Gold headed for $10,000 by 2012

Arnold Bock
www.resourceinvestor.com

No wishful thinking here! As I see it gold is going to a parabolic top of $10,000 by 2012 for very good reasons - sovereign debt defaults, bankruptcies of “too big to fail" banks and other financial entities, currency inflation and devaluations - which will all contribute to rampant price inflation.

Not surprisingly, I have company in that view:

Money manager, Peter Schiff, told Business Week recently that, "Gold could reach $5,000 to $10,000 per ounce in the next 5 to 10 years" and highly respected economist David Rosenberg is of the opinion that "There is no doubt that gold can easily double from here."

The causes:

1. History is No Guide
   Gold has only been trading freely since President Nixon's 1971 decision to deny gold to the French and others attempting to repatriate their paper dollars for the metal. As such, there has been a scant forty years of gold production and trading since it was detached from supporting paper money. This period has also been marked by substantially higher monetary and price inflation as well as currency devaluation.
2. Market Manipulation
   The Commodity Futures Trading Commission (CFTC) recently held a major hearing which blew the doors off bullion metals futures trading markets in terms of what was revealed publicly. I predict this public hearing will be viewed in the period ahead as the precious metals price liberation event of the decade. It is commonly known that JP Morgan Chase is the major player in commodities futures markets trading. Not only do they take massive naked short positions (betting that prices will fall), they do it with large substantial leverage. What isn't as well known though is that Chase acts as the agent for the Federal Reserve Board and other central banks in "managing" the markets on their behalf. Central banks want "orderly" precious metals markets and prices and currencies which don't gyrate wildly. Only then can they achieve stealth inflation in their monetary policy which is so beneficial in servicing debt. It also makes for good (meaning effective) politics.
3. Insufficient Physical Inventories
   While it is normal for traders to roll their expiring contracts over into new paper trades, some traders accept cash in settlement rather than the metal. To the amazement of everyone, the recent hearing of the CFTC -- specifically Jeffrey Christian’s comments -- inadvertently confirmed that there is little bullion in storage at the London Metal Exchange or New York's Comex to back the metals trading. He justified this fact by noting that only one ounce of one hundred traded is paid out in physical metal. This revelation confirmed a much worse reality than even critics, such as the Gold Anti-Trust Action Committee (GATA), had expected. It seems that the Asian and Mid East buyers and owners of bullion have been removing gold from their dealers’ vaults and are taking it "home" thus leaving much less than previously thought in the London, New York and Toronto vaults.
   
   In addition to what looks like a production peak in the gold mining industry (production has fallen in five of the last eight years), central banks have for the first time recently become net purchasers (having bought more gold last year -- 425 tons -- than at any time since 1964). The single largest purchasers of metal these days, other than central banks, are the bullion ETFs (exchange traded funds) which ostensibly have their metal inventories in vaults. These relatively new investment vehicles, unfortunately, are not transparent in their business practices. Regular audits by reputable accounting firms and allocated and segregated bullion inventories stored in reputable vaults are opaque at best. This begs the question: “Do the large ETF bullion funds actually have the metal they purport to own, or is their inventory more the 'paper gold' variety in which bullion trading exchanges seem to specialize?"

The effect:

1. The revelations, outlined above, that there is insufficient physical inventory to meet new investment demand for ownership and delivery of physical bullion, is about to blow the price lid skyward.
2. As public awareness of sovereign debt mounts, it will drive home the reality of mounting government insolvency.
3. Confidence in currencies will wilt commensurately.
4. Investment demand for real gold and real money as a safe haven investment will expand exponentially.
5. These events should take place from mid 2011 through 2012 and extend further out toward 2015 before demand is satiated.
6. The dramatic price increases in gold and silver will at that point also satisfy the unstated desire of central banks and politicians to devalue their currencies in order to assist them in meeting their debt and unfunded liabilities.

After the 2008/2009 crash, governments bailed out their failing financial institutions and investment banks through a variety of innovative measures. The next time round most governments will not be in a position to do so -- again. Even more troubling, the IMF (International Monetary Fund) will not be capable of rescuing the increasing number of insolvent governments and their financial institutions.

You may think my aforementioned views are crazy or perhaps just that my imagination is way out of hand or, at best, that I don’t have access to the appropriate reality checks. Be that as it may, I am increasingly confident that the consequences of fragile sovereign debt, precious metals market manipulation, insufficient physical supply, and the need for a safe haven investment refuge, will drive precious metals bullion and mining stock to unimagined heights.

The circumstances immediately ahead are largely unprecedented. History is therefore only marginally useful as our guide to the future price of precious metals. We are now in genuinely unchartered territory.

Get yourself positioned to take advantage of this event of a lifetime. Protect your assets from the next and more serious leg of the 'Greater Depression' directly ahead. Get a running start NOW on growing your future wealth

Aurumania Gold Track Bike Crystal Edition

Aurumania, a Scandinavian bicycle company, has created a very limited edition track bike that is completely covered in 24-karat gold and decorated with 600 Swarovski crystals. It is quite possibly one of the most expensive bikes in existence, worth a grand total of almost $117,000. The exclusive bike company includes a 10-year no-questions-asked guarantee should you somehow mess this baby up while you show it off to your less than rich friends.

