Jason Hommel of the Silver Stock Report confirms, "None of my trusted, major, regular dealers have any silver to sell.
And oh yes, what about that current low price?
There's a short story that goes something like this. A lady wants to buy sausage. There are two butcher shops next to each other, one advertises $1.99/lb., the other advertises $2.99/lb. She goes to the $1.99/lb. shop first. But there's no sausage, they are out. So, she goes across the street, and sees sausage for $2.99/lb., and promptly complains about the price. "Why don't you sell it for $1.99/lb like the other guy?" Butcher answers, "Lady, when I'm out, mine is $1.99/lb, too!"
Price means nothing if you can't get the product"
It should be pointed out that many believe the current "spot price" for silver and gold is pure fiction since just about every major coin dealer is currently SOLD OUT of most silver, especially American Eagle Silver coins. It's been reported the US Mint, which has been severely rationing silver coins the past 5 months has now stopped shipping gold coins. and I just saw at one dealer site that they aren't taking orders for silver until they catch up. And obviously none have been shipped out recently or coins dealers would have some. Why? A good guess is because they can't find enough to buy - at least at the "fictional" spot price.
The Gata Dispatch reports, "The U.S. Mint has suspended sales of American Eagle gold coins and is refusing orders from dealers, two coin and bullion dealers confirmed Thursday.
The mint's suspension of gold coin sales follows its tight rationing of sales of silver eagle coins, begun in May, when sales to the public were terminated and sales to the mint's 13 authorized dealers were tightly limited.
The suspension is overwhelming evidence that the futures contract price of gold on the commodities exchanges is substantially below the physical market price and that, indeed, the commodities exchanges are being used as GATA long has maintained -- as part of a massive scheme of manipulation of the precious metals, currency, and bond markets."
At Silver Snowball we currently do still have American Eagle Silver coins and there has been no disruption in our fast, reliable service. We will continue to do all we can to keep the silver coming to you.
I've received quite a few articles about the current silver shortage from members. I'm putting what seems like the most complete article below.
And if you aren't ready to settle in to a long explanation of how the volatility in the precious metals markets could be a sign that something big is about to happen then a great little distraction is to go to http://www.iousathemovie.com and watch the trailer to this movie that is coming out called I.O.U.S.A.
And last random thought - My condolences to those of you who currently can't advertise in a popular traffic exchange site that is being prevented from paying its members by those who protect us from making money. The latest news from the company looks very promising and it's a great place to advertise Silver Snowball. But it just shows how quickly "digital" money can disappear. In the blink of an eye money "you think" is somewhere such as a traffic exchange site, or perhaps a bank, or bond, ANY type of digital form of paper money, or even the value of that paper money - it can disappear just like that. Digital money and paper money are not money. They are digits and paper. Silver or gold that you own is real money. We like silver better because it's more rare than gold. The current silver shortage proves just how rare it is. And the fact that money in digital form you think is somewhere can disappear, that's all the more reason to accumulate silver and share our mission with others. Accumulate real money because someday it could be the only money you have.
Thanks,
Ed
SilverSnowball
Update: I just found out that Kitco, one of the biggest precious metals
dealers in North America, just posted the following notice:
IMPORTANT NEW NOTICE: Due to market volatility and higher demand in the
entire industry, we are anticipating delays in supply of all bullion
products. Please note that you can continue to place orders and prices will
be guaranteed; however, cancellation fees will still be applicable
regardless of the length of the delay. Consequently once inventory is
received there may also be delays in processing and shipping by our vaults.
(italicized emphasis added)
Sounds like a severe shortage to me.
article below:
The Disconnect Between Supply and Demand in Gold & Silver Markets
by: James Conrad posted on: August 18, 2008 | about stocks: DBP / GDX / GLD/ SLV
There is a huge demand for both gold and silver right now in India and North America. North American shops are completely bare of silver. Indian shops are empty of both silver and gold.
Even the Indian banks don't have any gold or silver. The big western bullion banks, based in New York and London, control both the gold and silver trade. Reports from India are that they are refusing to extend Indian bank lines of credit, forcing the small banks to deliver to clients, collect money, and pay down lines of credit, before being allowed to take delivery of another gold or silver shipment. This is very abnormal.
Normally, if a banker's bank knows that its customer-bank has firm orders,
it would extend the smaller bank a bigger line of credit. Not now.
