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-- Posted 15 May, 2004 | Digg This Article
FRIDAY, May 14th, 2004
This week's report lists 114 silver stocks. There are 30 silver stocks that list reserves, resources (and exploration potential.) which I calculate by using my "ounce in the ground" forumula. There are 54 explorers. There are about 30 additional "silver" stocks with incomplete information. Additions & Changes from last week are in bold.
If this is the first time you have seen this report, please try to read the entire report before sending me an email. This report goes out now to over 8900 investors each week in email.
If you are an Accredited or Sophisticated investor and want information I may find out about private placement opportunities in some of the very best silver stocks in my opinion, (This is not a solicitation for any stock, and I'm not brokering any securities) you can sign up to receive such a notice by adding yourself to my private placement list at GoldIsMoney.com
If you want to receive an email notice of when and where this FREE weekly report is published, sign up at GoldIsMoney.com Anyone who signs up will also get a FREE e-book that explains the bullish case for gold and especially silver. If you have studied the silver market at all, then the time has come that you ought to be a teacher, and you ought to explain the silver story to all who will listen. GoldIsMoney.com is designed to help spread the word. I suggest you email the link to your address book.
To read about my religious bias, see my other website, bibleprophesy.org There are two essays near the top of the page that explain why I believe the entire world will return to using gold and silver as money again before the end times. Hint, see Ezekiel 38. To read more about my religious bias when it comes to investing, see my essay, Biblical Guidelines for Managing your Money
Kitco reports silver at $5.71/oz. as of Friday, 3:00 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7197. I will use .72 for ease.
How to read the following table:
Stock Symbol that works at Yahoo! Finance (Company name) / Silver oz. "in ground" for 1 oz. silver's worth of stock. / valuation price change since last week relative to silver price change (and stock dilution, and resource changes, if any) / additional comments (EXPT is "exploration potential")
I'm working on automating a summary table of the calculations I do each week. It will cost me just over $5000 for the programming for this, and perhaps $500 to $2000 per month for the data feed, depending on traffic. Once it's done, you will be able to see a summary table of my work, like the one below, but the calculations will be done with 20-minute-delayed quotes, and you can see this every day, and watch the changes during the day, not just once a week, like now. I will probably start this out as an additional free benefit to my paid subscribers, but hopefully, in the long run, I aim to make it public, and free. I may be able to provide this service for free, if I get some advertising that I think I could round up from a few mining companies. Would you be interested in this? If so, please email me at jasonhommel@yahoo.com - ABX (BARRICK) 1 even --infamous hedger (18 mil oz. gold hedged, 3 yrs production) hedged?
- IPOAF.PK (INDUSTL PENOLES) 1.7 down --current producer, mostly family owned, hedged?
- CDE (COEUR D'ALENE) 1.4 even --current producer, (gold bonus) in debt.
- SIL (APEX SILVER) 3.6 up --large zinc bonus, low grades, cash rich--$345 million! in debt
- GRS GAM.TO (GAMMON LAKE) 3.7 down --current producer, owns 26% of Mexgold
- CFTN.PK (CLIFTON MINING) 4.4 down -- (104 EXPT) (colloidal silver patent bonus)
- FSR.TO FSLVF.PK (FIRST SILVER) 4.7 up --current producer, (not profitable '03 3rd q.) unhedged
- PAAS (PAN AMERICAN SILVER) 5.0 even --current producer, in debt.
- MFN MFL.TO (MINEFINDERS) 5.4 down --significant gold bonus, $35 mil cash on hand.
- KBR.V KBRRF.PK (KIMBER RSCS) 6.2 way down A one property company, high grades, with exploration potential.
- MGR.V MGRSF.PK (MEXGOLD RSCS) 6.6## down (##exploration target) -- bonanza grade discovery on Jan 13th
- WTZ WTC.TO (WESTERN SILVER) 6.7 up -- (23 EXPT) large mine development cost. copper & zinc bonus
- * TM.V TUMIF.OB (TUMI RSCS) 7.9 down -- (16 EXPT) recent bonanza grade silver discovery
- SSRI SSO.V (SILVER STD RSC) 8.8 down --multi-property company, understands silver story
- ORM.V OREXF.PK (OREMEX RES) 8.9 down (37 EXPT)
- SRLM.PK (STERLING MINING) 10.8 down --(29 EXPT) acquired the Sunshine in Cour d'Alene
- CHD.V CHDSF.PK (CHARIOT RSCS) 13.0 up (explorer, with inferred resources)
- CZN.TO CZICF.PK (CDN ZINC) 13.3 down --large zinc bonus, high grades, low start up costs, great EXPT
- GGC.V GGCRF.PK (GENCO RESOURCES) 14.4 down
- RDV.TO RDFVF.PK (REDCORP VENTURE) 16.0 up --60% gold bonus
- ADB.V ADBRF.PK (ADMIRAL BAY RSCS) 18.7 down --actively expanding resources. (Huge gas bonus)
- FAN.TO FRLLF.PK (FARALLON RSCS) 20.3 down --(34 EXPT) low grades, silver 1/3; also gold & zinc bonus.
- * PLE.V (PLEXMAR RES INC) 21.8 down
- HDA.V (HUSIF?) (HULDRA SILVER) 26.3 down --very tiny, no debt, zinc bonus, low start up costs.
- * MGN (MINES MGMT) 26.7 down --60% copper bonus (low grades), start up cost ~ $250 mil
- EXR.V EXPTF.PK (EXPATRIATE RECS) 30.4 down --significant zinc bonus 60% zinc, 25% silver
- * SVL.V STVZF.PK (SILVRCRST MINES) 31.7 down --(52++ EXPT) --(Silver in Honduras) ++
- ASM.V ASGMF.PK (AVINO SILV GOLD) 31.8 down --owns 49% of the Avino +4 other silver props. (silver bonus)
- ABI.V ABMBF.PK (ABCOURT MINES) 32.2 down --large zinc & small gold bonus
- UNCN.OB (UNICO INC) 54 up --lease expiring on largest property, June 1 2004.
* = I own shares
Explorers (by market cap, in millions):
- HL (HECLA MINING CO) .33 down --current producer (gold bonus) cash rich.
- SPM.V SMNPF.PK (SCORPIO MINING)
- * IMR.V IMXPF.OB (IMA EXPL)
- EZM.V EZMCF.PK (EUROZINC MINING)
- CDU.V CUEAF.PK (CARDERO RSCS) 57-93 "exploration potential"
- AOT.V ASOLF.PK (ASCOT RSCS) -- owns percentage of Cardero, CDU.V
- MCAJF.PK (MACMIN LTD)
- * FCO.TO FCACF.PK (FORMATION CAPTL) Cobolt (and Sunshine silver refinery)
- * MMGG.OB (METALLINE MINE) --zinc/silver (historic high grade silver) (low cost revolutionary oxide zinc process)
- TVI.TO TVIPF.PK (TVI PACIFIC) --current producer of a dore silver bar 96% silver, 4% gold
- * OTMN.PK (O.T. MINING) very large exploration potential
- * FR.V FMJRF.PK (FIRST MAJESTIC) -- Bought a former silver producer. Acquiring silver properties.
- * NPG.V NVPGF.PK (NEVADA PAC GOLD) 33-168 "exploration potential" (owns 1 silver property, 10 gold properties)
- MAG.V MSLRF.PK (MAG SILVER)
- IAU.V ITDXF.PK (INTREPID MINRLS) 7 "exploration potential"
- ECU.V ECUXF.PK (ECU SILVER MINI) 4.1 down --(11 EXPT) --50% gold bonus
- CAUCF.PK (CALEDON RES)
- MMM.TO MMAXF.PK (MINCO MINING)
- MAI.V MNEAF.OB (MINERA ANDES) (gold bonus)
- PXI.V PNXPF.PK (Planet Exploration Inc.)