And hey, since you’re buying such an expensive bike, the company might as well deliver it personally to you anywhere on the planet with white-glove service. Oh, they do. Wow. Maybe, just maybe, this bike is worth the huge price tag.

If for whatever reason you cannot afford this beautiful bike, maybe you might be able to afford the lesser non-crystallized version. Still decked out in gold, the standard Aurumania gold track bike is only just over $30,500. The company also sells a gold-plated wall-mount for your bike so that you can keep it out of reach of poor, oily fingers. However, the bike rack will cost you over $7300, which alone is enough to get you several very, very, very nice non-gold, non-crystallized bicycles. It’s your money though, so do what you want with it.

Read more at http://www.doobybrain.com/2008/09/25/aurumania-gold-track-bike-crystal-edition/

Why Are Silver Sales Soaring?

Jeff Clark, Senior Editor, Casey's Gold & Resource Report

The U.S. Mint just reported another record, but this time it wasn't for gold. The Mint sold more Silver Eagles in March and in the first quarter of the year than ever before. A total of 9,023,500 American Silver Eagles were purchased in Q110, the highest amount since the coin debuted in 1986.

While this is certainly bullish, there's something potentially more potent developing in the background. Namely, how this matches up with U.S. silver production. Like gold, the U.S. Mint only manufactures Eagles from domestic production. And U.S. mine production for silver is about 40 million ounces. In other words, we just reached the point where virtually all U.S. silver production is going toward the manufacturing of Silver Eagles.

Yikes.

This is especially explosive when you consider that roughly 40% of all silver is used for industrial applications, 30% for jewelry, 20% for photography and other uses, and only 5% or so for coins and medals.

To be sure, mine production is not the only source of silver. In 2009, approximately 52.9 million ounces were recovered from various sources of scrap. Further, the U.S. imported a net of about 112.5 million ounces last year. (Dependence on foreign oil? How about dependence on foreign silver!) So it's not like there's a worry there won't be enough silver to produce the Eagle you want next month.

Still, why so much buying? The silver price ended the quarter up 15.5% from its February 4 low - but it was basically flat for the quarter, up a measly 1.9%. We tend to see buyers clamoring for product when the price takes off, so the jump in demand wasn't due to screaming headlines about soaring prices.

I have a theory.

For some time, silver has been known as the "poor man's gold." Meaning, silver demand tends to increase when gold gets too "expensive." The gold price has stubbornly stayed above $1,000 for over six months now and spent much of that time above $1,100. You'd be lucky to pay less than $1,200 right now for a one-ounce coin (after premiums), an amount most workers can't pluck out of their back pocket. But Joe Sixpack just might grab a "twelve-pack" of silver.

What would perhaps lend evidence to my theory is if gold sales were down in the face of these higher silver sales.

The U.S. Mint reported a decline in gold bullion sales of 20.8% this past quarter vs. the same quarter in 2009. Further, other world mints have seen sharp declines in gold bullion coin sales as well: the Austrian Mint reported an 80% drop in sales for the first two months of the year and the Royal British Mint a 50% decline in gold coin production for the first quarter.

What's even more dramatic is the difference in the dollar value of the sales. Gold Eagle sales in the U.S. dropped $10,263,500 from a year earlier - but Silver Eagle sales increased by $61,855,290. So, not only did silver sales make up the drop in gold sales, they exceeded them by $51,591,790.

Is the rush into "poor man's gold" underway?

Why the answer to that question is significant is that a shift toward silver for this reason could signal we're inching closer to the greater masses getting involved in the precious metals arena. And that - for those of us who've been invested for awhile now - would be music to the ears. Because when they start getting involved, the mania will be underway, and from that point forward, it's game on.

I'm not saying the mania is starting, and I actually think we could see another sell-off before things take off for good. Gold could dip to $1,000 and maybe even $950, with silver going to the $14-$15 range. But as clues like these begin to build up, we'll know we're getting closer. (And any drop to those ranges would clearly be a major buying opportunity.)

Everyone talks about gold, myself included, but a meaningful portion of one's precious metals portfolio should be devoted to silver. The market is tiny, making the price potentially explosive. Remember that in the '70s bull market gold advanced over 700%, but silver soared over 1,400%. Don't be a "poor man" by ignoring gold's shiny cousin.

Silver Coins

For those who have been collecting Silver Coins, I am suggesting that you read through the SilverCoinReview. It gives some insights of the Silver Coins in the market and how to make more with Silver Coins.

Silver Coins has always been second to Gold. With the current situation, Silver Coins should be the next THING. People should keep more Silver Coins.

Just visit SilverCoinReview and read more.

Investors like China and Japan continue to switch out of dollars and into gold

By David Levenstein

Many market commentators argue that investing in gold is a waste of time especially since it does not pay interest and remains inert. This statement is very misleading. The issue of interest has no relevance. No one has ever invested in gold in order to receive interest. While gold is a precious metal as well as being a form of global currency, it is also a commodity. And, the reason why investors buy commodities is not for an annual dividend payment, but for a return on their investment that occurs as the price of the commodity appreciates. (I have not heard analysts say don't buy corn because it doesn't pay an interest). And, in many instances this rate of appreciation can be truly spectacular giving investors massive returns.