By refusing to extend lines of credit, the big bullion banks are essentially
rationing a very thin supply. Most physical silver, for example, is being
reserved for industrial and fabrication use, and investors are simply not
able to get any, without waiting for months. Investor oriented shops are
bare, and the U.S. Mint has suspended coin production. All available supply
seems to be reserved for industrial users. You cannot substitute paper
claims for real silver, in industrial use, because paper doesn't have the
physical properties of silver. So, it seems that all available supply is
being diverted to industrial users, and, to a lesser extent, aside from the
squeeze on lines of credit, also to jewelry fabricators. But, investors are
left out in the cold. They can accept paper claims, or nothing. The most
interesting mistake that the manipulators have made is in not supplying the
U.S. Mint, which has run out of silver, proving that there is a severe
shortage.
Meanwhile, by refusing to extend Indian bank lines of credit, Indian jewelry
demand for both gold and silver is being stymied. India is not being
allowed to drain away precious metals, in the amounts that are warranted,
given the low prices and the numbers of unfilled orders that are sitting on
desks in India. World bullion banks, in other words, are managing
deliveries of physical gold and silver to artificially reduce the quantities
delivered, under the excuse that the "Indians have run down their credit
lines."
The happiest fact of bullion bankers' lives is that western markets are,
with the exception of some fabrication and industrial demand, almost 90%
paper based. The huge COMEX futures market almost never sees an ounce of
real silver or gold ever change hands. It is all paper, shuffled back and
forth. These paper markets are being flooded with paper based "claims"
to alleged gold and silver, supposedly being held in big bank vaults in London
and New York City. The market is overwhelmed with paper claims, and the big
bullion banks (maybe, with the Federal Reserve providing the money?) are
paying big bucks to secondary derivatives dealers to get them to lease this
artificially created "gold and silver." In a normal market, one who leases
a thing of value must pay for it. But, now, derivatives dealers are being
paid to lease both gold and silver. Then again, it may not be a thing of
value, if it is fake.
That being said, the paper claims may have a lot of value, whether or not
they are fake. Derivatives dealers can write futures contracts, options,
etc., according to CFTC rules, because paper "claims" to vault-stored
silver and gold can be used as the legally mandated "cover" for futures contracts.
To understand the nature of paper claims, we must travel back in time, for a
moment, to a class action against Morgan Stanley (MS). According to the
complaint, Morgan Stanley claimed that it bought physical silver, on behalf
of various clients, and was storing it, in safe-keeping, in its vault in New
York. Allegedly, Morgan Stanley defrauded its clients from Feb. 19, 1986,
and Jan. 10, 2007. According to the complaint, it never bought any silver,
but, all the while, continued to charge clients big fees for storing the
imaginary metal. Morgan Stanley is one of the biggest investment banks in
the world. It is one of the major players in precious metals. Yet,
according to the lawsuit, the paper claims to vaulted silver it issued to
clients was nothing more than a lie. One of Morgan Stanley's defenses,
interestingly enough, was that everything it did simply followed "standard
industry practices." For more information, see here.
Apparently, it is standard Wall Street industry practice to send people
monthly statements promising that the firm is storing physical precious
metals in a vault, charge for the storage, but really never buy or store any
real metal. Morgan Stanley eventually settled the case for many millions of
dollars in damages, rather than going to trial. That tends to indicate that
they were guilty, as charged. I believe, with good reason, as you shall
soon see, that most of the paper claims to silver and gold, now floating
about, and collapsing prices, are cousins to the Morgan Stanley silver
claims.
Logic tells us that the so-called metal must be imaginary, and I will soon
tell you why. Yet, for some reason, in spite of class actions like the one
described above, no one demands to see it. The majority assumes that banks,
like Morgan Stanley, are honest, and would not issue fake paper claims.
But, if they did it before, they are probably doing it again. That could be
the key to precious metal market manipulation.
If you are a huge bank, with hundreds of billions of dollars worth of short
positions, and you know the price is going to explode, you can do one of two
things. You can be honest, like most individual and institutional short
sellers must be, and cover your short position by buying back at market
prices even though you may take losses to do so. Or, you can be dishonest.
The majority of banks and hedge funds don't have the option of being
dishonest, even if they want to be.