- * CBE.V CBEFF.PK (CABO MINING) --Historic Silver and Cobalt district
- QTA.V QURAF.PK (QUATERRA RES)
- * EDR.V EDRGF.PK (ENDEAVOUR GOLD) A PRODUCER (I could not yet find a listing of resources or reserves)
- BZA.V ABZGF.PK (AMER BONANZA)
- DNI.V DMNKF.PK (DUMONT NICKEL) exploring Clifton's property
- EXN.V EXLLF.PK (EXCELLON RSCS)
- BCM.V BCEKF.PK (BEAR CRK MINING)
- NJMC.OB (NEW JERSEY MIN)
- * CMA.V CRMXF.OB (CREAM MINERALS) 194 "exploration potential"
- * KG.V KDKGF.PK (KLONDIKE GOLD)
- SML.V SMLZF.PK (STEALTH MNRLS)
- NBG.V NBULF.PK (NEW BULLET GP) 54 - 150 "exploration potential"
- SDR.V SDURF.PK (STROUD RSCS)
- ATN.TO ATNAF.PK (ATNA RES. LTD) partners with Expatriate Res.
- CHMN.PK (CHESTER MINING)
- EPZ.V ESPZF.PK (ESPERANZA SILVR)
- GNG.V GGTHF.PK (GOLDEN GOLIATH) --Historic silver district in Mexico
- GPR.V GPRLF.PK (GREAT PANTHER)
- MMG.V MMEEF.PK (MCMILLAN GOLD)
- SHSH.PK (SHOSHONE SILVER)
- * KRE.V KREKF.PK (KENRICH ESKAY)
- EGD.V EGDMF.PK (ENERGOLD MINING)
- PCM.V PAOCF.PK (PAC COMOX RES)
- LEG.V LEGCF.PK (LATEEGRA RSCS)
- BGS.V BLDGF.PK (BALLAD GLD SLVR)
- * AUN.V AUNFF.PK (AURCANA CORP)
- SRY.V (STINGRAY RSCS)
- TUO.V TEUTF.PK (TEUTON RES)
- ASLM.PK (AMER SILVER MINI)
- BBR.V BBRRF.PK (BRETT RES)
- ROK.V ROCAF.PK (ROCA MINES INC)
- MTB.V (Mountain Boy Minerals Ltd)
- LSM.V LASCF.PK (Langis Silver & Cobalt Mining Co Ltd)
- CBP.V CPBMF.PK (CONS PAC BAY MIN)
* = I own shares
Silver oz. "in ground" means and counts all "silver oz. in the ground" as the same, but they are NOT EQUAL. Some are more certain and others are more speculative. Some are higher grades, some are lower grades. They range from most certain to least certain such as: "proven & probable reserves," "measured, indicated, inferred resources." This single number next to each stock symbol above represents the approximate number of ounces of silver in the ground you are buying title to when you invest the equivalent of one ounce of silver into buying shares in the company at current prices. Here's the math on how to get it. 1. Get a market cap in U.S. dollars. Divide that by the silver price, so the market cap is denominated in terms of silver ounces. Then, divide the ounces in the ground by the market cap as denominated in silver. This tells you how many ounces of silver in the ground you are buying when you give up one ounce of silver in you hand for shares of stock, instead.
(It does not include zinc, or copper, or lead, but it does include gold at a 1:10 ratio of gold:silver.) At goldsheetlinks.com, they add 100% of proven & probable reserves, but only 70% of measured & indicated resources, and only 50% of inferred resources. I don't do that. I count them as all the same.
I believe that the two most important numbers that a silver mining company can report are the resources in the ground, and the number of their fully diluted shares. Of course, there is much more to a mining company than that, but without those numbers, it is extremely difficult to even start an evaluation. This report highlights those key numbers, where possible. If you think those numbers are also important, please email the executives of the mining companies you own, and ask them to make sure their numbers are clearly published at their websites.
To quickly "tab" down to the company you are interested in, note the symbol. Then hit "control-F" to "FIND" the symbol below.
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If I use a word you don't understand and is not listed in the dictionary at www.m-w.com you can look up the meaning at http://investorwords.com/
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WEEKLY COMMENTARY (All new in this section):
In general, regarding the prices of silver stocks... Things are extremely volitile right now in many silver stocks, and they are trading on extremely light volume. It's like all the stocks are in a huge air pocket. Tiny selling will move prices down 15%, and tiny buying will rise prices 15%. It seems like nobody knows how to value the stocks right now. It's as if those who were scared out by the recent price drop have all sold, and the true believers are all remaining firm, but are already fully committed, and thus, have little left to buy more. Looks like even the market makers have been scared out, or all bought in! One stock was up 17% on 250 shares, and another stock was up 13% on even fewer shares traded. But both stocks lost all those gains soon afterwards. I think this goes to show that you must remain fully invested in order to participate in the big run up that I expect will soon occur. You can't "buy back in" at the last moment without paying up to 30% more for the shares... first, you will wait to see them move up at least 15%, and the next day, your buying back in will drive the prices up 15% again!
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May 14, 2004 CFTC responds to Allegations of manipulation in the silver market.
http://www.cftc.gov/files/opa/press04/opasilverletter.pdf
--it's a 9 page response!
In sum, they basically lie and say that there can't be a short selling manipulation, because if there was, and if silver was priced too low, then others would be able to buy whatever they wanted, without restriction, which would end it. This is such a lie, it's amazing, because they also admit there are position limit restrictions of 1500 contracts per delivery month, which means that people can't buy whatever they want without restriction!!!
Highlights:
--They acknowledge the production deficit that is not meeting demand.
--They acknowledge that demand has been met by a draw down of existing above ground refined silver supplies (stocks).
--They note the total GFMS estimated identifiable world silver stocks at the end of 2003 are 671 million troy ounces.
--They believe that historic above ground supplies (stocks) of silver, which have been drawn down, explain the low price for silver. And they note that, "Had these stocks not been available, silver prices surely would have risen higher." -p.4
--They believe that the large commercial shorts are not primarily naked positions: "Based on information that we have, we are satisfied that what may appear to be large net short futures exposure are often offset by other market positions, including physical silver inventories, forward positions, positions in other derivative products, and positions in non-U.S. markets. We believe that the characterization of the largest commercial short positions as "naked" short positions is simply not correct."
--They acknowledge that most hedgers (shorts) never participate in delivery of real silver.
--That they believe there is no collaboration or collusion or manipulation, and no evidence of the shorts working together to suppress prices.
--They believe there is no motive to manipulate silver prices lower.
--On page 6, there is the ridiculous assertion that "a magnitude of the silver price exposure that could be hedged" is the following: all world silver supplies at 671 million ounces, and all world mine production for one year at 596 million ounces in 2003, and production from scrap at 192 million ounces, for a total of 1.5 billion ounces.
--They admit that the shorts, "by knowingly selling something for less than it was worth, they would put themselves at grave risk since they could never know when the market price might correct."
--They lie when they write, "Because there is unrestricted access to the market [?????], many knowledgeable and well-capitalized traders would readily buy any silver offered at artificially low prices. The buying by these traders -- buying that the alleged manipulators would have no way of preventing -- would quickly cause the price to rise to its appropriate level."
--The above statement, that "there is unrestricted access to the market" by those who could buy silver is a lie, because they also acknowledge there is a position limit of 1500 contracts in the spot month!!! p. 8
--In further direct contrast to their statement that there is unrestricted access to the market, they say that purchases by longs can be manipulative, such as the Hunts in silver and Sumitomo in copper. p.3
--They admit that the position limit of 1500 contracts exists for the spot month because, "That is when the requirements for making or taking futures delivery are most pressing, liquidity is diminished because the numbers of open contracts and volume are generally declining, and time is running out to decide how to settle an open position -- liquidate it outright, roll it forward with a spread trade, or be involved in actual delivery of the physical commodity."
--Finally, they admit that "good, clever writing can carry half-truths and total falsehoods as easily as it can carry accurate information." They damn themselves with this statement, since it is abundantly obvious that they are lying when they say that longs have unrestricted access to the market, and then turn around and hypocritically say they also describe long accumulations as manipulation, and say there are position limit restrictions!!!