It should also be noted that gold is unique as an asset class as its value is influenced by many factors. And, like other asset classes, the price does not go up in a straight line. What amazes me is when gold goes through periods of consolidation certain analysts immediately denigrate it as an investment. Yes, there are going to be times when other forms of investments will out perform gold, but as the major trend in gold still remains firmly upwards, we must not allow these short-term periods to cloud our long-term judgment.

Like central banks that hold a portion of their reserves in gold, individual investors should do the same and allocate a portion of their funds to this precious metal. In fact, practically most countries hold a portion of their reserves in gold. All developed countries hold gold in their reserves while most of the developing countries also have a small holding of the yellow metal. As at the end of February 2010, some one hundred countries held gold in their reserves.

According to the World Gold Council (WGC), central banks added the most gold to their reserves since 1964 last year amid the longest rally in bullion prices in at least nine decades. Combined holdings rose 425.4 metric tons to 30,116.9 tons, an increase worth $13.3 billion at last year's average price, according to the (WGC). India, Russia and China said last year they added to reserves. The expansion was the first since 1988. Central banks, holding about 18 percent of all gold ever mined, are expanding their holdings for the first time in a generation as investors in exchange-traded funds amass bullion as an alternative to currencies. Holdings in the SPDR Gold Trust, the biggest ETF backed by the metal, are at 1,115.5 tons, more than the holdings of Switzerland.

Many of these central banks also hold currencies and US Treasuries in their reserves. But, what has been interesting is recently, some of these countries have been reducing their holdings of their US Treasuries while they have added to their gold holdings.

Last Monday, the US Treasury Department said that China's holdings dipped by $5.8 billion to $889 billion in January compared to December. Japan, the second largest foreign holder of U.S. government debt, also trimmed its holdings but by a much smaller $300 million to $765.4 billion. A month ago, Treasury initially reported that China had cut its holdings so sharply that it had lost its top spot as America's largest foreign creditor, a position it had held since its holdings overtook Japan in September 2008. However, 10 days later, Treasury released its annual update of the figures. The revised data showed that China, while reducing its holdings, still retained the top spot.

While China and Japan decreased their holdings, oil exporting countries boosted their holdings to $218.4 billion, up from $207.4 billion in December, and holdings of Treasury securities in Great Britain rose to $206 billion, up from $178.1 billion.

Economists say that unless foreign demand for U.S. Treasury debt remains strong the interest rates that the government has to pay for that debt could rise sharply, making the U.S. deficit picture look even worse. Rising rates for government debt would also put upward pressure on private debt, sending borrowing costs up for U.S. businesses and consumers adding another risk to the U.S. economy as it struggles to emerge from the worst recession since the 1930s.

Last week the Euro remained under pressure especially after Mr. Papandreou, the Prime Minister of Greece, basically threatened the EU and warned that if Greece could not sell its bonds and the EU would not come to his rescue, they may have to go to the International Monetary Fund and get some help. So the saga of Greece's debt problems continues. During the week, sterling rebounded strongly on the back of the stronger than expected job market data. The Dollar index dropped further to as low as 79.52 which represents a 38.2% retracement of 76.60 to 81.34.

Using the Dinar & Dirham

by The Islamic Mint

Gold and silver are the most stable currency the world has ever seen

From the beginning of Islam until today, the value of the Islamic bimetallic currency has remained surprisingly stable in relation to basic consumable goods:

A chicken at the time of the Prophet, salla'llahu alaihi wa sallam, cost one dirham; today, 1,400 years later, a chicken costs approximately one dirham.

In 1,400 years inflation is zero.

Could we say the same about the dollar or any other paper currency in the last 25 years?

In the long term the bimetallic currency has proved to be the most stable currency the world has ever seen. It has survived, despite all the attempts by governments to transform it into a symbolic currency by imposing a nominal value different from its weight.

Reliability

Gold cannot be inflated by printing more of it; it cannot be devalued by government decree, and unlike paper currency it is an asset which does not depend upon anybody's promise to pay.

Portability and anonymity of gold are both important, but the most significant fact is that gold is an asset that is no-one else´s liability.

All forms of paper assets: bonds, shares, and even bank deposits, are promises to repay money borrowed. Their value is dependent upon the investor's belief that the promise will be fulfilled. As junk bonds and the Mexican peso have illustrated, a questionable promise soon loses value.

Gold is not like this. A piece of gold is independent of the financial system, and its worth is underwritten by 5,000 years of human experience.

What are the Dinar & Dirham

by The Islamic Mint


According to Islamic Law...

The Islamic Dinar is a specific weight of 22k gold (917.) equivalent to 4.25 grams.

The Islamic Dirham is a specific weight of pure silver equivalent to 3.0 grams.

Umar Ibn al-Khattab established the known standard relationship between them based on their weights: "7 dinars must be equivalent to 10 dirhams."

