Silver Will Outperform Gold as a Hedge Against Inflation- 11/07/08

"Silver will outperform gold as a hedge against inflation," investor Jim Rogers said this week.

Before today, silver was down 33 percent this year, compared with a 13 percent drop for gold.

``It's been beaten down horribly,'' Rogers, chairman of Singapore-based Rogers Holdings, said on Nov. 3. ``If you put a gun to my head and said you have to buy one, I would buy silver rather than gold.''

Silver futures may ``spike higher'' to $22 an ounce in the next six months, Carlos Sanchez, associate director of research at CPM Group, said in an interview in China's southern Haikou city.

Click here to buy American Silver Eagles now

~~~

Tracy Austin
www.Webinfusion.com

Silver and Gold Markets: FACT VERSUS SPECULATION by Theodore Butler

Got Silver? Earn Free Silver Eagles

FACT VERSUS SPECULATION

By Theodore Butler

Mid September 2008

(This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)

What’s happening in the silver and gold markets is, without a doubt, the most sordid scheme in the history of finance. It makes a mockery of financial regulation and the rule of law. It allows a large financial entity, or entities, to rip off the investing public and gouge them for obscene profits.

It is cronyism, back-room dealing, market fixing and inside information at its worst. I am terribly disappointed and dismayed that such a thing could happen in our great country. In the following paragraphs I will outline and explain how a major bank or banks, in likely concert with the U.S. government, pulled off financial shenanigans that will literally take your breath away. This is an outrage that should not be allowed to stand.

The recent revelations in the CFTC’s Bank Participation Report for August provided stunning proof of concentration and manipulation in the COMEX silver and gold futures markets. Two U.S. banks held a short position in COMEX silver futures, as of August 5, of 33,805 contracts, or almost 170 million ounces, an increase of 138 million ounces in one month. That increase is equal to 20% of the world mine production. If one or two entities bought or sold 20% of the annual world production of oil or wheat in a month, it would bring about a congressional feeding frenzy.

In gold, no more than 3 U.S. banks sold short in one month more than 10% of world annual mine production. This was the largest short position in gold and silver ever recorded by U.S. banks. After the massive and concentrated silver and gold short position was established by these U.S. banks, the markets experienced a historic decline in price. It all took place during the first widespread retail silver shortage in history. It is completely at odds with how the law of supply and demand works.

The facts are so clear that the CFTC should have provided an immediate explanation as to why this doesn’t constitute manipulation. They should move against the manipulators just as promptly. Silence is not an option. The U.S. banks (or bank) in question are at the top of the financial food chain when it comes to size, power and importance. They are publicly owned by millions of investors. These banks are generally open about their financial dealings, which are closely scrutinized. There is an archaic rule that prevents the CFTC from revealing the identity of these banks. But there is no rule preventing these banks acknowledging they were responsible for these silver and gold short sales and explaining the economic justification behind them. These are material transactions that should be disclosed to their shareholders. Apparently transparency does not apply to manipulative transactions.

One U.S. Bank?

While the report lists two U.S. banks in silver and three in gold, it may be that only one bank, and perhaps the same bank, held the greatest amount of the total short position in silver and gold. The published data is not specific enough, but objective analysis raises the strong probability that just one bank held 30,000 or more short silver contracts (150 million ounces), and 75,000 gold contracts in the current report. What are the odds of two or three banks suddenly deciding to short unprecedented amounts of silver and gold contracts spontaneously? If it were two or three banks it would raise the issue of collusion. If it was just one U.S. bank, it would mean that bank held 34% of the entire COMEX silver market and 30% of the gold market. Such a concentration would be manipulation to any reasonable person.

The Bank Participation Report is a monthly snapshot on a predetermined single date. Therefore, it is unlikely to capture the extreme high or low holdings of participants. Based upon the weekly Commitment of Traders Report (COT) for positions as of July 22, the 4 largest traders, including the big U.S. banks, held a record net short position of 63,740 silver contracts, or 7,779 more contracts than they held for the COT and Bank Participation Reports of 8/5. Thus, it is almost certain that the big U.S. bank(s) held a substantially larger position on 7/22 than it held in the Bank Participation Report of August 5. That would mean the true net percentage of the entire market possibly held by one U.S. bank could be even higher than 34%, and may in fact, exceed 40%. That is truly shocking.

I have a simple solution to determine if what I am suggesting is true. Let the CFTC tell us. I’m not asking them to violate the rule that they and the big traders hide behind, the one that protects the identity of the traders. I’m asking they tell us what the one largest trader held in silver and gold. That will settle the matter. Let them protect the identity, just tell us how many contracts the big U.S. bank held on July 22 and August 5.

