the top.
Government buying created the top.
Therefore, government selling will create the bottom.
Tell me when the government, or Fed, will sell all their "toxic" mortgages, or forclose and sell the houses that back them, and I'll tell you when the housing market will bottom out.
Government dumping of all mortgages and housing could be a long way off--perhaps decades.
If we are fortunate, housing prices will drop 50-75% in 4-8 years, and it will be over quickly. That is unlikely, and would require the election of somebody like Ron Paul as President.
More likely, due to continued government intervention, as is taking place, the housing collapse could last another 20-30 years.
Yes, 70% of home sales are either short sales or foreclosures. However, this only means that some banks are selling. Most of the government mortgages are not being sold, and most of the homes owned by people are owned with mortgages, meaning, on leverage, and these are not yet being sold either. Just wait until the public starts dumping homes, AND the government starts dumping at the same time. Then, you will really see a housing crash.
A "normal" housing market will have most homes selling for far LESS than construction costs. After all, homes deteriorate, and a 20 year old faucet is not nearly as nice, or functional, as a new one. People know how to "write off the depreciation" of a home on their taxes, but this generation does not yet seem to understand that real homes, do, in actual fact, depreciate, as a normal function of real life!
If a new car can lose 20-30% of the value the moment it "drives off the lot", why is that not also applicable with homes? It should be the norm. When it's not, it's a bubble. Housing is still a bubble. Grossly overvalued.
=========
I've been reading and writing about silver for 10 years now. Sometimes, it's hard to "come up with something new" about silver, and so, sometimes I touch on real estate, or oil. But I think I have an new and important insight to share.
My education about silver has mostly come from other men who are writing today, who have 20 to 60 years of experience in precious metals, and it comes from my reading of history, and, of course, from my readers.
The historical perspective is important, but sometimes, things get forgotten by historical writers as people forget over time, and yet, knowldge is gained over time as humanity advances.
Back in the depression in the 1930's, silver was valued at around 29 cents per ounce, yet that silver was turned into U.S. silver coinage that was valued at around $1.40 per ounce! That silver thus formed the "backing" for the currency; as it was the currency, but it also formed the backing for the paper currency. In other words, paper could be "redeemed" or "exchanged" for silver currency, and thus, it was said that silver "backed" the currency.
Unfortunately, writers in the metals community lost some perspective on that by 1964, and I believe that negatively influenced my thinking for years.
They wrote statements like this, and see if you can see the inconsistency with the facts above:
"After 1964, 90% silver coins were no longer issued, and silver no longer backed the currency. Thus, without any possibility of redemption, people were forced to hold unbacked paper money, or trade their dollars for other fiat paper currencies, as there was no safe haven."
Or they would write:
"After 1964, 90% silver coins were no longer issued, and silver no longer backed the currency. After that, paper money could be exchanged to buy silver only at excessive premiums which discourage trade. See, when silver was money, you could exchange a $1 of paper, for a silver dollar, at zero cost, paying no premiums."
BUt silver was not valued at $1.40/oz. the entire time that silver was used as currency in dimes, quarters and half dollars for 173 years or so, but as low as $.29/oz! The silver that you could get, when turning in your paper, was up to 400% overvalued, as $0.29 x 5 = $1.45!
These days, we all know a bit more about silver premiums, which is the extra price you pay, over spot, to buy silver. In the last year, premiums for silver coins and bars have ranged from about 50% down to about 5% over spot.
My math tells me that 5-50% is much less than 400%. Wouldn't you agree?
Thus, silver has a much lower premium today, than when "silver was US coinage".
I've written on this before, but here's the insight.
If silver, at 400% overvalued, can "back" the currency, then don't we have a de-facto "private" backing of the currency if you can actually buy silver from private dealers for much less, ranging from 5% to 50% over spot?
Yes, we do. Interesting thought, isn't it?
Here's something else. Over 100 years ago, before the founding of the Federal Reserve which issues all paper money, there were privately issued paper money called dollars. But who issued them? Various banks. Each bank would issue paper dollars that said it was issued by each bank, like the First Bank of Iowa, or some place. Other banks would redeem those dollars, at varying discounts, depending on how far away the issuing bank was from the redeeming bank, and also depending on the reputation of the bank. After all, a redeeming bank would have to trust the issuing bank could deliver the gold or silver upon redemption.
Our markets works shockingly similarly, even today.
Today, coin shops and bullion dealers will redeem Federal Reserve Notes (dollars) at varying discounts, depending on the volume of trade, and also, depending on their supply sources, such as mints, major wholesalers, or public selling. Some of those supply sources tap directly into the large bullion banks that are the owners of the Federal Reserve and/or who have enormous short positions at the COMEX or in over the counter derivatives, and/or are custodians for the bullion ETFs.