"The Revelation undertook to mention them and attached many judgements to them, for example zakat, marriage, and hudud, etc., therefore within the Revelation they have to have a reality and specific measure for assessment [of zakat, etc.] upon which its judgements may be based rather than on the non-shari'i [other coins].

Know that there is consensus [ijma] since the beginning of Islam and the age of the Companions and the Followers that the dirham of the shari'ah is that of which ten weigh seven mithqals [weight of the dinar] of gold. . . The weight of a mithqal of gold is seventy-two grains of barley, so that the dirham which is seven-tenths of it is fifty and two-fifths grains. All these measurements are firmly established by consensus." Ibn Khaldun, Al-Muqaddimah

How are the Islamic dinar used?

1.- The Islamic Dinar can be used to save because they are wealth in themselves.

2.- They are used to pay zakat and dowry as they are requisite within Islamic Law.

3.- They are used to buy and sell since they are a legitimate medium of exchange.

The History of the Dinar & Dirham

by The Islamic Mint

In the beginning the Muslims used gold and silver by weight and the dinar and dirhams that they used were made by the Persians.

The first dated coins that can be assigned to the Muslims are copies of silver dirhams of the Sassanian Yezdigird III, struck during the Khalifate of Uthman, radiy'allahu anhu. These coins differ from the original ones in that an Arabic inscription is found in the obverse margins, normally reading "in the Name of Allah". Since then the writing in Arabic of the Name of Allah and parts of Qur'an on the coins became a custom in all mintings made by Muslims.

Under what was known as the coin standard of the Khalif Umar Ibn al-Khattab, the weight of 10 dirhams was equivalent to 7 dinars (mithqals)

In the year 75 (695 CE) the Khalifah Abdalmalik ordered Al-Hajjaj to mint the first dirhams, thus he established officially the standard of Umar Ibn al-Khattab. In the next year he ordered the dirhams to be minted in all the regions of the Dar al-Islam. He ordered that the coins be stamped with the sentence: "Allah is Unique, Allah is Eternal". He ordered the removal of human figures and animals from the coins and that they be replaced with letters.

This command was then carried on throughout all the history of Islam. The dinar and the dirham were both round, and the writing was stamped in concentric circles. Typically on one side it was written the "tahlil" and the "tahmid", that is, "la ilaha ill'Allah" and "alhamdulillah"; and on the other side was written the name of the Amir and the date. Later on it became common to introduce the blessings on the Prophet, salla'llahu alayhi wa sallam, and sometimes, ayats of the Qur'an.

Gold and silver coins remained official currency until the fall of the Khalifate. Since then, dozens of different paper currencies were made in each of the new postcolonial national states created from the dismemberment of Dar al-Islam.

Allah says in the Qur'an:

And amongst the People of the Book there are those who, if you were to entrust them with a treasure (qintar), he would return it to you. And amongst them is he who, if you were to entrust him with a dinar would not return it to you, unless you kept standing over him. Qur'an (3,75)

Qadi Abu Bakr Ibn al-Arabi, the greatest authority on Qur'anic Law wrote in his famous "Ahkam al-Qur'an" about this ayat:

"The benefit that can be taken from this is the prohibition of entrusting the People of the Book with goods".

Qadi Abu Bakr said: "The question concerning entrusting property is legislated by the text of Qur'an." This means that the ayat is a legal judgement of absolute validity and of the greatest importance to the deen.

Entrusting wealth to non-Muslims is not allowed, but furthermore, taking a non-Muslim as a partner outside Dar al-Islam (where we stand over them) is extremely restricted, because they might cheat or might use our wealth in forbidden transactions.

Since paper-money is a promise of payment, can it be permitted to trust the issuers while they hold the payment (our property) outside our jurisdiction? History has also demonstrated repeatedly that paper money has been a permanent instrument of default and cheating the Muslims. In addition, Islamic Law does not permit the use of a promise of payment as a medium of exchange.

Gold Seeker Weekly Wrap-Up: Gold Gains 1.5% While Silver Surges Over 5% Higher This Week

http://news.goldseek.com

Gold traded mostly slightly higher in Asia and London before it briefly fell as much as $4.95 to $1127.45 in early New York trade after the jobs report was released, but it then rose to a new session high of $1140.49 by late morning and ended with a gain of 0.24%. Silver rose to as high as $17.49 by late morning in New York before it fell back off a bit in the last couple hours of trade, but it still ended with a gain of 1.05%.

Euro gold fell to about €834, platinum lost $5 to $1572.50, and copper gained 4 cents to about $3.40.

Gold and silver equities rose over 2% in the first hour of trade before they moderated a bit midday, but they still ended with over 1.5% gains.

Buy American Eagle gold coins online – Cheapest reputable gold bullion dealers on the internet

By Abdullah Patel

As inflation rises, purchasing gold may be the best financial decision that you can ever make. Gold is well known as a hedge against inflation and if you want to protect your financial future then investing in gold coins could be the way to go.

Here are a few gold facts for you:

For thousands of years gold has been highly valued and has never been valued at 0. Gold has been a popular choice not only in the United States but also in many foreign countries around the world. Gold has nearly tripled in value in the past 10 years and continues to rise today. As you can probably tell, gold is just as important today as it was several thousands of years ago.