Michael Gorham, who wrote this CFTC response, also indicates that we should read his letter of July 26, 2002 "for a more detailed discussion" of the point that the longs are unrestricted from buying more, which, I believe is the most blatent lie of his entire report. http://www.cftc.gov/files/opa/press04/opatedbulter07-26-02.pdf
I previously addressed that same lie in that other letter in my article here:
Letter To Authorities of Silver Markets - 06 January 2003
I wrote:
Gorham admitted that the large long position of the Hunt brothers was a manipulation of the markets, ostensibly resulting in prices that would be too high, and Gorham took pride that such manipulation (as it was called) was stopped! I would argue that it is impossible for longs to manipulate markets in free markets because freedom means that anyone is free to buy as much of anything as they wish. That's what freedom means. However, it should never be legal to allow people to sell what they do not have, because that is the very essence of fraud, and fraud is not to be tolerated wherever justice and free markets are enforced. A short manipulation is dangerous. It will hurt everyone who holds the commodity and who is invested in producing the commodity. Furthermore, a short manipulation ends in a short squeeze or bankruptcy and default by the shorts, the kind of default that regulators, such as you two gentlemen, are supposed to prevent. Gorham wrote, "Any attempt to hold prices at artificially-low levels would require visible, systematic, and comprehensive efforts to block the ability of users, investors, and dealers to take advantage of too-low prices." I agree! And there have been visible efforts to block the accumulation of the longs, thus proving that prices are at artificially low levels! Warren Buffet bought 130 million ounces of silver in 1997 and was effectively blocked from the market, blocked from accumulating more. To Warren Buffet, this silver represented less than 1% of the portfolio of his holding company, Berkshire Hathaway. In fact, it is still unknown to this day and remains a topic of discussion in the silver investment community whether Warren Buffet actually received physical bullion for all of the 130 million ounces he attempted to buy!
I appreciate that the CFTC finally addressed the other key point of my letter, which was asking about what percentage of short sales are naked positions. But their assertion that they believe "naked shorts are not characteristic" still does not solve that particular problem. The problem is that naked (unbacked) short sales are even allowed, and the problem is that there should be regulations that prevent naked short sales, not just in silver, but in all futures markets!
The other problem is that the longs are restricted to access to silver through the silver futures market, because of the position limit requirements. There are over 500 billionaires, but the limit of 1500 contracts of 5000 ounces each, at $6/oz, is a limit of 7.5 million ounces, or a limit of $45 million dollars in a spot month. That's a very low limit for a billionaire, 4.5% of a billion dollars, and very restrictive for a billionaire who may wish to limit his exposure to the falling dollar by buying silver! If there are 5 spot months per year, it would take a billionaire over 4 years now to buy a billion dollars of silver at $6/oz.!
I am also shocked to see that they believe there is no motive to keep silver prices suppressed. Clearly, the motive is to keep the fraud of the dollar alive, and that is an extremely profitable enterprise, worth many trillions of dollars.
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This week, I was going to provide a guest commentary, "Golden Opportunity," by Richard Greene of http://www.ThunderCapital.com
But it was published at goldseek.com on May 16th, so I will just provide the link: It is a very good article, and I suggest you read it if you have not already.
http://news.goldseek.com/GoldSeek/1084731753.php
To access more articles by Richard Greene please visit:
http://www.ThunderCapital.com
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Here is a letter from Richard Greene, in response to my commentary last week, that I wanted to share (which led to Richard providing the commentary, above):
This is also one more reason we are at rock bottom prices for the metals: Even I cannot convince my parents to sell their real estate. And I'm a leading advocate on the internet for precious metals, or so people tell me! --Jason
Jason
Sorry to hear about your parents and their real estate. It is frustrating
when the ones you love the most can not see what is so clearly right in
front of your eyes. I have a true story I would like you to show them. I
will make it as short as possible.
My grandfather came from Italy in the early 1920's to work on the high rises
in Manhattan. He built a two family home on over 100 acres in Islip
Terrace, New York, one bag of cement at a time. He owned it free and clear.
When the depression hit he lost 98 acres as the government raised his
property taxes beyond his means. He lost 98 acres on a $29 annual property
tax bill that I have seen with my own eyes.
The moral is: even if you own your home free and clear, you still don't own
it because the gov't can tax whatever they want and take your property
because they too are desperate when finances go out of whack as they are
even more so today. I have sold all my real estate two years ago, put it
all in gold and mostly silver and I have made much more than I would have in
my real estate and there are no expenses or taxes.
My parents still own this two family home with 3 building plots attached.
It is probably worth more than $1 million and they do not see the danger
ahead, particularly my mom. She thinks real estate is always good and does
not realize there has never been more debt attached to real estate than
there is today. The taxes are now $9800 a year. Does this not prove the
currency debasement message you are trying to enlighten them with? As far
as renting, if a deflation scenario eventually unfolds good luck collecting
any rent at all, in a hyperinflation few tenants will be able to keep up
with rents. WHAT A DISASTER! SELL SELL SELL SELL SELL! If you did not get
Jason's message, let me add this SELL!!!!!!!!!!! If I can convince your
parents to sell just one of their properties it would make me happy I have
done something for YOU who by your educational weekly letters is doing so
much for so many people.
I convinced my dad to buy some silver coin bags and he has doubled his money
on them but they can not see this is like the horse taking the first step
out of the starting gate. The paper market is the only thing stopping the
metals and time is short.
Richard Greene
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When I recently attended the precious metals resource conference in Calgary, a number of people asked me, "How did you first become interested in precious metals?" Well, when I was 9, it was late 1979, and early 1980, and the gold price was going up very rapidly, past $500 and past $600. It really was the topic of the day among many of the discussions of most of the adults I knew, who were expressing their concern and worry. I was confused by their concern. I asked, "If you are so afraid and so certain that gold is going to go up in price, why don't you go out and buy some gold?" (The implication was, "What are you, an idiot?") Every adult, of whom I asked this question, had no answer. They still don't.
If the gold price goes up, it does not, and cannot, hurt the economy, contrary to popular myth. It can only help the economy in about a million ways. If the gold and silver prices go up so that paper money becomes non-existent, it will be a boon to the economy in many ways. 1. It will eliminate the debt burden that is denominated in terms of paper money. The economic slaves will be set free. 2. It will provide jobs as gold mining booms as an industry. 3. It will limit intrusive and abusive and tyrannical government, who must now fund itself through honest money, thus eliminating income taxes, the welfare state, and socialism within the U.S. 4. The use of gold and silver as money will provide a framework for honest exchange between all participants within the economy, and will provide a base for the next economic boom. 5. The use of gold and silver as money will facilitate trade, and boost the division of labor, and will reward genuine productivity and industry, thus providing the framework for increased prosperity for all people.
For more on why rising prices will be good for the economy, see my article:
Rising Gold Prices Will Help The Economy - 02 December 2003
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How much cash and how much silver does one keep on hand? One month in cash? 6 months cash? How much savings does one have? How much can you afford to move into and out of silver on a regular basis?
Let's say you are living off of savings. In this case, I think you can put all of your savings into silver bullion (and stocks) and just keep selling silver bullion once a month as you need cash.
Let's say you are a mining company, and that you get money once a year, or even less often. Should you keep a year's worth of expenses in cash then? Would you buy silver, and then sell silver as needed for each month's expenses? Buying and selling creates a commission loss. You have to balance that against the potential gains, and also against the volatility.
On Thursday, http://www.tulving.com/ has a spread of $195 on a $4175 purchase. That's a 4.6% spread as follows: 90% Silver Bags- Buy at $3,980 (you pay shipping) Current Price - $4,175 Delivered (tulving pays shipping) Shipping cost for one bag is about $50 at the U.S. post office. Shipping makes the spread actually 5.8%.
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Gresham's law says that bad money drives out good money. In theory, when people have a choice between using spending real money and debased money that are valued equally in the market place, they will spend the debased money first, and hold on to the real money. And thus, bad money drives good money out of circulation, which is hoarded. That's the theory. But that principle only works when there are unjust laws in place (and that people are obeying) that unlawfully decree that an unjust weight and measure must have the same value as a just weight and measure.
When such unjust laws are not in place, or when the people ignore such ridiculous laws, good money will then drive out bad money.