This is a perfectly reasonable request. There is no taxpayer cost involved. It will take one employee only a few minutes to determine this. There is no valid reason why the CFTC, in the interest of monitoring concentration and preventing manipulation, should not disclose what the very largest trader in every market held. The CFTC should answer forthwith. If they don’t, we must make them, through our elected representatives. They will try to weasel out of this reasonable request. We can’t let them.

A U.S. Government Silver Intervention?

For many years, I have openly alleged an ongoing manipulation in the silver (and gold) market. As that message became more believable to growing numbers of readers, their feedback indicated that their most popular motive behind the manipulation was some type of U.S. Government involvement. I rejected these "conspiracy" theories, preferring instead my simple explanation of control by big financial firms.

There were a few things I didn’t report on in my previous article, "The Smoking Gun" (By the way, since so many have referred to that article, let me acknowledge and thank Carl Loeb for his valuable contributions to that article.) It wasn’t just that 2 U.S. banks were short almost 34,000 silver futures contracts, as of August 5. It was also that they replaced what the other big financial entities had been short. The key here is the replacement angle. The data in the weekly COTs, and in the monthly Bank Participation Report, confirm this. What does this data mean?

I am going to speculate based upon the known facts. Maybe I will be proven correct, maybe not. The nature of this speculation is so disturbing, that I hope I am wrong. But I need to state it because if I am close to the mark, the implications for the silver market are profound.

I think the data in the COT and the Bank Participation Reports indicate that the U.S. Government may have bailed out the biggest COMEX silver short by arranging for a U.S. bank to take over their position. This coincides with JP Morgan’s takeover of Bear Stearns. In fact, it would not surprise me if the bailout was JP Morgan taking over Bear Stearns‘ short silver position, at the government‘s request. While this silver bailout (if it happened) was no doubt undertaken with financial system stability in mind, it has disturbing implications of legality and equity.

JP Morgan has been mentioned as a possible big silver and gold short. If it’s not them, it is someone like them. How many big U.S. banks fit the profile? Certainly, if JP Morgan isn’t one of the big silver or gold shorts, they can instantly dismiss such talk by stating so.

Logically, there would appear to be no way that a big money center U.S. bank would choose this time and place to suddenly decide to short 150 million ounces of silver and 7 million ounces of gold voluntarily. The banks are hemorrhaging losses due to poor quality mortgages and other ill-advised bets. They’ve cut back credit and are circling the wagons. A CEO, like Jamie Dimon, is not going to risk the wrath of shareholders with a massive and dangerous impromptu bet on the short side of precious metals. No bank CEO would, as it is too reckless to contemplate. And no CEO would do it without prior approval from the regulators.

I believe the bank involved did not seek approval, but merely followed the request of the U.S. Government to sell quantities of silver and gold to bailout the former big short. If that former big short bought back this position, we would have seen $50 or $100 silver in a flash. If my speculation is correct, someone in the government wished to prevent that. Worse, the government (most likely Treasury and the Federal Reserve) allowed the new short to further rig the market to the downside with a variety of dirty tricks.

In other words, it was the U.S. Government that arranged and sanctioned the sell-off. That the government might undermine confidence in our markets and sanction manipulation and illegal market behavior for any reason is beyond my understanding. I love this country. But I certainly don’t love our government. Nor do I trust them. What to do about it?

Well, a start is to insist that the CFTC disclose how many contracts the largest trader held short in COMEX silver and gold futures on 7/22 and 8/5. Ask them and ask your elected officials to ask them. I’m including the e-mail addresses of the commissioners and the Inspector General.

Wlukken@cftc.gov Mdunn@cftc,gov
Bchilton@cftc.gov Jsommers@cftc.gov
Alavik@cftc.gov

Now that the Chicago Mercantile Exchange Group is the new owner of the NYMEX/COMEX, they should be notified of the alleged manipulation and also asked to provide the number of contracts held net short by the largest short position holder on 7/22 and 8/5. I’m including the e-mail address of the Chief Regulatory Officer. Dean.payton@cmegroup.com

If my speculation is close to the mark that the U.S. Government is now involved in the silver manipulation, does this mean the manipulation can be extended indefinitely? In my opinion, the answer is no. In the end, what will terminate the manipulation will be a lack of adequate wholesale supplies of silver to the industrial users. It’s similar to what is now happening in the retail market. Uncle Sam does not have any silver, and is powerless to secretly subsidize the users. Additionally, the government is more subject to scrutiny than others. The single inevitable solution to this manipulation is higher prices; sharply higher prices.

What I’ve explained here, if true, cannot be condoned for any reason. It’s illegal and contrary to everything that America stands for.