A popular choice among gold investors is the United States American Eagle gold coin. The reason why this is such a popular choice among investors is because it is the only gold coin that is guaranteed by the federal government to have an accurate weight and purity. When it is backed by the United States government you can bet it’s pure.

You can purchase these coins in several weights, manufacture dates, and purities. A common coin is the one ounce American Eagle. These beautiful coins have found their way into many homes across the United States and around world.

You can find these coins at your local collectors shop, on the internet, or even on E Bay. If you are really looking to get a good deal on your American Eagle gold coin perhaps the best place to look would be on Ebay, Here you will find an auction that is open to the public and often offers discounted deals on these coins. Be sure to check out your seller’s ratings and comments in the feedback box. The last thing that you want to do is get stuck with a fake gold coin and end up eating the cost.

Kiwis Caught Up In Gold Rush

By ROB STOCK

Gold-selling fever is seeing millions of dollars of unwanted gold flowing into refiners, but the boom still doesn't rival the upturn in investors seeking gold bullion as a defence against uncertain economic times.

Last week, the Sunday Star-Times reported on the low prices people may receive for their unwanted gold when they sell it at kiosks in shopping malls, and how those wishing to cash up old gold can often find a better price at a jewellers or pawnbrokers.

But one of the refiners who buys from pawnbrokers said its trade in buying unwanted gold, either directly from the public or through a network of gold buyers, had gone from $10,000 a month 18 months ago to between $250,000 and $500,000 a month.

Tony Coleman of New Zealand Gold Merchants, which has been operating since 1975, said: "In the last 18 months it has gone from nearly no market at all to a huge market. Millions and millions of dollars a year are changing hands, but we are also seeing 10 to 20 times that in the amount of investment gold being sold."

The gold price has been high, but it is the recent surge in adverts from gold buyers that has fuelled the selling bug among the wider public. "It is really because of the advertising. The gold price was a bit lower a year ago, but there is a massive amount of people seeing easy money to be made by selling their gold," said Coleman.

NZ Gold Merchants, which also recovers silver from x-rays and photographic film, is one of the largest recyclers of gold jewellery, said Coleman.

But he said the gold-buying bonanza had a darker side, with burglars increasingly targeting gold jewellery which is often hard to identify as much of it is mass-produced, said Coleman. That's led to a police crackdown he said, which was unfortunate for one burglar who was nabbed after one enterprising victim emailed pictures of her lost items to New Zealand Gold Merchants. The firm's workers spotted the items when a man tried to sell them, and coincidentally there was a policeman there on a regular visit looking for stolen items.

Coleman said the gold-selling fever was dwarfed by the rush of some of New Zealand's wealthier citizens to buy gold as an investment, often as an insurance policy against financial meltdown. Some were concerned that the economy could collapse entirely, said Coleman. Others were afraid the government might go bust and attempt a wealth-grab.

New Zealand Gold Merchants manufactures gold bars for investors, as well as supplying jewellers, but to satisfy investor demand it is importing high-quality bars from Swiss firm Pamp, one of the world's most prestigious bullion dealers.

"We do make our own gold bars, but what we have found is that people sometimes want the ultimate surety of Swiss gold," Coleman said. Pamp is one of the world's most recognised bullion product producers with its Lady Fortuna bars instantly recognisable and accepted around the world.

One troy ounce bars currently cost about $1680 – there's no GST on gold bullion purchases – though the price changes constantly as the gold price moves in New Zealand dollars.

What is a Dinar

Basically, Dinar is a gold coin. The World Islamic Trading Organisation following the standard of caliph Umar Ibn al-Khattab, established the following standard: DINAR Weight: 4.25 grams Alloy: 22 carats (0.916) Gold

According to Islamic Law... The Islamic gold dinar (sometimes referred as Islamic dinar or Gold dinar) is a bullion gold coin made from 4.25 grams of 22-carat gold with historical Islamic significance. Gold dinar may also refer to various historic gold coins denominated in dinars. The Islamic Dirham is a specific weight of pure silver equivalent to 3.0 grams. Umar Ibn al-Khattab established the known standard relationship between them based on their weights: "7 dinars must be equivalent to 10 dirhams." "The Revelation undertook to mention them and attached many judgements to them, for example zakat, marriage, and hudud, etc., therefore within the Revelation they have to have a reality and specific measure for assessment [of zakat, etc.] upon which its judgements may be based rather than on the non-shari'i [other coins]. Know that there is consensus [ijma] since the beginning of Islam and the age of the Companions and the Followers that the dirham of the shari'ah is that of which ten weigh seven mithqals [weight of the dinar] of gold. . . The weight of a mithqal of gold is seventy-two grains of barley, so that the dirham which is seven-tenths of it is fifty and two-fifths grains. All these measurements are firmly established by consensus." Ibn Khaldun, Al-Muqaddimah

When gold goes up, gold stocks soar.

Have you started to invested in gold? Now is the time to put your money and convert it to gold. You know that even though that the investment in gold has resulted 350% profit, not many have invested into the yellow metal.