Currently, due to vast ignorance about silver among the population in the United States, people are not actually hoarding silver coins. The general population continues to sell silver that they inherit. Thus, good money is coming to market, at historic low prices, and nearly everyone is using bad money, paper dollars, or worse, electronic banking dollars, as a form of savings--as a matter of habit or conditioning. The good money, the silver, should be hoarded, according to Gresham's law, but it isn't, because so few people even realize that silver is good money, let alone money at all. In fact, on the chat boards at yahoo, you will even find silver stock investors who will strenuously argue that silver is not money at all since it is not used in daily transactions! How absurd! The reality is that, people who inherit silver assume that "it must be valuable", and "I must be able to get something for it if I sell it". Our society is so under-educated about silver, and wants instant gratification, and thus, people tend to sell silver within a month or so after it is discovered that they have inherited it.
I know this is taking place, because the coin dealers tell me so. Their "buy" prices also tell the story, because many dealers will pay as little as 3 or 3.5 times face value for 90% silver bullion U.S. coins, when the fair market value is as high as 5 times face value, with a real market bid/ask spread of 2/10ths times face value, not 2 times face value! (face value is $.10 for a silver dime. A silver dime selling at "5 times face value" would thus sell for $.50.) The local coin dealers pay so little, because there is a constant stream of ignorant sellers. It may be next to impossible to measure the size of this supply of silver being sold to the market.
Eventually, however, silver will be regarded as good money. Ultimately, the good money will drive out the bad money. Currently, silver is up from $4.15 about a year ago to $5.71 today, a gain of 38% ! Amazingly, this has caught little attention--even among silver investors, and silver company CEO's, who only look at the previous month's decline. If this was widely realized among the market place as being the start of an historic rise, then the rush for silver would have already begun. But the rush has not yet begun. So far, we've only seen a tiny trickle, if any, of the potential investment and monetary demand.
Soon, regardless of whether or not investment and monetary demand will materialize, people will see silver appreciate and go up 30% to 100% each year for several years in a row, and at the same time, they will see the value of paper money being slashed 25-40% per year, and they will begin to realize and understand which is the good money, and which is the bad money. Then, demand for good money will increase, and the desire to hold on to bad money, especially in the form of bonds, will decrease. Good money will drive out bad money, regardless of any and all laws that may be enacted to prevent people from selling bonds and buying silver bullion.
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Since oil hit $40/barrel, many people have been emailing me about oil. Lots of people are concerned about oil and they want to know what I think about oil, and they want to know how oil may relate to, or impact, the silver market. Just like rising interest rates, rising oil prices are very, very good for the price of silver.
In the early 70's, an ounce of silver was worth the same as a barrel of oil. Each about $2.50. In the late 70's, they were again worth about the same, about $50. The implication is clear. Silver is headed up towards $40/oz., for starters, and could go higher depending on oil prices. That's a lot of upside potential for silver!
Some people are very concerned about oil. They fear we will "run out", and that modern society is doomed. I don't believe so. I believe the world may run out of extremely cheap oil that we have today, but we will never "run out" completely, and our modern society is certainly not doomed. As the price of oil will rise once again, then production will increase, and demand will decrease, and it will be in balance. Oil is not like silver and gold, where increases in prices will increase demand. Oil is not money, and can never be money. If it is too inconvenient and heavy to use silver and gold as money, think how much less convenient would be oil? If you had a choice to lug around an ounce of silver, or a barrel of oil, which would be easier? It's a no-brainer.
Today, oil is probably too cheap for several reasons.
1. I drink only distilled water. I do so, because it is the cleanest water available, and I believe the healthiest. Distilled water costs about $1.50 per gallon. It's not that much less than the price of gasoline, which is merely distilled oil. Water, as everyone knows, is rather plentiful. If gas and water cost about the same, may I suggest that oil may be more plentiful than some would suggest, and is certainly very cheap if its price is not much higher than water.
2. Oil is too cheap, because alternative forms of energy are described as too expensive to pursue, compared to the cost of oil.
3. Oil is too cheap, because we are paying for it with paper money. We are not paying in real money, gold and silver. We send two $20 bills, or the electronic equivalent, for each barrel. We do not send silver or gold at all! Even though oil is far more expensive relative to silver than historic prices, (the oil being worth far more than the oz. of silver today), we are not sending and not paying in terms of silver or gold!
Since we are getting oil for nothing (paper fraud), and since oil costs about the same price as water, and since oil is a finite resource, it is elementary that such a low price for oil is unsustainable. Oil prices will move up for many reasons, but primarily, because the fraud of the dollar cannot last forever.
Interestingly, oil was once not so cheap as it is today, and yet we still had an industrial revolution in the U.S.A. Industry got along just fine, through a very inefficient initial development phase, without the extremely cheap oil we have today. Thus, may I suggest that our post-industrial society will survive, even with rising oil prices? Rising oil prices will help to cause change, but the change will be good, acceptable and manageable. Alternative energy sources will become cost effective, and silver prices will move up to match.
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Speaking of oil, I received the following, from U.S. Senator of California, Barbara Boxer. Her comments are indented. Included is my response.
Dear Friend:
Rising gas prices is an issue that impacts all Californians.
Whether you drive a car, own a business, or buy groceries and
other goods, you feel the pinch of higher gas prices. For
months, both in Washington and in California, I have been
focusing on the critical problem of rising gas prices.
Over the past three months, gasoline prices have spiraled out
of control. Nationwide, the average price per gallon of gas
has risen from $1.54 on January 5th to $1.88 on April 12th.
Here in California, the price increase over this same period
has been even sharper, from $1.61 to $2.15. In some areas of
California, the price is much higher. In response to these
rising prices, I have come up with a 9-point plan to fight
rising gas prices. My plan includes:
As per your request, I have feedback about your 9 point plan. So that you know, I'm well researched in economics, and I have an email list of 9000 who read my weekly reports on the silver market. I do not own any oil stocks or have any interest in any oil companies.
1. FTC Investigation of Current Situation
First, I have called on the Federal Trade Commission to
investigate the current gas price spikes in California, which
began in mid-February. I have met with the Chairman of the
FTC, who confirmed that there was an "anomaly" in California’s
gasoline market and that the FTC was conducting an informal
investigation.
There is no need to investigate the gas companies. You need to investigate how the free market works. Here's how it works: If prices are high, it will encourage competition that will move in to take advantage of the profits, by charging less than others. Competition is always welcome in capitalistic societies, since it creates the best prices. Furthermore, the gas belongs to those who own it, and thus, they can sell it for whatever price they want, and it is no crime. On the other hand, your threats of "investigation" are like a false accusation that the gas stations are doing something wrong, and they are more apt to fear government reprisals. This creates increased risk, as they may fear government. Increased risk leads to less competition, and higher prices, which they will need to charge to compensate for the risk. Thus, point 1 is a horrible idea, and will lead to the exact opposite of what you intend.
2. Automatic Investigations of Rapid Price Increases
Second, I have introduced legislation that would require an
automatic investigation of the gasoline market for possible
manipulation any time that average gasoline prices in a state
increase by 20% or more over a three-month period. If the FTC
finds market manipulation in a given case, they would work with
the state’s Attorney General to determine penalties to be
imposed on the companies.
Please kill this legislation. Again, investigations for people who have the right to charge what they like, for assets they own, are like false accusations (and hints of communism) that increase the risk of doing business. If I was a gas station owner, and if I knew I could not raise prices more than 20% over 3 months, I'd try and charge the highest price I could as soon as possible if I thought prices may head up. Again, your intention will lead to the exact opposite result. Thus, point 2 is a horrible idea.
3. "Cease and Desist" Orders in Highly Concentrated Markets
I am cosponsoring the Gasoline Free Market Competition Act
authored by Senator Wyden, which would give the FTC the
authority to issue "cease and desist" orders in order to
prevent market manipulation whenever four or fewer gasoline
companies control more than 70 percent of the gas supply in a
given market.
I have no idea what you are thinking. If you issue a "cease and desist" to a gas station, and they go out of business and stop doing business, you will be reducing competition even more. This will not increase competition. What are you thinking?
4. Strategic Petroleum Reserve
We need to stop filling the Strategic Petroleum Reserve – which
is now at 93% of capacity – in order to increase the supply of
gasoline on the market. We should also establish a short-term
"exchange" in which some oil in the SPR is released immediately
and refilled later, just as SPR reserves were released four
years ago to ease the home heating oil crisis in the Northeast.
