Plebian

Gold and Silver Continue Their Ascent

Mr. Gary North just put out an article, 'Why Silver Is a Poorer Investment Than Gold, and Both Are Better Than Dollars: A Free Report for Newcomers'. His main points about gold vs silver are:

A. Gold has done better than silver from 2000-2009.
B. The silver peak in 1980s was an 'anomaly' due to Hunt Brothers taking physical delivery.
C. Central banks hoard gold, but they don't own or have any need for silver.
D. There is no shortage of silver.

But look at things this way:

A1. Wait until then end of the bull-run in precious metals, then see if silver or gold does better. The way most people look at it, things are just getting warmed up!

A2. Another way to look at it... Silver in the 1980s just reverted to its historical ratio of 1:16 vs. gold ($800/$50=16). So, nothing unusual about that... Also, since when was taking physical delivery unlawful? No, it was the 'regulators' who changed the rules in the middle of the game, and bankrupted multi-billionaries in the process! (Can anyone imagine that happening today?)

A3. Central banks own gold because of the after-effects of the 'gold stantard', which is what most rich countries in the world were on before 'fiat' took over (ie, 'everyone' still thinks only gold is 'money'). However, note that they needed to demonetize silver first, before ever being able to get rid of even the gold standard. Thus, silver actually has much more of a monetary history than even gold (eg, China's last monetary standard was silver). Silver is the people's money, and gold is the bankers'. In the end, people will have no use for central banks, but silver (money) will still be needed for everyday trade and commerce.

A4. Both gold and silver are finite resources taken from the Earth. Gold is always saved, while silver gets used up (to the point that some day there won't be enough of it to keep low prices around). Industry will guarantee this. There may not be any true 'shortage' of silver yet, but at some point supply will only be able to meet demand when silver prices go up (and that by definition would be considered a shortage!). If human civilization is to persist, silver can be guaranteed to become more valuable one day than gold!

Incurious Gold Manipulation Theorists

Off-topic, but a curious thing:

Before 'crisis':
3 major US car makers (GM, Ford, Chrysler).
3 similar business models.
3 similar company performances.

After 'crisis':
2 major US car makers received bail-outs (GM, Chrysler).
2 major US car makers still went bankrupt (GM, Chrysler).
1 major US car maker doing 'well' (Ford).

Question:
What did Ford do differently than the others, that was so miraculous, that allowed them to 'prosper' in the midst of this crisis? Should they not have gone bankrupt also?

Will the Dollar Rally on the Market's Next Crash?

In the grand scheme of things, the dollar (FRN) has NEVER rallied. Does the dollar hold more purchasing power than it did back in 1913? No. Everything else is just 'chatter'. In a debt-based money system, it is an oxymoron to say that any currency is rallying. Rallying against what, other denominations of debt-based fiat money?

It is time to return to a sound money system.

Will the Dollar Rally on the Market's Next Crash?

In the grand scheme of things, the dollar (FRN) has NEVER rallied. Does the dollar hold more purchasing power than it did back in 1913? No. Everything else is just

Capmark Should Make for an Interesting Monday

Another bankruptcy, another chance to dump silver and gold (the paper variety, that is)!...

Playing with paper is

Silver: Commercial Short Positions Continue to Rise

A bit off-topic, but what went wrong with NASA's LCROSS mission that bombed a moon crater today?... How could sending a 2-ton projectile down at 5,000 mph create absolutely no visual physical signs of a dust plume? Isn't the moon's surface supposed to be 'dusty', with a gravity force lower than the Earth's? So where is all the dust and debris?...

The public is right to doubt the impact events for having created no dust plume at all, nothing visual or physical of the sign of a major high-energy impact, which indeed this was. Will we learn the truth about what happened?... Wouldn't any reasonable person be skeptical?

COMEX Silver Positions Since May 2008

Negative media coverage on silver (disguised as good, of course):
WSJ - "Amid Surging Gold Prices, Silver Quietly Shines" 10/1/09.

A. Quote: "'because over time alternatives are developed that allow production to switch to a cheaper metal,' says Neil Meader, research director at GFMS", implying that industry will find a substitute for silver...
No, the metal silver has many unique properties that no other metals on Earth can match. Gold might be a substitute in some cases (but that would hardly make any economic sense). Silver has no equal in versatility and indispensability. Plus, it's sound money.

B. Quote: "For the time being, then, silver remains more precious than industrial. And if the two forces propelling the metal's rising price—fear of inflation and a weakening dollar—reverse course, says UBS's Mr. Reade, 'silver falls maybe into the single digits again.'"
No comment necessary.

As usual, the article relies on opinions from the 'official experts' at GFMS and UBS... More jawboning.

If Housing Were Priced in Gold

MarketWatch reports today: "Metals Stocks: Gold dips below $1,000, hit by housing data"

Really? Did anyone with any common sense really think the housing data was going to be improving any time soon? Doesn't everyone who owns gold know that gold does well in deflationary periods? Doesn't everyone who owns gold know that gold also does well in inflationary periods? Who's really selling gold (and silver, and oil) because housing data went down today?

