-- Posted 28 August, 2006 | |

The Wallace Street Journal

By David Bond, Editor

The Silver Valley Mining Journal

Wallace, Idaho – The following is a true story. It all started happening day after tomorrow:

Chaos continued to confound world energy and metal markets today on news that Venezuela would accept only silver for American oil payments at a rate of 5 ounces of .999-fine silver per barrel of oil.

Hugo Chavez, president of the oil-exporting South American nation, said last Friday that Venezuela had sufficient “United States Fed promissory notes” in its foreign exchange accounts that it fears future accumulations would render Venezuela “far more susceptible to gyrations in the U.S. economy and foreign policy than we care to be. We don’t need no more stinking Yankee dollars,” he added.

Oil, prior to Chavez’s announcement, was trading for $75 Fednotes per barrel; silver for $12 per ounce. The Venezuela ratio of 5 ounces per barrel confused mainstream media analysts and sent the US dollar plummeting in overnight trading as traders scrambled to get into silver or silver-equivalent gold physicals in anticipation of much higher opening prices tomorrow.

Chavez hinted that Venezuela would consider accepting silver- or gold-equivalent-backed paper currency in exchange for oil at the same ratio, but added, “I don’t think, other than the Liberty Dollar, that there are any.”

“This is just plain dumb,” fumed Fox News analyst Bill O’Reilly. “It just goes to show you once again how backward and stupid South America is. Here’s Hugo Chavez, he can’t even add. He’s willing to take $60 worth of silver instead of $75 in cold, hard U.S. paper for his oil. Silver is a barbarous relic; it hasn’t been money for years! How dumb can you get?”

However, religious commentator Pat Robertson, sensing something more complicated was afoot, renewed his call for Chavez’s assassination. “Whatever he’s up to, it’s not going to be good for America. We’d better nip this Bolshevik in the bud, the CIA way,” Robertson said.

At 1.1 million barrels per day, Venezuela is the U.S.’ fourth-largest supplier of crude oil, behind Canada, Mexico and Saudi Arabia. Venezuela’s exports to the U.S. account for one-third of Venezuela’s total daily output and 10 percent of U.S. total crude imports.

Weekend trading in Asia showed the effects of Venezuela’s oil-for-silver swap resulting in a rise in silver to $20/ounce and a commensurate jump in oil to $100/bbl. Gold was also up.

Analysts without television shows wondered where the United States would get enough silver to pay for its Venezuelan oil, even at the discounted rate of 5 million ounces per day. Prior to 1980, sufficient government and bank stockpiles existed in the U.S. to sustain Venezuelan imports for a year or longer. Now, however, all U.S. silver is gone and daily U.S. silver production is a mere 107,397 ounces per day.

Fearing a collapse of the New York and Chicago silver contracts similar to the collapse of the London Metal Exchange nickel contract earlier this month, nervous holders of purchase contracts were already lined up around both exchanges early Sunday morning, hoping to be first in line for delivery when the NYMEX and CBOT open Monday.

The same scene was reported around Bank of America, Citibank, Wells Fargo and other major federally-chartered banks in U.S. cities, where nervous depositors were hoping to be among the 3 percent actually able to redeem their accounts for cash.

In Washington, D.C., White House sources said President George Bush would declare a “gasoline station holiday” on Monday for an indeterminate period of time, in hopes that “hoarders” would not abuse the crisis by filling up their automobiles. “This will not stand, and is proof that Venezuela is hiding weapons of mass destruction and has an active nuclear program under way,” a leaked copy of Bush’s speech is purported to have him saying.

Elsewhere in Washington today, from the rooftop of the Federal Reserve building at 20^th Street and Constitution Ave., several eyewitnesses reported seeing a large helicopter depart.