1.3 billion Chinese have converted the savings into gold and yet others have not done anything about it yet.

Will you be the one following the crowd or be the leader, putting yourself in front of the crowd of those having the most investment in gold waiting to cash in your wealth?

Act now. As Bloomberg says, "gold is the hedge against currency devaluation" - it can't be diluted, debased, or destroyed. This is why demands tends to pick up when inflation does.

Get your report now. Be the early ones to be informed on the latest news.

Why I got into silver

by Jason Hommel, December 17th, 2009

When I started working for myself, I made my very first money, enough to save for the very first time, but I was working so hard, over 80 hours a week! I guess God finally caught up to me, because, at some point, I began to think. And that's when it all started.

I thought: Why am I working myself to the bone, sleep depriving myself, to save up little pieces of paper in a bank, that does not even have the pieces of paper that they say are in my account? It's fraud upon fraud.

Yes, yes, I know what they tell us, that they are lending my money out, to be able to provide a return, enough to pay me the "interest". Sorry, 1% is not enough to get excited about, not when I've been living with 4-5% inflation my whole life. I saw the increases in the prices of candy and comic books in the 70's when I was a kid. I know.

I heard at the gun store from a guy who said that gold was cheap at anything under $350/oz., because the miners can hardly produce it for that, he was amazed at the low prices, and he thought that buying it was a zero risk opportunity to make some money.

I forget now, but I probably did a little research on the internet, which confirmed what he was saying.

So, I bought some gold and silver from the local coin shop at Tebo Coin in Boulder, Colorado, something I wanted to do my whole life, but never had the money to do.

I got 4 ounces of gold, and about 400 silver dimes. I got an American Eagle, a Kruggerand, a Mapleleaf, and a Philharmonic. I think I paid about $300 each for them, or so.

I had already bought a gun, because it seemed to be the responsible thing to do, but this was really cool. Now I had Gold, silver, cash, and a gun!

I kind of felt like an outlaw or something. I felt like I was robbing the banks, but legally!

I also stocked up on some food. But I quickly sold the food, and moved home.

I had to convince my dad. Y2K was coming up. He had way more money than me to protect, and he could prepare much better than I could, "just in case". We spent less than 1/2 of 1% of his net worth on preparations, and converted less than 10% of his wealth into silver and gold. Not too bad.

One day, my dad asks me, "Which is better, silver, or gold, and how do you know?"

Good question. It forced me to research more. I already knew the silver market was smaller, and that there was no investment demand, and thus, any new investment demand that went into silver would push the price way up.

Back in 1998, there was more investor selling than buying. Coin shops would send excess silver to refiners. From their perspective, they were drowning in silver. From an investor's perspective, the silver coming from investors selling is an "unsustainable supply source" one that, when it ends, will cause a whipsaw price change to the upside, even without any new investor buying!

In 1999, investors started buying 90% "junk" USA silver coinage dated 1964 or earlier, to prepare for Y2K, in case the banks crashed from computer failure, or bank runs. Prices for on those silver coins soared from about 5% over spot, to 50% over spot of $5/oz., in just a few months. We got a bit scared at that, and held on.

My grandmother had some bonds. My father next suggested that we try to convince her. So, I wrote up a small report about what I learned. I detailed that silver mine supply was about 500 million ounces, recycling was about 200 million more ounces, and government selling was about another 50 million ounces. Recycling included "investor selling".

Demand consumed it all, all 750 million ounces produced or recycled each year. Demand consisted of about 45% industrial demand, mostly in electronics, 25% jewelry & flatware demand, and 25% photography demand, and about 5% coin/medallion production.

The shocker was the relative numbers. At $5/oz., the size of the annual silver market was a tiny $3.7 billion, world wide.

In monetary terms, that was nothing. The money in US banks stood at $4 trillion, 1000 times as large.

She seemed a bit convinced, but where would she get silver, and where would she put it? She was too old to guard it, she was nearly 80. Sigh.

Very little has changed in 10 years.

Photography demand has dropped by about 10%, and investor demand has increased to about 10%, effectively replacing it, creating no new significant investment buying pressure.

Silver Eagle production has increased from 10 million coins to 20 million coins per year. In a 600 million oz. annual mining market, it's almost an insignificant change, this increase in coinage of 100%.

Silver has gone from $5 to $17.

M3, money in the banks, has gone from about $4 trillion to about $15 trillion.

The increase has been at about the same rates. Silver is just keeping pace with the inflation.

No significant money has yet flowed into silver, which is the event that will cause silver to vastly outpace in value all other investments or real property.

Popular press that writes about how much silver the ETF's "have obtained", have no clue about how much the ETF's have, since their silver is not able to be audited.

JP Morgan is the custodian of the silver for SLV.

JP Morgan has the largest short position in silver at the COMEX.

SLV's silver cannot be audited, as JP Morgan has the right to have sub custodians and sub sub custodians hold silver for the SLV. READ THE PROSPECTUS!

This means they can back up the SLV with long positions in futures, since "someone else" has the silver. So, SLV is backed by futures, and futures can now be backed by SLV.