Doesn't a rise in gold and silver prices signify that fiat currency is losing its efficacy, all over the world? Did everyone suddenly have a 'V8' moment this morning about the appeal of fiat paper? I think not...

History is on the side of silver and gold, and those who are wise enough to keep it as money.

Silver Remains a Contrarian's Dream

Actually, $50/oz for silver is hardly a misleading high, as that was the dollar price of silver back in 1980's peak! If adjusted for dollar inflation, the actual record high would be closer to something like $130/oz for silver in 2009 dollars (and that's using the massaged 'official' CPI figures). Back then, silver reverted back to 16:1 ratio compared to gold, another sign that it was not a misleading high.

By the same token, dollar prices for gold are hardly at all-time highs in 2009 (as so many like to claim). Adjusted for dollar inflation, the $800/oz gold price in 1980 would be $2,080/oz in 2009 dollars!

Therefore, both silver and gold are still way under their 'record highs' at present dollar prices. Short of some kind of direct intervention, more and more people will start to see the safe haven status of saving wealth in the form of the precious metals, especially silver and gold (historically the only true sound money).


On Sep 23 11:24 AM Richard K wrote:

> No one can prove that silver will not reach $50 or even more someday.
> Obviously the future is unknown and anything can happen.
>
> But it is misleading to refer to $50 as a "record high." That was
> an anomoly, a very short sharp spike resulting from an attempted
> (and failed) market manipulation scheme. Yes, it did happen, but
> it tells us nothing about the overall silver market or its prospects.

A Silver Takedown's Currently in Progress

Most people say silver seems to always follow gold in price movement, but it's been pointed out that silver is a much smaller market as compared to gold, and thus much easier to 'manage'. Would it not make sense that pushing down silver prices is the means to control the precious metals' prices in general, even that of gold? Notice that silver was demonetized before gold was, so in a way is was used as a means to demonetize the precious metals in general. It follows that the key to breaking the fiat money 'system' is found in silver.

The IMF announced sales of $13B of hard asset gold in exchange for paper money (bad money drives out good money). Everyone knows the world has the capacity to 'print' paper money without limit, so it is laughable that they want to exchange gold for $ supposedly to help 'finance' poor nations' money needs. Why not just print another $13B while the US is printing their Trillions of $ to bail out a hopeless system! Surely that would cost a lot less than 13,000,000 ounces of physical gold sales. Or could it be that they're actually selling paper gold?

Better yet, if they are so keen at giving away physical gold, why not give this gold directly to these so-called poor nations, so that they can use it to shore up their finances?! Then maybe in 3 to 5 years, if they have been smart enough to hang on to their gold, it will be worth multiples of the $ that they would have gotten to begin with. Another benefit of having assets in gold is that these poor countries' currencies would suddenly be stronger, giving them the financial and economic edge that they so much need. Everyone would suddenly be more interested in investing in these poorer countries, because now they would have real hard assets to back up their financial system.

So, why is the IMF really selling 403 tonnes of 'gold' for?...

Spiegel Interview Exposes Irrational Disdain for Sound Money

Good commentary on Gold! Now, try and look up the many uses for Silver (which physically is every bit as good as Gold in terms of being able to serve as 'Sound Money'). One will be amazed at how useful the metal Silver really is (even more so than Gold). Then, it will dawn on many why silver is not held in higher esteem than it is right now.

It has even been reported that the human cell has built-in receptors for silver, which might explain why silver particles and ions have been proven useful at helping to heal wounds. What shall we say then--should man and woman have a natural affinity for this ordinary element Silver (Ag)? Perhaps so...

On Sep 17 08:17 PM Bundee wrote:

> "What's the metal worth? You hardly can use it for industry,"
> Hardly use it in industry?
>
> geology.com/minerals/g...
> -Uses of Gold in electronics
> A small amount of gold is used in almost every sophisticated electronic
> device. This includes: cell phones, calculators, personal digital
> assistants, global positioning system units and other small electronic
> devices. Most large electronic appliances such as television sets
> also contain gold
> -Medical Uses of Gold
> Gold is used as a drug to treat a small number of medical conditions.
> Injections of weak solutions of sodium aurothiomalate or aurothioglucose
> are sometimes used to treat rheumatoid arthritis.
> ...Small amounts of gold are used to remedy a condition known as
> Lagophthalmos, which is an inability of a person to close their eyes
> completely. This condition is treated by implanting small amounts
> of gold in the upper eyelid. The implanted gold "weights" the eyelid
> and the force of gravity helps the eyelid close fully.
>
> Radioactive gold is used in diagnosis. It is injected in a colloidal
> solution that can be tracked as a beta emitter as it passes through
> the body. Many surgical instruments, electronic equipment and life-support
> devices are made using small amounts of gold. Gold is nonreactive
> in the instruments and is highly reliable in the electronic equipment
> and life-support devices.
> -Uses of Gold in Aerospace
>
> If you are going to spend billions of dollars on a vehicle that when
> launched will travel on a voyage where the possibility of lubrication,
> maintenance and repair is absolutely zero, then building it with
> extremely dependable materials is essential. This is exactly why
> gold is used in hundreds of ways in every space vehicle that NASA
> launches.
>
> Gold is used in circuitry because it is a dependable conductor and
> connector. In addition, many parts of every space vehicle are fitted
> with gold-coated polyester film. This film reflects infrared radiation
> and helps stabilize the temperature of the spacecraft. Without this
> coating, dark colored parts of the spacecraft would absorb significant
> amounts of heat
>
> Gold is also used as a lubricant between mechanical parts. In the
> vacuum of space, organic lubricants would volatilize and they would
> be broken down by the intense radiation beyond Earth's atmosphere.
> Gold has a very low shear strength and thin films of gold between
> critical moving parts serves as a lubricant - the gold molecules
> slip past one another under the forces of friction and that provides
> a lubricant action.
>
> -Uses of Gold in Glassmaking
> Gold has many uses in the production of glass. The most basic use
> in glassmaking is that of a pigment. A small amount of gold suspended
> in the glass when it is annealed produces a rich ruby color.
>
> Gold is also used when making specialty glass for climate controlled
> buildings and cases. A small amount of gold dispersed within the
> glass or coated onto the glass surface will reflect solar radiation
> outward, helping the buildings stay cool in the summer, and reflect
> internal heat inward, helping them stay warm in winter.
>
> The visor on the helmet of an astronaut's space suit is coated with
> a very thin film of gold. This thin film reflects much of the very
> intense solar radiation of space, protecting the astronaut's eyes
> and skin.
> Hardly any use in industry, yeah right.
> ……………..
> Someone mentioned that there is about one and a half ounces of gold
> for each person in the world (for sake af arguement lets say that
> is accurate) considering gold is so scarce why shouldn't gold be
> considered valuable? Platinum is valuable and sells for more than
> gold yet I hear few if anyone complaining about the price of platinum.
>

The Gold / Silver Ratio: From 1300 to 1900... And Now

Please note that silver is NOT being manipulated to support industry--they are not saints trying to save the world!

No, silver (like gold) is being manipulated to maintain control of the use of fiat currency. Due to the much smaller market size, silver is much easier to manipulate compared to gold. And when you manipulate silver, you will manipulate gold...

On Aug 01 02:24 PM tc1 wrote:


> At a 20:1 ratio (the future ratio seen by silver bugs like Sean Rakhimov),
> silver would be $75/oz—but it is MOST doubtful that JP Morgan (by
> far the biggest short-seller and manipulator of silver’s price) would
> let silver hit this high because of its negative impact on industry.

The Gold / Silver Ratio: From 1300 to 1900... And Now

Your assumption is incorrect. The economic collapse that we are witnessing right now is due to the world-wide experimentation with fiat currency (funny money), which started in earnest when the US$ became no longer convertible for gold in 1971 (and silver stopped being coined as money in the 1960s). Soon enough, people all over the world will realize that the current economic crisis we are facing is indeed a 'currency crisis' waiting to explode. By then, the economy all over the world may be in the dumps, but everyone will flock to silver and gold (and PGMs) as real stores of value and wealth.... Remember, before they could get rid of the gold standard, they first had to get rid of the silver standard. Silver is the money of the US Constitution and of the people.

On Jul 31 11:42 AM Steve in Greensboro wrote:

> Silver and the PGMs will recover from their currently depressed levels
> v gold and return to their historical ratios, but only when the economy
> recovers, not before. This is because they are primarily industrial
> metals. And the economy has not begun to recover.

You did not define $. Perhaps you mean $6 to $8 of some new global currency (valued a 10X the US$). Then silver would be US$60 to $80/oz, when everyone and their neighbor will be trying to jump on the bandwagon...

On Aug 01 02:18 PM specks wrote:

> When silver reaches around $6 to $8, then, I might be a buyer. Today,
> no thank-you!!

Unlocking the Money Matrix: Gold Price Suppression

Interesting tidbit on US Mint coin sales in 2008:
A. Total gold sales: 1,172,000 bullion coins.
B. Total silver sales: 19,583,500 bullion coins.
C. Ratio: 16.7:1

So, at least the demand figures are in line with the historical 16:1 gold to silver price ratio that so many people have written about. Silver demand has exploded in 2009, with 14,899,500 silver bullion coins sold so far (it's only July), compared to 700,000 gold bullion coins.

Gold: The Unsung Asset Class

*1 in 9 Americans is on food stamps...

*California is issuing IOUs for the 2nd time since the 'Great Depression'...

*Illinois is considering the release of 10,000 prisoners because they've run out of money...

If this is not the start of the 'Greater Depression', then what is?....

Fiat money has finally met its match... TIME. Given enough time, all fiat moneys will fail (that is by design). But Silver and Gold are sound money.