Our markets are so free, that we actually have a de facto private precious metals backing for the current paper dollar. By "de facto" I mean "in practice but not necessarily ordained by law".
My main point is that anyone can exchange their paper money, for silver or gold, on much better terms today, at much less premiums today, than during the vast majority of the time that silver "officially" backed the currency!
The fallacy of thought was that silver could be bought for "zero premium" when it was money, while today, you have to pay an "unfair 5-10%". The truth is that when silver was money, government distortions and monopoly pricing created 400% premiums, also called "seniorage".
http://en.wikipedia.org/wiki/Seniorage
Implications? I don't mean that all of our currency is backed by silver. The relative amounts are so different, it's shocking. Dollars in the banks now exceeds $14 trillion, or $14,000 billion, but the amount of money going into physical silver per year, world wide, is only about $1 billion.
I can see the criticism now. People will say that I'm just trying to justify selling silver at up to 10% over spot when other dealers may have it offered at 5% over spot
Of course I am! Every business does that. Quality goods typically cost more.
But the point is that the free market in silver, or multiple sellers and suppliers (not just government currency), is creating the competition that leads to sometimes absurdly low prices, which is great for all silver buyers today.What quality do I offer? Speed & reliability, at a very low price!
You might be able to buy silver cheaper elsewhere than from me, but it may cost you more in terms of time, or you might lose it all in a default. Other dealers still have a 2-5 month delivery delay. Or the other dealers might default, because they might not have the silver, or might be in debt, or their suppliers might not have the silver.
What's worse is that some dealers are slower, less reliable, and more costly than I am!
I have 81,000 oz. of silver that I'm using to deal silver.
Thus, we have the goods, the real silver, ready to deliver upon demand, with zero default risk to you.
If you want to sell your home, and buy silver, you will be a very wise, and rare, customer.
We've heard from a few of our wiser customers, that they've already done exactly that, and they are now renting. In beautiful Grass Valley, CA, in the foothills of the Sierra mountains, where you would be surrounded by evergreen trees and all the modern conveniences of modern life, with access to high speed Comcast Cable internet, you can rent a million dollar McMansion / Ranch on multiple acres, with 5+ rooms, about 4000 sq. feet, for about $2000/month, or even less. We saw one for $1700! Housing must lose about 2/3 of the value, or more, from present day values, to come in line with such rents.
Sincerely,
Jason Hommel
In case you miss an email, check the archives, now on the main page:
http://silverstockreport.com/
See us also at:
Rocklin Coin Shop
4870 Granite Drive, Rocklin, CA 95677
http://rocklincoinshop.com/
Silver is your means of preserving your wealth. Monex is the low-cost Silver retailer. Jump on the 500% rise in Silver over the next two years. 800-949-4653 x2172
use Kevin from Goldmoneybill as referral to help support this site.
(Sell your House and Buy Silver!)
Silver Stock Report
by Jason Hommel, July 1st, 2009
So far, out of 80,000 readers, nobody has asked me when the housing collapse will end. Funny. I might be regarded as knowing something about that, since I called it in advance, well before the peak, 5 years ago:
Overvalued Housing, Bonds & Stocks July 2, 2004
The lack of questions is a sign that the housing collapse has a long way to go, because, generally, people are still in the first stage of mourning the death of the housing boom: denial. Nobody can ask "When will the housing collapse end?" if they can't admit the phrase "housing collapse".
After Denial, next in the stages of mourning comes Guilt. Then Anger. Then Depression. Then Acceptance.
Unfortunately, people don't start asking questions until they get to the anger phase, and they don't start doing anything about it until the acceptance phase.
Let me help you get there more quickly.
Denial: Wake up! Housing prices will NOT soon stop going down, since in many locations, 10% of all properties are 90 days past due on their mortgages, and those foreclosures have not yet hit the market, and they will.
Guilt: You should have known! Government intervention into the economy always creates distortions, and government sponsored home loans through Fannie Mae and Freddie Mac and corruption at all levels gave everyone with a pulse and the ability to lie to qualify for a home loan, that extra and excessive buying power created the top, and this was easy for anyone to see. Why didn't you see it? Were you asleep?
Anger: But good intentioned democrats who wanted to help their poor constituents achive "the American Dream" of home ownership did nothing of the sort, they helped enslave poor people into debt, not true ownership, due to government meddling. It's the government's fault!
Depression: But what can you do about it? Nothing! No matter how much you work on your yard or keep your neighbors mowing their lawns, or no matter how much you write your congressman, and regardless of electing Obama, home values will continue to go down, and there's nothing you can do about it.