~~~

Got Silver? Earn Free Silver Eagles

Gold and silver dealer reports an ‘unprecedented’ shortage of metals PT II

I hope you're buying all of the silver and gold that you can! I am not currently able to buy gold, so I'm thankful for Silver Snowball.

Some of the largest wholesalers in the world are out of all bullion product except for exchange bullion product - 100 ozt and 400 ozt gold bars and 1,000 ozt silver bars. They cannot supply South African Krugerrands, American Eagles and Buffaloes, Canadian Maples, Austrian Philharmonics, Chinese Pandas, Australian Nuggets (all 1 ozt).

They cannot supply 1 oz or 10 oz gold bars or 1, 10 and 100 oz silver bars. And I have confirmed they cannot sell any European or world gold coins such as British sovereigns, francs, marcs, Mexican pesos etc. etc. They have confirmed that there is no physical supply at all from the primary marketplace - large refiners and government mints.

Worryingly they are being informed that this is not a temporary problem and there are no supply side commitments and there is little in the pipeline for the foreseeable future due to excessive and unprecedented demand. Secondary supply from the public and retailers is nearly non existent as there are nearly no sellers and nearly all buyers. Bullion shortages and the confluence of unprecedented supply and limited demand in conjunction with macroeconomic, inflation and systemic factors is leading to extremely bullish conditions for the gold market - probably even more bullish than in the 1970s when gold rose some 3,000% from $35 to over $850 in just 9 years.