However, what if you happen to be a primary dealer of the Federal Reserve,
or the ECB, or the Bank of England, or all three? If you are, then you
happen to have overwhelming knowledge and control of the marketplace,
because your divisions are deeply enmeshed in the global financial trading
system, and your powerful computers allow you to analyze all markets in a
matter of minutes or even seconds. You have an ownership stake in all the
big markets like the New York Stock Exchange, Nasdaq, COMEX, NYMEX, and the
London Metals Exchange.
Unlike a small or medium sized institutional investor, you are in a position
to be dishonest, if you choose to be, and in a position to profit from your
dishonesty. Because all orders flow, at one point or another, through your
firm or one of a handful of other big wire houses, you will know where the
stop-loss triggers of non-affiliated long and short sellers are. With this
in hand, you are ready to manipulate any market, especially small commodity
markets like gold and silver.
The first thing you need to do is issue large numbers of false paper claims
to allegedly stored gold and silver in your vault. This gold and silver
really doesn't exist, but it doesn't matter because you are a big
prestigious bank, and no one questions you when you say it is in your vault.
You offer these claims for "lease" to any secondary dealer willing to
take you up on it. You don't want to sell them outright, because then you might
eventually be faced with a demand for the real metal, as Morgan Stanley was.
You don't actually have enough real metal to cover these claims, so, you
want to make sure that the operation takes place in a limited time frame.
That's why you "lease" the claims for a term of months. If you find
that small dealers are afraid to lease such claims, you encourage them by
subsidizing the leases with a negative interest rate. In other words, you
pay them to accept your alleged gold and silver.
This is exactly what is happening in the precious metals market, right now.
Gold and, especially, silver leases are being subsidized. As of a week ago,
if you are a dealer, and you lease gold or silver, from the bullion banks,
incredibly enough, THEY WILL PAY YOU! At the end of this article, I have
attached a chart, showing the current negative lease rates for the various
metals. Dealers who lease claims to fake metal, are able to issue futures
contracts and other derivatives. The fact that they hold contractual claims
to metal means they will have fulfilled the "cover" requirement imposed
by their federal regulator, CFTC. The CFTC has never bothered to audit a vault
to see if the gold or silver is really there, so you've got nothing to worry
about. You're a big bank! You say it is there. Everyone believes you,
just like Morgan Stanley's customers believed them. You might even be
Morgan Stanley.
At any rate, you initially issue a lot of claims to fake metal, and so many
futures contracts are written, in a very short time period, that they flood
the market on exchanges like COMEX and the London Metals Exchange, where
almost all the transactions are on paper, and real metal rarely changes
hands. Meanwhile, if you are the big bullion bank, you know what you are
doing. You issue just enough subsidized precious metal paper to
automatically trigger stop-loss orders. The price starts going down as the
sell orders are filled. That triggers yet more stop-loss orders, and the
process becomes one of dominos, falling one after another, until the price
collapses. If the operation is successful, and the collapse is big enough,
market confidence is destroyed, on a wide scale.
The destruction of market sentiment won't last forever. You can't fool
all the people all of the time. But, temporarily, having been burned badly,
investors refuse to buy. Buying may still be happening on the real market,
as it is, in both America and India, in gold shops. True physical metal
will still be in severe shortage, so the metal will disappear quickly, as
the price goes down below where true market forces should be bringing it to
reach equilibrium between supply and demand. But, real market buyers look
to the COMEX and the London Metals Exchange, because they think they are
honest exchanges, even though they may not be.
Prices on those exchanges will determine prices charged in shops, and when
the price goes down deeply, there isn't enough product to go around, because
everyone buys it. In other words, supply and demand go into disequilibrium,
there isn't enough supply to meet the demand at such low price points, so
delays in delivery, as well as outright shortages result. That is what is
happening, right now, in the physical gold and silver market. Not only to
retail investors, but, also, even to the U.S. Mint, which has suspended
production of gold coins, and is rationing silver coins.
At any rate, when market confidence is damaged sufficiently, we can move in.
We unwind our new short positions in the futures market, by buying back huge
number of long positions at very low prices on the COMEX. We also unwind an
exponentially larger number of positions inside the shadow world of "dark
pools", which are little known secretive private exchanges, controlled by
the big banks. It ended up costing us some money, but not a lot compared to
the money we've avoided losing. We've paid subsidies on the leases, but
we've never actually had to buy the gold or silver, because there isn't
any available, and none in our vault. This is the way that a group of big
bullion banks could induce a price collapse to unwind hundreds of billions
of dollars worth of potential losses, or position themselves to go long on
hundreds of billions of dollars worth of potential profits.