It doesn’t even make sound economic sense to buy gas for the
reserve when prices are at a peak.
This is a good idea, if we were not at war, but we are. The Strategic Petroleum Reserve is not meant to help smooth out prices for the market. It is there in case of war. Given that we are at war, it should be topped off, and be at 100%. But if you want a government stockpile, to add to when prices are low, and sell when prices are high, you should have another reserve for that purpose. It would also need to be operated by the same people who control inflation, since gas prices are not only a function of how much gas is available, but also, they are a function of how much money they are creating.
5. Increased Production by OPEC
I am cosponsoring a Senate resolution that calls on the
President to work with OPEC to increase world crude oil
supplies in order to achieve stable crude oil prices.
President Bush should work with OPEC to increase supply.
Excuse me? Neither a senator from California, nor the President of the United states, controls OPEC. OPEC, in case you don't know, was formed as a result of the U.S. leaving the gold standard, and paying for oil with irredeemable dollars. If you want the President to "work with" OPEC, you should be advocating a gold standard, and not working to continue the fraud of the unjust weight and measure of the dollar.
6. Subject OPEC to U.S. Anti-Trust Laws
I am cosponsoring a bipartisan bill authored by Senator DeWine
that would subject OPEC to the laws prohibiting collusion,
market manipulation, and other anti-competitive behavior.
Now you are just being ridiculous. Do you think the Arab States are states of the United States? They are sovereign nations. Do you propose we wage war on all of them if they do not comply? Furthermore, owners who have products to sell cannot manipulate markets. Markets are manipulated by shorts, who sell what they do not have. And by nations who produce fraudulent paper money, which is a broken promise to deliver gold we do not have.
7. Save the Bakersfield Refinery
I have called on Shell Oil to find a buyer for its Bakersfield
refinery and commit to keeping the refinery open until a buyer
is found. I have also asked the FTC and Attorney General Bill
Lockyer to use their powers to stop the refinery from closing.
We cannot afford to lose any more California refinery capacity.
If this refinery closes, it will only further stress an already
tight California market.
Given all the talk of government taking over refineries and energy plants after the California energy crisis, I don't blame Shell for trying to sell their refinery. If you want to save the refinery, I suggest that California apologize for even hinting at confiscating the property of Shell Oil. I also suggest that California reduce any taxes and environmental regulations, so that they can operate a profitable refinery, in peace. Without profits for the local Oil refineries, local gas prices will be even higher as transportation costs will increase.
8. Oxygenate Waiver
Along with Governor Schwarzenegger, Senator Feinstein, and
California’s bipartisan Congressional delegation, I have called
on the EPA to grant California a waiver from the requirement
that an oxygenate – MTBE or ethanol – be added to gasoline.
Adding ethanol to gasoline may already be driving prices higher
in some parts of the state.
This is a great idea. Reduced legislation and regulation! Wonderful!
9. Fuel Formula Investigation
We may be able to reduce price spikes by reducing the number of
different fuel formulations now required by different
jurisdictions. I have asked the General Accounting Office to
investigate whether we can do this while maintaining the same
air quality benefits that we get with California's
cleaner-burning gasoline.
Again, another great idea. Get government off the backs of the producers, and they will be more efficient.
I believe that these steps, if implemented, would go a long waytoward easing gasoline price spikes in California andpreventing further price gouging in the future. If you havequestions about any item on my 9-point plan or if you wouldlike to send me any other idea, I encourage you to contact meat http://boxer.senate.gov/contact/webform.cfm
In conclusion, 2 out of 9 would give you an F in school. But I'm glad you had at least 2 free market solutions on your list. Too bad they are at the bottom, and not at the top of your list. To my readers, please contact Barbara Boxer at the link above. I do not want to live under communism in California.
Barbara Boxer, you need to learn to trust in the free market and you need to trust capitalism to provide solutions to problems. Government's role is to provide an environment where true free market capitalism can flourish, so that all of society will be better off. If you really want to do something great to help California, you should sponsor a "sound money" bill, as they are doing in New Hampshire.
The problem with gas prices in dollars is a problem, not of gas, but of dollars. The dollars are the problem. Right now, the U.S. government is set on a course of inflation, to devalue the dollar, so that we can, in theory, compete with other nations in exporting goods. Other nations will do the same, and devalue their currencies. It is literally a race to inflate, and devalue the overvalued fraudulent dollars in society. All who hold dollars stand much to lose. But the race to devalue fraudulent money is real, and the winners will be those who devalue first, just as China has devalued their currency! The winners will really be those who devalue all the way, and who go back to using gold and silver as money first. Those who use gold and silver first, will be, essentially, buying and holding gold and silver while it is least valued, and not in use in other places, and thus, will become the most wealthy in the long run.
Included below is information about the sound money bill in NH.
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My goals and solutions. Due to my research on the huge size of the bond markets, and the tiny size of the silver and gold markets, I believe that if far less than 1% of the U.S. population became educated about money, and sold bonds for gold and silver, then meaningful and prosperous monetary change could occur almost overnight. Therefore, I began this "free silver stock report" months ago.
I created several ways that this report could help the process of mass education and communication, and be be profitable, and thus, self-sustaining. I earn money through finder's fees, by helping companies to raise capital through share offerings. And, I earn money from the "look at my portfolio".
However, what I have neglected so far was the "non-profit" way to take in money, and spend it on marketing. So, I'm planning on forming a Political Action Committee, or some sort of organization that can take in donations to help spread the word about silver and gold as money, in order to assist my goal of communicating with as many people as possible. I honestly believe convincing less than 1% of the population to act will not be that difficult to do. In fact, I regard it as being a great advantage, and I see my advantage as being as great as David's in the fight against Goliath.
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Although I may not be able to pursue every idea I have, I can certainly share them with you... I can help you to educate others about precious metals, and do so in a profitable manner. Here is my suggestion: Become a silver dealer, and do it in a pro-active and educational way. Don't set up a shop, instead, take out newspaper ads! Take out ads in the newspapers in a big city, to hold a free seminar about estate planning, money, investing, and precious metals. Then, create an hour-long presentation based on the information contained in this free report. You don't have to tell your audience about me, and I won't sue you for copyright! At the end, you should be taking orders left and right for silver bullion. Take orders on the basis of, "When your funds clear, we will then call you and lock in your price for silver, and place your order". This way, it's safe for you, and you won't even need any money to start, other than to place the ads, and book the meeting place. If you do it right, your average order size should be about $25,000 from each person, and you should be able to charge about 10-15% above the spot price, which should earn you a rather healthy commission. You might be able to make $10,000 to $20,000 per presentation, per weekend! In fact, you may be able to make more money doing that, than I make from both the subscriptions to the look at my portfolio and the finder's fees combined! In this way, you will also be reaching people who may not yet be on the internet, and have no knowledge of the facts contained herein, because they get their news from TV or the papers only! If you don't want to do the public speaking yourself, you can actually hire someone to read this report, and do that part of it for you! Good salesmen can always be hired for the job. This can be a serious business that can be started for less than $5000! I see that the largest potential problem would be to convince people to trust you with their money, if you don't actually have silver bullion that you'd be selling them at the moment. The best way around this, I believe, would be to bring as much silver bullion to the presentation as you can afford. Even if it's only one bag of bullion, that may be enough. You could also get a website and business cards rather easily enough, to help establish credibility. The other issue would be that you'd want to make sure to get everyone's name and phone number at the start of the meeting. This way, if they slip out before you close, you can call them, to follow up and get an order over the phone later. A really, really good presentation would be one where people got and were able to follow up on referrals. And a bonanza would be to be able to make such a presentation to an entire Church.
Presentations like these were actually happening during the late 60's and 70's. And it was a very profitable business. It ended in the early 1980's, of course, with the major decline in silver prices, as people got disgusted with silver. But it's probably long past due for people to start this up again. The facts today are far more bullish than they were in the 1970's. Although, given that we now have the internet, this suggestion may be an "old school" way of doing business. However most of the money of this nation is held by very old people. They may not have the inclination or technical savvy to read up on the internet, but I do know that they attend "free estate planning seminars" in herds! Your ad could combine "estate planning" and "silver". After all, leaving silver and gold as an inheritance is the best estate plan of all, since it is outside the system, not tracked, and therefore, untaxable.