Buy Silver Coins

~~~

Outstanding Work at home Opportunity
Recorded overview: 1-212-990-6973
Call Tracy for more information: 1-413-773-0779

Why Silver; Why Silver Eagles, written by Israel Friedman in December of 2007

An excellent article on why you would want to buy silver coins. enjoy!

Why Silver; Why Silver Eagles

I'm going to tell you why silver is the best
investment available today. The first question you
have to ask yourself is why silver should be good
for the future. Here's what determines that;

Is silver a necessary metal?
Are world stocks of silver lower than 5 years ago?
Are world stocks of silver likely to be lower in 5 years?
Is there a chance, at some point, to have a shortage in silver?

If the answers will be yes on those 4 questions,
the probabilities are that owning silver will
enrich you in the future.

Based upon this formula, the answers for gold are
"no" for all the 4 questions, so in the future,
we could see devastation for gold prices. And if
gold prices hold, or move higher, the comparisons
will even be better for silver. Take into
consideration this point ­ silver is a rare and
strategic metal and industry cannot do without
silver. Today we are left with a minimal supply and
this can produce a worldwide shortage of silver.

Money cannot solve a shortage of material, only
material can. When the industrial users come into
the market for real material, the shorts will be
destroyed. At that time we will have a bigger
scandal than the subprime mortgage crisis of
today. In my opinion, we need a shortage to put
silver in a free market. When this occurs the
real value will come and no one can predict what the
price will be.

Mr. Butler has a modest view on future prices,
and my opinion is more extreme. I can see very high
prices. If I tell you the price you will need a
seatbelt, not to fall from your chair. With this kind of
opinion on future silver prices, what is the best
single form for buying and holding real silver?
Looking at my crystal ball, considering that a
silver shortage is likely, and that silver prices
will then reach or exceed the price of gold; I
think silver Eagles are the best way to own
silver. Why?

I can see silver prices so high, that the risk of
imitation or phony silver coming to market will
be great. Great price increases always bring out
frauds and crooks. People will want to be sure
they are buying the real thing. Coins are more
difficult to counterfeit than paper instruments. At
current silver prices, there has been no big
incentive to counterfeit silver Eagles or other forms
of silver. Because the US Mint produces silver
Eagles, an added level of protection against
counterfeiting is present. The US Government does
not sit still on counterfeiting.

Because Silver Eagles are sold at a premium to
the price of silver from the Mint to wholesalers,
few if any of the 160 million regular silver
Eagles minted and sold since 1986 have been, or will
ever be melted for their silver content. The same
with millions of more expensive Proof Eagles and
commemorative silver coins issued by the Mint.
Silver Eagles that are sold by investors are bought
by other coin investors. Therefore, the silver
used in Eagle production is taken off the market,
in my opinion, forever.

But the premium on Silver Eagles will explode
someday, because the Mint will stop making them in
the future. When the silver shortage comes, and
prices start to escalate wildly, the US Government
will not wish to aggravate the shortage by
continuing to take silver off the market. By then, the
users will be screaming for relief from high
silver prices and the mint will see this.

According to Mr. Butler, before the gold and
silver Eagle program began in 1986, it was decided
that, in order not to hurt domestic miners, only
metal purchased from domestic miners would be
used in the Eagle program, so government owned
metal wasn't dumped on the market.

But the Silver Users Association, fearing higher
silver prices because of demand for Silver
Eagles, lobbied behind the scene to change things
to their advantage. They couldn't kill the
program completely, but the silver users were
still successful. Gold was left unchanged in that
domestic production was to be used, but silver
was changed so that only silver from the Strategic
Defense Stockpile was to be used for Eagles,
until it ran out, which it did in 2001. Since then,
the US Mint has had to buy more than 50 million
ounces of silver to produce silver Eagles.

It will not take much convincing by the silver
users to get the US Mint to cease production of
Silver Eagles, when the silver shortage hits. So
a premium could develop, if and when that
happens. The same kind of premium that develops
when an artist dies and it becomes known there
will be no more new works of art from him. Now
some may say, what kind of numismatic premium could
develop on a modern bullion coin with a total
amount in existence of more than 160 million? I say,
a very big premium. The Silver Eagle is no
ordinary coin. It is the world's leading silver bullion
coin. The US Government guarantees its purity and
weight. It is recognized everywhere. In the
years to come, people from all over, including
India and China, will want to buy them. It is, in
my opinion, the most beautiful coin in the world.

At any point in time, very few old Silver Eagles
are available for sale in any large quantities.
That's because Silver Eagles are widely held by
many small investors and coin collectors.
Many are given as gifts and hold sentimental
value. Grandparents, like me, set them aside for
their grandchildren. Silver Eagles are not a
trading vehicle, they are mostly held for the long term.
The market relies on the fact that new coins from
the Mint will always be available for sale, in
order to satisfy new demand. But always isn't forever.

When the shortage comes and silver explodes, the
price will be so high that most people won't be
able to afford even a 100 ounce bar. Then, there
will be much more demand for silver in one-ounce
denominations, just like there is for gold today.
That extra demand will put a bigger premium on
the smaller pieces compared to bigger bars. The
best small piece is the Silver Eagle and it will
have the biggest premium of any other one-ounce
choice. Also, it will be easier to sell in one-
ounce pieces when prices are sky-high.

I think the premium on Silver Eagles will go to
such crazy levels, that out of respect for Mr.
Butler, I will not say a number, because he
thinks it will sound too extreme. Instead, I will be
very conservative and just say that in the
future, when the silver shortage comes, the premium on
Silver Eagles to the price of silver will be much
greater than the total cost of an Eagle today.
If that comes true, it's like buying silver at today's price for free.

To those who are inclined to own silver, buy
Silver Eagles. To the gold investors, please change
some gold into Silver Eagles. If anyone is lucky
enough to buy, say, 1000 Silver Eagles or more,
in 15 years it will be worth a sum that will
shock you. Don't think for one minute that I have a
financial interest in selling Eagles. I don't
work for the Mint or for commissions. I write for
love of silver and my friend Ted Butler.

Taken from Ted Butler's archive http://www.investmentrarities.com/12-03-07.html

* * *


Silver Eagles - Get 'em while you can :-)
www.WhyBuySilverCoins.com

End of Day Report - Silver, Gold, Dollar, Euro, Crude Oil,

The metals complex with the exception of Silver ended the day lower but well above the intraday lows...Mixed results in the Weekly Oil Inventories caused a sharp rebound in the price of Oil helping to pull the metals off the session lows...Silver actually went positive ending the day at $17.40 up 5 cents.

Gold finished at $903.00 down $14.00....Palladium was down $10.00 at $382.00....Platinum closed $30.00 lower at $1715.00...As trading got underway the price of Oil was down a little over $1.00 per barrel until the Weekly Oil Inventories showed a slightly smaller than expected draw down in Oil supplies, but a much larger than expected 3.5 million barrel decline in Gasoline supplies. Slowly but surely the price of oil climbed on the news and is presently up $3.29 per barrel at $125.48....

Over in the currency markets the Euro managed to recover early session losses attributed to a better than expected ADP Employment Report. While the Street expected to see a loss of 60,000 private sector jobs, the report clocked in with a gain of 9,000 jobs. The Dollar rallied on the news for about an hour then began selling off as the price of Oil began to climb. Last on the Euro $1.5583 up 18/100ths of U.S. cent.

Stocks were up about 160 points in early trading on the employment picture but has since given up the bulk of the gains in light of the $3.00 gain in oil...The Dow is currently up a mere 45 points with 2 hours left in the trading day....As for tomorrow the calendar is full with the latest look at our Gross Domestic Product (GDP), the Weekly Initial Jobless Claims, and The Chicago Purchasing Managers Index of Manufacturing.