Contrary to the pundits at CNBC, Bloomberg, etc., the price of gold really
has nothing to do with the value of the dollar or the value of oil. It
doesn't matter what the dollar is worth, in relation to euros, pounds
sterling or Zimbabwee money. It only matters what supply and demand factors
exist for gold. Yes, the demand will fall a bit if the price goes up, for
example, in euros, because the euro has depreciated. But, what really
counts is not what the euro, yen or dollar price is, but, rather, whether or
not there is enough demand to soak up the available supply.
Gold is priced in dollars, but, so long as people holding either dollars,
euros, yen, yuan or Zimbabwean money, are willing to pay whatever price gold
is selling for, in an honest market, the price should rise. Obviously,
enough people are willing to pay for gold and silver, at the previous $978
and $19.50 per troy ounce price, because the U.S. Mint could not source
enough metal at those price, and had to suspend coin production.
This proves that people are more than willing to fork over, in whatever
currency they are using, the previous prices for gold and silver, in such
quantities, that a shortage was already existing, before the price collapse,
especially in the silver market. It is true that people in poorer countries
like India, might have back on their consumption.
But, while they were cutting back, demand and consumption of gold in North
America, including Canada and the USA, was soaring. For example, before it
suspended production of bullion coins, due to shortages, the U.S. Mint's
statistics show that it was printing 2.5 times as many gold coins, and
almost 4 times as many silver bullion coins, this year, compared to last
year. Gold and silver bullion, in bar form, was also flying off North
American retail shelves.
Bottom line: Enough people were buying, when the price was high, to exhaust
the supply. Basic economics says that, in a free market, this means the
price must rise.
But we don't live in a world of free markets. Instead, we are living in an
Orwellian 1984 double-speak world. Welcome to the world of Fed/PPT, where
2+2=5, blue is yellow, and black is white. All things are as they say they
are, rather than as they really must be. Welcome to the world of a
controlled business media, where the pundits will do anything and say
everything to convince you to forget your math, and your eyesight. No, they
tell you. It really isn't so. What you're seeing isn't the way it
is. Believe, instead, what we tell you. We can do it! We have special skills.
There is a new world order. We can make 2+2=5. Just give us your money,
and we'll show you how!
But, let's return to reality. Right now, virtually no North American
precious metals dealer can give you a firm delivery date on large quantities
of silver. They have no stock to sell. This means demand is robust. On
Friday, as the COMEX gold price was collapsing, the U.S. Mint suspended gold
bullion coin production because it cannot source enough gold bullion! That
could not happen if bullion banks were selling claims to real physical metal
into the marketplace. Indeed, the Mint began rationing silver bullion coins
two months ago, when it started having trouble sourcing silver bullion. Word
from the Perth Mint in Australia is that it is taking weeks or months to
take physical delivery of gold and silver, even though investors are already
supposed to own that metal. Supposedly, it is simply being kept in the
Mint's vault for safe storage. But, it is getting harder to take it out of
"storage". Meanwhile, as previously stated, Indian gold and silver dealers,
wholesalers and banks all have empty vaults. None of this can happen if
demand is down, and supply is abundant.
We have a disconnect between reality markets and fantasy markets. The COMEX
and London Metals Exchange are fantasy markets controlled by the big bullion
banks. They must be engaged in market manipulation, because nothing can
explain a big price collapse, in the midst of widespread shortages and
robust demand. A group of big financial institutions, deeply enmeshed in
the global trading system, and heavily involved in the gold and silver
market, must be deliberately inducing temporary panic, for their own
purposes. These malevolent characters will eventually be able to buy back
their short positions at low prices, and, possibly, also, even collect a
significant long position. The process is a continuing one, and hasn't
stopped yet. On Friday, for example, the subsidy for leasing gold and
silver was raised to very high levels.