I may end up trying to get into starting up that kind of business myself. Not sure at the moment, as I'm so busy. If I do it, I will certainly let everyone know how it goes. The reason I would is that I don't fear competition, I have always welcomed it, and I'd welcome getting the nation back to using sound money again.
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At the Calgary show, I met several people who bought silver futures contracts and options. I spoke with a man this week who said he was an avid silver investor, who regularly read my material. Yet he admitted he invested in futures contracts. I asked him if he read my papers condemning buying futures contracts. He said he did, and that he understood my "point of view", but he replied that he needed futures contracts "for the leverage", because he did not have enough to buy bullion alone. I replied, and said, if you can buy a silver dime today for 40 to 50 cents, and that silver dime was once a day's wage, which is worth up to $200 today, what need do you have for leverage? Silence. I further retorted, "If it's so clear that they are using futures contracts to manipulate the market, then it is equally clear that the ones who buy the contracts are the ones being deceived. I don't like to be deceived, and so I don't buy them." Again, silence.
The point is that to buy one single futures contract is about $3,375, with the increased margin requirements that took place right near the peak of silver prices of $8.40 oz. You also have to keep an additional 125% on margin in your account in cash, which is another $4218. That's a total of $7594 just to "control" one contract, minus the cost itself, and that you don't really control. The contract is for 5000 oz. At $6/oz. silver, that's $30,000 worth of silver, for $7594. So, you actually have to put down about 25% these days, which does not give you very much leverage, really, and you run the risk of market default, as well.
Now, let's see if a person took that $7594, and bought silver bullion instead. If they bought 90% coin at the spot price for silver, they could buy a bag for $6 x 715 = $4290 per $1000 face value bag. That would contain 10,000 silver dimes, of course. Actually, for $7594/$4290 means they could buy 1.77 bags, which would contain 17,700 silver dimes at about 43 cents each. Eventually, these dimes will be more valuable than a day's wage because silver is now more scarce than at any other time in human history. Thus, I expect that each dime will be worth more than about $200 today, and thus, the whole pile will be worth more than $200 x 17,700, which is $3,540,000. That's a lot of money for someone who says he can't afford to buy silver. How greedy are these people, and how much do they need? For an investor to say he "can't afford silver, and must buy futures or options", really goes to show that they are enormously and disgustingly greedy and really ignorant about the opportunity now in silver. There is no other answer that I can see to explain it. I guarantee you that no futures contract will be honored by the time silver moves back to its historical price.
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I think a lot. I think a lot about silver, our economy, and how we arrived at this peculiar investment opportunity that is a once-in-human-history opportunity. It's the proliferation of paper money. Paper money creates artificial wealth and artificial boom times. Housing, currently, is in a boom, because extra paper money home loans are available to anyone with a job. Even people who have recently declared bankruptcy can get a home loan. Housing needs copper, for the pipes and electrical wiring. Maybe houses in the third world are not built with copper pipes and copper wiring, but here in America they are. As most of you should already know, most silver is produced as a by-product of copper, gold, zinc, and lead mining. Not much of the approximately 600 million ounces of silver produced each year come from primary silver producers, as anyone can see by examining this silver stock report. So, there may also be an artificially high boom in copper production, and in zinc production, seeing as how the excesses of paper money are creating an artificial boom. Therefore, more silver is being produced than would otherwise be produced, if not for the excesses of paper money. This is one more reason why silver is cheap today, excessively so, because more silver is being produced than would otherwise exist. Once the housing prices collapse, and the building boom stops, what will happen to the demand for copper? It will likely go way down, as will the price. And with less copper mining, there will be less silver coming to market as a by-product of copper mining. Instead, it will be as it was in the old days, and copper will be produced as a by-product of silver mining, which is where the primary profits will be out of deposits such as the one owned by Mines Management.
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Here is a thoughtful letter I received this week:
HI Jason: As always, I enjoy your letter and views, although I am of the 100% physical view and would never participate in the silver stock game.
I wanted to run a thought by you in regards to the silver miners using silver as money and why the bullion banks might not get hurt by their short position in the silver market.
Isn't it possible that many of the major silver mines are in some way controlled by the bullion banks? It would only make sense that if there is an effort by powerful interests to control the price of silver that they would not only influence the futures market but also have control, or at least some control, of its production!! It almost seems assured. The miners themselves may be trying to keep the price of their own product reduced! Owning the producers would also give a no-fail insurance policy against any short position since they would own the silver in the ground to off-set any losses in their paper contracts if they ever lost control of the futures market.
Of course such a miner would not want to use silver as money as that would be the very thing they are there to ensure DOES NOT HAPPEN. To protect the fiat regime at any cost.
Wouldn't it be ironic to own shares in silver companies controlled by the very organizations that are trying to suppress silvers price. An odd thought to be sure.
Yes, it would be ironic. And very counterproductive for certain silver stock investors. I do not think your suggestion is such an odd thought! It is very reasonable, and may well explain the outright hostility that the largest cash-rich silver miners have to the idea that they use silver as money. Certainly, in the gold mining world, the hedgers were contributing to the price decline, by placing bets on it that would cost money if gold went up!
I think it is very important for silver stock investors to know the positions and beliefs of the management of their silver companies. There are two ways that the company you own can be sold right out from underneath you. Debt is one, and hedging is another. Mining companies must renounce both debt and hedging at all costs. If they don't, the companies are ripe to be raped by the banks, and can destroy shareholder value.
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Several people have written in the last month, wanting me to comment on this article:
Silver? No Thanks, We Got Lots
by Mark Taylor, April 14, 2004
http://www.safehaven.com/article-1449.htm
I didn't comment on it earlier, because I thought that the article was too lame to be worthy of rebuttal. But enough people want a rebuttal to it, so here it is.
First of all, this line is laughable, "silver began trading in the 1960's."
Second, he writes, "It traded there for 5 years before the first outright manipulation occurred. We know who pulled that one off, the Hunt Boys." I maintain it is impossible for longs to manipulate a market. It cannot be illegal to buy a physical commodity that you want with your own money, unless you live under communism.
Third, he doesn't understand what is meant by the silver deficit. The deficit is the fact that less silver is mined annually than is used by industry annually. This deficit, of course, is met, and satisfied, by the dwindling supplies of above ground resources that have been mined previously in human history. Of course it is impossible to have a real deficit in any physical thing that is exchanged, where more is used than exists, or more bought than sold. Of course the numbers must balance, in total. The fact that the deficit between industrial use and mine supply is being met by government sales and investor sales, does not mean there is no deficit.
Fourth, he writes, "7 years later I can buy all the silver I want, and so can you." This is false.
Refuting that false assertion, first, there are position limits on the paper longs at the COMEX, that are limited to 1500 contracts per person or entity. The shorts also have this same limit, unless they have an exemption, which, of course, they have. There are no exemptions for longs. This is a limit of 1500 x 5000 ounces, or 7.5 million ounces. Furthermore, the restriction may well be 1/10 of that, since I have heard that the COMEX has the option to limit total deliveries to as little as 3/4 of one million ounces of silver in one delivery month! I still have to look into that.
Second, many coin dealers report that there are only about 50 major coin dealers across the United States. Most of these dealers express shock and disbelief that any of the dealers have over 100,000 ounce of silver bullion in inventory in their local shops. Others say there cannot be more than 5 with such large inventories. I have actually found 5 that claim to have at least that in inventory. By asking for referrals, and by asking my list of 9000 readers to provide me with other dealerships that may have more, I have failed to find any more. Therefore, if you want significantly more than about 500,000 ounces, after you clean out those 5 shops, you have cleaned out most of the silver of the nation, and thus, you have to go directly to a refiner, such as Johnson Mathey, JM, or go to the COMEX. Reports are that to get a large order from the big refiners, you will have to wait over a month.
Therefore, supply in the real world is rather restricted. No, you cannot buy all the silver you want. I know, because I have had extreme difficulty getting all the silver I have, which has taken me over 3 years to accumulate!