Acceptance: Well, there is one thing you can do. Sell your house! Get out of the way of this oncoming train wreck in motion.
The government is doing everything they can to stop it, but they will fail.
Everyone should know by now that the government is buying up the "toxic assets" of the banks, meaning, the mortgages that are worth more than the homes are worth. Government bought at the top, and they bought the worst of the "assets".
The housing crash will end when the government finally sells all of their housing, and "exits" the market.
That's what marked the bottom of the gold market. When the governments of the world were hell-bent on selling as much gold as possible, back in 1999-2001, when gold bottomed at $250/oz. They are still selling gold, but not as much, since they are running out of gold to sell.
Government intervention always distorts markets.
Housing topped, because of excessive government-backed loans. See, government was really buying housing on the way up, creating the top. The continued government buying, through bailouts, means we are still at the top.
Government buying created the top.
Therefore, government selling will create the bottom.
Tell me when the government, or Fed, will sell all their "toxic" mortgages, or forclose and sell the houses that back them, and I'll tell you when the housing market will bottom out.
Government dumping of all mortgages and housing could be a long way off--perhaps decades.
If we are fortunate, housing prices will drop 50-75% in 4-8 years, and it will be over quickly. That is unlikely, and would require the election of somebody like Ron Paul as President.
More likely, due to continued government intervention, as is taking place, the housing collapse could last another 20-30 years.
Yes, 70% of home sales are either short sales or foreclosures. However, this only means that some banks are selling. Most of the government mortgages are not being sold, and most of the homes owned by people are owned with mortgages, meaning, on leverage, and these are not yet being sold either. Just wait until the public starts dumping homes, AND the government starts dumping at the same time. Then, you will really see a housing crash.
A "normal" housing market will have most homes selling for far LESS than construction costs. After all, homes deteriorate, and a 20 year old faucet is not nearly as nice, or functional, as a new one. People know how to "write off the depreciation" of a home on their taxes, but this generation does not yet seem to understand that real homes, do, in actual fact, depreciate, as a normal function of real life!
If a new car can lose 20-30% of the value the moment it "drives off the lot", why is that not also applicable with homes? It should be the norm. When it's not, it's a bubble. Housing is still a bubble. Grossly overvalued.
=========
I've been reading and writing about silver for 10 years now. Sometimes, it's hard to "come up with something new" about silver, and so, sometimes I touch on real estate, or oil. But I think I have an new and important insight to share.
My education about silver has mostly come from other men who are writing today, who have 20 to 60 years of experience in precious metals, and it comes from my reading of history, and, of course, from my readers.
The historical perspective is important, but sometimes, things get forgotten by historical writers as people forget over time, and yet, knowldge is gained over time as humanity advances.
Back in the depression in the 1930's, silver was valued at around 29 cents per ounce, yet that silver was turned into U.S. silver coinage that was valued at around $1.40 per ounce! That silver thus formed the "backing" for the currency; as it was the currency, but it also formed the backing for the paper currency. In other words, paper could be "redeemed" or "exchanged" for silver currency, and thus, it was said that silver "backed" the currency.
Unfortunately, writers in the metals community lost some perspective on that by 1964, and I believe that negatively influenced my thinking for years.
They wrote statements like this, and see if you can see the inconsistency with the facts above:
"After 1964, 90% silver coins were no longer issued, and silver no longer backed the currency. Thus, without any possibility of redemption, people were forced to hold unbacked paper money, or trade their dollars for other fiat paper currencies, as there was no safe haven."
Or they would write:
"After 1964, 90% silver coins were no longer issued, and silver no longer backed the currency. After that, paper money could be exchanged to buy silver only at excessive premiums which discourage trade. See, when silver was money, you could exchange a $1 of paper, for a silver dollar, at zero cost, paying no premiums."
BUt silver was not valued at $1.40/oz. the entire time that silver was used as currency in dimes, quarters and half dollars for 173 years or so, but as low as $.29/oz! The silver that you could get, when turning in your paper, was up to 400% overvalued, as $0.29 x 5 = $1.45!
These days, we all know a bit more about silver premiums, which is the extra price you pay, over spot, to buy silver. In the last year, premiums for silver coins and bars have ranged from about 50% down to about 5% over spot.
My math tells me that 5-50% is much less than 400%. Wouldn't you agree?
Thus, silver has a much lower premium today, than when "silver was US coinage".
I've written on this before, but here's the insight.
If silver, at 400% overvalued, can "back" the currency, then don't we have a de-facto "private" backing of the currency if you can actually buy silver from private dealers for much less, ranging from 5% to 50% over spot?