It is obvious what they are doing. More important, however, is why? What
does it mean? Well, the PPT bank executives are generally "people in the
know" about financial events, before they actually happen, sue to close
relations with regulators like the Federal Reserve, and FDIC. They folks
are so desperate to cover short positions, that they are willing to spend a
billion or so dollars, subsidize precious metal leases, to collapse the
market, and destroy investor confidence. But, why? We know that the
Federal Reserve, like other central banks, sees gold as a rival to the
dollar. But, that's not enough, because they've never attacked precious
metals with such ferocity as now, and, if the Fed were directly involved,
they could probably supply real metal.
If something terrible is about to happen in the financial world, the losses
that big banks would take on their precious metal short positions would put
most of them into bankruptcy. Remember the words of Warren Buffett.
Derivatives are the financial world's weapons of mass destruction. Precious
metals futures short positions are highly leveraged transactions that could
cost hundreds of billions if the price of gold were to suddenly explode.
We can guess that the main players here are big powerful Wall Street and/or
High Street investment banks who work closely with the Federal Reserve, the
ECB, and the Bank of England. These people are privy to the information
needed to carry out a massive manipulation as described above. No one else
is. Since most of the collapse happens on the COMEX, we can assume that
most of the manipulation is being done by New York based investment banks.
Wall Street's investment banks control most of the world's gold and silver
markets. They are also entrenched in the overall mesh of all financial
markets. Making matters worse, because of the 1987 President's Executive
Order on Working Markets, they are authorized to work together, and in
conjunction with the U.S. Treasury and the Federal Reserve, to manipulate
markets without fear of criminal prosecution. They know exactly where the
stop-loss orders are, and how much flooding of paper claims for gold and
silver would be needed to trigger them. They are, therefore, perfectly
positioned to carry out the nefarious scheme I have outlines. The ultimate
aim, of course, would be to destroy investor confidence, by collapsing the
price for a few weeks. This would allow them to unload their own exposure
at a very low cost, while the majority of market participants are
temporarily shell-shocked, and in retreat.
As noted above, they are not using real gold or silver to do this. That
implies that this particular attack on gold was not authorized by the
Federal Reserve. They've never had any real silver and have used paper
claims for years to manipulate that market. But, gold has often been
supplied out of the U.S. hoards at Fort Knox, West Point, or the NY Fed. I
suspect all three have had their gold hoard so heavily loaned and swapped
out, that there is little or no physical gold left to play with. That's why
the Federal Reserve has been pushing for the IMF gold sales. The vaults are
probably already filled with IOUs from the likes of Goldman Sachs, JP
Morgan, etc. Perhaps, that is why the Treasury Department lists total U.S.
gold holdings as "gold and gold swaps", and refuses to disclose details
how much consists of real gold and how much consists of swap IOUs (loaned out
gold). But, anyway, the lack of physical gold probably implies that the
Federal Reserve is not involved directly, because they probably still have
enough to flood the market for a week or two.
But, it's not cheap to manipulate markets. It will probably cost over a
billion dollars to subsidize the negative lease rates. The only logical
reason to spend such a huge amount of money, is if you are going to get an
even bigger benefit from doing so. They must be very worried about losing
far more. Once again, that implies that some VERY bad economic news is
about to be released. Skeptical? How much worse can the economy get? It
can get much worse! So, what's in store? A series of huge bank failures,
maybe? IndyMac collapsed two weeks ago. Are we going to see the collapse
of Washington Mutual (WM)? National City Bank (NCC)? Someone else?
I don't know. But, I do know this. The FDIC will not have enough cash to
make good on its insurance pledges, if they fail. The FDIC only has $37
billion left in its trust fund, after paying off IndyMac depositors.
Between its two major divisions, WaMu has total deposits of about $204
billion. National City has about $101 billion. Could FDIC turn to the
Federal Reserve for a quick loan? Not a chance! The Fed has its own
problems. It has already polluted its balance sheet with some $450 billion
in low value and absolutely worthless mortgage paper that its client banks
wanted to get rid of.
Depositors might wait months for their money, while Congress is petitioned
to approve the sale of more Treasury bills. This delay would be likely to
cause other depositors to make a run on other banks, creating a domino
effect. Then, more banks might fail. More bank failures will require yet
more dollars, and cause more delays in making depositors whole. At the very
least, the sudden issuance of $300 billion new dollars would stimulate
massive inflation. Under such circumstances, gold could be expected to
explode to the $2 - $3,000 per troy ounce range, within a matter of a few
weeks or months.
click to enlarge
Source: Kitco