It's now fraud backing fraud. But business as usual for the banks!

JP Morgan has $80 trillion in derivatives exposure, while the next largest banks have only $35 trillion, and the 4th largest has only $4 trillion.

What has changed significantly is that the fraud of "holding silver for investors", silver that was never purchased, and does not exist, has vastly increased.

Creating "paper silver" is similar to inflation. The effects of rising prices for REAL silver are not seen right away, there is a delay. The delay will one day manifest itself in silver rising much faster than it did in 1980.

The 1980 peak saw silver rise to $50/oz.

You can adjust for inflation in many ways.

1. If you go by government CPI numbers, the former peak would be about 2.5 times higher, or $125/oz.

2. If you go by the increase in M3, the increase in the paper money creation, which is the real inflation, then the increase is about 8 times higher, from about $1.8 trillion to about $15 trillion, so silver's "inflation adjusted" high would be $400/oz.

Silver moved up $10/day back then. We could see silver thus move up by $80 day sometime in the future, when things "blow up" in the financial world, or even more per day.

3. The third kind of inflation is the derivatives. There are a notional $1000 trillion of derivatives, mostly interest rate derivatives, or bets on the change in interest rates. People don't really buy very much gold in this era, they mostly place bets on the way they think interest rates will go, using highly leveraged bets. Mostly interest rates are flat. I suspect most of the bets thus fail. You need a change in rates for people's bets to pay off.

The comparative numbers are that the world's annual mine production of gold is about 2400 tonnes, or about 75 million oz., worth about $85 billion.

All the gold in all the world, ever mined in all of human history, stands at about 155,000 tonnes, or about 5 billion ounces, worth about $5.5 trillion.

The $1000 trillion of notional value of mostly "interest rate" derivatives simply dwarfs the gold market.

I write that more for future students of history than for people today. Most fools alive now simply don't get it. Future generations would simply not believe the stupidity of this generation, unless I wrote it down.

4. The fourth kind of inflation is a narrow subset of derivatives, including all the different kinds of "paper silver". This would include futures, options, ETF's, silver pools, silver certificates from Perth or Canadian Banks, and "over the counter" silver obligations.

For ten years, I was told that the "over the counter" silver obligations were unknowable, but probably the biggest kind of fraud.

Last year, I finally got a hold of some data on the over the counter silver derivatives.

The BIS report on commodity derivatives.

http://www.bis.org/statistics/otcder/dt21c22a.pdf

It shows there is $203 billion in "other precious metal" notional derivatives owed by all the world's banks.

That's mostly $203 billion of silver fraud, because the silver market is a $10 billion market, with investors only buying $1.7 billion per year!

We ought to know who the BIS is. The BIS is the Bank for International Settlements.

http://www.bis.org/

http://en.wikipedia.org/wiki/Bank_for_International_Settlements

"The Bank for International Settlements (BIS) is an international organization of central banks which "fosters international monetary and financial cooperation and serves as a bank for central banks." It is not accountable to any national government.

The latest report shows an increase in the "notional amounts outstanding" in the "other precious metals" category, from $96 billion in Dec. 2008 to $203 billion in June 2009. They only report twice a year.

Please note, the entire annual silver mine production is about 600 million ounces, at $17/oz., is $10.2 billion.

Thus, the banks owe 20 times more "other precious metals" than silver is produced per year.

Does the "other precious metals" category include platinum and palladium? Sure. But those markets are as small, if not smaller, than silver!

The world produces about 8 million ounces of each.

Platinum at $1428/oz. x 8 million is an $11.4 billion market.

Palladium at $365/oz. x 8 million is a $2.9 billion annual market.

Few people try to accumulate platinum and palladium, it's nearly zero, less than 5% of those markets physically, nearly no buyers of those metals in our coin shops, and I suspect even fewer derivatives to match. Thus, nearly all of the "other precious metals" derivatives are silver.

I hope I didn't lose you, but here's more comparative numbers.

99.5% of silver investors are being defrauded by paper silver!!!

BIS "other precious metals": $203 billion.

COMEX futures silver contracts, 157,310 x 5000 oz. x $17: $13.3 billion.

Perth Mint gold and silver certificates: $2 billion

Annual investor demand for silver: 100 million oz. x $17: $1.7 billion

Thus, 99.5% of all silver investors, or more, do not have the silver they think they have.

If your silver is a number on a statement or on a piece of paper, I can tell you, it probably does not exist. The math shows it's probably impossible for it to exist.

It would have been impossible for the sellers of paper silver to have gone into the tiny $3 billion to $10 billion annual silver market to buy $200 billion of silver!

The BIS figures show they should have bought $100 billion of silver in the last year! FROM WHERE?!

If you have paper silver, you have to take delivery, or cash out, and buy real silver from a real seller of real silver.

Please tell me your story, on why you bought silver. When? What led you to it? Over how long?

Yes. I'm biased. I'm a bullion dealer. But I've been writing on silver for 10 years, and I've only started dealing last year.

I became one, in part, because too many of my readers were being defrauded, and telling me about the fraud.