Yes, we do. Interesting thought, isn't it?
Here's something else. Over 100 years ago, before the founding of the Federal Reserve which issues all paper money, there were privately issued paper money called dollars. But who issued them? Various banks. Each bank would issue paper dollars that said it was issued by each bank, like the First Bank of Iowa, or some place. Other banks would redeem those dollars, at varying discounts, depending on how far away the issuing bank was from the redeeming bank, and also depending on the reputation of the bank. After all, a redeeming bank would have to trust the issuing bank could deliver the gold or silver upon redemption.
Our markets works shockingly similarly, even today.
Today, coin shops and bullion dealers will redeem Federal Reserve Notes (dollars) at varying discounts, depending on the volume of trade, and also, depending on their supply sources, such as mints, major wholesalers, or public selling. Some of those supply sources tap directly into the large bullion banks that are the owners of the Federal Reserve and/or who have enormous short positions at the COMEX or in over the counter derivatives, and/or are custodians for the bullion ETFs.
Our markets are so free, that we actually have a de facto private precious metals backing for the current paper dollar. By "de facto" I mean "in practice but not necessarily ordained by law".
My main point is that anyone can exchange their paper money, for silver or gold, on much better terms today, at much less premiums today, than during the vast majority of the time that silver "officially" backed the currency!
The fallacy of thought was that silver could be bought for "zero premium" when it was money, while today, you have to pay an "unfair 5-10%". The truth is that when silver was money, government distortions and monopoly pricing created 400% premiums, also called "seniorage".
http://en.wikipedia.org/wiki/Seniorage
Implications? I don't mean that all of our currency is backed by silver. The relative amounts are so different, it's shocking. Dollars in the banks now exceeds $14 trillion, or $14,000 billion, but the amount of money going into physical silver per year, world wide, is only about $1 billion.
I can see the criticism now. People will say that I'm just trying to justify selling silver at up to 10% over spot when other dealers may have it offered at 5% over spot
Of course I am! Every business does that. Quality goods typically cost more.
But the point is that the free market in silver, or multiple sellers and suppliers (not just government currency), is creating the competition that leads to sometimes absurdly low prices, which is great for all silver buyers today.What quality do I offer? Speed & reliability, at a very low price!
You might be able to buy silver cheaper elsewhere than from me, but it may cost you more in terms of time, or you might lose it all in a default. Other dealers still have a 2-5 month delivery delay. Or the other dealers might default, because they might not have the silver, or might be in debt, or their suppliers might not have the silver.
What's worse is that some dealers are slower, less reliable, and more costly than I am!
I have 81,000 oz. of silver that I'm using to deal silver.
Thus, we have the goods, the real silver, ready to deliver upon demand, with zero default risk to you.
If you want to sell your home, and buy silver, you will be a very wise, and rare, customer.
We've heard from a few of our wiser customers, that they've already done exactly that, and they are now renting. In beautiful Grass Valley, CA, in the foothills of the Sierra mountains, where you would be surrounded by evergreen trees and all the modern conveniences of modern life, with access to high speed Comcast Cable internet, you can rent a million dollar McMansion / Ranch on multiple acres, with 5+ rooms, about 4000 sq. feet, for about $2000/month, or even less. We saw one for $1700! Housing must lose about 2/3 of the value, or more, from present day values, to come in line with such rents.
Sincerely,
Jason Hommel
In case you miss an email, check the archives, now on the main page:
http://silverstockreport.com/
See us also at:
Rocklin Coin Shop
4870 Granite Drive, Rocklin, CA 95677
http://rocklincoinshop.com/
Silver is your means of preserving your wealth. Monex is the low-cost Silver retailer. Jump on the 500% rise in Silver over the next two years. 800-949-4653 x2172
use Kevin from Goldmoneybill as referral to help support this site.
Treaty of Paris; Lost Templar Treasure
More documentation regarding the Phillipine Treasure that according to Her Majesty Salvacion A. Legaspi the Head of the Elder of the Gospel Ministry of the Holy Spirit for Salvation or something to that effect.
Evidence of Mythical U.S. Gold Treasure Buried in the Phillippines Pt 2
Amazing images of lost of Federal Reserve Gold Notes. Maybe there is Truth and Justice coming back to the world. I was witness personally to a Krupp Foundation documents based in the Philippines that were alleged to be held in Trust by someone from the Mormon church.
Evidence of Mythical U.S. Gold Treasure Buried in the Phillippines? Pt 1
Raye Allan from Rumormillnews.com has talked about a Templar Treasure buried in the Phillipines that is supposed to back Gold standards in Europe as well as America bringing back Constitutional Republics.
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