~~~

Cash Gifting Abundance
Why Buy Silver Coins?

7/30/08 Market Update - Silver, Gold, Crude Oil

The metals complex continued moving lower in overnight trading in follow up reaction to yesterday's slide in oil and the surge in the U.S. dollar. Silver is 22 cents lower at $17.14. Gold is off $9.00 changing hands at $908.00. Palladium is $386.00 down $6.00. Platinum is $3.00 lower at $1,742.00.

Our background barometers are mixed this morning with the Euro as shade stronger at $1.5592 up 27/100ths of cent versus our Dollar. On the other hand; Crude Oil continues to weaken at $121.38 down an additional 81 cents per barrel. Oil ended the trading day yesterday with a final loss of $2.55 per barrel.

~~~~~

www.WhyBuySilverCoins.com
www.CashGiftingAbundance.com

Why Buy Silver Coins?

The video below is a must-see about why it is important to buy precious metals now, particularly silver coins (more portable than bullion - more to come on why to consider this).

Content in this video (on the dollar and why it's smart to buy silver) is truly shocking, alarming and must be watched by everyone. (World renowned financial author of Rich Dad Poor Dad, Robert Kiyosaki)

If you have never made a dollar on the internet watch the video, get educated and get involved in a proactive way today!

A simple home based silver dollar coin business that makes a difference for you and your customers’ futures. Common sense wealth building with leverage stronger than dollars and a pay-it-forward feature that educates and demonstrates wealth principals. Click here or the silver coins for more information.