The reason most coin shops do not have large inventories of silver bullion is that silver is also difficult for them to find and sell silver on a consistent basis, and they have few buyers walking through their doors. The coin shop owners may also not even believe in silver, given the 23 year bear market that they have lived though, and has now just ended. They regard holding silver as risky, and unprofitable. From their view, they think, "Why carry inventory of a product that's going down in value, that you cannot find, and few people will buy?" Basic economics, there. And it also explains why the price is low! No public interest. And this is exactly why I'm buying!!!
So, no, you can't buy all the silver you want, because most coin shops carry zero silver bullion in inventory, or perhaps about one bag of silver, if you are lucky. That's less than $5000. Peanuts!
You can only buy all the silver you want if you are poor, and have virtually no money to invest.
Fifth, he writes as if there is no difference between refined silver, and unmined silver in the ground. The assertion that we have almost no silver left are referring to above ground supplies that have been refined to .999 fineness. This supply is down to perhaps 250 million ounces left, as reported by the silverinstitute.org, and there is an annual deficit that requires using up that remaining silver! Unmined silver is not the same thing. The supply of over 400 million ounces of silver per year as a by product of copper, zinc, gold and lead mining, do not go to show that we have infinite above ground supply! This annual supply is being totally consumed, and then some, by the total silver demand of about 850 million ounces!
Finally, he concludes, "I think it is pretty evident why the price of silver stays in a range of around $5 an ounce, it is not because Central Banks are controlling the price or because of Commercial hedging.....it is just that silver is very abundant, it is everywhere.Which leads me to wonder, what motivates Butler and others like him to continue in their attacks and claim that there is no silver to be had? Are they as smart as Mr. Buffet? I imagine to a degree they just might be. So what are you doing right now, buying at higher prices or following the golden rule of investing and selling at higher prices? Remember, successful investing is a matter of knowledge, not luck. So rather than closing with the usual "good luck all".... I'll stick with good day....luck is for rabbits."
Unbelievable! Mark Taylor demonstrated his thorough confusion on the concepts of supply, demand, deficit, and the difference between refined and unmined silver, and showed he is both poor, and clueless as to the relative the scarcity of silver. (Literally, there is perhaps less than 1.2 million ounces of silver bullion available, to you personally, if you wanted it immediately from the five biggest coin shops and COMEX.) He has no knowledge of how scarce silver is, as money, compared to how available bonds are, as money. It's literally tens of trillions of dollars in bonds, and only a few hundred million dollars of silver. The difference is a factor of 100,000! There is literally over 100,000 dollars in bonds for ever one dollar worth of silver available, and that's if you count all the silver in the registered category at the COMEX, as "available". But with position limits on paper longs, it actually may be much, much less!
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Virus alert!
As many of you know, many viruses will get an email address, and pretend to be sent from it. These viruses have hit the gold community rather hard, and my email in particular. If you get an attachment, or a short and cute note, saying it's from me, it's not. Here's a most dangerous virus!
Dear user of GoldIsMoney.com,
We warn you about some attacks on your e-mail account. Your computer may contain viruses, in order to keep your computer and e-mail account safe, please, follow the instructions.
Further details can be obtained from attached file.
The Management,
The GoldIsMoney.com team GoldIsMoney.com Attached is a pif file that is a worm. The link below can show you how to disinfect your computer. The link below is not a worm or virus, and cannot hurt your computer if you click on it. What is dangerous, is to open attachments.
http://www.snopes.com/computer/virus/beagle.asp
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I have been thinking about forming a political action committee (PAC) to advocate the use of gold and silver as money. Doing this, would allow me to collect donations which would be tax-exempt. After speaking with several attorneys, they have advised me to form a 501 c3 non profit organization, which cannot support, endorse, or give to political candidates. A 501 c3 non profit is supposed to be able to receive donations, and the donor is able to claim a deduction on their taxes, as if they did not earn the donated money in the first place, and so, they pay taxes on a smaller income. So, the government thus encourages people to give to government sanctioned groups, with the tax deduction. However, the government can also disqualify and revoke the 501 c3 at any time, and charge back taxes, and destroy the non-profit organization. And the restrictions are a violation of free speech! Furthermore, and this is perhaps the most important point, donors who give to a 501 c3, and who report their giving to the government, are disobeying God's command to give in secret in order to be rewarded by God!
(Mat 6:1-21) Take heed that ye do not your alms before men, to be seen of them: otherwise ye have no reward of your Father which is in heaven. {2} Therefore when thou doest thine alms, do not sound a trumpet before thee, as the hypocrites do in the synagogues and in the streets, that they may have glory of men. Verily I say unto you, They have their reward. {3} But when thou doest alms, let not thy left hand know what thy right hand doeth: {4} That thine alms may be in secret: and thy Father which seeth in secret himself shall reward thee openly.
Therefore, I will not form a 501 c3. But I will accept your secret donations, so you will have a reward from God. Your donations will be used to further expand my advertising, expand my market reach, and further advocate the use of silver and gold as money. I do not yet believe that the time is right to sponsor bills and legislation, or support political candidates. Right now, I believe more people need to be educated about the supply and demand fundamentals of the silver market. These are numbers produced in silver reports that are sponsored by miners and users in the industry, but their market reach is limited. People also, in general, do not see much of a benefit of precious metals over paper. We need, first of all, to get more people to invest in silver than are selling silver bullion! I do not fear government confiscation, or unjust laws enacted now, simply because the silver market is too small, silver is too cumbersome, and is not worth it. Confiscation may become a factor after the price of silver rises up to over $100/oz. Silver confiscation did not happen in 1980 when it was at $50/oz, which is like an inflation adjusted price of $150. People who fear government confiscation at today's prices are overly fearful, in my opinion.
If you believe that God hates unjust weights and measures, as I believe, then we have the same beliefs. I may not receive as many donations as would a 501 c3. But what glorifies God, and what will God honor? I believe God will honor and bless obedience, and I would rather work with less money and have God on my side than have more money, and not have God's blessing. Gideon's army won his fight with 300 men, after God had him reduce the size of the army in order so that God would be glorified. With God on our side, who can be against us?
I think we only need to get the message out to less than one tenth of one percent of bondholders, 1 in 1000, and then the price of silver will be roaring wild!
So, you can send your donations to:
Jason Hommel
general delivery
Grass Valley, CA
If you donate, please also email me at jasonhommel@yahoo.com so I will know to check the post office.
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Another way to help out is by buying a "look at my portfolio".
Because I have a market reach, I also receive a lot of tips about silver stocks. And thus, I believe I may have invested in some of the best ones that came my way. If you believe I may have an edge based on my work and position... then the best way for me to share this with you is to is tell you where I put my money. It's not investment advice. I offer a monthly "look at my portfolio". I do not issue recommendations, and I don't list number of shares or the size of my portfolio, but I will show the top investments in my portfolio, by rank, updated monthly.
Price: $39.95/monthly, or $49.95 for a single month, or $295.00/year
To order: Click here
If you have any questions about billing or order fulfillment, you need to contact my support staff at support@goldismoney.com and not me. I manage a large portfolio, and I don't have time to process billing requests. I don't bill any cards, my support staff handles all of that. The toll free telephone customer support line is: 877-895-6824.
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I will be attending the following two mining/gold shows in the next month:
1. World's Largest Natural Resource Investment Conference...
June 02-03, 2004 - New York Marriott Marquis
http://www.iiconf.com/ny04/default.aspx
2. World Gold, PGM & Diamond Investment Conference,
June 13-14, 2004 - Vancouver, BC
http://www.goldshow.ca/
I will be speaking in Vancouver.
In case you can attend one of the shows, and if you want to know what I look like, there's a picture of me here:
http://www.goldismoney.com/about.php
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General Commentary on Silver (slightly modified from last week):
The sponsors of the Sound Money Bill in New Hampshire are now looking for donations so they can take this to other states!
For news on the New Hampshire Sound Money Bill, that proposes to use U.S. Treasury minted Silver Eagles and Gold Eagles as money see:
http://www.nh-inews.org/
http://veritasradio.com/ -- site temporarily disabled.