Consider this: Why am I one of the most popular silver advocates in the world, when I'm just a tiny little player? There is $5 trillion of gold out there in much wealthier hands than mine. They are not telling you to buy gold. Why not? Maybe because they are trying to keep it a secret, because they want to buy more for themselves! Maybe because they have no intention of selling at these prices.

But gold and silver are mined each year. Miners have huge expenses, they MUST sell, and that accounts for most of new supply, thus, the focus on it for supply/demand considerations.

In other words, bullion holders, 99.999% of them anyway, are not telling you to buy gold, and they are not selling!

My readers tell me it can be almost IMPOSSIBLE to get silver out of the large companies perpetrating the silver fraud and interest rate fraud.

Let's remember, their silver is unauditable.

Gold and silver are as good as they ever were.

To this day, miners are not expanding production, because expenses, such as energy costs, have risen more than gold.

Thus, the story is the same today as it was 10 years ago, only better. The miners can hardly make money at these prices for gold.

The difference today is that we now have nearly ten years of price rises behind us. Buyers today have "price confirmation". It's not like trying to catch a falling knife, or buying into a market that's dead in the water. Prices are moving. Don't get caught out.

If silver is going to go up by $80/oz. in a day, as inflation suggests, that suggests that silver will be unavailable anywhere, at any price, at some point.

This is why I suggest you buy silver, while you still can.

They day has already come when no silver was available!

I know a lot of people bought 1000 oz. bars in the last year, when no other better kinds of silver was available. Let me help you.

My best offer:

We are now buying 1000 oz. bars, paying cash, at 5% under spot prices.

We can exchange a 1000 oz. silver bar, for 1 oz. silver rounds, 10 oz. bars, or 100 oz. bars, for 10%. IE, you ship us a 1000 oz. bar, and you get 10% less silver.

Almost nobody really needs to exchange more than 1 bar.

You might not need to exchange any, but just buy at least 1000 generic rounds.

The exchange offer at 10% is actually the better deal, you will save about 4.8% than if you sold for cash, and then spent cash on rounds.

Premiums should come down as silver prices rise. As it stands, the 20 million silver eagles sold each year in the US bring in a mere $1 per coin, on average, or $20 million gross profit among 4000 coin dealers nationwide, or $5000 average each.

We also are selling silver products at approximately the following premiums over spot:

$1.37/oz. over spot, 8.0% Silver 720 oz. $1000 90% Junk Coins
$1.48/oz. over spot, 8.6% Silver 100 oz. bar
$1.37/oz. over spot, 8.0% Silver 10 oz. bar
$1.59/oz. over spot, 9.2% Silver 1 oz. Generic Rounds
$3.47/oz. over spot, 20.2% Silver 1 oz. American Eagles 1 oz.

For up to the minute prices, see:
http://jhmint.com/cgi-bin/ssrbidask

DON'T FORGET!

Phoenix Investment Conference � Gold & Silver Showcase, Feb.4-5

I'll be speaking!

When I first began to learn about the opportunity in silver, I spoke to anyone who would listen. One of the first men was a pastor of a local Church. He listened to me when silver was $5/oz., but I suppose his wife was harder to convince. He discovered the mining investment conferences; one was taking place in San Francisco. He insisted I come. He dragged me to it, because he was looking for more info. I was already convinced, and didn't think I needed to go.

It was great!

You will learn a lot at the show from other experts, and part of the fun is to discern their reasons for why they have slightly different views, and to discern whether their reasons are sound, or not.

So, plan to attend, and plan to drag someone along, whether friends, family, enemies, etc.

This is the ONLY mining show in the USA put on by Cambridge House! It's one the very best shows in the industry, and there are about 20 industry shows per year.

Frank Holmes will be there, the man who gave the best presentation in San Francisco last month.

Bill Murphy will be there, of GATA. This show is a "must"!

Phoenix Investment Conference � Gold & Silver Showcase, Feb.4-5
http://cambridgehouse.ca/index.php/phoenix-resource-investment-conference.html

PROMO CODE: SSR

The conference is going to have an admission fee of $40. If you use promotion code (SSR) the Admission fee is reduced to $20.

American Silver Eagles

American Silver Eagles have been the official silver bullion coin of the United States since its first release in 1986. It is only ever struck with a face value of one dollar and carries one troy ounce of .999 pure silver. It is authorized by the US Congress and backed by the US Mint for both weight and content. The coin is minted in the U.S. Mint's West Point, New York facility,

Each coin contains one troy ounce of pure silver and measures 1.598" (or 40.6mm) in diameter with a thickness of .117" or 2.98mm. They are impressively large and substantial coins and are America's only official investment grade silver bullion coins.

It is also legal tender in the US although hardly likely to be used as such since the value of the silver in the coin heavily outweighs the face value.

The obverse design is based on the U.S. "Walking Liberty" half dollar, which was originally minted in 1916 and designed by the German-immigrant sculptor Adolph Alexander Weinman. He was the designer of the famous U.S. "Mercury" dime, also introduced in 1916. The reverse side of the coin features a bald eagle and shield, with 13 stars, representing the 13 original American colonies, positioned above the eagle's head.