Current status of the NH bill:
The bill will live until the November elections. It'll have a different #,
but we now have 6 months or so to get EVERYONE we need on board.
Now looking to raise $25,000 to $35,000 for "phase II", to get set up with an office and staff training..
Looking to raise $500,000 for "phase III", to take this to about 5 other states.
Send any donations you can, to:
[These are not political campaign donations.]
SOUND MONEY FOR AMERICA,
c/o Henry W. McElroy,
15 Iroquois Rd, Nashua, NH 03063
ANY AMOUNT, ANY LEGAL TENDER CURRENCY - U.S. OR FOREIGN !
Video copies of the sound money bill press conference are available for a $35 donation.
For more info, contact
Rep. Henry W. McElroy, NH State Representative
Sponsor of the bill
603-233-5892
Harvey Wharfield
978-635-9586
We also need assistance with the following.
1. Please contact your local representative to your state government. Find out whether they might support a similar "sound money bill" in your own state.
To contact your state rep to the federal goverment, see http://www.house.gov/writerep/
To contact your state rep to your local state government, you will have to find that on your own. Try searching for "contact state representative california" and replace the name of your state in the search.
2. If you know of any local representaives to your state government, who may be GOOD, LIKE MINDED REPRESENTATIVES, SENATORS, and GOVERNORS, who may like to support, or sponsor, a sound money bill in your state, please tell them about the NH initative. Copy the above, and send it along to them. And call Henry W. McElroy or Harvey Wharfield, and let them know of the other reps who may assist the cause.
3. If you have an email list to people who may be interested in gold and silver as money, or who may be good conservatives, please send out this notice to the list, so the project can move forward!
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See my article: Biblical Guidelines for Managing your Money
As the New York Times, January 11, 1859, page 2 said---
"It is well known that the most colossal fortunes the world ever saw have been based on silver mines..."
--quote found by Charles Savoie
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WHERE and HOW to BUY SILVER BULLION
http://www.goldismoney.com/buy-gold.php
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My 2004-2009 price predictions for gold and silver:
2004: $595/oz. gold, 50:1 ratio = $12/oz. silver
2005: $1011/oz. gold, 30:1 ratio = $34/oz. silver
2006: $1719/oz. gold, 10:1 ratio = $172/oz. silver
2007: $2923/oz. gold, 5:1 ratio = $ 585/oz. silver
2008: $4,969/oz. gold, 1:1 ratio = $4969/oz. silver
2009: $8448/oz. gold, 5:1 ratio = $1698/oz. silver
2010+: infinity dollars/oz. gold, infinity dollars/oz. silver.
I calculate the gold price rise by guessing that by 2009, M3 will have a "gold-value" like it did in 1980, which is to say, M3 was worth 2 Billion oz. of gold or less. It also assumes M3 will about triple in that time. These figures are conservative, because I see no reason that M3 should be valued more than the gold the U.S. actually holds, which is a mere 261 million oz., not billion. Today, the M3 value is $8870 billion / $425/oz. = 19 billion oz. of gold M3 could buy in theory. The silver:gold ratio is also a very, very vague guess, reflective of monetary demand chasing silver, which is more scarce than gold in above ground, refined form. I have no idea when the ratio of 15:1 will be exceeded, I'm just totally guessing. I suppose it could happen this year or next month for all I know. Of course my real price targets are infinity dollars per oz. for both gold and silver when all is said and done, I just don't know how long that will take, nor what year it will be. But my point in producing the price predictions is to show my bullishness for silver and gold.
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I wrote an article predicting that Silver Companies will buy silver, and urging Silver Companies to buy silver with their cash, to use silver as money, and sell silver as needed for expenses. See http://news.goldseek.com/GoldIsMoney/1069879327.php
That article is now having an effect! It is being discussed by several large "cash rich" silver companies, who are seriously considering the idea of holding their cash in the form of silver.
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A great overview on silver: Douglas Kanarowski's 78 Approaching Forces For Higher Silver Prices
See also Douglas Kanarowski's article: What Impact Will Digital Photography Have on Silver?
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See the 600 year silver chart to see how undervalued silver really is:
http://goldinfo.net/silver600.html
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Look at the summary of the world silver survey by GFMS Limited on behalf of The Silver Institute :
http://www.gfms.co.uk/Publications%20Samples/WSS03-summary.pdf
Note, there is virtually no monetary nor investment demand. Note, the 2002 mine production (585 mil oz.) is greatly exceeded by industrial, photo, and jewelry demand. (838 mil oz.). Note the chart on page five, "Supply from above-ground stocks".
The difference between mine supply and industrial demand was met by a combination of three factors: 1. Government selling, 2. Private selling, 3. Recycling
U.S. government selling is ending, as their stocks have run out, or will run out. This factor will reverse, because the U.S. government will need silver to continue their coin program, and/or need silver when they wake up and decide they need to replenish their strategic stockpile for domestic security. Silver is a war material. China's selling of silver will also likely turn into buying, as China will need silver for continued industrial development, or when they also lose faith in the U.S. dollar.
Private selling has been rapidly shrinking and is now almost ended, and should turn into buying, and become monetary demand. Monetary demand is everything in the silver supply / demand situation. It's not now. Now, it's nothing. But it will become something incredible, because the dollar is dying.
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The following is a "must read": Ted Butler's best ever explanation of how silver is manipulated lower than it should be.
http://www.investmentrarities.com/11-04-03.html
Over 3400 people have signed the silver petition to stop the manipulation at the COMEX:
http://www.PetitionOnline.com/comex/
Ted correctly points out that a lower price creates excessive demand from consumers. However, Ted Butler does not point out, and neglects to mention, that a perpetually low price also creates lack of demand from investors who are "trend investors".
I think most silver experts over-analyze all the supply and demand factors of the silver market. No factor is more important than monetary demand. The force of photographic demand is like a light breeze compared to the hurricane or tornado of monetary demand. Monetary demand is everything.
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Consider the gold market for a moment: Even short selling at the COMEX is nothing compared to monetary demand. The short position most certainly helps to depress the price of gold as the short position is growing larger. However, it adds fuel to the fire if there is short covering, and thus, it can boost the gold price later. But the commercial short position on the COMEX is next to nothing compared to the non-reported "over the counter" trading that is done that does not appear on the COMEX.
(Numbers in metric tonnes, 32,152 oz. per tonne.)
870 tonnes -- the paper position at the COMEX, 280,000 contracts for 100 oz. each.
5,000 tonnes -- the official number admitted that the central banks have sold.
15,000 tonnes -- the number GATA research shows that central banks have sold / or leased.
30,000 tonnes -- the number of official central bank gold, minus either the 5000 or 15,000 tonnes.
145,000 tonnes -- all the gold mined in the history of the world.
2,600 tonnes -- annual mine supply
4,000 tonnes -- annual demand
And all of that is nothing compared to the amount of dollars out there that exist that could buy gold. $20 trillion bonds, $9 trillion M3 = $29 Trillion. A mere 1% is $290 Billion, which, at $500 /oz. is a massive demand of 18,039 tonnes. Do you understand what that means? That means that far, far less than 1% of dollars, in either bonds or M3 can buy gold, because there simply is not that much gold available.
Long before 1% of U.S. paper dollars tries to buy gold, gold will be going up well over $1000/oz., and silver will be headed up over $50/oz.
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To scare away investors--that is the entire reason gold and silver are manipulated in the first place. Only the trend investors can be deceived. The problem is that nearly everyone is a trend investor. So few investors understand value. If people knew the facts and used their brains, the available above-ground refined silver would be gone by tomorrow, and the price would be well over $20-50/oz. But don't trust me, follow the urls and check the numbers:
1,000,000,000,000: 1 Trillion dollars
1,000,000,000: 1 Billion dollars
1,000,000: 1 Million dollars
$33,000,000,000,000: World bond market, yr end, '01: http://tinyurl.com/vr7u
$26,400,000,000,000: World stock market, June 2002: http://www.nyse.com/press/1044027443845.html$20,200,000,000,000: U.S. bond market, yr end, '02: http://tinyurl.com/vr7g $11,300,000,000,000: NYSE U.S. stock market, April, '04 (363 bill/s x $3
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